AUR#697 May 15 William Taylor, Ambassador-Designate; Weeks After Ukrainian Vote, Unclear Who Won; Tatars; Light From The East In NYC; Minister Pynzenyk

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

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

 
           IF CONFIRMED I WILL SUPPORT THE UKRAINIAN
               PEOPLE IN THEIR CONTINUING EFFORTS TO
                              TRANSFORM THEIR COUNTRY.
STATEMENT:
U.S. Ambassador-Designate to Ukraine William B. Taylor, Jr.
 

ACTION UKRAINE REPORT – AUR – Number 697
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., MONDAY, MAY 15, 2006 
             –——-  INDEX OF ARTICLES  ——–
           Clicking on the title of any article takes you directly to the article.               
  Return to the Index by clicking on Return to Index at the end of each article
 THEIR CONTINUING EFFORTS TO TRANSFORM THEIR COUNTRY
STATEMENT: Ambassador-Designate to Ukraine William B. Taylor, Jr.
U.S. Senate Foreign Relations Committee, Sen Dick Lugar, Chairman
Dirksen Senate Office Building, Washington, D.C., Friday, May 12, 2006
 
         NOMINATED TO BE U.S. AMBASSADOR TO UKRAINE
OPENING STATEMENT: Chairman Richard G. Lugar
Nominations Hearing, Senate Committee on Foreign Relations
Dirksen Senate Office Building, Washington, D. C., Friday, May 12, 2006

3.   WEEKS AFTER UKRAINIAN VOTE, IT’S UNCLEAR WHO WON
By Steven Lee Myers, The New York Times, NY, NY May 13, 2006

4     IMPORTANT MEMBER OF UKRAINIAN CABINET RESIGNS, 

MOVES TO PARLIAMENT MEMBER OF THE ‘OUR UKRAINE’ BLOC
UNIAN news agency, Kiev, in Ukrainian 1431 gmt 12 May 06
BBC Monitoring Service. UK, in English, Friday, May 12, 2006

5UKRAINIAN DEPUTY FOREIGN MINISTER LISTS CIS DRAWBACKS
NTN, Kiev, Ukraine, in Ukrainian 1630 gmt 14 May 06
BBC Monitoring Service – United Kingdom; Sunday, May 14, 2006

6.    PROFILE OF UKRAINE’S EX-GAS CHIEF OLEKSIY IVCHENKO
                The surprise resignation of the head of Naftohaz Ukrayiny
BBC Monitoring Research, BBC Monitoring Service, UK, Thu, May 11, 2006

7UKRAINE’S GAS FIRM’S FINANCIAL STANDING IS ‘VERY POOR’
NTN, Kiev, Ukraine, in Ukrainian 1630 gmt 11 May 06
BBC Monitoring Service – United Kingdom; Friday, May 12, 2006

8.   UKRAINE: REGIONS PARTY LEADER CRITICIZES PRESIDENT
   OVER GAS CHIEF’S RESIGNATION, DEPARTURE DISGRACEFUL
Interfax-Ukraine news agency, Kiev, in Russian 1048 gmt 12 May 06
BBC Monitoring Service – United Kingdom; Friday, May 12, 2006

9.  UKRAINE: CRIMEAN TATARS BLOCK TRAFFIC AHEAD OF 62ND
   ANNIVERSARY OF THEIR WWII DEPORTATION UNDER STALIN
AP Worldstream, Kyiv, Ukraine, Friday, May 12, 2006

10.    ORTHODOX CHURCH IN UKRAINE ATTACKS ‘CHARLATAN’
                             AND HIS BOOTY-SHAKING BABES
By Adrian Blomfeld, Telegraph, London, UK, Sat, May 13, 2006

11.             VARIETY.COM REVIEWS: LIGHT FROM THE EAST 

              A ‘Light From the East’ release of a SigmaBleyzer production in
           association with Strike Prods. Produced by Amy Grappell, Christian
              Moore. Executive producers, Michael Bleyzer, Natasha Bleyzer.
               Co-producer, Chris Krager. Directed, written by Amy Grappell.
By Joe Leydon, Variety.com, New York, New York, Wed, May 10, 2006

12AN EVENING IN NYC WITH AMY GRAPPELL AND A SCREENING 

         OF HER FILM “LIGHT FROM THE EAST” TUESDAY, MAY 16 
Action Ukraine Report (AUR) #697, Article 12
Washington, D.C., Monday, May 15, 2006

13.                      “REPLACEMENT WITHOUT CHANGE”
  Current system of law-making is blocking the building of a law-based state.
        Ukraine’s finance minister Pynzenyk criticizes government system
ANALYSIS & COMMENTARY
: Viktor Pynzenyk
Finance Minister of Ukraine
Zerkalo Nedeli, Kiev, in Russian 13 May 06, p 3
BBC Monitoring Service, UK, in English, Sunday, May 14, 2006

14.         NET PROFIT RISES AT AUSTRIA’S RAIFFEISEN BANK
                        Helped by acquisition of Ukrainian bank Aval
Staff Reporter, The Wall Street Journal, NY, NY, Thu, May 11, 2006

15.    POLISH, UKRAINIAN PRESIDENT STRESS ENERGY ISSUES,
     POLISH SUPPORT FOR UKRAINE AND HISTORICAL MEMORY
            To commemorate victims of the tragedy in Pawlokoma in 1945
Excerpt from report by Polish news agency PAP
Warsaw, Poland, in Polish 1334 gmt 12 May 06
BBC Monitoring Service, UK, in English, Friday, May 12, 2006

16.             “YUSHCHENKO STRETCHES OUT HIS HAND”
                            The best option is an orange coalition.
            Ukrainian President tells Polish newspaper of coalition hopes
INTERVIEW:
With Ukrainian President Viktor Yushchenko
BY: Waclaw Radzinowicza in Kiev
Gazeta Wyborcza website, Warsaw, in English 12 May 06
BBC Monitoring Service, United Kingdom; May 12, 2006

17.    POLISH PRESIDENT’S ADDRESS AT COMMEMORATION OF

      THE 1945 UKRAINIAN AND POLISH VICTIMS IN PAWLOKOMA
Cannot change the past, but we can make sure that it not determine the future.
SPEECH:
  By Polish President Lech Kaczynski
TVP1, Warsaw, Poland, in Polish 1031 gmt 13 May 06
BBC Monitoring Service, UK, in English, Saturday, May 13, 2006

18. UKRAINIAN PRESIDENT’S ADDRESS AT COMMEMORATION OF
       THE 1945 UKRAINIAN AND POLISH VICTIMS IN PAWLOKOMA
           “We declare today that Ukraine and Poland are this day manifesting
                      a new policy of solidarity. May God assist us in this.”
SPEECH:
By Ukrainian President Viktor Yushchenko
TVP1, Warsaw, Poland, in Polish 1022 gmt 13 May 06
BBC Monitoring Service, UK, in English, Saturday, May 13, 2006

19RUSSIAN BEAR IS BACK – AND THIS TIME IT’S GAS-POWERED
                      Petrodollars give Putin weight on world stage
                      America is ‘nervous and angry’, say observers
Ian Traynor, Nick Paton Walsh in Moscow & Ewen MacAskill in Washington
The Guardian, London, United Kingdom, Saturday May 13, 2006

20.                              RUSSIA: PRODDING THE BEAR
LEAD EDITORIAL: The Guardian
London, United Kingdom, Saturday, May 13, 2006
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1
. IF CONFIRMED I WILL SUPPORT THE UKRAINIAN PEOPLE IN

THEIR CONTINUING EFFORTS TO TRANSFORM THEIR COUNTRY

STATEMENT:
Ambassador-Designate to Ukraine William B. Taylor, Jr.
U.S. Senate Foreign Relations Committee, Sen Dick Lugar, Chairman
Dirksen Senate Office Building, Washington, D.C., Friday, May 12, 2006

Mr. Chairman and members of the Committee, I am honored to appear before
you today to discuss my nomination as the United States Ambassador to
Ukraine.

I deeply appreciate the confidence that President Bush and Secretary Rice
have placed in me.  If confirmed by the Senate, I pledge to work closely
with this Committee and your Congressional colleagues to advance U.S.
interests in Ukraine and the region.

My experience coordinating the assistance Congress made available to support
nascent democracy and market economics in the former Soviet states will
prove useful in Ukraine.  I first visited Ukraine in the early 1990s when
the newly independent country was experiencing freedom for the first time
since World War I.

I returned many times during the next decade, working to advance political
and economic reform.  If confirmed, I look forward to returning yet again to
help solidify the gains made to date and to support the Ukrainian people in
their continuing efforts to transform their country.

Following free and fair parliamentary elections this March, Ukraine is
striving to redefine itself as a stable and prosperous European democracy.
Ukraine has become a good partner to the United States on matters of
national security, free trade, human rights and other key issues.  If
confirmed
, I will work to strengthen and broaden our cooperation.

Ukraine has made significant progress since gaining freedom in 1991.  To be
sure, this progress has been uneven and opportunities have been missed.
Ukraine, like other countries making the transition from communism to
democracy and a free market, has had to overcome major hurdles and has
suffered setbacks.

But Ukraine has made notable advances.  These have been most significant
since the winter 2004 Orange Revolution, which radically transformed the
political dynamic in Ukraine.

The media is now unquestionably freer, respect for basic rights of citizens
has improved, a vibrant civil society has grown even stronger, and Ukraine
is a more constructive and energetic player in the region and worldwide.
Ukraine’s recent parliamentary election is proof of its progress.

This election was a critical test of Ukraine’s commitment to democracy –
and Ukraine passed convincingly.  The campaign and vote met OSCE and
international standards for democratic elections and were the most
democratic in Ukraine’s history.

The Orange Revolution also put our bilateral relations on a new trajectory.
Scandals and corruption limited our engagement with earlier Ukrainian
administrations, but our relations with the post-Orange Revolution
administration and governments have been characterized by close cooperation.

Over the last year and a half, with strong support from the U.S. Congress,
the Administration has worked with our allies to offer Ukraine an
Intensified Dialogue with NATO, restored generalized system of preferences
(GSP) trade benefits to Ukraine, recognized Ukraine as a market economy,
concluded a bilateral market access agreement–a key step to WTO accession
for Ukraine– and lifted Jackson-Vanik Amendment restrictions.

These steps were taken in response to Ukraine’s own positive actions and
reforms.  The Administration has also worked closely with Ukraine to halt
the proliferation of arms and potentially dangerous materials and
technology, and to advance democracy and security in the region.

Ukraine’s new coalition government will face a daunting but vital challenge:
to consolidate the gains to date of the Orange Revolution, and to further
Ukraine’s democratization, economic development, and integration with
Europe, Euro-Atlantic institutions, and the international community.  The
U.S. Government will continue to help.

The Administration strongly supports Ukraine’s NATO aspirations, and, if
confirmed,
I will do all I can to assist Ukraine in implementing the
political, economic, defense and security reforms necessary for possible
membership in NATO’s community of shared values.

If confirmed, I would look forward to continuing the already strong
cooperation with Ukraine to combat global threats such as trafficking in
persons, avian influenza, HIV/AIDS and TB.  If confirmed, I would work

with the government of Ukraine on effective implementation of an improved
export control system as part of our nonproliferation policy.

On the economic side, if confirmed, I will strongly support Ukraine’s
efforts to join the WTO and integrate its markets into international
structures, strengthen its–and Europe’s–energy security, and improve
energy efficiency and conservation. 

 
If confirmed, I will also do all that I can to help Ukraine strengthen rule of
law, combat corruption and money laundering, and improve its investment
climate.

Among the tasks ahead for Ukraine are developing domestic financial markets,
further improving protection of intellectual property rights, and
simplifying the regulatory environment and increasing access to credit for
small- and medium-sized entrepreneurs, who form the backbone of developed
economies.  Given Ukraine’s agricultural endowments, helping private farmers
play an increasing role in the economy is another key to a prosperous,
sustainable future.

Ukraine’s good and growing ties with the United States and with
Euro-Atlantic institutions are entirely compatible with Ukraine’s having
good neighborly relations with Russia.

If confirmed, I will join Ambassador Burns and my colleagues in encouraging
both countries to continue to build their bilateral relations on the basis
of mutual respect for each other’s sovereignty, territorial integrity, and
other principles of human rights to which Ukraine, Russia, and the United
States have subscribed in the United Nations and in the Organization for
Security and Cooperation in Europe.

As you know, Mr. Chairman, there is a terrific group of people on the ground
at Embassy Kyiv working toward these goals.  I look forward, if confirmed,
to leading them as we work to deepen cooperation with Ukraine and pursue
the interests of the American people.

Mr. Chairman, I appreciate the opportunity to share my initial thoughts
about Ukraine and its relations with the United States.  If confirmed, I
will look forward to working with you closely.  We all appreciate your
personal interest and leadership, not just in the area of weapons security,
but in Ukraine in particular.  I would welcome the opportunity to host you
and other interested members of Congress in Kyiv.

————————————————————————————————-
FOOTNOTE:  Your editor attending the confirmation hearing on Friday.
Ambassador-designate William Taylor’s nomination is expected to be
approved by the U.S. Senate soon. Assuming Bill Taylor is approved
reports indicate he will most likely be in Kyiv around Monday, June 12th
to assume his duties as U.S. Ambassador to Ukraine.  AUR EDITOR
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2. U.S. SENATE HEARING TO CONSIDER WILLIAM TAYLOR, JR.
         NOMINATED TO BE U.S. AMBASSADOR TO UKRAINE

OPENING STATEMENT: Chairman Richard G. Lugar
Nominations Hearing, Senate Committee on Foreign Relations
Dirksen Senate Office Building, Washington, D. C., Friday, May 12, 2006

Today, the Foreign Relations Committee meets to consider nominees to three
key diplomatic posts. Joining us are Mr. William Taylor, Jr., who has been
nominated to be Ambassador to Ukraine; Ms. Anne Derse, who has been
nominated to be Ambassador to Azerbaijan; and Mr. Daniel Sullivan, who has
been nominated to be Assistant Secretary of State for Economic and Business
Affairs. We are pleased to have these three nominees with us today.

Mr. Taylor has given decades of service to his country, including experience
in critical posts at the Departments of State, Defense, and Energy. As a
graduate of West Point, he served as a combat infantry officer in Vietnam.
He also is familiar with this body, having served for five years as a
legislative assistant to our good friend Senator Bill Bradley.

Currently, he is serving as Senior Advisor to the Coordinator in the Office
of Reconstruction and Stabilization at the Department of State. This office
originated out of a framework developed by this Committee, so we are
especially interested in Mr. Taylor’s experience in this capacity.

Prior to his current position, he served as the U.S. Representative to the
Quartet Special Envoy for Disengagement in Jerusalem and as Director of the
Iraq Reconstruction Management Office at the U.S. Embassy in Iraq.

The United States and Ukraine have developed a close relationship since
Ukraine achieved independence. Ukraine has been an excellent partner to the
Nunn-Lugar program in controlling and destroying the arsenal of weapons of
mass destruction that was left on its territory when the Soviet Union broke
up. As a result of this cooperation, Ukraine is nuclear weapons free.

We have been inspired by the struggle of the Ukrainian people to achieve
political, economic, and social freedoms. In November 2004, I witnessed this
struggle first hand when I served as President Bush’s representative to the
Ukrainian runoff elections.

On that occasion, the Ukrainian people would not let the election be stolen.
They demonstrated their commitment to democratic principles, which
eventually brought President Yushchenko to power.

But democracy cannot be won with a single event. We in the United States
have been working for more than 200 years to understand and to perfect our
own democracy. Even today, protecting the sanctity of the ballot box
requires constant vigilance.

Our experience has taught us that democracy is both difficult to establish
and hard work to maintain. I am hopeful that the new cabinet in Ukraine will
continue democratic momentum.

The United States must do its part to support the expansion of democracy

and free markets in Ukraine. Earlier this year, I was pleased that Congress
passed the bill that I had sponsored to repeal Jackson-Vanik trade
restrictions against Ukraine and extend permanent normal trade relations to
that country.

Ukraine faced another challenge earlier this year, when Russia took action
to deny some natural gas to Ukraine. The dispute led to sharp drops in gas
supplies reaching European countries that receive natural gas moving through
Ukrainian pipelines from Russia.

Russia charged that Ukraine was diverting gas intended for other European
nations. Eventually, the confrontation was resolved with a near doubling of
the price of natural gas sold by Russia to Ukraine.

Like the United States, Ukraine’s energy import dependence makes it
vulnerable to price volatility and the manipulation of supplying countries.
Development of alternative fuels, along with rapidly increased efficiency,
should be a central area of cooperation with Ukraine.

                      [——————————————————]

I would observe that today we are considering ambassadorial nominees to two
countries where energy is among the most important considerations in our
relationship. This is not an unusual circumstance. Our relations with dozens
of countries around the world – both allies and rivals – are dominated by
the opportunities and threats associated with energy supplies and our status
as an import dependent nation.

Recently, Secretary Rice and Undersecretary Burns have expressed to the
Foreign Relations Committee how central energy has become to broader issues
of U.S. diplomacy. In fact, global energy security is one of the main
reasons why the Administration has asked Congress to support the U.S.-India
Civilian Nuclear Agreement.

As we consider the talents and responsibilities of our two ambassadorial
nominees, I want to ensure that they and other ambassadors have the support
and institutional expertise necessary to effectively deal with energy
issues. In my judgment, the State Department must greatly increase its
capacity to address energy issues at the highest levels of its bureaucracy.

As my introduction indicated, the job description of the Assistant Secretary
for Economic and Business Affairs includes many other important topics
besides energy. Although I would urge Mr. Sullivan to develop a sharp focus
on energy as quickly as possible, the State Department needs to do more than
expand energy capabilities within the Economic and Business Bureau.

To address this situation, I have introduced S. 2435, the Energy Diplomacy
and Security Act, which would create a coordinator for energy diplomacy in
the Secretary’s office and expand the profile of energy considerations
within the department.

Unfortunately, despite a good deal of prodding, the State Department has not
been able to express a definitive view of the bill or its needs in this
area. The Foreign Relations Committee plans further hearings on this topic,
and we intend to be persistent.

I congratulate each of our nominees. Please deliver your statements in the
order that you were introduced. If you are summarizing a statement, the text
of your entire presentation will be included in the hearing record. Also,
please introduce family and friends that may have accompanied you on this
important occasion.                              -30-
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3. WEEKS AFTER UKRAINIAN VOTE, IT’S UNCLEAR WHO WON

By Steven Lee Myers, The New York Times, NY, NY May 13, 2006

KIEV, Ukraine, May 12 – The politicians trying to reunite the political
parties that were swept to power in Ukraine a year and a half ago have drawn
up a list of the issues that divide them. They include the World Trade
Organization, membership in NATO, privatization of state properties and the
volatile issue of whether to allow sales of agricultural land.

The most divisive issue, though, is the most important of the moment: Who
will be Ukraine’s new and newly empowered prime minister?

Six weeks after parliamentary elections produced no outright winners, no one
can say for certain. The issue has stirred a new round of recriminations
among those who joined President Viktor A. Yushchenko in leading the popular
protests that overturned a fraudulent election in 2004 and cleared the way
for his presidency.

“They want a compromise with the past, the Kuchma era,” said Hryhory M.
Nemyrya, a newly elected member of Parliament, referring to the
scandal-tarred presidency of Leonid D. Kuchma, whose chosen successor, Mr.
Yushchenko, ultimately defeated him in what became known as the Orange
Revolution.

The leading candidate for prime minister is the head of Mr. Nemyrya’s party,
Yulia V. Tymoshenko, the erstwhile ally of the president who insists that
her bloc’s showing in the election – ahead of Mr. Yushchenko’s party, Our
Ukraine – makes her the rightful candidate among the so-called orange
coalition.

In an interview with a Polish newspaper, published Friday, Mr. Yushchenko
said he did not preclude that possibility. But at least some of his
supporters strongly oppose Ms. Tymoshenko, arguing that she would prove as
divisive as she was when she served as his first prime minister for eight
months last year – until tumultuous economic policies, political infighting
and dueling accusations of corruption prompted him to dismiss her.

Even as they hold talks to reunite last year’s orange coalition to form a
governing majority, Mr. Yushchenko’s supporters have raised the possibility
of compromise candidates.

“There are others on the bench,” said Anatoly K. Kinakh, a leader of Our
Ukraine and Mr. Yushchenko’s national security adviser, declining to
identify them. Mr. Kinakh resigned his security post on Friday to take a
seat in Parliament, presumably as part of the positioning to form a
coalition government.

Some, including the acting prime minister, Yuri I. Yekhanurov, have
suggested the possibility of a broader coalition government that could
include the party led by Mr. Yushchenko’s vanquished presidential rival,
Viktor F. Yanukovich, which led all parties in the parliamentary election
with 31 percent of the votes.

“For eight months we had an orange coalition, but it fell apart because many
of its members were united only by their opposition to Kuchma,” Mr.
Yushchenko’s spokeswoman, Irina B. Gerashchenko, said. “What the

president wants is a stable coalition.”

The result has been an impasse that threatens to undermine Mr. Yushchenko’s
political standing further, even as he faces a stalling economy, accusations
of overly cozy associations with big business and a new confrontation with
Russia over the price of natural gas.

In January the confrontation over gas resulted in a doubling of the price
Ukraine pays Russia. A compromise, which increased prices for Ukrainian
households by 30 percent as of May 1, allows Russia’s gas monopoly to raise
them again as soon as July 1.

The deal has been unpopular here, in part because of the higher prices and
in part because of questions surrounding the ownership of an opaque trading
company, RosUkrEnergo, which now has a monopoly on supplying the gas to
Ukraine.

The controversy over the deal deepened late last month with the disclosure
that the partial owners included a prominent Ukrainian businessman, Dmitry
Firtash. Mr. Yushchenko, who initially denied any Ukrainian involvement, met
with Mr. Firtash “on several occasions,” Ms. Gerashchenko said.

Ms. Tymoshenko has led the opposition to the gas deal, calling it a threat
to Ukraine’s national security. On Thursday the controversy claimed a new
victim, when Oleksiy Ivchenko, who negotiated the deal as the head of
Ukraine’s state gas company, resigned to take a seat in Parliament as part
of Mr. Yushchenko’s Our Ukraine bloc.

The new Parliament – with increased powers, including the ability to appoint
the prime minister and other cabinet ministers – is not expected to convene
until the end of May. Based on the electoral results, Ms. Tymoshenko’s bloc
will have 129 of the 450 seats, compared with 81 for Our Ukraine. With the
Socialist Party’s 33 seats, a reunited coalition could control a slight
majority.

Mr. Yanukovich’s Party of Regions won the largest number of seats, with 186,
while the Communists won 21.

The uncertainty over a coalition has raised the possibility that none will
be formed. That would allow Mr. Yushchenko to dissolve the Parliament at

its inception and call new elections, plunging Ukraine into new political
turmoil.

“He is losing public support,” Mikhail B. Pogrebinsky, director of the Kiev
Center for Political and Conflict Studies, said in an interview. “No smooth
movement can restore trust in him. He must make a decisive step. And he is
not prepared for it.”

Others in Mr. Yushchenko’s camp said that jockeying aside, the political
leaders who led the Orange Revolution would ultimately reunite in some form.
Roman P. Bezsmertny, another leader of Our Ukraine, said the immediate goal
was to agree on the policies that bind them and then deal with who would be
chosen as prime minister to carry them out. That is why lists of areas of
agreement, and disagreement, are being drafted.

Mr. Yushchenko’s spokeswoman, Ms. Gerashchenko, described the process

as something akin to restoring a marriage broken by betrayal. “It is like
trying to rebuild a family,” she said. “And it is difficult to rebuild a
family if both sides cannot realize why one side walked out and slammed the
door.”                                        -30-
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http://www.nytimes.com/2006/05/13/world/europe/13ukraine.html?_r=1&oref=slogin
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4.    IMPORTANT MEMBER OF UKRAINIAN CABINET RESIGNS, 
MOVES TO PARLIAMENT MEMBER OF THE ‘OUR UKRAINE’ BLOC

UNIAN news agency, Kiev, in Ukrainian 1431 gmt 12 May 06
BBC Monitoring Service. UK, in English, Friday, May 12, 2006

KIEV – The secretary of the National Security and Defence Council, Anatoliy
Kinakh, has decided to work in parliament [Kinakh was elected to parliament
on the election list of the propresidential Our Ukraine Bloc]. Kinakh sent a
statement to this effect to the presidential secretariat.

Kinakh said that a number of political and economic risks are currently
mounting in Ukraine, dealing with this country’s switching to the
parliamentary-presidential form of governance. “The Supreme Council has
received very serious powers now that constitutional reform has been
implemented. Further sociopolitical and socioeconomic development of the
state depends on its coordinated and professional decisions,” he said.

Kinakh said that the country and the newly elected parliament are unprepared
to function under the parliamentary-presidential form of governance.
Difficult talks on forming a coalition in the Supreme Council and the
deteriorating socioeconomic situation are warning signs for the further
development of the state.

“It is clear today that the Supreme Council will begin to work in very
difficult circumstances. Bearing this in mind, I believe that my duty is to
concentrate my experience and efforts to ensure the most coordinated,
pragmatic, clear and professional lawmaking in the new parliament,” Kinakh
said.

Kinakh also said that the importance of the National Security and Defence
Council recently increased significantly as the agency develops, adopts,
implements and coordinates the implementation of decisions to ensure
Ukraine’s security in the entire spectre of the country’s life.

He said that a solid analytical base was developed, a range of systemic
presidential decrees were adopted on the basis of the National Security and
Defence Council’s decisions on improving security in the energy, food,
investment and information areas. Work to develop the national security
strategy is near completion. “This is a powerful foundation for functioning
and coordination between the future cabinet and the Supreme Council,” he
said.                                            -30-
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5. UKRAINIAN DEPUTY FOREIGN MIN LISTS CIS DRAWBACKS

NTN, Kiev, Ukraine, in Ukrainian 1630 gmt 14 May 06
BBC Monitoring Service – United Kingdom; May 14, 2006

KIEV – Ukrainian First Deputy Foreign Minister Volodymyr Ohryzko spoke

about what he saw as drawbacks of the CIS live on the air of the Ukrainian
pro-opposition NTN TV on 14 May. He, however, did not say whether
Ukraine is going to quit the CIS, noting that Ukraine is formally not a member
of it anyway.

He also refused to comment on Georgia’s reported intention to quit the CIS.
The CIS has been unreformed, according to Ohryzko, and “no single economic
project has been implemented in the CIS”.

Ohryzko listed the following drawbacks of the CIS: [1] the free-trade
agreements of 1994 have not been ratified by Russia; [2] last year’s reform
proposals from Ukrainian President Viktor Yushchenko have been ignored; [3]
there’s been no proper border demarcation between CIS countries, so the
borders are transparent to illegal migration and contraband; [4] bulging CIS
bureaucracy gets a disproportionate share of funds.

Ohryzko denied a suggestion by the presenter that relations with Russia
recently worsened. He said the relations have not got worse, rather there’s
been more transparency.                              -30-

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6. PROFILE OF UKRAINE’S EX-GAS CHIEF OLEKSIY IVCHENKO
              The surprise resignation of the head of Naftohaz Ukrayiny

BBC Monitoring Research, BBC Monitoring Service, UK, Thu, May 11, 2006

The Ukrainian government on 11 May announced that it had accepted the
surprise resignation of the head of Naftohaz Ukrayiny, the state-owned oil
and gas giant. The ostensible reason for Oleksiy Ivchenko’s resignation was
that he has been elected to parliament on the ticket of the pro-presidential
Our Ukraine bloc – the Ukrainian constitution does not allow MPs to hold
executive posts.

But most government members elected to parliament are not in a hurry to make
a choice between their current jobs and the seat in parliament, while
uncertainty remains as to how many of them will keep their posts in the new
government. There appear to be several possible other reasons for Ivchenko’s
resignation.
[1] GAS DEAL WITH RUSSIA —–
Ivchenko was one of the main advocates of the controversial gas agreements
signed with Russia on 4 January 2006, after Moscow briefly switched gas
supplies amid a price dispute, also disrupting supplies to Europe.

Ukraine eventually accepted a price rise from 50 to 95 dollars per 1,000
cu.m. of gas, accompanied by a smaller rise in the rates charged by Ukraine
for the transit of Russian gas to Europe (ITAR-TASS news agency, Moscow,

in Russian 0738 gmt 4 Jan 06).

There was uncertainty as to whether the rate of 95 dollars was fixed for the
next five years or is subject to further rise. While President Ivchenko
Yushchenko and Ivchenko himself appear to believe that the rate can only
rise with Ukraine’s consent, Russia has been talking about another price
rise starting from July (Den, Kiev, in Ukrainian 13 Apr 06; p 1).

The choice of the intermediary company, RosUkrEnergo, to supply a mix of
expensive Russian and cheaper Asian gas to Ukraine has also stirred
controversy, with allegations that the company is linked to shadowy figures
(Zerkalo Nedeli, Kiev, in Russian 21 Jan 06; p 1, 4).

The Ukrainian opposition vehemently criticized the deal, even calling for
Ivchenko to be prosecuted for signing it, and Yuliya Tymoshenko at one point
spoke of reversing the deal with Russia as one of the conditions for forming
a ruling coalition in parliament with Our Ukraine and the Socialist Party
(Ukrayinska Pravda website, Kiev, in Ukrainian 17 Feb 06). Ivchenko’s
departure appears to have removed one of the obstacles for the ongoing
coalition talks between the three parties.
[2] NAFTOHAZ FINANCES —–
The Ukrainian media has repeatedly raised the topic of Naftohaz finances,
with allegations being made that the company is close to bankruptcy
(Kiyevskiy Telegraf, Kiev, in Russian 28 Apr 06). This has been flatly
denied by Naftohaz, but Finance Minister Viktor Pynzenyk publicly voiced
dissatisfaction with the company’s financial state and tax payments (UT1,
Kiev, in Ukrainian 1530 gmt 19 Apr 06), and the international ratings agency
Fitch on 24 April downgraded the company’s credit rating from BB- to B plus
(Ukrayinska Pravda, 24 Apr 06).
[3] MERCEDES SCANDAL —–
Ivchenko came under fire in April after the web site Ukrayinska Pravda
posted photos of his new company car, a Mercedes reportedly costing over
200,000 dollars (Ukrayinska Pravda web site, Kiev, in Ukrainian 7 Apr 06).

The web site questioned the need for a Ukrainian state company in a
difficult financial situation to buy expensive cars, given that Ivchenko’s
previous company car, another Mercedes, was less than two years old.

Ivchenko made the situation worse by commenting on television that using the
latest models of Mercedes cars was a matter of “tradition” for him (NTN,
Kiev, in Ukrainian 1400 gmt 8 Apr 06). After the scandal flared up in the
media President Yushchenko said at a press conference that he found
Ivchenko’s comments inappropriate, and ordered him to sell the car (UT1,
Kiev, in Ukrainian 0900 gmt 12 Apr 06).

But after the car was sold, the Tender Chamber announced an investigation
into the car’s purchase, as it appeared that the Mercedes had been bought
bypassing the compulsory tender procedure.
[4] PARLIAMENT PERKS
Finally, parliament seat itself could be an attractive option due to the
many perks that come with it – including immunity from prosecution.
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7. UKRAINE’S GAS FIRM’S FINANCIAL STANDING ‘VERY POOR’

NTN, Kiev, Ukraine, in Ukrainian 1630 gmt 11 May 06
BBC Monitoring Service – United Kingdom; Friday, May 12, 2006

KIEV – Ukraine’s National Security and Defence Council Secretary Anatoliy
Kinakh has said that the state oil and gas company Naftohaz Ukrayiny’s
financial standing is “very poor”.

Speaking in a studio interview with the NTN TV channel, Kinakh said: “It is
unacceptable to sink as low as paying taxes into the budget at the expense
of foreign loans with property pledged as security, while this is the
property of a strategic company.”

Kinakh said that Oleksiy Ivchenko’s resignation from the post of chief of
Naftohaz Ukrayiny is not directly linked to gas talks with Russia. He went
on to say that the reshuffle at Naftohaz will be followed by a serious
policy change to step up the competitiveness of Ukraine’s oil and gas
sector.

Kinakh said that the 4 January gas deals with Russia’s gas monopoly Gazprom
are imperfect and that a Ukrainian-Russian intergovernmental gas protocol
should be signed to guarantee gas supplies to Ukraine.

Kinakh said that Ukraine has “no alternative to Gazprom at present”, and
called for direct contacts between Naftohaz and Gazprom bypassing the
RosUkrEnergo gas intermediary.

“Ukraine has never been and will not be an advocate of RosUkrEnergo. We want
these relations to be transparent and commitments to be met, including the
price parameters. We have repeatedly proposed to Russia and to Gazprom to
establish direct contacts, without any intermediaries, between Naftohaz
Ukrayiny and Russia’s Gazprom,” Kinakh said.

Kinakh said that Ukraine is not considering “quitting the CIS immediately”,
and called on Russia to sign a free-trade zone agreement.         -30-

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8. UKRAINE: REGIONS PARTY LEADER CRITICIZES PRESIDENT
 OVER GAS CHIEF’S RESIGNATION, DEPARTURE DISGRACEFUL

Interfax-Ukraine news agency, Kiev, in Russian 1048 gmt 12 May 06
BBC Monitoring Service – United Kingdom; Friday, May 12, 2006

KIEV – Oleksiy Ivchenko’s resignation as chairman of the board of the
Naftohaz Ukrayiny national joint-stock [oil and gas] company is a logical
outcome of the “highly unprofessional” personnel policy by President [Viktor
Yushchenko], members of the [opposition] Party of Regions think.

This is the comment a member of the political council of the Party of
Regions, Yevhen Kushnaryov, has made on Ivchenko’s resignation to
Interfax-Ukraine. He dubbed Ivchenko’s departure “disgraceful”.

“One has got to be a complete bungler to bring one of the most economically
efficient Ukrainian structures to the brink of bankruptcy in just 16
months,” he believes.

In his opinion, a professional, state-level manager should have been
appointed to such an important post rather than a person close to Yushchenko
in ideology.

He recalled that this was stressed publicly not only by representatives of
the opposition, but also by those members “of the propresidential forces who
are capable of assessing the situation realistically and who have the
courage to speak the truth”.

The politician says responsibility for the gas crisis between Ukraine and
Russia should rest “personally with Yushchenko and Ivchenko”.

He expressed hope that the post of Naftohaz Ukrayiny head will be occupied
“not by some other close or distant relative of the president, but by a real
professional, a patriot of Ukraine capable of running such a complex and
large organization efficiently and having the qualities of a real diplomat
in negotiations with Russia, Turkmenistan, Kazakhstan and other suppliers of
gas to Ukraine”.

The Ukrainian government yesterday relieved Oleksiy Ivchenko of his duties
as chairman of the board of the Naftohaz Ukrayiny national joint-stock
company after his resignation tendered because of his election to
parliament. Ivchenko had headed Naftohaz Ukrayiny since March 2005. He was
elected to the Supreme Council [parliament] of the fifth convocation on the
list of the Our Ukraine Bloc.                        -30-
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9. UKRAINE: CRIMEAN TATARS BLOCK TRAFFIC AHEAD OF 62ND
   ANNIVERSARY OF THEIR WWII DEPORTATION UNDER STALIN

AP Worldstream, Kyiv, Ukraine, Friday, May 12, 2006

CRIMEA – Hundreds of Crimean Tatars blocked traffic in southern Ukraine,
before the 62nd anniversary of their deportations under Soviet dictator
Josef Stalin, police said Friday.

The Tatars, in a column of some 600 cars, had tried Thursday to enter the
Black Sea village of Partenit – which they consider to be their historic
home – but were stopped by residents blocking the road, Crimean police
spokesman Oleksandr Dombrovsky said.

The blockade caused a 7-kilometer (4-mile) traffic jam until early Friday,
when police persuaded the Tatars to remove their cars from the road.

Partenit’s residents continued to block entry to the village, however, and
crowds of Tatars were gathered near the pedestrian crossings, Dombrovsky
said, adding that the situation was tense but under control.

The Crimean Tatars, a Muslim Turkic group, had inhabited the Black Sea
peninsula for more than seven centuries. Stalin accused Tatars of
collaborating with the Nazis, and on May 18, 1944, ordered that some 200,000
be deported to the Central Asian steppes, where many died of famine and
disease.

They were not allowed to return until around the time of the Soviet collapse
of 1991. Some 250,000 returned to Crimea, where they now make up 13 percent
of the population.

Unemployment is high among the Crimean Tatars today, and many live in grim
conditions in villages that lack basics such as water, natural gas and
roads. Fights break out frequently between Crimean Tatars and ethnic
Russians and Ukrainians.  The Ukrainian authorities under President Viktor
Yushchenko have pledged to restore Tatars’ rights.             -30-
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10. ORTHODOX CHURCH IN UKRAINE ATTACKS ‘CHARLATAN’
                          AND HIS BOOTY-SHAKING BABES

By Adrian Blomfeld, Telegraph, London, UK, Sat, May 13, 2006

KIEV – The Orthodox Church in Ukraine is not quite sure which part of
Sunday Adelaja’s weekly services it likes the least. The dubious Russian pop
and the pom-pom-waving Cossack dancers are certainly contenders. The
hot babes in choir dress swaying to the music might win the vote of its many
older and weaker-hearted clergymen.

Or it could be the thousands of Ukrainian teenagers squealing as the
diminutive Nigerian pastor preaches the word of God.

In the 1,000 years that it has been in existence, the Ukrainian Orthodox
Church has faced down many threats ranging from Reformation-era heretics
to Soviet iconoclasts and modern day schismatics.

But never before has it had to see off an intruder who encourages his
congregants to “shake their booty and praise the Lord”. Mr Adelaja is a
serious threat, even if it took the Church a while to realise it.

Twelve years ago, his Embassy of God church consisted of seven fellow
Africans who used to gather in his Kiev flat. Today he heads one of the
fastest-growing Christian congregations in Europe, with 250,000 members in
Ukraine alone. Among them is the first Protestant mayor of Kiev, elected to
the post in March.

Quite something for a man who, thanks to a Soviet scholarship won in 1986,
fled his impoverished Nigerian village at the age of 19 to escape the
“witchcraft” that killed many of his family.

Alarmed at his burgeoning congregation, the Church has launched a counter
attack, seeking to portray Mr Adelaja as a charlatan.
“Our main problem is that Sunday Adeleja has created a personality cult
around himself,” said Fr Evstratiy, a spokesman for the Kiev Patriarchate.

“Experts say he uses conscience manipulation techniques. He starts his
sermons in a low, ingratiating voice, and gradually gets heated up to the
point where he is running round the stage screaming.” At a recent service at
a Kiev ice hockey stadium 14,000 people crammed in to experience the effect.

As “Pastor Sunday” prepared to make a grand entrance, the choirgirls shook
their pompoms, the disco lights started to flash and a fanfare sounded. The
lights cut out, and Mr Adelaja emerged from a shroud of dry ice. Children
holding flags of the world wafted round him and the choir bellowed
“Sanctus!”

The congregation responded enthusiastically. Many danced in the aisles. With
his eyes closed and brows furrowed in concentration, he raised his arms
aloft. A hush fell over the audience.

“A man who is having problems functioning in his manly area, God is healing
you,” he intoned. “Those who are having skin problems, God is healing you.”

On and on he droned, curing everything from buttock problems to bankruptcy.
Some in the congregation wept, others bellowed hallelujahs. Ushers
discreetly passed around collection boxes.

African preachers heading largely white European congregations are no longer
such a rarity. Still, the 38-year-old stands out. Not only has he achieved a
phenomenal conversion rate in the birth place of Russian Orthodoxy, he has
also done it in one of Europe’s most racist countries – one where skinhead
attacks on ethnic minorities are reported on an almost daily basis.

“People would spit at me in the street, or call me ‘monkey’ and
‘chocolate’,” he recalled. “They thought it was an insult for a black man to
preach.” He attributes his success to the fact that he reached out to the
rejects of society: the drug addicts, criminals, prostitutes and the
homeless; those considered by the Church to be beyond redemption.

But Mr Adelaja also owes something of his success to his appeal among the
young. It was the young who were at the forefront of protests in Kiev’s main
square during the 2004 Orange Revolution that brought the pro-Western Viktor
Yushchenko to power.

Orthodox luminaries supported his Kremlin-backed opponent. Mr Adelaja made
no such mistake. Every day he joined the crowds and led them in prayer. Now
he is reaping the rewards.                            -30-
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11.          VARIETY.COM REVIEWS: LIGHT FROM THE EAST 
              A ‘Light From the East’ release of a SigmaBleyzer production in
          association with Strike Prods. Produced by Amy Grappell, Christian
              Moore. Executive producers, Michael Bleyzer, Natasha Bleyzer.
              Co-producer, Chris Krager. Directed, written by Amy Grappell.

By Joe Leydon, Variety.com, New York, New York, Wed, May 10, 2006

‘Light From the East’ follows a group of American actors in the former
Soviet Union.

Though it covers widely reported events more than 15 years after the fact,
“Light From the East” generates genuine suspense as it follows a group of
American actors in the former Soviet Union during a fateful period of the
Perestroika era.

Illuminating time-capsule doc boasts impressive technical polish, and could
find receptive auds in commercial and nonprofit venues after its May 11-17
premiere run at New York’s Two Boots Pioneer Theater.

The year is 1991, and bad timing turns out to be good fortune for helmer
Amy Grappell. She and other members of New York’s La Mama Theater are
in the Ukraine to take part in a bilingual stage production with Ukrainian
counterparts when the attempted coup in Moscow threatens to drag the
region back to the bad old days.

Grappell starts out an inquisitive tourist, asking locals how they feel
about freedom after decades of Soviet rule. Helmer’s host, prickly and
pessimistic dramaturge Natalia Shevchenko, is supposed to provide literal
translation during interviews.

More often than not, however, Shevchenko instead offers cynical commentary
concerning respondents who care more about whether store shelves are full
than they do about freedom of expression.

Doc’s tone changes dramatically as reports circulate that Gorbachev has
disappeared, the Kremlin has been overthrown, and power now lies in the
hands of a few military men. Shocked — and, perhaps, more than a little
frightened — the helmer asks Shevchenko: “Does this happen often?”

The stranger-than-fiction irony: At a time that was filled with dark
portents of renewed repression, increasingly anxious U.S. and Ukrainian
thesps were collaborating on a play about Les Aurbas, a maverick theater
artist who rebelled against Soviet Realism and was killed during a 1937
Stalinist purge.

By the time the actors complete their limited run, the coup has been turned
back, Ukraine declares its independence — and “Light From the East”
demonstrates that, on stage on off, nothing is more satisfying than a happy
ending.

Camera (color), Christian Moore; editors, Kyle Henry, Leah Marino; sound,
Eric Friend; associate producers: Mark Rudkin, Rina Rudkin, Kevin Pruitt,
Kyle Henry. Reviewed on videocassette, Houston, May 7, 2006. Running
time: 73 MIN.                                  -30-
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12. AN EVENING IN NYC WITH AMY GRAPPELL AND A SCREENING
         OF HER FILM “LIGHT FROM THE EAST” TUESDAY, MAY 16

Action Ukraine Report (AUR) #697, Article 12
Washington, D.C., Monday, May 15, 2006

WASHINGTON – The Ukrainian Congress Committee of America (UCCA)
& the Brooklyn Ukrainian Group is sponsoring an evening with documentary
filmmaker Amy Grappell and a screening of her film “Light From The East,”
on Tuesday, May 16, at the Pioneer Theater, East Third Street between
Avenues A & B, at 9 p.m in New York City.

The film, written by Amy Grappell, produced by Mr. Grappell and Christian
Moore, chronicles a tour of the Yara Arts Group to Kyiv and Lviv during
August of 1991 when Ukraine declared its independence from the Soviet
Union.  For discounted tickets call UCCA, 212 228 6840.      -30-
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13.                     “REPLACEMENT WITHOUT CHANGE”
  Current system of law-making is blocking the building of a law-based state.
        Ukraine’s finance minister Pynzenyk criticizes government system

ANALYSIS & COMMENTARY: Viktor Pynzenyk
Finance Minister of Ukraine
Zerkalo Nedeli, Kiev, in Russian 13 May 06, p 3
BBC Monitoring Service, UK, in English, Sunday, May 14, 2006

Finance Minister Viktor Pynzenyk has sharply criticized the current system
of government in Ukraine. In a lengthy article published in an influential
weekly, he said the functions of various government bodies often overlapped,
while many agencies did not wield enough powers to perform their duties. He
also criticized parliament, in particular its approach to approving the
state budget – which is drafted by the cabinet.

The following is an excerpt from the article by Pynzenyk entitled
“Replacement without change” published in the Ukrainian weekly Zerkalo
Nedeli on 13 May; subheadings have been inserted editorially:

Every four or five years at the time of the latest elections, people hope
for changes for the better. Nevertheless, the number of optimists decreases
every time. Citizens feel intuitively that something is wrong here. And the
reason is obvious – power changes hands, but the machinery of power remains
unchanged.

The system remains old. And if it is not changed, the old machinery of the
system of power will pulverize both new people and good decisions. We now
have a unique chance to change it, considering the key principles of
changing the system of power when forming the structures of the newly
elected authorities.
                    LEGISLATIVE FUNCTIONS MISUSED
By the will of fate I had occasion to get to know well the cooking process
of elaborating and adopting decisions in the state – both in the legislature
and the executive. And through the nature of the present work (on the
budget) I also see features of the culinary art in other branches of power
as well.  [Passage omitted: introductory remarks]

The Constitution of Ukraine defines the division of power into the
legislature, the executive and the judiciary. In real life, such a clear-cut
division is lacking in Ukraine. It is only a declaration.

The legislature in Ukraine is fixed allegedly in the Supreme Council
[parliament]. In actual fact, this is far from the case. What is more, under
the existing system of power, this body may not be necessary at all. After
all, there are enough legislative institutions even without it.

We observe that legislative functions in this country may be completely
taken on (and that is happening) by the Constitutional Court. It is
producing the norms of law through interpreting the constitution and the
compliance of enforceable regulations with the fundamental law. Especially
popular in this regard is Article 22 of the constitution: “When adopting new
laws or introducing changes to existing laws, a narrowing of the content and
volume of existing rights and liberties is not permitted.”

When adopting the constitution, legislators laid down the aspiration to
defend the political rights and liberties of citizens. Their intentions were
good, but what happened was as it always is. This standard is used in
Ukraine for all cases in life.

Under this article any law or enforceable regulation can be rescinded; one
can give one’s own interpretation having the force of law. Decisions of the
Supreme Council can be changed. But the norm of a decision by the
Constitutional Court is final and not subject to revision (appeal). There
are no precedents of revision of such decisions in Ukraine.

Medical and pension reform have already been blocked by current decisions of
the Constitutional Court. It seems that our medicine is free. But then what
can one call the payment for maintaining medical institutions from the
budget? Or is this not money from the citizens of Ukraine?

The state of affairs with pension decisions is no better. How can we escape
a situation whereby some people are allocated and will be allocated 100 or
200,000 hryvnyas of pension, and not because they have worked and earned
more, but because they are “the chosen ones”, special people?

For some reason Article 24 of the constitution does not apply to them:
“Citizens have equal constitutional rights and liberties and are equal
before the law.” It seems that some people are more equal than others.

Since the Constitutional Court judged the norm establishing an upper limit
of pensions for “the chosen” to be unconstitutional. And now what we have
is – hands off pensioners who receive pensions amounting to 90 per cent of
their salary.

For others (who, by the way, are the majority) 1 per cent per year worked
will be enough. The word “pension” has lost its meaning. There is no point
in working and earning, since pensions in Ukraine do not depend on that.

Courts of general jurisdiction are also taking on the functions of
legislators. I recently studied a decision of two courts in Donetsk and
Zaporizhzhya regions. I am not a lawyer, but I always thought that courts
assessed the compliance of actions (or inaction) with the norm of the law.
It turns out that I was mistaken. After all, in the above cases these two
courts took a decision on a non-existent norm of the law.

There is a curious Ukrainian paradox: there is no norm of the law, but there
is non-compliance with it. Who can explain that? Or maybe there’s something
faulty with my logic? Or maybe it is that domestic justice has a unique
logic different from the rest of the world?

In essence the courts are creating their own new norms of law and taking on
legislative functions that do not belong to them.

We also witnessed legislative functions being enacted by the executive. This
is the granting of tax privileges, release from taxation, granting
preferential tariffs to individuals for services or production.

To be fair, I will note that that I cannot recall such decisions during the
period of work of the last two governments. But where is the guarantee
against a recurrence of such decisions?

All “active people” in the country are aspiring to the functions of the
executive, and at all levels. It was with enormous “satisfaction” that I
recently familiarized myself with the decision of one court in Kiev whereby
the finance minister was prohibited from conducting an in-house inquiry
regarding the actions of a worker in the finance system.

I’d like to ask the whole country: what norm of law concerning an in-house
inquiry was breached? Why is a court interfering in questions that are
within the remit of the executive?

There also exists a reverse influence of the executive on the judiciary.
True, it is not connected with the adoption of formalized decisions, but
exists in the well-known form of “telephone law”. I had occasion to witness
events when hundreds of millions of hryvnyas were removed from the budget.
And it was useless then to refer to many laws.
          LEGISLATURE ASSUMING EXECUTIVE FUNCTIONS
The legislature is assuming a lot of executive functions. The scale of the
problem is so large here that it requires separate consideration.

But what would your attitude be to the question of carrying out power
functions not by institutions of power at all? There is no such phenomenon
in the organization of power anywhere in the world, and yet it is the norm
for Ukraine. Functions of the disposal of state (budget) funds are delegated
to public (self-governing) organizations. It is they that carry out the
function of running state property, including alienation.

Hundreds of millions of hryvnyas of payments of a taxation nature are being
spent by non-state institutions, since they do not run them and do not bear
responsibility for them. State bodies in essence have no influence on the
policy of spending such funds, and they are not inconsiderable. It is
understandable when citizens voluntarily collect money.

Here the state has nothing to do apart from setting the rules of the game in
order to make deception of people impossible. But it is a matter of taxation
revenues. And the state turns out to be not involved in it.

The power function of the privatization of state property is carried out by
commercial economic organizations (regardless of their form of ownership).
The functions of regulating the spending of large sums of money on state
purchases are entrusted to a public organization – the chamber of tenders.

What is there left to add to the existing state of affairs? Perhaps the
absolute commercialization of power. For example, paying judges depending on
the number of convictions, policemen on the number of arrests and so on.
                 PROBLEMS IN APPROVING STATE BUDGET
The biggest systemic problems in the organization of power are manifest in
the relations of its legislative and executive branches. I already mentioned
the interference of the executive in the legislative field of activity. But
the reverse pull of powers is acquiring increasing scope. And it is only
strengthening from year to year.

With the consolidation of changes to the constitution of a new status of
resolutions of the Supreme Council of Ukraine, the Cabinet of Ministers may
become in general a superfluous rudiment in the organization of power. The
process that has been intensifying in recent years is acquiring its logical
conclusion.

Extremely dangerous phenomena on the example of the budget process are
especially clearly visible. In the adoption of the budget the government
essentially is carrying out consultative, basically technical functions
(compiling comparative tables, recalculating indicators, multiplying
material and so forth).

Consideration of the budget resolution is turned into a theatrical show that
nobody needs. The budget and the resolution, the first and second readings
(and sometimes a third) are different documents. Remember how the
government’s attempt to restrain the level of the 2006 budget deficit to 2
per cent as envisaged by the resolution ended. That figure remained only in
the budget resolution.

I want to cross myself when I hear about the last budget night. The politics
of the last budget night (when the entire budget is rewritten) is a road to
the abyss. It is the absence of possibilities to implement any
understandable prospect for the country, since it is impossible to implement
strategic tasks.

My schoolboy son asked me, “Dad, why can’t the government cope with sugar
crises? All you need to do is make a commodity intervention.”

This is an elementary task even for a schoolboy, but it cannot be solved.
Since there are no sugar stocks. And it is impossible to create them,
because the relevant funds lodged in the draft budget were simply thrown out
of the final document.

Funds for energy saving met a similar fate. Attempts to react to an
extremely serious challenge to the country in the coming years (energy
saving) ended in the same way. Of the funds put in, virtually nothing was
left after the last budget night. In a few hours or from a voice in the hall
it is not simply figures that are changed, but fundamental questions of
state policy are decided.

But the adoption of the budget is merely the beginning of budgetary trials.
The real ones start after its adoption and coming into force.

Have any of the readers pondered about what funds the people’s deputies so
unanimously divided recently? Because specialists don’t know. The point is
that the only law distributing state funds is the law on the State Budget.
As far as 2006 is concerned, the law was already passed last year. And now
the skin of an unkilled bear is being shared out.

Especially comical (were it not so tragic) is the division of money from the
privatization of [steel giant] Kryvorizhstal. Those funds were distributed
by a law approved by the Supreme Council. After that a new distribution
scheme was adopted. But what to do with the old designations? The norms of
which law are to be implemented? Or should our compatriots simply take
pleasure in the sweet promises heard?

After the approval of the budget, for some reason it became a matter of
glory and honour for many people to break a hole through that budget (for
example, to hit at incomes by granting tax privileges or to share out the
skin of an unkilled bear, having envisaged expenditure not lodged in the
budget).

Every year the law on the budget stops the action of laws, spending on which
exceeds budget revenues. This year marked a record – there will not be
enough in even three budgets to finance the populist laws passed.

A loaded gun will fire some time. If nothing is changed and this policy
continues, the burden of accumulated problems may some time explode in a
serious financial collapse.

The current system of law-making is blocking the building of a law-based
state.
                                 MPs’ BILLS ‘ILLOGICAL”
In Ukraine the answer to the simple question of whether laws passed should
be implemented is not unequivocal. And what about those laws that are
impossible to implement? Herein lies a serious threat of disrespect for the
laws, in particular to the legislative system as a whole too.

Since there are laws that are not being implemented because of the
impossibility of enacting them, why not treat other laws the same way? And
they are treated like that – there are many examples.

It would seem that the constitution protects the country from such policy.
Article 95 envisages that only the law on the state budget determines the
size and direction of spending. Logically no law concerning spending can be
passed if the money for it is not part of the budget. But another logic
operates in this country.

Increasing numbers of purely executive functions are being concentrated in
the legislative body. Deputies are compiling a list of facilities for
capital investment. It has reached the point where an amount of spending is
being determined for each of them. What kind of logic of priorities can this
be? What decision of strategic tasks?

Increasing numbers of procedures for spending funds have to be agreed with
the budget committee. But is this really a function of the legislature?
These are tasks purely for the executive.

A similar system of interaction is starting to become widespread locally as
well. Additional problems are arising at a low level. Who will draw up draft
budgets: the staff of executive committees or local state administrations?

It is obvious that fundamental changes are needed to the system of the
relationship between the legislative and executive branches of power.

I’ll ask an easy question: who should draw up the laws? The answer, it would
seem, is obvious: the legislator. That is what happens with us. Over 90 per
cent of all draft laws registered since 1 February 2005 were drawn up by
people’s deputies. Only 7 per cent came from the government. They formed
public opinion, as it should be.

The work of a deputy is assessed according to the number of draft laws. The
machine is operating at full throttle. But is has no chance of moving in a
clear-cut direction. Indeed, it cannot move, since these directions are
often multi-directional.

With such distortions of law-making in Ukraine there will never be a single
purposeful policy. Because there is no single centre for elaborating it.
There are at least 450 such centres (the number of people’s deputies).
Uniting in factions does not reduce the number of centres, since there is a
corporate solidarity at work: we vote because the author is one of us.

In these conditions the development and approval of a government action
programme loses any meaning. An approved programme and its implementation
are far from being the same thing.

Any clear-cut policy requires the presence of a single centre of its
elaboration. The government can and should be that centre. In other words,
the functions of drawing up and passing laws should be restricted. The
former should be transferred to the executive and the latter to the
legislature.

God forbid that you might think that I am encroaching on the holy of
holies – the right of a deputy’s legislative initiative. Nobody will deprive
him of that. But any initiative should pass through the government. Without
the government presentation, a draft law cannot be considered.

The logic of actions then becomes clear: a government action programme is
affirmed, the government is responsible for its enactment and all draft laws
correspond to the logic and aims of the programme.

Such changes of powers make it institutionally impossible to transform
elections into permanent natural disasters for Ukraine; it cannot be subject
to constant risks of serious problems arising.
PROCEDURE OF VOTING ON BUDGET SHOULD BE CHANGED
This logic should also be applied to the budget process taking consideration
of the special features of the relevant law. It should be adopted according
to a standard scheme: two readings instead of the current three. Both
readings are drawn up exclusively by the government (the deputies make
proposals on the first reading). And only the government draft is put to the
vote.

The law-maker has the right to say yes to the budget or no to the
government. If they don’t like the government, let them dismiss the
government. But don’t take this country and its citizens hostage.

This is a comprehensible, logical scheme. Especially in conditions where the
parliamentary majority forms the government. If the budget is not approved,
it means that there is no majority. The majority needs to be reformatted and
the government changed. Or (if this proves not to be possible) new elections
must be held.

Similar changes should also apply to local budgets. True, additional
problems appear here requiring legislative regulation in connection with
imperfect constitutional reform.

Unlike other laws, the budget cannot be voted on article by article. The
budget is a balance. The failure of any article means its violation. Further
voting has no sense. In both readings the voting should take place only on
the whole.

The current status of the budget resolution also has no sense. Today it is a
resolution of the Supreme Council. The resolution should become a government
document, a guideline of intentions of its policy that agrees with the
approved government action plan.

In new conditions a legislatively regulated role of resolutions of the
legislative body is required (a sharp restriction of the spheres of its
application). They cannot apply to tax and budget issues and functions of
the executive.

And now let us try to understand the logic of building the executive. In all
civilized countries the government is the sole central body. In all, except
ours. With us it is not the only one.

First, its functions are carried out by those branches of power that have
nothing to do with the executive. Second, the powers and functions of the
government, the secretariat of the Cabinet of Ministers and the secretariat
of the president of Ukraine have not yet been clearly delineated.
Interference in each other’s field of activity is obvious. [Passage omitted:
times changed since Soviet era]
       GOVERNMENT DOES NOT HAVE ENOUGH POWERS
It got to the point where bodies of the executive do not have the right to
receive the necessary information from the statistics committee to take
management decisions. This is forbidden by law. How then should decisions

be taken – by sticking you finger in the sky? Why in that case are statistical
data collected at all? Does it mean that the job – everything, the final
result (purpose) – means nothing?

But just try to stop, for example, attempts to steal billions of hryvnyas
through accounts of bank institutions. There are no instruments for reacting
to such attempts. For some reason in the West they exist and work. Accounts
are immediately frozen there (actions are prevented), and then the situation
is clarified (with the participation of the courts).

For us such actions are banned by law. We are left with only one right: to
express outrage – after the carve-up has taken place. Seeing all this, quite
a few qualified specialists from the bodies of power do not even want to
express themselves. Or perhaps the concept of anarchy and democracy in
Ukraine are one and the same?

The country needs functional structures of government; it is sector-based.
It is recreated also in the structure of every ministry. There is no
consolidation of functions and hence of responsibility for the relevant
bodies.

How many ministries of labour, health care, finance, education and science
are there in Ukraine? This list could be continued with a full roll-call of
central bodies of the executive power of the government.

There are at least 10 health ministers. The actual Health Ministry has its
own system of medicine. The army has its own, as does the SBU [Security
Service of Ukraine], the Academy of Medical Sciences and the railways. Each
of them has its own vision of the system, its own logic of development and
its own budget. [Passage omitted: more in the same vein]

Subordination to the Cabinet of Ministers, fashionable in Ukraine, means
subordination to nobody. For the Cabinet of Ministers is a collegial body
that meets once a week. Members of the government are not involved in
“subordinate” bodies. And the heads of those bodies do not possess the logic
of decisions of the government, since they are not members of it.

This sort of “subordination” at the beginning of the year led to the signing
by Naftohaz Ukrayiny [oil and gas monopoly] of the well-known gas
agreements. They affected the budget and the pocket of every citizen. But
the finance and economics ministries got to know about them after they were
concluded. Or are they trifles? And we have no shortage of such systemic
“trifles”.

Such a purely executive structure as the State Property Fund has dropped out
of the system of the single body of executive power altogether. And,
unfortunately, that status has been fixed by law. In civilized countries it
is not even a body of government but of the Finance Ministry (the treasury
looks after state funds and state property).

So we have a situation in which there is no cook to entrust with looking
after the broth, since it is too dangerous.

The country needs a functional construction of the government and the
structure of ministries with a clear-cut allotment of every function to a
single body.

In a functional government, the key figure should be the minister, while the
other bodies, whose heads are not members of the government, should join the
structure of the relevant ministry according to function.
                            FINANCE MINISTRY TOO WEEK
Every morning on the eight floor of the government building I see the sign
“Ministry of Finance of Ukraine”. It pleases me less and less. Because the
signboard exists, but the ministry, with the functions and powers that it
should have, does not.

I want to note here and now that it is not duty that moves my hand now. All
the more so in that in a month the country will have a new government and
new ministers. God forbid also that my exit will somehow touch the Finance
Ministry staff. I feel only respect for the competent qualified staff of
this collective.

But facts are facts: institutionally the Finance Ministry is very weak. And
to a certain extent it is a special ministry. Apart from the fact that it,
like every central body of executive power, is a disburser of funds, it also
holds the balance of the country. If it holds it, the country will be in
luck, if it doesn’t hold it, the country will not.

The system, and as a result society, little understands this responsibility,
and hence underestimates the role of the state’s main financial department.
But everyone feels it when it is not possible to hold the balance, when
general problems arise. And the main thing is that it is not clear where
they come from.

Today the Finance Ministry cannot answer for maintaining the balance, since
it has no instrument to do it. No draft law or other enforceable regulation
should be approved without a positive conclusion from the Finance Ministry
if it affects the country’s balance (budget revenue or expenditure). It will
not be superfluous to say that for Ukraine this is only a good wish, while
for civilized countries it is the general norm.

It is not a matter of a tug-of-war as some may see it. If a minister does
not suit, he has to be replaced. It is the minister that is taken on rather
than the function. The function must not be taken on (washed away).
Otherwise the Finance Ministry will never be able to ensure financial
stability and the implementation of the budget. Otherwise, there will always
be disputes with members of the government.

It is not a function of the Finance Ministry to determine policy, to direct
funds where and in what amounts or to decide what are the priority tasks. It
is for the government to elaborate them and for parliament to approve them.
The task of this agency is to implement the budget and keep the balance
(read: stability). [Passage omitted: more in the same vein]
                        FUNDAMENTAL CHANGE NEEDED
Over a year ago we won the right to make good changes. But I want to live in
a country where a change of government cannot create risks every time. In
order for that not to be, there have to be fundamental institutional changes
in the system of power. And then the arrival of new people will have only an
insignificant affect on the formed action system. But there will not be
dangerous surprises.

Today there is a unique chance for such changes – institutions of the new
government are being formed. At the same time, deep systemic changes

have to take place. After all, once structures have been formed and duties
distributed, it becomes impossible to do that.

The decisions necessary for this are clear. I have described many of them in
detail, and some of them emerge from the analysis conducted. Some important
things did not make it into this article, but they can all be set out on
several sheets of paper. And they could become an inalienable element of a
coalition agreement.

We need the will and understanding of the necessity for these changes. The
formation of the new face of Ukraine and a good future for it depend on a
harmonious mechanism of power.                         -30-
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========================================================
14.      NET PROFIT RISES AT AUSTRIA’S RAIFFEISEN BANK
                          Helped by acquisition of Ukrainian bank Aval

Staff Reporter, The Wall Street Journal
New York, NY, Thursday, May 11, 2006

NEW YORK – Austria’s Raiffeisen International Bank-Holding AG said
first-quarter 2006 net profit rose 34%, helped by the acquisition of a
Ukrainian bank and continued growth in eastern European markets.

Net profit increased to Euro124.2 million ($158.4 million) from Euro92.8
million a year earlier. Net interest income — Raiffeisen’s main source of
revenue — rose 47% to Euro378.2 million from Euro258 million.

Raiffeisen saw the largest growth in its business in the Commonwealth of
Independent States, which contributed 30% of pretax profit, or Euro57.4
million, up 88% from Euro30.6 million the prior year.

The bank has aggressively expanded outside of Austria into the
faster-growing regions in Eastern Europe. The first-quarter results saw the
inclusion of Ukraine’s Bank Aval in the accounts for a full three months.

In April, Raiffeisen closed its acquisition of JSC Impexbank for around $550
million, becoming the largest foreign bank in Russia.
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========================================================
15.   POLISH, UKRAINIAN PRESIDENT STRESS ENERGY ISSUES,
   POLISH SUPPORT FOR UKRAINE AND HISTORICAL MEMORY
              To commemorate victims of the tragedy in Pawlokoma in 1945

Excerpt from report by Polish news agency PAP
Warsaw, Poland, in Polish 1334 gmt 12 May 06
BBC Monitoring Service, UK, in English, Friday, May 12, 2006

WARSAW – Polish-Ukrainian energy cooperation, assurance of the unchanging
nature of Polish policy towards Ukraine and the issue of historical memory
were the main threads of the talks between President Lech Kaczynski and the
Ukrainian leader Wiktor Yushchenko, who is visiting Poland.

“We spoke about matters of Ukrainian membership of NATO and about energy
initiatives presented by Ukraine,” said L. Kaczynski at a Friday [12 May]
press conference. “Perhaps in October we will be the co-hosts of a
conference on energy security in Warsaw,” he added. He stressed that this
was an idea of the Ukrainian leader.

Yushchenko added: “We spoke of cooperation in the area of energy, on the
implementation of the Odessa-Brody-Gdansk project. We regard it as sensible
to come out with initiatives concerning this project onto the international
level.” As he said, he is also discussing the activation of participation in
this project of the Kazakh side.

“For us, it is important that we should remain in solidarity in our stance
that stable supplies of energy products to the markets of other countries
are possible only through dialogue and cooperation,” stressed Yushchenko.

L. Kaczynski assured that that there was no change in Polish policy in
relation to Ukraine and that in this regard policy was stable.

A Ukrainian journalist at the press conference asked whether there would
not be a change in Polish policy towards Ukraine when, as he put it, “an
impression is gained of the temporary nature of the [present] Polish
government”.

“There has not been a coalition in Poland up until now, Poland was ruled for
six months by a minority government. At the moment there is no provisional
government. The present coalition is with certainty not an easy one, but I
think there is a chance that the coalition will be a lasting one,” responded
Lech Kaczynski in assuring that Polish policy towards Ukraine would not
change.

Both presidents also spoke about military cooperation, cooperation in the
area of youth exchange, teacher exchanges, and also the modernization of the
Polish-Ukrainian border.

L. Kaczynski announced that he would be doing everything for it to be
possible to increase the number of Polish-Ukrainian border crossings and to
increase their quality.
              VICTIMS OF THE TRAGEDY IN PAWLOKOMA
Yushchenko’s visit also has a historic dimension. Both presidents will on
Saturday [13 May] participate in ceremonies commemorating the Polish and
Ukrainian inhabitants who were victims of the tragedy in Pawlokoma, near
Przemysl [south-eastern Poland].

“As regards issues of historical memory, both sides have acknowledged that
there us no other way out that a march in that direction in which we shall
go tomorrow (Saturday – PAP editorial note), together visiting Pawlokoma,”
said the Polish president.

“Both sides are aware of the fact that is for each of us separately not an
easy way, but there is no other alternative,” he added.
Pawlokoma, where the presidents of Poland and Ukraine are to meet so as to
commemorate the Ukrainians and Poles who died there in 1945, has become one
of the tragic symbols of the complicated and often tragic history of both
nations.

According to most historians, 61 years ago a unit of the Home Army [AK]
commanded by Jozef Bissa, pseudonym “Waclaw”, shot 366 Ukrainian civilians.
This was in revenge for the abduction and murder of 11 Poles (some sources
state that it was nine). There are also sources indicating civilians as the
perpetrators of the revenge.

The Polish president was asked whether Ukraine will on Saturday hear the
word “sorry”. “You will hear my speech tomorrow. On our side we are moving
boldly forward, and no words of protest – and we have had such words
recently – will hold me back from this road,” replied the president.

A day before the arrival of the Ukrainian president, the All-Poland Youth
[MW] organization appealed to Lech Kaczynski to alter the formula for the
ceremonies in Pawlokoma. The authors of the appeal feel that the president
should not apologize for the events in Pawlokoma. Asked about this appeal,
Lech Kaczynski responded: “I spoke earlier of various voices that would not
hold me back.”

Yushchenko stressed that “both sides should with honour and honestly, as
befits neighbours, walk the distance to accord.” “We will win with the past,
not lose to it,” he stressed.

“I will be at the village of Pawlokoma and I will bow my head before this
tragedy that took place. We are doing this so that the past never again take
away the opportunity for accord today and development today,” Yushchenko
stressed. He added that “an honest historical dialogue” should be conducted.
“We will not build the future with a bad memory,” he stressed.

In the afternoon, Yushchenko laid a wreath at the Grave of the Unknown
Soldier [in Warsaw]. Before the end of the Day he was to meet with, among
others, the Speakers of the Sejm and Senate and deliver a lecture at the
European College in Natolin [near Warsaw]. [passage omitted – composition

of Ukrainian delegation]                              -30-
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========================================================
16.            “YUSHCHENKO STRETCHES OUT HIS HAND”
                            The best option is an orange coalition.
             Ukrainian President tells Polish newspaper of coalition hopes

INTERVIEW: With Ukrainian President Viktor Yushchenko
BY: Waclaw Radzinowicza in Kiev
Gazeta Wyborcza website, Warsaw, in English 12 May 06
BBC Monitoring Service, United Kingdom; May 12, 2006

Text of interview with Ukrainian President Viktor Yushchenko, by Waclaw
Radzinowicz in Kiev, entitled “Yushchenko stretches out his hand”, by Polish
newspaper Gazeta Wyborcza website on 12 May:

[Headline:] Yushchenko stretches out his hand.

We must look each other in the eyes, sit down at a table, say to the end
that which has been passed over in silence. Yushchenko is coming to Poland
today; tomorrow he will unveil a monument to Ukrainians murdered in the
village of Pawlokoma.

[Waclaw Radzinowicz] Just under a year ago, together with President
Aleksander Kwasniewski, you opened the restored Orleta Cemetery in Lviv.
Now, together with President Lech Kaczynski, you are to unveil a monument to
360 Ukrainians who were murdered by Poles in 1945 in Pawlokoma. What does
this place mean, to you personally and to Ukrainians?

[Viktor Yushchenko] History may help or hinder in the development of good
relations between nations. Our joint history is complicated. It contains
everything – much good and much evil.

We would thus like to say goodbye to something, turn a page back, leave
something behind in the memory. That is why it is sometimes necessary to
look each other in the eye, sit down at a table, say to the end that which
has been passed over in silence.

That will be sufficient to leave a part of history behind us, so that it not
take away from us our present opportunities and mutual trust.

[Radzinowicz] You speak of politics. Nonetheless, these difficult events
from our not so distant history still call forth emotions in people.

[Yushchenko] Because behind each of these events there stand many people

who have had history pass through their hearts. On 9 May, we celebrated the
anniversary of the end of World War II. For Ukrainians, Red Army veterans,
this is the memory of a great victory, whereas for veterans of the Ukrainian
Insurgent Army [UPA] it is something completely different.

Year by year, however, the desire to understand the truth and the desire to
forgive grow – both between Ukrainians themselves as much as between
Ukrainians and Poles. There comes a moment in every history when we start to
understand that we must stretch out our hands to each other.

The Polish and Ukrainian people have for years now been going through a
process of reconciliation. I very much value the fact that we are capable of
this, of mutually forgiving each other, of stretching out our hands to each
other for accord in difficult and emotion arousing matters.

[Radzinowicz] Is the direction of Ukraine towards integration with the EU
still an open question, is it still capable of being the subject of
political disputes?

[Yushchenko] There are no longer any disputes over this issue. Thirty per
cent of our exports today go to EU markets, whereas five years ago this was
barely 18 per cent. Ukrainian business has already voted with its feet in
favour of the country’s European direction. We are convinced that the great
European market is opening up before us, but we understand that this is also
a challenge for us.

Ukraine must adapt itself to the principles that are in force in Europe. We
must fulfil the conditions that will allow us to enter the WTO, we must
modify 350 pieces of commercial and social welfare legislation. This is a
serious bit of homework for us.

We do not stand before a choice where we are to go – to the East or to the
West – but before the task of meeting the conditions that are indispensable
for integration with Europe.

[Radzinowicz] What will happen to the CIS? Russia is in the process of
economic warfare with Ukraine over gas, with Georgia and Moldova over the
import of wine and mineral water… [ellipsis in original]

[Yushchenko] The CIS is above all a political club whose members meet,
regularly indeed, but the effectiveness of its economic activities is very
low. And all the members of this club admit this.

Ukraine supports all methods of harmonization of cooperation between members
of the CIS. It would be best were this market to become a free trade zone,
but the accords on this matter that have been ratified by the Ukrainian
parliament are not being implemented because they have not been ratified by
the Russian Duma.

Border and customs barriers still exist between the countries of the CIS,
there is no unified tariff policy. Nothing has been changing here for years.

[Radzinowicz] Will Ukraine leave the CIS?

[Yushchenko] In this matter Ukraine will be directed by the interests of the
state. We will support that in the CIS which is convenient to us. Today we
feel that dialogue over the issue of the CIS is still possible. The
community requires a new policy, but political will is required for the
introduction of changes. And that is lacking.

At the August meeting of CIS leaders in Kazan, we presented our partners
with specific proposals concerning, for instance, the delineation of the
border between Ukraine and Russia and also Ukraine and Belarus. To date we
have not yet received a reply.

[Radzinowicz] Europe has decisively condemned the Belarusian authorities for
the way in which they held the last presidential elections, it is trying to
isolate Alyaksandr Lukashenka and the officials of his regime. The Ukrainian
stance on this matter is more restrained. Why?

[Yushchenko] Our standpoint on the events in Belarus is clear. We assess
them the same way as does Brussels. And no additional commentaries are
required here.

Ukraine, just as Belarus at present, experienced long years when the
authorities ignored the opposition, when we sought round tables for
Ukrainian dialogue in Warsaw. We found them there, and very good too.

But we nonetheless came to the conclusion that a much better solution to the
political crisis would be a round table in Kiev. Unfortunately, the
political leadership in Ukraine did not decide to carry this out.

[Radzinowicz] Lukashenka is still less disposed to start a dialogue with the
opposition than was Leonid Kuchma.

[Yushchenko] I can only regret that not everyone draws conclusions from the
events that took place in Ukraine. The Belarusian authorities should speak
with the opposition. Ukraine could contribute to the dialogue as an
intermediary.

[Radzinowicz] Almost two months have passed since the parliamentary
elections in Ukraine. Why is it still not possible to form an orange
coalition in parliament and why is there no new government?

[Yushchenko] The negotiations that are normal in such a situation are
continuing. Over the last eight months the orange camp has experienced more
than one dramatic situation. It has turned out that people who passed the
test excellently in the square in Kiev and collaborated well were no longer
able to come to an understanding once they found themselves in government
office.

Apart from that, only on 27 April, after the final completion of court
procedures associated with electoral protests was it possible to officially
commence preparations for the first meeting of the new Supreme Council and
to hold official talks about a coalition.

[Radzinowicz] But informal talks about a coalition after all commenced
immediately after the March elections, but there are no results to be seen.

[Yushchenko] We must go through the indispensable formalities. The first
meeting of the Supreme Council will be on 24 May. After that, the
constitution still gives a month for the creation of a government. In formal
terms, we thus still have time until 24 June for the creation of a
coalition, and for the creation of a government until 24 July.

Nonetheless, I am of the view that the fundamental decisions on the matter
of creation of a government will be made before 24 May. Then just 10 days
will be sufficient to determine all the details concerning the creation of a
government. We will thus have a cabinet during the first ten days of June.

[Radzinowicz] The most difficult issue in coalition talks is the role that
is to be played in the government by Yuliya Timoshenko. In September of last
year you dismissed her from the post of prime minister. Now Timoshenko again
wants to be the head of the government. Will you agree to this?

[Yushchenko] The results of the latest opinion polls show that 35 per cent
of Ukrainians would like to see Viktor Yanukovych , the leader of the Party
of the Regions, at the head of a government. For Timoshenko it is 31.6 per
cent. And to the question of what parliamentary coalition they would like to
see in the Supreme Council, 47 per cent of respondents replied: a coalition
of Our Ukraine, the Yuliya Timoshenko Bloc and the Socialist Party of
Ukraine, or in other words an orange coalition.

[Radzinowicz] What conclusion do you draw from this?

[Yushchenko] The best option is an orange coalition. The nation is waiting
for precisely such a coalition. Nonetheless, it will only have in all 243
seats in parliament, which is 17 more than the opposition comprising the
Party of the Regions and the communists. In Ukrainian reality, this is a
very crumbly majority.

It is important how the opposition will behave. The Party of the Regions and
the communists have obtained very considerable support top the East of the
Dniepr. What to do so that they become a constructive opposition?

 How to behave so that they do not become an anti-state force in parliament
and so that they do not take advantage of these slogans with which they went
into the elections – about granting the Russian language the status of a
state language and on transforming the country into a federation, on
departing from the pro-European direction?

We should find a formula for co-existence with the opposition – using
different methods, including through the assistance of an appropriate
division of posts in parliament.

[Radzinowicz] In Poland it is being said that the creation is possible not
of an orange coalition, but of an orange-blue coalition – or in other words
one made up of your party and Yanukovych’s Party of the Regions.

[Yushchenko] It is possible that in certain situations the Party of the
Regions will support us. Occasional cooperation is possible, if only over
the budget. Nonetheless, today an orange-blue coalition is something that is
precluded.

[Radzinowicz] So, you agree to Yuliya Timoshenko talking over the post of
prime minister?

[Yushchenko] I do not preclude this. But the most important task for the
orange forces today is to find a formula for coalition stability. Everything
lese, and that includes the identity of the prime minister, should serve to
strengthen and not divide the joint camp.

I am especially not allowing talks on the division of posts – because
without a specification of principles and designation of purposes, a
discussion about sinecures will finally serve to bury the orange coalition.

It is better to come to an accord on these subjects beforehand than later
run the risk of a coalition concluded in haste falling apart.

We must, for instance, formulate a joint view as to what is to happen to the
state assets that have been taken over in recent years by private owners.

[Radzinowicz] The views of yourself and Yuliya Timoshenko on this matter

are very different. As prime minister she demanded a total revision of the
results of privatization. You did not want to let this come about.

[Yushchenko] Now I would like the orange camp to adopt a joint strategy on
this matter – and also on the matter of veterans’ rights for UPA veterans,
the status of the Russian language and on Euro-integration. As to all of
this, we must honestly come to an accord before creating a coalition.

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17. POLISH PRESIDENT’S ADDRESS AT COMMEMORATION OF
   THE 1945 UKRAINIAN AND POLISH VICTIMS IN PAWLOKOMA
Cannot change the past, but we can make sure that it not determine the future.

SPEECH:  By Polish President Lech Kaczynski
TVP1, Warsaw, Poland, in Polish 1031 gmt 13 May 06
BBC Monitoring Service, UK, in English, Saturday, May 13, 2006

PAWLOKOMA – Your eminence, Mr President, bishops, ladies and
gentlemen – both those who here represent the Ukrainian nation and the
Polish nation, I am making a speech for the third time in my life reading
a text.

The first time was at the anniversary of the Warsaw Rising, the second when
I was sworn-in as the president of the Republic [of Poland], and the third
time is today. If I read, this is because I attach the highest importance to
this speech.

We are meeting today in Pawlokoma so as to together commemorate Ukrainian
and Polish victims of years ago. We stand in pain and in sadness, in joint
prayer and reverie, so as to bow our heads over the graves of the victims of
this tragedy. In the 20th century fate exceptionally painfully touched on
our nations.

The period of World War II and the first post-war years was especially
tragic for our mutual relations. The ground was soaked with the blood of
Poles and of Ukrainians that was spilt in fratricidal battles, and also
spilt, unfortunately, in cruel murders.

In 1945, Pawlokoma became a place of tragic events. A group of Poles was
abducted from the village. They were killed and buried in a place that is
unknown to this day.

A few weeks later, Polish armed formations murdered the majority of the
Ukrainian inhabitants of Pawlokoma. This crime was covered in silence for
decades. It was not permitted for the victims to have crosses and the
prayers of their close ones.

For Ukrainians, Pawlokoma became a symbol of the tragedy of their nation. We
think of this today with the deepest sadness. The blood spilt in those years
is a matter of remorse for our nations. For the mutual good and friendly
development of relations between our countries, it cannot be made light of.

The time has now come not to hide the truth and to speak of the wrongs that
have not been righted.

The ceremony today with the participation of the presidents of Poland and
Ukraine, our meditation over the graves of the victims of past hatred, our
coming together in joint prayers uttered by our priests, are witness that we
acknowledge the same values, that we are linked in the conviction that there
is no justification in any circumstances for any crime.

Aware of the bad and good experiences, we must today lift the burden of
Polish-Ukrainian history. We should however remember in the greatest
possible degree the good experiences, because there were also not a few of
these.

There are still many tragic places, many graves, often nameless, on both
sides of the border. It would be just and dignified for the close ones of
the victims, for decades deprived of the opportunity to pay their respects,
to be able to erect a cross and say prayers on each of these hitherto
nameless and uncommemorated graves.

We must speak openly of our painful and difficult past, step by step,
working out one, just assessment for all the erstwhile wartime tragedies,
the Polish ones and the Ukrainian ones.

All the tragic events in Pawlokoma, in the Chelm region, in Volyn [mass
killings of Poles in 1943], in Eastern Galicia, those accompanying Operation
Vistula [mass expulsion of Ukrainians from south-eastern Poland in 1947],
should find thorough explanations in the dialogue of politicians, historians
and ordinary people. Strong and lasting reconciliation may only be built
upon a foundation of truth.

We cannot change the past, but we can make sure that it not determine the
future.

Ladies and gentlemen, our presence, that of the president of the Republic
[of Poland] and the president of the Republic of Ukraine before the
monuments in Pawlokoma is witness that there is on both sides a readiness, a
readiness to continue this great process – I would say great work – that a
successive, important step is being taken on the road of reconciliation
between our nations.

A great worth of the meeting today is the participation of the inhabitants
of Pawlokoma in this act of accord and prayer.

The process commenced by the great advocate of Polish-Ukrainian
reconciliation [Polish emigre editor and commentator] Jerzy Giedroyc is
being marked out by acts of commemoration of the victims of murders in
Volyn, the opening of the Orleta war cemetery in Lviv, the words of
forgiveness and peace that the bishops of the Roman Catholic [means Latin]
and Greek-Catholic rites have said to each other.

But what Poles and Ukrainians have achieved was probably most certainly
displayed at the Square in Kiev, Independence Square, when there were also
Polish flags in the orange crowd, amongst the forest of Ukrainian flags. And
our voice of Solidarity met on the square with the enormous cry [says next
words in Ukrainian]: Long live Poland! We thank you for this cry. [applause]

Once more, I repeat: We thank you, and I would like to say that nobody will
ever erase that from our history.

Our nations are showing to the whole world that there is no such evil in
history as cannot be overcome. Here, before the crosses of Pawlokoma, just
as before the crosses of Volyn and Podillya and so many other tragic places
in our past, we combine memory and hope. This is a duty that we fulfil
together and that we are passing on to younger generations.

Let us, Poles and Ukrainians, carry this heritage into the future. Let us
always find the best in ourselves. Let us be capable of praying together
with mercy and with courage to God with the words: Forgive us our trespasses
as we forgive those who trespass against us. That is what I ask for.
[applause]                                       -30-
————————————————————————————————
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18. UKRAINIAN PRESIDENT’S ADDRESS AT COMMEMORATION OF
       THE 1945 UKRAINIAN AND POLISH VICTIMS IN PAWLOKOMA
              “We declare today that Ukraine and Poland are this day manifesting
                          a new policy of solidarity. May God assist us in this.”

SPEECH: By Ukrainian President Viktor Yushchenko
TVP1, Warsaw, Poland, in Polish 1022 gmt 13 May 06
BBC Monitoring Service, UK, in English, Saturday, May 13, 2006

PAWLOKOMA – Esteemed president, venerable fathers, dear Ukrainian
community, today we have a historic day.

I know that I stand here before representatives of the famed and renowned
Ukrainian and Polish nations, nations which have had a famed and excellent
history, a noble history, but unfortunately this is history that also
contained bad pages.

I know what a tragedy was brought upon us by World War II, the
Polish-Ukrainian war in the years 1918-19, what pain these events carried
through to the inter-war period. And still greater misfortune was brought by
World War II. This was the time of the Volyn [1943 mass killings] tragedy
and the Pawlokoma tragedy and many, many others.

Two nations, two countries, had before them two roads from which to
choose: To continue the war in their souls, or to stretch out their hands.
We know that our relations have not only a state dimension but a strictly

human dimension as well.

And the tragedies that I have mentioned today passed through the souls of
hundreds of thousands on both the Polish side and on the Ukrainian side.

I can imagine what a difficult road has been travelled by tens of thousands
of people to this act of reconciliation to which we are witnesses today. But
I am convinced of one thing, that only the strong are capable of forgiving.
I am convinced that the memory of own history, historical memory, is an
injunction for contemporary times.

Of these two roads that we had before us, in 1997 we chose the road of
accord. We have made a number of important steps, and among other things we
have had the opening of the Orleta war graves at the Lychakivskyy Cemetery
in Lviv and today’s unveiling of the monument commemorating the victims
here.

I turn to everyone with an appeal, that this is the one true path that can
guarantee us future prospects. Today, we speak a lot about our relations and
we take much care over how these relations should be like in the future.

But I am convinced that all of this will bear fruit on one condition, when
we give true replies before our history. And that is why I above all bow my
head before the victims of these tragedies.

I bow my head before you, beloved Ukrainians and Poles who stand before
me and who stand on these hills. You are creating a courageous and correct
policy.

I would like to express particular words of thanks to the community of the
village of Pawlokoma. I am grateful to you for your patience, your tolerance
and your understanding.

I am grateful to President of Poland Lech Kaczynski, to the Polish
authorities and Polish society. I am grateful to the Ukrainian side that

participated in the development of this project.

I am particularly grateful to those inhabitants of the village of Pawlokoma
who used to come to this place over decades, to a place that was forgotten,
and who paid the Christian signs of attention and respect.

Thank you, beloved friends, and please allow me, in the name of the
Ukrainian state and the Ukrainian nation, to once more express high respect
for the Republic of Poland, and for Poles. And we declare today that Ukraine
and Poland are this day manifesting a new policy of solidarity. May God
assist us in this. [applause]                           -30-
————————————————————————————————-
[Ukrainian President Viktor Yushchenko, live, in Ukrainian, with consecutive
Polish translation – from which later this translation was made]
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
19. RUSSIAN BEAR IS BACK-AND THIS TIME IT’S GAS-POWERED
                         Petrodollars give Putin weight on world stage
                         America is ‘nervous and angry’, say observers

Ian Traynor, Nick Paton Walsh in Moscow & Ewen MacAskill in Washington
The Guardian, London, United Kingdom, Saturday May 13, 2006

In the Kremlin on Thursday a little-known but powerful Russian official held
court for the first time before foreign journalists with a very simple
message: Russia is great and getting greater by the week.

Sergei Sobyanin, a former governor of the oil-rich region of Tyumen, chief
of staff to President Vladimir Putin, and one of the mightiest men in
Russia, was enlarging on his leader’s state-of-the-nation speech 24 hours
earlier in which Mr Putin identified the key to Russia’s progress in both
human and military regeneration.

The shrinking of Russia’s population had to be reversed. Russian mothers
would be paid to have more babies. And for the first time in ages, Mr Putin
talked of missiles and nuclear rearmament.

The obvious if unstated enemy was not Chechen “terrorists” or “coloured”
revolutionaries from the former vassal states of the old Soviet Union but
the old foe, the American “wolf”, with its voracious appetite dressed up as
phony concern for human rights and the spread of democracy.

“Russia’s international weight rises every year,” Mr Sobyanin boasted. The
country is strong, wealthy, and throwing its restored weight around
internationally.

After 20 years of decline combined with the festival of liberty ushered in
by Mikhail Gorbachev’s revolution in 1985, the bear is back. Helped by a
tide of petrodollars, his “national champion” gas and oil titans projecting
Russia’s power abroad, and his authority unassailable at home in contrast to
Bush, Blair and Chirac, Mr Putin is walking tall on the global stage.

The climax comes in July in his hometown, the old imperial capital of St
Petersburg, when Mr Putin hosts the leaders of the world’s richest seven
countries.

The rest of the world is worried. The US has concluded that Mr Putin
represents a clever return to traditional Russian authoritarianism. Central
and east Europeans, all too familiar with Russian domination, are quaking.
Western Europeans, mired in introspection, are waking up to the new
challenges. All are scrambling to devise new policies towards Russia.

Andrew Kuchins, a Russia expert at Washington’s Carnegie Endowment, said:
“It is a precarious situation. We need cool heads and for neither side to
over-react.”

Aleksandr Vondra, a former deputy Czech foreign minister, said: “The
post-cold war world is somehow finally starting. We all need to sit down and
come up with an agenda, new policies.”

Alexander Rahr, a biographer of Mr Putin and Germany’s leading analyst of
Russia, said years of western cooperation with Russia were giving way to
rivalry. “Putin is starting to set the international agenda. The Americans
are getting nervous and angry. The US wants to prevent this but has very
limited means to do it.”

A week before Mr Putin delivered his address to the nation, the US
vice-president, Dick Cheney, went to Russia’s Baltic border to read Mr Putin
the riot act.

Five years ago at a country house outside the Slovenian capital of
Ljubljana, George Bush first met Mr Putin. The US president said he looked
into the eyes of the former KGB officer, caught a glimpse of his soul and
saw a man he could trust. But now, with the bitterness of a jilted lover, Mr
Cheney called an end to the US romance with post-Soviet Russia.

“None of us believes that Russia is fated to become an enemy,” he declared,
before accusing the Kremlin of exploiting Russia’s mineral wealth to
blackmail and bully foreign customers, of reversing the democratic gains of
the past decade, of “improperly” curbing Russians’ rights.

If Mr Cheney’s attack was the strongest ever on Mr Putin from the Bush
administration, the vice-president’s criticisms can be heard all across
bipartisan Washington.

Bruce Jackson, an influential neo-con lobbyist on Russia, said: “It’s a
difficult time now for the Russia romantics. The people who over-invested in
this are in intellectual and political trouble right now.”

Mr Cheney’s Lithuania speech was preceded by criticism from Condoleezza
Rice, the US secretary of state. Mary Warlick, her Russia department chief,
said last month: “The promise of strategic [US-Russian] partnership has not
been fulfilled … the jury is out about where Russia is going to end up.”

Leading Republicans and Democrats, such as John McCain and John Edwards,
have joined the chorus of what critics of the new line call Russophobia.

Mr Kuchins says the Kremlin is enraged by the American lectures but Mr
Putin’s speech showed his contempt. “Putin lumped together the US, Africa
and Latin America and that is new. That is part of the response: ‘You
Americans no longer are important to us, so piss off’.”

The Russian response has been to warn of a new cold war. This seems an
over-reaction but the frostiness does suggest what Mr Jackson calls the
onset of a “soft war”. He welcomes it. “There’s nothing wrong with a battle
of ideas,” he says. “It’s a soft power competition. It’s desirable.”

Mr Jackson sketches three fronts on the new battlefield of ideas and values
between Russia and the west: “Our institutions versus their Potemkin
institutions, free markets versus their coercive state monopolies, and our
democracy versus their managed democracy. What we don’t want is militarised
competition.”

As well as Mr Putin’s quiet and methodical consolidation of control over the
past five years, the fundamental reasons for the balance of power tilting Mr
Putin’s way is money, derived from colossal mineral wealth when oil is
selling at more than $70 a barrel and when the state corporation Gazprom has
a monopoly on supplying a third of Europe’s gas supplies.

He has paid off much of Russia’s foreign debt and built a $62bn (£33bn)
“stabilisation fund” from the windfall. Russia now has some of the world’s
biggest financial reserves; Gazprom recently overtook BP as the world’s
second-biggest energy firm by market value, and Mr Putin has eliminated all
important rival centres of power in Russia while enjoying consistent
popularity ratings of more than 70%.

The outcome, analysts predict, is that if he stands down after two terms as
scheduled in 2008, Mr Putin may be gone but “Putinism” will remain. “The
transition will be smooth – he will handpick his successor,” predicts Mr
Rahr in Berlin. “Putin will be like a Russian Deng Xiaoping, still there
behind the scenes.”

But these strengths are also weaknesses. Russia’s new wealth is utterly
dependent on the markets and the price of oil, which can fall as well as
rise. And Gazprom’s power is umbilically linked to Europe, which provides
two-thirds of its revenue. “They need Europe as much as Europe needs
Russia,” said Chris Weafer, chief strategist at Alfa Bank in Moscow.

Nonetheless, Russia’s new clout is making itself felt on the biggest
problems on the international agenda – Iran’s nuclear ambition is number
one. Russia is the biggest block to the US and Europeans punishing Tehran
and Mr Cheney’s attack looks unlikely to change Moscow’s policy. Quite the
contrary; there is talk in Washington that Mr Cheney timed his speech to
dash any chance of a diplomatic breakthrough on Iran since, as a hawk, he
favours confrontation with the mullahs.

Hamas and Palestine is another neuralgic point, with the Kremlin at odds
with the west on how to deal with the “elected terrorists”. There are even
suggestions that Russia sees itself as better able, with China, to sort out
Afghanistan, branding the US and Nato missions a failure.

And in the contest for influence among the post-Soviet states bordering
Russia, Moscow is recovering ground after setbacks in Ukraine and Georgia.
It is asserting control of central Asian gas by agreeing distribution deals
with the despotic regimes of Turkmenistan and Uzbekistan, while slapping
trade embargoes on pro-western neighbours such as Moldova and Georgia,

which says a Russian ban on wine imports and a brief halt to gas supplies
were revenge for closer ties with the west.

Georgia’s foreign minister, Gela Bezhuashvili, said Russia’s “imperialist
mentality means they still see [Georgia] as a backyard that cannot have its
own choice. And they are squeezing us for our European choice, that is
clear.” Mr Putin’s speech this week, he added, was “a wake-up call … for
Europe to realise who they are dealing with.”

In the long term, Mr Rahr predicts, Russia could lead a new “gas Opec”, a
Eurasian gas cartel controlling central Asia and backed by China. “Gas will
be more important than oil in the future. What will that mean for the world
economy?”

Mr Jackson also identifies the Caspian basin and the Black Sea region as the
cockpit of the tussle between Russia and the west, a battle of ideas that is
also a fight for markets and energy security.

What has changed in the balance of power, say long-term Russia watchers, is
that for most of the two decades since Mr Gorbachev began dismantling the
Soviet Union Russia has been in decline.

Mr Vondra, in Prague, said: “The west was setting the agenda and Russia was
reacting, on the defensive. Now that Putin has completed his
renationalisation and consolidation of power, he is setting the agenda and
it is the west that is on the defensive. Energy policy is a classic example.
But it’s not a new cold war. Its weapons are not missiles but oil, gas and
uranium. Putin has a long vision, while the Europeans are very
short-sighted.”

In Washington, Mr Kuchins says relations between Russia and the west are now
at their worst since 1999, when Boris Yeltsin named an obscure apparatchik
and ex-KGB officer, Vladimir Putin, as his successor. “The difference with
’99 is Russia was in the toilet and had no leverage. Now we have a real
competitor.”                                -30-

———————————————————————————————–
http://www.guardian.co.uk/russia/article/0,,1774040,00.html?gusrc=rss
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20.                          RUSSIA: PRODDING THE BEAR

LEAD EDITORIAL: The Guardian
London, United Kingdom, Saturday, May 13, 2006

Back in the bad old days of the cold war, western Kremlinologists used to
earn their keep by interpreting impenetrable data about Soviet five-year
plans, Pravda editorials or the pecking order of politburo gerontocrats on
the Red Square reviewing stand. No such expertise is required to decode the
meaning of what Vladimir Putin has been saying recently.

In his annual state of the union address this week, the Russian president
sniped openly at US complaints about his democratic credentials and warned
that the country must modernise its armed forces to be able to withstand
foreign pressure. Two days earlier, he failed to even mention the western
allies at the Moscow ceremony marking the anniversary of the victory over
Nazism in the second world war.

Much of what Mr Putin said was about domestic issues, calling for investment
to boost growth and measures to reverse a declining birth rate. But it was
his dismissive riposte to the US vice-president, Dick Cheney, which
attracted most attention.

Speaking in Lithuania, Mr Cheney prodded the bear by regretting Russia’s
backsliding on democracy and warned it not to use its energy might at a time
of record prices for “intimidation or blackmail” against its neighbours.

That was the harshest public criticism of Russia yet from the Bush
administration. Russia-bashing plays well in Washington, especially as
ratings for the president reach new lows. Nor did it escape notice that Mr
Cheney was far less negative about Kazakhstan, a US client where oil is
cheaper than human rights.

Still, there was substance enough to his comments, reflecting a belated
admission that Mr Bush’s trusted ally in the “war on terror” has ensured,
through Chechnya, the Yukos affair and a crackdown on NGOs and the media,
that Russia’s democracy is still a carefully “managed” one.

Nostalgics apart, no one believes that Russia has any real claim to be the
global titan it once was, though it is still a nuclear-armed, veto-wielding
member of the UN security council and thus a key player on issues like Iran.
But its oil and gas reserves have given it a clout it could only dream of in
the dying days of the Soviet Union, as Mr Putin recognises with his use of
the term “energy superpower”.

The first real sign that this was more than just semantics came in January,
when Russia shut down its gas pipeline to Ukraine after the man it backed
had been defeated by the “Orange” candidate in the presidential election –
though this also meant shortages in Austria, Italy and Germany.

Now the state-controlled exporter Gazprom has threatened to cut supplies to
worried EU governments and seek new markets in Asia unless they let it
gobble up companies such as Britain’s Centrica. Economic pressure has been
used openly against Georgia and Moldova, where Russia still meddles in the
old Soviet “near abroad”.

Even the Germans are uncomfortable with the way Moscow props up Alexander
Lukashenko in Belarus – using heavily subsidised gas to keep his people from
challenging what the Americans call Europe’s “last dictatorship”. Only
yesterday Mr Putin welcomed President Islam Karimov of Uzbekistan, almost a
year since hundreds died in the Andijan massacre.

The Putin-Cheney exchanges hardly constitute a new cold war, as some claim,
though there is a distinct nip in the summer air. It seems certain to be
felt at the G8 summit in St Petersburg in July, when Mr Putin is hoping for
progress on Russia’s bid to join the World Trade Organisation. The Kremlin
has hired a slick PR firm to improve its image.

The problem is that image and reality will have to coincide more closely for
such a campaign to have much effect. Churchill once quipped that Russia was
“a riddle wrapped in a mystery inside an enigma”. It’s a memorable line, but
no longer a useful one. For what’s going on these days is now fairly clear –
and fairly alarming.                                       -30-

————————————————————————————————
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