AUR#650Last Strategic Nuclear Bomber Scrapped; US Political Consultants Work For Opposition; Pinchuk’s Davos Lunch; Two Languages – One People

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Mr. E. Morgan Williams, Publisher and Editor  
Washington, D.C., Kyiv, Ukraine, MONDAY, JANUARY 30, 2006
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Inter TV, Kiev, in Russian 1800 gmt 27 Jan 06
BBC Monitoring Service, UK, in English, Friday, Jan 27, 2006

            Under U.S.-Ukraine Program to Reduce Common Threats
Public Affairs Section, U.S. Embassy, Kyiv, Ukraine, Fri, Jan 27, 2006

                    SDPU(o), PARTY OF REGIONS AND PORA
      Paid by Victor Medvedchuk, Victor Yanukovych, Rinat Akhmetov
Glavred.Info, Kyiv, Ukraine, Wednesday, January 18, 2006

     With George Soros, Strobe Talbott, Arseniy Yatsenyuk, Jean Lemierre
                 A separate discussion was held later on Russia’s future
By Lynn Berry, Staff Writer, The Moscow Times
Moscow, Russia, Monday, January 30, 2006. Page 1.

Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006

       Court ruling quashing Yanukovych’s convictions had been forged
ICTV television, Kiev, in Ukrainian 1105 gmt 29 Jan 06
BBC Monitoring Service, UK, in English, Sunday, Jan 29, 2006

ANALYSIS & COMMENTARY: By Serhiy Porytskyy
Glavred, Kiev, Ukraine, in Russian 0000 gmt 23 Jan 06
BBC Monitoring Service, UK, in English, Saturday, Jan 28, 2006

                               Two languages – one people!
Ukrayina TV, Donetsk, in Ukrainian 1857 gmt 27 Jan 06
BBC Monitoring Service, UK, in English, Saturday, Jan 28, 2006

Ukrayinska Pravda On-line, Kyiv, Ukraine, Monday, January 30, 2006

             Ukrainian president hints at abolishing constitutional reform
ANALYSIS & COMMENTARY: By Oleksandr Mikhelson
Glavred, Kiev, Ukraine, in Russian 0000 gmt 24 Jan 06
BBC Monitoring Service, UK, in English, Friday, Jan 27, 2006

Natalia Bukvich, Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006

                       Born in Lviv region of Ukraine in July of 1930
Nataliya Bukvych, Ukrinform, Kyiv, Ukraine, Sat, January 28, 2006

ANALYSIS: By Stephen Clayson, Correspondent, London, Miami, Florida Tuesday, 24 Jan 2006

ag-IP-news Agency website, Friday, January 27, 2006

Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006


Ukrainian News Agency, Kyiv, Ukraine, January 28, 2006

                    Zhytomyr, Rivne and Poltava regions also attractive
Ukrinform, Kyiv, Ukraine, Saturday, January 28, 2006


Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006


                            RUSSIA’S GAS POLICY WRONG 
UNIAN news agency, Kiev, in Ukrainian 1231 gmt 28 Jan 06
BBC Monitoring Service, UK, in English, Saturday, Jan 28, 2006

ANALYSIS & COMMENTARY: Electricity4Business, PrWeb.Ccm
London, United Kingdom, Sunday, January 29, 2006

21.                          RISKING ANOTHER SLAVIC WAR
OP-ED: by Masha Lipman, Columnist
The Washington Post, Washington, D.C.
Monday, January 30, 2006; Page A17
              Conference: Ukrainian Research Institute, Harvard University
                     Sunday, February 5 and Monday February 6, 2006
Ukrainian Research Institute, Harvard University
Cambridge, MA, Friday, January 27, 2006
By Delphine Strauss, Financial Times, Lonon, UK. Mon, Jan 30 2006
24.                             THE MUSHROOM CLOUD
Ruadhan Mac Cormaic, Irish Times, Dublin, Ireland, Sat, Jan 28, 2006
Natalie Kononenko, Kule Chair of Ukrainian Ethnography
University of Alberta, Modern Languages and Cultural Studies
Edmonton, Alberta, Canada, Mon, 23 Jan 2006

Inter TV, Kiev, in Russian 1800 gmt 27 Jan 06
BBC Monitoring Service, UK, in English, Friday, Jan 27, 2006

[Presenter] The last Tu-22 heavy bomber was scrapped in Poltava today.
Ukraine thus accomplished all the terms of its agreement with the USA on
destroying strategic nuclear weapons and preventing their dissemination.

About 11m dollars have been spent for the scrapping. Three Tu-22 aircraft
and seven hulls of X-22 cruise missiles will continue their lives at
museums. Our correspondent Hanna Onishchuk has just returned from


[Correspondent] The last Tu-22M3 bomber from the dead list is considered
scrapped. Now Ukraine has nothing left from its former nuclear arsenal. Ten
years ago Ukraine had the world’s third biggest nuclear arsenal.

Unlike Russia and the USA, it lacked only aircraft carriers and nuclear
submarines. It cost colossal amounts of money to maintain. But in the Soviet
Union there was no lack of funding for the defence sector. The nuclear
arsenal turned out to be heavier than Ukraine could bear.

[Oleksandr Kuzmuk, former defence minister, in Ukrainian] Keeping and
maintaining strategic offensive nuclear weapons was the most costly and
science-dependent area.

[Correspondent] It was heavy to carry, but it was a pity to drop. However,
economic issues were not decisive for taking a political decision. Many are
saying now that Ukraine made a mistake when it believed the promises made

by Russia and the USA and gave up its nuclear weapons.

[Yevhen Marchuk, former defence minister and secretary of the National
Security and Defence Council, in Ukrainian] The question is whom are we
going to attack? In addition, we would keep the world strained. We would
look a little bit silly – more than a half of Ukrainians are below the
poverty line but the country possesses nuclear weapons.

[Correspondent] But it was as hard to get rid of the nuclear arsenal as to
maintain it. There was time, money and nerves spent. There were tears.

The Ukrainian army was constantly cutting, destroying, scrapping.

First, all nuclear warheads were transferred to Russia. Ukraine received
nuclear fuel in return. Then intercontinental ballistic missiles were
scrapped and all missile silos were blown up. It was more complicated

with the aircraft.

They rusted with time and turned into scrap metal. However, Ukraine

managed to cover its gas debt to Russia with 11 bombers and 487 cruise
missiles. So, it is finished with the hardware now. It is only people who
are left now with their unsolved problems.   -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
            Under U.S.-Ukraine Program to Reduce Common Threats

Public Affairs Section, U.S. Embassy, Kyiv, Ukraine, Fri, Jan 27, 2006

POLTAVA, Ukraine – The last Tu-22M strategic bomber was eliminated

January 27 at Poltava Air Base under the Cooperative Threat Reduction
(CTR) program.

“I think we can all agree that, through our cooperative efforts, the CTR
Program has enjoyed considerable success here in Ukraine, ” stated U.S.
Ambassador to Ukraine John E. Herbst during the elimination ceremony in

“But, these combined efforts have accomplished much more than just the
elimination of weapons, delivery systems, and infrastructure.  They have
clearly demonstrated Ukraine’s commitment to international peace and
stability and enhanced Ukraine’s standing as a nation willing to play its
part in the global war on terrorism and as a reliable partner in arms
control efforts, ” the Ambassador said.

At a press conference commemorating this event, Doug Englund, the acting
deputy assistant secretary of defense for chemical demilitarization and
threat reduction programs, commended Ukraine for its steadfast support of
this and the other strategic nuclear arms elimination programs.

“The elimination of the last Tu-22M Backfire bomber represents a significant
milestone in both the relationship between Ukraine and the United States and
in the elimination of a weapon of mass destruction,” Englund said.

In October 1993, the United States and Ukraine signed the CTR Umbrella
Agreement for the elimination of strategic nuclear arms.  Sixty bombers have
been eliminated under this $12 million program since January 2001.

Using elimination methods specified in the Conventional Forces in Europe
arms control treaty, high speed saws cut off the nose of the bomber and
hydraulic shears cut through the tail.  The metal is cut into smaller pieces
and sold as scrap metal, and the equipment is sent to another military base
where the precious metals are recovered and sold.  All funds received from
these activities are used by Ukraine to provide housing for retired military

Through the CTR program, the Department of Defense is assisting the Ministry
of Defense and the National Space Agency of Ukraine with the elimination of
strategic aircraft and air-to-surface missiles and with the storage of SS-24
intercontinental ballistic missile solid propellant rocket motors.

The Defense Threat Reduction Agency implements the CTR program which
prevents the proliferation of weapons of mass destruction (WMD) and related
materials, technologies and expertise from former Soviet Union states. This
includes providing for the safe destruction of Soviet era WMD, associated
delivery systems and related infrastructure.  -30-

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                 SDPU(o), PARTY OF REGIONS AND PORA
 Working for Victor Medvedchuk, Victor Yanukovych, Rinat Akhmetov

Glavred.Info, Kyiv, Ukraine, Wednesday, January 18, 2006

KYIV – In the past, the pro government politicians used Russian political
technologists after they renamed themselves opposition, SDPU(o) and

Party of Regions have started using political technologists.  For example, a
former director of NDI, Andreas Katsouris, in the meantime is a consultant to
former head of pres admin and now head of SDPU(o) Victor Medvedchuk.

Incidentally, NDI gets its funding from American taxpayers “to further
democracy” in Ukraine.  It’s not clear how Mr. Katsouris manages to divide
his time between the Hotel Radisson on Yaroslviv Val where he currently
lives and the NDI Kyiv offices, where he appears regularly, and the SDPU(o)

It is also not very difficult to establish that Mr. Katsouris works for
Aristotle, Inc. and SDPU(o) is a client of that company.  What concerns NDI
ties with other political parties, back on March 2, 2004, press service of
the party of Regions sent out a notice about a meeting between head of the
Party of Regions Yanukovych with the current director of NDI, David


At that time, Dettman offered to the leader of the Party of Regions, whom he
considers “a strong opposition leader” (as was quoted by Party of Regions
website), he offered help in developing the new opposition in Ukraine.

Sidebar: “In the US, the network of the National Democratic Institute is
headed by former Secretary of State Madeline Albright.

Last Tuesday, January 10, 2005, the influential American newspaper Wall
Street Journal reported that one of the richest Ukrainian oligarchs hired
American political consultant and veteran of “dirty tricks”, Paul Manafort,
for consulting on the election campaign for the Party of Regions.  According
to our information, Manafort did not sign a contract with Victor Yanukovych,
rather he signed on with Rinat Akhmetov.

Which concerns the persona of Manafort is known that he is a partner of

the company “Davis Manafort & Freeman, Inc.”.  This lobbying firm is also
known to cooperate with Kremlin technologists.  For example, Vyacheslav
Lyazlov, a political consultant from Moscow, who works in the Kremlin. 
Today he is responsible for the Party of Regions voter turnout in program
in Zaporizhiya and Dnipropetrovsk.

Regarding Manafort himself, he is credited with “victory” over Ferdinand
Marcos in the Philippines.  According to western press, that election was
marred by total fraud, voter intimidation, problems with voter lists and
irregular vote counts.  Among clients of Manafort’s “business” are also
governments of Kenya, Somalia, Zaire, National Union for Angola’s
Independence and others.

According to rumors, earlier American Lee Avrashov, a Russian immigrant
who earlier imported American chicken thighs to Russia, and Brian
Christenson, a Republican politicians, helped out on the project earlier but
seemed to have quit because of disagreements with Manafort.

Manafort himself rarely visits Ukraine, but meets with Akhmetov in Paris.
But according other sources, Rinat Leonidovych (Akhmetov) prefers to
conduct all negotiations on the territory of Monaco.

However, Manafort if not the only consultant for the Party of Regions.
Another American, former director of the office of the International
Republican Institute in Moscow, Phillip Griffin, who was fired from IRI
many years ago, is currently also a consultant to the Party of Regions.

There is also information that the business partner of Manafort, Rick Davis,
is also helping out with the strategy of Party of Regions election campaign.

He works in close contact with Kremlin political consultants. Office of
Davis Manafort & Freeman, Inc, is currently located in Kyiv on Sofievska
Street across from the building of the company of Golden Telecom.

Sources in Washington state that the most famous client of Mr. Davis is
American Senator John McCain, who may be the next rival of Bush for the
next presidential election in the US.  Incidentally, McCain heads the
International Republican Institute [IRI] which, as well as the National
Democratic Institute [IRI], has an office in Kyiv.

According to the information that we possess, Robert Dahl, former advisor to
the Speaker of the House of Representative, Newt Gingrich, is also involved
in the Party of Regions election campaign.  Dahl was also a consultant to
the well known international organization IFES, and participated in the Bush
election campaign during the controversial vote recount in Florida in 2000.

According top some information, Dahl earns around $40,000 per month for

his consulting and establishing of ties between Party of Regions and
Washington Republicans.

In fairness, it should be noted that the Regions established contacts with
the US relatively long ago.

Earlier, “Ukrainskiy Pravda” published a list of PR companies that worked to
create a positive image for Victor Yanukovych in the US. Among them, were
the following; Venable L.P.; Potomac Communications Strategies, Inc;
Creative Response Concepts; DB Communications, L.C.; JWI, L.C.; and
Alexiy Kiselev.

And the president of a PR company “which presented itself as a sociological
research firm” Whitman Insight Strategies, Bernard Whitman, during the
presidential election of 2004, personally visited Kyiv to present the
results of Victor Yanukovych’s high rating.

To be fair, it should be noted that not only opposition parties have access
to the US government resources.  For example, one of the high ranking
Ukrainian employees of the National Democratic Institute office, Tetiana
Soboleva, who has worked for NDI for ten years, is currently a candidate in
the political party PORA-PRP.  She is #64 on the party list for parliament.

At the same time, she continues to receive an NDI salary (money of the
aforementioned American taxpayers).  Of course, there is no evidence that
uses NDI resources for promoting her political party.  But the question
remains open.

PS – Glavred, for several days, tried to contact the representatives of the
mentioned parties to receive an official answer regarding participation of
the former or current technologists from the US.  But we received no answer.
Well, we will have the wait. (Original article translated into English)   -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

     With George Soros, Strobe Talbott, Arseniy Yatsenyuk, Jean Lemierre
              A separate discussion was held later on Russia’s future

By Lynn Berry, Staff Writer, The Moscow Times
Moscow, Russia, Monday, January 30, 2006. Page 1.

DAVOS, Switzerland — The World Economic Forum is a strange place,
where members of an elite but eclectic global club meet for five days in a
Swiss ski resort to hold structured discussions on high-minded topics and,
of course, to schmooze.

These discussions, sometimes over lunch or dinner, bring together people
who might otherwise never meet. And sometimes they encourage people
with low public profiles but high-impact jobs to express their ideas. The
results are often surprising, which presumably is the point of the whole
expensive exercise.

But for people from our part of the world, two events this weekend in
Davos stood out.

On Friday, Viktor Pinchuk, a Ukrainian billionaire on the losing side of the
Orange Revolution, put on a private lunch with such an assortment of guests
and speakers that you wondered how he got them all into the same room.

With George Soros, Strobe Talbott and Pinchuk’s wife, who is former
President Leonid Kuchma’s daughter, seated at the head table and some of
Russia’s biggest businessmen at the table all the way in the back, Pinchuk
introduced the main speaker, former Polish President Aleksander
Kwasniewski, and noted the important role he had played in “our Orange

Two Cabinet ministers from the ousted government joined the current
economy minister and TNK-BP CEO Robert Dudley in making short

Then on Saturday morning, some of Russia’s most successful young
business leaders engaged in a lively discussion on Russia’s future, at times
taking opposing views.

The discussion on Saturday centered around three scenarios for Russia
developed by the forum and presented by Angela Stent, a professor at
Georgetown University who until recently was on the U.S. National
Intelligence Council; Lilia Shevtsova, an expert on Kremlin politics from
the Carnegie Moscow Center; and Olga Dergunova, chairman of
Microsoft in Russia.

It fell to Dergunova to present the rosiest scenario, in which oil prices
decline and in the ensuing turmoil an exceptionally wise president is
democratically elected and implements a series of bold reforms.

Alexander Izosimov, CEO of VimpelCom, stood up to take issue with the
premise that high oil prices are holding Russia back. He made the case that
high oil prices bring a sense of stability, reduce the risk of borrowing
money and thus allow other sectors that require significant outlays of
capital, such as telecommunications, to grow.

“Look at the amount of money being borrowed in the West,” Izosimov said,
expanding on his remarks after the conclusion of the session, which like
most sessions at Davos is off the record unless the speaker explicitly
agrees to be quoted. “The accessibility of international money would not
happen if Russia were not perceived as stable.”

He was joined by Alexei Mordashov, head of Severstal, who said that in
addition to creating stability, high oil prices generated demand and allowed
for increases in public sector wages.

Dergunova shot back that their arguments were based on the notion that oil
revenue was being distributed through society — and indeed, the figures
show a widening disparity between rich and poor in Russia.

This recalled a discussion the day before at a session on how countries
should spend their oil revenues and the conclusion that rising prices carry
very real dangers for petro-states such as Russia.

At the session, Ngozi Okonjo-Iweala, the finance minister of Nigeria,
described an effort to fight her country’s notorious corruption by
publishing information in the newspapers on how the oil revenues are
distributed. H.E. Sheikha Lubna Al Qasimi, the economy and planning
minister of the United Arab Emirates, made the point that the oil industry
does not produce jobs; it is what is done with the revenues that matters.

The arguments of these two accomplished, Western-educated women seemed
to have given Dergunova food for thought. She said the problem in the
Russian oil industry was that the surplus revenues were “badly managed,
poorly distributed and there was no transparency. “Revenue distribution
creates room for corruption when there is no civil control,” she said.

Economic Development and Trade Minister German Gref also participated in
the Friday morning session on oil revenues, where he was asked to explain
the gas dispute with Ukraine. He reiterated Gazprom’s position that the
demand for Ukraine to pay a higher price for gas was not based on politics
and that the company had a responsibility to its shareholders to sell to all
its customers at market prices. “I’ll repeat that it relates not only to
Ukraine, but in Ukraine, because of political developments, it was over-

politicized,” Gref said.

The gas dispute was also a main topic of discussion at the lunch hosted by
Pinchuk. Arseniy Yatsenyuk, the economy minister, reiterated that questions
over the ownership of Rosukrenergo were the main stumbling block to the
signing of a gas deal initialed on Jan. 4. The deal has a signing deadline
of Feb. 1.

He said that under Ukrainian anti-monopoly legislation, before the joint
venture could be registered, Rosukrenergo had to disclose information on its
shareholders. Asked whether the Ukrainian government knew who owned
Rosukrenergo, he said, “The minister of economy doesn’t know.”

He denied the Russian claim, repeated here by Gref, that Rosukrenergo was
brought into the deal at the insistence of the Ukrainian side. “The
Ukrainians say it was the Russians, the Russians say it was the Ukrainians.”

He said he had met with Gref earlier Friday and on Thursday. He predicted
that President Vladimir Putin and President Viktor Yushchenko would have to
step in to break the deadlock before Wednesday’s deadline. “It depends on
the political willingness, but probably the two presidents have to
reconcile. They are the best negotiators.”

Pinchuk’s lunch was moved to a bigger restaurant because so many people
wanted to come. Among the 100 guests were Soros, a financier who supported
the Orange Revolution; Talbott, president of the Brookings Institution who
was former U.S. President Bill Clinton’s point man on Russia; and Jean
Lemierre, president of the European Bank for Reconstruction and

Development [EBRD].

The Russia dinner that night, which was part of the official forum program
and thus open to everyone, was less of a draw. There was an embarrassing
number of empty seats at the tables.

Dudley said TNK-BP, in addition to expanding in Ukraine, was showing its
confidence in Russia by planning to increase its capital investment in
Russia by another 30 percent this year, from just under $2 billion in 2005
to up to $2.5 billion. This was also part of its protection plan in a
country where the state is increasingly jealous of its energy resources, he

“As long as we continue to do the things we said we’d do, which is continue
to increase investment, bring lots and lots of new technology into the
country through people and expertise, and put in place programs around
developing people, training, and we’re very, very open about what we do, I
think we’re a good citizen and I think the government looks at us that way,”
he said following the Ukrainian lunch.

“We’re in competition with many other companies, including some state
companies in the oil and gas industry, so there’s a normal healthy
competition,” Dudley said. “But we do not feel pressure that makes me
stay awake at night.  -30-

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
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Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006

KYIV – According to the Polish magazine Wprost, seven Ukrainians are

listed among Central and East Europe’s 100 most affluent persons.

[1] Igor Kolomoiskiy, co-owner of the Privat group, has been placed in the
twelfth position to top the list of Ukrainian tycoons. His fortune is
estimated at 2.8 billion dollars. According to the magazine, in 2005 Igor
Kolomoiskiy’s capital increased by over 500 M. USD.

[2] Rinat Ahmetov, president of the Shakhtar football club, and Viktor
Pinchuk, former president Kuchma’s son-in-law and Interpipe group founder,
lost one billion dollars in 2005. Rinat Ahmetov a year ago topped the Polish
magazine’s list of most affluent Ukrainians. He has been placed in the 15th
position. His fortune is evaluated at 2.1 bn. USD.

[3] Serhiy Taratuta, ISD (Industrial Union of Donbass) chairman, has been
placed in the 13th position, with his fortune estimated at almost 2.5 bn.

[4] Viktor Pinchuk’s fortune shrank in 2005, as well. He has been placed in
the 27th position. His fortune is evaluated at 1.5 bn. USD, one billion less
than in 2004.

According to the magazine Wprost, other rich Ukrainians are [5] Fedir Shpyk
(Aval bank owner, 51st), [6] Oleksandr Yaroslavskyi (UkrSibBank owner,
62nd), [7] NSDC ex-secretary Petro Poroshenko (95th). The Wprost

appraises Petro Poroshenko’s capital at 300 M. USD.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
        Court ruling quashing Yanukovych’s convictions had been forged

ICTV television, Kiev, in Ukrainian 1105 gmt 29 Jan 06
BBC Monitoring Service, UK, in English, Sunday, Jan 29, 2006

Ukrainian Interior Minister Yuriy Lutsenko has said that opposition leader
Viktor Yanukovych cannot be disqualified from the parliament election race,
even though his criminal convictions were quashed unlawfully.

Speaking live during the talk show called “In detail with Dmitriy Kiselev”
on the ICTV commercial TV channel, Lutsenko said that Yanukovych’s
convictions are considered quashed under the statute of limitation.

“I can clarify this issue today. On the one hand, every man who has served
his sentence is considered to be without convictions after some period of
time. Depending on the nature of the crime committed, this happens in three,
six of eight years.

Mr Yanukovych’s last conviction was in 1970. At any rate, at present he is
the person with quashed convictions due to the statute of limitation. On the
other hand he committed crimes for which he served his prison term,”
Lutsenko said.

Lutsenko produced documents in the studio, which, he said, show that the
court ruling quashing Yanukovych’s convictions had been forged. “Currently
an expert examination has unequivocally established that the ruling by the
court of appeals to the effect that Yanukovych had no criminal convictions
and committed no crimes was forged.

The investigation has failed to identify the people who did this because the
people have stopped turning up for questioning and are at large. But this
does not mean that Mr Yanukovych can be disqualified from the election race.
Due the fact that very much time has passed since his last prison term in
1970, this conviction has been quashed automatically. That is it,” Lutsenko

Lutsenko also said that the police have information that some candidates are
running for parliament in breach of Ukraine’s laws. He added that he is
obliged to share these concerns with the public. “Under the law on the
police, I, as a state servant, should inform the public about the criminal

Therefore, I am informing of the criminal situation in some election lists.
I mean people at the centre of attention from the police and law-enforcement
agencies. We have evidence and have grounds to suspect these people of
involvement in crime,” Lutsenko said.

As an example, Lutsenko mentioned a candidate running for parliament on

the election list of former Prime Minister Yuliya Tymoshenko’s bloc: “In
November last year, he was a citizen of the African republic Cape Verde. We
have checked this, and he received his Ukrainian passport unlawfully, in
breach of the appropriate mechanism.”

“Well, this does not mean that he is suspected of any wrongdoing. But he
received Ukrainian citizenship unlawfully in November last year, and the
Central Electoral Commission will face a dilemma: to register or to
disqualify him,” Lutsenko said.

“Two people, who are on the international wanted list, are also on
[opposition Progressive Social Party leader] Nataliya Vitrenko’s list,”
Lutsenko went on.

“I do not know if this is good or bad. Probably, some people will like it
and definitely vote for them. These are two people wanted internationally by
Interpol. Some may not like this. Let people decide. I am not canvassing for
anyone, but providing information,” Lutsenko said.

Apart from election-related matters, Lutsenko also talked about the reform
of the traffic police and the police’s priorities in this year, including
fighting crime and corruption.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

ANALYSIS & COMMENTARY: By Serhiy Porytskyy
Glavred, Kiev, Ukraine, in Russian 0000 gmt 23 Jan 06
BBC Monitoring Service, UK, in English, Saturday, Jan 28, 2006

The Ukrainian Interior Ministry appears to be coming under the influence of
one political party, a website has said. The author said that Interior
Minister Yuriy Lutsenko, a member of the Socialist Party of Ukraine, is
changing priorities in the ministry giving much more power to the Department
of Public Relations.

The author said an internal instruction from Lutsenko means all information
must be filtered through the Department of Public Relations before reaching
the outside world.

The author said the former Socialist Party press secretary [Inna Kysil] now
in charge of the department is disliked for “incompetence” in police affairs
and added that even generals in the ministry are afraid to cross her path as
“it could cost a job”.

The following is the text of the article by Serhiy Porytskyy, entitled “Will
the Interior Ministry become an appendage of the Socialist Party of
Ukraine?”, published on the Ukrainian website Glavred on 23 January;
subheadings have been inserted editorially:

The one-year anniversary of Yuriy Lutsenko becoming the interior minister

of Ukraine is just around the corner. Has it been possible to de-politicize
this police agency and make it “open and transparent”?

The head of the ministry never tires of repeating – yes. At least that
achieving the goal is very close. But that is simply his own particular
opinion. We will be bold enough to express a bit of doubt on this issue.

And here’s why.
                               A CHANGE IN PRIORITIES
First, it looks like the law enforcement institution has undergone a change
of priorities. There is a strong feeling that many of the what would seem to
be the most important units – for example, the investigative department, and
the department of searches and so on – are gradually giving up the leading
positions…[ellipsis as published] to the Internal Ministry’s Department of
Public Relations.

This sector, which is in no way linked to operations or investigative work,
is gradually becoming the main body in the ministry structure. And these are
not simply unsubstantiated assertions.

Glavred has possession of a curious document – a copy of a service
instruction signed by Minister Lutsenko [who is also a member of the
Socialist Party of Ukraine].

It reads: With the goal of coordinating the activities of sub-departments of
bodies under the Internal Ministry…[ellipsis as published] to establish
the following order of preparing and presenting material to the mass media:

To the leaders of structural sub-units of the ministry: Materials prepared
for the media must be agreed with the Department of Public Relations (DPR).

DPR (Kysil I.V.) Interior Ministry of Ukraine: [is instructed] to coordinate
the activity of sub-units of agencies of internal affairs in carrying out
the unified informational policy of the ministry and to organize operative
and objective informing of society through the media of the activities of
the police.
                       A FILTER FOR OUTSIDE WORLD
This instruction could mean that the Internal Ministry has set up a single
powerful information “filter”, without the sanction of which not only
press-officers, but not even a single general can “talk openly” with a

That, by the way is about “openness and transparency”. Such “acts” were
unknown even during the Kuchma era. Yes, the old regime once tried to instil
such a means of “communicating” with the press. But then the attempt ended
in a complete fiasco.

What is the reason for giving the DPR such wide-ranging authority? “To
strengthen the image of the minister” – that is a version frequently found
in the press. In our opinion, the reason is deeper and its roots lie in the
ideological sphere. Just like in communist times: ideology is supreme.

It’s just that in this case, the DPR is responsible for the functions of the
Interior Ministry’s political department. Which strongly resembles an
ideological centre, the work of which is permeated by a quite specific
“political spirit”.
                              WHICH SPIRIT EXACTLY?
Here is a small episode which is quite telling. Glavred is in privy to
information that at the congress of the Socialist Party of Ukraine [SPU],
which took place in December, a cameraman from the Interior Ministry DPR

was “delegated” – to film. It is not likely that the DPR employee came on his
own initiative. So one asks the big question: why the sudden disposition to
one particular party?

More than once criticism has sounded against Yuriy Lutsenko for
professionals leaving the police. As one example, people mention the
resignation of deputy chief of police of Kiev Region, Ivan Proshkovskyy.

And we recall another man – Hennadiy Moskal, recently appointed governor
of Luhansk Region.

There are many rumours about why he “was taken out” of the Interior Ministry
ranks. Most of them come down to politics being involved. It is very hard
not to agree with this. What other reasons can explain the dismissal of a
deputy minister with whom few can compare in terms of professionalism?

Meanwhile, our suppositions on the “political priorities” of the uniformed
ministry are to a certain extent strengthened by Yuriy Lutsenko himself. On
20 January, the chief of the Interior Ministry stated his readiness to run
for the Rivne Regional council from the SPU. How can one keep from

recalling the old saying: “Is the congregation just like the pope?”

That, by the way, is about de-politicizing the police. As one bureaucrat in
the ministry expressed in a private conversation, bit-by-bit the Interior
Ministry is becoming an arm of the SPU. One hopes that this is not yet the
case. On the other hand – facts are stubborn things.
Getting back to that wonderful instruction from the chief of the Interior
Ministry, we draw attention to the last point. It is far more important than
it may appear to be. In light of the role now given to the DPR, a “random
person” is not going to turn up at the wheel. One must suppose that Inna
Kysil had no competition for this post.

We remind our reader that in the not-too-distant past she worked as the
press secretary of the leader of the SPU, Oleksandr Moroz, and then for
Yuriy Lutsenko himself. Many complaints have been voiced in the press

about the 23-year old girl.

Foremost, about her – to put it mildly – not-too-high level of competency in
issues of the activity of law enforcement agencies. Nevertheless, the
minister is prepared to stand up for her. “Maybe there are some who like the
former press secretary with a general’s rank? I had hoped one could find
more substantial things to criticize”. That is exactly how Lutsenko parried
unflattering comments about his subordinate during a recent Internet chat.

And it seems no-one cares much that the current leader of the DPR has got
authority that the “general” never even dreamed of.

The situation is bordering on the absurd: police chiefs with big stars who
have more than once looked fatal danger in the eye, literally shake at the
mention of the name of the young boss of the DPR. “God forbid a conflict
with her! It is very easy to lose your position”, a fairly high-ranking
person in the ministry told us, as if excusing himself.

His colleague – also high-ranking – nodding his head in the direction of the
chief of the DPR, said painfully: “Unfortunately, every revolution has its
costs”. We suppose that many publications in general – and journalists in
particular – could join in drawing such conclusions.

Why hide the sin – the possibility of a correspondent “getting in” to any
particular Interior Ministry event depends directly on the “sympathy or
antipathy” towards you on the part of the DPR. Although, it may be better
here to say “loyalty”.

As one source in the ministry told us, the existence of a “black list”
cannot be ruled out. If that is really so, then it is easy to explain the
“green light” for some – chosen – media, and the “red light” for the rest.
For example, I wonder how the Internal Ministry will react to this article?

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

Ukrayina TV, Donetsk, in Ukrainian 1857 gmt 27 Jan 06
BBC Monitoring Service, UK, in English, Saturday, Jan 28, 2006

DONETSK – [Male voice-over, in Russian] For the first time in Ukraine!

The Party of Regions presents a short-text-message referendum in favour
of the Russian language.

To take part in the referendum, it is necessary to send a short text message
with figure 2 if you support granting the Russian language the status of
second official language in Ukraine, or with figure 1 if you are against, by
dialling a short number – 7757, which is the same for all national

The price of a short text message is standard for subscribers’ tariff

The Party of Regions. [Switches to Ukrainian] Two languages – one people!

[This advertisement has been run ahead of the evening news bulletin. Video
shows a map of Ukraine divided horizontally into the blue (upper) and yellow
(lower) parts – the colours of the Ukrainian state flag. Video also shows
words “Ukraine” and “the Party of Regions” in the top right corner of the
screen, and the above text in the form of short messages written on blue

The same text is shown in Ukrainian – white letters against a blue
background – at the bottom of the screen. The last picture shows the Party
of Regions’ top election candidates Rinat Akhmetov, Taras Chornovil,

Viktor Yanukovych, Yevhen Kushnaryov and Nina Karpachova standing
together, with an inscription in Russian: “Two languages – one people!” and
the same but smaller inscription in Ukrainian at the bottom of the screen.]
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

Ukrayinska Pravda On-line, Kyiv, Ukraine, Monday, January 30, 2006

BYuT leader Yulia Tymochenko is certain that president Yushchenko issued
security guarantees for ex-president Kuchma.

“It is dead certainty”, she said on Sunday on NTN air answering the question
whether there was an agreement between Yushchenko and Kuchma.

“Absolutely ignoring the opinion of general public, just behind everyone’s
back they agreed that peaceful existence is guaranteed for everyone”, – she
is certain.

According to Tymoshenko, the fact that the partnership memorandum was

signed by Yushchenko and Yanukovich, and Kuchma’s son-in-law Pinchuk
had voted for Yekhanurov to become prime minister are strong evidence of
such conspiracy.

“Today Yekhanurov gave back thousands of hectares of land in Borispol

which where given to Pinchuk by Kuchma. Back in possession of Kuchma’s
family.”, stated Tymoshenko.

“Today even Supreme Courts rulings regarding returning of the strategic
objects, which were given to Pinchuk’s during Kuchma’s days in office, into
the state ownership, were suspended”, she said.

According to Tymoshenko’s statement “Yekhanurov and president’s team,
everyone has appeased with Kuchma and his team and they have establish

this kind of happy mutual co-existence.”

“Despite the fact that I have cancelled the directive for his (Kuchma)
government provision, today he carries on living on government dacha, he is
being served by a great number of domestics who are being paid from the
state budget, loads of bodyguards who guard him are also on government
 wages”, said Tymoshenko.   -30-

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
              Ukrainian president hints at abolishing constitutional reform

ANALYSIS & COMMENTARY: By Oleksandr Mikhelson
Glavred, Kiev, Ukraine, in Russian 0000 gmt 24 Jan 06
BBC Monitoring Service, UK, in English, Friday, Jan 27, 2006

Ukrainian President Viktor Yushchenko has not given up the idea of
abolishing constitutional reform reducing his powers, which came into

force on 1 January, a Ukrainian web site has said.

In his televised address on the first anniversary of his inauguration,
Yushchenko failed to admit his fault for mistaken personnel decisions

and his programme for 2006 is merely declarative, it said.

The following is the text of the article by Oleksandr Mikhelson entitled
“Yushchenko declared war for the sake of peace” posted on the Glavred
website on 24 January; subheadings have been inserted editorially:

The president’s [Viktor Yushchenko] address to the nation dedicated to the
anniversary of his inauguration has demonstrated: Yushchenko agrees to

be an English queen, but not Queen Victoria.

[Epigraph] All 10,000 grasses blossom out before the sovereign’s eyes, and
trees change their foliage on his order. ([Russian journalist and writer]
Yuliya Latynina, “100 fields”)
On Monday [23 January], on the anniversary of his inauguration, Viktor
Yushchenko made another address to the nation. There were at least three
pleasant things in this address.

[1] First, the president abandoned his habitual armchair and stood up before
the nation.
[2] Second, the head of state was likely to have become the first person in
this country to make a public statement “Ukraine above all” [corresponding
to the first line of the German anthem “Germany above all”] (associations
can be different, but is not it present-day pragmatism?).
[3] Third, Yushchenko said everything he wanted without redundant wording.

While the shorter initial part of his address in which Yushchenko enumerated
accomplishments of his administration is quite controversial, one can hardly
argue the rest of theses. This is because they are not subject to
discussion: they are subject to fulfillment.
However, there were also some significant points in the “praising” part. [1]
For example, having said that the authorities should draw conclusions of
their own mistakes, Yushchenko emphasized: “All those who stood close to me
on Maydan [central square in Kiev, venue of Orange Revolution] a year ago
received a chance to work in Yushchenko’s team. Unfortunately, sometimes
personal ambitions took precedence.”

These words have more in common with recognition of his own mistakes, in
particular those on personnel issues, but not with another criticism of his
staff members, of course, the former ones.

[2] Second, the president said for the first time that retaining our gas
transportation system in Ukraine’s ownership is an important result of gas
agreements with Russia, the same way as the gas price being “lowest in
Europe” (according to the president).

Being a liberal, Yushchenko surely understands that, as long as we have this
cheap gas, our way to different kinds of EU and WTO is closed. However, what
can be done: the election is coming, and one should speak about good things.

This is the reason of the statement that passage of gas transportation
system to foreign hands is “out of the question” in future as well. One
should understand that this is in case the incumbent authorities remain

The statement “the cabinet did not increase gas prices for ordinary people,
as it promised” is a different thing, as there is great different between
“did not increase” and “will not increase”, especially in the current
situation… [ellipsis as published]

                         LEGISLATION TO BE ADOPTED 
But let’s return to instructions. Actually, there were two “packages of
instructions” in the president’s address. The first one is designated for
quoting in printed media and on TV under the heading “The president
announced the authorities’ priorities for 2006″.

There are five of them: “Health of the Nation”, upgrading the education
system, rural development programme, diversification of Ukrainian energy
market, and finally, judicial reform.

The interesting point was that concentration of concrete points of the
president’s plans in his address dropped from the first sentence to the last
one. Speaking about medical service, the president named the programmes

of fighting AIDS, tuberculosis, etc. personally supervised by him.

Speaking about the energy market, he promised “at least a 10 per cent”
reduction of energy consumption this year; obviously, fighting for Ukraine’s
independence in energy in 2006 ends with this. Finally, while speaking about
the most imminent reform of the third [judicial] branch of power, Yushchenko
did not specify the ways of trying to implement it.

However, there was no special need to give clear interpretations if we take
into account the fact that the priorities announced by Yushchenko seem to
have been copied from the electoral programme of one of the parties. Can you
guess which one? [propresidential Our Ukraine People’s Union Party]

The second “package” is a different thing. By the way, passage to it was
composed quite successfully, the same way as the whole address: dear
Ukrainians, EU remains our strategic priority this year, therefore we should
adopt laws on WTO as soon as possible; by the way, let us speak about laws.
                             DECREE ON FAIR ELECTIONS
Yushchenko made many signals here. First, Yushchenko will observe laws

with all his might and will force others to do so. In particular, it concerns
election laws. For this purpose, the president even signed a decree on fair
elections which he promised long ago.

Those who have read the decree and have reached its final provision paid
attention to the presidents directive to the Interior Ministry, Security
Service of Ukraine and local authorities “to take measures for non-admission
of spreading calls to liquidation of Ukraine’s independence, changing the
constitutional system by forcible means, violation of the country’s
sovereignty and territorial integrity, unlawful usurpation of state power,
propaganda of war and violence, stirring up inter-ethnic, racial, religious
and other kinds of hostilities, infringing of human rights and freedoms and
people’s health, along with materials containing these calls, slanderous
information about political parties, their leaders, election blocs and
candidates during the election campaign in any form.” Unquote.

There are suspicions that the whole decree has been written exactly for the
sake of this provision. Yushchenko confirmed this suspicion in his address.
“I will not allow a single political force to divide the country, speculate
on language, religion, federalism or separatism”, he said.

Undoubtedly, this is the warmest regard to those parties which have included
federalism in their election programmes. If [former President Leonid] Kuchma
had once made this kind of statement, all papers would have written next day
about withdrawal of the criticized parties from the election.
There is even more interesting point: “I consider it necessary to introduce
a moratorium on any decision or action by the executive or the legislature
which may destabilize the situation in Ukraine.”

To put it mildly, it sounds enigmatically. How is it related to moratorium,
which means a temporary ban of something? There should not be any actions

of the authorities at all which can result in destabilization, and for this one
should just observe laws and principles of morality.

If it is not done, no decrees and agreements on fair election will help. But
the logic seems to be lying in something else: political justification of
the president’s side in its actions, in particular, with regard to

It is not the only point. Speaking briefly, the president made a demand to
harden the line of fighting against “bad guys”. One of them was recently
detained by [Interior Minister Yuriy] Lutsenko.

So, the main essence of this part of Yushchenko’s address means that
“Lutsenko’s line” should be continued and enforced. Let [opposition leader
and former Prime Minister Viktor] Yanukovych visit Brussels to complain…
[ellipsis as published]

                              CONSTITUTIONAL REFORM
There is one more point. Yushchenko flatly instructed parliament to swear in
the Constitutional Court judges, but he did not mention that it would be
nice to appoint the parliament’s share of the court. He said that he would
initiate formation of a working group with equal presidential, parliamentary
and government representation to develop “proposals on harmonizing the work
of the branches of power”.

He also emphasized that the laws on the president, the Cabinet of Ministers,
opposition and – attention! – all-Ukrainian referendum should be urgently

It means that the president does not abandon the idea of abolishing the
amended constitution. He honestly said this: “I recognize that from 1
January 2006, in accordance with Supreme Council’s [parliament] decision, a
new constitution has come into force in Ukraine (as if it needs this kind of
recognition – Author’s note). But I do not believe that this constitution is

It should be abolished through a referendum or with the help of the
Constitutional Court, and it would be nice to drag down appointment of its
judges from parliament’s quota (it had been successfully done by
propresidential factions until recently), or with the help of both ways:
anyway, in general.

At the same time, Yushchenko intends to take any opportunity to level
enforcement of the political reform with the help of the aforementioned
laws, and probably, not only with them: with the ones drafted by a group
with “parity participation” of representatives of the President, Cabinet of
Ministers and Supreme Council; in other words, with Yushchenko’s majority.

Therefore, after one year the president began doing the thing we was
supposed to do from the very beginning: strengthening his power. But will
the president succeed in making the phrase quoted in the epigraph to this
article not sound ironically in relation ho him in present situation?
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]


Natalia Bukvich, Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006

WASHINGTON, DC – Ukrainian Ambassador to USA Oleh Shamshur
met with Head of the Congressional Ukrainian Caucus Curt Weldon,
Ukrainian Embassy sources told Ukriform correspondent. The meeting
dealt with the current state of Ukrainian – American relations, which are
gaining traits of real strategic partnership.

The parties to the meeting also discussed a series of projects of bipartite
cooperation in 2006. Curt Weldon reassured the Ukrainian Ambassador
to the USA of the Congressional Ukrainian group’s promoting these.

Congressman Weldon noted, after the Orange Revolution, the group
increased almost twofold. Now, it is a weighty political force ready to
solve current issues of bilateral relations. Among these, he named the
revocation of the Jackson – Vanik amendment.   -30-
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    If you are receiving more than one copy of the AUR please contact us.
                       Born in Lviv region of Ukraine in July of 1930

Nataliya Bukvych, Ukrinform, Kyiv, Ukraine, Sat, January 28, 2006

WASHINGTON, DC – US Army Colonel (ret), holder of the Order Of Merit

3d Grade PhD Stepan Oliynyk has been decorated with the Meritorious Badge
by the Defense Ministry of Ukraine, in view of his personal contribution to the
Ukrainian Armed Forces’ establishment and development.

The award was presented to Stepan Oliynyk by Ukrainian Ambassador to the

USA Oleh Shamshur. Speaking on behalf of the Ukrainian Government, Oleh
Shamshur thanked Stepsn Oliynyki for his years-long work toward promoting
American – Ukrainian bilateral relations and military cooperation.

Stepan Dmytrovych Oliynyk was born in the Lviv region on July 18, 1930. He
came to America after WWII. His military career lasted for as long as 35
years. As a US Army officer he served with the US Army Headquarters, with
the JCS. After retirement in the rank of Colonel he engaged in research work
in matters of national security with the DOD.

Since 1992 Stepan Oliynyk has been working as a consultant, senior
counsellor for national security with the Consultative-Advisory Council
under the Verkhovna Rada of Ukraine and the Defense Ministry for matters

of mobilization readiness.

He is often invited to lecture at the Ukrainian Armed Forces Academy and for
the editorial board of the journal Viysko Ukrainy (“Ukraine’s Army”). Stepan
Oliynyk also participated in activities of  the International Institute for
Global and Regional Security, the Taras Shevchenko Scientific Society, other
professional societies and organisations both in Ukraine and the USA.

Stepan Oliynyk is the author of many scientific papers and books on
military, literary and historic subjects. He has been awarded the Ukrainian
Education & Science Ministry’s honorary diploma.  -30-
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ANALYSIS: By Stephen Clayson, Correspondent, London, Miami, Florida Tuesday, 24 Jan 2006

LONDON – Although Ukraine’s oil & gas requirements have only been thrust
to prominence by recent upsets, Cardinal Resources [AIM:CDL] has been
active in the sector for some time.

Cardinal shares have found their natural home here in London, where, as a
rule, investors are more comfortable appraising risky investments in distant
places; the company having grown out of and superseded the defunct,
formerly Toronto listed Carpatsky Petroleum and deliberately switched to
a London listing on account of its greater suitability.

According to Cardinal’s Chairman & CEO Robert Bensh, the outfit has
been operating in Ukraine long enough, since 1995 to be specific, to have
acquired a useful array of contacts across the country’s oil & gas sector,
which is dominated by the state controlled NAK Naftogaz Ukrainy. This
established presence may assist the company in ameliorating some of the
trickiness associated with such an operating environment.

Back when Cardinal was known as Carpatsky though, less was achieved than
would have ideally been so. Bensh imparts that in essence “everything was
wrong with Carpatsky”; he was in fact hired in 2000 to try and sort things
out, the most significant single issues being Carpatsky’s chronic shortage
of funds and that it suffered from the poor quality of certain of its
business relationships in Ukraine.

So, following a long restructuring, Cardinal debuted on AIM in April 2005,
raising GBP10.6 million in the process. Since then its shares have traded
somewhat erratically, and today stand at 28 pence, compared with a placing
price at listing of 32 pence.

The company has recently emplaced a $38 million bridge loan facility, which
was put up by a U.S. hedge fund, and is seeking an additional $10-15 million
in order to satisfy the requirements of its growth plans.

Although Cardinal has producing assets, it does not expect to be a cash
positive concern until 2008 or 2009, owing to high levels of planned
expenditure. If all goes as the company expects, then the funding scheme
just outlined should carry it to this point.

Part of Cardinal’s development expenditure will redress damage done to its
business position by past underfunding, the best example of this damage
being the significant dilution of its profit interest in the producing
Rudivsko-Chernovozavodske (RC) field in the east of Ukraine.

Cardinal now intends to earn its way up to a 45% revenue interest in the RC
field, building from the 14.9% level down to which it has been diluted. The
RC field is a joint venture with Ukranafta, an affiliate of NAK Naftogaz
Ukrainy. At the moment, the RC field can be regarded as the Cardinal’s most
substantial asset, even though 45% is the maximum stake that the company
can hold under the joint venture agreement as it stands.

The field’s original gas in place amounted to 1.5tcf and it presently
supports five producing wells, with significantly greater production
capacity expected to come on stream following a programme of workovers
and new drilling.

A mix of workovers and new drilling is characteristic of Cardinal’s
development plans for its various assets across Ukraine. Many of the
country’s existing oil & gas wells are poorly completed and can often

benefit from workovers either to restore production where total failures
have occurred, or to raise output levels where these sit below their potential.

Cardinal uses mostly Ukrainian equipment hybridised with certain Western
components, which keeps costs lower than would otherwise be the case and
should improve effectiveness, as local equipment tends to be outdated and
ill constructed. However, given the absence of Western oil & gas service
companies in Ukraine, use of adapted local equipment is a convenient option
for Cardinal.

The omens in the Ukrainian gas markets are, to an extent, good from a
producer’s point of view. Ukrainian gas prices have been illustrated to be a
bit of a contentious subject by recent events, but the Ukrainian government
is thought to be moving towards letting prices rise closer to E.U. levels in
order to promote efficiency and because of the difficulty of keeping prices
depressed without Russian support, which has now been conspicuously

Cardinal already receives world prices for its oil output, a barrel of which
sells at a $3 discount to a barrel of Russia’s Urals blend, which itself
changes hands at a small discount to Brent. The company currently gets an
average price for its gas of around $2.20/mcf; rather low next to current
E.U. prices of $12-15/mcf, making it easy to understand the arguments for

Cardinal’s focus is decidedly on production rather than exploration, though
this will not preclude it from some involvement in the latter activity if it
espies the right opening. The company is on the look out for acquisition
opportunities, Bensh seeing a 12-18 month window of opportunity, starting
around now, within which some plum targets may become available before
the competition for Ukrainian oil & gas assets becomes too heated.

Cardinal anticipates this growth in competition as a corollary of its
expectation of improving Ukrainian gas market conditions and of an increase
in the transparency of the nation’s business & government, but the company
feels that its in-country connections will give it an edge. Investors will
hope so, just as they will hope that Ukrainian gas prices are indeed allowed
to track closer to E.U. levels.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

ag-IP-news Agency website, Friday, January 27, 2006

WASHINGTON, DC – The International Intellectual Property Alliance (IIPA),
an alliance of seven US copyright-based trade associations comprising over
1,900 companies, announced on Thursday its support for the decision by the
United States Trade Representative (USTR) to restore Ukraine’s eligibility
for benefits under the Generalized System of Preferences (GSP) trade

According to a press release by the Alliance, GSP is a provision of US trade
law that unilaterally grants duty-free trading benefits to certain products
from eligible beneficiary countries from the developing world, conditioned
in part on each beneficiary providing “adequate and effective” protection of
intellectual property rights (IPRs).

GSP benefits in Ukraine were suspended in 2001 based upon a petition filed
by the IIPA (in 1999) because of the then rampant and unregulated optical
disc production and distribution of music, film, business and entertainment
software materials in Ukraine for sale locally and exported for sale in many
other countries. In 2005, Ukraine adopted legal reforms aimed at curbing
this piracy.

IIPA Vice President, Eric J. Schwartz, said, “IIPA supports the US decision
to restore trade benefits to Ukraine. After several years of hard work by
the government of Ukraine in conjunction with US government officials,
Ukraine adopted significant improvements in its optical disc laws in 2005.

These new laws, as well as an agreement by the Ukraine government to
participate cooperatively with the copyright industries in Ukraine on
enforcement, should result in significant improvements in Ukraine.”

Schwartz added, “If fully implemented, these changes will properly regulate
the legal production and distribution of optical media material in Ukraine.

We applaud the combined efforts of the Ukraine and US governments to
make this happen. That said, the government of Ukraine must fulfill its
obligations and remain vigilant on its pledges of cooperative enforcement in
order to improve on-the-ground efforts.”

IIPA notes that there are several steps that the government of Ukraine must
immediately undertake to ensure proper implementation of the new laws.

These include the adoption of regular surprise plant inspections; the creation
of an “evidence repository” of the master materials used to produce optical
disc materials in Ukraine; and, the proper prosecution and imposition of
deterrent sentences against commercial pirates of optical disc and other
copyright materials.

If these steps are taken, then Ukraine will go a long way towards improving
its copyright enforcement regime for the betterment of the local economy
and the protection of domestic and foreign copyright owners.

The International Intellectual Property Alliance is a coalition of seven
trade associations formed in 1984 to represent the US copyright-based
industries in bilateral and multilateral efforts to improve international
protection of copyright materials, and to open up foreign markets closed
by piracy and other market access barriers.  -30-

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

Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006

KYIV – The Ukrainian National Committee of the International Chamber of
Commerce (ICC Ukraine) opened its office in Toronto (Canada), which is
11th office abroad. The ICC Ukraine will proceed to opening its offices in
the countries, where the Ukrainian Foreign Ministry doesn’t suppose
commissioning diplomatic missions so far.

The ICC Ukraine doesn’t rule out that its offices may in some time become
a basis for embassies or consulates. Prime Minister Yuriy Yekhanurov
charged the Ukrainian Foreign Ministry to tackle this likelihood with the
ICC Ukraine.

As ICC Ukraine President Volodymyr Shchelkunov noted, this initiative is
aimed at making Ukraine’s external relations more economically oriented.

“More concrete affairs and investment projects, stronger protection of
domestic businesses abroad and more world business in Ukraine – that is
how it works in the countries, where the ICC Ukraine runs its offices”, he

While opening the office in Toronto, the ICC Ukraine delegation met with
Canada’s business circles. There are preliminary agreements on Canada’s
investments in building in Ukraine with using newest, so said building block

Canada is a leader in building cheap dwellings undertime. Introduction of
similar technologies in Ukraine could make dwellings in Ukraine
significantly cheaper.

Canadian business execs also proposed to establish joint ventures in
engineering, rocketry – space and energy spheres, including in fuel,
processing industries and agricultural produce conservation branches.
The talks also dealt with likely exports of Ukrainian pipes and metal-roll
to Canada.

The Ukrainian National Committee of the International Chamber of
Commerce, headquartered in Paris, was established in 1998. The National
Committee is an NGO and registered as the Association of Enterprises.

The ICC Ukraine is mainly meant for creating efficient national system of
intellectual property protection in Ukraine, grating a certificate of
partnership reliability, which is recognized in 93 countries of the national
committee network.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

Ukrainian News Agency, Kyiv, Ukraine, January 28, 2006

KYIV – Ukraine and Canada are aiming to develop inter-parliamentary
cooperation. The press service of the Ukrainian Foreign Affairs Ministry
disclosed this to Ukrainian News, citing a meeting between Ukraine’s
Ambassador to Canada Mykola Maimeskul and Canada’s Senate Speaker

Daniel Hays on January 26.

Maimeskul thanked Hays for his interest in events in Ukraine and support

for the democratic changes in the country.
As an example of Canada’s friendly attitude to Ukraine, Hays cited the
Senate’s approval of a special resolution on recognition of the 1932-1933
famine in Ukraine as genocide and the holding of Senate hearings on the
events that took place in Ukraine in late 2004.

Maimeskul and Hays stressed the prospects for deepening inter-parliamentary
cooperation between the two countries and expressed hope for its further
development. The meeting took place as part of events connected with the
completion of Maimeskul’s diplomatic mission.

Maimeskul also met with the Canadian prime minister’s chief adviser on
foreign policy, Jonathan Fried, and the director-general of the Bureau for
Eastern and Central European Countries at the Canadian department of

Foreign Affairs, Tom MacDonald.

They discussed ways of accelerating Ukrainian-Canadian political dialogue,
particularly within the context of exchange of high-level visits.As
Ukrainian News earlier reported, Canada plans to continue supporting

Ukraine in the implementation of political and economic reforms.

Ukraine and Canada are interested in deepening of bilateral trade and
economic cooperation, as well as development of cooperation in the sphere

of defense and environmental protection.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                    Zhytomyr, Rivne and Poltava regions also attractive

Ukrinform, Kyiv, Ukraine, Saturday, January 28, 2006

KYIV – The Volyn region in West Ukraine is Ukraine’s most attractive region
as offering best conditions for foreign investors’ operations.  An opinion
to the above effect was stated by Ariana Bauer, a representative of the
Swiss Organisation for Facilitating Investments (SOFI), while on a visit to
Lutsk, the Volyn region’s administrative center.

The SOFI official also mentioned Zhytomyr, Rivne and Poltava regions as
investment-attractive. The Volyn region occupies a 20,200 sq. km. territory,
populated by slightly over a million inhabitants. Its geographic position is
favorable as the Volyn region borders on the EU.

The region maintains trade-economic relations with over 60 European,
Asiatic, American and African nations. Polish, German, British, other
foreign companies are operating in the region, including the
Switzerland-based Nestle. The Volyn region is among Ukraine’s leaders

in terms of industrial production growth rates.
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Ukrinform, Kyiv, Ukraine, Friday, January 27, 2006

KYIV- The Czech energy group CEZ is contemplating to buy six Ukrainian
regional electric power companies (OblEnergos) in 2006. Speaking in an
interview to the newspaper Ekonomicheskiye Izvestiya, Vladimir Schmalz, CEZ
director for mergers and takeovers, said the CEZ had received a principled
consent to wrap up a relevant deal from the VS Energy company, which
controls the OblEnergos.

According to Mr Schmalz, the Credit Suisse First Boston (CSFB, Switzerland)
poses as the deal’s consultant. Besides, the CEZ is interested to buy two
other Ukrainian OblEnergos, Vladimir Schmalz further disclosed, which belong
to the company AES Energy.

The CEZ is contemplating to acquire energy assets in Bosnia, Ukraine and
Bulgaria, which will cost around 3 bn. euros, of which 1.5 bn. euros will be
spent on buying energy assets in Ukraine and Bulgaria.

In 2005 the CEZ bought the Romanian distribution company Oltenia for 151

M. euros and three Bulgarian distribution companies for 281.5 M. euros.
                                      UKRINFORM NOTE:
The Netherlands-based VS Energy International N.V. (a daughter-company of
the Slovakia-based Vychodoslovenske Energeticke Zavody S.P, or VSE) owns
stakes in the public joint-stock company SevastopolEnergo (95.18 percent),
KhersonOblEnergo (94.51 percent), KirovogradOblEnergo (94 percent),
ZhytomyrOblEnergo (75.56 percent), OdesaOblEnergo (20.36 percent),
ChernivtsiOblEnergo (21.98 percent), KhmelnytskOblEnergo (11.79 percent),
TranscarpathiaOblEnergo (10.53 percent).

In October 2005 the VS Energy International N.V. refuted media reports about
the company’s alleged intention to sell its parcels in several Ukrainian
energy companies. According to the reports, the auditing company Deloitte &
Touche was carrying out audits of these companies, with a view of evaluating
their assets.

As VS Energy International N.V. representatives stressed, the company
annually hires the Deloitte & Touche and KPMG to carry out audits of the
Ukrainian energy companies.

The company AES Washington B.V. BN (a daughter-company of the US-

based AES Corporation) holds 75 percent plus one share stakes in the
AES-RivneEnergo, AES-KyivOblEnergo.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                            RUSSIA’S GAS POLICY WRONG 
UNIAN news agency, Kiev, in Ukrainian 1231 gmt 28 Jan 06
BBC Monitoring Service, UK, in English, Saturday, Jan 28, 2006

DONETSK — The [opposition] Party of Regions leader, Viktor

Yanukovych, has said that Russia’s “wrong” gas policy is disastrous
for the Ukrainian economy.

Speaking at a Party of Regions conference in Donetsk today, Yanukovych
said: “Gas price hikes are disastrous for the Ukrainian economy. We

believe that this position in relations with Ukraine is wrong.”

He stressed that the Party of Regions does not support “this position of
Russia”. “We do not support this position of Russia, we believe that this
position of Russia is not promising in relations with Ukraine,” Yanukovych

He said that “Russia took advantage of the weakness of the authorities

and government ministers involved in the talks”. “On the other hand, we
understand very well that all participants in the talks were cornered at
the end of the last year,” Yanukovych said.

He said that gas talks should not stop. “We believe that this process
should never be stopped. I made it quite clear during my meeting with the
Russian Security Council secretary, Sergey Ivanov,” Yanukovych said. He
said that there are constructive forces on both sides which should develop
a long-term policy to satisfy the national interests of both Russia and

Yanukovych also said that it is necessary “to develop a project of shifting
to market prices”. “We are confident that we should meet at the negotiating
table and hold a very serious discussion of this issue, to develop a
project of shifting to market prices, and, by the way, Russia should do
this as well,” Yanukovych concluded.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

ANALYSIS & COMMENTARY: Electricity4Business, PrWeb.Ccm
London, United Kingdom, Sunday, January 29, 2006

LONDON – The current crisis over the increase in gas prices from Russia
to Ukraine can be viewed differently depending on which side of the fence
you stand.

Many Ukrainians, including the present leader, believe that Russia is using
its economic strength to make a political point. Viktor Yushchenko’s
eventual victory in the election for a leader last year was not popular with
the Russians due to his leanings towards the West. It is thought that the
huge rises in gas prices is an attempt to destabilise the Ukrainian economy
and hence undermine the current leadership.

Those with Russian sympathies would argue that Yushchenko is turning it
into a political issue because of his and his government’s incompetence in
running the country since his election.

Whichever way it is viewed the problem is real and could escalate into a
crisis which affects the whole of Europe. Which is why the EC called a
crisis meeting to try to find a way to resolve the dispute.

For years now the rest of Europe has been urging Russia to raise the price
of gas to market rates. However, few would recommend that this is done in
one fell swoop as has been carried out in this case. The proposed rise is a
fourfold one, clearly too high for Ukraine to swallow – it should be noted
that Russia has been rather more lenient on some of the other nearby states
where price rises have been limited to 100%. This may give some credence
to Yushchenko’s argument -.

Negotiations have come to a stalemate with the Ukrainians refusing to pay
and the Russians carrying out their threat to cut off supplies on 1st

Russia now accuses Ukraine of siphoning gas from the pipeline and this is
causing concern in Europe with a number of countries experiencing a
significant drop in supplies.
                         ELECTRICITY4BUSINESS’S VIEW
Without getting too embedded in the politics of the Eastern Bloc, we would
like to highlight the position of the UK should this dispute escalate,
either now or in the future.

[1] We have always questioned the wisdom of the UK government’s energy
policy in relinquishing control of its energy supplies to foreigners. This
dispute has exposed the vulnerability of the UK to the energy giants of
Europe, who when threatened by an interruption to their own supplies would
be expected to ration the movement of gas though the pipeline to the UK.

[2] Secondly, can we really rely on an energy policy which is crucially
dependent on Russian gas supplies when there is such a history of
instability in the region? Just remember that our existing energy policy
depends on future gas supplies from Russia to help replace our dwindling
reserves in the North Sea. Pressure should be exerted on the government to
consider this position in depth when carrying out the forthcoming energy
                                             THE DEAL
Ukraine has until now been paying only $50 per 1000 cubic metres of gas
and even then, a deal was done to enable Ukraine to barter this for use of
its territory through which the pipeline passed. The new rate agreed is $230

per cubic metre – more than a fourfold increase.

However, this is the rate payable by RosUkrEnergo – a joint venture company
between the Russians and Austrians – who will in turn sell a combination of
Russian and Turkmen gas to the Ukrainians at $95 per 1000 cubic metres.
Complex or what? Talk about fudge!

In a related deal the transportation cost payable to the Ukraine for use of
its territory was set at $1.60 per for the transit of 1000 metres of gas
through each 100kms of its territory. This deal, double the previous amount,
has been fixed for a period of five years.

Electricity4Business’s opinion is that a deal has been thrashed out to save
face. Russia cannot be seen to back down on its original offer, however, it
has to protect as much as possible its position as a reliable international
gas supplier and since international supplies were being affected by the
dispute a compromise had to be found to resolve it. However, the
implications for future security of supply to Europe cannot be ignored.
The news that a deal has been done between the Russian state-run Gazprom
and the Ukraine’s Navtogaz which will allow gas supplies to flow freely
through the European pipeline will bring a sigh of relief that Europe can at
least for the moment secure enough gas supplies to take it through a
predicted colder than average winter.
                             BUT WHAT OF THE FUTURE?
This deal is for five years only. Clearly, Europe’s energy policy must plan
much further ahead than the next five years. Also, Ukraine’s bargaining
power will be greatly reduced in 2010 when the North European Gas Pipeline
is expected to come into operation. This will by-pass Ukraine and other
former Soviet Bloc nations, connecting Gazprom’s Siberian gasfields directly
with Germany using a route that goes under the Baltic Sea.

Who knows what the relationship between Ukraine and Russia will be like in
2010 or how close Ukraine will be to the West? But simply the prospect of
further dispute is likely to have a significant effect on the European price
of gas.

The dispute has also had an effect on the oil price and the prospect of
persistent shortages in Gas is likely to result in a rise in price of
alternative fuels.

It’s worth noting that the Nuclear Lobby in the UK will have further
ammunition to make their case to the forthcoming energy review. The
wisdom of rushing to gas and the run down of nuclear plants may now

be put in question. The security of supply argument along with the
environmental impact of burning fossil fuels could well establish the
basis for a compelling case.
Although the government would like us to believe that the dispute will have
little effect on British gas and electricity supplies the reality is
different. Anything which has an impact on the wholesale price of gas, as
this dispute certainly has, will inevitably filter through to the final
customer. Unfortunately, businesses are always first to suffer the increases
and unlike the domestic customers, will bear the brunt of the full increase
at once.   -30-
                                      EDITORS NOTES:
Electricity4business is Britain’s independent electricity retail company
specialising in the supply of electricity to small and medium sized
businesses. E4B’s aim is to cut the cost for British business by offering
lower prices.
Gazprom is the Russian state run gas giant. Its policies are very much tied
to the Russian government, hence its involvement in what is essentially a
political dispute.
The German energy giant E.ON has very close ties with Gazprom and
controls the infrastructure which distributes Russian gas throughout
mainland Europe.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
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21.                         RISKING ANOTHER SLAVIC WAR

OP-ED: by Masha Lipman, Columnist
The Washington Post, Washington, D.C.
Monday, January 30, 2006; Page A17

MOSCOW — A group of young people carrying spades came together
recently where the isthmus connecting the Crimean Peninsula to the
Ukrainian mainland is narrowest. “Isolate the Crimea from Ukraine!” their
leader shouted in a mock military order, and then, as TV cameras recorded
it all, the group began to dig.

The Crimea is a Russian-speaking territory joined to Ukraine in 1954 by
Nikita Khrushchev as part of an administrative rearrangement within the
Soviet Union that is seen by many in Russia as unfair. The recent publicity
stunt with shovels, however unserious, is another example of growing
friction between Russians and Ukrainians that got the world’s attention last
month during a dispute over natural gas supplies. If tensions are further
inflamed, it will be an unpardonable consequence of Russia’s geopolitical

After Russia moved to raise the price of the natural gas it supplies,
Ukraine warned that it may revise the contract regulating rent paid by the
Russian government for the Black Sea Fleet bases in the Crimea. The Russian
defense minister, Sergei Ivanov, responded with a thinly disguised threat to
take the Crimea away from Ukraine. A revision of the rent contract, he said,
might lead to renunciation of the 1997 agreement by which Russia recognized
the 1954 borders of Ukraine.

Several Russian legislators chimed in, but unlike the defense minister, they
were quite explicit. “Sooner or later the Crimea will be reclaimed,” one
Russian Duma deputy said. “To make the Crimea again part of Russia will
be an absolutely right decision,” said another.

Those who live in the Crimea have long complained about forced
“Ukrainization.” Recently, the complaints have become more vocal: The
Crimean inhabitants claim that their last names have been changed in the
lists of registered voters to sound Ukrainian.

In mid-January Ukraine and Russia got involved in a dispute over control

of Crimean lighthouses. One lighthouse was seized by a group of Ukrainians
who barred access to anybody from the Russian Black Sea Fleet. The
Russian fleet commanders regard the lighthouses as part of their operation.
A Ukrainian ambassador said all of them are the property of Ukraine and
must be returned to it.

A Ukrainian foreign ministry spokesman said that with respect to the
lighthouses the actions of the Black Sea Fleet “border on interference with
the affairs of a sovereign state.” Ukrainian student groups picketed the
headquarters of the Black Sea Fleet in Sevastopol, demanding that the
lighthouses be returned to Ukraine, while their pro-Russian opponents
camped outside one of the lighthouses.

A dispute that broke out in 2003 over the border between Russia and Ukraine
in the Kerch Strait, which connects the Sea of Azov with the Black Sea, has
flared up again. And about 10 days ago Ukraine blamed Russia for giving
shelter and granting Russian citizenship to Ukrainian government officials
who were ousted in the country’s Orange Revolution and are under
investigation for alleged misconduct. (Russia also has barred all imports of
Ukrainian meat and dairy products, citing safety concerns that Ukraine

The gas conflict, which continues to pick up steam, has an obvious political
underpinning. Since the humiliating failure of Russia’s attempt to influence
the Ukrainian presidential election in late 2004, the Kremlin has sought
ways to recoup. The move to raise gas prices for Russia’s intractable
neighbor came three months before important parliamentary elections and was
clearly meant to cause maximum destabilization of Ukrainian politics. The
goal of Kremlin strategists appears to be a weak coalition government in
Ukraine that will be more vulnerable to Russian economic pressure.

This may or may not work. One thing is certain, though: Russia’s attempt
to cut gas to Ukraine led to a disruption of supplies to Europe, thus
undermining Russia’s reputation as a reliable economic partner.

There may be another consequence of Russia’s ambition to emerge as an
energy superpower. Political destabilization and the stirring up of
territorial disputes could provoke nationalist sentiment and anti-Russian

feelings in Ukraine, a country that is divided into mostly Russian-speaking
and mostly Ukrainian-speaking regions and is struggling to shape its

If this happens, anti-Ukrainian sentiment in Russia is also certain to grow.
People in Russia hardly differentiate between those of Russian and Ukrainian
ethnic origin, even though Ukrainian last names are easily recognizable. The
neighboring Slavic nations are blessed with good relations based on
historical, cultural and language kinship.

This is exactly why it would be unforgivable should the current conflict
lead to an accidental act of violence. After all, in recent times we have
seen Slavic nations in Yugoslavia with shared history and basically common
language engage in bloody warfare nobody had predicted.  -30-
Masha Lipman, editor of the Carnegie Moscow Center’s Pro et Contra
journal, writes a monthly column for The Post.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

               Conference: Ukrainian Research Institute, Harvard University
                       Sunday, February 5 and Monday February 6, 2006
Ukrainian Research Institute, Harvard University
Cambridge, MA, Friday, January 27, 2006
The Ukrainian Research Institute is pleased to invite the larger academic
community and general public to the following event of special interest:

PROGRAM: SUNDAY, FEBRUARY 5, 2006, 3:00–6:00 p.m.
Ukrainian Research Institute, Harvard University
1583 Massachusetts Ave., Cambridge, MA
Michael S. Flier, Director, Ukrainian Research Institute
Lubomyr Hajda, Associate Director, Ukrainian Research Institute
SESSION 1. Economic Aspects of the Crisis: Players, Agendas, Outcomes
Chair: Margarita M. Balmaceda  (Associate Professor, John C. Whitehead

School of Diplomacy and International Relations, Seton Hall University,
and Associate, Ukrainian Research Institute and Davis Center, Harvard
a. “Introductory Remarks: The Background to the Crisis”
Margarita M. Balmaceda, Associate Professor, John C. Whitehead
School of Diplomacy and International Relations, Seton Hall University
Associate, Ukrainian Research Institute and Davis Center for Russian
and Eurasian Studies
b. “Player One at the Table: Ukraine”
Oles Smolansky, University Professor of International Relations
(Emeritus), Lehigh University
c. “Player Two at the Table: Russia”
Marshall Goldman, Kathryn Wasserman Davis Professor of Russian
Economics (Emeritus), Wellesley College , Associate Director, Davis
Center for Russian and Eurasian Studies
d. “The Unexpected Guest:  RosUkrEnergo”
Roman Kupchinsky, Coordinator of Corruption Studies, RFE/RL,
Inc., Prague, Czech Republic
e. “The Ukrainian-Russian Gas Agreement: Analysis and Alternatives”
Ferdinand Pavel, Research Associate, German Institute for Economic
Research, Berlin, Member, German Advisory Group with the Ukrainian
Government, Kyiv
f. Commentator: Serhiy Teriokhin, former Minister of Economy of Ukraine
g. Rapporteur: Oleh Havrylyshyn, Deputy Director and Special Advisor,
Office of Internal Audit, International Monetary Fund
MONDAY, FEBRUARY 6, 2006, 12:00–2:00 p.m.
Case Study Room, Center for Government and International Studies
Harvard University, 1730 Cambridge St., Cambridge, MA
SESSION 2. The Political Fallout in Ukraine
Chair: Oxana Shevel (Assistant Professor of Political Science, Purdue
University, University and Eugene and Daymel Shklar Research Fellow,
Ukrainian Research Institute)

a. “Energy, Interest Groups, and Politics in Ukraine”
Margarita M. Balmaceda, Associate Professor, John C. Whitehead School

of Diplomacy and International Relations, Seton Hall University, Associate,
Ukrainian Research Institute and Davis Center for Russian and Eurasian
b. “The Political Context of the Crisis: The Split in the Orange Coalition,
Constitutional Reform, Parliamentary Election”
Gene Fishel, Acting Division Chief, Bureau of Intelligence and Research,
U.S. Department of State
c. “The Governmental Crisis: Kto kogo, or Who Is Getting Whom?”
Taras Kuzio, Visiting Professor,  Institute for European, Russian and
Eurasian Studies, Elliott School of International Affairs, George
Washington University
d. Commentator: Serhiy Teriokhin, former Minister of Economy of Ukraine
e. Rapporteur: Oleh Havrylyshyn, Deputy Director and Special Advisor,
Office of Internal Audit, International Monetary Fund (IMF)

MONDAY, FEBRUARY 6, 2006, 4:00–6:00 p.m.
Case Study Room, Center for Government and International Studies
Harvard University, 1730 Cambridge St., Cambridge, MA
SESSION 3. International Dimensions of the Gas Crisis
Chair: Lubomyr Hajda (Associate Director, Ukrainian Research Institute)
a. “Ukrainian-Russian Relations: Beyond the Gas”
Paul D’Anieri, Associate Professor of Political Science, and Associate

Dean, College of Liberal Arts and Sciences, University of Kansas
b. “Europe and the Ukrainian–Russian Gas Crisis: Political Lessons”
John Gillingham, Professor of History, University of Missouri-St. Louis
Senior Visiting Scholar, Ukrainian Research Institute
c. “Europe and the Ukrainian–Russian Gas Crisis: Economic Lessons”
Ferdinand Pavel, Research Associate, German Institute for Economic
Research, Berlin Member, German Advisory Group with the Ukrainian
Government, Kyiv
d. “The Central Asian Factor”
Carol Saivetz, Associate, Davis Center for Russian and Eurasian Studies
e. “The View from Washington”
Gene Fishel, Acting Division Chief, Bureau of Intelligence and Research,
U.S. Department of State
f. Commentator: Serhiy Teriokhin, former Minister of Economy of Ukraine
g. Rapporteur: Oleh Havrylyshyn, Deputy Director and Special Advisor,
Office of Internal Audit, International Monetary Fund
PLEASE NOTE:  Registration is required.  Participants may register at the
door before the sessions.   Pre-registration is strongly encouraged. 
Pre-registration forms may be downloaded from the HURI web site at:  
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

By Delphine Strauss, Financial Times, Lonon, UK. Mon, Jan 30 2006

Wood smoke curling from chimneys of an Alpine village encapsulates the
picture- postcard image of an Austrian winter. But the reality is fast
becoming more high-tech – sleek, smoke-free boilers burning wood pellets or
other biomass fuels to heat villages, factories and urban housing, with a
neutral impact on carbon emissions.

In 2003, nearly 70 per cent of Austria’s domestically produced power came
from renewable sources. Biomass fuelled 11.2 per cent of Austria’s total
primary energy supply and 21 per cent of heat production, according to
International Energy Agency (IEA) statistics. Not only do forests grow back,
they absorb carbon dioxide from the air as they grow.

As businesses in Europe struggle with mounting energy costs, worries over
supplies, and pressure to reduce carbon dioxide emissions, Austria’s biomass
proponents are keen to show that small-scale schemes offer an economic
solution. With almost half of Austria covered in forests, wood-fired heating
schemes have grown in popularity.

Even the fashionable Lech ski resort has a biomass plant that provides 90
per cent of its heat, and has spurred imitators as far away as the Canadian

Biomass energy is a growing business in Austria, sustaining a new market in
wood pellet supply, and building a technology cluster that increasingly
exports its services. Forestry, the second largest sector after tourism, has
a growing stock of wood and is keen to put by-products – chips, sawdust

and low-grade logs – to use.

It is no surprise, then, that the Austrian presidency of the EU has put
biomass high on its agenda. Wolfgang Schuessel, the Austrian chancellor,
told the European parliament on January 18 that Europe must diversify energy
supplies to reduce its dependence on imports, especially after Russia’s gas
dispute with Ukraine.

Austria’s commitment to biomass stems from concerns over energy security –
Austria relies on imports for two-thirds of its supply, and has banned
nuclear generation – as well as environmental targets and a wish to support
rural jobs.

The use of biomass energy “started as a grassroots movement”, says

Reinhard Madlener, a senior energy economist at the Swiss Federal Institute
of Technology.

Over time the design of plants that could be smelly and inefficient
improved, arousing the interest of mainstream energy suppliers. A new market
in wood pellets – compressed sawdust that is dryer, cleaner and easier to
transport than other biomass fuels – was key to the spread of domestic
biomass boilers.

Nonetheless, government support has been crucial to the development of an
industry where the start-up costs of buildingboilers are high, and
transporting fuel over long distances uneconomic.

It supports biomass through subsidies of up to 50 per cent of investment
costs, funding for research and development, and legislation matching a 4
per cent target for renewable electricity with a guaranteed price for

With these incentives, and new technology that can support larger projects,
big utility companies are starting to take an interest. Siemens’ power
generation division is building Europe’s largest wood-fired power plant in
Vienna, due to supply 5,000 households with electricity and 12,000 with
district heating from June.

EVN, the leading energy supplier in the country’s largest province of Lower
Austria, is building two biomass heat and power plants and says its
environmental business made up 14 per cent of total sales in 2005.

Taxes make natural gas more expensive than pellets in Austria, especially
after the recent surge in gas prices, but the cost of installing boilers has
raised doubts over the market’s ability to survive without subsidy.

Volatility in oil and gas prices and the stability of a local wood supply
could change this logic. For businesses investing in a system lasting 10-15
years, says Kasimir Nemestothy from the Austrian Energy Agency: “It makes
sense to reduce the risk by choosing the fuel with the least price

Less thickly-wooded countries are already exploring other options. Kerrin
Buckley, at the Bangor Centre for Alternative Land Use in Wales, says crops
such as willow and miscanthus could grow even in damp, isolated North


So Austria’s support for biomass and its focus on localised heating schemes
could provide a template for other European markets too far from forests for
transporting pellets to be viable.

Its genesis in rural communities should appeal to European farmers seeking
more profitable non-food crops as Common Agricultural Policy subsidies are
separated from production.

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
24.                             THE MUSHROOM CLOUD

Ruadhan Mac Cormaic, Irish Times, Dublin Ireland, Jan 28, 2006

Many thousands of Latvians come to Ireland to work on mushroom farms.

A book by undercover reporter Laima Muktupavela about their lives,
working conditions and the land devastated by their departure, has become
a bestseller in her native Latvia, and would be an eye-opener for Irish
readers. She talks to Ruadhan Mac Cormaic.

On Christmas Day that year they were en route before sunrise. From the
three-bedroom house that the 12 Latvians shared to the mushroom farm where
they worked could have been no more than a few miles, though it felt longer
after a day’s exertion.

“I can still remember that Christmas Day,” says Laima Muktupavela. “We had
to start work at five o’clock in the morning. Between 5am and 7am we had to
prepare 200 boxes of mushrooms, ready to go to the shops. I asked could we
have more money for that work, but the owner said: ‘If you ask questions,
you can go home.’

“I remember another time when I found myself sweating all over. I had fallen
ill, and whatever I had brought out a rash and swelling on my skin. I asked
the owner if he could help me with some bandages or medicine. He replied
that he couldn’t be bothered with it. It wasn’t his problem, he said, and
walked away. I approached him again and said: ‘It is your problem. It’s a
big problem.’

“What I did was, I lay down and placed cabbage leaves over my skin to try to
relieve the pain and bring down the swelling. He was terrified when he saw
how bad the damage was. So he looked at me and said [giving an exasperated
wave of the arm]: ‘Go away! I don’t want to see you again today.’ “

Muktupavela laughs at the recollection. Her walk-on role in the drama of
Latvian migration was an ambivalent one from the start, she says, conceived
not of economic need but of a journalist’s hunch. As a newspaper reporter in
Latvia at the turn of the century, Muktupavela had increasingly found
herself as chronicler of an incipient trend, jotting down the impressions of
returning emigrants with greater frequency, if diminishing insight.

In all such conversations, she found, one could go so far before invariably
hitting the boundary of the emigrant’s need to rationalise his lot by
painting his experience in primary colours alone. “Yes, I thought they were
hiding something. They were holding back. They weren’t telling the absolute
truth. So I thought, I’ll go myself. I’ll find out.”

Leaving behind her partner and four children, Muktupavela travelled to
Ireland in 2001 and joined the group of 11 other Latvians working on a
mushroom farm in Co Meath. “We shared one house between 12 of us. There

were three bedrooms upstairs, and there was even a small kid in the house. I
fought for my own space. Physically! I didn’t tell anyone I was a journalist
but made a point of talking with everyone, trying to get to know their
characters, their attitudes, the way they interacted.”

A typical working day began at 6am and finished when they could no longer
see the mushrooms through the darkness. For this they each earned about
GBP125, or just under 160, a month. As the only member of the group with any
English, Muktupavela became its spokeswoman. “I asked the owner why Irish
people were getting better pay than Latvians. And do you know what he said?
‘You are different.’

“But at the end of the day he was good enough. He wasn’t the worst man.
There was a lady among us who was due to give birth, and he would bring

her to the hospital; he would look after her. I wrote that in the book: that we
were very grateful to him for that.”

When she returned home, the impressions Muktupavela had formed in Ireland
became the matter for her first book, and the questions raised by “The
Mushroom Covenant” were of such resonance that its first edition was briskly
followed by a second, then a third and a fourth.

It was awarded the Latvian National Literary Award in its publication year,
and its author’s voice radiated outwards like a bell; the work has been
translated several times, with an English version on the way. To most
Latvians, Muktupavela’s name is the standard gambit in debates on

The book drew on the author’s experience to broach a broader set of
questions, most to do with the social ramifications of the exodus of young
Latvians seeking better-paid work in countries such as Ireland, Britain and
Sweden. Doing so, it tapped into deeply-held national misgivings that had
taken root by the time of its publication.

“When I came back from Ireland,” says Muktupavela, “I started to write about
the social problems this huge movement of people was having on Latvia –
about the break-up of families, marital separation. Just some journalism, at
first. What kind of life is it for a woman with children whose husband
leaves the country? How would they live? At first, people were angry with

me for bringing all of this up. But in general the book was received very

She likens it to “a Bible” on the bookshelves of those who have family
members working abroad. When she arrived in Dublin last week, an official

at the Latvian embassy told her that when he left home for this posting, his
family made sure to send him off with a copy of The Mushroom Covenant
under his arm.

Muktupavela was born in Rezekne, a town in the poor Latgale region, in
eastern Latvia. Built on seven hills close to the border with Russia, it is
a place of great lakes, bad roads and long memories. As an old geopolitical
pivot – Rezekne is where the Moscow-Riga and St Petersburg-Warsaw

railway lines intersect – the family trees of its 40,000 people are multi-ethnic

And the economic forces that here drew together Balts and Slavs and
Ugro-Finns, Polish landlords and Russian peasants, are today exerting the
same circular effects. Unemployment in Latgale is the highest in Latvia, and
since the country joined the EU, in May 2004, tens of thousands of the
region’s young have departed with the certainty of a better wage overseas.
Few homes in Latgale have not had a son or daughter emigrate to Ireland,
says Muktupavela.

Employers in the region now look to Ukraine and Belarus to fill their
vacancies, but the social collateral is heavier still: broken families,
orphaned children, desolate townships.

“We have very small salaries in Latvia, and these people left Latvia because
they need to have a normal life. Thank God that Ireland can help. But people
who go to Ireland, many don’t come back. We were the first wave of Latvians
[in 2001]. Now I see that Latvians are building the economies of other
countries, like Ireland.

Only now, after five years, has the Latvian government started to think
about this problem. Only now have they started to discuss it. Only now,

when 50,000 Latvians have left for Ireland.”

Muktupavela speaks English, but I have brought along an interpreter just in
case. Though skilled, he is more accustomed to legal translation, with a
spare style and an uncanny knack for rendering two minutes of Latvian

speech in three words of English. But he has been following the conversation
intently, and here he takes up Muktupavela’s argument. He has been in
Ireland for some time, he says.

His mother, who joined him two months ago, has found a job washing dishes

in the city. His father stayed at home; he is a foreman on a building site.
“Every time I call home, my father tells me how they have to finish a
building by such a time, but they can’t because they’re short of staff. All
they have is unqualified workers, because the qualified builders are earning
much more money abroad.”

Four years and five books have passed since that Christmas morning on the
mushroom field. Muktupavela, liberated from daily journalism by the
commercial success of The Mushroom Covenant, is now a full-time writer.

She has returned to Ireland with a television production team to prepare for
a full-length documentary and a 20-programme series based on the experience
of Latvians in Ireland.

The project, for which she is writing the script, will involve shuttling
between the two countries over the next three years. The job is a pleasure;
they need do no more than sit in a Dublin cafe to find their subjects, says
Muktupavela. The day after we meet, the production team hopes to track down
Jekabs Nakums, a Latvian Olympic athlete who announced on television last
November that he was leaving to go and wash cars in Ireland.

The project also gives Muktupavela the chance to indulge an abiding passion
for the country she is so closely identified with at home. A regular
visitor, she spent her last trip hitching around the west with her daughter,
and she has taken in much of the rest of the country over the years. “I have
thought about buying a house here,” she says.

“I have dreamed of it. In Co Mayo. Irish people always laugh when I tell
them that. Who would have believed five years ago that a Latvian would be
talking about buying a house in Ireland? I can’t explain my attitude to
Ireland. I cannot find words.”

She reverts to Latvian, smiles and fluently pours forth, her hands waving,
her voice halting once or twice while scouring for the right word, before
delicately nudging her head forward and conspiratorially imparting the final
clause in a whisper. When she has finished, we turn to the interpreter. He
raises his gaze slowly from the table. “Yes, she is happy.”
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

Natalie Kononenko, Kule Chair of Ukrainian Ethnography
University of Alberta, Modern Languages and Cultural Studies
Edmonton, Alberta, Canada, Mon, 16 Jan 2006
I am pleased to announce another exciting web page.  Please go to  From this page you will
be able to access all of the sound files that I recorded in Central Ukraine
between the years 1998 and 2000 or about 150 hours of sound. 
What makes this page special and ground breaking is that all of the sound
files are indexed, thanks to the careful and thoughtful work of our graduate
student, Svitlana Kukharenko.  Indexing means that you can find a topic on
our keyword list, click on the topic, and go directly to the sound recording
where that topic is being discussed.

The project for which the files were recorded had to do with family or life
cycle rituals: weddings, birth rites, baptisms, funerals.  At the same time,
all sorts of other material came up: personal recollections, stories about
house spirits or domovyky, stories about the unquiet dead and their return.
Our interviewees told me etiological and anecdotal narratives to educate me.
Since my field partner is interested in tales, a number of them are

When you go to the TAPoR page, you will find a list of keywords.  Those

are the topics covered in the sound files indexed so far.  Click on the topic. 
You will see one or more recordings.  Click on the recording.

You will also find a list of the topics on the entire file that you have
pulled up. Should you want to listen to something you see on the list,

drag the pointer to the appropriate number of the file and click play.  If
this is not clear from my explanation, it will be when you see the website.

In addition to crediting Svitlana Kukharenko for her good work, I must

also credit Yue (Eric) Zhang, the programer at TAPoR, and Peter Holloway,
our resident digital expert.  They deserve the credit for the programming
behind the ground-breaking module.

Natalie Kononenko, Kule Chair of Ukrainian Ethnography
University of Alberta, Modern Languages and Cultural Studies
200 Arts Building, Edmonton, Alberta, Canada T6G 2E6
Phone: 780-492-6810,
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
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