Monthly Archives: June 2006

AUR#720 Jun 30 Ukraine VS Italy, Football Fever Grips Ukraine; Wash Wizards Draft Ukrainian Basketball Star; Parliament Blocked; What About The Bandits?; NATO

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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

FOOTBALL FEVER GRIPS UKRAINE
AHEAD OF HISTORIC MATCH

ACTION UKRAINE REPORT – AUR – Number 720

Mr. E. Morgan Williams, Publisher and Editor
Published in Washington, D.C., Friday, June 30, 2006

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

1. FOOTBALL FEVER GRIPS UKRAINE AHEAD OF HISTORIC MATCH
Agence France-Presse (AFP), Kiev, Ukraine, Friday, June 30, 2006

2. WORLD CUP: UKRAINE SAYS ITS NO LONGER A DARK HORSE
Erica Bulman, AP Worldstream, Germany, Thu, Jun 29, 2006

3. WORLD CUP: UKRAINE NOT AFRAID TO FACE ITALY
Kyodo News Service, Thursday, Jun 29, 2006

4. SHEVCHENKO GOES BACK TO FUTURE: AMBITIONS OF UKRAINE’S
TALISMAN HAVE BEEN SHAPED BY GREAT COACH OF THE PAST
Jonathan Wilson, The Guardian, London, United Kingdom, Fri, Jun 30, 2006

5. WASHINGTON WIZARDS BASKETBALL TEAM MAKE UKRAINIAN
OLEKSIY PECHEROV THEIR FIRST DRAFT CHOICE
By Ivan Carter, Washington Post Staff Writer
The Washington Post, Washington, D.C., Thu, June 29, 2006; Page E01

6. UKRAINIAN OLEKSIY PECHEROV GROWS ON WIZARDS
Former Soccer Player Developing on the Basketball Court
By Ivan Carter, Washington Post Staff Writer
The Washington Post, Wash, D.C. Fri, June 30, 2006; Page E01

7 . RADA FAILS TO START WORK, BLOCKED BY REGIONS PARTY
Ukrainian News Agency, Kyiv, Ukraine, Friday, June 30, 2006

8. WHAT ABOUT THE BANDITS?
EDITORIAL: Kyiv Post, Kyiv, Ukraine, Thursday, June 22, 2006

9. ON PROSPECTS FOR THE NEW ORANGE COALITION
“The coalition should not be formed by fomenting war”
COMMENTARY FOR DEN : By James Sherr
The Day Weekly Digest in English, Kyiv, Ukraine, Tue, 27 June 2006

10. CHOICE FOR UKRAINE PM IS THE LEAST OF ALL EVILS
Letter-To-The-Editor: By Maxim Glinkin. editor of the politics
section of Vedomosti, where this comment was published.
Moscow Times, Moscow, Russia, Friday, Jun 30, 2006

11. A JOYLESS COALITION
By Olena YAKHNO, The Day, Luka HRYNENKO
The Day Weekly Digest in English #20, Kyiv, Ukraine, Tue June 27, 2006

12. ROSUKRENERGO MAY LEAVE UKRAINE GAS PRICE UNCHANGED
Greg Walters, Dow Jones Newswires, Moscow, Russia, Fri, June 30, 2006

13. RUSSIA UNDECIDED OVER GAS PRICE HIKE FOR UKRAINE
ALEX NICHOLSON, AP Worldstream, Moscow, Russia, Fri, Jun 30, 2006

14. FITCH LAUNCHES NATIONAL RATING SCALE IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 29, 2006

15. AUTHORITIES NOT INFORMED ABOUT MILITARY EXERCISE
Anatoliy Hrytsenko comments on the Crimean events
INTERVIEW:
With Anatoliy Hrytsenko, Chairman, Crimean Parliament
By Mykyta Kasyanenko, Symferopil
The Day Weekly Digest in English, #20, Kyiv, Ukraine, Tue, Jun 20, 2006

16. UKRAINE: NATO DEMILITARIZATION PROJECT LAUNCHED
Largest Trust Fund project established by NATO and is the single
largest demilitarization project ever undertaken.

NATO, Brussels, Belgium, Monday, June 19, 2006

17. RUSSIAN ENERGY POLICY TOWARDS UKRAINE –
BUSINESS OR BULLYING?
New Report: “Ukraine: Post-revolution Energy Policy & Relations with Russia”
Alica Henson, GMB Publishing Ltd, London, UK, Wed, June 28, 2006

18 . DYING TOWN? HOW TO SAVE THE UKRAINIAN PROVINCE?
The first thing is to develop local self-government
By Viktoria Herasymchuk, The Day Weekly Digest in English #20
Kyiv, Ukraine, Tuesday, June 20, 2006

19. KYIV TO HOST 4TH WORLD FORUM OF UKRAINIANS AUG 18-20
Ukrainian News Agency, Kyiv, Ukraine, Wed, June 28, 2006

20. NEW DOCUMENTARY: “WE’LL MEET AGAIN IN HEAVEN”
Searing chronicle of a forgotten genocide and a lost people
Ethnic Germans: starvation, forced labor & execution in Soviet Ukraine
Germans from Russia Heritage Collection,
North Dakota State University Libraries, Fargo
Fargo, North Dakota, Friday, June 30, 2006

21. ANTI-SEMITIC, RACIST ATTACKS
A GROWING THREAT IN RUSSIA AND UKRAINE
Radio Free Europe/Radio Liberty (RFE/RL), Wash, DC, Fri, June 23, 2006

22. UKRAINE-U.S. BUSINESS COUNCIL JOINS COALITION FOR
A SECURE AND DEMOCRATIC UKRAINE
Dr. Susanne S. Lotarski, President and CEO
Ukraine-United States Business Council
Washington, D.C., Friday, June 30, 2006
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1
. FOOTBALL FEVER GRIPS UKRAINE AHEAD OF HISTORIC MATCH

Agence France-Presse (AFP), Kiev, Ukraine, Friday, June 30, 2006

KIEV – No longer do kids playing football in the backyards of Ukraine argue
over who is going to be Ronaldo and Beckham. Today they fight over who is
going to be ‘Sheva’, Voronin and Kalinichenko.

The children have caught the football fever sweeping the country ahead of
Ukraine’s historic quarter- final against Italy on Friday in the nation’s
first-ever World Cup appearance.

“People who’ve never been interested in football, today the games are all
they talk about,” says Valya Romanenko, a 28-year-old English teacher in
Kiev and longtime football fanatic. “Everyone is buying flags to hang from
windows.”

Ukrainian flags and the yellow jerseys of the team are selling like hotcakes
from stands throughout the country. Many people are wearing team jerseys to
work and around town, and lawmakers are donning them for parliament
sessions. Taking the lead from head coach Oleg Blokhin, many fans are vowing
to shave their heads in the event that the team wins football’s top prize —
a distant dream only a few weeks ago that’s today gaining more and more
converts.

Bars and restaurants overflow with people during matches and most businesses
come to a standstill. “All of our tables get reserved several days before
matches,” says Serhiy, a barman at Planeta-Sport in Kiev, one of the
capital’s most popular sport-watching venues.

The former Soviet state is making its first appearance at the world’s
premier football contest since gaining its independence in 1991 and few
thought the boys in yellow would get as far as the quarter finals.

Star striker Andriy Shevchenko, alias ‘Sheva’, has said repeatedly that he
would consider it a success if the team made it to the last 16.

So the unexpected arrival in the last eight has fanned patriotic flames,
especially vis-a-vis Russia, which has traditionally wielded influence over
its smaller neighbor. Russia never made it past the group phase in the two
World Cups at which it has played and failed to qualify for this year’s
contest.

“We’re the only eastern European team that has gone this far,” says Grigoriy
Medvid, a 30-year-old railroad worker from western Lviv. “Now more people in
the world will know that Ukraine is not Russia. Russia is not even
competing. So which one of us is the little brother?”

The team’s victories also come as a welcome break from headlines about the
nation’s bickering politicians, the stagnating economy and rising energy
prices. “If we beat the Italians and they triple gas prices, I don’t even
think anyone would notice,” says Vassyl Androsenko, a 52-year-old engineer
in Kiev. -30-
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2. WORLD CUP: UKRAINE SAYS ITS NO LONGER A DARK HORSE

Erica Bulman, AP Worldstream, Germany, Thu, Jun 29, 2006

Ukraine no longer considers itself an outsider since it reached the
quarterfinals of the World Cup. The Eastern European nation, which is making
its first World Cup appearance, has been emboldened since becoming the first
former-Soviet republic to get past the group stage, then defeating the
unbeaten Swiss in the second round. Now the team is eager to face
talent-packed Italy in the quarterfinal at Hamburg on Friday night.

“We are not dark horses. We are the Ukrainian national team,” declared
Ukraine coach Oleh Blokhin, a former Soviet player who is worshipped by his
team and nation of 47 million. “I understand we are not Argentina or Brazil,
or one of those teams, but we made the quarterfinals.

“We’ve not stopped here. I’m not satisfied so far. We have a game against
Italy. I understand Italy is the favorite but there are two teams on the
pitch and we developed an appetite and we will try to win.”

Despite reaching the quarterfinals and its own self-assurance, Ukraine still
hasn’t imbued a great deal of confidence in World Cup observers.

In its opener, the team lost 4-0 to Spain. The players regained some of
their confidence after whipping Saudi Arabia by the same score but then
barely scraped past 10-man Tunisia 1-0 to finish runner-up in the group
behind Spain and advance to the knockout stage.

There, despite unfavorable odds, Ukraine held Switzerland off for 120
minutes and prevailed on penalty kicks 3-0 to reach the round of eight.

“We’ve had some luck but we’ve played well, and I understand what we’ve
done for our country and fans,” Blokhin insisted.

He dismissed criticism of his team’s inelegant, laborious style, and is
hoping Ukraine will enjoy the same fate as Greece, which won the Euro 2004
title after entering the tournament as a longshot.

“We are different in style to Greece, but maybe our success will be the
same,” Blokhin said. “A lot of teams play attractively. I liked Mexico and
Spain was nice, but they went home. “Can we win the Cup? Why not?”

The confident team invited Ukraine’s President Viktor Yushchenko to attend
its quarterfinal match. According to a statement on Yushchenko’s press
office’s web site, he has not yet decided whether he will make the trip.

“The president said he had a very busy schedule on Friday but would choose
to go to Germany if he knew his presence could support and encourage the
team,” the statement said. Yushchenko was expected to decide Friday, the
day of the contest. -30-
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3. WORLD CUP: UKRAINE NOT AFRAID TO FACE ITALY

Kyodo News Service, Thursday, Jun 29, 2006

Coach Oleg Blokhin says Ukraine have nothing to be afraid of when the
World Cup debutants face Italy and will be going all out for victory in their
quarterfinal clash in Hamburg. “We are not scared of playing Italy, we will
play freely and are going to target victory,” said Blokhin.

Italy battled past Australia 1-0 in Kaiserslautern to reach the last eight
thanks to a highly contentious late penalty from Francesco
Totti and are heavily favored to advance to the semifinals.

But Blokhin said Ukraine, who ousted Switzerland 3-0 on penalties after a
dour 0-0 draw in the round of 16, had already surpassed their goal of
qualifying for the knockout stage and insisted the pressure was all on the
Italians.

“Italy are more under pressure because they are the favorites in our match
and we have already achieved what we set out to do. We have already made
history,” said Blokhin.

Ukraine, hammered 4-0 by Spain in their opening game of the group stage, are
the only team in the last eight to have lost a game and have been criticized
for their playing style at the tournament so far.

But Blokhin said, “People are saying we are playing modest football. But I
like the football Ukraine are playing and we are in the quarterfinals.”

Ukraine’s star striker Andriy Shevchenko insists just being in the
quarterfinals was a cause for celebration in the former Soviet state.

“After our 4-0 defeat against Spain, a lot of people wrote us off. Getting
to the quarterfinals is a cause for celebration though, both for the team
and for the entire people of Ukraine,” said Shevchenko.

“It’s a good thing the Spain game was our first match. Unfortunately we were
hesitant that day because it was our debut. But our self belief grew more
and more as time went on.” The winner of Friday’s match will face either
Germany or Argentina, who face off in the first quarterfinal in Berlin
earlier the same day. -30-
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4. SHEVCHENKO GOES BACK TO FUTURE: AMBITIONS OF UKRAINE’S
TALISMAN HAVE BEEN SHAPED BY GREAT COACH OF THE PAST

Jonathan Wilson, The Guardian, London, United Kingdom, Fri, Jun 30, 2006

A jet leaves Skopje for Milan. On it is a furious Andriy Shevchenko, and
with him, as more than one of his team-mates put it, is “the soul of
Ukrainian football”. The phrase recurs among the present squad, as does the
observation that “we thought that was it”.

After being denied qualification for three major tournaments in play-offs,
Ukraine, once the footballing jewel of the Soviet Union, faced sinking to
the level of Georgia, Belarus and Armenia. Even Latvia surpassed them,
qualifying for Euro 2004.

Shevchenko has a reputation for equanimity, but as Ukraine went one down to
Macedonia the frustration became too much. A minute before half-time, he
took a blow to the face. With blood dripping from his mouth he tore off the
captain’s armband, ripped off his shirt and stormed from the stadium to the
airport.

He was 27, the great Dynamo Kiev generation that reached the Champions
League semi-final in 1999 was ageing and Ukraine had gone five games
without a win.

The appointment of Oleg Blokhin as coach was generally regarded as a
disaster. Yet a little over two years later, Ukraine are in the last eight
of the World Cup. The USSR only got beyond this stage once.

The turnaround resulted from a moment of diplomacy from Blokhin, who has
been an MP for eight years. Publicly he defended Shevchenko but privately he
sought a tete-a-tete. A captain, Blokhin told Shevchenko, has certain
responsibilities, a country’s best player even more. That was the stick,
then came the carrot: “Without the national team,” he said, “you can forget
about the Ballon d’Or.”

Shevchenko was convinced and he came back with renewed vigour, though it was
only in Blokhin’s 10th game in charge, away to Kazakhstan, that he achieved
his first win. Fortunately, that was the second match in World Cup
qualifying and followed a draw in Denmark. That December, Shevchenko was
named European Player of the Year.

That the two should share such an obvious bond is only natural, and not just
because both backed Viktor Yanukovych, the “wrong” candidate, during the
Orange Revolution. Blokhin, like Shevchenko, was a forward brought up at
Dynamo Kiev and coached by Valeriy Lobanovskyi.

Blokhin, Ballon d’Or winner in 1975, was arguably the first great
Lobanovskyi player; Shevchenko is certainly the last. “The Colonel” died
four years ago and things are changing. It is hard to imagine Lobanovskyi
countenancing the dinked penalty with which the 21-year-old Artem Milevskyi
opening the scoring in Monday’s shoot-out with Switzerland.

Lobanovskyi remains a misunderstood figure in the west, his belief in
systems and the value of statistics leading many to conclude he was no more
than a socialist version of Charles Hughes, the FA technical director whose
beliefs legitimised long-ball football in the 1980s. Possession was all to
Lobanovskyi, and he would have his teams learn set moves. The analogy,
according to his collaborator Professor Anatoliy Zelentsov, was to chess.

At its best, Lobanovskyi’s ideal could produce passing moves of aching
beauty, but individuality could prosper within his systems too, as was
demonstrated by Blokhin in the 1975 Super Cup final when Dynamo beat
Bayern Munich.

Back then, Dynamo functioned almost as a Ukraine national side, but there is
a modern urge for genuine national achievement. That is partly political, to
unite the east and west of the country, but it is also to do with a need to
continue the line of great Ukrainian footballers.

As Ukraine prepare for tonight’s quarter-final against Italy in Hamburg they
have been repeatedly reminded that Lobanovskyi’s finest moments as USSR
coach came against the same opposition in the same country, a 2-0 win in the
semi-final of the 1988 European Championship. Eight of the 12 Soviets who
played that day, including the two goalscorers, Henadiy Litovchenko and Oleg
Protasov, were Ukrainian.

Marcello Lippi, the Italy coach, has spoken of the influence that match had
over his thinking. “Back then,” he said, “we all learned from Lobanovskyi.”

Ukraine are hoping to put his lessons into practice one last time. -30-
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5. WASHINGTON WIZARDS BASKETBALL TEAM MAKE UKRAINIAN
OLEKSIY PECHEROV THEIR FIRST DRAFT CHOICE

By Ivan Carter, Washington Post Staff Writer
The Washington Post, Washington, D.C., Thu, June 29, 2006; Page E01

WASHINGTON – In a draft that was widely thought to be devoid of
instant-impact prospects, the Washington Wizards didn’t expect to land a
player who would elevate them from playoff team to championship contender.

However, the Wizards hope they came away with a potential star of the future
when they used the 18th pick to select forward Oleksiy Pecherov, a
20-year-old native of Ukraine who recently completed a season playing for
Paris Basket Racing of the French Pro A League.

The selection of the 7-foot, 210-pound Pecherov concluded a scouting process
that led Wizards President of Basketball Operations Ernie Grunfeld to Europe
to see Pecherov play this spring.

It is the first time the Wizards have used a first-round pick on an
international player, and the team continued the international trend in the
second round with the selection of Vladimir Veremeenko, a 6-10, 230-pound
forward who is a native of Belarus and plays professionally in Russia.

The Wizards hosted both players in pre-draft workouts at Verizon Center
earlier this month but it is Pecherov who has drawn the most interest from
NBA teams. Though still developing physically, Pecherov has been on the
radar of NBA scouts since his performance for the Ukrainian national team in
the 2005 European Championships.

“It will depend on him when he will be ready,” Grunfeld said of Pecherov.
“We’ll work with him over the course of the summer and see where he is. When
you are drafting at that position, it’s hard for that type of player to come
in and make an immediate impact on a playoff team with 12 players under
contract.”

In 23 games, Pecherov averaged 11.2 points, 6.3 rebounds and 21 minutes per
game for Paris Basket Racing, which plays in the top French league. He also
played professionally in Ukraine.

Pecherov attended the draft at Madison Square Garden last night and will be
in Washington today. He will join second-year Wizards Andray Blatche and
Donell Taylor and other prospects when summer league play opens July 6 in
Las Vegas. The Wizards do not know whether Veremeenko will be available for
summer league.

According to Grunfeld, Pecherov has a buyout on his contract with Paris
Basket Racing but the Wizards liked him enough to pass on several
first-round candidates, including guard Quincy Douby, who went 19th to
Sacramento, guard Rajon Rondo, who went 21st to Phoenix, and forward Josh
Boone, who went 23rd to New Jersey.

“He has an NBA talent — shooting the basketball, rebounding the basketball
and he runs the floor well,” Grunfeld said. “And he’s extremely competitive.
He’s not afraid to mix it up.”

One scouting service described Pecherov as “a very skilled big man who can
play both inside and out. Decent athlete. Excellent shooter. Has the ability
to put the ball on the floor though that seems to be somewhat diminished as
he’s filling out. Has developed into an excellent rebounder.”

Pecherov has a solid command of English — a skill he picked up while
playing professionally in Ukraine and in Paris — and said he has patterned
his game after the most successful international player in the NBA, Dallas
Mavericks forward Dirk Nowitzki.

‘I try to learn from every experience but I like Dirk Nowitzki,” Percherov
said. “He’s a great player. He’s from Europe. He has the same skills like
me so I think he’s a good example for me to be like in the future. I will
keep working hard and we’ll see in the future.”

“I think this is a sign that our scouts did a real good job.” said Wizards
Coach Eddie Jordan, who saw both players work out prior to the draft.
Pecherov “has a lot of skills, a lot of toughness. He has good size. If all
the stars fall right, maybe he can help this year.” -30-
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6. UKRAINIAN OLEKSIY PECHEROV GROWS ON WIZARDS
Former Soccer Player Developing on the Basketball Court

By Ivan Carter, Washington Post Staff Writer
The Washington Post, Wash, D.C. Fri, June 30, 2006; Page E01

WASHINGTON – Oleksiy Pecherov plans to be in front of a television
today when the Ukrainian soccer team takes on Italy in the World Cup.

During a news conference officially announcing his arrival as the
first-round draft choice of the Washington Wizards yesterday afternoon,
Pecherov’s eyes lit up at the mere mention of today’s match. “Football is
the big thing in Ukraine,” Pecherov said. “Our team is doing a good job and
I hope they beat Italy.”

Wizards draft pick Oleksiy Pecherov has only played basketball for five
years but his development has been swift.

The Toronto Raptors select Italy’s Andrea Bargnani with the No. 1 pick in an
unpredictable draft that saw four of the top seven picks switch teams by the
middle of the first round.

The Wizards use the 18th pick to select forward Pecherov, a 20-year-old
native of Ukraine.

George Washington guard Danilo Pinnock and Cincinnati swingman James
White are the only two players drafted with D.C.-area ties.

Had circumstances been different, Pecherov might have had a career in
soccer. However, nature had other plans as Pecherov, now 20, has grown to 6
feet 11 with a smooth shooting stroke and outstanding agility for a person
his size, something he attributes to his background on the soccer pitch.

“I started out playing football but I kept growing and growing,” said
Pecherov, who has been playing basketball for only five years. “Once I
started playing basketball, that’s all I cared about, all I read about. It
was all I wanted to do. It is my favorite game.”

And it has him on the cusp of playing in the NBA. The Wizards used the 18th
pick to take Pecherov in Wednesday’s draft and feel that with time, he has
the kind of talent that could steal him a few headlines back in soccer-mad
Ukraine.

Wizards officials traveled to France to watch Pecherov play for Paris Basket
Racing this spring and were intrigued by the lanky forward with deadly
outside shooting skills and solid rebounding ability.

They grew more impressed on June 1, when Pecherov had a strong head-to-head
workout against Hilton Armstrong, a center from Connecticut who was selected
by New Orleans with the 12th pick. Wizards Coach Eddie Jordan was on hand
for that workout and rattled off a few things that intrigued him about
Pecherov, who has been compared to Dallas Mavericks star Dirk Nowitzki.

“The fact that with his size he can get off a shot,” Jordan said. “That he’s
versatile with the ball off the floor, off the dribble, that he can get his
shot off either on catch-and-shoots or off the dribble. He has some nice
skills.”

Paris Basket Racing, which plays in the French Pro A league, is the same
team that produced San Antonio Spurs star Tony Parker. Pecherov is currently
on loan to Paris Basket Racing and holds an $800,000 buyout option with his
original team in Kiev, Ukraine.

The Wizards can pay up to $500,000 of that buyout if they feel that Pecherov
is ready to play next season. That will be decided starting Thursday when
Pecherov plays for Washington’s summer league team in Las Vegas. The squad
will include last year’s draft pick, forward Andray Blatche, as well as
second-year guard Donell Taylor and third-year center Peter John Ramos.

While expressing excitement over the prospect of playing in the NBA,
Pecherov said he would be open to returning to Europe.

“It depends on the team,” said Pecherov, who averaged 11.2 points and 6.3
rebounds in 23 games in Paris last season. “If they want me right away, I
will stay. If they need me to stay in Europe, I will stay one more year in
Europe and improve myself. I think this is a good situation for me.”

Several NBA teams have experienced success by drafting an international
player and then waiting for that player to develop overseas before bringing
him to the United States.

The best example may be Spurs guard Manu Ginobili, a native of Argentina who
played in Italy when the Spurs chose him in the second round of the 1999
draft. Ginobili remained in Italy until 2002, and the result was a seasoned,
polished and physically developed player who has helped the Spurs win two
championships.

Jazz forward Andrei Kirilenko, Pacers guard Peja Stojakovic and Nets center
Nenad Krstic also spent years overseas after being drafted before making
their NBA debuts. Pecherov’s overall skills appear to be ideal for Jordan’s
Princeton-style offense.

“It excites me about him,” Jordan said. “It excites me that a guy at seven
feet can do those things: pass, shoot, play on the perimeter, and yet he’s
tough enough to take some hits inside and he’s a good defensive rebounder.
But again, we have to see how his international experience and what he does
in summer league translates into October.”

Pecherov’s first order of business yesterday was figuring out where he was
going to watch today’s big World Cup match. “I can’t wait to see Washington
and get to know this city,” said Pecherov, who has been assigned jersey No.
14. “I think I will like it very much here.”

Wizards Note: Second-round pick Vladimir Veremeenko was not in Washington
yesterday. Veremeenko is under contract to Dynamo St. Petersburg and is
expected to remain in Russia for at least another year, but the Wizards
would like to bring him to Las Vegas for summer league. -30-
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7. RADA FAILS TO START WORK – BLOCKED BY PARTY OF REGIONS

Ukrainian News Agency, Kyiv, Ukraine, Friday, June 30, 2006

KYIV – The Verkhovna Rada failed to open its meeting on Friday, June 30, as
the Party of Regions faction continues to block the presidium of the parliament.
On Friday morning, the Verkhovna Rada conciliatory council failed to reach
an agreement to put the work of the parliament back on track.

As Ukrainian News earlier reported, the parliamentary faction of the Party
of Regions has been blocking the work of the parliament since June 27,
saying that it wants to prevent election of the prime minister and
parliament speaker as a single package in violation of parliamentary
regulations, prevent amendment of the regulations themselves, and prevent
distribution of parliamentary committees exclusively among members of the
parliamentary coalition.

On June 27, the Party of Regions faction leader Viktor Yanukovych said the
party would continue blocking the work of the parliament, unless the
coalition fulfils the conditions of the party’s ultimatum. -30-
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8. WHAT ABOUT THE BANDITS?

EDITORIAL: Kyiv Post, Kyiv, Ukraine, Thursday, June 22, 2006

Ukrainian President Viktor Yushchenko & Co. promised to put a whole list
of “bandits” in jail, but it hasn’t quite worked out that way

One of the rallying calls of the Orange Revolution was “Put the bandits in
jail!” Most Ukrainians may not have understood the finer points of what
they’d been called on to defend on the freezing streets of their capital in
late 2004, but they had an intuitive understanding that ever since their
country gained independence, a small group of well-connected people – call
them oligarchs or mafia – had bled the state dry at the expense of everyone
else.

Now, as this week’s front-page article in the Post points out, Ukrainians’
trust in those who promised them a just society a year-and-a-half ago is not
much higher than it was in the former regime of President Leonid Kuchma,
which seemed to represent everything that was wrong with the authorities.

Does anyone remember Serhiy Kivalov, who headed the country’s Central
Electoral Commission during the 2004 presidential elections, widely
condemned as fraudulent by everyone but the Russians?

Kivalov was never charged for the mass vote rigging that took place under
his nose, but Yushchenko’s new interior minister, Yury Lutsenko, publicly
called on Kivalov to show up for questioning about another criminal case.
Kivalov eventually returned from Moscow and was promptly instated as the
rector of a legal academy in Odessa.

How about former governor of Sumy Region Volodymyr Shcherban? After the
Orange Revolution, Lutsenko and Prosecutor-General Sviatoslav Piskun, who
Yushchenko had left in place since the Kuchma days, accused Shcherban of
abuse of office and extortion, prompting him to flee to the U.S ., where he
was soon detained for visa violations.

Kyiv threatened to extradite the former governor, but it turns out that
Shcherban still enjoyed local deputy immunity from prosecution under a law
that has since been annulled. Shcherban had been a member of Yushchenko’s
Our Ukraine faction, with which he was elected to parliament in 2002, before
joining a pro-Kuchma faction and being appointed governor. Is Shcherban one
of the bandits Yushchenko and Co. had referred to?

Then there was the governor of Kyiv Region – Anatoliy Zasukha. Like
Shcherban, he also disappeared when the people from Maidan came to power.
Shcherban is still in the U.S., but recent rumors have it that Zasukha has
already come home, as the PGO dropped its case against him in May, citing
the same deputy immunity law: Zasukha served as governor and head of the
Kyiv Regional Council concurrently, which is illegal.

Top cop Lutsenko has threatened to open another criminal case, which
unfortunately will have to be prosecuted by the same prosecutor that
cancelled the first one, Oleksandr Medvedko. Like his predecessor Piskun,
Medvedko is more closely associated with the political parties that
supported Kuchma and Party of Regions head Viktor Yanukovych, who
opposed Yushchenko in the 2004 presidential elections.

Zasukha’s wife Tatiana is also a Regions lawmaker, which means she also
can’t be prosecuted, although Interior Ministry reports from last year
suggest that she helped her husband flee the country.

The governor of Donetsk, Borys Kolesnikov, was one of the few officials
under the Kuchma regime who actually ended up spending time behind bars, but
he has been released and now also a has seat in the new parliament, also
with the Regions party. Kolesnikov was released by freshly elected Regions
lawmaker Piskun.

As Yushchenko continues his public duel with former Orange ally Yulia
Tymoshenko, the Regions party is increasingly mentioned by Our Ukraine
faction members as a possible coalition partner.

And how about Ihor Bakai, former head of Ukraine’s state oil and gas company
Naftohaz Ukrayiny and more recently in charge of managing lucrative state
property under Kuchma? It was in this last position that Bakai allegedly
bilked the state out of almost a billion hryvnias before fleeing to Russia,
where he supposedly now has citizenship.

Russian Ambassador to Ukraine Viktor Chernomyrdin has pledged to defend
Bakai against extradition. But this isn’t the only friend Bakai has: During
a recent media interview, Bakai counted close Yushchenko ally Petro
Poroshenko among people with whom he has good relations.

All these ‘cases’ raise an important question. If none of these people
hounded and jailed by the government and put or kept in place by the
president are bandits, then just who did Yushchenko mean when he promised to
jail the people’s persecutors a year-and-a-half ago? What about those
bandits? -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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9. ON PROSPECTS FOR THE NEW ORANGE COALITION
“The coalition should not be formed by fomenting war”

COMMENTARY FOR DEN: By James Sherr
The Day Weekly Digest in English, Kyiv, Ukraine, Tue, 27 June 2006

One should try to be hopeful. But Ukraine needs more than hope.
Democracy exists in Ukraine, but it is not yet irreversible. It won’t be
irreversible until the forces of the old order know that they cannot survive
if they carry on in the old way. The old order in Central Europe grasped
this point more than a decade ago.

But Ukraine’s Party of Regions has not grasped it, and so far it has had no
reason to. It will not fragment, transform or mutate until it knows it has
no future as a national force and only a steadily diminishing future as a
regional one. Can a new Orange coalition launch this process, or will it
once again disappoint and demoralise the country?

One must also be realistic. Coalition government should be built on
accommodation, not the internalisation of war. The juxtaposition of
Tymoshenko and Poroshenko is a recipe for internal war: a war relaunched
without so much as a prior truce.

Why has this combination been chosen? Yulia Tymoshenko is certainly more
popular than BYuT, which secured 22 per cent of the vote. Petro Poroshenko
is certainly less popular than Nasha Ukraina, which secured 14 per cent of
the vote.

So why has Mr Poroshenko been nominated to the most powerful position in
the parliament of a country that is becoming a parliamentary republic? Does
his nomination not tell us just how closely business remains connected to
power in Orange Ukraine?

What will the punters [pontyoriy] make of all of this? I think it is
unlikely they will be betting on success. It is equally unlikely that
Regions will be betting on its rivals’ success. If, instead, backchannel
accommodations between members of the Orange factions and Regions
proliferate, then Regions will prepare for power.

In doing so, they will exploit their comparative advantages: a strong
vertical of authority, a good distillation of Western and Russian PR and the
ruthless employment of financial resources to penetrate administrative
structures. Will Yulia Tymoshenko be an effective foil [rapira] to this?
Will she be given effective help? That is now what we need to watch.
——————————————————————————————–
FOOTNOTE: The views are strictly those of the author, not of the British
government. James Sheer is a Fellow at the Fellow, Conflict Studies
Research Centre, Defence Academy of the United Kingdom. E-mail:
james.sherr@lincoln.oxford.ac.uk)
———————————————————————————————-
LINK: http://www.day.kiev.ua/164442/
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[ return to index] [Action Ukraine Report (AUR) Monitoring Service]
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10. CHOICE FOR UKRAINE PM IS THE LEAST OF ALL EVILS

Letter-To-The-Editor: By Maxim Glinkin. editor of the politics
section of Vedomosti, where this comment was published.
Moscow Times, Moscow, Russia, Friday, Jun 30, 2006

Yulia Tymoshenko’s return as prime minister in Ukraine was at once expected

and hard to believe. Everything seemed to go against this latest twist in the
career of the Gas Princess — a career that has alternated between government
service, the threat of prison and Independence Square during the Orange
Revolution.
Working against her was her stint as head of a government recognized as a
failure by just about every major politician in the country with the exception
of Tymoshenko herself. Also against her was the relative electoral success
of Viktor Yanukovych’s Party of the Regions. The entire logic of the
negotiations to form a coalition was against her. Nonetheless, Ukraine’s Iron
Lady came out on top.

Those familiar with the talks describe Tymoshenko as an extremely able
negotiator — clever, subtle, not afraid to play on opponents’ weaknesses
and a master at blackmail. She also wields exclusive influence with the
president, openly stating that the most important thing was to meet
personally with Viktor Yushchenko. But are these really the qualities you
look for in a head of government? Tymoshenko’s first turn at the helm came
as a result of a deliberate choice on the part of Yushchenko, but this time
around it seems to be the result of a lack of options. This is the blind
alley the country’s political elites have reached.

In essence, Yushchenko opted for Tymoshenko as the least of all evils.
Yanukovych turned out to be intransigent, delivering demands and ultimatums,
while the president’s own Our Ukraine party feared a coalition with the
Party of the Regions would be political suicide. It didn’t help that
deputies in the Ukrainian parliament are constantly jumping from faction to
faction. What it costs to have a Ukrainian deputy change positions is common
knowledge and is discussed as widely as the price of gas.

The second coming of Tymoshenko is a symptom of democracy, Ukrainian style.

This democracy can best be described as unmanaged and, compared with the
managed variety, seems to come up short. On one hand, it increases the role
of the electorate while taking into account the opinion of the parliamentary
minority.

On the other, it generates corruption, a continuing power vacuum
and economic instability. This kind of democracy is not only unpopular with
Moscow, but possibly also with Washington. Last week, U.S. President George
W. Bush announced he would not visit Kiev before the July G8 summit in St.
Petersburg, and Sunday brought the announcement that NATO was not planning
to make Ukraine a member. -30-

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11. A JOYLESS COALITION

By Olena YAKHNO, The Day, Luka HRYNENKO
The Day Weekly Digest in English #20, Kyiv, Ukraine, Tue June 27, 2006

At long last Yulia Tymoshenko’s bloc, Our Ukraine, and the Socialist Party
of Ukraine have formed a parliamentary coalition. Roman Bezsmertny’s motion
to postpone the date of its announcement until Friday [June 22 being the
anniversary of Nazi Germany’s invasion of the Soviet Union], caused a stormy
response from the Party of Regions.

So the negotiating parties decided to close the issue so as not to irritate
their colleagues any further, considering that their condition was
lamentable enough; they thought victory was so close.

On June 22 Tymoshenko formally announced that the Orange camp had finally
reached an agreement. Her speech gave the tragic date an entirely different
coloration. “I think it is important to note that this coalition commences
today, under the new constitution, when 65 years ago the people of Ukraine,
together with the people of the Soviet Union, began their struggle against
the aggressor.

Today we are beginning our struggle for a democratic Ukraine, cleansed of
all that dirt of corruption, so we can be proud of the country of which our
forefathers dreamed, all those who fought for its independence.” She
stressed that this struggled ended in victory, and so will this coalition’s
struggle (even though this coalition is likely to struggle with itself in
the first place – Ed.).

Tymoshenko went on to say that the situation in Ukraine largely depends on
official appointments. She was right.

The Day previously wrote about the incorrect quota principle and
revolutionary expediency practiced by the first post-Maidan coalition. The
Orange camp’s people, interviewed by this newspaper shortly before and after
the last government crisis, admitted that the quota approach was wrong.

Now that there is a fresh smell of power in the air, we will see whether
they remember their statements any time soon. From what is stated below it
is clear that once again appointments have been assigned to coalition
members on a quota basis, although the names have not been announced.

In her speech at the Verkhovna Rada, Tymoshenko lashed out at the Party of
Regions. The BYuT leader said they should kiss good-bye to their hopes of
taking over political power “after 10 years of ruination.” In fact, this
part of Tymoshenko’s speech was not especially pleasing to the ear, as there
was no mistaking the gloating tone of her voice.

After all, there are years before the next elections, so a constructive
approach would seem more appropriate under the circumstances, especially in
regard to a rather strong opposition that makes up almost one-half of the
Ukrainian parliament.

It is also safe to assume that the electorate has become sick and tired of
the political shows over the past couple of months; shows that turned out to
be cheap farces for the most part. Indeed, the Party of Regions did its best
to torpedo a broad coalition.

Language and anti-NATO recommendations proved to be the wrong way to
influence Our Ukraine. Whatever the arguments in favor of a “broad format”
coalition, the Orange electorate would regard the signing of an agreement
between Our Ukraine and the Party of Regions as an act of capitulation.

Of course, one ought to wish the newly established coalition Godspeed
because Ukraine’s well-being and progress will depend on their stable and
professional performance. There is the risk that, before dedicating every
effort to combating economic problems, the new coalition will have to deal
with a great many internal differences, including personal issues that are
not likely to have been resolved in the course of negotiations.

Mykhailo Pozhyvanov of Rukh made an interesting statement on June 22, to the
effect that his party does not like way the posts were assigned within the
coalition. The parliamentarian stressed that they will not recall their
signatures, of course. “I am sure that if they keep up this practice,
without considering the opinion of the People’s Rukh of Ukraine, for
example, or other entities that created the bloc Our Ukraine, 17 MPs will
always be found, who will be able to block the coalition’s further work.”

The Verkhovna Rada is in recess until Tuesday (June 27). The coalition must
resolve a number of formal and cadre issues during its meeting, especially
in regard to the speaker. Roman Zvarych says he has learned about a meeting
of the Political Council of the Party of Industrialists and Entrepreneurs of
Ukraine from media coverage and that PIEU leader Anatoliy Kinakh was
nominated as candidate speaker. Earlier Our Ukraine announced that their
candidate was Petro Poroshenko.

Zvarych commented on the deputy prime minister’s candidacy, saying that the
Verkhovna Rada’s Standing Orders read that it takes a general meeting of the
coalition: “Of course, Yulia Tymoshenko’s bloc will have the post, but
formal procedures must be observed.” Nor should one ignore President
Yushchenko’s stand; he made it clear that he would not endorse the prime
minister’s candidature before the justices of the Constitutional Court are
sworn in.

On June 22 the president was pleased to inform journalists in the village of
Nova Petrivka that all the “t’s” had been crossed in the coalition-forming
process. When he was asked whether the process was actually complete, the
head of state replied, “I believed that it is, by and large.

I would also like to ask you to assess it with a great degree of patience
because a majority efficiency test is being performed in parliament for the
first time in 15 years.” The president noted that even clauses that are not
regulated by the constitution and other laws had been agreed upon during the
talks.

Whether or not these arrangements last will depend on a number of subjective
and objective factors. Will the politicians learn from their mistakes? How
will the team perform in the conditions of a prognosticated crisis? The Day
posed these questions to its political analysts.

COMMENTARY
[1] Volodymyr MALYNKOVYCH , Ukrainian Branch, International Institute

for Humanitarian and Political Studies:

This coalition has its pluses and minuses. It unites very different forces;
it includes five, maybe six blocs, rather than three. Our Ukraine alone
comprises three rival groups.

There are Socialist Party groups with differences in their stands. True, the
BYuT is a coalition designed to serve only one political figure; it may have
dissatisfied members but they keep quiet. The coalition is a markedly motley
crowd.

The document they have signed contains a number of controversial provisos
and implementing them will prove to be a sophisticated process, especially
the one concerning NATO. We know that we have a NATO membership plan.
How will the different political groups within this coalition behave when it
comes time to carry out this plan?

There are many such examples. In other words, this alliance is rather vague
ideologically, yet I believe that this aspect isn’t that important
ideologically because it will not hurt the coalition’s longevity.

I am not one of those who believe that this coalition will collapse soon. If
Tymoshenko comes up with a program next spring, they will feel pretty
confident during the year. In the spring of 2007 Viktor Yushchenko will have
to worry about having Tymoshenko in opposition and thus having actually
deprived himself of being elected for the second term.

Tymoshenko, as an opposition leader, will simply never let him make the
second round of the presidential campaign; she will have snatched the rest
of his electorate from him. Even now Yushchenko is scared by this scenario
and will be scared even more as the election date approaches.

Neither do I think that the Party of Regions should count on obtaining quick
access to power. In fact, I believe that this party feels quite comfortable
in opposition as a business project rather than a political party. They will
have to work hard to create a full-fledged and influential party.

How will the economic situation evolve in the presence of this coalition? A
most realistic option would be for both parts of Ukraine – those influenced
by Our Ukraine and by the Party of Regions – to unite.

This hasn’t happened, so the situation looks more complicated. Tymoshenko
will have to display a great deal of flexibility in (a) persuading business
circles in the east of Ukraine that business can be done with her, and (b)
persuading Russia that she is its great friend. An intergovernmental
protocol will have to be signed in the nearest future.

I think Russia’s requirements will be extremely harsh; I also believe that
Tymoshenko will have to concur with most of them, even though she will try
to portray this as though everything depended on her. She has no
alternative. This flexibility may also help her push Ukraine through a
complicated period. Prime Minister Yulia Tymoshenko will, of course, take a
vividly populist stand, but she will actually conduct no populist policy.

The Maidan is history and the next elections are far ahead. This leads me to
assume that she will take a pragmatic stand, but will keep up her populist
rhetoric.

As for the Tymoshenko-Poroshenko combination, I don’t think their relations
will be normal. Their respective stands are incompatible. Today the Speaker
of the Verkhovna Rada is not a very important figure. Lytvyn’s days are
over. There is the coalition’s secretariat and they will vote for a number
of issues duly agreed upon.

Decisions will be made not by the Verkhovna Rada but by the coalition’s
secretariat. The prime minister cuts a much stronger figure now than last
year, when s/he could be fired by the president at any moment. In other
words, Tymoshenko will find it much easier to compete with Poroshenko.

[2] Vadym KARASIOV, Director, Institute of Global Strategies:

I believe that this event ends the revolutionary cycle that started in 2004.
It’s a step forward, of course, in terms of political and perhaps national
development. Needless to say, this Orange family isn’t going to face a
cloudless future; there will be ideological differences and personal
ambitions, the more so that in the end-game phase Our Ukraine suddenly
nominated Petro Poroshenko as speaker. Although the situation reminds one of
what happened in the spring and summer of 2005, the alignment of political
forces is essentially different.

Will the Poroshenko-Tymoshenko combination be marked by conflict? I
wouldn’t overstate the situation, because both politicians are currently bound
by both coalition protocol and even broader political obligations assumed by
the Orange Coalition.

Poroshenko and Tymoshenko realize that they won’t have another chance. In
the face of a rather serious opposition (the Party of the Regions and the
Communists hold 206 seats in parliament), neither has a right to make a
mistake. This overall containing factor is bound to reduce conflicts to a
minimum and can make this coalition sufficiently stable and lasting.

Under the circumstances, one can expect the Ukrainian government to show a
more or less stable performance until the second half of 2008. Other reasons
and a different alignment of political forces might appear prior to the
elections scheduled for 2009. Then a more autonomous and conflictual game
could start being played. However, this prognosis is conventional; we still
have to see what happens in 2009. So far the whole Orange Coalition is under
“cloudless skies.”

As regards the economic policy, I expect it to be pragmatic and that
unpopular decisions will have to be made. Tymoshenko, however, appears to
possess a unique quality; she can use any unpopular decision to boost her
image. Therefore, she won’t be afraid of unpopular decisions. Also, the main
coalition figures are aware of having this unique historic chance and are
cognizant of their own historic mission.

[3] Kost BONDARENKO, Director, National Strategy Institute:

This turned out to be a hysterical rather than historical event because all
the arrangements were made on a hasty and slapdash basis. There are still
outstanding differences. Another spectacular fact is that the two leading
branches of power will be headed by polarized figures.

First of all, this coalition is fraught with serious controversies. Second,
Yulia Tymoshenko is shouldering a burden that she may well not be able to
bear. She is taking charge of the main ministries; perhaps she regards them
as sinecures.

On the other hand, she will have to assume the greatest degree of
responsibility for them. This and the approaching economic crisis make it
possible to forecast that this coalition won’t last long. Another
possibility is that the next session of the Verkhovna Rada will raise the
matter of retiring the current government, all the more so as Tymoshenko won’t
have critical immunity: during the negotiations it was decided that the
government’s action would not be approved by the Verkhovna Rada, so
Tymoshenko would be unable to be prime minister for a long time.

I believe that after Tymoshenko sustains a blow from a crisis, her departure
to the opposition won’t be that damaging for Yushchenko. Indeed, I think she
has already sung her swan song. -30-
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LINK: http://www.day.kiev.ua/164299/
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========================================================
12. ROSUKRENERGO MAY LEAVE UKRAINE GAS PRICE UNCHANGED

Greg Walters, Dow Jones Newswires, Moscow, Russia, Fri, June 30, 2006

MOSCOW – Swiss-registered natural gas trader RosUkrEnergo will most likely
leave gas prices for sales to Ukraine unchanged at $95 for 1,000 cubic
meters in July, deputy chief executive of Russian natural gas monopoly OAO
Gazprom (GSPBEX.RS) said Friday, Russian newswire Interfax reported.

Gazprom owns 50% of RosUkrEnergo, which is half-owned by Ukrainian
businessmen and is the monopoly importer of gas into Ukraine.

The announcement appears to be a reversal by Ryazanov, who had said only
days ago that RosUkrEnergo would increase prices starting July 1.

But Ryazanov also cautioned that a decision on the price had not been taken,
Russian news agency RIA Novosti reported.

An agreement to periodically recalculate Ukraine’s gas price based on global
prices was reached in January, following a bitter dispute over the price at
which Ukraine buys gas from Russia.

The dispute culminated in Russia shutting off gas supplies to Ukraine for a
brief period shortly after the new year. Ukraine began siphoning Russian gas
exports to Europe passing by pipeline through Ukraine, causing several
European consumers of Russian gas exports to register dropping gas import
levels.

Yet the deal brokered between Russia and Ukraine in January – under which
RosUkrEnergo would buy some gas from Russia and cheaper gas from central
Asia and sell gas to Ukraine at a blend price – has since come under fire
from several sides.

Yulia Tymoshenko, who is expected to become Ukraine’s next prime minister,
has called for a new gas deal with Russia without the involvement of
intermediary companies.

Saparmurant Niyazov, president of Turkmenistan, has demanded from Gazprom
a drastic increase in the price at which it sells gas. Gazprom sells large
amounts of Turkmen gas to RosUkrEnergo for sale to Ukraine. -30-
———————————————————————————————-
By Greg Walters, greg.walters@dowjones.com
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Send in a letter-to-the-editor today. Let us hear from you.
========================================================
13. RUSSIA UNDECIDED OVER GAS PRICE HIKE FOR UKRAINE

ALEX NICHOLSON, AP Worldstream, Moscow, Russia, Fri, Jun 30, 2006

MOSCOW – A senior official at state-controlled gas giant OAO Gazprom said
Friday that Russia has not yet decided whether it will increase the price for
the price could be hiked.

“The decision on raising the gas price for Ukraine from July 1 has not been
taken yet,” the RIA-Novosti news agency quoted Gazprom Deputy CEO
Alexander Ryazanov as saying.

The Gazprom head threatened earlier to hike the price, even though Ukraine’s
state-owned Naftogaz gas and oil company argues that the current price of
US$95 (A76) per 1,000 cubic meters is valid for five years unless both sides
agree to review it.

Under the current deal that defused an earlier bitter fight over gas prices,
Ukraine receives all of its imported natural gas at that price from a
little-known intermediary company, RosUkrEnergo, a joint venture between
Gazprom and Centragas Holding AG.

According to the terms of the agreement, Gazprom sells Russian and cheaper
Central Asian gas to RosUkrEnergo, which then sells it at the blended price
of US$95 (A76) to Ukraine. Previously Ukraine had paid US$50 (A40) for gas
from Russia.

However, Turkmenistan, a main contributor to the gas Gazprom sells to
RosUkrEnergo, has sought to increase its prices from the current US$65 (A52)
per 1,000 cubic meters to US$100 (A80), raising fears that the cost could be
passed on to Ukrainian consumers.

The gas-rich Central Asian country has warned that it will cut exports to
Russia if Gazprom does not accept the new price by September. Ryazanov noted
Friday that the current contract with Turkmenistan would remain in force
until between September 23 and 27.

The situation could be further complicated by demands from Ukraine’s Yulia
Tymoshenko, who is widely expected to become the ex-Soviet republic’s prime
minister, to revise the agreement. Tymoshenko argues the contract is not
transparent, saying there is no need for an intermediary company. -30-
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14. FITCH LAUNCHES NATIONAL RATING SCALE IN UKRAINE

Ukrainian News Agency, Kyiv, Ukraine, Thu, June 29, 2006

KYIV – The Fitch international rating agency has announced the launch of
its National ratings scale in Ukraine. This follows from a press release by
the agency, a copy of which was made available to Ukrainian News.

Fitch’s National ratings provide a relative measure of creditworthiness for
rated entities in countries with relatively low international sovereign
ratings and where there is a demand for such ratings. The best risk within a
country is rated ‘AAA’ and other credits are rated only relative to this
risk.

National ratings are designed for use mainly by local investors in local
markets and are signified by the addition of an identifier for the country
concerned, such as ‘AA+(ukr)’ for National ratings in Ukraine.

‘The National rating of ‘AA+(ukr)’ with a Stable Outlook assigned to Ukraine
becomes the benchmark against which all other issuers or issues within
Ukraine will be assessed. National ratings are maintained by the analytical
team in the agency’s Moscow office, with relevant assistance from
international offices,’ the statement reads.

Ukraine is the 30th country in which the National rating scale has been
introduced. National ratings are designed to indicate relative
creditworthiness of issuers and issues within one country.

By making available a complete range of notches on a separate national
scale, they permit better credit differentiation than is possible on the
international scale, where ratings tend to bunch below the sovereign
ceiling.

Fitch Ratings is a leading global rating agency committed to providing the
world’s credit markets with independent, timely and prospective credit
opinions.

Fitch Ratings is dual-headquartered in New York and London, operating
offices and joint ventures in more than 49 locations and covering entities
in more than 90 countries. As Ukrainian News reported, earlier Moody’s and
Standard&Poor’s international rating agencies also launched national rating
scales in Ukraine. -30-
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15. AUTHORITIES NOT INFORMED ABOUT MILITARY EXERCISE
Anatoliy Hrytsenko comments on the Crimean events

INTERVIEW: With Anatoliy Hrytsenko, Chairman, Crimean Parliament
By Mykyta Kasyanenko, Symferopil
The Day Weekly Digest in English, #20, Kyiv, Ukraine, Tue, Jun 20, 2006

It is little wonder that many of Kyiv’s problems and oversights come to a
head in the Crimea of all places, above all for the simple reason that the
Crimea’s status of autonomous republic runs counter to the unitary setup of
Ukraine, because any autonomous entity always strives for greater
self-sufficiency.

Furthermore, there are foreign military facilities on the peninsula, whose
existence stirs up many both juridical and political disputes. The Crimean
land is a priceless treasure that many are trying to grab at any cost. This
land is also the ancestral home of the Crimean Tatars, who have come back
and now have to struggle for the right to be full-fledged citizens in their
native land.

The Crimea is very special owing to its multiethnic and multicultural
character. Every year it welcomes millions of CIS residents and, therefore,
should develop effectively in order to withstand competition from other
world holiday resorts.

Naturally, to a large extent the local authorities are responsible for the
development of and preservation of peace in the region. Above all, this
applies to the Supreme Council of the Crimea, the autonomous republic’s
government and its leadership.

Anatoliy Hrytsenko, whom the new Crimean parliament elected as chairman, is
not new to this autonomous republic. He was born, raised, and educated in
the Crimea, and he has carved out a political and administrative career
here. Nor is he a novice as parliamentary speaker: Hrytsenko chaired the
Supreme Council in 1997-1998.

The recent events in the Crimea have propelled the newly-elected speaker to
political prominence in the peninsula. In his interview with The Day,
Hrytsenko reveals his opinion on the events in Feodosiya, cooperation
between Symferopil and Kyiv, and ways to solve the peninsula’s many
problems.

[The Day] “Mr. Hrytsenko, you used to say that the current Crimean
parliament, dominated by pro-Russian deputies, would be neither a ‘fifth
column’ nor ‘anti-Kyiv enclave’ in Ukraine. But even today the Crimean
parliament, whose members supported the decision of local councils to
declare the Crimea a ‘NATO-free territory,’ is regarded as a destabilizing
factor.

During your previous tenure as head of the Crimean parliament, you actively
opposed the separatist tendencies of Meshkov (president of the Crimea –
Ed.). This time around, will you again be playing the role of a peacemaking
speaker curbing the extremist passions of some parliamentarians?”

[Hrytsenko] “I interpret such phrases as ‘fifth column’ and ‘anti-Kyiv
enclave’ as pure journalese aimed at drawing their readers’ attention to the
problem. You have to understand that there is some exaggeration here.
Although there really are preconditions for a conflict with Kyiv, so far
they are only potential ones, and I will make every effort not to let them
materialize.

“At the same time, not only can there be work differences and debates, they
must exist. Contradictions arise from the Constitution of Ukraine itself
because there is an autonomy that is bound to lay claim to its own share of
power in any event. In particular, the Crimea will continue to insist on
greater economic powers, on the right to greater economic initiative and the
right to apply additional leverage for filling the budget.

“I see no reason why the center should deny us these rights. If the autonomy
has opportunities for boosting the budget through an economic experiment or
additional tax payments that would naturally stimulate the economy, instead
of being a burden on the public, why not allow us to do this?

“From the political angle, I would like Ukrainian politicians to adopt a
more balanced approach to the Crimean events and not provoke conflicts.
Those who have been elected to the Supreme Council of the Crimea and hold
leading posts are civil servants who have sworn an oath, and I am sure they
will observe the Constitution and laws of Ukraine. We are all aware that our
country has a president, and no matter what political party he may
represent, he is the head of state.

“So the Supreme Council of the Crimea is not going to be in opposition to
him. At the same time, we will be expressing our attitude to certain actions
of politicians and the decisions of some bodies that are destabilizing the
situation in the Crimean autonomy by, among other things, appealing to the
highest governmental bodies and the president. I think President Yushchenko
fought for this very right of the people on Independence Square. I hope the
time of uniformity of thought has gone forever in Ukraine.”

[The Day] “The Meshkov affair is usually recalled when separatism is
discussed. You were elected parliamentary speaker right after the
constitution was repealed. How did you manage to normalize the situation?”

[Hrytsenko] “The point is that Meshkov personally was the factor that
increased tensions both in Ukraine and the Crimea: as you remember, he even
had the Supreme Council building blocked and tried to dissolve parliament.
Some politicians now reproach me for working with Meshkov. Yes, I was in
parliament during his presidency, but we played different roles.

When he began subverting the sociopolitical situation in the country, a
group of deputies and I did our best to have Meshkov dismissed from office.
I had always defended the law and the unity of state by mobilizing MPs
against the separatism that Meshkov was encouraging in the Crimea. By the
way, I did not vote for the first constitution.

“After the constitution was abrogated, I was entrusted with restoring the
status quo. And together with the newly-formed majority I succeeded in
persuading parliament to pass the law on the Supreme Council of the Crimea,
which not only ensured stability but also turned our parliament into a
legitimate body. This law is still in force. We also managed to have the law
on elections to the Crimean Supreme Council passed and began to work on the
constitution. If you remember, only 17 out of 138 articles were not
approved.

“This means we were on the right track even then and might have averted some
of the difficulties that we are experiencing now. For example, if we had
approved the article that there are three official languages in the Crimea –
Ukrainian, Russian and Crimean Tatar – as we in fact intended, today there
would be no exacerbation of the language problem at all.”

[The Day] “Was it possible to predict what happened in Feodosiya?”

[Hrytsenko] “This is a totally unexpected exacerbation of the situation.
Clearly, Kyiv missed an opportunity to get parliament to allow the presence
of foreign troops. Because of this, the local authorities were not duly
informed about the forthcoming Sea Breeze-2006 exercise. But now it is
too late to discuss the root cause.

My efforts were aimed at warding off an even more dangerous showdown.
As a result, we managed, in spite of essential differences, to maintain stability
in parliament and suppress antagonism among the corps of deputies.”

[The Day] “Right now it is very important for the Crimea to spell out the
prospects for its development. Do you have a development strategy, and what
does it entail?”

[Hrytsenko] “We are going to form a task force in the nearest future to map
out a 15-year comprehensive program for our autonomous republic. We
already have a lot of programs and strategies, but they are either of a
sectoral or short-term nature, whereas the Crimea needs a long-term
comprehensive strategy.

“I am sure we can draw up quite a viable plan, but to apply any strategy you
need certain leverage, above all in financial terms. We used to criticize
the system where you had to ask Moscow to approve the development plan for
almost every village. But today we have an equally imperfect system of
budgetary relations. For example, 42 million hryvnias have been earmarked
for our social needs this year, but we still have to get the budget
utilization program approved by the Cabinet of Ministers.

“Does the cabinet know our requirements better than we do? Why on earth do
we have to set aside considerable funds for the center and then to go there
and beg for subventions to tackle various problems? That is absurd. Does
this mean they want to burden the Crimea with economic problems so that it
won’t engage too much in politics? I think we must obtain the right to fill
our budget according to the constitution, which envisions that all tax
returns remain in the Crimea, while the center only receives funds for the
purposes of nationwide importance.

“By the way, it is not normal that Naftohaz Ukrainy should buy gas from
Chornomortnaftohaz at cost and we should beg for it, only to receive what
has been left over. Since Chornomornaftohaz is allowed to sell fuel to
individual consumers only, our industrial sector is fully dependent on gas
deliveries from Haz-Teplo, while irregular supplies of this gas impair the
entire sector.

When we are allowed to fill our own budget, we will be able to claim that
any strategy will be implemented, and people will see that the Crimean
authorities are efficient. The resort and recreational sector should become
the top priority of our strategy. These days we often say that our resorts
are far from world standards. Indeed, to bring this sector to the
international level, we need to give it sizable financial injections. But we
cannot do this simply by waving a magic wand.

If we are to build resort facilities, we should establish a special fund as
soon as possible and invest this money in the reconstruction of the
resort-oriented infrastructure. Only then will we have a stable taxpayer and
can establish a land sales fund; only then will our cities and villages
develop.

“Moreover, we should revise our resort strategy. I recently spoke to
Germany’s Ambassador to Ukraine Dietmar Stuedemann, who asked me:
why are you building 16-storey hotels in Yalta, because Europeans are
used to vacationing in cottages and will never come here? We are still
building hotels for prospective CIS vacationers, but their tastes will soon
change.

“Furthermore, we have not yet fully appreciated the Crimea’s healing factors
that are in high demand all over the world. Our mud-treatment hospitals are
mostly concentrated in Saky, although there are several salubrious water
reserves on the Kerch Peninsula, including unique Chokrak Lake, which has
4.5 million tons of argentiferous mud.

So far, private entrepreneurs are producing several dozen varieties of
cosmetics there, but this is a recreational Klondike that we are still
overlooking and do not take into account in our strategy.” -30-
————————————————————————————————
LINK: http://www.day.kiev.ua/164004/
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[ return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
16. UKRAINE: NATO DEMILITARIZATION PROJECT LAUNCHED
Largest Trust Fund project established by NATO and is the single
largest demilitarization project ever undertaken.


NATO, Brussels, Belgium, Monday, June 19, 2006

A contract was signed on 19 June 2006, at the NATO Liaison Office in Kyiv,
between Ukraine’s Ministry of Defence and the NATO Maintenance and Supply
Agency for the destruction of 1000 Man-portable Air Defence Missiles
(MANPADS).

This is the first element of the NATO Partnership for Peace Trust Fund
project to destroy surplus munitions and weapons in Ukraine. The destruction
of MANPADS took place on 20 June near the town of Shostka in Northeast
Ukraine.
A DEADLY LEGACY
As a legacy of the Cold War, Ukraine holds more than seven million surplus
small arms and light weapons and more than two million tons of excess
munitions.

The presence of such huge stockpiles is dangerous and represents a direct
threat to the safety of the population of Ukraine as well as a potential
security threat to the region. Three ammunition depots in Ukraine have
suffered devastating explosions in the last few years and the situation will
worsen as the stockpiles age and degrade.

The destruction of the MANPADS is the first step in the safe destruction of
1.5 million small arms and light weapons and 133,000 tons of munitions in
Ukraine. The tendering process for the equipment and facilities to undertake
the subsequent tasks will begin in due course.

LARGEST PROJECT EVER
It is the largest Trust Fund project established by NATO and is the single
largest demilitarization project ever undertaken.

The project, established at the request of Ukraine, is led by the United
States with funding from 13 other NATO Member and Partner Nations (Austria,
Bulgaria, Canada, Germany, Lithuania, Luxembourg, Netherlands, Norway,
Slovakia, Switzerland, Turkey, United Kingdom) and the European Union.

This is the second of three NATO Trust Fund projects to be established in
Ukraine. The first project, completed in 2003 in Donetsk, destroyed 400,000
anti-personnel landmines as part of Ukraine’s implementation of the Ottawa
Convention to eliminate landmines. A third Trust Fund project led by the
Netherlands was established in Khmelnitsky in January 2006 for the
retraining and resettlement of its redundant military personnel. -30-
————————————————————————————————-
LINK: http://www.nato.int/docu/update/2006/06-june/e0619a.htm
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
17. RUSSIAN ENERGY POLICY TOWARDS UKRAINE –
BUSINESS OR BULLYING?
New Report: “Ukraine: Post-revolution Energy Policy & Relations with Russia”

Alica Henson, GMB Publishing Ltd, London, UK, Wed, June 28, 2006

LONDON – “Ukraine: Post-revolution Energy Policy and Relations with Russia”
was written by a close adviser to Ukraine’s President. This unique report
looks at how Russian energy interests – both political and private sector –
have interfered with Ukraine’s attempts to distance itself from Russia’s
sphere of influence.

Following Ukraine’s Orange Revolution, the Government of President Viktor
Yushchenko declared a new energy policy, the goals of which include the
diversification of oil and gas supply sources, the reform of the domestic
market, and the creation of strategic oil stock.

Ukraine’s search for more partners in the energy sphere has affected the
relationship between Ukraine and Russia, which has transformed from a
“brotherly” relationship to one of pragmatic interest.

The Ukrainian government’s attempts to reduce dependency on Russian energy
supply escalated into a bilateral dispute which reached crisis point in
December 2005 when Russia cut off gas supplies to Ukraine, thus opening the
door to Europe’s worries over its dependence on Russia for gas which flows
through Ukraine’s gas pipelines.

Published in June 2006, by GMB Publishing Ltd., “Ukraine: Post-revolution
Energy Policy and Relations with Russia” provides instructive analysis of
the impact of Russian foreign energy policy towards Ukraine and, in
particular, provides an explanation of Ukraine’s post-revolution energy
policy and how it seeks to reduce Russian influence over its energy sector.

The Russia Foreign Energy Policy Report series establishes for the first
time the confluence of Russian foreign policy with the acquisition of
foreign energy assets by Russian entities. Nine specific country profiles
focus on the oil, gas, electricity and nuclear power industries. Each report
written by an author of international standing, explains how Russian foreign
energy downstream mergers and acquisitions are transpiring to consolidate
the new Russian empire.

EDITORS
Editor: Olena Viter is a Senior Adviser to the Operational Department of the
Secretariat of the President of Ukraine. She is Coordinator of Energy
Programs at the School of Policy Analysis, National University of
Kyiv-Mohyla Academy, and a member of the non-governmental Expert
Council on Energy Security.

Rostyslav Pavlenko, PhD (Political Science), is Head of Situation Analysis
Service of the Secretariat of President of Ukraine. Dr Pavlenko is also an
associate professor of Political Science at the National University of Kyiv
Mohyla Academy.

Mykhaylo Honchar is Deputy Chairman of the Board of Ukrainian JSC
“Ukrtransnafta”. He also serves as Vice President of the non-governmental
“Strategy-1” Foundation. Between 1994 and 2000, he worked in the Council of
National Security and Defence, National Institute for Strategic Studies.

Series Editor: Dr. Kevin Rosner, PhD is a specialist in Russian oil and gas,
security of critical energy infrastructure, and international energy
security policy. He served as the 2006 Co-Director of the NATO Forum on
Energy Security. He is a Senior Fellow, both at the UK Defence Academy and
at the Institute for the Analysis of Global Security (IAGS) in Washington
DC.

Posts held include Senior Security Advisor to the Baku-Tbilisi-Ceyhan
pipeline company, Project Director with the Programme on Cooperation with
the Russian Federation at the OECD, and Project Manager with the UNESCO
Science Division in Paris. Dr. Rosner is the founder of Therosnergroup®,
serving leading members of the global oil and gas community with energy and
security analytical products.

The Russia Foreign Energy Policy Reports are factual case studies, written
by leading authorities on Russian hydrocarbons and critical energy
infrastructure protection, including Dr. Kevin Rosner, Dr. Ariel Cohen,
Liana Jervalidze, Dr. Harold Elletson, and Dr. Gregory Gleason.

ADDITIONAL NEW REPORTS
[1] “Gazprom and the Russian State” – part of the Russian Foreign Energy
Policy series.
[2] “Georgia: Russian Foreign Energy Policy and Implications for Georgia’s
Energy Security”
[3] “Russian Energy Policy During President Putin’s Tenure: Trends and
Strategies”

Global Market Briefings is the ultimate information resource for analysts,
entrepreneurs and companies trading internationally. Its respected list
includes The Doing Business with. series focusing on all 10 new EU member
states, and many other countries in the Central and Eastern European and CIS
regions, the Middle East and China.

In addition, GMB Publishing Ltd. also publishes “A Handbook of World Trade,
The Handbook of Country Risk 2006-2007, and other books and reports focusing
on a variety of international business topics.

For further information, to request a review copy, or to interview the
author, please contact Alica Henson, tel: 0207 843 1973, fax: 0207 843 1965;
email: ahenson@gmbpublishing.com.

£397 / $687 / Euro583 – Spiral-bound – 1 905050 31 3 – 40 pages – A4; An
electronic version is also available (ISBN 1 905050 77 1). Published by GMB
Publishing Ltd. in June, 2006.

Available from all good bookshops or direct from the publisher at GMB
Publishing Ltd, 120 Pentonville Road, London N1 9JN
Tel: 0207 278 0433 Fax: 0207 843 1965; Email: info@gmbpublishing.com,

Or order on line at www.globalmarketbriefings.com ; GMB Publishing Ltd. (US
Office), 525 S. 4th St., Suite 241, Philadelphia, PA 19147, USA, Tel.: +1
215 928 9112. Email: gmbriefings@aol.com
———————————————————————————————–
GMB Publishing Ltd; 120 Pentonville Road; London, N1 9JN
United Kingdom; E-mail: info@gmbpublishing.com;
www.globalmarketbriefings.com
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18. DYING TOWN? HOW TO SAVE THE UKRAINIAN PROVINCE?
The first thing is to develop local self-government

By Viktoria Herasymchuk, The Day Weekly Digest in English #20
Kyiv, Ukraine, Tuesday, June 20, 2006

The main thing is a road – a good road along which civilization can reach a
small town, because civilization does not travel along bad roads. I was
pondering this after a preview of the US animated movie Cars, dubbed into
beautiful Ukrainian. It is set in a small town that died because the road
was destroyed and then resurrected after the road was restored.

I had to make a trip to another small town, not a fairy-tale or animated
film one-a good old Ukrainian provincial town. There is nothing remarkable
about it, no advanced infrastructure, no outstanding architectural sites,
and no large industrial projects. That is why the central authorities have
little interest in it, and even less so, the local government.

In the last while many official words have been pronounced about the rebirth
of the Ukrainian countryside, but not a word about the rebirth – or at least
survival – of the Ukrainian province.

The town begins where the decent road ends. Here you will find something you
will never see in Kyiv: the potholes in the asphalt are filled with crushed
stone (there is a major granite quarry in the vicinity). Some of the holes
are patched with pieces of fresh asphalt that are not even half a square
meter in size. The crushed stone is knocked out of other holes by feet and
tires.

The town is literally covered with crushed stone. There is more of it here
than garbage, which is also abundant. Here and there the asphalt distends,
rises, and falls to pieces, forming another pothole that will be filled with
crushed stone. As for patching it with asphalt, this is an unlikely
possibility.

The buildings lining the road match the road: flaking, dusty, best described
as disgusting. The Park of Culture and Relaxation is the only place
frequented by the local youth in the evenings and on weekends, not counting
several public gardens and, of course, the cafe.

The park is very beautiful, by the way. It used to be the town’s main focal
point – I guess even the capital doesn’t have such large parks, even though
it has so much greenery! It is better not to look down while you walk; all
the paving stones are broken and unchanged since Soviet times, although the
need to replace them is glaringly obvious.

The same is true of the benches; they are not only not replaced but never
painted. They stand there flaking year in and year out.

Once you are in the park, you have to stop on the bridge. Although it is in
hazardous condition, the sign and small fence blocking the entrance were
removed a few years ago. People are still using the bridge, now and then
joking darkly, “Can you feel it shaking?” It is not too big a problem
tidying up and renovating the park and the road, except that neither the
local authorities nor residents have shown enough enthusiasm. All the
“active” populace has since left for Kyiv (a short distance from this town).

The Day asked its experts about how to save the Ukrainian province.

COMMENTARIES
[1] Inna PILSUDSKA, president of the civic organization Europe XXI
Foundation:

(A) The first thing is to develop local self-government. I mean not just
declarations but changes on the legislative level and real budgetary reform.
Local money must be kept locally, where it has been collected.

(B) Second, private initiative must be encouraged, first and foremost, small
business. Residents of small towns must realize that small business is not
just retail trade.

(C) This brings us to the third factor: developing public opinion. It is
very important to turn the populace into a community capable of assuming
responsibility for the town and seeing ways of progress. There are many
techniques for developing a civic society throughout the world; some can be
applied in Ukraine. Such experiments have taken place and shown good
results.

Also, local authorities must also be responsible; they must initiate
positive changes, show effective management using gradual planning and
enlist all possible resources. Let me repeat myself: budgetary reform is a
very important factor. Once it is carried out, we’ll see positive changes –
of course, given local initiative.

[2] Andriy KOKOTIUKHA, writer and journalist:

First of all, we should we forget about the word “province” and stop
bandying it about left and right. I try to use the word “periphery” because
it’s more neutral and can be applied even to big cities; its lexical
connotation has not been vandalized yet. Once we stop treating the province
this way, we’ll make the first step toward rescuing it.

This isn’t enough, of course. Residents of small towns and big cities must
be on the same level. In all countries, even the most advanced ones, you
find a capital and a periphery. In the United States, for example, people
who live in small towns enjoy the same benefits of civilization as residents
of big cities.

In Ukraine there is social inequality in terms of opportunities, including
the lack of good movie theaters, books, newspapers, PCs with Internet
access; there is no information infrastructure.

But provincials can also be found living in downtown Kyiv – provincials in
spirit and mentality, like in that joke about the Chukchi, who moved into a
large apartment and in the biggest room set up a yurt where he lived and
went to the toilet. Our mothers, regardless of the size of the town or city
they live in, still wash plastic bags after buying sausage.

We live in the city, but we want to spend weekends at the cottage to tend
our kitchen gardens and make jars of pickled vegetables and fruit preserves.
It is only recently that we became a country in which the city dominates the
countryside. We don’t have a large urban population.

Moreover, until recently this whole country was a periphery, a district of
Russia. This periphery complex is the same as an inferiority complex, and it
is still there. Our parliamentarians gleefully recount stories about how
they made it from the bottom to the top – in other words, from the
countryside to Kyiv. But the countryside must not be considered the bottom!

The periphery problems will disappear once the periphery stops regarding
itself this way. What we need is small-town patriotism in the best sense of
the word. No industries? So what. No towns should consider themselves
superfluous! The very fact that people built it once is proof that it was
necessary. It’s this feeling of being useless that constitutes the biggest
problem of the periphery.

[3] Yevhen HOLOVAKHA, sociologist:

In order to save the province, it is necessary to curb the egotism of the
center. The question is how this is to be accomplished. For centuries our
state was built on the pyramid principle – not only geographically, but also
politically, economically, and culturally: the closer to the base, the
broader the pyramid, and the greater the number of poor people.

In the civilized world it is the rhombus principle, with the greatest number
of citizens in between, where people can live reasonably well, because there
everything depends on the level of activity, not the place of residence.

In Ukraine the center is doing its utmost to draw people from the periphery,
in excessive quantities. By doing so it is destroying both the periphery as
well as itself, for many people thus drawn into the center are not adapted
to the capital’s lifestyle. Kyiv is a rather specific city with a marginal
culture. The way to save the province lies through dismantling the existing
pyramidal structure.

But our people are impatient, they believe in miracles, so dismantling this
structure is easier said than done. Miracles are not worked in social life
just like that; one must struggle for them.

There are many versions of reform. Just think of everything that is being
proposed to save the periphery! But the periphery is afraid of such reforms,
and with good reason; it feels that they will finish it off. Their very
“intellectual” level will. In fact, even more or less clever reforms are not
likely to help the periphery because the center cannot save the province; it
can only save itself.

Lately, much has been said about the construction of a civic society. But
how can a civic society build a state? It’s like communists building
capitalism. The state cannot build its antipode; a civic society must be
built by citizens.

People who live in the periphery must take an interest in dismantling this
pyramid. Without a doubt this interest can originate only from the province.
These people must realize that their living standard is much lower than in
the capital; they must confront the center with economically and culturally
substantiated demands.

Of course, the central government could give them definite signals and
demonstrate its readiness to help them instead of throwing monkey wrenches
into the works. After that, political parties should take over. After all,
we have switched from a majority to a party electoral system. Parties should
set up regional cells to convey regional demands to the center.

Such demands should be supported by cultural and intellectual leaders. Most
importantly, it takes people, a massive movement. When such signals appear,
the central government will have no alternative but to head this new
movement that will produce the required reforms.

[4] Volodymyr TSARUK, director of the tourist information center
National Tourist Organization:

As far as small towns in Ternopil, Zakarpattia, and Ivano-Frankivsk oblasts
are concerned, unquestionably the key to their development is tourism
through small hotels, museums, and various souvenirs. Rural tourism support
associations are being set up, and there are various small business
development options.

Two organizations of small towns were recently founded in western Ukraine,
embracing Zakarpattia, Khmelnytsky, Ivano-Frankivsk, Rivne, and Ternopil
oblasts. Their objective is to jointly solve small- town problems, draft
programs, and help small businesses. I think that similar approaches can be
effective in other regions that have no tourist options. The state must help
develop small business anyway. -30-
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LINK: http://www.day.kiev.ua/164020/
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
19. KYIV TO HOST 4TH WORLD FORUM OF UKRAINIANS AUG 18-20

Ukrainian News Agency, Kyiv, Ukraine, Wed, June 28, 2006

KYIV- The 4th World Forum of Ukrainians will be held in Kyiv August 18
through 20. Acting Deputy Prime Minister Viacheslav Kyrylenko’s press
service reported this to Ukrainian News, with reference to a meeting of the
forum’s steering committee.

On June 27, the Ukrainian members of the steering committee in charge of
organizing and conducing the forum approved a concept and plan of
preparations. According to the new report, 1,730 people will take part in
the forum.

“They will be representatives of all countries where Ukrainians live.
Post-Soviet countries will be represented by unions of Ukrainians from each
country,” Kyrylenko said.

He added that unlike previous forums, the next one will be focused on the
problems of the eastern diaspora, of Ukrainians living in the Russian
Federation first of all, and on labor migrants.

As Ukrainian News earlier reported, the 3rd World Forum of Ukrainians took
place in Kyiv August 18 through 21, 2001. In December 2005, the Cabinet of
Ministers replaced Oksana Bilozir with Kyrylenko as head of the Steering
Committee of the 4th World Forum of Ukrainians. Earlier, Yuschenko
announced the idea to create a Department of Ukrainian Diaspora Affairs
under the Cabinet of Ministers. -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20. NEW DOCUMENTARY: “WE’LL MEET AGAIN IN HEAVEN”
Searing chronicle of a forgotten genocide and a lost people
Ethnic Germans: starvation, forced labor & execution in Soviet Ukraine

Germans from Russia Heritage Collection,
North Dakota State University Libraries, Fargo
Fargo, North Dakota, Friday, June 30, 2006

FARGO, North Dakota – The new thirty minute documentary, “We’ll Meet
Again In Heaven” is a searing chronicle of a forgotten genocide and a lost
people, whose ” … misery screams to the heavens.”

The lost people are the ethnic German minority living in Soviet Ukraine, who
wrote their American relatives about the starvation, forced labor, and
execution that were almost daily fare in Soviet Ukraine during this period,
1928-1938.

Ronald J. Vossler, Narrator and Scholar
“We’ll Meet Again in Heaven” is part detective-story, part historical
research, and part travelogue. Narrator and scholar Ron Vossler guides the
viewer from the small North Dakota town where he found the first letter,
down the “blood-dark corridor of ethnic history” to former German villages
in Ukraine and Moldova that were the source of numerous immigrants to the
American prairie frontier.

Based on a decade of research, including on-location footage in Ukraine and
Moldova, this film draws upon hundreds of personal letters, written from
German villages in Ukraine to the Dakotas, and brought to public attention
for the first time. These wrenching personal letters, along with compelling
survivor interviews, detail an odyssey of hunger and destruction in Soviet
Ukraine.

Noted historian Robert Conquest, author of Harvest of Sorrow, has called
these letters “…virtually the only absolutely contemporary first-hand
testimony from those actually suffering the famine as they wrote.”

Villagers weep ” … hundreds of thousands of gallons of tears, tears,
tears.” People kill themselves. Forced into cattle cars for almost certain
death in Siberia, their children taken from them, parents tear the hair from
their heads in grief. At night, the regime’s secret police gather victims.
During the day, collective leaders threaten villagers with starvation and
execution if grain quotas aren’t met.

This documentary, with its focus on the treatment of the ethnic German
minority, helps clarify the Soviet regime’s intent to solve aspects of its
nationalities problem with depopulation and ethnic cleansing, and also to
punish with starvation and forced labor the small landholders in Ukraine for
resisting collectivization.

Major funding by the Germans from Russia Heritage Collection, North
Dakota State University Libraries, Fargo, North Dakota.

Producer: Bob Dambach; Script Writer: Ronald J. Vossler; Cover Artwork:
Joshua Vossler; Cover Design: Will Clark; Closed Captioning: Armour
Captioning; Executive Producers: Bob Dambach, Michael M. Miller,
Roadshow Productions.

ORDER FORM: We’ll Meet Again in Heaven
The price of the We’ll Meet Again in Heaven DVD is $25 each plus postage and
handling ($4 for shipping in the U.S.; $6 for shipping to Canada; and $10
for shipping via air mail post outside the U.S. and Canada. All orders must
be in U.S. dollars. Check or money order payable to NDSU Library. Name,
Address, City, State/Province, ZIP/Postal Code, Daytime phone number, E-mail,
Number of DVDs ($25 each), Total enclosed $.

Mail to: Germans from Russia Heritage Collection
We’ll Meet Again in Heaven DVD
NDSU Libraries, PO Box 5599, Fargo, ND 58105-5599
————————————————————————————————–
LINK: http://www.lib.ndsu.nodak.edu/grhc/order/tapes/meet_again.html
————————————————————————————————–
Michael M. Miller, Bibliographer; Germans from Russia Heritage Collection
(GRHC); Marie Rudel Portner Germans from Russia Room
North Dakota State University Libraries, P.O. Box 5599, 1201 Albrecht Blvd.
Fargo, ND 58105-5599 USA, Tel: 701-231-8416, Cell: 701-306-3224,
701.231.7138 – fax, E-mail: Michael.Miller@ndsu.edu
Germans from Russia Heritage Collection Website:
LINK: http://www.lib.ndsu.nodak.edu/grhc
———————————————————————————————–
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========================================================
21. ANTI-SEMITIC, RACIST ATTACKS
A GROWING THREAT IN RUSSIA AND UKRAINE

Radio Free Europe/Radio Liberty (RFE/RL), Wash, DC, Fri, June 23, 2006

WASHINGTON, D.C. – Anti-Semitic and racist attacks in Russia and
Ukraine show no sign of abating, according to an expert on racial
violence. Nickolai Butkevich, Research and Advocacy Director with the Union
of Councils for Jews in the Former Soviet Union (UCSJ) told a RFE/RL
audience last week that the month of April this year saw the largest number
of racially motivated murders (7 murders), and that the number of attacks
against minorities in Russia has increased over the last decade.

According to Butkevich, the number of Neo-Nazi, skinhead and other extremist
groups in Russia is estimated by Russian police to be anywhere from 15,000
to 20,000, with sociologists putting the number closer to 50,000. Three
reasons are usually cited for the existence of these extremist groups,
Butkevich said: the collapse of the Russian economy in the 1990s, the
demographic collapse of Russia’s population, and migration by Muslims
from the southern tier of the former Soviet republics, Butkevich said.

Steady economic improvement has not, however, led to a decline in the
extremist movement, Butkevich said — it has, instead, spread “outside of
the big cities of European Russia” to the rest of the country.

Butkevich said that he believes the Neo-Nazi movement is at its peak
now in Russia, because of a “psychological affect” generated by both the
social disruptions of the 1990s and the current government’s efforts to
“reassert Russia’s dominance” in the world. Those who have joined the
extremist groups, Butkevich said, feel that their activities represent “a
kind of revenge” for Russia.

Although the Neo-Nazi and skinhead problem has continued to grow in Russia,
“Russian law enforcement agencies are doing a better job” in tackling the
threat, according to Butkevich. The number of arrests for crimes tied to
racist and anti-Semitic incidents has risen in the last four years,
Butkevich said, and “some prosecutors have even started to apply hate-crime
statutes, which never happened before.”

Turning to the situation in Ukraine, Butkevich said the Neo-Nazi movement
has gained strength and attacks have worsened over the past three years.
“Unlike Russian officials,” Butkevich said, Ukrainian law enforcement
officials have “continued to deny” that the country has a problem with hate
crimes. Comparing the situation in Ukraine today to that in Russia during
the 1990s, Butkevich said, “is like déjà vu.”

Jews are the primary target of hate crimes in Ukraine rather than Muslims,
according to Butkevich, and political groups associated with the Orange
Coalition of reformers have “called for mass violence” against Jews. In
addition, Butkevich said, Ukrainian officials are doing little to fight
racist and anti-Semitic extremism — for example, in the last ten years
Ukraine has prosecuted only one hate-crime and one hate-speech case,
while in Russia there have been a dozen such prosecutions.
———————————————————————————————
Radio Free Europe/Radio Liberty is a private, international communications
service to Eastern Europe, the Caucasus, and Central and Southwestern Asia
funded by the U.S. Congress through the Broadcasting Board of Governors.
CONTACT: Martins Zvaners (202) 457-6948, ZvanderM@rferl.org or
Melody Jones (202) 457-6949, Fax 202 457 6992; http://www.rferl.org.
————————————————————————————————
[ return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22. UKRAINE-U.S. BUSINESS COUNCIL JOINS COALITION FOR
A SECURE AND DEMOCRATIC UKRAINE

Dr. Susanne S. Lotarski, President and CEO
Ukraine-United States Business Council
Washington, D.C., Friday, June 30, 2006

WASHINGTON- The Ukraine-United States Business Council has joined
the newly formed Coalition for a Secure and Democratic Ukraine. This
will afford the Council and its members opportunities to participate in
important initiatives to strengthen Ukraine’s democracy and deepen
U.S.-Ukraine relations.

The Coalition for a Secure and Democratic Ukraine has been created to
support steps to further strengthen U.S.-Ukraine relations. Co-chaired by
Ambassadors Steven Pifer and William Green Miller, former U.S.
Ambassadors to Ukraine, the Coalition will build on the success of the
Jackson-Vanik Graduation Coalition.

Members of the Coalition have already met with U.S. Ambassador Taylor
and Ukrainian Ambassador Shamshur, both of whom strongly support this
initiative. The U.S.-Ukraine Foundation provides coordination support for
the Coalition.

The Coalition intends to engage on an array of issues. It has assigned early
priority to promoting the establishment of a closer institutional
relationship between the U.S. Congress and Ukraine’s parliament (the Rada).
Such a link will promote interaction and mutual understanding between the
two legislative branches.

The Coalition also will work to foster the integration of a democratic,
market-oriented Ukraine into the Euro- Atlantic community. Energy issues
and NATO membership are other likely topics of Coalition attention.

Other organizations participating in the Coalition include the U.S.-Ukraine
Foundation (USUF), NCSJ, Jewish Institute for National Security Affairs,
the Ukrainian American Coordinating Council, Ukrainian-American
Environmental Association, SigmaBleyzer, The Bleyzer Foundation, and
the Ukrainian Federation of America (UFA).
——————————————————————————————-
FOOTNOTE: Further information about the Coalition can be found at:
http://www.usukraine.org/csdu.shtml. For additional information or to
become a member of the Coalition for a Secure and Democratic Ukraine,
you may contact Marta Matselioukh at martam@usukraine.org or at
(202) 223-2228.
——————————————————————————————–
Dr. Susanne S. Lotarski, President and CEO, Ukraine-United States
Business Council, P.O. 42067, Washington, DC 20015, slotarski@boo.net

————————————————————————————————
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AUR#719 Jun 29 Sixth U.S. Amb’s Peaceful Mission; Soccer Unites Nation; Nestle Ukraine Revenue Up; Victory Over NATO; Robert Conquest; Ukrainian Modernism

========================================================
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     

                                                         
ACTION UKRAINE REPORT – AUR – Number 719
Mr. E. Morgan Williams, Publisher and Editor  
PUBLISHED FROM KYIV, UKRAINE, THURSDAY, JUNE 29, 2006
           –——-  INDEX OF ARTICLES  ——–
         Clicking on the title of any article takes you directly to the article.               
Return to the Index by clicking on Return to Index at the end of each article
1.            SIXTH US AMBASSADOR’S “PEACEFUL MISSION”
By Viktor Rybachenko, The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, June 27, 2006

2.      U.S. AMB TAYLOR: THEY SENT ME TO A GOOD PLACE
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 28, 2006

3.        UKRAINE-U.S. BUSINESS COUNCIL BRIEFS NEW U.S.
                   AMBASSADOR WILLIAM TAYLOR IN KYIV
Ukraine-U.S. Business Council
Action Ukraine Report (AUR), Kyiv, Ukraine, Thu, June 29, 2006

4.               UKRAINE SOCCER UNITES DIVIDED NATION
By Mara D. Bellaby, Associated Press Writer
AP, Kiev, Ukraine, Wednesday, June 28 2006

5UKRAINE SOCCER COACH: LARGE CASH BONUS DESERVED

REUTERS, Potsdam, Germany, Wednesday, June 28, 2006
6KYIVSTAR TO PAY UKRAINE WORLD CUP SQUAD UP TO $9.5 M
Anna Ivanova-Galitsina,Dow Jones Newswires
Moscow, Russia, Tuesday, June 27, 2006

7.      WORLD CUP: ITALY FAMILIAR UKRAINE’S SHEVCHENKO
Associated Press, Duisburg, Germany, Wed, June 28, 2006

8NESTLE UKRAINE REVENUE  UP 15% FURTHER GROWTH SEEN
By Martin Gelnar, Dow Jones Newswires
Zurich, Switzerland, Wednesday, June 28, 2006

9GALLAHER TOBACCO CO SAYS TRADING IN LINE WITH HOPES
                 Strong performance in Ukraine, Russia and Kazakhstan
By Michael Carolan, Dow Jones Newswires
London, United Kingdom, Tuesday, June 27, 2006

10.   UKRAINE: IFC LOANS USD 100 M TO SUPERMARKET CHAIN

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006 (16:47)

12.       NAFTOHAZ UKRAINY PLANS TO INSTALL 400,000 GAS

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

13NAFTOHAZ UKRAINY REQUESTS USD 1 BILLION FOR PAYING
  OFF DEBTS TO ROSUKRENERGO, PUMPING BAS INTO STORAGES 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

14ROSUKRENERGO, UKRHAZ-ENERGO TO PUMP 10.2 BILLION
        CUBIC METERS OF GAS INTO UNDERGROUND STORAGES 
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006 

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

17.               NATO INVESTING IN UKRAINIAN SECURITY
Valeriy Savytskiy, Kyiv Weekly, Kyiv, Ukraine, Wed, June 28, 2006

18.   YULIA TYMOSHENKO: UKRAINIANS ARE INSUFFICIENTLY
                                INFORMED ABOUT NATO

Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

19UKRAINE: CRIMEAN TOWN REVELS IN “VICTORY” OVER NATO 

NTV Mir, Moscow, in Russian 0900 gmt 26 Jun 06
BBC Monitoring Service, United Kingdom, Mon, June 26, 2006

20.     RUSSIA OIL TEMPERS U.S. SWAY – MOSCOW’S WEALTH
               STRENGTHENS PUTIN’S HAND IN POLICYMAKING 
By NEIL KING JR. in Washington and ALAN CULLISON in Moscow
The Wall Street Journal, NY, NY, Wed, June 28, 2006; Page A10

 
21.         FITCH SEES CONVERGING FORCES COULD SPARK
                             A NEW EUROPEAN GAS CRISIS
    “It seems like all the makings of a perfect storm,” said Jeffrey Woodruff.
Cbonds News, St. Petersburg, Russia, Monday, June 26, 2006
 
                           IN GAS SUPPLIES TO UKRAINE 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006
 
23.                                 “WITH BEST WISHES”
                   Meeting Robert Conquest at Stanford University
By Vasyl Marochko, Ph.D. (History),
Head of the Association of Holodomor Researchers, Kyiv
The Day Weekly Digest in English, #21
Kyiv, Ukraine, Tuesday, 27 June 2006
 
24EXHIBITION “UKRAINIAN MODERNISM 1910-30: TO CHICAGO
              “Kyiv of the 1910s-1930s was the mecca of ‘leftwing artists'”
By Olena SHAPIRO, special to The Day
The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, 27 June 2006
========================================================
1
      SIXTH US AMBASSADOR’S “PEACEFUL MISSION”

By Viktor Rybachenko, The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, June 27, 2006

The fifth US Ambassador to Ukraine, John Herbst, has completed his
diplomatic mission. Shortly before Herbst’s departure, President Viktor
Yushchenko awarded him the Order of Merit, 3rd degree.

Ukraine is keenly interested in the new, sixth, American ambassador. William
Taylor has worked in Iraq and Afghanistan, and coordinated the withdrawal of
Israel from the West Bank and Gaza Strip. What lies behind the appointment
of such a seasoned diplomat to Ukraine?

A few days ago the newly-appointed US ambassador to Ukraine held his first
press conference. Taylor strode into the hall, flashing a happy smile.
Everybody saw that he is slender and trim with a telltale military bearing,
as Taylor, a graduate of West Point Military Academy, saw service as a US
infantry officer in Vietnam and Germany.

Yet the diplomat in no way looked like a tightlipped soldier. Taylor
apologized for not having learned Ukrainian yet, but he promised to do so.

The ambassador said the US will be continuing to support Ukraine and, to
prove it, he announced that his country is allocating $45 million to combat
corruption in Ukraine. He is convinced that democratic transformations will
continue in Ukraine, especially now that the parliamentary coalition has
been formed. President Bush plans to visit Ukraine this year and will
cooperate closely with the coalition government.

There were a lot of questions in connection with the recent events in
Feodosiya. Taylor stressed that nothing serious happened. In his view,
people are still misinformed about these military exercises and NATO’s goals
and activities. Therefore, the US Embassy will be sponsoring explanatory and
informational efforts, workshops, and roundtable debates.

Apparently, the Feodosiya protesters did not know that quite a large budget
had been drawn up for this aborted military exercise, which also included
social aspects, such as creating new jobs for Crimeans and renovating a
stadium, the ambassador noted.

In Taylor’s opinion, Russian Black Sea Fleet bases in the Crimea will not
hamper Ukraine’s Euro-Atlantic drive because Russia maintains an active
dialogue with NATO. Taylor also took a cautious approach to some rather
murky points in the Ukrainian-Russian gas deal and the unclear role of
Rosukrenergo. On behalf of the US government, he expressed his readiness
to help solve the problem of energy supplies to Ukraine.

Asked if he was appointed to Ukraine because he is considered an anti-crisis
manager, Ambassador Taylor smiled and said that he has indeed worked in
some “hot spots” and is now glad to come to a peaceful country.   -30-
———————————————————————————————–
LINK: http://www.day.kiev.ua/164439/
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.  U.S. AMB TAYLOR: THEY SENT ME TO A GOOD PLACE

Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 28, 2006

The new U.S. ambassador to Ukraine William Taylor clearly said that the
United States will help Ukraine’s government in reconsidering the
Ukrainian-Russian “gas” agreement signed on January, 4. “We do have
difficulty understanding the role of RosUkrEnergo in this agreement that was
agreed on January 4.

Our general advice is that openness and transparency in contracting is the
best policy for all countries,” he stated during his first news conference
in Kyiv following his Presentation of Credentials.

“We think that if the government of Ukraine decides to reconsider this, then
they will look for advice from experts – international experts, as well as
Ukrainian experts. And we will be glad to help in that regard and also
provide assistance on making the factories and other users – large users –
of natural gas more efficient,” Taylor added.

The U.S. ambassador knew how to play with Ukrainians: “I’m very glad to
be here at the time that Ukraine is doing so well in the World Cup.”

 “The United States does not expect a crisis here in Ukraine, marked then
Ambassador Taylor, who worked before in Afghanistan and Iraq. I guess they
figured in Washington that I had paid my dues in difficult places so they
were going to send me to a good place this time. So, they sent me to
 Ukraine”. And spoke very serious not only on the gas issues.

As for Ukraine’s possible membership in NATO, the U.S. ambassador continued
with the words of support. “If the people of Ukraine and if the government
of Ukraine decide that they are interested in becoming a member of NATO, the
United States government will be glad to help them,” said Ambassador Taylor.

The same was frequently said by his predecessors for the last 3-4 years. But
now he promised then that the United States can “sponsor discussions,
dialogues, conferences and roundtables, where Ukrainians and others can have
a conversation about the good things and the bad things about joining NATO”.

And he doesn’t think the presence of Russian Naval forces to be a major
problem to Ukraine’s membership in NATO.

He confirmed then that U.S. President Bush would very much like to visit
Ukraine, but he is waiting for the Ukrainian government to be formed.
———————————————————————————————
LINK: http://www.weekly.com.ua/?art=1151436094

———————————————————————————————
NOTE: Another article on the new US Ambassador William Taylor:
LINK: http://www.glavred.info/archive/2006/06/22/115253-7.html
——————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.     UKRAINE-U.S. BUSINESS COUNCIL BRIEFS NEW U.S.
                AMBASSADOR WILLIAM TAYLOR IN KYIV

Ukraine-U.S. Business Council, Washington
Action Ukraine Report (AUR) #719, Article 3
Kyiv, Ukraine, Thursday, June 29, 2006

KYIV – Thirty-five members of the Ukraine-United States Business
Council and their guests gathered Wednesday, June 28, in the Conference
Room of the U.S.-Ukraine Foundation (USUF) offices in Kyiv to brief
the new U.S. Ambassador William B. Taylor, Jr. about Ukraine’s
business conditions and prospects.

Mr. Taylor was confirmed by the Senate on Friday, May 26, and was
sworn in as U.S. Ambassador to Ukraine on June 5th.

Council members spoke of the huge potential they saw in agriculture,

food processing, telecommunications, insurance and energy, among
other sectors. Several spoke of “the good story” they have to tell
about their company’s experience in Ukraine and are planning to
expand their operations.

Morgan Williams of SigmaBleyzer, the Council’s Chairman of the

Executive Committee of the Board of Directors, introduced Amb.
Taylor as an experienced diplomat who had helped design and
implement American assistance programs for Ukraine in an earlier
position at the State Department.  “We are fortunate that William
Taylor was chosen to be our Ambassador in Ukraine, ” Williams
stated.
 
Ambassador Taylor said he was pleased to represent the United States
in Ukraine and encouraged Council members to keep him informed about
their business operations and the business climate in Ukraine. Taylor
said he was very positive towards Ukraine’s future and the absence of
any regular elections the next three years offered Ukraine a real opportunity
to pass additional reform legislation and to make real progess.
Members told the Ambassador that stronger rule of law, better pay for
judges, a reduction of corruption, major government structural
reorganization, better implementation and delivery procedures for
government programs, the protection of private property contract rights
and the development of a private commodity exchange topped the list of
business needs.  Several members told the Ambassador that corruption
levels have really not been reduced since the Orange Revolution.
 
Ambassador Taylor invited members of the Council to meet with him
again soon. They in turn offered him their support and wished him a
successful tour in Ukraine.

Council members participating in the meeting included representatives of
AES Ukraine, ALICO AIG LIFE (Ukraine), Cargill, Chadbourne & Park,
the Eurasia Foundation, SASI Corporation, SigmaBleyzer, WJ Group
of Agricultural Companies, and The Bleyzer Foundation.

Guests included representatives from Delta Airlines, Kodak, Ukraine 3000
International Charitable Fund, The Willard Group, Bank Kontrakt,
Medical Relief Charity Fund, Frishberg & Partners, Horizon Capital,
Squire Sanders & Dempsey, EuroRegio Ukraine, Whites International
Public Relations, Presidential Secretariat of Ukraine, U.S.-Ukraine
Foundation (USUF) and Znayu.                              -30-
————————————————————————————————
                 Ukraine-U.S. Business Council, Washington
Susanne Lotarski, President; E. Morgan Williams, SigmaBleyzer,

Chairman, Executive Committee, Board of Directors; John Stephens,
Cape Point Capital, Secretary/Treasurer;
Members of the Ukraine-U.S. Business Council Executive Committee:
Van Yeutter, Cargill; John W. Rauber, Jr, Deere & Co; Shannon Herzfeld,
Archer Daniels Midland; Michael Kist, Westinghouse; and Andrew Bej,
American Life Insurance Company/AIG.
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4.          UKRAINE SOCCER UNITES DIVIDED NATION

By Mara D. Bellaby, Associated Press Writer
AP, Kiev, Ukraine, Wednesday, June 28 2006

KIEV, Ukraine — Suddenly, all the old divisions don’t seem so important.
Ukrainians — bitterly split over language, politics and whether they belong
in the West or with Russia — have been savoring a rare taste of unity with
their country’s gritty advancement to the quarterfinals of the World Cup.

When the team steps onto the field on Friday against Italy, this nation of
47 million — Russian-speakers and Ukrainian-speakers; those who considered
the 2004 Orange Revolution an explosion of democracy and those who

deride it as a coup — will all be rooting in unison, “Ukraina (oo-kry-EE-nah)!”

“It’s caused a wave of patriotism and it doesn’t matter if you’re orange or
blue, we’re all Ukrainians,” said Andrey Myshkovsky, 19, referring to the
country’s color-coded politics (orange are supporters of the pro-Western
bloc, blue backers of the pro-Russian party), just one of many ways that
this ex-Soviet republic divides itself.

Politicians are salivating over how to capitalize on the unusual sense of
unity, but also grumbling that it took a soccer team to do what they could
not. For others, it’s another chance to show the world that Ukraine is more
than just the location of the world’s worst nuclear accident or home to the
president whose face was badly scarred in a still-unsolved poisoning.

“It’s a huge breakthrough … millions of people all over the world, some of
them for the first time are hearing about Ukraine in a positive light,” said
Vice Prime Minister Vyacheslav Kyrylenko. “They saw that we have cool

boys who can play soccer.”

Torn apart by competing empires throughout much of its history, Ukraine

has spent the last 15 years of independence trying on different identities. It
has yet to settle on one. The pro-European outlook that fits so easily in
the country’s west, where Ukrainians are nationalists and view Moscow as a
former occupier, angers the ethnic Russians who people Crimea and the
industrial east.

Even the 2004 mass uprising that captured the world’s attention won the
support of only about half the country.

“Ukraine has had some problems with patriotism, with forging one national
identity,” said Ivan Lozowy, president of the Kiev-based Institute of
Statehood and Democracy.

Soccer could be a chance to bridge the gap.

Serhiy Varenyk, 43, was in a train car headed to Kiev when Oleg Gusev scored
the deciding penalty kick against Switzerland. Listening by radio, the car,
filled with Russian-speakers from eastern Ukraine, erupted into a roar so
loud it shook the windows, he said.

Across the country, in the nationalistic west, a similar cheer went up as
Lviv fans set off fireworks and bellowed out the national anthem.

“Such victories unite people and lay the groundwork to create a normal
nation,” said Yevhen Kushnaryov, a former regional governor who was

accused last year of encouraging eastern Ukraine toward separatism.

The timing is also good. Ukraine’s political life remains unsettled, three
months after a parliamentary election ended indecisively; a majority
coalition was formed only last week.

Success on the soccer field “is just what Ukraine needs,” said 57-year-old
lawyer Vitaliy Yenin, as he joined a protest Tuesday against rising
electricity, gas and transport costs.

Ukrainians fear the rising prices will widen the gulf even further between
living standards here and in the club of nations they aspire to. But when it
comes to kicking around the soccer ball, this country — making its first
appearance in the World Cup — is daring to dream that they belong.

Prime Minister Yuriy Yekhanurov put it simply: “We believe in you,” he

wrote in a telegram to the team.

Of course, a little bit of smugness also helps. Some Ukrainians can’t resist
the chance to taunt giant neighbor and regular sparring partner, Russia,
whose team didn’t make it into the World Cup. Critics accuse Russia of
trying to punish Ukraine for its turn westward with higher gas prices, and
for refusing to drop the idea of Ukraine as the little brother.

“Ukraine is the soccer country,” said lawmaker Serhiy Polyshchuk. “Let
Russia play ice hockey.”                            -30-

————————————————————————————————
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========================================================
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5. UKRAINE SOCCER COACH: LARGE CASH BONUS DESERVED
 
REUTERS, Potsdam, Germany, Wednesday, June 28, 2006


POTSDAM, Germany – Ukraine’s players will receive a shared £4.4million
bonus for reaching the World Cup quarter-finals and coach Oleg Blokhin
said on Wednesday hard work should always be well rewarded.

‘Do you think they should just play for a ‘thank you’?’ Blokhin asked
reporters. ‘For good work you receive good money. If the players had been
playing badly, they wouldn’t have got a penny.’

Ukraine, making their debut at the tournament, face Italy on Friday after
beating Switzerland 3-0 on penalties in the second round on Monday. They
have surpassed their pre-tournament aim of reaching the knockout stage so
anything else is quite literally a bonus.

Blokhin stressed that money was not the main motivation for the players, but
rather national pride. ‘They are playing for national honour… it is also
work,’ he said. ‘I told them that the players in this team will play first
of all for prestige and not the money.’

 
Friday’s game in Hamburg kicks off at 2000 BST and the winner will face
either Germany or Argentina.                        -30-
————————————————————————————————
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========================================================      
6. KYIVSTAR TO PAY UKRAINE WORLD CUP SQUAD UP TO $9.5 M

Anna Ivanova-Galitsina,Dow Jones Newswires
Moscow, Russia, Tuesday, June 27, 2006

MOSCOW – Ukrainian mobile phone operator Kyivstar Tuesday said it

will pay up to $2 million to the country’s soccer team, depending on the
team’s results in the World Cup.

A payment of $2 million would bring Kyivstar’s total funding of the
Ukrainian National Soccer Team to $9.5 million, as the company has already
paid the team $7.5 million in sponsorship money. For the duration of the
2006 World Cup, Kyivstar has changed its logo to include a football.

Ukraine beat Switzerland on penalties in a goalless draw Monday, and

goes on to meet Italy in a quarterfinal match June 30.
Kyivstar, Ukraine’s largest mobile phone operator by subscriber numbers,
is majority owned by Norway’s Telenor ASA (TELN). Company Web
site: http://www.kyivstar.net.                       -30-
————————————————————————————————–
Anna Ivanova-Galitsina, Dow Jones Newswires; anna.galitsina@dowjones.com
————————————————————————————————–
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7. WORLD CUP: ITALY FAMILIAR WITH UKRAINE’S SHEVCHENKO

Associated Press, Duisburg, Germany, Wed, June 28, 2006

DUISBURG, Germany – Italy’s players knew all about Ukraine’s best player
even before watching film of the team on Wednesday.

Andriy Shevchenko spent seven seasons at AC Milan before transferring to
Chelsea a month ago and his 173 goals give him the second highest total in
club history behind Gunnar Nordahl’s 221.

Blue and yellow Ukraine flags with “Sheva” written across them became a
common site at Milan’s San Siro stadium when Shevchenko plied his craft
there. Not many Italians will be waving Ukraine flags on Friday, when the
Azzurri meet Shevchenko’s team in the World Cup quarterfinals.

“To stop Sheva you’ve got to be 100 percent and make as few errors as
possible,” said Italy defender Alessandro Nesta, who will miss the game with
a right thigh injury. He’s a unique player, he has few weak points. You
can’t let up for the entire 90 minutes.”

Nesta is one of five Milan players and former teammates of Shevchenko on
Italy’s roster.

Shevchenko is still regaining strength from a left knee injury and has
scored two goals in Ukraine’s first four games. He missed the opening
penalty kick in the shootout that Ukraine went on to win over Switzerland in
its last match but Nesta said Shevchenko is still on a par with Brazil
strikers Ronaldo and Adriano.

“Sheva you can’t put behind anyone,” Nesta said. In 2003, Shevchenko’s
penalty kick won Milan the Champions League in a shootout against Juventus.
A year later, he led Milan to the Italian league title and was European
player of the year.

Critics say Ukraine is a one-man team that Italy should handily beat. “No
team is a pushover at the World Cup,” Nesta said. “Inside the locker room we
know it’s not going to be an easy game and we’re going to enter the field
very focused.”

Italy drew 0-0 with Ukraine in June 2 in a World Cup warmup. Shevchenko
missed the game due to his injury. “They’re very strong physically and
they’ve got some other good individual players, like Anatoly Tymoshchyuk,
who I’ve faced a few times with Milan,” Nesta said.

At Milan, Shevchenko played with Filippo Inzaghi and Alberto Gilardino in
attack. His usual strike partner at Ukraine, Andriy Voronin, is out with a
thigh injury. “Voronin is also very good, we’re fortunate that he’s not
going to play,” Nesta said.

With Nesta out and Marco Materazzi suspended, the inexperienced Andrea
Barzagli is expected to start alongside Fabio Cannavaro in central defense.
It will be their job to contain Shevchenko.

“I’ve encountered him a few times in Serie A and I think he scored on me a
few times,” said Barzagli, who has played for Chievo Verona and Palermo in
Serie A. “I’m going to put a little extra effort into training these next
few days.”

It doesn’t appear any of the Milan players on Italy’s team are upset with
Shevchenko for his departure. “I don’t know the reason why he left. I think
he spoke the truth – for his family and to learn another language,” Nesta
said. “Those are personal choices, and we shouldn’t comment on them. I
respect him and I thank him for all he did for us.”           -30-

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8. NESTLE UKRAINE REVENUE  UP 15% FURTHER GROWTH SEEN

By Martin Gelnar, Dow Jones Newswires
Zurich, Switzerland, Wednesday, June 28, 2006

ZURICH – Nestle S.A.’s (NESN.VX) revenue in Ukraine is rising by
double-digits and sales in this upcoming emerging market are expected to
continue expanding, a Nestle Ukraine official said. “Our business grew more
than 15% last year and we expect further growth,” said Gennadiy Radchenko,
Nestle’s corporate affairs manager for Ukraine and Moldova.

The Switzerland-based company doesn’t usually release actual
country-by-country sales results, but Radchenko said that its Ukraine sales
reached about $320 million in 2005. He declined to give a specific
growth-rate outlook.

Nestle, the world’s largest food and beverage company by revenue, is
exploring potential Ukraine acquisitions, Radchenko said.

“We are always looking at acquisition opportunities. We have no operations
in water or ice cream so far, and we would like to get into that business,”
he said. “It doesn’t mean we’re planning to buy something this year, but
we’re looking around.”

Radchenko said Nestle’s Ukraine business, which once consisted mainly of
Nescafe sales, is undergoing fast changes. Today, Nestle Ukraine is active
in three areas with annual sales of around $100 million each: cold sauces
and ketchup, confectionary products and beverages, mainly Nescafe.

Nestle Ukraine’s market share is 51% in cold sauces, 72% in ketchup and 22%
in chocolate, Radchenko said. He didn’t provide the market-share information
for other products. “In the last three years, we have expanded our
operations by acquiring two local factories,” he added.

Competition is generally tough given an abundance of local chocolate and
soluble coffee producers, but one of the biggest successes in 2005 was the
turnaround of the chocolate business, Radchenko said. He did not say how
much the chocolate business had grown.

“The confectionary business is difficult in former Soviet countries because
chocolate is traditionally quite cheap there,” he added.

Consumer habits aren’t the same across Ukraine, which is the second-biggest
European country by land mass after Russia.

“In western Ukraine, ground coffee is more popular, while instant coffee is
more popular in the south and east,” Radchenko said.

Nestle’s turnover in Ukraine was more than UAH1.6 billion, (UAH1=$0.20) in
2005, which is around 0.4% of Nestle’s global turnover. Nestle Ukraine
employs about 3,000 people and exports to Russia, the Czech Republic,
Slovakia and the Baltics, among other countries.        -30-
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By Martin Gelnar, Dow Jones Newswires; +41 43 443 8042;
martin.gelnar@dowjones.com
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9. GALLAHER TOBACCO CO SAYS TRADING IN LINE WITH HOPES
                 Strong performance in Ukraine, Russia and Kazakhstan

By Michael Carolan, Dow Jones Newswires
London, United Kingdom, Tuesday, June 27, 2006

LONDON – Gallaher Group PLC said Tuesday that current trading was in line
with expectations, with a stronger performance in the group’s CIS markets
offsetting weak market conditions elsewhere.

In a trading update, the tobacco company said that its total cigarette
volumes rose 4.4% to 68.3 billion in the first five months of 2006. Strong
performance in Russia, Ukraine and Kazakhstan “more than offset declines in
some of the group’s European markets,” it said.

Gallaher sells brands such as Benson & Hedges, Silk Cut, Sobranie, Sovereign
and Mayfair – mainly in Europe, but also in Asia and Africa.

The statement had little impact on the company’s stock. At 0840 GMT Gallaher
shares were down 3.25 pence, or 0.4%, at 820.5 pence in a slightly higher
London market. “The key point is everything is in line,” said Dresdner
Kleinwort Wasserstein’s Charles Manso de Zuniga. “On a group level
everything is fine.”

The company said that in the Commonwealth of Independent States, or CIS, it
was continuing to benefit from improved product mix and an ongoing focus on
low cost production.

“As a result of the strong trading performances across the group’s CIS
markets, this division’s 2006 full-year earnings before interest, tax and
amortization growth is now expected to be ahead of the growth rate achieved
in 2005,” the company said. In 2005, EBITA in the region grew 17.4% to GBP67
million. “CIS is going like a train,” said DKW’s Manso de Zuniga, “but the
Rest of the World is a little bit worse.”

The company said that its Rest of the World division – which includes
markets such as Sweden, Poland, Nigeria and South Africa – had suffered from
difficult market conditions. The company said it now expects the division’s
full-year EBITA to be broadly flat, while in the first half it will be “down
sharply versus the first half of 2005.”

Trading conditions in Europe also continue to be challenging, the company
said, with higher taxes, persistent cross-border trade, lower UK tourist
volumes and workplace smoking bans all contributing to market declines.

Full-year EBITA from the European tobacco business is expected to be
marginally ahead of 2005, though difficult pricing conditions in Austria and
Spain will mean it is flat in the first half. “Europe is no worse than it
has been,” said DKW’s Manso de Zuniga, “it’s perfectly in line, they’ve
always been up front about that,” he said.            -30-
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Company Web site: http://www.gallaher-group.com

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10. UKRAINE: IFC LOANS USD 100 MILLION TO SUPERMARKET CHAIN
 
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

KYIV – The International Finance Corporation, part of the World Bank group,
has issued a loan of USD 100 million to Velyka Kyshenia, one of the largest
trading networks in Ukraine. Ukrainian News learned this from the press
service of IFC. ‘A loan of USD 100 million that includes a syndicated amount
of USD 55 million,’ the report reads.

The loaned funds will be spent to refinance the current debt and open more
than 35 new Velyka Kyshenia supermarkets and hypermarkets in Ukraine during
the period of 2006-2008. Velyka Kyshenia presently owns 27 supermarkets and
hypermarkets, 16 of which are in Kyiv, IFC reported.

The company press service said one hypermarket was opened in Poltava, and
one supermarket in Kyiv, Uzhhorod and Mykolaiv each at the beginning of the
year, and in the nearest time the company will open supermarkets in Yalta
and Lutsk. IFC would not disclose details of the loan agreement.

Press service of the Retail Group reported that the loan was organized by
the Dragon Capital investment company and will be repaid in five to seven
years.

‘IFC financing gives important support to our efforts to expand the
company’s presence in the regional markets and strengthen its position as
one of the biggest supermarket chains in Ukraine,’ said Roman Lunin,
supervisory board chairman at Retail Group.

As Ukrainian News earlier reported, IFC has taken part in 23 investment
projects in Ukraine to a total sum of USD 480 million as of May 1, 2006.

Last year’s trade turnover of Velyka Kyshenia grew by a factor of 2.15 or by
UAH 0.75 billion to UAH 1.4 billion year-on-year.

Retail Group controls the chains of Velyka Kyshenia supermarkets and
fast-food restaurants, as well as open joint stock company KVIZA, and its
affiliate enterprise KVIZA Trade.

According to the IFC, 88% stake in Retail Group OJSC belongs to chairman

of the company’s supervisory board Roman Lunin, 12% to eight financial
institutions (mainly private European funds and asset management companies).
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11.      EBRD LIKELY TO LOAN FUNDS TO POLISH CO FOR
      CONSTRUCTION OF BATH & TOILET EQUIP IN UKRAINE 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006 (16:47)

KYIV – The European Bank for Reconstruction and Development (EBRD) is

likely to loan EUR 46.8 million to the Cersanit company of Poland for the
construction of ceramic tiles and sanitary porcelain production lines in the
city of Novhorod-Volynskyi in Zhytomyr Region. This is announced in a
press-report by the EBRD, the text of which Ukrainian News has obtained.

According to the report, the investment project is designed to help the
Polish company further penetrate into Ukrainian regions as well as to draw
additional foreign investments into the Ukrainian economy.

This project is going to be one of the first in Ukraine to handle the
manufacture of ceramic tiles and sanitary porcelain and to be managed by an
established investor and one of the biggest manufacturers of products of
this kind on the global market.

In addition, in the framework of the same project the company is planning to
implement a range of small-scale investment projects in the expansion of its
operations in Ukraine.

The money from the credit will be raised with participation of a number of
banks. The final sum in investment has not been disclosed by the EBRD. The
EBRD’s Board of Directors plans to examine the issue of the credit at its
July 25 meeting.

As Ukrainian News reported earlier, Cersanit was going to build bath and
toilet equipment factories as well as bathroom furniture factories not far
from Vinnytsia by 2010, and was planning to invest USD 100 million in the
construction of the factories.

According to the company, it is expected that the complex of factories will
annually put out products to the tune of USD 150 million.

Cersanit produces bath and toilet equipment, shower cabins and furniture for
bathrooms. The company is running three factories in Poland. It has been
operating on the Ukrainian market since 1998. The company produced goods
worth USD 150 million in 2004.                            -30-
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12. NAFTOHAZ UKRAINY PLANS TO INSTALL 400,000 GAS METERS
                      FREE OF CHARGE BY 2007 IN RURAL AREAS
 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

Naftohaz Ukrainy, a national joint-stock company, has plans to install over
400,000 household gas meters using its own funds by 2007. A Naftohaz Ukrainy
representative told this to journalists on June 23. As he said, in the first
place, gas meters will be installed in rural areas.

Round UAH 150 million will be allocated for this purpose. Since the year’s
beginning, the company has installed over 250,000 household gas meters.

According to the National Electricity Regulation Commission (NERC), the
program for installation of household gas meters has been functioning
already for several years.

While revising gas supply tariffs, the NERC included in the tariff a
targeted charge for installation of gas meters to enterprises that supply
gas and perform gasification, which provided the commission with
corresponding investment programs.

As Ukrainian News earlier reported, the decision by the NERC on a rise of
natural gas tariffs for household consumers by 85% to 40.7-44.4 kopecks per
cubic meter from July 1, 2006 was registered with the Ministry of Justice on
June 16.

According to the NERC’s decision, the retail tariff for gas for household
consumers was raised from 22 to 40.7 kopecks per cubic meter if a gas meter
is installed and from 24 to 44.4 kopecks per cubic meter in the absence of a
gas meter.

Also the top level for the wholesale price on gas was raised for
enterprises, supplying gas to the population, by 79.22% or UAH 183 per 1,000
cubic meters to UAH 414 per 1,000 cubic meters. The NERC’s decision came
into effect on June 16.

The NERC intends to raise the gas prices for population to the economically
justified level from January 1, 2007. The National Electricity Regulation
Commission raised the gas prices for population by 25% to 22-24 kopecks and
the top level of the wholesale gas prices for enterprises supplying gas for
the population to UAH 231 per 1,000 cubic meters from May 1.      -30-

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13.  NAFTOHAZ UKRAINY REQUESTS USD 1 BILLION FOR PAYING
  OFF DEBTS TO ROSUKRENERGY, PUMPING BAS INTO STORAGES 

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – The National Joint-Stock Company Naftohaz Ukrainy has requested the
Cabinet of Ministers to be given up to USD 1 billion for repaying debts to
RosUkrEnergo for supplied gas and purchasing additional amounts of natural
gas to be pumped into underground gas storage facilities.

A letter to this effect was addressed by the chief deputy Naftohaz Ukrainy
board chairman Ihor Vasiunyk to the acting Prime Minister Yurii Yekhanurov.

‘…We are requesting You, dear Yuri Ivanovych, to support our proposal
concerning the provision of state funding (crediting) in the amount of 1
billion U.S. dollars for the National Joint-Stock Company Naftohaz Ukrainy
to pay off debts to RosUkrEnerho and purchase additional amounts of natural
gas to have it pumped into underground gas storage facilities,” reads the
letter, the text of which Ukrainian News has obtained.

According to the letter, the issue of USD 1 billion will deprive Russia of
the possibility to reduce natural gas supplies to Ukrainian consumers on the
ground that Ukraine does not pay in due time.

The letter also says that Naftohaz Ukrainy by the end of July is gong to
secure USD 500 million in a credit from the ABN AMRO Bank of the
Netherlands, and, if given USD 1 billion by the Government, it is gong to
repay part of the loaned money in the amount of up to USD 500 million
necessary for the purchase of imported gas during the summer period to fill
underground gas storage facilities.

The letter also points to shortfall in delivery of natural gas by
RosUkrEnergo and the joint-venture company Ukrhaz-Energo.

 
In particular, a mere 7.86 billion cubic meters of gas had been supplied
during April and May instead of 10.4 billion contracted for, frustrating
target plans for pumping gas for storage in underground facilities.

Shortfalls in delivery of natural gas are also expected in June, as 3.99
billion cubic meters of natural gas are planned to be supplied out of 5.3
billion cubic meters provided for by a technical agreement.

In his letter to Yekhanurov, Vasiunyk also said that Naftohaz Ukrainy owed
Ukrhaz-Energo USD 25.5 million as of May 29.

“For this reason the joint venture does not sign contracts for gas supplies
with Naftohaz Ukrainy,” the letter says.

As Ukrainian News reported before, Naftohaz Ukrainy in June secured USD 200
million in a credit from the ABN AMRO Bank of the Netherlands, and is
planning to raise another USD 300 million in a credit from the same bank to
repay debts for natural gas supplies to RosUkrEnergo and Ukrhaz-Energo.

Previously, Plachkov said that Naftohaz Ukrainy owed debts totaling USD 700
million to the RosUkrEnergo company and the Ukrhaz-Energo joint-venture
enterprise.

On June 9, Naftohaz Ukrainy said it intended to obtain an additional loan of
USD 200 million from ABN AMRO Bank (the Netherlands). In late May, Naftohaz
Ukrainy secured a loan of USD 60 million from the joint-stock company Alfa
Bank (Russia).

Previously, the acting Prime Minister Yurii Yekhanurov said that Ukraine was
2 billion cubic meters behind the schedule for pumping natural gas into
underground storage facilities.

The Naftohaz Ukrainy National Joint-Stock Company intends to pump 16 billion
cubic meters of natural gas into underground storage facilities before the
start of the 2006-2007 cold season.                         -30-
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14. ROSUKRENERGO, UKRHAZ-ENERGO TO PUMP 10.2 BILLION
       CUBIC METERS OF GAS INTO UNDERGROUND STORAGES 

Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006 

KYIV – The RosUkrEnergo company and the Ukrhaz-Energo joint-venture
company are planning to pump by the start of the 2006/2007 cold season
10.2 billion cubic meters of natural gas into Ukraine’s underground gas
storage facilities at the cost of their own funds.

This was disclosed in an interview with the Russian newspaper Vedomosti by
Dmytro Firtash, the owner of a 45% share in RosUkrEnergo.

According to a decision taken by a coordinating council at RosUkrEnergo, the
company would pump into underground storage facilities in Ukraine by the
start of the 2006/07 heating season 5.2 billion cubic meters, and
Ukrhaz-Energo five billion cubic meters of natural gas worth a total of USD
1 billion, said Firtash.

“Failing this, it will be impracticable to provide Ukraine and Western
Europe with gas in required volumes. This is not a matter of business but
rather a matter of energy security. We, being aware that Naftohaz (National
Joint-Stock Company Naftohaz Ukrainy) is unable at this point to get this
gas pumped into [underground storage facilities] for financial reasons, took
a decision to provide funding for the resolution of this common problem,”
said Firtash.

Furthermore, Firtash announced his plans to convert the Emfes Kft. gas
trading company in Hungary that he controls into a public company.

“We are now preparing Emfesz for IPO [initial public offering], but the
shares will most likely be placed on a stock exchange in Hungary. We are
planning to sell 25-35% of the shares by the end of 2007. However, I did not
rule out the possibility that part of the shares in Emfesz will be purchased
by RosUkrEnergo,” he said.

He also said that Emfesz intends to take part in gas storage construction
projects in Hungary, and is also handling construction projects for
natural-gas fired power stations. Emfesz sells three billion cubic meters of
natural gas to Hungary every year.

Firtash also gave his comments on the recent media reports that RosUkrEnergo
had acquired Russia’s Astrakhan Oil and Gas Company (AOGC).

“The shares in AOGC had been purchased by Raiffeisenbank, but if
RosUkrEnergo wants to own this company, we will sell it. If not, the AOGC
will be acquired by Emfesz,” Firtash said.

As Ukrainian News reported before, the acting Fuel and Energy Minister, Ivan
Plachkov said that of the 23 billion cubic meters of gas to be pumped into
underground gas storage facilities by the start of the cold season, 16
billion cubic meters will be provided by Naftohaz Ukrainy, 2.271 billion by
the Ukrhaz-Energo joint-venture company and 3.4 billion by RosUkrEnergo.

Naftohaz Ukrainy is confident that the amount of natural gas required for
being pumped into underground gas storage facilities will be there before
the start of the 2006/2007 heating season.

Previously, the acting Prime Minister Yurii Yekhanurov said that Ukraine was
2 billion cubic meter behind the schedule for pumping natural gas into
underground storage facilities.

Swiss-registered RosUkrEnergo was set up in July 2004 by affiliate firms of
Russia’s Gazprom and Raiffeisen to manage Turkmen gas supplies to Ukraine
during the period until 2028.

To provide gas supplies to Ukraine, the Naftohaz Ukrainy [National
Joint-Stock Company] and RosUkrEnergo set up the joint-venture closed
joint-stock company Ukrhaz-Energo on February 2.

At the same time, Ukrhaz-Energo and RosUkrEnergo concluded a contract for
the supply of natural gas to Ukraine at the rate of USD 95 per one thousand
cubic meters for the period until the end of 2010. Gazprom controls 45% in
RosUkrEnergo, Dmytro Firtash 45% and Ivan Fursin 5%.      -30-
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15. ROSUKRENERGO READY TO BUILD PIPELINE FOR DELIVERING
 GAS FROM ASTRAKHAN GAS-CONDENSATE DEPOSIT TO UKRAINE
 

Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

KYIV – The RosUkrEnergo company is ready to build a gas pipeline for

delivering natural gas from the Astrakhan gas-condensate deposit (Russia)
to consumers in Ukraine.

Dmytro Firtash, who owns 45% of the shares in RosUkrEnergo, announced

this in an interview with Russia’s Vedomosti publication.

Firtash said that RosUkrEnergo has an agreement with Ukraine’s Naftohaz
Ukrainy national joint-stock company on delivery of natural gas by the
Astrakhan oil and gas company, which has a license to develop the coastal
part of the Astrakhan gas-condensate deposit.

‘Astrakhan has a reserve of over 4 trillion cubic meters of gas, and the
distance from the region to Ukraine is only 600 kilometers. We are prepared
to build a pipeline for delivering gas to eastern Ukraine, where the main
industrial consumers are located. The Astrakhan gas-condensate deposit will
yield up to 20 billion cubic meters of gas per year,’ Firtash said.

He added that if the project were implemented, the gas pipeline would be
handed over to Russia’s Gazprom gas monopoly and operated as a concession
for 10-20 years.

He also said that RosUkrEnergo was prepared to provide Gazprom with a single
export channel and that construction of the gas pipeline would facilitate a
significant increase in the volume of gas exports through Ukraine because
the main transit pipelines would be less involved in domestic gas
deliveries.

Moreover, according to Firtash, RosUkrEnergo plans to build a chemical
complex for production of polypropylene at the cost of USD 3.5 billion.

The Astrakhan oil and gas company holds a license to develop the right part
of the Astrakhan gas-condensate deposit, which has reserves of 220 billion
cubic meters of gas and 20 million tons of crude oil.

As Ukrainian News earlier reported, several mass media organizations
recently reported that RosUkrEnergo had acquired 74.89% of the Astrakhan oil
and gas company. Firtash later said that shares in the Astrakhan oil and gas
company were bought for Raiffeisenbank (Austria).

Subsidiaries of Russia’s Gazprombank and Raiffeisen (Austria) founded the
Swiss-registered RosUkrEnergo in July 2004 for delivering Turkmen natural
gas to Ukraine until the year 2028.

Naftohaz Ukrainy and RosUkrEnergo jointly created the Ukrhaz-Energo closed
joint-stock company on February 2 for delivering natural gas to Ukraine.

On the same day, Ukrhaz-Energo and RosUkrEnergo signed a contract for
delivery of natural gas to Ukraine at the price of USD 95 per 1,000 cubic
meters until the year 2011. Russia’s Gazprom owns 45% of the shares in
RosUkrEnergo, Firtash owns 45%, while Ivan Fursin owns 5%.   -30-
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16. PHILIP MORRIS UKRAINE TO DONATE REHABILITATION EQUIP

     FOR ORPHAN CHILDREN TO NUCLEUS CHARITY FOUNDATION 
 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – Philip Morris Ukraine is going to donate on June 26 rehabilitation
equipment for orphan children living in special shelters to the Nucleus
charity foundation under the charity program that aims to help children with
organic central nervous system lesions. Ukrainian News learned this from

the press service of the company.

According to the report, the specialized children’s homes in various regions
of Ukraine will receive 21 sets of rehabilitation equipment (sensor rooms
consisting of a dry swimming pool filled with plastic balls of different
colors, multi-functional set called The Little Gnome, entertainment
labyrinth, Hofr message carpet, and an air trampoline Kazka (Fairy Tale).

The program is under the patronage of the Ministry of Health. The total cost
of the equipment is around UAH 420,000. The donation will help children
exercise simple movements and improve their physical and mental skills while
playing, the company reported.

‘Thanks to the program, over the past two years, all 42 specialized
children’s homes in Ukraine have been contacted. The homes nurse children
with organic central nervous system lesions. Our aim is to help medical
institutions improve health of kids, give them a chance to develop
normally,’ said Alla Ihnatenko, head of the corporate communications
department at Philip Morris Ukraine.

As Ukrainian News earlier reported, last year Philip Morris Ukraine
increased cigarette production by 20.6% or 6,408.2 million to 37,489.6
million cigarettes and accounted for a 37.5% share among the companies which
belong to the Ukrtiutiun association.

Philip Morris Ukraine produces Marlboro, Parliament, Chesterfield, Muratti,
L&M, Bond Street, and Next cigarettes.               -30-
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17.              NATO INVESTING IN UKRAINIAN SECURITY

Valeriy Savytskiy, Kyiv Weekly, Kyiv, Ukraine, Wed, June 28, 2006

Representatives of the Ministry of Defense of Ukraine and NATO signed in
Kyiv the Fund-in-Trust of NATO project within the framework of the
Partnership for Peace program for the recycling of used ammunition.

According to the project. over the next 12 years NATO will allocate 25 mn
euro to Ukraine to destroy 1.5 mn rifles and several thousand tonnes of
ammunition.

Ukraine’s share of investments into this project is 50 mn euro. The NATO
Maintenance and Supply Organisation (NAMSÎ) will oversee the project and
will define the list of ammunition and arms.

At this point approximately 2 mn t of ammunition are stored at 159 arsenals,
military bases and warehouses of the Ministry of Defense. The warehouses are
overloaded by 20%. One third of the ammunition is stored under the open air,
while half the storage facilities do not even have fire alarm systems
installed due to the lack of financing.

During the last seven years less and less money is being allocated from the
National Budget for state programs of ammunition recycling. For this reason,
the progress in this area is negligible.

Poor storage conditions and the violation of safety rules caused several
huge fires at ammunition storage facilities not far from the town of
Artemivsk (Donetsk oblast) and near the village Novobohdanivka (Zaporizhzhia
oblast). Strong explosions of mines and ammunition sent shrapnel flying over
a huge radius surrounding the warehouses. The population of the nearby areas
had to be evacuated and the environment was polluted by chemicals.

Ukraine appealed to NATO in 2002 with a request to finance recycling
programs of outdated ammunition. A few years ago Ukraine destroyed 400,000
anti-infantry mines with the financial assistance from NATO. This latest
project is the largest in terms of the amount of investments.

Michel Duray, Director of the NATO Information & Documentation Centre in
Kyiv, explained the four-year delay in the development of the approved
project by the need for “specifying all the elements, procedures and
 details”. “I think it is better to have a good agreement. It can not be
prepared hastily, because security is a very serious business. It must
include all details and nuances. It is better than an agreement signed in a
hurry, which brings nothing but advertisement and is not fulfilled,” Duray
is convinced.

Serhiy Zhurets, an expert at the Center for Army Research, Conversion and
Disarmament, explained the few years of delay “by the problem in choosing
companies that will participate in tenders and choosing the company that
will distribute the terms of the tender.”

The expert believes that the political factor also played a significant role
in this delay: “There was intrigue related to the Orange Revolution. It was
postponed, because both NATO and the U.S. had to make sure that the
allocated funds would be effectively used. The Ukrainian side thought that
the terms and conditions set by the Alliance were too strict. It looked like
a large amount of money remained in the pockets of NATO structures, which
allocated a small amount of money for this work,” believes Zhurets.

The U.S. are especially interested in this project. Zhurets said, that
“among 1.5 mn rifles, the project envisaged destroying 1,500 mobile
anti-aircraft rocket constructions, which are considered the most dangerous
ones if they get into the hands of terrorists and pose the threat of
destroying different classes of aircraft.”

Zhurets believes that the first practical results from the project can be
expected in 2-3 years. The expert forecasts wide-scale recycling no sooner
than in 6-8 months, since “it will take half a year to allocate the money
and another half a year to distribute it within the tender among the
companies. A few days after presenting this project on ammunition recycling,
Slovakia allocated 20,000 euro.

At the same time, Zhurets believes that “it will take 100 years to recycle
all extra ammunition, since approximately only 60,000 t of ammunition can be
recycled per year. It is not only a financial issue, we need to expand the
number of plants and increase their capacity. We should use not only state
factories, but also create some separate structures that will also deal with
ammunition problems. Now it is like a clot that clogs our veins and does not
allow us to quickly get rid of ammunition. We cannot blow them up, because
it is very dangerous. Many arms storage facilities are located near
residential areas in towns and cities.”

Approval of the project for recycling excess ammunition confirms the fact
that NATO upholds security inside and outside of Ukraine. At the same time,
Russia, Belarus and China never initiated any assistance programs in this
area, although they have similar ammunition and recycling technologies.

Oleksiy Plotnikov, a VR deputy from the Party of Regions, explains it as
follows: “It is difficult for me to say why Russia or Belarus did not
initiate assistance in ammunition recycling. Maybe the reason is that
Ukraine moved too far away from contact with these and other countries of
the CIS. And NATO supports their desire to see Ukraine as its member, so the
Alliance carries out its policy by different methods, including signing this
agreement.”

He also stated that despite NATO’s desire to improve security in Ukraine,
the Party of Regions as a part of the anti-NATO movement would not change
their attitude towards the Alliance.

“This agreement will not change the Party of Regions’ attitude towards NATO.
Of course, we always approved cooperation with the Alliance in these issues
and participated in them. However, the party has a clear and staunch
position that the issue of NATO entry should be settled only through a
nationwide referendum. Only the results of the referendum should be used to
make a final decision on entering NATO,” stressed Plotnikov.

—————————————————————————————————-
LINK: http://www.weekly.com.ua/?art=1151437106
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18. YULIA TYMOSHENKO: UKRAINIANS ARE INSUFFICIENTLY
                                INFORMED ABOUT NATO
 
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

KYIV – Member of the Verkhovna Rada and eponymous bloc leader Yulia
Tymoshenko says that Ukrainian citizens are insufficiently informed about
activities of NATO. Tymoshenko told this to journalists at the presentation
of the Idealna Kraina (Ideal Land) online project.

In Tymoshenko’s opinion, information about NATO is absolutely absent in
Ukraine, which points to a low professional level of authorities’ work with
information. The lawmaker said that first the public should be explained
what NATO is and only then the referendum on Ukraine’s membership in the
Alliance should be held.

As she noted, the Ukrainian society is deeply uninformed and needs a
professional discussion of NATO. ‘Now we see nothing but propaganda on

TV and radio,’ Tymoshenko said.

The BYT leader also noted that there exist many provocations regarding NATO
issues, which are used for isolating Ukraine from cooperation with the North
Atlantic Alliance. In her opinion, during the Crimean crisis, the President
had to cover the issue of Russia’s cooperation with NATO in mass media in
every way possible.

Tymoshenko said that Russia itself furthers Ukraine’s accession into the
organization. ‘If Russia makes some other steps like raising gas prices,
Crimea will be the first to join NATO,’ Tymoshenko said.

As Ukrainian News earlier reported, the parliamentary coalition set up on
June 22 pledges to make a decision on Ukraine’s accession to NATO based on
the result of a national referendum. In mid-April Ukraine elaborated the
Plan of Actions on NATO membership.

Ukraine plans to begin implementation of the Plan of Actions on NATO
membership in September. Ukraine hopes to become a NATO member in 2008.

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19. UKRAINE: CRIMEAN TOWN REVELS IN “VICTORY” OVER NATO 
 
NTV Mir, Moscow, in Russian 0900 gmt 26 Jun 06
BBC Monitoring Service, United Kingdom, Mon, June 26, 2006
MOSCOW – Crimea will henceforth celebrate two Victory days. The traditional
May holiday [Victory Day on 9 May] will be complemented by another one in
June. [Passage omitted]

Anna Konyukova, our own correspondent in Crimea, watched the victorious
parade of Crimean residents and the bewilderment of the holiday-makers.

[Correspondent, over video of a column of marchers chanting “Victory!”]
Feodosiya has added its own holiday to the list of Crimea’s festive days.
The residents of Feodosiya have decided to mark it every year in late June.
It will be called “We have won!” [Video of marchers chanting “We have won!”]

The Feodosians held their festive march along the route of the recent
anti-NATO protests and pickets past the anti-NATO square, the embankment

and the sanatorium of the Defence Ministry. Rallies were staged in places where
pickets had kept US military, hardware and weaponry sealed off for 27 days.
Deputies of the Crimean parliament and the Feodosian city council
congratulated the Crimeans on the victory and spoke not about today but
about Ukraine’s tomorrow.

[Oleh Slyusarenko, MP of the Autonomous Republic of Crimea, addressing

the crowd] They will come to a sorry end with their joining NATO. They will
force Ukraine to split but this will be on their conscience, not on ours.

[Borys Stepanov, deputy of the Feodosiya city council] This is only a
beginning. I think we will see such protests not for the first or the last
time and not only in Crimea but throughout the whole of Ukraine. [Passage
omitted]

[Correspondent] Participants in the anti-NATO protests have decided to
rename Priportovaya Square as Anti-NATO Square and to set up an anti-NATO
museum in the city. One of the items from this museum was temporarily hanged
on a pole. [Video of an effigy of a NATO serviceman strung up on a telegraph
pole] [Passage omitted]                          -30-
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20.   RUSSIA OIL TEMPERS U.S. SWAY – MOSCOW’S WEALTH
            STRENGTHENS PUTIN’S HAND IN POLICYMAKING 

By NEIL KING JR. in Washington and ALAN CULLISON in Moscow
The Wall Street Journal, NY, NY, Wed, June 28, 2006; Page A10

The Bush administration is wrestling with a new challenge from abroad: an
often strong-willed Russia made all the more assertive by its energy wealth.
As if to drive home that point, Russian President Vladimir Putin delivered a
hard-hitting speech yesterday, arguing that Russia’s economic renaissance
makes it an equal among other global powers.

His comments highlight the dilemma facing Secretary of State Condoleezza
Rice, who arrives in Moscow today hoping to win Russia’s support on
international issues such as curbing Iran’s nuclear ambitions, even as the
Bush administration has stepped up criticism of Mr. Putin’s policies both at
home and toward Russia’s nearest neighbors.

President Bush is set for his own visit to Russia next month, when he must
face a similar bind. Administration officials concede that Moscow’s economic
boom is fueling a more independent Russian foreign policy, and that U.S.
criticism of Russian policies increasingly falls on deaf ears.

Mr. Putin, talking to an annual gathering of top diplomats in Moscow,
acknowledged that some countries haven’t caught up with Russia’s new
economic strength. “Not everyone was ready for Russia to restore so quickly
its economic health and position in the world arena,” he said. “Some see us
through the prism of the prejudices of the past … and see a threat in a
strong, reborn Russia.”

Bush aides say they worry that Russia’s economic clout already is leading
Moscow to overplay its hand on the diplomatic front. As examples, they cite
Moscow’s decision in January to cut off gas supplies briefly to Ukraine, and
Mr. Putin’s outreach in March to top leaders of Hamas soon after the
militant group began to run the Palestinian government.

“They are certainly feeling better about themselves than at any time since
the breakup of the Soviet Union,” says one senior administration official,
adding that Russia’s energy wealth “has given them the distinct feeling that
they are back as a big-time player.” Russia’s assertiveness has complicated
life for an administration already struggling with falling approval ratings
at home and the intractable conflict in Iraq.

The big test of U.S.-Russia relations is Iran. So far, Moscow has supported
U.S. and European efforts to forge a united front within the United Nations
to get Tehran to give up any pursuit of nuclear weapons. But Moscow has said
repeatedly that it doesn’t support imposing sanctions or harsher measures if
Iran doesn’t comply, and Mr. Putin made clear that Russia wasn’t ready to
give ground on this issue. “I repeat again: We do not intend to join all
sorts of ultimatums that can only drive the situation to a dead end,” he
said.

Administration officials say that Ms. Rice, while in Moscow this week, is
unlikely to echo the blunt language that Vice President Dick Cheney used
last month in Lithuania, when he accused the Putin government of
concentrating power at home while using Russia’s vast oil and gas reserves
as “tools of intimidation or blackmail.” Instead, Ms. Rice may meet
privately with several leaders of Russian civil society. Mr. Putin yesterday
denounced all criticism of his energy policy as “exclusively political.”

President Bush, during his trip in July, may also show some sign of support
for greater democracy in Russia, though his advisers are debating what
gesture to make. Mr. Cheney’s public blast in Lithuania, U.S. officials say,
was meant to put down a marker in the lead-up to the Russian-hosted summit
of the Group of Eight top industrialized countries in St. Petersburg next
month. Russia’s stewardship of the G8 this year, at a time when the Putin
government clamps down on dissent at home, has embarrassed many in Europe
and the U.S.

Mr. Cheney’s speech, if anything, only appeared to redouble the Kremlin’s
defiance of Washington, and aroused an argument in the state-run media that
is often expressed: The U.S. is using the rhetoric of democracy as a weapon
as it installs unfriendly governments on Russia’s borders, and supports
opposition groups within Russia itself.

Mr. Cheney delivered his broadside against the Kremlin from Lithuania, and
then departed to oil-rich Kazakhstan, where he praised the authoritarian
leader as a personal friend. “Where is all this pathos about protecting
human rights and democracy when it comes to the need to pursue their own
interests?” Mr. Putin asked in his annual state-of-the-nation address a week
later.

Bush administration officials insist there is no internal feud over Russia
policy per se. The administration wants good relations with Russia, they
say, on counterterrorism and energy cooperation, but also won’t shy away
from pointing out Mr. Putin’s democratic lapses.

“We believe it’s possible to do the criticism and the cooperation at the
same time,” says one official. To keep some focus on the democracy side, the
administration plans to send two State Department officials, including the
top U.S. diplomat for Europe, Daniel Fried, to a pro-democracy “alternative
summit” four days before the G8 gathering.

Still, U.S. officials acknowledge that dealing with an increasingly cocky
and robust Russia has complicated interactions with Moscow and made
negotiations within the U.N. Security Council, where Russia holds a veto,
more tricky.

When Mr. Bush in June 2001 declared Mr. Putin “a man deeply committed to his
country,” Russia was still severely in debt and struggling to recover from
the chaos of the 1990s. Russians were also far more uncertain of Mr. Putin
himself.

Moscow now has the third-largest currency reserves in the world, including a
special $70 billion domestic “stabilization fund.” The Russian economy is
growing at faster than 6% a year, driven mainly by its output of oil and
gas. And its OAO Gazprom, now one of the world’s largest companies, supplies
more than a quarter of all of Europe’s gas, and is pushing to become a major
future supplier to China and the U.S.
—————————————————————————————————
Write to Neil King Jr. at neil.king@wsj.com and Alan Cullison at
alan.cullison@wsj.com

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21.        FITCH SEES CONVERGING FORCES COULD SPARK
                             A NEW EUROPEAN GAS CRISIS
     “It seems like all the makings of a perfect storm,” said Jeffrey Woodruff.

Cbonds News, St. Petersburg, Russia, Monday, June 26, 2006

Fitch Ratings said today that a combination of events, demands and potential
price rises could spark a new European energy crisis.

The chief elements converging now are [1] calls by Ukraine’s prime minister
designate to re-visit the gas agreement reached with Russia at the beginning
of the year; [2] new demands by Turkmenistan that Russia pay USD100 per
thousand cubic meters of gas; [3] reports that OJSC Naftogaz (rated
‘B+’/Outlook Negative) is not storing enough gas in its underground storage

facilities to ensure uninterrupted supplies to Europe this winter; and [4] indications
that OAO Gazprom (‘BB+’/Outlook Stable) intends to raise prices for Ukraine
again in July..

“It seems like all the makings of a perfect storm,” said Jeffrey Woodruff,
Director in Fitch Rating’s Energy Group in Moscow. “Any of the events in
isolation could be enough to spark a new supply interruption concerns in
Europe, but all of them colluding near the beginning of the G8 summit on
energy security seems almost unbelievable.”

Political parties in Ukraine (‘BB-‘/Outlook Stable) have finally been able
to form a new coalition after months of infighting and bickering that
followed parliamentary elections in March of this year. Yulia Tymoshenko is
poised to be reinstated as Ukraine’s prime minister, eight months after
being dismissed from her duties, after forming a coalition that includes the
pro-presidential Our Ukraine party, Tymoshenko’s own bloc and the smaller
Socialists party.

As part of her return to power, the incoming prime minister says, “All
agreements on gas supplies to Ukraine today call for further profound
revision, and for construction in a friendly mode of new contractual
relations with Russia and Turkmenistan.” Gazprom has said that any attempt
to revise the previously reached agreement could lead to renewed supply
problems for Europe.

Gazprom has also said that Naftogaz is not currently pumping enough natural
gas into underground storage facilities to meet winter demand. Gazprom
believes that about 18.5 billion cubic meters of gas should be pumped into
Ukraine’s underground storage facilities before the heating season starts in
order to ensure uninterrupted transit of Russian gas to Europe.

The head of Italian energy group ENI, Paolo Scaroni, has also said he feared
January’s crisis might recur due to the insufficient pace of gas storage.
Naftogaz claims it has pumped 5 billion cubic meters of natural gas into
underground storage facilities as of June 22 and intends to pump a total of
16 billion cubic meters into underground storage facilities before the start
of the 2006-2007 heating season.

In the meantime, tensions continue to rise as Turkmenistan threatened to cut
gas supplies to Russia after an agreement on the price for the second half
of 2006 failed to be struck. Turkmenistan is attempting to raise the price
at which Gazprom buys from Turkmenistan from USD65 to USD100 per thousand
cubic meters. Any such price increase will likely have a direct negative
impact on Ukraine as well since the country receives most of its gas from
the Central Asian republic.

Fitch expects that Gazprom, which supplies up to 17 billion cubic meters of
gas to Ukraine per year, would be quick to pass on these higher costs. In
addition, successful price increases by Turkmenistan to supply gas to Russia
would also likely lead to direct price increases for Ukraine, which receives
approximately 40 billion cubic meters from Turkmenistan per annum.
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http://www.securities.com/MyImages/Info/RU/RU-CBONDS.html
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22.  YULIA TYMOSHENKO OPPOSES ROSUKRENERGO’S PART
                           IN GAS SUPPLIES TO UKRAINE 

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – Yulia Tymoshenko, the leader of the eponymous BYT Bloc who has

been nominated for premiership by the Verkhovna Rada coalition, is opposed to
RosUkrEnergo’s participation in gas supplies to Ukraine. Tymoshenko made a
statement to this effect while speaking in an interview with the Russian
publication “Russian Newsweek”.

“I am confident that three countries (Ukraine, Russia and Turkmenistan) and
their respective state organizations (National Joint-Stock Company Naftohaz
Ukrainy, the Russian gas monopoly Gazprom and the state-owned company
Turkmenneftegaz) should conclude contracts directly, without any
interpreters or intermediaries, official or semi-official, being
involved…And, of course, without RosUkrEnergo,” Tymoshenko said.

Tymoshenko said that she is planning to start on negotiations on natural gas
supplies to Ukraine just after the formation of the new Cabinet of
Ministers.

[This work will start] “…once the formation of the Cabinet is completed — 
that is to say in a week,” said Tymoshenko.

As Ukrainian News reported before, Yulia Tymoshenko insists that gas
agreements between Ukraine and Russia should be revised.
On the night to January 4, Naftohaz Ukrainy, Gazprom and the RosUkrEnergo
company agreed on natural gas to be supplied to Ukraine for USD 95 per one
thousand cubic meters and that the cost of gas transit via the Ukrainian
territory be raised from USD 1.09 to USD 1.6 per one thousand cubic meters
of gas transported by 100 kilometers.

Naftohaz Ukrainy and RosUkrEnergo on February 1 set up a joint-venture
closed joint-stock company, Ukrhaz-Energo, to manage gas supplies to
Ukraine.                                                -30-
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23.                               “WITH BEST WISHES”
                    Meeting Robert Conquest at Stanford University

By Vasyl Marochko, Ph.D. (History)
Head of the Association of Holodomor Researchers, Kyiv
The Day Weekly Digest in English, #21
Kyiv, Ukraine, Tuesday, 27 June 2006

I visited the United States for the second time in April 2006. Whereas in
2003 I had to spend weeks attending a conference and listening to papers
given by historians, men of letters, and philologists without leaving the
session hall even for an hour, this time my trip had a broader geography,
stretching from the Atlantic to the Pacific coast.

After acquainting myself with the program of the visit, I said I would like
to meet Robert Conquest, the noted researcher of the purges in the Soviet
Union, author of the substantial work “Harvest of Sorrow,” and the first
Western researcher to recognize the Holodomor in Ukraine as an act of
genocide.

Stanford University is a large, scenic campus with its own post office,
security service, numerous research foundations, and learned professors,
who teach various disciplines to diligent students. Tuition fees range from
43,000 to 54,000 dollars a year, which is a stimulus of sorts.

We met with Robert Conquest at the reading hall of the Hoover Institution on
War, Revolution and Peace. Of British descent, he is a remarkably learned
and cultured person whose research and journalist activities are associated
with Oxford, where he plans to return in the nearest future.

During our conversation at Stanford, where he is a research fellow, he
listened more than he spoke. I asked Professor Conquest how he got around
to studying Ukrainian history. He said that in 1937, when he was still a
student, he had made a trip to Europe and even visited the Ukrainian pearl,
the city of Odesa. The year of the Great Terror would become a matter of
special interest for the researcher.

During the years of Khrushchev’s Thaw Conquest worked as a journalist,
literary critic, and edited a collection of verse “The New Line” in
1955-1963. He is a noted writer and the author of several works of fiction.
He collaborated with Alexander Solzhenitsyn in the 1970s and helped publish
English versions of his books.

In 2005, his book “The Dragons of Expectation” came off the presses.
Listening to Conquest, I found myself thinking that we know far too little
about his scholarly legacy, mostly his well-known monograph about the
Holodomor, and that this legacy should be the subject of a dissertation.

Conquest’s student, the noted US researcher James Mace, came to Ukraine
in 1990, where he would spend the rest of his life. Mace spoke about his
teacher, their joint research project and the work of the U.S. Commission on
the Ukraine Famine. In other words, he familiarized us with the scholarly
legacy of a researcher who was well known in the West but taboo in the
Soviet Union.

In 1968, when Jim was still going to school, Conquest published one of his
first papers on Soviet agriculture. That same year his important work “The
Great Terror” appeared in print, followed by reprints in 1971 and 1973.

The two-volume Russian version came off the presses in 1991, the year the
USSR collapsed. The book went down in the annals of historiography,
although historians’ opinions, especially those of the Soviet generation,
were
varied. Some criticized it; others admired it, while others continued to
debate the issue.

The monograph elucidated the causes and consequences of the Great Terror in
1936-1938, yet made no mention of the Holodomor. Judging by the author’s
references to S. Pidhainy, V. Hryshko, I. Maistrenko, and K. Kononenko,
Prof. Conquest knew about the tragedy of the Ukrainian people.

Who or what prompted Robert Conquest to write a book about the Holodomor?

This is a question that occasionally surfaces in the press. In the early
1980s Ukrainian communities in the United States, Canada, and Australia
marked the 50th anniversary of the Holodomor in Ukraine. American political
circles showed little interest in the subject.

As James Mace later wrote, a generation of English-speaking professional
researchers of purely American descent, who had become influential in the
Ukrainian community, as well as in the sphere of Soviet studies, proceeded
to demand recognition of the Great Famine in Ukraine of 1932-1933.

In June 1981 the Toronto-based newspaper Homin Ukrainy formally announced
that Professor Conquest would be writing a work on the Holodomor. He was
invited to Harvard University to supervise a research project investigating
the famine in the Ukrainian countryside. James Mace, his assistant, was
researching the origins of Ukrainian national communism in Soviet Ukraine in
1918-33.

Mace recalled later that, while working on his doctorate, he knew all the
sources of data available in the West and the historical context of the
Holodomor in the Ukrainian SSR and the Soviet Union. The result of their
joint research was the book “Harvest of Sorrow.” The combination of youth
and
experience, hard facts and political analysis, James Mace’s American Indian
energy, and the British scholar’s academic training and knowledge of Soviet
affairs proved successful.

I wanted to discuss James Mace and hear Robert Conquest’s opinion. When
I asked him about his students, he said quietly: “I’ve never been a
traditional university lecturer. I mostly busied myself with research.” He
did remember Mace as a gifted Harvard researcher. He knew that his former
assistant had died and been buried in Kyiv; he recalled his public
appearances at the universities of Toronto and Stanford.

Mace’s scholarly biography, especially when he was working on his doctorate
at the Harvard Ukrainian Research Institute and later as a research fellow
(1984-1986) is included in the book “Day and Eternity of James Mace.”

I didn’t dare ask Dr. Conquest about what happened on Oct. 2, 1983, in
Washington when 18,000 Ukrainian Americans staged a rally in front of the
Soviet Embassy, although I was eager to find out whether he and Mace were
there. Jimmy had never mentioned his participation in this political event.

Orest Deychakiwsky, staff adviser to the Commission on Security and
Cooperation in Europe (Helsinki Commission), read an open letter during the
rally. The message is still topical, considering the Russian Federation’s
critical attitude to the recognition of the 1932-1933 Famine as an act of
genocide, which was voiced during the CIS summit in April 2006.

“The Holodomor was a deliberate act of genocide, the only man-made famine
in world history, and although different methods were being applied by the
Soviet government, the objective was the same: to destroy Ukrainian national
identity. Your current leadership knows about the genocidal famine and the
current policy of Russification, but it continues to deny this.”

Eighteen years have elapsed since that rally in front of the Soviet Embassy
in Washington. The USSR is history, but the embassy building is still there,
which the Russian Federation inherited along with great-power ideology and
responsibility for the past.

Perhaps it would be best to disown such a dubious heritage, considering that
peasants in the Don region were also dying during this famine and Mikhail
Sholokhov, the author of the novel “Virgin Soil Upturned,” repeatedly told
Stalin about this.

The historical fact of this crime must be acknowledged, all the more so as
during this tragic period the government of the RSFSR was not involved in
the ideology and practice of genocide. Apparently, certain circumstances are
preventing Moscow from taking this step, since official Moscow is loath to
return to the past, not wishing to “disturb” the present.

Robert Conquest and I discussed the need to preserve and study archival
documents on the Holodomor, which are stored in Ukrainian and Russian
archives. I have an autographed copy of his English-language book “Harvest
of Sorrow.”

It appeared in print in 1986 and its Russian version was published in 1988.
The Ukrainian version appeared in 1993, although separate chapters were
published in the journals Dnipro, Trybuna Lektora, and Kyiv in 1990.

Somehow the 1986 original foreword was not included in the Ukrainian
translation. In it Robert Conquest thanks James Mace and his Stanford and
Harvard colleagues for their cooperation. Judging by reviews in the Diaspora
press, the book was written in the spring of 1984 and the text was discussed
during a forum of the Harvard Ukrainian Research Institute. The foreword’s
date also looks logical: 1985, meaning that it was written before the book
appeared in print.

When Conquest’s monograph was published 20 years ago, it sparked great
debate. Soviet historians tried to refute some of the facts; Western
political scientists upheld them; while the Ukrainian Diaspora used it to
substantiate the fact of this act of genocide through scholarship.

Its publication coincided with Gorbachev’s perestroika campaign, although
the book itself marked the appearance of a new perception of the causes and
consequences of the Holodomor in Ukraine. It served as fresh impetus for
further research, destroyed existing stereotypes, and encouraged us to
revise our history.

It taught us to identify gaps in our history as blank pages hiding entries
covered in blood. From the rostrum of the 18th All-Union Party Conference
held in Moscow in 1988, Borys Oliynyk spoke about the 1933 Famine as a
tragedy endured by the Ukrainian people. In the following years a series of
archival documents on the Holodomor appeared in print.

Yevhenia Shatalina and I published them in Ukrainskyi istorychnyi Zhurnal
[Ukrainian Historical Journal] in 1989. The process had been launched, and
in the next several years we published several volumes of Holodomor
eyewitness accounts, a collection of archival documents, dozens of
monographs, and held scholarly conferences on the subject.

Although sufficient efforts seemed to have been made, the process stalled
when it came time for the official recognition of the Holodomor as an act of
genocide. From a purely scholarly question it had acquired markedly
political hallmarks. In May 2003 the Communist Party of Ukraine, then with
a sizable faction at the Verkhovna Rada, refused to acknowledge the
Holodomor and marched out of the parliamentary hall.

These are strange people to whom ideological prestige means more than
Christian consciousness: all those peasants who starved to death were not
buried in accordance with the Eastern Orthodox rite.

Over 60 countries are observing the anniversary of the Holodomor in Ukraine;
many of them have handed down due political and legal judgments and
confirmed the act of genocide, i.e., a crime against humanity. We must
officially recognize the Holodomor as an act of genocide against the
Ukrainian people; no one will suffer any political losses. On the contrary,
this will serve as proof of the start of an era of new political morals.

For me it was important to hear Robert Conquest’s political and legal
assessment of the Holodomor in Ukraine. I asked the learned professor if he
had revised his view of the Famine as an act of genocide, as presented in
his book, now that 20 years have elapsed.

He gave a definite no, and then bolstering his argument as a true
researcher, said that Holodomor is the best term, because it means a
concrete historical form of mass physical destruction, because peasants died
en masse at the time as victims of a man-made socioeconomic phenomenon,
not a disaster.

The term “terror-famine,” applied in “The Harvest of Sorrow,” related to the
political causes of the Holodomor – in other words, it was a deliberate
effort aimed at bringing about a famine that would kill, which is none other
than an act of genocide.

When we use the term Holocaust, the scholar went on to say, we have in mind
the Nazi methods and forms of massacring Jews in concentration camps, which
falls under the 1948 genocide convention. I was very impressed by his
tolerant, scholarly approach to formulating the causes of the Holocaust and
the Holodomor.

For a researcher the best reward is public recognition of his findings and
their social value. I presented Stanford University with the monograph “The
1932-1933 Famine in Ukraine: Causes and Consequences (2003).” Dr. Conquest
commented on it positively and then gave me a copy of his book signed “With
best wishes.”                                           -30-
—————————————————————————————————-
LINK: http://www.day.kiev.ua/164447/
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
24. EXHIBITION “UKRAINIAN MODERNISM 1910-30” TO CHICAGO
                   “Kyiv of the 1910s-1930s was the mecca of ‘leftwing artists'”

By Olena SHAPIRO, special to The Day
The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, 27 June 2006

This July the Chicago Arts Center and New York’s Ukrainian Museum will
hold an exhibit of paintings by Malevich, Bohomazov, Yermilov, Burliuk,
Maksymovych, and many other noted Ukrainian artists.

Entitled “Ukrainian Modernism: 1910-30,” the show is being organized on the
initiative of Prince Nikita Lobanov-Rostovsky, a member of the board of
directors of the Foundation for International Arts and Education
(Washington, DC), in collaboration with art specialist Dr. Dmytro Horbachov,
and with the support of Ukraine’s Ministry of Culture and Tourism and the
National Art Museum of Ukraine.

My conversation with Dr. Horbachov touched on the upcoming exhibit and the
unique artworks that will be on display. We also talked about a longstanding
problem, namely whether works by renowned Ukrainian artists will be returned
from private collections to Ukraine.

“Nikita Lobanov-Rostovsky, a noted collector, art patron, and consultant to
Christie’s and Sotheby’s, recently visited Ukraine,” Dr. Horbachov told The
Day. “He and I visited various regions in search of masterpieces. It all
started after Lobanov-Rostovsky spotted artworks of world caliber at the
Kyiv Theatrical Art Museum on the grounds of the Kyivan Cave Monastery. He
was also shocked by the lamentable state of Ukrainian museums. Stunning
paintings were gathering dust in sealed-off museum ‘fund’ rooms.

“The unique set designs of the early 20 th century were an unparalleled
phenomenon. Nowhere in the world did set designers make easel works. As a
rule, Western artists prepared working sketches for the theater (including
Picasso, Braque, and Chagall). Our artists, starting with Bakst, did two
versions: a working sketch for the stage and a full-fledged easel painting,
as in Petrytsky’s case.

This is proof that our artists worked not only on commissions but also
painted works for themselves, for the sake of pure art.

“Lobanov-Rostovsky, who has been closely following creative life in Ukraine
for a long time, conceived the idea of holding a Ukrainian modernist art
exhibit in the West.

The Washington-based Foundation for International Arts and Education has the
funds for organizing such an exhibit and renting the premises; that was how
the idea of showing Ukrainian avant-garde artists in the United States
emerged.

“One of the conditions was that only large works could be submitted because
US audiences appear to have special optical characteristics; they seem
unable to “see” small-format paintings. In contrast, the Japanese prefer
miniature works of art and can look at them for a long time. We discovered
several magnificent works of art in Kyiv and other Ukrainian cities.

But Lobanov-Rostovsky was sad because there wasn’t enough ‘critical mass’
for a full-fledged exhibit, so he proposed to expand its format and call it
‘Ukrainian Modernism,’ meaning modern plus avant-garde. Apart from the
gifted Novakivsky, another talented Ukrainian artist by the name of
Maksymovych specialized in the field.

He was destined to live a short life – he committed suicide at the age of 20
but left behind interesting works as the number-one artist of the ‘Ukrainian
school’. Nevertheless, by force of Soviet mental habits, Maksymovych is
still regarded as a dilettante.

“The arrangements for the exhibit took six years, and during that period
Lobanov-Rostovsky and I became real experts on Ukrainian private and museum
collections. We unearthed around 100 works of art that will be displayed at
the Chicago Arts Center and the new Ukrainian museum in New York City. We
managed to carry out this creative project thanks to the personal support of
President Viktor Yushchenko.

“By the way, this is not the first time that Lobanov-Rostovsky has
undertaken a benevolent project. He is well known to Ukrainian museums as a
patron and art collector. For example, he donated 15 stage designs sketched
by Sonja Terk Delone and Ilya Repin’s study A Zaporozhian Cossack, along
with a watercolor landscape by Shevchenko, which he donated to the
Shevchenko Museum.

Lobanov-Rostovsky’s private collection boasts works by Ukrainian artists,
such as Anatol Petrytsky, Kazimir Malevych, Oleksandr Khvostenko-Khvostov,
Vladimir Tatlin, I. Rabynovych, Oleksandr Tyshler, Oleksandr Bohomazov, and
other gifted artists.”
             “ARTIST SHOT, PAINTING WAS DESTROYED”
We know that most of the works created by Ukrainian avant-garde and
modernist artists were destroyed. What happened to their creators? Surviving
inventories state: “Artist shot, painting was destroyed.” Dr. Horbachov
succeeded in processing part of the collection and using the newly
discovered paintings to create a fundamental study entitled The Ukrainian
Avant-Garde, 1919-1930.

You have studied and rediscovered works created by artists who were banned
by the Soviet government, and returned them to the National Art Museum.
Today the names of Malevich, Petrytsky, Ekster, and Bohomazov comprise the
museum’s “gold fund.” Could you describe your work on the “Ukrainian avant-
garde?” How was it conceived?

D. H.: “In the 1930s-1940s all formalist works of art, so-called
“anti-Soviet” paintings, were denounced. The museum had a separate room in
which all condemned works of art, with their canvases removed from their
frames and rolled up, were stored. They were supposed to be burned. However,
since the size of these paintings ranged from small to large, disposing of
them required special vans. So the pictures were stored there, awaiting
destruction.

“Eventually, the authorities must have forgotten about them and that was how
they survived. Some artists were not lucky, as their paintings were scrubbed
off the canvas or even shredded. During that period paintings banned by the
authorities was regarded as the creativity of “enemies of the people.” For
example, there was a whole saga around Petrytsky’s portraits.

Some of the writers he had portrayed (Liubchenko, Khvylovy) were purged and
their portraits were burned. But there were cases where museum employees
would hide “taboo” works by rolling up the canvases and storing them in
their “fund” rooms. When I started working as the museum’s chief security
officer, I was told to accept shipments of canvases without actually
examining them. I was supposed to just check the number, sign the invoice,
and forget all about it.

“In the early 1960s there was an exhibit by the artist Sayenko in Kyiv. An
art critic named Vorona declared during the opening ceremony that we were
praising Sayenko because he was a pupil of Boichuk. We should explore
Boichuk’s works again and see if we were wrong in our previous estimation of
them.

This statement prompted Boichuk’s opponents, who had cut up his canvases in
1937, to forward a complaint to the Central Committee. Several days later I
was instructed from “upstairs” to find Boichuk’s works, look at them again,
and submit my findings on his kind of pictorial art.

“I remember hanging the wrinkled, damaged paintings on the walls of the
cellar. Right next to the rolls of Boichuk’s paintings, I spotted the works
of Palmov and Bohomazov. I was impressed by their work. Boichuk’s supporters
were keen innovators.

Even today Western art critics are unable to assess their true value when
they are exploring their works for the first time because it is difficult to
establish criteria for Biochip and his school. I believe that the works of
Palmov, Yermilov, Petrytsky, and Bohomazov look “Western,” judging by their
creative language; at the same time they are very germane to Ukrainian
culture.

“I found works by Maksymovych stored in that museum storeroom, which, like
Shekhtman’s, were once described by a Central Committee commission as being
incompatible with “the image of Soviet man” and thus could not be publicly
displayed. After examining these paintings, the aggressive Comrade Skoba
declared that they were all “counterrevolutionary,” even though among them
were portraits of Lenin and Stalin – but those were the times.

The Soviet Ukrainian culture minister, Babiychuk, staged “pogroms” by not
allowing the works of Boichuk’s followers to be included in public exhibits.
Instead, he cited “realists” as worthy models: “Consider Pymonenko as an
example; he is our artist.”

“But contemporary art critics know that our supremacist Malevich was
Pymonenko’s pupil and that he must have acquired some knowledge from his
teacher. Years later, the artworks of Boichuk’s followers found their way to
the art museum.

“You know, when I started studying the canvases hidden in the museum’s
storerooms, I realized that Ukraine in the 1920s had its own, inimitable,
and very talented school of art. At the time our Kyiv Art Institute was a
kind of Bauhaus, and Kyiv was a mecca for leftwing artists for several
years.

During this period Tatlin, Malevich, Petrytsky, and Arkhypenko [Archipenko]
worked in the Ukrainian capital. The film director, Oleksandr Dovzhenko, was
working on his film Earth. In those days Kyiv boasted the world’s only
professional theater of the absurd known as “SoZ,” an acronym meaning
“socialist emulation.” Here every creative endeavor signified a novel trend,
a desire to reach world standards. Then the Diaspora “became inspired” and
joined in.

“By the way, people of Ukrainian descent who lived in Leningrad proudly
identified themselves as Ukrainians. It was a matter of prestige. Parisian
Ukrainians, among them Radko, Babiy, and Burliuk, wrote that they were true
sons of Ukraine. A number of Russians visited Kyiv at the time simply
because they knew they could accomplish something here that they would never
be allowed in Moscow.

Dziga Vertov made the first documentary in Kyiv, entitled Man with a Movie
Camera, now regarded as a classic of cinematography. Vertov was seen in
Russia in the 1930s-1940s as a rank-and-file Mosfilm Studios film editor in
Moscow; no one wanted him. He was scared and depressed. There was no way
to go abroad during the Iron Curtain era.

“After I became interested in the Kyiv art school of the early 20th century,
I made a discovery: Bohomazov. We visited the artist’s widow and saw
mind-boggling works of art; they are now scattered throughout the world and
cost a fortune. In the Bohomazov archives I found a portrait of Karl Marx. I
brought the engraving to the curator of our museum, but he refused to put it
on display, saying that Bohomazov was a formalist.

“I had to resort to subterfuge. The centenary of the International was
approaching and the museum was staging an exhibit. It didn’t have a single
portrait of Marx, so I talked the management into displaying Bohomazov’s
portrait. The caption read “Karl Marx” in block letters and had Bohomazov’s
name underneath in small print. That was how we first displayed that
“formalist.” We got press reviews, and Bohomazov’s name appeared in print
after long years of being ignored by the media.

“Gradually, art lovers began to discover his creative heritage. In 1966
Pavlo Zahrebelny helped us organize a Bohomazov exhibit at the Writers’
Home, although he had to listen to a lot of reproaches from “a group of
outraged members” of the Writers’ Union of Ukraine. The exhibit did take
place, contrary to bureaucratic hurdles, and was followed by articles in
newspapers and journals.

A number of distinguished foreign specialists and art collectors took an
interest in Bohomazov’s art. Prince Nikita Lobanov-Rostovsky visited Kyiv.
He purchased some Bohomazovs and took them with him. He later donated
them to the Guggenheim Museum.

“Some of Bohomazov’s paintings found their way abroad thanks to Serhiy
Hryhoriants, who smuggled them out in diplomatic pouches (this would later
cost him a term in a Soviet prison, on charges of “illegal currency
transactions”). Despite all sorts of obstacles, the works of our artists
were displayed in the West.

Nakov, the famous Russian art historian, noted that there was an avalanche
of rapturous reviews. Art critics were unanimous in declaring that a new
name of world rank had been discovered. Analyzing his discoveries in
Ukraine, Nakov wrote that there were many avant-garde painters here,
including Malevich, Ekster, Tyshler, Arkhypenko, and Bohomazov, and that
behind these names unquestionably stood a real school of art.

“Later Lobanov-Rostovsky asked me to prepare a long article about the Ekster
school in Kyiv. The cubist-futurist set designs eventually grew from these
roots. I was interested in this study and discovered a number of facts that
even took me by surprise.

“In the 1960s and 1970s, when I was unearthing paintings by Palmov,
Bohomazov, and other artists in the museum basement, Ukrainian intellectuals
began to visit the museum. The news of these “vernissages in museum
storerooms” reached Moscow. Then foreigners started visiting the museum,
and I was fired from the museum because in its storerooms I had shown
works by officially banned Ukrainian avant-garde artists to the noted French
art specialist Jean-Claude Marcade.
                                 MORE ROOM FOR MUSEUMS
Dr. Horbachov, in 2000 you broached the fate of Prince Nikita
Lobanov-Rostovsky’s collection during an interview with The Day. He had
suggested that it be acquired for a museum in Kyiv, so that the priceless
works created by Ukrainian artists would remain in Ukraine. Six years have
elapsed and the question remains open.

D.H.: “It took Lobanov-Rostovsky years to purchase paintings for his
collection. The prince doesn’t have a direct heir. He wants his collection
to be kept intact. He has had offers in the West, but the prospective buyers
made it clear that they would start selling the paintings from his
collection. The prince wants his collection kept in a state-run museum.

Moscow Mayor Yuri Luzhkov was interested, but ill-wishers succeeded in
convincing him that the collection includes counterfeit works. This is not
true! I know every work of art there.

“However, it has been difficult to find interested people in Kyiv. I visited
the mayor’s office. They listened to me carefully and asked, “How much does
this collection cost?” I told them that, according to Sotheby’s estimates,
it was in the neighborhood of three million dollars. This is not a large
sum, considering the Ukrainian capital’s budget.

Then we studied the question of suitable premises for the collection:
there’s an old building on Moskovska St. (the Cultural Heritage Museum).

 
We even found a patron, a young Kyiv millionaire, who showed an interest
in the prince’s collection. He met Lobanov-Rostovsky, they signed a tentative
agreement, but the Ukrainian businessman went bankrupt before it came time
to transfer the agreed sum to the prince’s bank account.

“You know, there are not many European-standard museums in Kyiv. We

have sustained many losses historically and there are quite a few unfavorable
circumstances that we have to put up with. We have missed a great many
opportunities in the cultural domain. Ukraine’s entire history is a long
chain of missed opportunities.

As for Nikita Lobanov-Rostovsky and his collection of set designs by early
20th-century artists, we could use these works to set up a museum of
international caliber. This project’s recoupment would be quick because
these kinds of art collections are popular all over the world. I believe
that we need a civilized approach and understanding on the part of those
who are responsible for the future of our cultural heritage.”     -30-

————————————————————————————————–
LINK: http://www.day.kiev.ua/164457/
————————————————————————————————–
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AUR#719 Jun 29 Sixth U.S. Amb’s Peaceful Mission; Soccer Unites Nation; Nestle Ukraine Revenue Up; Victory Over NATO; Robert Conquest; Ukrainian Modernism

========================================================
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     

                                                         
ACTION UKRAINE REPORT – AUR – Number 719
Mr. E. Morgan Williams, Publisher and Editor  
PUBLISHED FROM KYIV, UKRAINE, THURSDAY, JUNE 29, 2006
           –——-  INDEX OF ARTICLES  ——–
         Clicking on the title of any article takes you directly to the article.               
Return to the Index by clicking on Return to Index at the end of each article
1.            SIXTH US AMBASSADOR’S “PEACEFUL MISSION”
By Viktor Rybachenko, The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, June 27, 2006

2.      U.S. AMB TAYLOR: THEY SENT ME TO A GOOD PLACE
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 28, 2006

3.        UKRAINE-U.S. BUSINESS COUNCIL BRIEFS NEW U.S.
                   AMBASSADOR WILLIAM TAYLOR IN KYIV
Ukraine-U.S. Business Council
Action Ukraine Report (AUR), Kyiv, Ukraine, Thu, June 29, 2006

4.               UKRAINE SOCCER UNITES DIVIDED NATION
By Mara D. Bellaby, Associated Press Writer
AP, Kiev, Ukraine, Wednesday, June 28 2006

5UKRAINE SOCCER COACH: LARGE CASH BONUS DESERVED

REUTERS, Potsdam, Germany, Wednesday, June 28, 2006
6KYIVSTAR TO PAY UKRAINE WORLD CUP SQUAD UP TO $9.5 M
Anna Ivanova-Galitsina,Dow Jones Newswires
Moscow, Russia, Tuesday, June 27, 2006

7.      WORLD CUP: ITALY FAMILIAR UKRAINE’S SHEVCHENKO
Associated Press, Duisburg, Germany, Wed, June 28, 2006

8NESTLE UKRAINE REVENUE  UP 15% FURTHER GROWTH SEEN
By Martin Gelnar, Dow Jones Newswires
Zurich, Switzerland, Wednesday, June 28, 2006

9GALLAHER TOBACCO CO SAYS TRADING IN LINE WITH HOPES
                 Strong performance in Ukraine, Russia and Kazakhstan
By Michael Carolan, Dow Jones Newswires
London, United Kingdom, Tuesday, June 27, 2006

10.   UKRAINE: IFC LOANS USD 100 M TO SUPERMARKET CHAIN

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006 (16:47)

12.       NAFTOHAZ UKRAINY PLANS TO INSTALL 400,000 GAS

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

13NAFTOHAZ UKRAINY REQUESTS USD 1 BILLION FOR PAYING
  OFF DEBTS TO ROSUKRENERGO, PUMPING BAS INTO STORAGES 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

14ROSUKRENERGO, UKRHAZ-ENERGO TO PUMP 10.2 BILLION
        CUBIC METERS OF GAS INTO UNDERGROUND STORAGES 
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006 

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

17.               NATO INVESTING IN UKRAINIAN SECURITY
Valeriy Savytskiy, Kyiv Weekly, Kyiv, Ukraine, Wed, June 28, 2006

18.   YULIA TYMOSHENKO: UKRAINIANS ARE INSUFFICIENTLY
                                INFORMED ABOUT NATO

Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

19UKRAINE: CRIMEAN TOWN REVELS IN “VICTORY” OVER NATO 

NTV Mir, Moscow, in Russian 0900 gmt 26 Jun 06
BBC Monitoring Service, United Kingdom, Mon, June 26, 2006

20.     RUSSIA OIL TEMPERS U.S. SWAY – MOSCOW’S WEALTH
               STRENGTHENS PUTIN’S HAND IN POLICYMAKING 
By NEIL KING JR. in Washington and ALAN CULLISON in Moscow
The Wall Street Journal, NY, NY, Wed, June 28, 2006; Page A10

 
21.         FITCH SEES CONVERGING FORCES COULD SPARK
                             A NEW EUROPEAN GAS CRISIS
    “It seems like all the makings of a perfect storm,” said Jeffrey Woodruff.
Cbonds News, St. Petersburg, Russia, Monday, June 26, 2006
 
                           IN GAS SUPPLIES TO UKRAINE 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006
 
23.                                 “WITH BEST WISHES”
                   Meeting Robert Conquest at Stanford University
By Vasyl Marochko, Ph.D. (History),
Head of the Association of Holodomor Researchers, Kyiv
The Day Weekly Digest in English, #21
Kyiv, Ukraine, Tuesday, 27 June 2006
 
24EXHIBITION “UKRAINIAN MODERNISM 1910-30: TO CHICAGO
              “Kyiv of the 1910s-1930s was the mecca of ‘leftwing artists'”
By Olena SHAPIRO, special to The Day
The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, 27 June 2006
========================================================
1
      SIXTH US AMBASSADOR’S “PEACEFUL MISSION”

By Viktor Rybachenko, The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, June 27, 2006

The fifth US Ambassador to Ukraine, John Herbst, has completed his
diplomatic mission. Shortly before Herbst’s departure, President Viktor
Yushchenko awarded him the Order of Merit, 3rd degree.

Ukraine is keenly interested in the new, sixth, American ambassador. William
Taylor has worked in Iraq and Afghanistan, and coordinated the withdrawal of
Israel from the West Bank and Gaza Strip. What lies behind the appointment
of such a seasoned diplomat to Ukraine?

A few days ago the newly-appointed US ambassador to Ukraine held his first
press conference. Taylor strode into the hall, flashing a happy smile.
Everybody saw that he is slender and trim with a telltale military bearing,
as Taylor, a graduate of West Point Military Academy, saw service as a US
infantry officer in Vietnam and Germany.

Yet the diplomat in no way looked like a tightlipped soldier. Taylor
apologized for not having learned Ukrainian yet, but he promised to do so.

The ambassador said the US will be continuing to support Ukraine and, to
prove it, he announced that his country is allocating $45 million to combat
corruption in Ukraine. He is convinced that democratic transformations will
continue in Ukraine, especially now that the parliamentary coalition has
been formed. President Bush plans to visit Ukraine this year and will
cooperate closely with the coalition government.

There were a lot of questions in connection with the recent events in
Feodosiya. Taylor stressed that nothing serious happened. In his view,
people are still misinformed about these military exercises and NATO’s goals
and activities. Therefore, the US Embassy will be sponsoring explanatory and
informational efforts, workshops, and roundtable debates.

Apparently, the Feodosiya protesters did not know that quite a large budget
had been drawn up for this aborted military exercise, which also included
social aspects, such as creating new jobs for Crimeans and renovating a
stadium, the ambassador noted.

In Taylor’s opinion, Russian Black Sea Fleet bases in the Crimea will not
hamper Ukraine’s Euro-Atlantic drive because Russia maintains an active
dialogue with NATO. Taylor also took a cautious approach to some rather
murky points in the Ukrainian-Russian gas deal and the unclear role of
Rosukrenergo. On behalf of the US government, he expressed his readiness
to help solve the problem of energy supplies to Ukraine.

Asked if he was appointed to Ukraine because he is considered an anti-crisis
manager, Ambassador Taylor smiled and said that he has indeed worked in
some “hot spots” and is now glad to come to a peaceful country.   -30-
———————————————————————————————–
LINK: http://www.day.kiev.ua/164439/
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2.  U.S. AMB TAYLOR: THEY SENT ME TO A GOOD PLACE

Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 28, 2006

The new U.S. ambassador to Ukraine William Taylor clearly said that the
United States will help Ukraine’s government in reconsidering the
Ukrainian-Russian “gas” agreement signed on January, 4. “We do have
difficulty understanding the role of RosUkrEnergo in this agreement that was
agreed on January 4.

Our general advice is that openness and transparency in contracting is the
best policy for all countries,” he stated during his first news conference
in Kyiv following his Presentation of Credentials.

“We think that if the government of Ukraine decides to reconsider this, then
they will look for advice from experts – international experts, as well as
Ukrainian experts. And we will be glad to help in that regard and also
provide assistance on making the factories and other users – large users –
of natural gas more efficient,” Taylor added.

The U.S. ambassador knew how to play with Ukrainians: “I’m very glad to
be here at the time that Ukraine is doing so well in the World Cup.”

 “The United States does not expect a crisis here in Ukraine, marked then
Ambassador Taylor, who worked before in Afghanistan and Iraq. I guess they
figured in Washington that I had paid my dues in difficult places so they
were going to send me to a good place this time. So, they sent me to
 Ukraine”. And spoke very serious not only on the gas issues.

As for Ukraine’s possible membership in NATO, the U.S. ambassador continued
with the words of support. “If the people of Ukraine and if the government
of Ukraine decide that they are interested in becoming a member of NATO, the
United States government will be glad to help them,” said Ambassador Taylor.

The same was frequently said by his predecessors for the last 3-4 years. But
now he promised then that the United States can “sponsor discussions,
dialogues, conferences and roundtables, where Ukrainians and others can have
a conversation about the good things and the bad things about joining NATO”.

And he doesn’t think the presence of Russian Naval forces to be a major
problem to Ukraine’s membership in NATO.

He confirmed then that U.S. President Bush would very much like to visit
Ukraine, but he is waiting for the Ukrainian government to be formed.
———————————————————————————————
LINK: http://www.weekly.com.ua/?art=1151436094

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NOTE: Another article on the new US Ambassador William Taylor:
LINK: http://www.glavred.info/archive/2006/06/22/115253-7.html
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3.     UKRAINE-U.S. BUSINESS COUNCIL BRIEFS NEW U.S.
                AMBASSADOR WILLIAM TAYLOR IN KYIV

Ukraine-U.S. Business Council, Washington
Action Ukraine Report (AUR) #719, Article 3
Kyiv, Ukraine, Thursday, June 29, 2006

KYIV – Thirty-five members of the Ukraine-United States Business
Council and their guests gathered Wednesday, June 28, in the Conference
Room of the U.S.-Ukraine Foundation (USUF) offices in Kyiv to brief
the new U.S. Ambassador William B. Taylor, Jr. about Ukraine’s
business conditions and prospects.

Mr. Taylor was confirmed by the Senate on Friday, May 26, and was
sworn in as U.S. Ambassador to Ukraine on June 5th.

Council members spoke of the huge potential they saw in agriculture,

food processing, telecommunications, insurance and energy, among
other sectors. Several spoke of “the good story” they have to tell
about their company’s experience in Ukraine and are planning to
expand their operations.

Morgan Williams of SigmaBleyzer, the Council’s Chairman of the

Executive Committee of the Board of Directors, introduced Amb.
Taylor as an experienced diplomat who had helped design and
implement American assistance programs for Ukraine in an earlier
position at the State Department.  “We are fortunate that William
Taylor was chosen to be our Ambassador in Ukraine, ” Williams
stated.
 
Ambassador Taylor said he was pleased to represent the United States
in Ukraine and encouraged Council members to keep him informed about
their business operations and the business climate in Ukraine. Taylor
said he was very positive towards Ukraine’s future and the absence of
any regular elections the next three years offered Ukraine a real opportunity
to pass additional reform legislation and to make real progess.
Members told the Ambassador that stronger rule of law, better pay for
judges, a reduction of corruption, major government structural
reorganization, better implementation and delivery procedures for
government programs, the protection of private property contract rights
and the development of a private commodity exchange topped the list of
business needs.  Several members told the Ambassador that corruption
levels have really not been reduced since the Orange Revolution.
 
Ambassador Taylor invited members of the Council to meet with him
again soon. They in turn offered him their support and wished him a
successful tour in Ukraine.

Council members participating in the meeting included representatives of
AES Ukraine, ALICO AIG LIFE (Ukraine), Cargill, Chadbourne & Park,
the Eurasia Foundation, SASI Corporation, SigmaBleyzer, WJ Group
of Agricultural Companies, and The Bleyzer Foundation.

Guests included representatives from Delta Airlines, Kodak, Ukraine 3000
International Charitable Fund, The Willard Group, Bank Kontrakt,
Medical Relief Charity Fund, Frishberg & Partners, Horizon Capital,
Squire Sanders & Dempsey, EuroRegio Ukraine, Whites International
Public Relations, Presidential Secretariat of Ukraine, U.S.-Ukraine
Foundation (USUF) and Znayu.                              -30-
————————————————————————————————
                 Ukraine-U.S. Business Council, Washington
Susanne Lotarski, President; E. Morgan Williams, SigmaBleyzer,

Chairman, Executive Committee, Board of Directors; John Stephens,
Cape Point Capital, Secretary/Treasurer;
Members of the Ukraine-U.S. Business Council Executive Committee:
Van Yeutter, Cargill; John W. Rauber, Jr, Deere & Co; Shannon Herzfeld,
Archer Daniels Midland; Michael Kist, Westinghouse; and Andrew Bej,
American Life Insurance Company/AIG.
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4.          UKRAINE SOCCER UNITES DIVIDED NATION

By Mara D. Bellaby, Associated Press Writer
AP, Kiev, Ukraine, Wednesday, June 28 2006

KIEV, Ukraine — Suddenly, all the old divisions don’t seem so important.
Ukrainians — bitterly split over language, politics and whether they belong
in the West or with Russia — have been savoring a rare taste of unity with
their country’s gritty advancement to the quarterfinals of the World Cup.

When the team steps onto the field on Friday against Italy, this nation of
47 million — Russian-speakers and Ukrainian-speakers; those who considered
the 2004 Orange Revolution an explosion of democracy and those who

deride it as a coup — will all be rooting in unison, “Ukraina (oo-kry-EE-nah)!”

“It’s caused a wave of patriotism and it doesn’t matter if you’re orange or
blue, we’re all Ukrainians,” said Andrey Myshkovsky, 19, referring to the
country’s color-coded politics (orange are supporters of the pro-Western
bloc, blue backers of the pro-Russian party), just one of many ways that
this ex-Soviet republic divides itself.

Politicians are salivating over how to capitalize on the unusual sense of
unity, but also grumbling that it took a soccer team to do what they could
not. For others, it’s another chance to show the world that Ukraine is more
than just the location of the world’s worst nuclear accident or home to the
president whose face was badly scarred in a still-unsolved poisoning.

“It’s a huge breakthrough … millions of people all over the world, some of
them for the first time are hearing about Ukraine in a positive light,” said
Vice Prime Minister Vyacheslav Kyrylenko. “They saw that we have cool

boys who can play soccer.”

Torn apart by competing empires throughout much of its history, Ukraine

has spent the last 15 years of independence trying on different identities. It
has yet to settle on one. The pro-European outlook that fits so easily in
the country’s west, where Ukrainians are nationalists and view Moscow as a
former occupier, angers the ethnic Russians who people Crimea and the
industrial east.

Even the 2004 mass uprising that captured the world’s attention won the
support of only about half the country.

“Ukraine has had some problems with patriotism, with forging one national
identity,” said Ivan Lozowy, president of the Kiev-based Institute of
Statehood and Democracy.

Soccer could be a chance to bridge the gap.

Serhiy Varenyk, 43, was in a train car headed to Kiev when Oleg Gusev scored
the deciding penalty kick against Switzerland. Listening by radio, the car,
filled with Russian-speakers from eastern Ukraine, erupted into a roar so
loud it shook the windows, he said.

Across the country, in the nationalistic west, a similar cheer went up as
Lviv fans set off fireworks and bellowed out the national anthem.

“Such victories unite people and lay the groundwork to create a normal
nation,” said Yevhen Kushnaryov, a former regional governor who was

accused last year of encouraging eastern Ukraine toward separatism.

The timing is also good. Ukraine’s political life remains unsettled, three
months after a parliamentary election ended indecisively; a majority
coalition was formed only last week.

Success on the soccer field “is just what Ukraine needs,” said 57-year-old
lawyer Vitaliy Yenin, as he joined a protest Tuesday against rising
electricity, gas and transport costs.

Ukrainians fear the rising prices will widen the gulf even further between
living standards here and in the club of nations they aspire to. But when it
comes to kicking around the soccer ball, this country — making its first
appearance in the World Cup — is daring to dream that they belong.

Prime Minister Yuriy Yekhanurov put it simply: “We believe in you,” he

wrote in a telegram to the team.

Of course, a little bit of smugness also helps. Some Ukrainians can’t resist
the chance to taunt giant neighbor and regular sparring partner, Russia,
whose team didn’t make it into the World Cup. Critics accuse Russia of
trying to punish Ukraine for its turn westward with higher gas prices, and
for refusing to drop the idea of Ukraine as the little brother.

“Ukraine is the soccer country,” said lawmaker Serhiy Polyshchuk. “Let
Russia play ice hockey.”                            -30-

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5. UKRAINE SOCCER COACH: LARGE CASH BONUS DESERVED
 
REUTERS, Potsdam, Germany, Wednesday, June 28, 2006


POTSDAM, Germany – Ukraine’s players will receive a shared £4.4million
bonus for reaching the World Cup quarter-finals and coach Oleg Blokhin
said on Wednesday hard work should always be well rewarded.

‘Do you think they should just play for a ‘thank you’?’ Blokhin asked
reporters. ‘For good work you receive good money. If the players had been
playing badly, they wouldn’t have got a penny.’

Ukraine, making their debut at the tournament, face Italy on Friday after
beating Switzerland 3-0 on penalties in the second round on Monday. They
have surpassed their pre-tournament aim of reaching the knockout stage so
anything else is quite literally a bonus.

Blokhin stressed that money was not the main motivation for the players, but
rather national pride. ‘They are playing for national honour… it is also
work,’ he said. ‘I told them that the players in this team will play first
of all for prestige and not the money.’

 
Friday’s game in Hamburg kicks off at 2000 BST and the winner will face
either Germany or Argentina.                        -30-
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6. KYIVSTAR TO PAY UKRAINE WORLD CUP SQUAD UP TO $9.5 M

Anna Ivanova-Galitsina,Dow Jones Newswires
Moscow, Russia, Tuesday, June 27, 2006

MOSCOW – Ukrainian mobile phone operator Kyivstar Tuesday said it

will pay up to $2 million to the country’s soccer team, depending on the
team’s results in the World Cup.

A payment of $2 million would bring Kyivstar’s total funding of the
Ukrainian National Soccer Team to $9.5 million, as the company has already
paid the team $7.5 million in sponsorship money. For the duration of the
2006 World Cup, Kyivstar has changed its logo to include a football.

Ukraine beat Switzerland on penalties in a goalless draw Monday, and

goes on to meet Italy in a quarterfinal match June 30.
Kyivstar, Ukraine’s largest mobile phone operator by subscriber numbers,
is majority owned by Norway’s Telenor ASA (TELN). Company Web
site: http://www.kyivstar.net.                       -30-
————————————————————————————————–
Anna Ivanova-Galitsina, Dow Jones Newswires; anna.galitsina@dowjones.com
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7. WORLD CUP: ITALY FAMILIAR WITH UKRAINE’S SHEVCHENKO

Associated Press, Duisburg, Germany, Wed, June 28, 2006

DUISBURG, Germany – Italy’s players knew all about Ukraine’s best player
even before watching film of the team on Wednesday.

Andriy Shevchenko spent seven seasons at AC Milan before transferring to
Chelsea a month ago and his 173 goals give him the second highest total in
club history behind Gunnar Nordahl’s 221.

Blue and yellow Ukraine flags with “Sheva” written across them became a
common site at Milan’s San Siro stadium when Shevchenko plied his craft
there. Not many Italians will be waving Ukraine flags on Friday, when the
Azzurri meet Shevchenko’s team in the World Cup quarterfinals.

“To stop Sheva you’ve got to be 100 percent and make as few errors as
possible,” said Italy defender Alessandro Nesta, who will miss the game with
a right thigh injury. He’s a unique player, he has few weak points. You
can’t let up for the entire 90 minutes.”

Nesta is one of five Milan players and former teammates of Shevchenko on
Italy’s roster.

Shevchenko is still regaining strength from a left knee injury and has
scored two goals in Ukraine’s first four games. He missed the opening
penalty kick in the shootout that Ukraine went on to win over Switzerland in
its last match but Nesta said Shevchenko is still on a par with Brazil
strikers Ronaldo and Adriano.

“Sheva you can’t put behind anyone,” Nesta said. In 2003, Shevchenko’s
penalty kick won Milan the Champions League in a shootout against Juventus.
A year later, he led Milan to the Italian league title and was European
player of the year.

Critics say Ukraine is a one-man team that Italy should handily beat. “No
team is a pushover at the World Cup,” Nesta said. “Inside the locker room we
know it’s not going to be an easy game and we’re going to enter the field
very focused.”

Italy drew 0-0 with Ukraine in June 2 in a World Cup warmup. Shevchenko
missed the game due to his injury. “They’re very strong physically and
they’ve got some other good individual players, like Anatoly Tymoshchyuk,
who I’ve faced a few times with Milan,” Nesta said.

At Milan, Shevchenko played with Filippo Inzaghi and Alberto Gilardino in
attack. His usual strike partner at Ukraine, Andriy Voronin, is out with a
thigh injury. “Voronin is also very good, we’re fortunate that he’s not
going to play,” Nesta said.

With Nesta out and Marco Materazzi suspended, the inexperienced Andrea
Barzagli is expected to start alongside Fabio Cannavaro in central defense.
It will be their job to contain Shevchenko.

“I’ve encountered him a few times in Serie A and I think he scored on me a
few times,” said Barzagli, who has played for Chievo Verona and Palermo in
Serie A. “I’m going to put a little extra effort into training these next
few days.”

It doesn’t appear any of the Milan players on Italy’s team are upset with
Shevchenko for his departure. “I don’t know the reason why he left. I think
he spoke the truth – for his family and to learn another language,” Nesta
said. “Those are personal choices, and we shouldn’t comment on them. I
respect him and I thank him for all he did for us.”           -30-

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8. NESTLE UKRAINE REVENUE  UP 15% FURTHER GROWTH SEEN

By Martin Gelnar, Dow Jones Newswires
Zurich, Switzerland, Wednesday, June 28, 2006

ZURICH – Nestle S.A.’s (NESN.VX) revenue in Ukraine is rising by
double-digits and sales in this upcoming emerging market are expected to
continue expanding, a Nestle Ukraine official said. “Our business grew more
than 15% last year and we expect further growth,” said Gennadiy Radchenko,
Nestle’s corporate affairs manager for Ukraine and Moldova.

The Switzerland-based company doesn’t usually release actual
country-by-country sales results, but Radchenko said that its Ukraine sales
reached about $320 million in 2005. He declined to give a specific
growth-rate outlook.

Nestle, the world’s largest food and beverage company by revenue, is
exploring potential Ukraine acquisitions, Radchenko said.

“We are always looking at acquisition opportunities. We have no operations
in water or ice cream so far, and we would like to get into that business,”
he said. “It doesn’t mean we’re planning to buy something this year, but
we’re looking around.”

Radchenko said Nestle’s Ukraine business, which once consisted mainly of
Nescafe sales, is undergoing fast changes. Today, Nestle Ukraine is active
in three areas with annual sales of around $100 million each: cold sauces
and ketchup, confectionary products and beverages, mainly Nescafe.

Nestle Ukraine’s market share is 51% in cold sauces, 72% in ketchup and 22%
in chocolate, Radchenko said. He didn’t provide the market-share information
for other products. “In the last three years, we have expanded our
operations by acquiring two local factories,” he added.

Competition is generally tough given an abundance of local chocolate and
soluble coffee producers, but one of the biggest successes in 2005 was the
turnaround of the chocolate business, Radchenko said. He did not say how
much the chocolate business had grown.

“The confectionary business is difficult in former Soviet countries because
chocolate is traditionally quite cheap there,” he added.

Consumer habits aren’t the same across Ukraine, which is the second-biggest
European country by land mass after Russia.

“In western Ukraine, ground coffee is more popular, while instant coffee is
more popular in the south and east,” Radchenko said.

Nestle’s turnover in Ukraine was more than UAH1.6 billion, (UAH1=$0.20) in
2005, which is around 0.4% of Nestle’s global turnover. Nestle Ukraine
employs about 3,000 people and exports to Russia, the Czech Republic,
Slovakia and the Baltics, among other countries.        -30-
———————————————————————————————–
By Martin Gelnar, Dow Jones Newswires; +41 43 443 8042;
martin.gelnar@dowjones.com
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9. GALLAHER TOBACCO CO SAYS TRADING IN LINE WITH HOPES
                 Strong performance in Ukraine, Russia and Kazakhstan

By Michael Carolan, Dow Jones Newswires
London, United Kingdom, Tuesday, June 27, 2006

LONDON – Gallaher Group PLC said Tuesday that current trading was in line
with expectations, with a stronger performance in the group’s CIS markets
offsetting weak market conditions elsewhere.

In a trading update, the tobacco company said that its total cigarette
volumes rose 4.4% to 68.3 billion in the first five months of 2006. Strong
performance in Russia, Ukraine and Kazakhstan “more than offset declines in
some of the group’s European markets,” it said.

Gallaher sells brands such as Benson & Hedges, Silk Cut, Sobranie, Sovereign
and Mayfair – mainly in Europe, but also in Asia and Africa.

The statement had little impact on the company’s stock. At 0840 GMT Gallaher
shares were down 3.25 pence, or 0.4%, at 820.5 pence in a slightly higher
London market. “The key point is everything is in line,” said Dresdner
Kleinwort Wasserstein’s Charles Manso de Zuniga. “On a group level
everything is fine.”

The company said that in the Commonwealth of Independent States, or CIS, it
was continuing to benefit from improved product mix and an ongoing focus on
low cost production.

“As a result of the strong trading performances across the group’s CIS
markets, this division’s 2006 full-year earnings before interest, tax and
amortization growth is now expected to be ahead of the growth rate achieved
in 2005,” the company said. In 2005, EBITA in the region grew 17.4% to GBP67
million. “CIS is going like a train,” said DKW’s Manso de Zuniga, “but the
Rest of the World is a little bit worse.”

The company said that its Rest of the World division – which includes
markets such as Sweden, Poland, Nigeria and South Africa – had suffered from
difficult market conditions. The company said it now expects the division’s
full-year EBITA to be broadly flat, while in the first half it will be “down
sharply versus the first half of 2005.”

Trading conditions in Europe also continue to be challenging, the company
said, with higher taxes, persistent cross-border trade, lower UK tourist
volumes and workplace smoking bans all contributing to market declines.

Full-year EBITA from the European tobacco business is expected to be
marginally ahead of 2005, though difficult pricing conditions in Austria and
Spain will mean it is flat in the first half. “Europe is no worse than it
has been,” said DKW’s Manso de Zuniga, “it’s perfectly in line, they’ve
always been up front about that,” he said.            -30-
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Company Web site: http://www.gallaher-group.com

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10. UKRAINE: IFC LOANS USD 100 MILLION TO SUPERMARKET CHAIN
 
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

KYIV – The International Finance Corporation, part of the World Bank group,
has issued a loan of USD 100 million to Velyka Kyshenia, one of the largest
trading networks in Ukraine. Ukrainian News learned this from the press
service of IFC. ‘A loan of USD 100 million that includes a syndicated amount
of USD 55 million,’ the report reads.

The loaned funds will be spent to refinance the current debt and open more
than 35 new Velyka Kyshenia supermarkets and hypermarkets in Ukraine during
the period of 2006-2008. Velyka Kyshenia presently owns 27 supermarkets and
hypermarkets, 16 of which are in Kyiv, IFC reported.

The company press service said one hypermarket was opened in Poltava, and
one supermarket in Kyiv, Uzhhorod and Mykolaiv each at the beginning of the
year, and in the nearest time the company will open supermarkets in Yalta
and Lutsk. IFC would not disclose details of the loan agreement.

Press service of the Retail Group reported that the loan was organized by
the Dragon Capital investment company and will be repaid in five to seven
years.

‘IFC financing gives important support to our efforts to expand the
company’s presence in the regional markets and strengthen its position as
one of the biggest supermarket chains in Ukraine,’ said Roman Lunin,
supervisory board chairman at Retail Group.

As Ukrainian News earlier reported, IFC has taken part in 23 investment
projects in Ukraine to a total sum of USD 480 million as of May 1, 2006.

Last year’s trade turnover of Velyka Kyshenia grew by a factor of 2.15 or by
UAH 0.75 billion to UAH 1.4 billion year-on-year.

Retail Group controls the chains of Velyka Kyshenia supermarkets and
fast-food restaurants, as well as open joint stock company KVIZA, and its
affiliate enterprise KVIZA Trade.

According to the IFC, 88% stake in Retail Group OJSC belongs to chairman

of the company’s supervisory board Roman Lunin, 12% to eight financial
institutions (mainly private European funds and asset management companies).
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11.      EBRD LIKELY TO LOAN FUNDS TO POLISH CO FOR
      CONSTRUCTION OF BATH & TOILET EQUIP IN UKRAINE 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006 (16:47)

KYIV – The European Bank for Reconstruction and Development (EBRD) is

likely to loan EUR 46.8 million to the Cersanit company of Poland for the
construction of ceramic tiles and sanitary porcelain production lines in the
city of Novhorod-Volynskyi in Zhytomyr Region. This is announced in a
press-report by the EBRD, the text of which Ukrainian News has obtained.

According to the report, the investment project is designed to help the
Polish company further penetrate into Ukrainian regions as well as to draw
additional foreign investments into the Ukrainian economy.

This project is going to be one of the first in Ukraine to handle the
manufacture of ceramic tiles and sanitary porcelain and to be managed by an
established investor and one of the biggest manufacturers of products of
this kind on the global market.

In addition, in the framework of the same project the company is planning to
implement a range of small-scale investment projects in the expansion of its
operations in Ukraine.

The money from the credit will be raised with participation of a number of
banks. The final sum in investment has not been disclosed by the EBRD. The
EBRD’s Board of Directors plans to examine the issue of the credit at its
July 25 meeting.

As Ukrainian News reported earlier, Cersanit was going to build bath and
toilet equipment factories as well as bathroom furniture factories not far
from Vinnytsia by 2010, and was planning to invest USD 100 million in the
construction of the factories.

According to the company, it is expected that the complex of factories will
annually put out products to the tune of USD 150 million.

Cersanit produces bath and toilet equipment, shower cabins and furniture for
bathrooms. The company is running three factories in Poland. It has been
operating on the Ukrainian market since 1998. The company produced goods
worth USD 150 million in 2004.                            -30-
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12. NAFTOHAZ UKRAINY PLANS TO INSTALL 400,000 GAS METERS
                      FREE OF CHARGE BY 2007 IN RURAL AREAS
 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

Naftohaz Ukrainy, a national joint-stock company, has plans to install over
400,000 household gas meters using its own funds by 2007. A Naftohaz Ukrainy
representative told this to journalists on June 23. As he said, in the first
place, gas meters will be installed in rural areas.

Round UAH 150 million will be allocated for this purpose. Since the year’s
beginning, the company has installed over 250,000 household gas meters.

According to the National Electricity Regulation Commission (NERC), the
program for installation of household gas meters has been functioning
already for several years.

While revising gas supply tariffs, the NERC included in the tariff a
targeted charge for installation of gas meters to enterprises that supply
gas and perform gasification, which provided the commission with
corresponding investment programs.

As Ukrainian News earlier reported, the decision by the NERC on a rise of
natural gas tariffs for household consumers by 85% to 40.7-44.4 kopecks per
cubic meter from July 1, 2006 was registered with the Ministry of Justice on
June 16.

According to the NERC’s decision, the retail tariff for gas for household
consumers was raised from 22 to 40.7 kopecks per cubic meter if a gas meter
is installed and from 24 to 44.4 kopecks per cubic meter in the absence of a
gas meter.

Also the top level for the wholesale price on gas was raised for
enterprises, supplying gas to the population, by 79.22% or UAH 183 per 1,000
cubic meters to UAH 414 per 1,000 cubic meters. The NERC’s decision came
into effect on June 16.

The NERC intends to raise the gas prices for population to the economically
justified level from January 1, 2007. The National Electricity Regulation
Commission raised the gas prices for population by 25% to 22-24 kopecks and
the top level of the wholesale gas prices for enterprises supplying gas for
the population to UAH 231 per 1,000 cubic meters from May 1.      -30-

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13.  NAFTOHAZ UKRAINY REQUESTS USD 1 BILLION FOR PAYING
  OFF DEBTS TO ROSUKRENERGY, PUMPING BAS INTO STORAGES 

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – The National Joint-Stock Company Naftohaz Ukrainy has requested the
Cabinet of Ministers to be given up to USD 1 billion for repaying debts to
RosUkrEnergo for supplied gas and purchasing additional amounts of natural
gas to be pumped into underground gas storage facilities.

A letter to this effect was addressed by the chief deputy Naftohaz Ukrainy
board chairman Ihor Vasiunyk to the acting Prime Minister Yurii Yekhanurov.

‘…We are requesting You, dear Yuri Ivanovych, to support our proposal
concerning the provision of state funding (crediting) in the amount of 1
billion U.S. dollars for the National Joint-Stock Company Naftohaz Ukrainy
to pay off debts to RosUkrEnerho and purchase additional amounts of natural
gas to have it pumped into underground gas storage facilities,” reads the
letter, the text of which Ukrainian News has obtained.

According to the letter, the issue of USD 1 billion will deprive Russia of
the possibility to reduce natural gas supplies to Ukrainian consumers on the
ground that Ukraine does not pay in due time.

The letter also says that Naftohaz Ukrainy by the end of July is gong to
secure USD 500 million in a credit from the ABN AMRO Bank of the
Netherlands, and, if given USD 1 billion by the Government, it is gong to
repay part of the loaned money in the amount of up to USD 500 million
necessary for the purchase of imported gas during the summer period to fill
underground gas storage facilities.

The letter also points to shortfall in delivery of natural gas by
RosUkrEnergo and the joint-venture company Ukrhaz-Energo.

 
In particular, a mere 7.86 billion cubic meters of gas had been supplied
during April and May instead of 10.4 billion contracted for, frustrating
target plans for pumping gas for storage in underground facilities.

Shortfalls in delivery of natural gas are also expected in June, as 3.99
billion cubic meters of natural gas are planned to be supplied out of 5.3
billion cubic meters provided for by a technical agreement.

In his letter to Yekhanurov, Vasiunyk also said that Naftohaz Ukrainy owed
Ukrhaz-Energo USD 25.5 million as of May 29.

“For this reason the joint venture does not sign contracts for gas supplies
with Naftohaz Ukrainy,” the letter says.

As Ukrainian News reported before, Naftohaz Ukrainy in June secured USD 200
million in a credit from the ABN AMRO Bank of the Netherlands, and is
planning to raise another USD 300 million in a credit from the same bank to
repay debts for natural gas supplies to RosUkrEnergo and Ukrhaz-Energo.

Previously, Plachkov said that Naftohaz Ukrainy owed debts totaling USD 700
million to the RosUkrEnergo company and the Ukrhaz-Energo joint-venture
enterprise.

On June 9, Naftohaz Ukrainy said it intended to obtain an additional loan of
USD 200 million from ABN AMRO Bank (the Netherlands). In late May, Naftohaz
Ukrainy secured a loan of USD 60 million from the joint-stock company Alfa
Bank (Russia).

Previously, the acting Prime Minister Yurii Yekhanurov said that Ukraine was
2 billion cubic meters behind the schedule for pumping natural gas into
underground storage facilities.

The Naftohaz Ukrainy National Joint-Stock Company intends to pump 16 billion
cubic meters of natural gas into underground storage facilities before the
start of the 2006-2007 cold season.                         -30-
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14. ROSUKRENERGO, UKRHAZ-ENERGO TO PUMP 10.2 BILLION
       CUBIC METERS OF GAS INTO UNDERGROUND STORAGES 

Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006 

KYIV – The RosUkrEnergo company and the Ukrhaz-Energo joint-venture
company are planning to pump by the start of the 2006/2007 cold season
10.2 billion cubic meters of natural gas into Ukraine’s underground gas
storage facilities at the cost of their own funds.

This was disclosed in an interview with the Russian newspaper Vedomosti by
Dmytro Firtash, the owner of a 45% share in RosUkrEnergo.

According to a decision taken by a coordinating council at RosUkrEnergo, the
company would pump into underground storage facilities in Ukraine by the
start of the 2006/07 heating season 5.2 billion cubic meters, and
Ukrhaz-Energo five billion cubic meters of natural gas worth a total of USD
1 billion, said Firtash.

“Failing this, it will be impracticable to provide Ukraine and Western
Europe with gas in required volumes. This is not a matter of business but
rather a matter of energy security. We, being aware that Naftohaz (National
Joint-Stock Company Naftohaz Ukrainy) is unable at this point to get this
gas pumped into [underground storage facilities] for financial reasons, took
a decision to provide funding for the resolution of this common problem,”
said Firtash.

Furthermore, Firtash announced his plans to convert the Emfes Kft. gas
trading company in Hungary that he controls into a public company.

“We are now preparing Emfesz for IPO [initial public offering], but the
shares will most likely be placed on a stock exchange in Hungary. We are
planning to sell 25-35% of the shares by the end of 2007. However, I did not
rule out the possibility that part of the shares in Emfesz will be purchased
by RosUkrEnergo,” he said.

He also said that Emfesz intends to take part in gas storage construction
projects in Hungary, and is also handling construction projects for
natural-gas fired power stations. Emfesz sells three billion cubic meters of
natural gas to Hungary every year.

Firtash also gave his comments on the recent media reports that RosUkrEnergo
had acquired Russia’s Astrakhan Oil and Gas Company (AOGC).

“The shares in AOGC had been purchased by Raiffeisenbank, but if
RosUkrEnergo wants to own this company, we will sell it. If not, the AOGC
will be acquired by Emfesz,” Firtash said.

As Ukrainian News reported before, the acting Fuel and Energy Minister, Ivan
Plachkov said that of the 23 billion cubic meters of gas to be pumped into
underground gas storage facilities by the start of the cold season, 16
billion cubic meters will be provided by Naftohaz Ukrainy, 2.271 billion by
the Ukrhaz-Energo joint-venture company and 3.4 billion by RosUkrEnergo.

Naftohaz Ukrainy is confident that the amount of natural gas required for
being pumped into underground gas storage facilities will be there before
the start of the 2006/2007 heating season.

Previously, the acting Prime Minister Yurii Yekhanurov said that Ukraine was
2 billion cubic meter behind the schedule for pumping natural gas into
underground storage facilities.

Swiss-registered RosUkrEnergo was set up in July 2004 by affiliate firms of
Russia’s Gazprom and Raiffeisen to manage Turkmen gas supplies to Ukraine
during the period until 2028.

To provide gas supplies to Ukraine, the Naftohaz Ukrainy [National
Joint-Stock Company] and RosUkrEnergo set up the joint-venture closed
joint-stock company Ukrhaz-Energo on February 2.

At the same time, Ukrhaz-Energo and RosUkrEnergo concluded a contract for
the supply of natural gas to Ukraine at the rate of USD 95 per one thousand
cubic meters for the period until the end of 2010. Gazprom controls 45% in
RosUkrEnergo, Dmytro Firtash 45% and Ivan Fursin 5%.      -30-
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15. ROSUKRENERGO READY TO BUILD PIPELINE FOR DELIVERING
 GAS FROM ASTRAKHAN GAS-CONDENSATE DEPOSIT TO UKRAINE
 

Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

KYIV – The RosUkrEnergo company is ready to build a gas pipeline for

delivering natural gas from the Astrakhan gas-condensate deposit (Russia)
to consumers in Ukraine.

Dmytro Firtash, who owns 45% of the shares in RosUkrEnergo, announced

this in an interview with Russia’s Vedomosti publication.

Firtash said that RosUkrEnergo has an agreement with Ukraine’s Naftohaz
Ukrainy national joint-stock company on delivery of natural gas by the
Astrakhan oil and gas company, which has a license to develop the coastal
part of the Astrakhan gas-condensate deposit.

‘Astrakhan has a reserve of over 4 trillion cubic meters of gas, and the
distance from the region to Ukraine is only 600 kilometers. We are prepared
to build a pipeline for delivering gas to eastern Ukraine, where the main
industrial consumers are located. The Astrakhan gas-condensate deposit will
yield up to 20 billion cubic meters of gas per year,’ Firtash said.

He added that if the project were implemented, the gas pipeline would be
handed over to Russia’s Gazprom gas monopoly and operated as a concession
for 10-20 years.

He also said that RosUkrEnergo was prepared to provide Gazprom with a single
export channel and that construction of the gas pipeline would facilitate a
significant increase in the volume of gas exports through Ukraine because
the main transit pipelines would be less involved in domestic gas
deliveries.

Moreover, according to Firtash, RosUkrEnergo plans to build a chemical
complex for production of polypropylene at the cost of USD 3.5 billion.

The Astrakhan oil and gas company holds a license to develop the right part
of the Astrakhan gas-condensate deposit, which has reserves of 220 billion
cubic meters of gas and 20 million tons of crude oil.

As Ukrainian News earlier reported, several mass media organizations
recently reported that RosUkrEnergo had acquired 74.89% of the Astrakhan oil
and gas company. Firtash later said that shares in the Astrakhan oil and gas
company were bought for Raiffeisenbank (Austria).

Subsidiaries of Russia’s Gazprombank and Raiffeisen (Austria) founded the
Swiss-registered RosUkrEnergo in July 2004 for delivering Turkmen natural
gas to Ukraine until the year 2028.

Naftohaz Ukrainy and RosUkrEnergo jointly created the Ukrhaz-Energo closed
joint-stock company on February 2 for delivering natural gas to Ukraine.

On the same day, Ukrhaz-Energo and RosUkrEnergo signed a contract for
delivery of natural gas to Ukraine at the price of USD 95 per 1,000 cubic
meters until the year 2011. Russia’s Gazprom owns 45% of the shares in
RosUkrEnergo, Firtash owns 45%, while Ivan Fursin owns 5%.   -30-
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16. PHILIP MORRIS UKRAINE TO DONATE REHABILITATION EQUIP

     FOR ORPHAN CHILDREN TO NUCLEUS CHARITY FOUNDATION 
 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – Philip Morris Ukraine is going to donate on June 26 rehabilitation
equipment for orphan children living in special shelters to the Nucleus
charity foundation under the charity program that aims to help children with
organic central nervous system lesions. Ukrainian News learned this from

the press service of the company.

According to the report, the specialized children’s homes in various regions
of Ukraine will receive 21 sets of rehabilitation equipment (sensor rooms
consisting of a dry swimming pool filled with plastic balls of different
colors, multi-functional set called The Little Gnome, entertainment
labyrinth, Hofr message carpet, and an air trampoline Kazka (Fairy Tale).

The program is under the patronage of the Ministry of Health. The total cost
of the equipment is around UAH 420,000. The donation will help children
exercise simple movements and improve their physical and mental skills while
playing, the company reported.

‘Thanks to the program, over the past two years, all 42 specialized
children’s homes in Ukraine have been contacted. The homes nurse children
with organic central nervous system lesions. Our aim is to help medical
institutions improve health of kids, give them a chance to develop
normally,’ said Alla Ihnatenko, head of the corporate communications
department at Philip Morris Ukraine.

As Ukrainian News earlier reported, last year Philip Morris Ukraine
increased cigarette production by 20.6% or 6,408.2 million to 37,489.6
million cigarettes and accounted for a 37.5% share among the companies which
belong to the Ukrtiutiun association.

Philip Morris Ukraine produces Marlboro, Parliament, Chesterfield, Muratti,
L&M, Bond Street, and Next cigarettes.               -30-
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17.              NATO INVESTING IN UKRAINIAN SECURITY

Valeriy Savytskiy, Kyiv Weekly, Kyiv, Ukraine, Wed, June 28, 2006

Representatives of the Ministry of Defense of Ukraine and NATO signed in
Kyiv the Fund-in-Trust of NATO project within the framework of the
Partnership for Peace program for the recycling of used ammunition.

According to the project. over the next 12 years NATO will allocate 25 mn
euro to Ukraine to destroy 1.5 mn rifles and several thousand tonnes of
ammunition.

Ukraine’s share of investments into this project is 50 mn euro. The NATO
Maintenance and Supply Organisation (NAMSÎ) will oversee the project and
will define the list of ammunition and arms.

At this point approximately 2 mn t of ammunition are stored at 159 arsenals,
military bases and warehouses of the Ministry of Defense. The warehouses are
overloaded by 20%. One third of the ammunition is stored under the open air,
while half the storage facilities do not even have fire alarm systems
installed due to the lack of financing.

During the last seven years less and less money is being allocated from the
National Budget for state programs of ammunition recycling. For this reason,
the progress in this area is negligible.

Poor storage conditions and the violation of safety rules caused several
huge fires at ammunition storage facilities not far from the town of
Artemivsk (Donetsk oblast) and near the village Novobohdanivka (Zaporizhzhia
oblast). Strong explosions of mines and ammunition sent shrapnel flying over
a huge radius surrounding the warehouses. The population of the nearby areas
had to be evacuated and the environment was polluted by chemicals.

Ukraine appealed to NATO in 2002 with a request to finance recycling
programs of outdated ammunition. A few years ago Ukraine destroyed 400,000
anti-infantry mines with the financial assistance from NATO. This latest
project is the largest in terms of the amount of investments.

Michel Duray, Director of the NATO Information & Documentation Centre in
Kyiv, explained the four-year delay in the development of the approved
project by the need for “specifying all the elements, procedures and
 details”. “I think it is better to have a good agreement. It can not be
prepared hastily, because security is a very serious business. It must
include all details and nuances. It is better than an agreement signed in a
hurry, which brings nothing but advertisement and is not fulfilled,” Duray
is convinced.

Serhiy Zhurets, an expert at the Center for Army Research, Conversion and
Disarmament, explained the few years of delay “by the problem in choosing
companies that will participate in tenders and choosing the company that
will distribute the terms of the tender.”

The expert believes that the political factor also played a significant role
in this delay: “There was intrigue related to the Orange Revolution. It was
postponed, because both NATO and the U.S. had to make sure that the
allocated funds would be effectively used. The Ukrainian side thought that
the terms and conditions set by the Alliance were too strict. It looked like
a large amount of money remained in the pockets of NATO structures, which
allocated a small amount of money for this work,” believes Zhurets.

The U.S. are especially interested in this project. Zhurets said, that
“among 1.5 mn rifles, the project envisaged destroying 1,500 mobile
anti-aircraft rocket constructions, which are considered the most dangerous
ones if they get into the hands of terrorists and pose the threat of
destroying different classes of aircraft.”

Zhurets believes that the first practical results from the project can be
expected in 2-3 years. The expert forecasts wide-scale recycling no sooner
than in 6-8 months, since “it will take half a year to allocate the money
and another half a year to distribute it within the tender among the
companies. A few days after presenting this project on ammunition recycling,
Slovakia allocated 20,000 euro.

At the same time, Zhurets believes that “it will take 100 years to recycle
all extra ammunition, since approximately only 60,000 t of ammunition can be
recycled per year. It is not only a financial issue, we need to expand the
number of plants and increase their capacity. We should use not only state
factories, but also create some separate structures that will also deal with
ammunition problems. Now it is like a clot that clogs our veins and does not
allow us to quickly get rid of ammunition. We cannot blow them up, because
it is very dangerous. Many arms storage facilities are located near
residential areas in towns and cities.”

Approval of the project for recycling excess ammunition confirms the fact
that NATO upholds security inside and outside of Ukraine. At the same time,
Russia, Belarus and China never initiated any assistance programs in this
area, although they have similar ammunition and recycling technologies.

Oleksiy Plotnikov, a VR deputy from the Party of Regions, explains it as
follows: “It is difficult for me to say why Russia or Belarus did not
initiate assistance in ammunition recycling. Maybe the reason is that
Ukraine moved too far away from contact with these and other countries of
the CIS. And NATO supports their desire to see Ukraine as its member, so the
Alliance carries out its policy by different methods, including signing this
agreement.”

He also stated that despite NATO’s desire to improve security in Ukraine,
the Party of Regions as a part of the anti-NATO movement would not change
their attitude towards the Alliance.

“This agreement will not change the Party of Regions’ attitude towards NATO.
Of course, we always approved cooperation with the Alliance in these issues
and participated in them. However, the party has a clear and staunch
position that the issue of NATO entry should be settled only through a
nationwide referendum. Only the results of the referendum should be used to
make a final decision on entering NATO,” stressed Plotnikov.

—————————————————————————————————-
LINK: http://www.weekly.com.ua/?art=1151437106
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18. YULIA TYMOSHENKO: UKRAINIANS ARE INSUFFICIENTLY
                                INFORMED ABOUT NATO
 
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

KYIV – Member of the Verkhovna Rada and eponymous bloc leader Yulia
Tymoshenko says that Ukrainian citizens are insufficiently informed about
activities of NATO. Tymoshenko told this to journalists at the presentation
of the Idealna Kraina (Ideal Land) online project.

In Tymoshenko’s opinion, information about NATO is absolutely absent in
Ukraine, which points to a low professional level of authorities’ work with
information. The lawmaker said that first the public should be explained
what NATO is and only then the referendum on Ukraine’s membership in the
Alliance should be held.

As she noted, the Ukrainian society is deeply uninformed and needs a
professional discussion of NATO. ‘Now we see nothing but propaganda on

TV and radio,’ Tymoshenko said.

The BYT leader also noted that there exist many provocations regarding NATO
issues, which are used for isolating Ukraine from cooperation with the North
Atlantic Alliance. In her opinion, during the Crimean crisis, the President
had to cover the issue of Russia’s cooperation with NATO in mass media in
every way possible.

Tymoshenko said that Russia itself furthers Ukraine’s accession into the
organization. ‘If Russia makes some other steps like raising gas prices,
Crimea will be the first to join NATO,’ Tymoshenko said.

As Ukrainian News earlier reported, the parliamentary coalition set up on
June 22 pledges to make a decision on Ukraine’s accession to NATO based on
the result of a national referendum. In mid-April Ukraine elaborated the
Plan of Actions on NATO membership.

Ukraine plans to begin implementation of the Plan of Actions on NATO
membership in September. Ukraine hopes to become a NATO member in 2008.

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19. UKRAINE: CRIMEAN TOWN REVELS IN “VICTORY” OVER NATO 
 
NTV Mir, Moscow, in Russian 0900 gmt 26 Jun 06
BBC Monitoring Service, United Kingdom, Mon, June 26, 2006
MOSCOW – Crimea will henceforth celebrate two Victory days. The traditional
May holiday [Victory Day on 9 May] will be complemented by another one in
June. [Passage omitted]

Anna Konyukova, our own correspondent in Crimea, watched the victorious
parade of Crimean residents and the bewilderment of the holiday-makers.

[Correspondent, over video of a column of marchers chanting “Victory!”]
Feodosiya has added its own holiday to the list of Crimea’s festive days.
The residents of Feodosiya have decided to mark it every year in late June.
It will be called “We have won!” [Video of marchers chanting “We have won!”]

The Feodosians held their festive march along the route of the recent
anti-NATO protests and pickets past the anti-NATO square, the embankment

and the sanatorium of the Defence Ministry. Rallies were staged in places where
pickets had kept US military, hardware and weaponry sealed off for 27 days.
Deputies of the Crimean parliament and the Feodosian city council
congratulated the Crimeans on the victory and spoke not about today but
about Ukraine’s tomorrow.

[Oleh Slyusarenko, MP of the Autonomous Republic of Crimea, addressing

the crowd] They will come to a sorry end with their joining NATO. They will
force Ukraine to split but this will be on their conscience, not on ours.

[Borys Stepanov, deputy of the Feodosiya city council] This is only a
beginning. I think we will see such protests not for the first or the last
time and not only in Crimea but throughout the whole of Ukraine. [Passage
omitted]

[Correspondent] Participants in the anti-NATO protests have decided to
rename Priportovaya Square as Anti-NATO Square and to set up an anti-NATO
museum in the city. One of the items from this museum was temporarily hanged
on a pole. [Video of an effigy of a NATO serviceman strung up on a telegraph
pole] [Passage omitted]                          -30-
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20.   RUSSIA OIL TEMPERS U.S. SWAY – MOSCOW’S WEALTH
            STRENGTHENS PUTIN’S HAND IN POLICYMAKING 

By NEIL KING JR. in Washington and ALAN CULLISON in Moscow
The Wall Street Journal, NY, NY, Wed, June 28, 2006; Page A10

The Bush administration is wrestling with a new challenge from abroad: an
often strong-willed Russia made all the more assertive by its energy wealth.
As if to drive home that point, Russian President Vladimir Putin delivered a
hard-hitting speech yesterday, arguing that Russia’s economic renaissance
makes it an equal among other global powers.

His comments highlight the dilemma facing Secretary of State Condoleezza
Rice, who arrives in Moscow today hoping to win Russia’s support on
international issues such as curbing Iran’s nuclear ambitions, even as the
Bush administration has stepped up criticism of Mr. Putin’s policies both at
home and toward Russia’s nearest neighbors.

President Bush is set for his own visit to Russia next month, when he must
face a similar bind. Administration officials concede that Moscow’s economic
boom is fueling a more independent Russian foreign policy, and that U.S.
criticism of Russian policies increasingly falls on deaf ears.

Mr. Putin, talking to an annual gathering of top diplomats in Moscow,
acknowledged that some countries haven’t caught up with Russia’s new
economic strength. “Not everyone was ready for Russia to restore so quickly
its economic health and position in the world arena,” he said. “Some see us
through the prism of the prejudices of the past … and see a threat in a
strong, reborn Russia.”

Bush aides say they worry that Russia’s economic clout already is leading
Moscow to overplay its hand on the diplomatic front. As examples, they cite
Moscow’s decision in January to cut off gas supplies briefly to Ukraine, and
Mr. Putin’s outreach in March to top leaders of Hamas soon after the
militant group began to run the Palestinian government.

“They are certainly feeling better about themselves than at any time since
the breakup of the Soviet Union,” says one senior administration official,
adding that Russia’s energy wealth “has given them the distinct feeling that
they are back as a big-time player.” Russia’s assertiveness has complicated
life for an administration already struggling with falling approval ratings
at home and the intractable conflict in Iraq.

The big test of U.S.-Russia relations is Iran. So far, Moscow has supported
U.S. and European efforts to forge a united front within the United Nations
to get Tehran to give up any pursuit of nuclear weapons. But Moscow has said
repeatedly that it doesn’t support imposing sanctions or harsher measures if
Iran doesn’t comply, and Mr. Putin made clear that Russia wasn’t ready to
give ground on this issue. “I repeat again: We do not intend to join all
sorts of ultimatums that can only drive the situation to a dead end,” he
said.

Administration officials say that Ms. Rice, while in Moscow this week, is
unlikely to echo the blunt language that Vice President Dick Cheney used
last month in Lithuania, when he accused the Putin government of
concentrating power at home while using Russia’s vast oil and gas reserves
as “tools of intimidation or blackmail.” Instead, Ms. Rice may meet
privately with several leaders of Russian civil society. Mr. Putin yesterday
denounced all criticism of his energy policy as “exclusively political.”

President Bush, during his trip in July, may also show some sign of support
for greater democracy in Russia, though his advisers are debating what
gesture to make. Mr. Cheney’s public blast in Lithuania, U.S. officials say,
was meant to put down a marker in the lead-up to the Russian-hosted summit
of the Group of Eight top industrialized countries in St. Petersburg next
month. Russia’s stewardship of the G8 this year, at a time when the Putin
government clamps down on dissent at home, has embarrassed many in Europe
and the U.S.

Mr. Cheney’s speech, if anything, only appeared to redouble the Kremlin’s
defiance of Washington, and aroused an argument in the state-run media that
is often expressed: The U.S. is using the rhetoric of democracy as a weapon
as it installs unfriendly governments on Russia’s borders, and supports
opposition groups within Russia itself.

Mr. Cheney delivered his broadside against the Kremlin from Lithuania, and
then departed to oil-rich Kazakhstan, where he praised the authoritarian
leader as a personal friend. “Where is all this pathos about protecting
human rights and democracy when it comes to the need to pursue their own
interests?” Mr. Putin asked in his annual state-of-the-nation address a week
later.

Bush administration officials insist there is no internal feud over Russia
policy per se. The administration wants good relations with Russia, they
say, on counterterrorism and energy cooperation, but also won’t shy away
from pointing out Mr. Putin’s democratic lapses.

“We believe it’s possible to do the criticism and the cooperation at the
same time,” says one official. To keep some focus on the democracy side, the
administration plans to send two State Department officials, including the
top U.S. diplomat for Europe, Daniel Fried, to a pro-democracy “alternative
summit” four days before the G8 gathering.

Still, U.S. officials acknowledge that dealing with an increasingly cocky
and robust Russia has complicated interactions with Moscow and made
negotiations within the U.N. Security Council, where Russia holds a veto,
more tricky.

When Mr. Bush in June 2001 declared Mr. Putin “a man deeply committed to his
country,” Russia was still severely in debt and struggling to recover from
the chaos of the 1990s. Russians were also far more uncertain of Mr. Putin
himself.

Moscow now has the third-largest currency reserves in the world, including a
special $70 billion domestic “stabilization fund.” The Russian economy is
growing at faster than 6% a year, driven mainly by its output of oil and
gas. And its OAO Gazprom, now one of the world’s largest companies, supplies
more than a quarter of all of Europe’s gas, and is pushing to become a major
future supplier to China and the U.S.
—————————————————————————————————
Write to Neil King Jr. at neil.king@wsj.com and Alan Cullison at
alan.cullison@wsj.com

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21.        FITCH SEES CONVERGING FORCES COULD SPARK
                             A NEW EUROPEAN GAS CRISIS
     “It seems like all the makings of a perfect storm,” said Jeffrey Woodruff.

Cbonds News, St. Petersburg, Russia, Monday, June 26, 2006

Fitch Ratings said today that a combination of events, demands and potential
price rises could spark a new European energy crisis.

The chief elements converging now are [1] calls by Ukraine’s prime minister
designate to re-visit the gas agreement reached with Russia at the beginning
of the year; [2] new demands by Turkmenistan that Russia pay USD100 per
thousand cubic meters of gas; [3] reports that OJSC Naftogaz (rated
‘B+’/Outlook Negative) is not storing enough gas in its underground storage

facilities to ensure uninterrupted supplies to Europe this winter; and [4] indications
that OAO Gazprom (‘BB+’/Outlook Stable) intends to raise prices for Ukraine
again in July..

“It seems like all the makings of a perfect storm,” said Jeffrey Woodruff,
Director in Fitch Rating’s Energy Group in Moscow. “Any of the events in
isolation could be enough to spark a new supply interruption concerns in
Europe, but all of them colluding near the beginning of the G8 summit on
energy security seems almost unbelievable.”

Political parties in Ukraine (‘BB-‘/Outlook Stable) have finally been able
to form a new coalition after months of infighting and bickering that
followed parliamentary elections in March of this year. Yulia Tymoshenko is
poised to be reinstated as Ukraine’s prime minister, eight months after
being dismissed from her duties, after forming a coalition that includes the
pro-presidential Our Ukraine party, Tymoshenko’s own bloc and the smaller
Socialists party.

As part of her return to power, the incoming prime minister says, “All
agreements on gas supplies to Ukraine today call for further profound
revision, and for construction in a friendly mode of new contractual
relations with Russia and Turkmenistan.” Gazprom has said that any attempt
to revise the previously reached agreement could lead to renewed supply
problems for Europe.

Gazprom has also said that Naftogaz is not currently pumping enough natural
gas into underground storage facilities to meet winter demand. Gazprom
believes that about 18.5 billion cubic meters of gas should be pumped into
Ukraine’s underground storage facilities before the heating season starts in
order to ensure uninterrupted transit of Russian gas to Europe.

The head of Italian energy group ENI, Paolo Scaroni, has also said he feared
January’s crisis might recur due to the insufficient pace of gas storage.
Naftogaz claims it has pumped 5 billion cubic meters of natural gas into
underground storage facilities as of June 22 and intends to pump a total of
16 billion cubic meters into underground storage facilities before the start
of the 2006-2007 heating season.

In the meantime, tensions continue to rise as Turkmenistan threatened to cut
gas supplies to Russia after an agreement on the price for the second half
of 2006 failed to be struck. Turkmenistan is attempting to raise the price
at which Gazprom buys from Turkmenistan from USD65 to USD100 per thousand
cubic meters. Any such price increase will likely have a direct negative
impact on Ukraine as well since the country receives most of its gas from
the Central Asian republic.

Fitch expects that Gazprom, which supplies up to 17 billion cubic meters of
gas to Ukraine per year, would be quick to pass on these higher costs. In
addition, successful price increases by Turkmenistan to supply gas to Russia
would also likely lead to direct price increases for Ukraine, which receives
approximately 40 billion cubic meters from Turkmenistan per annum.
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http://www.securities.com/MyImages/Info/RU/RU-CBONDS.html
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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22.  YULIA TYMOSHENKO OPPOSES ROSUKRENERGO’S PART
                           IN GAS SUPPLIES TO UKRAINE 

Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – Yulia Tymoshenko, the leader of the eponymous BYT Bloc who has

been nominated for premiership by the Verkhovna Rada coalition, is opposed to
RosUkrEnergo’s participation in gas supplies to Ukraine. Tymoshenko made a
statement to this effect while speaking in an interview with the Russian
publication “Russian Newsweek”.

“I am confident that three countries (Ukraine, Russia and Turkmenistan) and
their respective state organizations (National Joint-Stock Company Naftohaz
Ukrainy, the Russian gas monopoly Gazprom and the state-owned company
Turkmenneftegaz) should conclude contracts directly, without any
interpreters or intermediaries, official or semi-official, being
involved…And, of course, without RosUkrEnergo,” Tymoshenko said.

Tymoshenko said that she is planning to start on negotiations on natural gas
supplies to Ukraine just after the formation of the new Cabinet of
Ministers.

[This work will start] “…once the formation of the Cabinet is completed — 
that is to say in a week,” said Tymoshenko.

As Ukrainian News reported before, Yulia Tymoshenko insists that gas
agreements between Ukraine and Russia should be revised.
On the night to January 4, Naftohaz Ukrainy, Gazprom and the RosUkrEnergo
company agreed on natural gas to be supplied to Ukraine for USD 95 per one
thousand cubic meters and that the cost of gas transit via the Ukrainian
territory be raised from USD 1.09 to USD 1.6 per one thousand cubic meters
of gas transported by 100 kilometers.

Naftohaz Ukrainy and RosUkrEnergo on February 1 set up a joint-venture
closed joint-stock company, Ukrhaz-Energo, to manage gas supplies to
Ukraine.                                                -30-
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23.                               “WITH BEST WISHES”
                    Meeting Robert Conquest at Stanford University

By Vasyl Marochko, Ph.D. (History)
Head of the Association of Holodomor Researchers, Kyiv
The Day Weekly Digest in English, #21
Kyiv, Ukraine, Tuesday, 27 June 2006

I visited the United States for the second time in April 2006. Whereas in
2003 I had to spend weeks attending a conference and listening to papers
given by historians, men of letters, and philologists without leaving the
session hall even for an hour, this time my trip had a broader geography,
stretching from the Atlantic to the Pacific coast.

After acquainting myself with the program of the visit, I said I would like
to meet Robert Conquest, the noted researcher of the purges in the Soviet
Union, author of the substantial work “Harvest of Sorrow,” and the first
Western researcher to recognize the Holodomor in Ukraine as an act of
genocide.

Stanford University is a large, scenic campus with its own post office,
security service, numerous research foundations, and learned professors,
who teach various disciplines to diligent students. Tuition fees range from
43,000 to 54,000 dollars a year, which is a stimulus of sorts.

We met with Robert Conquest at the reading hall of the Hoover Institution on
War, Revolution and Peace. Of British descent, he is a remarkably learned
and cultured person whose research and journalist activities are associated
with Oxford, where he plans to return in the nearest future.

During our conversation at Stanford, where he is a research fellow, he
listened more than he spoke. I asked Professor Conquest how he got around
to studying Ukrainian history. He said that in 1937, when he was still a
student, he had made a trip to Europe and even visited the Ukrainian pearl,
the city of Odesa. The year of the Great Terror would become a matter of
special interest for the researcher.

During the years of Khrushchev’s Thaw Conquest worked as a journalist,
literary critic, and edited a collection of verse “The New Line” in
1955-1963. He is a noted writer and the author of several works of fiction.
He collaborated with Alexander Solzhenitsyn in the 1970s and helped publish
English versions of his books.

In 2005, his book “The Dragons of Expectation” came off the presses.
Listening to Conquest, I found myself thinking that we know far too little
about his scholarly legacy, mostly his well-known monograph about the
Holodomor, and that this legacy should be the subject of a dissertation.

Conquest’s student, the noted US researcher James Mace, came to Ukraine
in 1990, where he would spend the rest of his life. Mace spoke about his
teacher, their joint research project and the work of the U.S. Commission on
the Ukraine Famine. In other words, he familiarized us with the scholarly
legacy of a researcher who was well known in the West but taboo in the
Soviet Union.

In 1968, when Jim was still going to school, Conquest published one of his
first papers on Soviet agriculture. That same year his important work “The
Great Terror” appeared in print, followed by reprints in 1971 and 1973.

The two-volume Russian version came off the presses in 1991, the year the
USSR collapsed. The book went down in the annals of historiography,
although historians’ opinions, especially those of the Soviet generation,
were
varied. Some criticized it; others admired it, while others continued to
debate the issue.

The monograph elucidated the causes and consequences of the Great Terror in
1936-1938, yet made no mention of the Holodomor. Judging by the author’s
references to S. Pidhainy, V. Hryshko, I. Maistrenko, and K. Kononenko,
Prof. Conquest knew about the tragedy of the Ukrainian people.

Who or what prompted Robert Conquest to write a book about the Holodomor?

This is a question that occasionally surfaces in the press. In the early
1980s Ukrainian communities in the United States, Canada, and Australia
marked the 50th anniversary of the Holodomor in Ukraine. American political
circles showed little interest in the subject.

As James Mace later wrote, a generation of English-speaking professional
researchers of purely American descent, who had become influential in the
Ukrainian community, as well as in the sphere of Soviet studies, proceeded
to demand recognition of the Great Famine in Ukraine of 1932-1933.

In June 1981 the Toronto-based newspaper Homin Ukrainy formally announced
that Professor Conquest would be writing a work on the Holodomor. He was
invited to Harvard University to supervise a research project investigating
the famine in the Ukrainian countryside. James Mace, his assistant, was
researching the origins of Ukrainian national communism in Soviet Ukraine in
1918-33.

Mace recalled later that, while working on his doctorate, he knew all the
sources of data available in the West and the historical context of the
Holodomor in the Ukrainian SSR and the Soviet Union. The result of their
joint research was the book “Harvest of Sorrow.” The combination of youth
and
experience, hard facts and political analysis, James Mace’s American Indian
energy, and the British scholar’s academic training and knowledge of Soviet
affairs proved successful.

I wanted to discuss James Mace and hear Robert Conquest’s opinion. When
I asked him about his students, he said quietly: “I’ve never been a
traditional university lecturer. I mostly busied myself with research.” He
did remember Mace as a gifted Harvard researcher. He knew that his former
assistant had died and been buried in Kyiv; he recalled his public
appearances at the universities of Toronto and Stanford.

Mace’s scholarly biography, especially when he was working on his doctorate
at the Harvard Ukrainian Research Institute and later as a research fellow
(1984-1986) is included in the book “Day and Eternity of James Mace.”

I didn’t dare ask Dr. Conquest about what happened on Oct. 2, 1983, in
Washington when 18,000 Ukrainian Americans staged a rally in front of the
Soviet Embassy, although I was eager to find out whether he and Mace were
there. Jimmy had never mentioned his participation in this political event.

Orest Deychakiwsky, staff adviser to the Commission on Security and
Cooperation in Europe (Helsinki Commission), read an open letter during the
rally. The message is still topical, considering the Russian Federation’s
critical attitude to the recognition of the 1932-1933 Famine as an act of
genocide, which was voiced during the CIS summit in April 2006.

“The Holodomor was a deliberate act of genocide, the only man-made famine
in world history, and although different methods were being applied by the
Soviet government, the objective was the same: to destroy Ukrainian national
identity. Your current leadership knows about the genocidal famine and the
current policy of Russification, but it continues to deny this.”

Eighteen years have elapsed since that rally in front of the Soviet Embassy
in Washington. The USSR is history, but the embassy building is still there,
which the Russian Federation inherited along with great-power ideology and
responsibility for the past.

Perhaps it would be best to disown such a dubious heritage, considering that
peasants in the Don region were also dying during this famine and Mikhail
Sholokhov, the author of the novel “Virgin Soil Upturned,” repeatedly told
Stalin about this.

The historical fact of this crime must be acknowledged, all the more so as
during this tragic period the government of the RSFSR was not involved in
the ideology and practice of genocide. Apparently, certain circumstances are
preventing Moscow from taking this step, since official Moscow is loath to
return to the past, not wishing to “disturb” the present.

Robert Conquest and I discussed the need to preserve and study archival
documents on the Holodomor, which are stored in Ukrainian and Russian
archives. I have an autographed copy of his English-language book “Harvest
of Sorrow.”

It appeared in print in 1986 and its Russian version was published in 1988.
The Ukrainian version appeared in 1993, although separate chapters were
published in the journals Dnipro, Trybuna Lektora, and Kyiv in 1990.

Somehow the 1986 original foreword was not included in the Ukrainian
translation. In it Robert Conquest thanks James Mace and his Stanford and
Harvard colleagues for their cooperation. Judging by reviews in the Diaspora
press, the book was written in the spring of 1984 and the text was discussed
during a forum of the Harvard Ukrainian Research Institute. The foreword’s
date also looks logical: 1985, meaning that it was written before the book
appeared in print.

When Conquest’s monograph was published 20 years ago, it sparked great
debate. Soviet historians tried to refute some of the facts; Western
political scientists upheld them; while the Ukrainian Diaspora used it to
substantiate the fact of this act of genocide through scholarship.

Its publication coincided with Gorbachev’s perestroika campaign, although
the book itself marked the appearance of a new perception of the causes and
consequences of the Holodomor in Ukraine. It served as fresh impetus for
further research, destroyed existing stereotypes, and encouraged us to
revise our history.

It taught us to identify gaps in our history as blank pages hiding entries
covered in blood. From the rostrum of the 18th All-Union Party Conference
held in Moscow in 1988, Borys Oliynyk spoke about the 1933 Famine as a
tragedy endured by the Ukrainian people. In the following years a series of
archival documents on the Holodomor appeared in print.

Yevhenia Shatalina and I published them in Ukrainskyi istorychnyi Zhurnal
[Ukrainian Historical Journal] in 1989. The process had been launched, and
in the next several years we published several volumes of Holodomor
eyewitness accounts, a collection of archival documents, dozens of
monographs, and held scholarly conferences on the subject.

Although sufficient efforts seemed to have been made, the process stalled
when it came time for the official recognition of the Holodomor as an act of
genocide. From a purely scholarly question it had acquired markedly
political hallmarks. In May 2003 the Communist Party of Ukraine, then with
a sizable faction at the Verkhovna Rada, refused to acknowledge the
Holodomor and marched out of the parliamentary hall.

These are strange people to whom ideological prestige means more than
Christian consciousness: all those peasants who starved to death were not
buried in accordance with the Eastern Orthodox rite.

Over 60 countries are observing the anniversary of the Holodomor in Ukraine;
many of them have handed down due political and legal judgments and
confirmed the act of genocide, i.e., a crime against humanity. We must
officially recognize the Holodomor as an act of genocide against the
Ukrainian people; no one will suffer any political losses. On the contrary,
this will serve as proof of the start of an era of new political morals.

For me it was important to hear Robert Conquest’s political and legal
assessment of the Holodomor in Ukraine. I asked the learned professor if he
had revised his view of the Famine as an act of genocide, as presented in
his book, now that 20 years have elapsed.

He gave a definite no, and then bolstering his argument as a true
researcher, said that Holodomor is the best term, because it means a
concrete historical form of mass physical destruction, because peasants died
en masse at the time as victims of a man-made socioeconomic phenomenon,
not a disaster.

The term “terror-famine,” applied in “The Harvest of Sorrow,” related to the
political causes of the Holodomor – in other words, it was a deliberate
effort aimed at bringing about a famine that would kill, which is none other
than an act of genocide.

When we use the term Holocaust, the scholar went on to say, we have in mind
the Nazi methods and forms of massacring Jews in concentration camps, which
falls under the 1948 genocide convention. I was very impressed by his
tolerant, scholarly approach to formulating the causes of the Holocaust and
the Holodomor.

For a researcher the best reward is public recognition of his findings and
their social value. I presented Stanford University with the monograph “The
1932-1933 Famine in Ukraine: Causes and Consequences (2003).” Dr. Conquest
commented on it positively and then gave me a copy of his book signed “With
best wishes.”                                           -30-
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LINK: http://www.day.kiev.ua/164447/
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
24. EXHIBITION “UKRAINIAN MODERNISM 1910-30” TO CHICAGO
                   “Kyiv of the 1910s-1930s was the mecca of ‘leftwing artists'”

By Olena SHAPIRO, special to The Day
The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, 27 June 2006

This July the Chicago Arts Center and New York’s Ukrainian Museum will
hold an exhibit of paintings by Malevich, Bohomazov, Yermilov, Burliuk,
Maksymovych, and many other noted Ukrainian artists.

Entitled “Ukrainian Modernism: 1910-30,” the show is being organized on the
initiative of Prince Nikita Lobanov-Rostovsky, a member of the board of
directors of the Foundation for International Arts and Education
(Washington, DC), in collaboration with art specialist Dr. Dmytro Horbachov,
and with the support of Ukraine’s Ministry of Culture and Tourism and the
National Art Museum of Ukraine.

My conversation with Dr. Horbachov touched on the upcoming exhibit and the
unique artworks that will be on display. We also talked about a longstanding
problem, namely whether works by renowned Ukrainian artists will be returned
from private collections to Ukraine.

“Nikita Lobanov-Rostovsky, a noted collector, art patron, and consultant to
Christie’s and Sotheby’s, recently visited Ukraine,” Dr. Horbachov told The
Day. “He and I visited various regions in search of masterpieces. It all
started after Lobanov-Rostovsky spotted artworks of world caliber at the
Kyiv Theatrical Art Museum on the grounds of the Kyivan Cave Monastery. He
was also shocked by the lamentable state of Ukrainian museums. Stunning
paintings were gathering dust in sealed-off museum ‘fund’ rooms.

“The unique set designs of the early 20 th century were an unparalleled
phenomenon. Nowhere in the world did set designers make easel works. As a
rule, Western artists prepared working sketches for the theater (including
Picasso, Braque, and Chagall). Our artists, starting with Bakst, did two
versions: a working sketch for the stage and a full-fledged easel painting,
as in Petrytsky’s case.

This is proof that our artists worked not only on commissions but also
painted works for themselves, for the sake of pure art.

“Lobanov-Rostovsky, who has been closely following creative life in Ukraine
for a long time, conceived the idea of holding a Ukrainian modernist art
exhibit in the West.

The Washington-based Foundation for International Arts and Education has the
funds for organizing such an exhibit and renting the premises; that was how
the idea of showing Ukrainian avant-garde artists in the United States
emerged.

“One of the conditions was that only large works could be submitted because
US audiences appear to have special optical characteristics; they seem
unable to “see” small-format paintings. In contrast, the Japanese prefer
miniature works of art and can look at them for a long time. We discovered
several magnificent works of art in Kyiv and other Ukrainian cities.

But Lobanov-Rostovsky was sad because there wasn’t enough ‘critical mass’
for a full-fledged exhibit, so he proposed to expand its format and call it
‘Ukrainian Modernism,’ meaning modern plus avant-garde. Apart from the
gifted Novakivsky, another talented Ukrainian artist by the name of
Maksymovych specialized in the field.

He was destined to live a short life – he committed suicide at the age of 20
but left behind interesting works as the number-one artist of the ‘Ukrainian
school’. Nevertheless, by force of Soviet mental habits, Maksymovych is
still regarded as a dilettante.

“The arrangements for the exhibit took six years, and during that period
Lobanov-Rostovsky and I became real experts on Ukrainian private and museum
collections. We unearthed around 100 works of art that will be displayed at
the Chicago Arts Center and the new Ukrainian museum in New York City. We
managed to carry out this creative project thanks to the personal support of
President Viktor Yushchenko.

“By the way, this is not the first time that Lobanov-Rostovsky has
undertaken a benevolent project. He is well known to Ukrainian museums as a
patron and art collector. For example, he donated 15 stage designs sketched
by Sonja Terk Delone and Ilya Repin’s study A Zaporozhian Cossack, along
with a watercolor landscape by Shevchenko, which he donated to the
Shevchenko Museum.

Lobanov-Rostovsky’s private collection boasts works by Ukrainian artists,
such as Anatol Petrytsky, Kazimir Malevych, Oleksandr Khvostenko-Khvostov,
Vladimir Tatlin, I. Rabynovych, Oleksandr Tyshler, Oleksandr Bohomazov, and
other gifted artists.”
             “ARTIST SHOT, PAINTING WAS DESTROYED”
We know that most of the works created by Ukrainian avant-garde and
modernist artists were destroyed. What happened to their creators? Surviving
inventories state: “Artist shot, painting was destroyed.” Dr. Horbachov
succeeded in processing part of the collection and using the newly
discovered paintings to create a fundamental study entitled The Ukrainian
Avant-Garde, 1919-1930.

You have studied and rediscovered works created by artists who were banned
by the Soviet government, and returned them to the National Art Museum.
Today the names of Malevich, Petrytsky, Ekster, and Bohomazov comprise the
museum’s “gold fund.” Could you describe your work on the “Ukrainian avant-
garde?” How was it conceived?

D. H.: “In the 1930s-1940s all formalist works of art, so-called
“anti-Soviet” paintings, were denounced. The museum had a separate room in
which all condemned works of art, with their canvases removed from their
frames and rolled up, were stored. They were supposed to be burned. However,
since the size of these paintings ranged from small to large, disposing of
them required special vans. So the pictures were stored there, awaiting
destruction.

“Eventually, the authorities must have forgotten about them and that was how
they survived. Some artists were not lucky, as their paintings were scrubbed
off the canvas or even shredded. During that period paintings banned by the
authorities was regarded as the creativity of “enemies of the people.” For
example, there was a whole saga around Petrytsky’s portraits.

Some of the writers he had portrayed (Liubchenko, Khvylovy) were purged and
their portraits were burned. But there were cases where museum employees
would hide “taboo” works by rolling up the canvases and storing them in
their “fund” rooms. When I started working as the museum’s chief security
officer, I was told to accept shipments of canvases without actually
examining them. I was supposed to just check the number, sign the invoice,
and forget all about it.

“In the early 1960s there was an exhibit by the artist Sayenko in Kyiv. An
art critic named Vorona declared during the opening ceremony that we were
praising Sayenko because he was a pupil of Boichuk. We should explore
Boichuk’s works again and see if we were wrong in our previous estimation of
them.

This statement prompted Boichuk’s opponents, who had cut up his canvases in
1937, to forward a complaint to the Central Committee. Several days later I
was instructed from “upstairs” to find Boichuk’s works, look at them again,
and submit my findings on his kind of pictorial art.

“I remember hanging the wrinkled, damaged paintings on the walls of the
cellar. Right next to the rolls of Boichuk’s paintings, I spotted the works
of Palmov and Bohomazov. I was impressed by their work. Boichuk’s supporters
were keen innovators.

Even today Western art critics are unable to assess their true value when
they are exploring their works for the first time because it is difficult to
establish criteria for Biochip and his school. I believe that the works of
Palmov, Yermilov, Petrytsky, and Bohomazov look “Western,” judging by their
creative language; at the same time they are very germane to Ukrainian
culture.

“I found works by Maksymovych stored in that museum storeroom, which, like
Shekhtman’s, were once described by a Central Committee commission as being
incompatible with “the image of Soviet man” and thus could not be publicly
displayed. After examining these paintings, the aggressive Comrade Skoba
declared that they were all “counterrevolutionary,” even though among them
were portraits of Lenin and Stalin – but those were the times.

The Soviet Ukrainian culture minister, Babiychuk, staged “pogroms” by not
allowing the works of Boichuk’s followers to be included in public exhibits.
Instead, he cited “realists” as worthy models: “Consider Pymonenko as an
example; he is our artist.”

“But contemporary art critics know that our supremacist Malevich was
Pymonenko’s pupil and that he must have acquired some knowledge from his
teacher. Years later, the artworks of Boichuk’s followers found their way to
the art museum.

“You know, when I started studying the canvases hidden in the museum’s
storerooms, I realized that Ukraine in the 1920s had its own, inimitable,
and very talented school of art. At the time our Kyiv Art Institute was a
kind of Bauhaus, and Kyiv was a mecca for leftwing artists for several
years.

During this period Tatlin, Malevich, Petrytsky, and Arkhypenko [Archipenko]
worked in the Ukrainian capital. The film director, Oleksandr Dovzhenko, was
working on his film Earth. In those days Kyiv boasted the world’s only
professional theater of the absurd known as “SoZ,” an acronym meaning
“socialist emulation.” Here every creative endeavor signified a novel trend,
a desire to reach world standards. Then the Diaspora “became inspired” and
joined in.

“By the way, people of Ukrainian descent who lived in Leningrad proudly
identified themselves as Ukrainians. It was a matter of prestige. Parisian
Ukrainians, among them Radko, Babiy, and Burliuk, wrote that they were true
sons of Ukraine. A number of Russians visited Kyiv at the time simply
because they knew they could accomplish something here that they would never
be allowed in Moscow.

Dziga Vertov made the first documentary in Kyiv, entitled Man with a Movie
Camera, now regarded as a classic of cinematography. Vertov was seen in
Russia in the 1930s-1940s as a rank-and-file Mosfilm Studios film editor in
Moscow; no one wanted him. He was scared and depressed. There was no way
to go abroad during the Iron Curtain era.

“After I became interested in the Kyiv art school of the early 20th century,
I made a discovery: Bohomazov. We visited the artist’s widow and saw
mind-boggling works of art; they are now scattered throughout the world and
cost a fortune. In the Bohomazov archives I found a portrait of Karl Marx. I
brought the engraving to the curator of our museum, but he refused to put it
on display, saying that Bohomazov was a formalist.

“I had to resort to subterfuge. The centenary of the International was
approaching and the museum was staging an exhibit. It didn’t have a single
portrait of Marx, so I talked the management into displaying Bohomazov’s
portrait. The caption read “Karl Marx” in block letters and had Bohomazov’s
name underneath in small print. That was how we first displayed that
“formalist.” We got press reviews, and Bohomazov’s name appeared in print
after long years of being ignored by the media.

“Gradually, art lovers began to discover his creative heritage. In 1966
Pavlo Zahrebelny helped us organize a Bohomazov exhibit at the Writers’
Home, although he had to listen to a lot of reproaches from “a group of
outraged members” of the Writers’ Union of Ukraine. The exhibit did take
place, contrary to bureaucratic hurdles, and was followed by articles in
newspapers and journals.

A number of distinguished foreign specialists and art collectors took an
interest in Bohomazov’s art. Prince Nikita Lobanov-Rostovsky visited Kyiv.
He purchased some Bohomazovs and took them with him. He later donated
them to the Guggenheim Museum.

“Some of Bohomazov’s paintings found their way abroad thanks to Serhiy
Hryhoriants, who smuggled them out in diplomatic pouches (this would later
cost him a term in a Soviet prison, on charges of “illegal currency
transactions”). Despite all sorts of obstacles, the works of our artists
were displayed in the West.

Nakov, the famous Russian art historian, noted that there was an avalanche
of rapturous reviews. Art critics were unanimous in declaring that a new
name of world rank had been discovered. Analyzing his discoveries in
Ukraine, Nakov wrote that there were many avant-garde painters here,
including Malevich, Ekster, Tyshler, Arkhypenko, and Bohomazov, and that
behind these names unquestionably stood a real school of art.

“Later Lobanov-Rostovsky asked me to prepare a long article about the Ekster
school in Kyiv. The cubist-futurist set designs eventually grew from these
roots. I was interested in this study and discovered a number of facts that
even took me by surprise.

“In the 1960s and 1970s, when I was unearthing paintings by Palmov,
Bohomazov, and other artists in the museum basement, Ukrainian intellectuals
began to visit the museum. The news of these “vernissages in museum
storerooms” reached Moscow. Then foreigners started visiting the museum,
and I was fired from the museum because in its storerooms I had shown
works by officially banned Ukrainian avant-garde artists to the noted French
art specialist Jean-Claude Marcade.
                                 MORE ROOM FOR MUSEUMS
Dr. Horbachov, in 2000 you broached the fate of Prince Nikita
Lobanov-Rostovsky’s collection during an interview with The Day. He had
suggested that it be acquired for a museum in Kyiv, so that the priceless
works created by Ukrainian artists would remain in Ukraine. Six years have
elapsed and the question remains open.

D.H.: “It took Lobanov-Rostovsky years to purchase paintings for his
collection. The prince doesn’t have a direct heir. He wants his collection
to be kept intact. He has had offers in the West, but the prospective buyers
made it clear that they would start selling the paintings from his
collection. The prince wants his collection kept in a state-run museum.

Moscow Mayor Yuri Luzhkov was interested, but ill-wishers succeeded in
convincing him that the collection includes counterfeit works. This is not
true! I know every work of art there.

“However, it has been difficult to find interested people in Kyiv. I visited
the mayor’s office. They listened to me carefully and asked, “How much does
this collection cost?” I told them that, according to Sotheby’s estimates,
it was in the neighborhood of three million dollars. This is not a large
sum, considering the Ukrainian capital’s budget.

Then we studied the question of suitable premises for the collection:
there’s an old building on Moskovska St. (the Cultural Heritage Museum).

 
We even found a patron, a young Kyiv millionaire, who showed an interest
in the prince’s collection. He met Lobanov-Rostovsky, they signed a tentative
agreement, but the Ukrainian businessman went bankrupt before it came time
to transfer the agreed sum to the prince’s bank account.

“You know, there are not many European-standard museums in Kyiv. We

have sustained many losses historically and there are quite a few unfavorable
circumstances that we have to put up with. We have missed a great many
opportunities in the cultural domain. Ukraine’s entire history is a long
chain of missed opportunities.

As for Nikita Lobanov-Rostovsky and his collection of set designs by early
20th-century artists, we could use these works to set up a museum of
international caliber. This project’s recoupment would be quick because
these kinds of art collections are popular all over the world. I believe
that we need a civilized approach and understanding on the part of those
who are responsible for the future of our cultural heritage.”     -30-

————————————————————————————————–
LINK: http://www.day.kiev.ua/164457/
————————————————————————————————–
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AUR#718 Jun 26 Ukraine Needs 5-6% GDP Growth Per Year For Next 5-7 Years; World Bank, IFC; World Cup; 2008 NATO Hopes Fading; Anti-NATO Enemy Within

=========================================================
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    

   
UKRAINE NEEDS 5-6% GDP GROWTH PER YEAR: 5-7 YEARS
          Instability, non-implementation of required reforms, in particular tax
                 reform, is hindering Ukraine’s development. (Article One)
                                                    
ACTION UKRAINE REPORT – AUR – Number 718
Mr. E. Morgan Williams, Publisher and Editor  
PUBLISHED FROM KYIV, UKRAINE, MONDAY, JUNE 26, 2006
           –——-  INDEX OF ARTICLES  ——–
         Clicking on the title of any article takes you directly to the article.               
Return to the Index by clicking on Return to Index at the end of each article
1.         UKRAINE NEEDS 5-6% GDP GROWTH PER YEAR
         Instability, non-implementation of required reforms, in particular tax
                         reform, is hindering Ukraine’s development.
INTERVIEW:
With Kamen Zahariev, EBRD Director, Ukraine
By Pavlo Berest, Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

2.      ‘CHRONICLE OF RECENT DEVELOPMENTS IN UKRAINIAN

Dr. Irina Paliashvili, President, Russian-Ukrainian Legal Group, P.A. (RULG)
Action Ukraine Report (AUR) #718, Article 2
Washington, D.C., Monday, June 26, 2006

3.                  KIEV SCRAMBLING TO AVERT GAS CRISIS 
By Catherine Belton, Staff Writer, Moscow Times

Moscow, Russia, Thursday, June 22, 2006

4.     WORLD BANK LOANS UKRAINE $150 MILLION TO EXPAND
                  ACCESS TO FINANCIAL SERVICES MARKETS 
Some funds to be channeled to loans to small and medium farming enterprises
Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006

5NAFTOHAZ UKRAINY, ROSUKRENERGO REACH AGREEMENT ON
 ADDED GAS SUPPLIES FOR FILING UNDERGROUND GAS STORAGES

Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006
                           FOR SEVERAL PROJECTS IN UKRAINE
IntelliNews – Ukraine Today, Kyiv, Ukraine, Monday, June 26, 2006
           Wide scale meeting of business lawyers from twelve countries
                  29-30 June 2006, Radisson SAS Hotel, Kiev, Ukraine
Vakhtang Mikadze, Forum Coordinator
Russian-Ukrainian Legal Group, Kyiv, Ukraine, Monday, June 26, 2006

8IFC APPROVES USD 9 MILLION CREDIT FOR ZEVS CERAMICS CO
Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 22, 2006

9UKRAINE DENIES STEALING RUSSIAN GAS, ADMITS DELAYS
Reuters, Kiev,Ukraine, Friday, Jun 23, 2006 

10. WORLD BANK SENDS REPORT ON ANALYSIS OF ROAD SAFETY
            MANAGEMENT IN UKRAINE TO TRANSPORT MINISTRY
Interfax-Ukraine, Kyiv, Ukraine, Thursday, June 22, 2006

11.      RECORD PROFITS FOR UKRAINIAN NITROGEN PLANTS
UNIAN, Kyiv, Ukraine, Thursday, June 22, 2006

 

12 NO BETTER STUDENT EXCHANGE THAN IN THIS COUNTRY
                       Ukrainian Students Exchange Program (USEP)
COMMENTARY
: By Yaroslav Kovalchuk, 2nd-year student,
Faculty of Romance and Germanic Languages,
National University of Ostroh Academy
The Day Weekly Digest #20, Kyiv, Ukraine, Tuesday, Jun 20, 2006

13WORLD CUP: IT’S ALL UKRAINIAN TO US SAY JOURNALISTS
REUTERS, Cologne, Germany, Monday June 26, 2006

14.                                    UKRAINIAN GLEE
Sport Illustrated magazine, New York, NY, Monday, June 19, 2006

15.                  UKRAINE: NATO HOPES FADING FOR 2008
ANALYSIS: Jane’s Intelligence Digest, London, UK,  Fri, 23, 2006

16.                         THE ANTI-NATO ENEMY WITHIN
COMMENTARY: By Oles Lisnychuk
Kuras Institute For Political and National Studies
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

17.                               MAKING A DIFFERENCE
COMMENTARY: By Arkady Moshes, Senior Researcher
The Finnish Institute of International Affairs
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

 
18.                                 THE ORANGE ORDER
           Ukraine now has a second chance to pursue pro-Western reform
EDITORIAL:
The Times, London, UK, Thursday, June 22, 2006

19. TIMES PORTRAYAL OF YULIA TYMOSHENKO IS ERRONEOUS

LETTERS TO THE EDITOR: By Leo Iwanycky
Action Ukraine Report #718, Article 19, Kyiv, Ukraine, Mon, June 26, 2006

20.    LETTER TO EUGENIA DALLAS ABOUT FAMINE GENOCIDE
LETTERS TO THE EDITOR: By Terry Lys
Action Ukraine Report #718, Article 20, Kyiv, Ukraine, Mon, June 26, 2006

 
21.    AN EPOCHAL FIGURE HAS DEPARTED: MYKOLA KOLESSA
Why do we revere him so much? Because he lived the way Man should live.
By Iryna Yehorova, Lviv, The Day Weekly Digest in English #20
Kyiv, Ukraine, Tuesday, June 20, 2006

22.     KATERYNA YUSHCHENKO TOOK PART IN OPENING OF
  A RENOVATED CLINIC AT THE KYIV OBLAST CANCER CENTER
By Maryna Antonova, Head of the Press Office
Ukraine 3000 Foundation, Friday, June 23, Kyiv, Ukraine
=======================================================
1
        UKRAINE NEEDS 5-6% GDP GROWTH PER YEAR
        Instability, non-implementation of required reforms, in particular tax
                         reform, is hindering Ukraine’s development.

INTERVIEW: With Kamen Zahariev, EBRD Director, Ukraine
By Pavlo Berest, Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

The EBRD Director in Ukraine Kamen Zahariev is hoping that his boss, the
EBRD President Jean Lemierre, will lose his wager with the Ukrainian premier
concerning the rate of GDP growth in Ukraine.

Zahariev is hoping that Ukraine, wins. In an interview for KW, Zahariev said
on many occasions that he believes in Ukraine and its future noting,
however, that corruption and inefficiency of the state system are remain
obstacles to the country’s development.

KW: What is your assessment of current Ukraine’s investment attractiveness?

KZ: After the Orange revolution, investment attractiveness of Ukraine has
improved in the West. A serious interest appeared among large investors.
Those who came to Ukraine in the middle of 1990s, looked and left seeing
that the situation did not dispose to normal work, were especially active.
Naturally, what they see now is also not ideal.

However, on the government level, there is an understanding now of those
main factors, which condition improvement of investment climate. There is
understanding among all key political players that Ukraine must be open to
civilized world in order to be rich and prosperous country.

KW: What are the main factors fulfillment of which could lead Ukraine to
become a developed European country?

KZ: Firstly, it is necessity to improve competitive level of the Ukrainian
economy due to the pressure applied on the country due to escalation of
prices for energy resources. Now, everybody in Ukraine understands that the
energy needs to be saved, investments should be made with this objective and
the country needs to be open to serious foreign investors, which is one of
the factors of improving the efficiency of the economy.

Holding of open fair tenders among investors for sale of large companies and
geological prospecting is a positive step. Let’s hope that such processes
will continue in all sectors of the economy. Other factors, which will lead
to further changes in the economy and investment attractiveness of the
country, include accession into the WTO and closer economic cooperation

with the EU within the Neighborhood program.

Another positive trend is when portfolio investors, which earlier actively
invested into central European countries are actively working on variants of
investing into Ukraine. Investors understood that there is a big promising
country with dynamically developing economy on the map of Europe.

Just the other day I spoke with several investors in the sphere of
construction, insulation materials, woodworking industry and car parts.

Naturally Ukraine is competing for investments mainly with Russia. That is
why further steps for “opening” the country are required. Because the
problems remain, namely: corruption, inefficiency of state system, problem
with registration of enterprises, receiving licenses and other permissions.
Nevertheless, even despite this, the clear improvements have been made.

KW: How does current political uncertainly influence economic development
of the country?

KZ: Instability, non-implementation of required reforms, in particular tax
reform, is hindering Ukraine’s development. Without stable parliamentary
majority, which has clear program of the country’s development, it is
impossible to implement the required reforms.

Lack of clarity in the policy of the country concerning privatization,
possible re-privatization, etc., also does not add confidence for investors.
Resolving tension in relations with Russia in gas and other spheres also
depends on what the new government will be like.

All these factors have negative effect, but not so serious to stop the
powerful flow of investments, which has recently been observed in Ukraine.

In the first half of the year, over US $900 mn has been invested into
Ukraine. These are not only large one-time investments, but a rather
powerful flow of smaller investors who bring money into the Ukrainian
economy.

Political uncertainty holds back local investors more than foreign ones.
They do not know what the rules of the game will be and that is why they
don’t invest to the extent they could. However, there are other examples too.

Already now, some Ukrainian companies are working for the future. For
example, at the moment we are working on  several large projects with

Donbas Industrial Union and some other big industrial groups.

KW: What projects does the EBRD intend to implement in Ukraine in the
near future?

KZ: We have rather strongly activated our effort over the past 2-3 years. In
2000-2003, the total level of our investments amounted to 160-170 mn euro
per year, while in 2004 – 260 mn euro and last year – 530 mn euro. We are
looking optimistically on development of Ukraine and its prospects.

We intend to invest into reconstruction of railways, highways, port
infrastructure. The bank is planning active involvement in projects on
construction of roads and also in railway and air transport.

Our participation could influence, among other things, methods of
procurement, consolidation of the industry and facilitate effective
privatization. The EBRD is financing air navigation facilities, air
transport infrastructure, etc.

Another sphere is the municipal  utilities sector. Over a third of all gas
consumed in Ukraine is used in the housing utilities sector.

Implementation of our district heating projects will help reduce consumption
of gas and electricity in this sector. Although, according to the Ukrainian
legislation, we can implement projects only in cities with population over
800,000 so far.

In the municipal and environment protection sphere, the bank focuses on the
plan of primary capital investments/not sure what do you mean by this/ for
financing most important investments into water supply and purification of
run-off water in large industrial cities.

Jointly with the Ukrainian government, the EBRD is working on implementation
of administrative and tariff reform aimed at improvement of quality of the
services provided to the population.

The third sphere is financial sector. Through opening credit lines through
local banks, we finance small and medium enterprises, perform
micro-financing. In this sphere, the volumes of loans have already reached
US $300 mn.

The EBRD emphasizes the significance of growth of its portfolio in the
private sector through increasing financial resources allocated for private
small and medium enterprises, direct financing of private enterprises,
support of development of private banks and direct financing of the
development of infrastructure, in particular, in such sphere as energy and
communications.

Special attention is given to energy, including assistance in privatization
of the sphere and improvement of energy efficiency of the country. The
projects with participation of the bank are implemented in the energy saving
and energy efficiency, nuclear safety and new technologies of electricity
production, construction of high-voltage transmission lines, financing of
generating capacities, etc. Special efforts are given for development of
wide potential of the agriculture.

Industrial energy saving is the new direction, which recently became
especially relevant. In this sphere, we implement projects with such giants
as Mittal Kryviy Rih and Alchevsk Steelworks.

In six months of 2006, we implemented projects for over 200 mn euro and
expect that in the end of the year we will achieve around 500 mn euro mark.

KW: Recently the EBRD President Jean Lemiere said he was ready to accept
the bet proposed by Premier Yuriy Yekhanurov concerning GDP growth in
Ukraine in 2006. Who has better chances to win?

KZ: In his response letter, president Lemiere said he hoped to lose, that is
the question is not about who wins. We are hoping that in the end Ukraine
wins, that there will be a higher GDP growth than experts are expecting.

I think that everybody understands that that was said by the Ukrainian
premier and the EBRD president in the spirit of very friendly relations that
exist between the bank and Ukraine. I hope that with the new government we
will have the same constructive, mutually beneficial relations.

KW: After Yekhanurov’s statement, the EBRD improved its GDP growth
forecast for Ukraine from 1.2%, which was given in the beginning of the year,
to 2%. What was the reason for that?

KZ: This was due to new statistical data. According to it, there is a
positive trend and revival of the industrial sector. Even despite escalation
of prices for gas, industrial growth of around 10% is observed.

One cannot say that one can be satisfied with such GDP growth. Will it be
1.8% or 2.8% is not so important. This is not the growth Ukraine needs in
order to catch up with other countries in central and eastern Europe.

 
Ukraine needs 6-8% growth per year at least for the next 5-7 years.

Ukraine needs 6-8% growth per year at least for the next 5-7 years. That is
why it is important that the new government immediately takes steps to
ensure such growth of the economy.

KW: What do you think about near prospects of Ukrainian economy
development? How much will economy depend on the politics?

KZ: I would like to say that configuration of the new coalition is not the
key problem. The most important thing is that there should be certainty.

Business likes stability and predictability. Naturally you cannot say that
it does not matter what the government will be like. A lot will depend on
which program it will be implementing. We believe that it is best for
Ukraine to take the course towards liberalization of the economy and
creation of equal opportunities for all players.

It can no longer be said that Ukrainian economy will depend on politics
only. The situation in the country has changed. For example, we had problems
in the past when former governments had difficulties working with us.

The problem was that by our procurement rules, an open tender must be held,
then the money is paid not to the borrower, but to the executor only for
provided services or materials. That is why we did not have problems with
non-targeted use of loans. It seems for some people it was not beneficial.

Now, we no longer have such problems. But there are still problems with
ratification of our agreements. All projects, which are implemented under
state guarantee, must be ratified by the Verkhovna Rada.

Sometimes, due to political reasons this did not happen. For example, EBRD
allocated a US $120 mn loan to UkrZaliznytsya, the largest carrier of
passengers and cargoes, in August 2004. The loan was allocated under the
government guarantee; the agreement was signed, but not yet ratified by the
VR. As a result, Ukraine is paying commission for the loan it cannot use.

But I remain optimistic. I think that Ukraine has a very good future for the
next 10 years. There are certain framework conditions in the country, which
allow to work in a civilized manner, but they need to be improved.

                                        BACKGROUND
As of May 1, 2006, the European Bank for Reconstruction and Development
signed 114 projects in Ukraine (including regional investments) in the total
amount of over 2.27 bn euro. The investments were made into the food
industry, finance, oil and gas, transport, services in agriculture,
telecommunications and municipal infrastructure.

The EBRD is one of the managers of “Shelter” Chornobyl Fund, founded in
December 1997 by the countries of the G7 and other contributors for
providing assistance to Ukraine in transforming the existing sarcophagus
into a safe and environmentally stable system.             -30-
————————————————————————————————-
LINK: http://www.weekly.com.ua/?art=1150838123

————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.    ‘CHRONICLE OF RECENT DEVELOPMENTS IN UKRAINIAN
 LEGISLATION’ IN BUSINESS & CORPORATE LAW FOR  MAY 2006

Dr. Irina Paliashvili, President, Russian-Ukrainian Legal Group (RULG)
Action Ukraine Report (AUR) #718, Article 2
Washington, D.C., Monday, June 26, 2006

Dear Morgan:

Our firm has just published the May edition of our popular “Chronicle of

Recent Developments in Ukrainian Legislation”, a monthly summary of the
most important legislative developments in Ukraine in the area of business
and corporate law, available in English and Russian.

In addition to the regular monthly Chronicle, we also issue Legislative
Alerts from time to time on the most urgent legal topics in Ukraine.

The Chronicle is a token of our appreciation to our esteemed clients and

friends, therefore, it is distributed as a free subscription. The Chronicle is
prepared in an effort to capture news of greatest interest to the widest
cross-section of our firm’s clientele, without restating all legislation
published and drowning our readers in too much information.

The principal contributors to the Chronicle are Rich Smith, Senior Counsel
at our Washington, D.C. office, and Yelena Korshikova, Counsel at our
Kyiv office.

Archived editions of the Chronicle are available for viewing and download

on our website, http://www.rulg.com/chronicle.asp. Future editions are
distributed via e-mail by the middle of each month, and will summarize the
legislative developments of each preceding month.

In order to begin receiving the Chronicle direct to one’s e-mail box, a

person just needs to fill out the subscription form at
http://www.rulg.com/subscription_form.asp.

The Chronicle will only be distributed to subscribers who fill out this
form. The “unsubscribe” option will be available at any time.

Due to the winnowing process necessary when preparing the Chronicle,

we cannot guarantee that it contains a comprehensive list of all Ukrainian
legislation relevant to business.

Finally, please bear in mind that this summary does not constitute legal
advice; it is an informational service only. Should anyone wish to receive
further information or actual legal advice, please do not hesitate email us
at chronicle@rulg.com.

Thank you and we look forward to welcoming readers of the Action
Ukraine Report (AUR) as subscribers to the Chronicle!             -30-
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.               KIEV SCRAMBLING TO AVERT GAS CRISIS 
 
By Catherine Belton, Staff Writer, Moscow Times
Moscow, Russia, Thursday, June 22, 2006

Ukraine is scurrying to form a government coalition and head off a gas
crisis that could hit July 1, when its controversial supply deal with Russia
expires.

Leaders of Orange Revolution factions announced Wednesday they had

reached a last-minute coalition deal. But with just two days left to collect
signatures before parliament must be dissolved, Turkmenistan announced it
could cut off gas supplies.

Turkmenistan’s Foreign Ministry said Wednesday it could turn off the taps if
Gazprom did not agree to nearly double the price it pays for gas to $100 per
1,000 cubic meters. Gazprom sells on most of the gas it buys from
Turkmenistan to Ukraine.

“Ukraine is in a very tough spot,” said Olexander Chaliy, an independent
energy expert, who led Ukraine’s gas negotiations with Russia as deputy
foreign minister from 1998 to 2004. “An energy crisis could develop within
the country and internationally in the next six months to one year.”

The Ukrainian economy is already struggling with the effects of a gas price
hike in January that followed a politically charged standoff in which Russia
briefly turned off the taps to Ukraine. Cheap Turkmen gas supplies were
crucial in bringing down the price from the $230 per 1,000 cubic meters that
Gazprom was demanding. Under the January deal, Ukraine ended up with a

final price of $95 after mixing in Central Asian supplies also sold to it by
Gazprom.

A hike in the price of Turkmen gas could tip the balance when the deal
expires at the end of June.

“Ukraine can’t afford to pay more for gas,” said Chris Weafer, chief
strategist at Alfa Bank. “A lot of issues are now coming to a head. They are
reaching a crisis point.”

A spokeswoman for Yushchenko, Irina Gerashchenko, declined to comment

on the proposed price hike, and said Ukraine intended to send negotiators to
the Turkmen capital, Ashgabat, next week.

Ukraine’s government has been in political limbo since January, when the gas
deal prompted parliament to fire the Cabinet. During parliamentary elections
in March, the gas deal was a central campaign issue between blocs headed by
Yushchenko and Tymoshenko. The two former allies have been deadlocked over
how to form a new government ever since.

At stake is not only Ukraine’s economy but also its bid for greater
integration into Europe and independence from Russia < issues that lay at
the heart of the Orange Revolution. Ukraine is a transit country for 80
percent of Russian gas supplies into Europe, and the gas standoff has
provoked fears over energy security in capitals across the continent.

It was unclear Wednesday whether Yushchenko’s Our Ukraine bloc and
Tymoshenko’s faction would be able to build their coalition on time, despite
an announcement the two sides had struck a deal late Tuesday after nearly
two months of talks.

Relations between the two leaders have been strained. Tymoshenko has
insisted on scrapping the gas deal, calling it a national security threat.

A spokesman for Tymoshenko’s bloc said the two sides had two days to collect
the 226 signatures – a majority in the parliament – necessary to form the
coalition and push ahead with the formation of a Cabinet.

“It’s too early to celebrate yet,” said the spokesman, Taras Pastushenko.
Viktor Yanukovych’s Party of the Regions, which won 30 percent of the vote
in the March elections, could still spoil the coalition, Pastushenko said.

Delays in forming the government mean that Ukraine may not be prepared for
the next round of gas talks when the current deal expires.

“The Ukrainian government should have been very actively developing a
strategic position on gas negotiations with Russia and the European Union in
the context of the future of our country,” Chaliy said. “But there is no one
to do this.”

“It is just weeks before the G8 summit in St. Petersburg, and we haven’t
heard anything from Ukraine’s leaders on what they want to say to the G8
about energy security.”

Turkmenistan briefly cut off gas supplies to Russia in January 2005 over a
price dispute. Analysts said the call for a price hike started a round of
price increases across the CIS, which have underlined the arbitrary and
opaque way prices are set in the former Soviet Union, where the costs of
extracting gas can be as little as $5 per 1,000 cubic meters.

It is unlikely that Turkmenistan will go ahead with its threat to turn off
the gas for long. When the Central Asian republic turned off gas supplies in
the late 1990s, it nearly went bankrupt.

Gazprom’s demand that Ukraine pay $230 per 1,000 cubic meters has had a
domino effect, sparking a race for Turkmen gas that could upset the gas
balance across the entire region.

Gazprom could be forced to pay more, analysts said.

Following the deal, China began courting Turkmen President Sapurmurat
Niyazov in an effort to persuade him to send gas east instead of west. When
Niyazov made a five-day trip to Beijing earlier this year, he came back with
an agreement to ship gas.

“Turkmenistan is unhappy selling gas at such a low price. It’s pretty clear
that it has been made a better offer by China. It’s now in a position to
raise the stakes,” Weafer said.

The standoff could affect security across the region. Russia also relies on
supplies of cheap Central Asian gas to make up for shortfalls in its own
production. Unified Energy Systems CEO Anatoly Chubais on Tuesday said that
Gazprom was not supplying enough gas to Russian power stations, even during
the summer months.

The International Energy Agency warned recently that a lack of investment by
Gazprom in boosting production could mean it will be unable to meet its
supply contracts by 2010.

Gazprom spokesman Sergei Kupriyanov insisted Wednesday that the company’s
contract to buy gas from Turkmenistan for $65 per 1,000 cubic meters was
valid for all of 2006, and not just the first half of the year, as the
Turkmen Foreign Ministry said Wednesday. Kupriyanov said negotiations
concerned only “extra supplies” covered by that $65 contract.

In April, Gazprom CEO Alexei Miller traveled to Ashgabat for talks with
Niyazov but returned without a deal.

Kupriyanov said by telephone Wednesday that negotiations with the Turkmens
were still ongoing.

Any negotiations on a new deal with Ukraine as a result of Central Asian
price hikes would be handed by RosUkrEnergo, the Swiss-registered trader
that won a monopoly on all gas sales to Ukraine under the January deal,
Kupriyanov said.

If Ukraine is hit with a new price hike, the European Union could be forced
to step in with subsidies to help out, Weafer said. “Ukraine has relied
heavily on political support from the EU to try and win independence from
Russia. Now it has reached the point where it needs financial assistance to
be able to do that,” he said. “The EU is going to have to put its money
where its mouth is. The question is whether it will do so or not.”

“How this is handled could determine whether Ukraine will have a real
economic crisis with gas shortages,” Weafer said,. “If Turkmenistan starts
supplying China, it will be a double blow for Europe.”          -30-
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4.    WORLD BANK LOANS UKRAINE $150 MILLION TO EXPAND
                  ACCESS TO FINANCIAL SERVICES MARKETS 
Some funds to be channeled to loans to small and medium farming enterprises

Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006

KYIV – The World Bank has issued a USD 150 million credit to Ukraine for a
project to expand access to financial services markets. The credit contract
was signed in a ceremony June 23 by the World Bank director for Ukraine,
Belarus and Moldova Paul Bermingem and the deputy Finance Minister,
Volodymyr Matviichuk.

According to the WB, the council of the bank’s executive directors approved
the credit at its meeting on June 22.

According to Matviichuk, USD 125 million of the loan will be channeled to
crediting small-scale and medium-scale farming enterprises via authorized
banks, while the remainder USD 25 million will pay for institutional
development of the State Regulatory Commission for Financial Services
Markets and the State Mortgage Organization.

The USD 150 million credit will fund for implementation of the initial phase
of the project during four years, after which the parties will consider
extending the project further.

This credit has been issued at a standard interest rate which the bank
applies to single-currency LIBOR credits in the U.S. dollars, and should be
repaid during 20 years, with five years of grace period, the WB report says.

Matviichuk also said that the World Bank and the Finance Ministry may add
another two banks to the three already selected for servicing the project in
order to eliminate the irregularities revealed during the competition
between banks for the right to service the project.

As Ukrainian News reported before, the World Bank and the Finance Ministry
in February selected three banks – redytprombank, Nadra Bank, and
Pryvatbank – to service the World Bank’s project for expanding access to
financial services markets.

The World Bank said that Ukraine may be issued a credit of up to USD 250
million for the project. Nineteen banks submitted their bids. In November
2005, the Finance Ministry selected seven banks as candidates for servicing
the project.

Ukraine has received over USD 4.5 billion in World Bank loans for
implementation of more than 30 projects since becoming a member of the

World Bank in 1992.                            -30-
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5.  NAFTOHAZ UKRAINY, ROSUKRENERGO REACH AGREEMENT ON
 ADDED GAS SUPPLIES FOR FILING UNDERGROUND GAS STORAGES
 
Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006
The National Joint-Stock Company Naftohaz Ukrainy and the RosUkrEnerho
company have reached an agreement on additional natural gas supplies for
filling underground gas storage facilities. This was disclosed to Ukrainian
News by a usually well-informed source.

“So far, agreement has been reached on additional volumes so that to reach
the level of 20+ [billion cubic meters] of active gas by the end of the gas
filling period,” he said.

According to the acting Naftohaz Ukrainy board chairman, Oleksandr Bolkisev,
3.2 billion cubic meters of natural gas will be pumped into Ukraine’s
underground gas storage facilities over this month.

The acting Fuel and Energy Minister, Ivan Plachkov said that of the 23
billion cubic meters of gas to be pumped into underground gas storage
facilities by the start of the cold season, 16 billion cubic meters will be
provided by Naftohaz Ukrainy, 2.271 billion by the Ukrhaz-Enerho
joint-venture company and 3.4 billion by RosUkrEnerho.

As Ukrainian News reported before, Naftohaz Ukrainy is confident that the
amount of natural gas required for being pumped into underground gas storage
facilities will be there before the start of the 2006/2007 heating season.

Previously, the acting Prime Minister Yurii Yekhanurov said that Ukraine was
behind the schedule for pumping natural gas into underground storage
facilities by 2 billion cubic meters.

The Naftohaz Ukrainy National Joint-Stock Company intends to pump 16 billion
cubic meters of natural gas into underground storage facilities before the
start of the 2006-2007 heating season.

Russia’s Gazprom gas monopoly said on May 5 that the volumes of Russian gas
pumped by Ukraine into underground storage facilities to ensure
uninterrupted transit of gas to European consumers were insufficient.

Gazprom believes that about 18.5 billion of cubic meters of gas should be
pumped into Ukraine’s underground storage facilities before the heating
season starts in order to ensure uninterrupted transit of Russian gas to
Europe in the winter.

Naftohaz Ukrainy owns 13 underground storage facilities with a combined
capacity of 32 billion cubic meters of natural gas, mainly located in
western Ukraine.                                   -30-
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6.  EBRD CONSIDERS POSSIBLE CREDITS TO POLISH COMPANIES
                           FOR SEVERAL PROJECTS IN UKRAINE
 
IntelliNews – Ukraine Today, Kyiv, Ukraine, Monday, June 26, 2006
KYIV – EBRD is examining the possibility to give EUR 40mn credit to Polish
Barlinek Invest for building a wooden floor production plant in Vinnytsya
region. The credit can be syndicated with commercial banks. Polish
BarlinekSA listed in Warsaw stock exchange owns 99% of Barlinek Invest.

At the end of 2005 Barlinek Invest announced that it intended to build a
plant with annual production capacity equal to 2mn m² of wooden floors in
Vinnytsya region. The company planned to invest UAH 204.3mn (PZL 58.4mn)

in the project. The company has already attracted PZL 58.4mn via IPO on
Warsaw stock exchange. The rest it planned to borrow from financial institutions.

The plant will be built in 12-15 months. Barlinek is 5 the world largest
wooden floor producer. Also EBRD can give EUR 46.8mn credit to Polish
Cersanit Invest that plans to build ceramic tile production plant in
Zhytomyr region. The bank will make the final decision regarding the project
on Jul 25.

In mid 2005 the company unveiled its plans to build a plant in Vinnytsya
region, but later changed its mind and decided to relocate the plant in
Zhytomyr region due to cheaper cost of land. Cersanit has already agreed
with Ukrainian-French  joint venture Osnova-Solcif on building the plant.

 
The fist stage of the project costs UAH 54.6mn. EBRD has already financed
projects in the country worth EUR 2.27bn as of May 1, 2006 .    -30-
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7. UKRAINE: FIRST CIS LOCAL COUNSEL FORUM TO BE HELD
           Wide scale meeting of business lawyers from twelve countries
                  29-30 June 2006, Radisson SAS Hotel, Kiev, Ukraine

Vakhtang Mikadze, Forum Coordinator
Russian-Ukrainian Legal Group, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – We are pleased to announce the CIS Local Counsel Forum, being

held at the Radisson SAS Hotel in Kiev on Wednesday, June 28 – Friday,
June 30, 2006.
The Forum is the first ever wide-scale meeting of business lawyers from the
CIS economic region, representing Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine
and Uzbekistan.

The Forum will bring together CIS law firms with the international legal
community, represented by international law firms from all over the world
and corporate counsel from a number of major multinational companies.

The Forum is a non-political gathering of more than 100 leading business
lawyers from 30 countries who share the Mission of the Forum, which is
“Bringing together the CIS and international legal communities with the aim
of creating joint business opportunities and long-term cooperation”.  The
Mission of the Forum reflects the 21st century reality, in which global
investors view the CIS countries as a broad economic region with intertwined
business connections and comparable legal systems.

Consequently, this region also represents, on a global scale, a larger legal
services market. The Forum will provide Delegates with an opportunity to
meet each other, share their experiences and news on legal and business
developments in their countries and establish new connections.

Based on the results of the Forum, a CIS Local Counsel Association will be
established. Subsequent Forums will be held annually in other CIS capitals
on a rotating basis.

Starting out with a Welcome and Introductory Remarks from the Conference
Co-Chairs Dr. Irina Paliashvili, Russian-Ukrainian Legal Group, P.A., and
Mr. John Whittaker, Clyde & Co., the Forum will feature a mix of panels
focusing on the legal and business climates of each CIS country, a separate
panel showcasing Ukraine, presentations by international law firms and
corporate counsel, as well as substantive panels on specific areas of
business law, such as Mergers & Acquisitions, Commercial Dispute Resolution,
Corporate Social Responsibility and others.

Keynote speakers at the Forum are Mr. Mykola Onischuk, a People’s Deputy of
Ukraine, and Mr. Serhiy Budkin, Managing Partner, FinPoint Investment
Advisers. A number of prominent members of Ukraine’s business, diplomatic,
legal and cultural communities have been invited as the Forum’s honored
guests.                                           -30-
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Visit the Forum’s Website http://www.rulg.com/cisforum or contact the Forum
Coordinator, Mr. Vakhtang Mikadze, at vakhtang.mikadze@ulg.kiev.ua to learn
more. Because of space limitations, media representatives, who would like to
cover the Forum, should contact Mr. Vakhtang Mikadze to register at:

+38 044 502 1024.
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8. IFC APPROVES USD 9 MILLION CREDIT FOR ZEVS CERAMICS CO

Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 22, 2006
 
KYIV – The International Financial Corporation (IFC), which is a part of the
World Bank, has allocated a credit worth USD 9 million to Slaviansk-based
Italian-Ukrainian Zevs Ceramics company the producer ceramic tiles. The IFC
has disclosed this in a statement, text of which Ukrainian News has.

The credit is to be directed to the company’s production increase and
development of the business structure. In particular, the company plans to
double the production and to considerably extend the range of the produce.

As Ukrainian News earlier reported, Zevs Ceramics is registered as closed
joint stock company. According to the enterprise, 35% of its shares belong
to Pivdenno Zhovtnevi Hlyny South enterprise, Italian Emilceramica S. P. A
and SIMEST S.P.A. hold 46% and 19% respectively.

The company produces 10 varieties of ceramic granite tile. In January-March
2006, the company increased the production by 289.3% 512,680 square, meters
of ceramic and granite tile. In March, the IFC opened a credit line worth
USD 7.25 million to Zevs Ceramics for the purchase of the production line.
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9.  UKRAINE DENIES STEALING RUSSIAN GAS, ADMITS DELAYS

Reuters, Kiev,Ukraine, Friday, Jun 23, 2006 

KIEV – Ukraine denied Russian allegations that it was stealing gas and
said on Friday it was trying hard to store enough underground to
ensure that smooth supplies would reach Europe through pipelines
across its soil this winter.

Oleksander Bolkisev, acting head of state oil and gas firm Naftogaz Ukrainy,
said a company delegation had just held talks with Russian gas monopoly
Gazprom (GAZPq.L: Quote, Profile, Research) in Moscow, designed to
ensure a dependable flow.

“We settled questions on additional volumes to avoid problems in winter,”
said Bolkisev, Ukraine’s top gas official. Gazprom supplies a quarter of
Europe’s gas needs and delivers up to 80 percent of this via Ukraine.

But tensions over Moscow’s decision to increase the low price that Russia
charged Ukraine for gas led to interruptions in supplies to Western Europe
in January.

They flared again this week after Yulia Tymoshenko, set to return as
Ukraine’s prime minister, signalled on Thursday that she would seek a cut in
the price, prompting a Gazprom spokesman to say such actions could lead
to a new gas crisis in Europe.

A senior Gazprom manager also accused Ukraine of taking gas to which it
was not entitled from pipelines, potentially risking shortages in western
Europe.

Ukraine’s Bolkisev said this charge was groundless but admitted that there
had been problems with adequate storage. “We do not violate the framework of
the signed technical agreements. There are no grounds for the accusations,”
Bolkisev told reporters during a government meeting.

We can underperform and that’s why we are lagging behind with pumping gas
into underground storage areas.”
Gazprom and Italian energy company ENI have expressed concern that the low
stocks in Ukraine’s reservoirs could affect deliveries to Europe when demand
soars in winter.

The row over gas was among issues that prompted U.S. Vice President Dick
Cheney to say Moscow was playing power politics with its energy resources
and warn in May against any attempt to turn oil and gas into tools of
intimidation or blackmail.                              -30-
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10. WORLD BANK SENDS REPORT ON ANALYSIS OF ROAD SAFETY
             MANAGEMENT IN UKRAINE TO TRANSPORT MINISTRY

Interfax-Ukraine, Kyiv, Ukraine, Thursday, June 22, 2006

KYIV – The World Bank (WB) has sent Transport and Communications

Minister of Ukraine Viktor Bondar a report on an analysis of the governance
and management of the road system in Ukraine conducted by a WB mission.

The report was drawn up by the World Bank international consultants –
VicRoads International’s advisor for road safety Eric Howard and chief
expert for road safety Gina Brean, the ministry’s press service reported.

According to the experts, the growth in the number of road traffic accidents
in Ukraine can be stemmed through a range of measures by governmental
bodies, as foreseen in a new national strategy for road safety in a relevant
action plan.

There is a need to agree on the duties of various ministries and bodies in
the road safety management sector, and to set up an organization in charge
for main issues in the sector, according to the report.

The experts said that they recommend assigning the Transport and
Communications Ministry the functions of a coordinating body to drawing up
policy in the sector.

The analysts from the World Bank said that a public information program
aimed at highlighting the risks and consequences of poor driving should be a
key tool in ensuring road safety.                        -30-
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11. RECORD PROFITS FOR UKRAINIAN NITROGEN PLANTS

UNIAN, Kyiv, Ukraine, Thursday, June 22, 2006

KYIV – The Russian and Ukrainian nitrogen fertilizer industry is currently
experiencing a remarkable growth in profits and nitrogen production,
according to a press-release of Integer Research Ltd., posted at the
PRNewswire.

A study of the 20 Russian and Ukrainian nitrogen fertilizer producers
published by Integer Research has revealed that Russian and Ukrainian net
profits reached US$600 million in 2004, up from US$60 million in 2000.

“Total revenues for the 20 companies in the report was US$2.6-2.8 billion
between 2000 and 2002, then increased rapidly, rising by US$0.9 billion in
2003 and then by a further US$1.8 billion in 2004,” says Integer Research
Director, Oliver Hatfield.

“The biggest fertilizer revenue increase among the Russian producers was at
Togliatti Azot, followed by Kuibyshevazot, and then the two EuroChem
nitrogen operations, Novomoskovsk and Nevinnomyssk,” says Hatfield. “The
study shows a similar growth for Ukrainian producers. The biggest increase
was seen at Stirol, followed by Severodonetsk and OPZ.”

“For the same period, production of ammonia has risen from 14.8 million
tonnes to 17.5 million tonnes. This growth is despite the fact that there
are increasing gas prices and logistical costs to port,” says Integer
Research Director, Tim Cheyne.

“Investment in the industry is booming, and profits are being reinvested.
Confidence in Russia in this environment is growing strongly. Investors from
the CIS and Western banks are competing to lend to the industry. On the
other hand, the Ukrainian producers face an uncertain future as gas prices
are influenced by politics.”

“Gas prices continue to rise for Ukrainian companies. For example, delivered
Ukrainian gas is now about US$3.5 per MMBtu, up from 2.5 in November last
year. It is possible that it could increase to US$5.0 per MMBtu next month.
The new prices are more in line with those worldwide, but many of these
Ukrainian companies are only profitable because of the low costs of gas and
high product prices,” continues Cheyne.

“Gas prices are increasing, and product prices are expected to decline,
which makes the future of the Ukrainian fertilizer producers unsure. With
this in mind, some investors have delayed investing in these companies, and
will play a wait-and-see game.”

“It is impossible to ignore the influence of the Russian and Ukrainian
companies on the global Fertilizer industry. Export prices From the Black
Sea are still the benchmark for the rest of the world, and CIS producers are
increasing their export capacity, challenging their overseas competitors. It
is for this reason that Integer Research has spent the last 12 months
looking at the 20 nitrogen producers in Russia and Ukraine,” says Hatfield.

Integer Research’s report, ‘Energy, Costs & Trade – Progress in the Russian
& Ukrainian Nitrogen Sector’ is the most in-depth analysis of the nitrogen
fertilizer industry in Russia and Ukraine to date. Integer Research is a
leading supplier of fertilizer market analysis and consultancy.   -30-
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12.  NO BETTER STUDENT EXCHANGE THAN IN THIS COUNTRY
                       Ukrainian Students Exchange Program (USEP)

COMMENTARY: By Yaroslav Kovalchuk, 2nd-year student,
Faculty of Romance and Germanic Languages,
National University of Ostroh Academy
The Day Weekly Digest #20, Kyiv, Ukraine, Tuesday, Jun 20, 2006

After Ukraine gained its independence, a considerable number of Ukrainian
students, as well as other young people, began to rave about traveling
abroad. Everybody had his/her own reasons for this kind of dream.

In most cases, young people, finding themselves in dire straits as a result
of the mid-1990s economic crisis in Ukraine, saw no alternative but to leave
their native land for a few years in order to earn some money and then come
back home and thus secure a cloudless future for their families. Their chief
motivation was not a lack of patriotism but the lack of any prospects to get
a job in their fatherland.

With this idea in mind, many students went after graduation to the coveted
“Eldorado” to see with their own eyes the “land flowing with milk and honey”
in the Western civilized world. Instead, once overseas they found nothing
but a lot of not so sweet daily bread and the constant awareness of their
“otherness,” differences in mentality and perception of the surrounding
reality of Americans and Ukrainians.

Another category of foreign travel fiends are students, who as tourists
dream of gaining many new impressions and invaluable experience – in other
words, their chief goal is to see how people live over there.

Fortunately, or perhaps unfortunately for the Ukrainian nation, there are a
lot of exchange programs for any taste and at any price, which allow a young
person to study, work, or vacation everywhere, but most often, at the
student’s wish and at the suggestion of the other side, in Canada, the US,
and the European Union.

Who can say how many exchange programs there are in Ukraine, which enable
young people to attend various universities and exchange experience that is
really useful in the context of our realities, not foreign ones? This
question can baffle a layman because even if such projects exist in Ukraine,
information about them is very limited.

Previous issues of The Day have already spotlighted the initiative of its
editor-in-chief Larysa Ivshyna and Ostroh students to establish an Ostroh
Academy-based club for free and informal contacts of young people from all
the regions of Ukraine.

It is gratifying to note that the idea of intra-Ukrainian youth projects has
aroused interest among students of different specialties.

This article is perhaps one of the first attempts to shed light on Ukrainian
exchange programs in general and one of them in particular. An organization
called the Ukrainian Students Exchange Program (USEP) was set up at the end
of last month exclusively on the initiative of students, which some may say
is rather unusual.

On their way home from the Kharkiv-based All-Ukrainian University English
Language Olympiad, students from three western Ukrainian higher educational
institutions – Uzhhorod National University (Andriy Husti), National
University of Ostroh Academy (Yuliya Lukyanchenko), and Rivne State Liberal
Arts University (Anton Rohashko) – agreed, at first half-jokingly and then
in earnest, to launch a program that in its general outlines would resemble
existing time-tested international ones.

The main difference is that program participants are not supposed to go
abroad but travel within the borders of Ukraine, visiting various
universities and comparing their systems of teaching and organized student
life. This makes it possible to drastically cut the program’s duration
because it only takes two days to visit each institution, which is quite
enough to see the city, attend lessons, and hold roundtable debates with
students about the introduction of the Bologna System in Ukraine.
Incidentally, the Bologna System calls for a more active exchange of
experience among universities. So far, it only calls for, but does not
ensure, this.

According to the approved schedule, a group of 10 Uzhhorod students visited
National University of Ostroh Academy and Rivne State Liberal Arts
University. Students from Ostroh and Rivne paid a return visit to Uzhhorod
on May 26-29. I am not exaggerating when I say that they gained masses of
lasting impressions and sincere emotions. Making new friends, seeing a new
city, and visiting an unknown university in which everything seems different
from your “native” one is an enviable experience.

One of the most acute problems that the program organizers faced was lack of
funds, so almost all costs were covered by participating students. Strictly
speaking, this cooperation was between academic departments rather than
universities.

As it turned out, it is more to the point to make such exchanges between
students of the same or related specialties (in this case, Romance and
Germanic languages) because it is easier for the participants to find a
common language and effectively analyze differences in teaching and other
areas.

While faculty deans offered some support for this program, Yuriy Maiboroda,
head of the Transcarpathian branch of the Ukrainian League of Industrialists
and Entrepreneurs, sponsored a considerable part of the program’s Uzhhorod
phase.

It is normal to support an initiative both morally and materially. USEP
organizers will be applying for a US embassy grant, but there is a glut of
people in Ukraine who are not so poor, and it would not hurt them to acquire
some practice in the art of sponsorship and help this project become an
annual, rather than a one-time, event.

After all, USEP serves a noble purpose.

The participants of this exchange program come to know more about their
own country and analyze the cultural and ethnic differences among different
regions. The realization that ours is a beautiful and inimitable fatherland
in turn forms the feeling of national dignity, identity, and patriotism.

Political spinmeisters will never unite Ukraine. All they can do is cut our
land into pieces in the Caesarean spirit of “Divide and rule” and manipulate
public sentiments before an election, trying to win shaky political
dividends at the expense of an embittered electorate over which they
supposedly agonize.

Programs like USEP make it possible to realize that there are no Left-Bank,
Right-Bank, northern, or southern Ukrainians but one Ukrainian nation. Yes,
we may differ in our customs, traditions, or even languages, but it is we
who are creating a Ukrainian nation today and building an independent
Ukraine, no matter how bombastic this may sound.         -30-
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LINK: http://www.day.kiev.ua/164017/
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13. WORLD CUP: IT’S ALL UKRAINIAN TO US SAY JOURNALISTS

REUTERS, Cologne, Germany, Monday June 26, 2006

COLOGNE – Journalists hoping to find out Ukraine coach Oleg’s Blokhin’s
thoughts ahead of his side’s World Cup game against Switzerland were left
baffled on Sunday.

The Ukraine team failed to provide a translator at his news conference,
leaving the majority of the 40 or so international journalists clueless
about what he was saying. An unsurprising lack of questions drew the
briefing to a rapid end, triggering anger about the lack of organisation.

“We need an English translator,” shouted one journalist as Blokhin was
leaving the room. The coach’s answer was surprising.
“Me too,” he replied in English.

A FIFA spokesman said it was the team’s responsibility to provide a
translator and that soccer’s world governing body only provided them for
official post-match news conferences. Ukraine face Switzerland in their
second round match in Cologne on Monday.               -30-
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14.                                    UKRAINIAN GLEE
                       
Sport Illustrated magazine, New York, NY, Monday, June 19, 2006

NEW YORK — The guy selling $10 Ukraine T-shirts out of three cardboard
boxes wasn’t happy. No one was buying. “Everyone’s upset,” said Oleh
Mykhaylyshyn, who drove up from Trenton, N.J., with a half-dozen different
shirt styles. “We lost to Spain, so now I don’t sell much.”

The bartender was getting surly too, muttering that he expected a crowd
three or four times the size of what turned up. “I’ve been counting money
since before you were born!” Jaroslaw Kurowyckyj boomed at one patron who
seemed to be struggling with his command of American currency.

I shuddered to think what the mood inside the Ukrainian Sport Club must have
been like on Wednesday, when the country’s first-ever World Cup squad was on
the wrong side of a 4-0 match with Spain.

But on this afternoon, the Ukrainians were dominating Saudi Arabia, and
there was that score again. It was 4-0, Ukraine, and the 100 or so expats
inside this members-only club in Manhattan’s Little Ukraine could finally
allow themselves to celebrate.

“I’m goal hungry,” Kurowyckyj says. “I wanted to see a fifth goal.” Yet
Kurowyckyj, 73, happily settled for a win that put his beloved homeland’s
name back on the global sports map. He began reeling off the names of
Ukraine’s best-known sporting exports, from Olympic gold medal winners to
track and field stars to heavyweight boxing champions.

“Oksana Baiul, Denys Yurchenko, the Klitshckos,” said Kurowyckyj, whose
family has run the Kurowyck Meat Market around the corner for three
generations. “When your athletes win, then people learn about your country.
“And it’s not Russia,” he says, cracking a smile.

Kurowyckyj guided me to a corner of the 83-year-old club to show off
trophies and a scrapbook documenting a Ukrainian soccer team that brought
him as much pride — if not more so — than the one that was cruising to
victory on the televisions overhead.

The New York Ukrainians — based out of this same Second Avenue clubhouse —
won the 1965 U.S. Open Cup, defeating a team from Chicago. Kurowyckyj was
the team’s manager, and in the lovingly crafted scrapbook, he appeared in a
few photographs, standing proudly next to his team’s players.

“This is me in my young days,” he said, before pointing me to the photocopy
of a congratulatory letter sent to the Ukrainian Sport Club from Sen. Robert
Kennedy.

After Saudi Arabia was officially dispatched, Ukraine’s soccer present
looked every bit as promising to Kurowyckyj as that 1965 scrapbook season.
Even Mykhaylyshyn could celebrate, as he finally sold several T-shirts as
soon as the match ended.

“Now we’re in business,” said the suddenly cheerful T-shirt salesman.     -30-

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http://sportsillustrated.cnn.com/si_blogs/soccer/world_cup_pub_blog/2006/06/ukrainian-glee.html
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15.              UKRAINE: NATO HOPES FADING FOR 2008

ANALYSIS: Jane’s Intelligence Digest, London, UK,  Friday, 23, 2006

The US plan to ‘fast track’ Ukraine into NATO following the enlargement
summit scheduled for 2008 is looking increasingly untenable. Jane’s
Ukraine correspondent reports on Kiev’s fading prospects for early
membership.

At first glance, the situation might not appear too bleak. An invitation
to enter NATO’s Membership Action Plan (MAP) at the Riga summit in
November remains likely, regardless of the outcome of the post-election
coalition negotiations in Kiev. Meanwhile, on 8 June, the North Atlantic
Council gave a positive signal in support of Ukraine’s MAP aspirations.

Immediately after Ukraine’s 26 March parliamentary elections, US
Vice-President Dick Cheney telephoned Ukrainian President Viktor
Yushchenko to lobby for the creation of a revived ‘Orange Coalition’. In
return, Washington would support a MAP for Ukraine and fast track an
invitation to join NATO in 2008, followed by membership two years later.

Other senior US officials from the National Security Council and
Department of State have continued to push the same informal agreement,
with newly appointed US Ambassador William B Taylor expressing his
support for a fast-track process. The US administration’s line is being
backed by Britain, as well as NATO members from the former Eastern Bloc.

Meanwhile, western EU member states are proposing their own informal
agreement with Ukraine. This would amount to not blocking Ukraine’s fast
track into NATO in exchange for Ukraine reducing its demands on the EU.

The EU’s ‘carrot’ is the offer of a deep free trade area following
Ukraine’s entry into the World Trade Organisation (WTO), which is most
likely to take place later this year, ahead of Russia’s entry. Such a
trade agreement would be part of an ‘enhanced agreement’ between Ukraine
and the EU that would replace the 10-year-old Partnership and
Co-operation Agreement that ends in 2007.

Unfortunately, international support for Ukraine’s membership of NATO
and the EU is not being reciprocated inside the country. Opposition to
NATO membership, which averaged 30 per cent in the 1990s, has doubled to
more than 60 per cent since 2000. This is seen as a response to NATO
intervention in Kosovo, the US-led invasion of Iraq in 2003 and the
anti-US campaign waged during the 2004 elections in Ukraine. In
contrast, support for NATO membership has fallen from around 30 per cent
in the 1990s to just 13 per cent according to recent polls.

Low public enthusiasm has fuelled calls for an early referendum on
future NATO membership – a move backed by political parties with a
strong anti-NATO platform. Yushchenko and his Our Ukraine bloc are
seeking to postpone any referendum until the eve of the country’s
accession.

Meanwhile, the prospect of a visit by US President George W Bush failed
to materialise, as it had been made conditional on an Orange government
emerging from the coalition negotiations. Washington’s agenda in
proposing the visit was to support pro-Western Orange Revolution
politicians in the face of mounting pressure from Moscow.

Nevertheless, Bush might still visit Ukraine ahead of the G8 Summit in
St Petersburg in mid-July, assuming that a coalition government is in
place in Kiev. It remains unclear whether a US presidential visit would
still go ahead if a coalition deal were brokered that included the
pro-Moscow Party of the Regions.

The Ukrainian leadership seems slow to appreciate the growing
disillusionment in Washington following the long delay in hammering out
a coalition deal. There is also concern over Yushchenko’s increasingly
weak political leadership.

More importantly, the failure to broker an ‘Orange Coalition’ has
created a power vacuum in Kiev, along with increasing doubts about the
feasibility of fast tracking Ukraine into NATO between 2008 and 2010.

If the country is not ready in time for the NATO enlargement summit in
2008, Ukraine could well drop back into a fourth enlargement group,
together with Georgia. If so, only three western Balkan states would be
invited to join in 2008, followed by Georgia and Ukraine in 2014-2016.

Although the Party of the Regions is officially opposed to NATO
membership for Ukraine, the party does include a pragmatic, pro-business
faction. However, although it is excluded from coalition negotiations,
the Party of the Regions is making good use of the current political
stalemate in Kiev to disrupt Yushchenko’s pro-Western foreign policy
agenda. The party also dominates the ruling coalition in the Crimean
parliament, which has issued a resolution declaring the strategically
important peninsula to be ‘NATO free’.

The political impasse is delaying the formation of a parliamentary
coalition and a new government and is also preventing the National
Security and Defence Council and the Constitutional Court from
functioning. The Security Service of Ukraine is also being criticised
for its inaction in the Crimea. This situation has enabled Moscow to
step up its efforts to fuel opposition to NATO.

Russian-backed non-governmental organisations (NGOs) and politicians –
together with the wives of Russian Black Sea officers – joined a series
of anti-NATO demonstrations that prompted Ukraine to ban visits by
leading Russian parliamentarians, such as State Duma Deputy Speaker
Vladimir Zhirinovsky. In response, the Russian Duma issued a resolution
backed by over 400 members of parliament condemning Ukraine’s moves
towards joining NATO.

Against this background, Kiev’s fast-track membership is now
increasingly unlikely for 2008. Meanwhile, if the Party of the Regions
enters government following the collapse of efforts to create an ‘Orange
Coalition’, Ukraine’s hopes of joining NATO could be postponed – perhaps
indefinitely.                                     -30-

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16.                       THE ANTI-NATO ENEMY WITHIN

COMMENTARY: By Oles Lisnychuk
Kuras Institute For Political and National Studies
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

Ukraine is considerably closer to gaining NATO membership. At the same time,
NATO opposition forces in the country have became more active. Progress and
counteraction to the tenets of Euro-Atlantic integration are closely related
to the internal political situation in Ukraine.

Political experts had mixed assessments of the recent demonstrations in the
Crimean port city of Feodosia against the holding of Sea Breeze military
training exercises. Most of them agreed that Russia’s external factor is
included in this anti-NATO campaign. Meanwhile, observers were surprised by
the lack of new coverage of these events.

The closer the opportunity for NATO membership is, the stronger the
anti-NATO lobby in the Ukrainian political spectrum. This includes a whole
group of political forces oriented towards molding the attitude of the
better part of Ukrainian society. According to a public opinion poll,
approximately one half of Ukrainian citizens are ready to vote against
Ukraine’s NATO membership in a possible referendum.

The anti-NATO lobby consists of both ideological opponents to Ukraine’s
Euro-Atlantic integration and those who are exploiting this issue just for
the sake of speculation and manipulating public opinion. At the same time,
there is a definite application of PR techniques in the anti-NATO lobby.

The idea of counteracting Ukraine’s entry to NATO began to be actively
exploited during the last parliamentary elections. The electoral bloc “Ne
Tak” was extremely vocal in promoting anti-NATO slogans and appeals.

The Social-Democratic Party (SDPU(o)) was a part of this bloc with its
faction in the previous parliament. When this party was in power, the
deputies of this faction constantly supported all draft laws on Ukraine’s
entry to NATO. During the parliamentary elections in 2006 the SDPU(o) became
an opposition force and called for holding a nationwide referendum on this
issue.

Ukraine’s membership in NATO is one of the most poignant issues in the
rhetoric of the radical left-wing populist Natalia Vitrenko, who speaks
against any kind of relations between Ukraine and European or Euro-Atlantic
organizations. Neither the Ne Tak Bloc nor Natalia Vitrentko’s Bloc won
seats in the Verkhovna Rada during the parliamentary elections in 2006.

Instead, representatives of these political forces received deputy positions
in city councils in the eastern and southern parts of the country, as well
as in the parliament of the Autonomous Republic of Crimea.

It is quite difficult to assess the attitude of the Party of Regions, the
largest faction in the newly elected parliament, towards NATO. In 2004
“regional” deputies made no observations and voted for the laws foreseeing
intensive cooperation with NATO.

After Viktor Yushchenko’s victory in the presidential election in 2004-2005,
criticism of the goals of the new government regarding NATO entry became a
part of the programmed ambushes by “regional deputies”. Representatives of
this party indeed took part in the protest act in Feodosia and turned it
into a purely political issue.

 
As soon as the opportunity arose for the Party of Regions to become a part
of the coalition, representatives of this force became more reserved in their
expressions. The issue of the European integration is one of the main differences
between the Party of Regions and its potential allies in Nasha Ukraina (Our
Ukraine).

In the current situation it is not difficult to predict that if the Party of
Regions returns to power, it sacrifices its anti-NATO rhetoric. It is highly
likely that the “regionals” could agree to continue following the country’s
current foreign policy course and preserve the rhythm of Ukraine’s relations
with the Alliance in exchange for satisfying their own goals.

The possibility of the Party of Regions pulling out of the “anti- NATO
 lobby” does not mean that this political force will automatically become
the conductor on the course of Euro-Atlantic integration. The Party of
Regions could well turn a cold shoulder towards this issue and their
behavior could be manifested in politics like a kind of “soft sabotage” of
the country course towards NATO and postpone Ukraine’s entry into the
Alliance.

Other participants of the anti-NATO lobby will try to exploit this possible
collusive cynicism of the Party of Regions to strengthen their position.

We can expect that the Communists, the Natalia Vitrenko Bloc and the SDPU
(o) will boost their anti-NATO efforts.

The Socialist Party, which during the formation of the “orange coalition”
did not conceal its dissatisfaction with Ukraine’s course towards NATO. In
fact, should they become a part of the opposition, they might just join the
anti-NATO alliance.

The anti-NATO lobby in Ukrainian politics is purely a project based on
circumstances. Its main weapon is anti-NATO rhetoric for its own political
self-affirmation. Needless to say, this lobby is quite capable of slowing
down Ukraine’s mutual relations with NATO. Finally, the successful
suspension of the Sea Breeze international joint milita ry training
exercises in Crimea is merely the first step in this process.           -30-
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17.                                MAKING A DIFFERENCE

COMMENTARY: By Arkady Moshes, Senior Researcher
The Finnish Institute of Internaitional Affairs
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

The EU remains extremely reluctant to discuss even a remote and hypothetical
possibility of Ukraine’s membership in the Union.

Certainly, Brussels’ attitudes and concerns are not difficult to understand.
The EU, as they say, already has “too much on its plate”. It has yet to
fulfil integration promises made to the Balkan countries, not to mention
Turkey.

Many member states would like to avoid complications with Russia, which
would hardly be possible if Ukraine were given a prospect of membership.
Some European capitals do not like the idea of expansion eastwards as they
think that eastern enlargements make the EU more open to the influence of
the United States.

Against this reasoning, the group of Ukraine’s advocates consisting of
several Central European and Baltic states does not look powerful and
skillful enough to lobby their case successfully.

On the eve of the Finnish EU presidency, this paper argues that the European
Union and its member states should further increase their commitment in
Ukraine, improve the effectiveness and visibility of their actions and
pursue a policy that not only encourages but substantially helps Ukraine to
complete its transformation work. Europe cannot afford to be or to appear
indifferent to the outcome of reforms in Ukraine for a number of reasons.

First, Ukraine matters to Europe. Second, it has a fairly good chance of
succeeding. Third, the transition there can still fail or stall, if the
country is left to its own devices, which would hardly be in the interests
of Europe.

                                    THE STRATEGIC CASE
Up until recently, Europe had difficulties in understanding the importance
of Ukraine. On the one hand, while not playing power politics on its
periphery and building a partner relationship with Russia, the EU was not
keen to adopt the well-known argument of Zbigniew Brzezinski, according to
which Russia without Ukraine would cease to be an empire – an argument that
implicitly valued Ukraine as a potential bulwark against its eastern
neighbor.

As it turned out, Europe’s cautious stance was justified, as the
prioritization of geopolitics by other international actors had undoubtedly
contributed to the emergence of the oligarchic system under Ukraine’s former
president, Leonid Kuchma.

On the other hand, apart from issues of nuclear safety – it is, after all,
the country of Chornobyl – soft security risks coming from Ukraine were,
relatively speaking, not too challenging. Compared to the conflagration in
the Balkans or even to the Baltic states with their Russian-speaking
minorities, Ukraine looked peaceful.

Ukraine can be viewed primarily through the prism of opportunities. To start
with, Ukraine possesses a huge demonstrative potential vis-a-vis Russia. If
it could be proven that a large post-Soviet country with a multi-million
strong Russian population could modernize and prosper not by means of
strengthening the “power vertical” but by gradually adapting to democratic
norms and values, there is an increasing likelihood that Russia might one
day follow suit.

In the foreseeable future, intensive contacts between Russian and Ukrainian
people will be preserved, which makes it possible to count on the transfer
of positive experience.

The success of transition in Ukraine would usher in a critical contextual
change for achieving the goals of European policy in Belarus, Moldova and
the whole Black Sea region, as Ukraine can serve as an anchor and a key link
of regional stabilization and democratization. Now that the countries of the
Caucasus are included in the European Neighbourhood Policy (ENP), this fact
should not be underestimated.

Finally, a reformed and economically transparent Ukraine could play a
significant role in Europe’s strategy of diversifying its energy supplies
and constructing new transit connections to the energy resources of the
Western Caspian. It is in this capacity that the future of Ukraine now
matters for Europe, perhaps, most immediately and tangibly.

What to do? The following can be done to help the country meet them.

European engagement in Ukraine should be primarily focused on systemic
internal transformation, not on consolidating foreign policy choices. There
should not be grounds for suspicions that Europe is simply playing a
zero-sum game with Russia in the shared neighborhood. All developments in
Ukraine ought to be scrupulously monitored.

If the policies conducted by Kyiv look dubious and incompatible with
European standards, the criticism should be public, transparent and firm. No
impression should be created that slogans of Euro-Atlantic integration may
be used to obtain support vis-?-vis Russia.

The transformation in Ukraine will require a massive transfer of expertise
in adaptation. This experience is available both in the new member states of
the EU and in some old members. But the work has to be coordinated and
financed. The European Union could help Ukraine address its energy concerns.
In the longer run the EU and Ukraine share a common interest in building a
new infrastructure for the transit of Caspian energy.

It is important to create success stories in bilateral relations that would
prove the emergence of the integrative pattern. Large numbers of Ukrainian
students and civil servants could be educated and trained in Europe to
facilitate the adoption of European norms in the country.

A special mechanism for consultations could be set up to give Ukraine a de
facto seat at the Common Foreign Security Policy table, when questions of
direct relevance to it are discussed. Most evidently, a profound
liberalization of the visa regime in EU countries for Ukrainian citizens
could be considered.

En route to these and other success stories, the list of potential
incentives may put conditionality in EU policy to work. Sooner or later,
depending on the progress made, the question of Ukraine’s EU membership will
have to be addressed. The membership incentive worked in ensuring the
success of the transformation in Central Europe. There is every reason to
believe that it would also work in Ukraine.                 -30-
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LINK: http://www.weekly.com.ua/?art=1150836287

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18.                                  THE ORANGE ORDER
           Ukraine now has a second chance to pursue pro-Western reform

EDITORIAL: The Times, London, UK, Thursday, June 22, 2006

Two important deadlines finally persuaded the political parties that led the
Ukrainian Orange Revolution to end their bickering and form a new coalition
government: the threat of fresh elections if parliament was unable to
resolve the deadlock; and the approaching G8 summit at which energy and a
possible renewed Russian threat to Ukraine’s gas supplies will be a central
focus.

It is three months since the general election, held in the wake of the
bitter split between President Yushchenko and Yuliya Tymoshenko, the out-
spoken former Prime Minister whom he sacked last September. The election
brought a spectacular return for Viktor Yanukovych, the pro-Moscow former
President whose party was accused of having a hand in the poisoning of Mr
Yushchenko and which won the most seats.

So bitter was the animosity within the Orange camp, however, that its three
main parties were unable to agree on a new coalition – leaving Mr Yushchenko
with the bizarre option of having instead to do a deal with his personal and
ideological opponent, Mr Yanukovych.

The wrangling has gone on since March, harming Ukraine’s economy and
damaging its image abroad. Mrs Tymoshenko has insisted on retaining three of
the most sensitive posts in any coalition – the ministries of Finance and
Energy as well as the office of Prime Minister, to which she proposes to
return herself.

To this, the President has clear objections: he is suspicious of Mrs
Tymoshenko’s fiery Ukrainian nationalism, which translates into a virulent
hostility to Russia and makes her unpopular in eastern Ukraine; he is wary
of her economic policies, which encompass a renationalisation of companies
sold off cheaply to cronies by the previous Government; and he knows that
she is deeply hostile to the complex deal reached with Gazprom that ended
the stand-off with Russia last December over gas prices.

But unless he had been able to announce a government by the end of this
week, he would have been forced to call for a fresh vote.
This coalition deal is not yet fully tied down. But Ukraine knows that it
now faces new pressure from its neighbour over gas.

Moscow has just warned Kiev that gas prices may rise sharply again in
January. Turkmenistan has threatened a cut-off in supplies to Gazprom if the
giant Russian supplier does not agree to a 30 per cent price rise, and
Gazprom will certainly pass on any increase.

Ukraine, which has portrayed itself as the victim of Russian blackmail,
needs to speak with one voice as Western nations, to whom the Orange leaders
want to draw closer, prepare for a dispute with President Putin over energy
stability.

The Orange Revolution has one more chance to reform itself and the country.
If the new coalition is to hold together, it must work out a pragmatic
relationship with Russia, tackle endemic corruption, agree a policy on
economic reform and set aside corrosive personal enmities. The future, for
the moment, is Orange. But is it bright?               -30-
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LINK: http://www.timesonline.co.uk/article/0,,542-2237000,00.html
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19. TIMES PORTRAYAL OF YULIA TYMOSHENKO IS ERRONEOUS
              
LETTERS TO THE EDITOR: By Leo Iwanycky
Action Ukraine Report #718, Article 19, Kyiv, Ukraine, Mon, June 26, 2006

 
RE: THE ORANGE ORDER (article 18 above)
Ukraine now has a second chance to pursue pro-Western reform
EDITORIAL: The Times, London, UK, Thursday, June 22, 2006
Sir, Your portrayal of Yulia Tymoshenko, likely to be reappointed as
Ukraine’s Prime Minister soon, as someone driven by “fiery Ukrainian
nationalism which translates into virulent hostility to Russia..[and which]
makes here unpopular in Eastern Ukraine,” in your editorial piece ‘The
Orange Order’ 22nd June 2006, is erroneous.

The March 2006 parliamentary elections showed Mrs. Tymoshenko lags

behind local politicians, including Viktor Yanukovych, in popularity, but
nevertheless she is the most popular ‘Orange’ politician in Eastern Ukraine.
Her popularity is growing there.

President Viktor Yushchenko’s ‘Our Ukraine’ is strongly opposed to raising
the status of the Russian language to that of a state language in Ukraine,
something Viktor Yanukovych’s ‘Party of Regions of Ukraine’ is demanding.
But this topic is a non-issue for Mrs Tymoshenko’s eponymous BYuT party.

Tymoshenko’s party is keen of closer relations with Europe, but is decidedly
‘lukewarm’ on Ukraine’s entry into NATO, unlike Mr Yushchenko’s ‘Our
Ukraine’.

You are quite right to point out that Mrs. Tymoshenko is “deeply hostile to
the complex deal reached with Gazprom” by means of which Ukraine purchases
large quantities of vital Russian and Turkmen gas. The deal involves opaque
intermediary companies which skim-off billions of dollars for the benefit of
ruling elites both in Russia and Ukraine, to the detriment of the citizens
in both countries. Attempting to tackle this, one of BYuT’s biggest election
platform planks, is not anti-Russian policy.

In 2005 Tymoshenko’s ‘second-in-command’ and Ukraine’s security services
chief at the time, Oleksandr Turchynov, was getting close to uncovering
involvement of some of Mr. Yushchenko’s closest associates in massive fraud
in Ukraine’s gas procurement.

These frauds originating from the days of President Kuchma and were not
dealt with when Yushchenko became President, as promised during the Orange
election campaign during Autumn 2004. This was the main reason Yushchenko
dismissed Tymoshenko and her government last September.

Your editorial piece also wrongly elevates Viktor Yanukovych to the status
of ‘former President’ whose party was “accused of having a hand in the
poisoning of Mr Yushchenko”. Yanukovych is a former Prime Minister. There

is no evidence of his party being linked to Mr Yushchenko’s mysterious
poisoning. There is some suspicion that agents from other countries may have
been involved.

Levko (Leo Iwanycky)
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20. LETTER TO EUGENIA DALLAS ABOUT FAMINE GENOCIDE

LETTERS TO THE EDITOR: By Terry Lys
Action Ukraine Report #718, Article 20, Kyiv, Ukraine, Mon, June 26, 2006

Dear Eugenia,

Thank you for your Letter to the Editor which appeared in Action Ukraine
Report yesterday (AUR#715, June 20, 2006, Article 14).  The more I think
about the Famine Genocide the more I come to believe that the tragedy will
not become widely known until the Kremlin acknowledges the ways of its past.

Unlike Germany, which has atoned the best it can for Nazi atrocities
generations ago, the Kremlin remains in a state of denial for over 70 years
and lives in a glass house.  One country is going forward and the other is
going nowhere.

Until the Kremlin acknowledges its past, it is unlikely eastern Ukraine and
Crimea will understand its nation’s past.  And with so many Russians
‘transplanted’ in these regions generations ago it is unlikely they even
feel part of it.

Nation building is not easy and Ukraine’s government has most certainly its
work cut out for it.  If only somehow it could leverage the gas transit or
Sevastopol port rental matter in order to make it happen.

It would likely be the final major step toward releasing truth in the world,
a truth that the world needs to know for there to be order.  Everytime the
radio plays John Lennon’s “Back in the USSR” it makes one realize just how
naive the world is.

A fundamental understanding of the meaning of human rights also poses a
roadblock to the Kremlin acknowledging that which it needs to acknowledge.

If it is not prepared to acknowledge it at present then the nation needs to
collapse even more until it falls at the feet of justice with the rest of
the developing world and comes to believe in the same values.  A truth is a
truth is a truth, and the world has a need to know.  By suppressing its past
the Kremlin suppresses its future.

It was a true honour to have you come to Calgary to speak at our joint
Ukrainian Canadian Professional and Business Association’s (UCPBA) and
Ukrainian Canadian Congress (UCC) monthly meeting on November 25, 2004
and to read your personally autographed book.  The current executive is
preparing to hand over the reigns to a new executive for the next two years
at tomorrow’s annual general meeting.

Also, please extend my regards to Volodomyr Klitschko on his recent success
in the ring.  Upon reading a recent full backpage article in a prominent US
sports magazine (likely Sports Illustrated) comparing he and the dubious
Mike Tyson I learned that he lives and trains in LA.

Kindest regards, Terry Lys, Calgary (Canada)                 -30-
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21. AN EPOCHAL FIGURE HAS DEPARTED: MYKOLA KOLESSA
      Why do we revere him so much? Because he lived the way Man should live.

By Iryna Yehorova, Lviv, The Day Weekly Digest in English #20
Kyiv, Ukraine, Tuesday, June 20, 2006

When the bitter news of Mykola Kolessa’s death came, the residents of Lviv
not only plunged into the throes of agonizing grief, but also fell into a
sort of childish confusion. Something of the kind happens in families,
whenever the eldest dies and someone else must assume his duties and
responsibilities.

The most painful thing is that this person carries away certain traditions,
habits and a part of the soul that embraces and brings everyone together, as
if protecting the family.

Today we can speak of the outstanding composer, conductor, and citizen, who
contributed to Ukraine’s prestige throughout his life; the son of a century
(born on Dec. 6, 1903), a legend of Ukrainian culture, Hero of Ukraine,
People’s Artist of the USSR, Meritorious Figure of Ukrainian Arts, winner of
the Shevchenko State Prize and every kind of Order of Merit.

We can also enumerate all his honorary titles and awards, and list his
world-famous pupils as well as all the symphonies and suites that he
composed. But the main thing is that the epoch that he embodied is passing,
never to return.

All those who saw this man at least once in their life – those who had the
privilege of knowing the patriarch personally and visiting his home, those
who saw his amiable smile from the parterre (because he usually sat in a
theater box when his jubilee was being celebrated), and even those who
simply knew that there was a Mykola Kolessa living on a quiet Lviv street –
felt as if they had just been orphaned, not just his family that lavished
love and care on Kolessa, protected him from pushy journalists, and tried to
persuade him to stop smoking that pipe. We have all been orphaned and feel
emptiness.

It is unlikely that Kolessa would have liked this, for he loved life and
people too much. It is difficult to think of a person whom he may have hurt
or to imagine that he could fail to greet someone he knew – he usually did
so in a respectful and dignified manner by tipping his hat and making a
slight bow.

Only elderly Lviv residents greeted people like this. This habit has
disappeared now, as is the special constitution of a soul that tends to
reject the speeds that kill spirituality.

Mykola Kolessa was born in Sambir into the family of the prominent
folklorist Filaret Kolessa. The father named his son Mykola in accordance
with the wishes of the Ukrainian music classic Mykola Lysenko and thus
determined his destiny, the difficult destiny of a musician who devoted
himself to promoting the culture of his people.

To tell the truth, it took some time for the son to sense his vocation: he
began to study medicine but quickly realized that he had to devote himself
exclusively to music.

He graduated from the Prague Higher School of Music, where he was taught by
the well-known Czech composer, Professor Vitezslav Novak. Kolessa composed
symphonic music, chamber and choral pieces, romances and other songs, as
well as film scores.

His artistic manner is easily recognizable: “With deep and well-developed
Ukrainian roots, it dates back to the period when the human voice was the
only musical instrument.

In this case, this voice finally began to sing in Ukrainian.” Incidentally,
Kolessa used to add other instruments to the orchestra so that it sounded
more like a Hutsul folk music ensemble.

Kolessa was always brimming with energy: when he taught at the Lysenko
Higher Musical Institute, he founded Western Ukraine’s first professional
conductors’ courses, which gave birth to the fine traditions that
distinguish representatives of the Lviv school of conducting from other
Ukrainian and foreign performers.

Why do we revere Kolessa so much? Because he lived the way Man should live.
“It was my father who handed down his life’s credo to me,” he once
confessed. “Nulla dies sine linea – ‘Not a day without a line.’ I try to
‘tick off’ every day that I live and ask myself every evening, what good I
have done.”

When asked whether he was happy, he usually said, “Moments of happiness
occur when you are working and things go smoothly. It is such a great
pleasure when you are working with flying colors! Inspiration… I don’t
know what to call it exactly, perhaps a desire to work. In that case it was
so easy and cheerful to work. So I miss this feeling.”

I once asked the composer to recall the moments of his life that were burned
into his memory. He was silent for a few seconds and then told me that when
he was a little boy, he once ran after the ambulance that carried his mother
to hospital. In the stormy days of the 1918 Ukrainian-Polish show-down she
was working at an outdoor “field kitchen” in Lviv.

She was going home one day when she was shot at through the fence
surrounding the Armenian cathedral. He remembers standing next to the door
of his father’s room, listening to a red-haired man singing a Ukrainian folk
song, while father was writing down the lyrics. That was Ivan Franko.

Or he would recall the days of World War II, when he regularly traveled from
Lviv to Stanislav to take part in choir rehearsals: this helped his family
to keep its head above water. One time he was returning home very late after
curfew, and he had to hide. He said he still remembered how hard his heart
was beating in his chest and how tasty the tea seemed, when he finally
reached his friends’ place. 

 
  [STALINST TIMES: I WAS FORCED TO SIT & KEEP SILENT]
He wished he had known how to fight with his fists and be aggressive. He
kept silent at a conservatory meeting in Stalinist times, when the bosses
censured Vasyl Barvinsky whom he greatly respected and loved. “In those
days I was forced to sit and keep silent. Those were terrible times.

Then Barvinsky was arrested, and later it was our turn. I tried to speak at
that meeting. For a long time after I could not recover from my spiritual
trauma, which affected my subsequent creativity.

So when people claim that today’s young people are ill-mannered, brusque in
speech, and never smooth things over, while people of our generation would
certainly have done so, I say that I see no regress: today’s people are more
determined, energetic, and free of complexes. But I am very worried that
money and profit have now supplanted much more important things.”

Music, including the music of life, was his obsession. This is why he always
kept a bicycle in his apartment corridor, the one he used to ride in his
younger years. It seemed to me today that an old bruise still hurts me – I
bashed my leg painfully against the pedal, either because of nervous tension
(I am talking to Kolessa himself!) or my natural clumsiness.

Kolessa apologized several times and then tried to smooth over the
situation: he made a few jokes, showed me his collection of pipes, the
pencil with which he wrote in his school years, and old musical scores.

Oddly enough, in spite of his asceticism, he took special care of the things
that reminded him of his friends, relatives, and children, as well as of the
way he had matured. Regrettably, many people consider this a trifle today.

Last Sunday Lviv paid its last respects to Mykola Kolessa.   -30-
————————————————————————————————
LINK: http://www.day.kiev.ua/164026/
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22.     KATERYNA YUSHCHENKO TOOK PART IN OPENING OF
  A RENOVATED CLINIC AT THE KYIV OBLAST CANCER CENTER

By Maryna Antonova, Head of the Press Office
Ukraine 3000 Foundation, Friday, June 23, Kyiv, Ukraine

KYIV – Kateryna Yushchenko, Chairperson of the Board of the Ukraine

3000 Foundation, and First Lady of Ukraine took part in the opening of a
renovated oncology clinic at the Kyiv Oblast Cancer Center on Thursday,
morning, June 22, 2006

In her speech Kateryna Yushchenko noted “the most important thing is that
modern medicine offers new technology and treatments for cancer. Our main
goal is to be able to effectively diagnose these diseases, find ways to
provide high quality treatment to our citizens, gain access to new
technology and innovations in the area of health care, and to build new and
renovate older hospitals.

The development of better medical programs for people with cancer is a
priority for President Viktor Yushchenko and for a large number of
government
and non-government organizations in Ukraine. I would like to express my
sincere gratitude to all those who were involved in renovating this Oncology
Clinic that will offer its services to thousands of patients”.

 MEDICATIONS WORTH ONE MILLION HRYVNYA DONATED
On behalf of the Ukraine 3000 Foundation and the pharmaceutical company
“Zdorovya”, Kateryna Yushchenko presented a certificate indicating that
anti-cancer drugs and other medications worth one million hryvnya were
being donated to the Kyiv Oblast Cancer Center and other participants in the
Hospital to Hospital Program.

She also presented the Clinics an icon and an old traditional Ukrainian
embroidery towel from the private collection of the Yushchenko family.

The newly renovated clinic at the Cancer center is a state-of-the-art
facility that provides a wide range of services to its patients. The Center is

able to provide service to over sixty-thousand patients a year. The Center is
equipped with modern diagnostics and treatment facilities and is able to
operate dozens of new technologies and treatment procedures to patients.

Currently there are thirty-four thousand people in the Kyiv Oblast have been
diagnosed with cancers, and every year 6,000 more people are added to this
list.                                             -30-
————————————————————————————————
Contact:  Maryna Antonova, Head of the Press Office, Ukraine
3000 Foundation, Kyiv, presa@kateryna.org.ua.
————————————————————————————————

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AUR#717 Jun 23 Who Will Get What List; Land Sales; WTO Agreement; Abolish Immunity; Gas Lines; Ukrainian Language; Gas Crisis Threat, 100 Paintings Stolen

========================================================
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       

 
WHO WILL GET WHAT: THE COMPLETE DISTRIBUTION LIST 
                 OF OFFICES IN THE ORANGE GOVERNMENT 
                                          
  
             
ACTION UKRAINE REPORT – AUR – Number 717
Mr. E. Morgan Williams, Publisher and Editor  
PUBLISHED FROM KYIV, UKRAINE, FRIDAY, JUNE 23, 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

Ukrainian News Agency, Kyiv, Ukraine,  Thu, June 22, 2006
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

4.    RADA COALITION PLANS TO COMPLETE ISSUANCE OF
                            LAND DEEDS BY JULY OF 2007
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006
5.     PARLIAMENTARY COALITION AGREES NEXT CABINET OF
MINISTERS WILL COMPLETE UKRAINE’S WTO ACCESSION BY 2007
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

6RADA COALITION PLEDGES TO ABOLISH DEPUTIES’ IMMUNITY
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

7RADA COALITION PLEDGES TO PRESERVE STATE OWNERSHIP
               OF MAJOR OIL, GAS AND AMMONIA PIPELINES
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

8. COALITION PLEDGES TO STRENGTHEN UKRAINIAN LANGUAGE
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

9.    PLEDGES TO IMPROVE PROPORTIONAL ELECTION SYSTEM

Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

COUNTRY BRIEFING: EIU Politics – News Analysis
The Economist Intelligence Unit Limited
New York, New York, Thu, June 22, 2006

11.        “ORANGE” PARTIES SIGN UKRAINE COALITION DEAL
                  Ukraine’s Tymoshenko wants Russia gas deal review
Ron Popeski, Reuters, Kiev, Ukraine, Thu Jun 22, 2006

12NEW GAS CRISIS THREAT AS UKRAINE SIGNS COALITION PACT
By Steven Lee Myers in Moscow, The New York Times
New York, New York, Thursday, June 22, 2006

13RUSSIA WARNS UKRAINE OF DANGER OF DISINTEGRATION
ANALYSIS & COMMENTARY: By Tatyana Stanovaya
RIA Novosti, Moscow, Russia, Thu, June 22, 2006

14GAZPROM ACCUSES UKRAINE OF PUTTING GAS SUPPLIES
                                  TO EUROPE AT RISK AGAIN 

AFX, Moscow, Russia, Thu, Jun 22, 2006

15.                    GAZPROM EXTENDS REACH IN EUROPE
By Gregory L. White in Moscow, The Wall Street Journal
New York, New York, Friday, June 23, 2006

16.                UKRAINE’S GREENHOUSE EMISSIONS DIVE,

                                    RISK SWAMPING KYOTO
Gerard Wynn, Reuters, London, UK, Friday, June 23, 2006

17PRESIDENT BUSH COMMEMORATES 50TH ANNIVERSARY OF
          HUNGARY’S BLOODY REVOLT AGAINST COMMUNISM
Terence Hunt, Associated Press, Budapest, Hungary, Fri, Jun 23, 2006

18100 MARIYA PRYIMACHENKO FOLK-ART PAINTINGS STOLEN
             Ukrainian President Yushchenko worried over painting theft
Office of the President of Ukraine, Kyiv, Ukraine, Thu, June 22, 2006
========================================================
1
WHO WILL GET WHAT: THE COMPLETE DISTRIBUTION LIST
                OF OFFICES IN THE ORANGE GOVERNMENT
 

Ukrayinska Pravda On-line, Kyiv, Ukraine, Thu, June 22, 2006

KYIV – BYuT, Our Ukraine, and the Socialists agreed between themselves

the distribution of positions in the government, an informed source of
Ukrayinska Pravda reports.

                                MINISTERIAL OFFICES
Therefore, the Block of Tymoshenko will control the following offices:
– the Prime Minister;
– the First Deputy Speaker of Parliament;
– the Minister of Agriculture;
– the Minister of Economy;
– the Minister of Fuel and Energy;
– the Minister of Coal Mining;
– the Minister of Construction and Architecture;
– the Minister of Culture;
– the Minister of Emergencies;
– the Minister of Health Care;
– the Minister of Finance;
– the Head of the State Property Fund;
– the Head of the State Committee on TV and Radio Broadcasting.

At the same time, Our Ukraine will control the following offices:
– the Speaker of Verhovna Rada;
– the Deputy Prime Minister on Regional Policy;
– the Minister of Labor;
– the Minister of Industrial policy;
– the Minister of Youth and Sports;
– the Minister of Internal Affairs;
– the Minister of Justice;
– the Head of Antimonopoly Committee.

Socialists obtained the right to nominate the following positions:
– the First Deputy Prime Minister;
– the Minister of Environment;
– the Minister of Education;
– the Minister of Transportation and Communications;
– the Ombudsman of Verhovna Rada on Human Rights.

Additionally, according to the informed source of Ukrayinska Pravda, Our
Ukraine will control the Parliamentary Committee on Budget and the
Parliamentary Committee on Banking and Finance. The total number of
Parliamentary Committees planned for Our Ukraine is seven.

At the same time, the Socialists will control the Parliamentary Committees
on Fuels and Energy, on Economic Policy, and on Foreign Affairs.

                              PARLIAMENTARY COMMITTEES
Our Ukraine obtained control over the following Committees:
– on Agrarian Policy;
– on Budget Policy;
– on Banking and Finance;
– on Industrial Policy;
– on Human Rights;
– on Agenda;
– on National Security;
– on Health Care;
– on European Integration.

BYuT gained control of the following Committees:
– on Fighting the Organized Crime;
– on Construction and Residential Issues;
– on Transportation and Communications;
– on Social and Pension Policy;
– on Ecology;
– on State Building;
– on Legal Policy;
– on Industrial Policy;
– on Freedom of Speech;
– on Cultural Issues;
– on Youth and Sports;
– on Science and Technology;
– on Protection of Veterans and People with Special Needs

Socialists will obtain control of the following Committees:
– on Fuel and Energy;
– on Economic Policy;
– on Foreign Affairs.

Additionally a member of BYuT faction Serhiy Polishchuk told the journalists
in his interview that BYuT will possibly obtain the positions of the head of
NAK Naftogas, the State Tax Administration and the State Treasury.

According to Mr. Polishchuk, Our Ukraine will gain control over all the
law-enforcement ministries and in particular the Ministry of Internal
Affairs and the Ministry of Defense, UNIAN reports.

The offices of Deputy Speaker, the Head of Audit Chamber, and the Head of
the Special Commission on Privatization are allotted for the Opposition.
Moreover, the Opposition is to receive the right to nominate First Deputy
Heads of Parliamentary Commissions.               -30-
————————————————————————————————–
The English translation of this article was provided by the New Project

for Democracy. Find more at http://www.newproject.org
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.     RADA COALITION PLANNING TO EXTEND MORATORIUM
      ON SALE OF UKRAINE’S AGRICULTURAL LAND UNTIL 2009

 
Ukrainian News Agency, Kyiv, Ukraine,  Thu, June 22, 2006
KYIV – The parliamentary coalition is planning to extend the moratorium on
sale of agricultural land until 2009.  This is stated in the agreement on
formation of the coalition.

“Amendment of the Land Code of Ukraine by December 1, 2006, to disallow
realization of legal relations in the area of sale of land before completion
of the work stipulated in the first part,” the agreement states.

The first party of this section of the document stipulates that it is
necessary to draft and implement before January 1, 2009, a set of measures
aimed at creating conditions for operation of a land market, including
completion of the issuance of land deeds, allocation of land plots, creation
of a land cadastre, establishment of the borders of territorial units,
conduct of monetary valuation of land, and establishment of mechanisms for
regulating land.

The coalition also pledges to raise the effectiveness and competitiveness of
agricultural production by introducing modern technologies and European
product quality and safety standards.

It also pledges to draft national and regional programs for comprehensive
development of agricultural territories, improve state support for
development of entrepreneurship, and solve the problem of employment in the
rural areas.

The coalition also pledges to create favorable conditions for realization of
the export potential of the country’s agricultural sector.

As Ukrainian News earlier reported, the parliamentary factions of the Yulia
Tymoshenko Bloc, the Our Ukraine bloc, and the Socialist Party formed a
parliamentary coalition on June 22.

Before this year’s parliamentary elections, the Our Ukraine bloc said it
opposed extension of the moratorium on sale of agricultural land. The
Socialist Party favors extension of the moratorium on sale of agricultural
land until 2012.

President Viktor Yuschenko directed the Cabinet of Ministers in November
2005 to draft a concept for creation and development of a land market. At
the end of 2004, then-president Leonid Kuchma signed the law “On Amendment
of the Land Code of Ukraine” that provides for extending the moratorium on
sale of agricultural land until January 1, 2007.                   -30-
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.  RADA COALITION PLANS TO BOOST THE DEVELOPMENT OF 
           LAND MORTGAGE CREDIT LENDING SYSTEM IN 2006
 
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006
KYIV – The Verkhovna Rada coalition is planning to pave the groundwork for
land mortgage credit lending system development during this year. This is
pointed out in the agreement on the Fifth-Convocation Verkhovna Rada
Coalition.

The coalition is going, among other things, to introduce changes to the laws
“On Loans of Mortgage” and “On Lease of Land” providing for a possibility

to take up loans on ownership rights to land plots.

The coalition has also undertaken to draft and adopt acts of law aimed at
upgrading the farming lands evaluation system. In addition, the coalition
intends to pave the groundwork for effective performance by the State
Mortgage Agency and launching the borrowing against land pledging.

As Ukrainian News reported before, the Verkhovna Rada coalition is planning
to extend the moratorium on the sale of farming lands until 2009.  -30-

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4.     RADA COALITION PLANS TO COMPLETE ISSUANCE OF
                            LAND DEEDS BY JULY OF 2007
 
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006
 
KYIV – The parliamentary coalition is planning to complete the issuance
of land deeds and inventory agricultural land by July 1, 2007. This is
stated in the text of the agreement on formation of the parliamentary
coalition, the text of which Ukrainian News has obtained.

‘Completion of the issuance of government acts of land ownership rights to
the citizens that hold certificates of ownership of land plots and
inventorying of agricultural land by July 1, 2007,’ the document states.

The parliamentary coalition also plans to introduce a single register of
rights to real estate and create a national electronic land cadastre.

It also plans to amend the law ‘On Lease of Land’ to establish the minimum
period of validity for agreements on lease of agricultural land at five
years. Moreover, the parliamentary coalition pledges to facilitate creation
of a land-market infrastructure.

As Ukrainian News earlier reported, the parliamentary coalition is planning
to extend the moratorium on sale of agricultural land until 2009. The
parliamentary factions of the Yulia Tymoshenko Bloc, the Our Ukraine bloc,
and the Socialist Party formed a parliamentary coalition on June 22.

Before this year’s parliamentary elections, the Our Ukraine bloc said it
opposed extension of the moratorium on sale of agricultural land. The State
Committee for Land Resources earlier said that it intended to complete the
issuance of government land deeds by April 1, 2006.         -30-
————————————————————————————————

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========================================================
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========================================================
5.   PARLIAMENTARY COALITION AGREES NEXT CABINET OF
MINISTERS WILL COMPLETE UKRAINE’S WTO ACCESSION BY 2007

Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 22, 2006

KYIV – The parliamentary coalition agrees that the next Cabinet of Ministers
will be obliged to complete Ukraine’s accession to the World Trade
Organization by 2007. This is stated in the text of the agreement on
formation of the parliamentary coalition, the text of which Ukrainian News
has obtained.

The coalition agrees to prioritize adoption of the laws that are necessary
for meeting the requirements for Ukraine’s admission into the World Trade
Organization while taking into account the country’s national interests in
the economic and social areas.

                  PRIORITY ADOPTION OF EIGHT LAWS
Specifically, it agrees to make a priority adoption of the law [1] ‘On
Amendment of Article 1 of the Law on the Export Duty on Waste and Scrap
Ferrous Metal,’ the law [2] ‘On the Export Duty on Waste and Scrap
Non-Ferrous Metal and Steels,’ the law [3] ‘On Amendment of the Law on the
Legal Profession,’ law [4] ‘On Amendment of the Law on the Export Duty on
Live Cattle and Hide,” the law [6] ‘On Amendment of the Law on Banks and
Banking Operations,’ the law [7] ‘On Amendment of the Law on State
Regulation of Production and Sale of Sugar,’ and the law [8] ‘On Amendment
of the Law on Milk and Dairy Products.’

The coalition also pledges to draft and adopt a package of laws necessary
for adapting the national economic regulation system and protection of the
domestic market to the conditions required for full application of the
instruments allowed by the rules of the World Trade Organization.

As Ukrainian News earlier reported, Acting Economy Minister Arsenii
Yatseniuk forecast in June that all the bilateral and multilateral
agreements on admission of Ukraine into the WTO would be completed by
September. According to him, it remains for Ukraine to sign similar
protocols with Kyrgyzstan and Taiwan.

The parliamentary factions of the Yulia Tymoshenko Bloc, the Our Ukraine
bloc, and the Socialist Party formed a parliamentary coalition on June 22.

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6. RADA COALITION PLEDGES TO ABOLISH DEPUTIES’ IMMUNITY

Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

KYIV – The Verkhovna Rada coalition has pledged to abolish Verkhovna

Rada deputies’ immunity from prosecution. This is pointed out in a coalition
agreement declared in the morning on June 22.

The coalition also undertook to abolish all privileges currently enjoyed by
state servants, judges and deputies in legislatures of all levels.

On top of that, the coalition undertook to build up in Ukraine a
European-style public administration by reforming the highest and
national-level executive bodies and reforming the country’s
administrative-territorial and local government systems in the best
interests of citizens.

As Ukrainian News reported before, legislative immunity is provided for by
Article 80 in the Constitution, saying that Verkhovna Rada deputies cannot
be held criminally liable, detained or arrested other than by Verkhovna
Rada’s consent.

Deputies of local legislatures were stripped of their immunity from
prosecution by the previous-convocation Rada on April 4.
The parliamentary factions of the Yulia Tymoshenko’s BYT Bloc, the Our
Ukraine Bloc and the Socialist Party declared a coalition on June 22.
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7. RADA COALITION PLEDGES TO PRESERVE STATE OWNERSHIP
               OF MAJOR OIL, GAS AND AMMONIA PIPELINES

Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

KYIV – The parliamentary coalition pledges to preserve state ownership of
the major oil, gas, and ammonia pipelines in the country.  This is stated in
the agreement on formation of the coalition.

Moreover, the coalition pledges to reduce the energy-intensiveness of the
gross domestic product in Ukraine and facilitate a transition to a national
economy based on energy-saving technologies.

The coalition also pledges to strengthen cooperation with the European Union
in the area of energy and coordinate its energy policy with the European
Union.

Moreover, the coalition pledges to cooperation with Russia, Central Asian
counties, and Ukraine’s other partners in the area of energy supplies based
on long-term, transparent, and mutually beneficial agreements and without
shadowy intermediaries.

It also pledges to develop Ukraine’s own resource base, develop prospecting
for and mining of crude oil and natural gas, and create elements of
Ukraine’s own nuclear energy production cycle.

The Ukrainian gas transportation system consists of 36,000 kilometers of
mainline gas pipelines, 71 compressor stations, and 12 underground gas
storage facilities. The country’s oil pipeline system has a length of 4,570
kilometers and has a capacity of 100 million tons of crude oil per year
while its pipes have a diameter of 1,220 millimeters.        -30-

————————————————————————————————
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8. COALITION PLEDGES TO STRENGTHEN UKRAINIAN LANGUAGE

Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006

KYIV – The parliamentary coalition pledges to strengthen the role of the
Ukrainian language as the state language. This is stated in the agreement on
formation of the parliamentary coalition.

The coalition also pledges to ensure the integrity of Ukraine’s language and
cultural space, government protection of the national cultural industry
(book publishing, cinematography, and arts), government protection of public
morals, integration of Ukrainian culture into world cultural processes, and
entrenchment of freedom of worship and freedom of conscience.

As Ukrainian News earlier reported, Article 10 of the Ukrainian Constitution
states that the state language in Ukraine is the Ukrainian language, but the
Constitution does specify the requirements for practical use of the
Ukrainian language as the state language and does not specify the
obligations of government organs and local self-government organs regarding
preservation, support, and development of the state language.    -30-

———————————————————————————————–
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9.   PLEDGES TO IMPROVE PROPORTIONAL ELECTION SYSTEM
 
Ukrainian News Agency, Kyiv, Ukraine, Thu, June 22, 2006
KYIV – The parliamentary coalition pledges to improve the proportional
system for electing deputies of the parliament and local councils. This is
stated in the text of the agreement on formation of the parliamentary coalition.

The coalition also pledges to legislatively regulate its status as well as
the status of the parliamentary opposition. It also pledges to complete and
improve political reform by optimizing the distribution of power among
various branches of government and creating effective checks and balances.

The coalition also intends to legislatively define the status of the
President, the Cabinet of Ministers, and the parliament, the mechanisms for
creation and the basis for their activities, and to regulate the procedures
for performance of their functions.

As Ukrainian News earlier reported, election of parliamentary deputies,
deputies of municipal, municipal district, regional district, and regional
councils, and deputies of the Kyiv and Sevastopol municipal councils, and
the Crimean Supreme Council on the basis of a proportional representation
system was introduced on October 1, 2005.

The parliamentary factions of the Yulia Tymoshenko Bloc, the Our Ukraine
bloc, and the Socialist Party formed a parliamentary coalition on June 22.
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10.           UKRAINE POLITICS: ORANGE RE-REUNITED

 
COUNTRY BRIEFING: EIU Politics – News Analysis
The Economist Intelligence Unit Limited
New York, New York, Thu, June 22, 2006

An “orange” coalition with a narrow parliamentary majority has finally
emerged to take control of the Ukrainian parliament, almost three months
after the March 26th legislative election. The formation of a generally
pro-Western and pro-reform coalition appears to end a damaging period of
political paralysis and reunites the three main parties that had fallen out
after coming to power in the 2004 “Orange Revolution”.

However, the deal hardly guarantees consistent reformist policies and almost
certainly does not spell the end to Ukraine’s political instability.

On June 22nd the three erstwhile “Orange Revolution” allies-Yuliya
Tymoshenko’s Bloc, Our Ukraine and the Socialist Party of Ukraine-formally
announced a coalition deal to the new parliament. Their announcement came
after three months of talks and only days after the three groups had seemed
to call off their negotiations. One of the parties, Our Ukraine, which is
closely linked to the president, Viktor Yushchenko, had days earlier even
begun alternative coalition talks with the opposition Party of Regions.

That Our Ukraine broke off its contact with the opposition and returned to
the “orange” fold represents a climb-down for Mr Yushchenko’s party. Most
significantly, it has needed to accept Yuliya Tymoshenko’s return to the
prime minister’s role, less than a year after her mounting differences with
those closest to Mr Yushchenko had sparked her dismissal from that post.

Our Ukraine had dragged out coalition talks for months precisely in order to
avoid Ms Tymoshenko’s return. Ms Tymoshenko had long insisted on that right
given that her eponymous bloc secured more seats than both Our Ukraine and
the Socialists combined. Although Ms Tymoshenko had originally helped Mr
Yushchenko come to power, the president’s inner circle has come to see her
as a major threat and wants her power minimised.

In return for having conceded the premiership, Our Ukraine will name the
speaker of parliament, according to the coalition agreement. This is not
necessarily a bad deal. Recent constitutional changes have strengthened
parliament’s powers, while the speakership offers political clout from a
less exposed position than that of the prime minister.

The Socialist Party of Ukraine, which is by far the smallest coalition
member, will control the vice-speaker’s   chair in parliament. Other
parliamentary posts, as well as cabinet positions, are to be divided on a
broadly proportional basis.

                         YANUKOVYCH IN OPPOSITION 
By agreeing to reconstitute their alliance, the three “orange” parties have
prevented for now the return to power of Viktor Yanukovych, whose Party of
Regions won by far the most seats in the new parliament. Although Mr
Yanukovych had been on the losing side of the “Orange Revolution”, a
coalition between Our Ukraine and the Party of Regions had until recently
appeared possible, given ongoing disputes within the “orange” camp.

A coalition along these lines would have brought back to power many of those
swept from office during the “Orange Revolution”, not least Mr Yanukovych,
who had served as prime minister before losing to Mr Yushchenko in the 2004
presidential election. As the Party of Regions is far larger than Our
Ukraine, veterans from the previous era would once again have assumed a
dominant role within parliament and the cabinet.

A coalition between Our Ukraine and the Party of Regions might have at least
avoided the chronic in-fighting characteristic of the “orange” camp. It
might also have introduced a greater degree of professionalism with
government, and resulted in more pro-business and investment-friendly
policies, given that the populist and left-of-centre YTB and SPU would have
been out of the picture.

Such a coalition would nevertheless have proved far from ideal. Programmatic
differences would still have split the government, seeing as the Party of
Regions had won the parliamentary election on an Anti-NATO and pro-Russian
platform antithetical to Our Ukraine’s.

Even more seriously, the return to power of the Party of Regions would have
represented a step backward in terms of Ukraine’s political transformation.
Mr Yanukovych’s party would have been even less likely than the “orange”
team to reform the untransparent political practices of the previous era. It
would certainly not have investigated the manifold allegations of serious
wrong-doing dating back to that time.

Just as worrisome is the fact that the Party of Regions would have been
difficult to dislodge from power once in place. It already controls the
largest share of parliamentary seats, and has the economic and political
clout needed to ensure that a number of deputies from other factions vote
alongside it.

Thus even if Our Ukraine were eventually to have disowned their coalition
agreement, a Party of Regions-dominated government could still have remained
in place. The quality and cleanliness of governance would almost certainly
have suffered once the possibility of alternation disappeared.

                                      ORANGE DISUNITY 

The risk of a Yanukovych return is nevertheless still there. Most
immediately, the newly formed “orange” coalition could collapse as soon as
it turns to the first order of business-voting in a Tymoshenko-led
government. Enough Our Ukraine deputies consider her anathema to scupper
this vote if they wanted.

At this point, though, this seems improbable given the damage it would do to
Our Ukraine’s credibility. But even once an “orange” governing team is
safely in place, a return to the open squabbling and political in-fighting
that marked its first stint in power in 2005 appears likely.

If anything, the animosity and mutual recriminations that surfaced during
the recent coalition talks suggest that relations between the coalition
parties have only worsened. Furthermore, Our Ukraine plans to fill the
parliamentary speakership with Ms Tymoshenko’s arch-rival, Petro Poroshenko,
the former head of the National Security and Defence Council.

His ongoing feud with Ms Tymoshenko had precipitated both their dismissals
in September 2005. Assuming he is elected to the speakership, Mr Poroshenko
is now once again likely to use his post to try to undermine his rival and
advance Our Ukraine’s party political interests.

The prominence of major businessmen within the Orange camp-not least of
which is Mr Poroshenko-points to other likely sources of tension. Powerful,
and often conflicting, interests are well represented within all three
“orange” parties and will on occasion vote down those parts of the
government’s programme that threaten their business interests.

Long-standing programmatic differences will similarly preclude the emergence
of more coherent government. Mr Yushchenko and his party are committed to a
liberal, pro-NATO platform, and want constitutional changes to strengthen
the presidency. In contrast, Ms Tymoshenko at times prefers statist
policies, while the SPU opposes land privatisation and NATO membership.

Both of the latter parties reject strengthening presidential powers. Disagreement
on all of these points seems inevitable.

The likelihood that Ukraine will now see a significant improvement in
political stability is therefore low. There is no guarantee that a
reconstituted “orange” coalition will survive the vote on a new cabinet, or
that it will push through reforms any more quickly than it did in 2005.

Moreover, there is still a very real possibility that the main opposition
party, the Party of Regions, will return to power before too long,
particularly as many in Our Ukraine would cheer the demise of a
Tymoshenko-led cabinet. Although the team now returning to power deserves
credit for the significantly greater political openness now evident in
Ukraine, those hoping for further rapid transformations are likely to be
disappointed.                                              -30-
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11.  “ORANGE” PARTIES SIGN UKRAINE COALITION DEAL
                 Ukraine’s Tymoshenko wants Russia gas deal review

Ron Popeski, Reuters, Kiev, Ukraine, Thu Jun 22, 2006

KIEV – Parties backing the “Orange Revolution” agreed on Thursday to form a
coalition government to keep the pro-Western administration on course for
bringing Ukraine out of Russia’s shadow and into the European mainstream.

Yulia Tymoshenko, due to be reinstated as prime minister after three months
of divisive negotiations, immediately said she would defend national
interests and called for a review of a deal that sharply increases the price
of Russian gas.

Tymoshenko, whose glamour and passion fired protesters during the 2004 mass
upheavals, was sacked as premier eight months ago by President Viktor
Yushchenko. He has since repeatedly accused her of pursuing personal
ambitions.

“Today is a momentous day. Ukraine’s people have given a second chance to
the democratic team,” Tymoshenko told reporters after announcing formation
of a three-party coalition.

“We will expend every effort to keep from disappointing people, to show we
are using this chance to build up Ukraine, its independence and stability.”

Accused throughout her first term in office of impulsive actions that
frightened investors, Tymoshenko pledged her economic policies would be
“reasonable and predictable”.

She called for a review of all gas deals with Russia. “I think all issues on
gas supplies to Ukraine now require further deep revision and review,”
Tymoshenko said.

The deputy chief executive of Russian gas giant Gazprom, which is seeking
new price increases told a magazine in Germany that Ukraine was taking gas
illegally and this could lead to supply shortages in Western Europe.

                      PRESENTING TYMOSHENKO AS PREMIER
Deputies from the three groups — Yushchenko’s Our Ukraine party,
Tymoshenko’s bloc and the smaller Socialists — intended to present her as
candidate for premier on Friday.

The three parties had been at odds since the president, committed to nudging
Ukraine towards EU and NATO membership, fired Tymoshenko after less than
eight months in office.

Reconciled to her return after long resisting it, the president has 15 days
to consider her. He noted the coalition had been formed and told reporters
outside Kiev to be patient as it was “the first time in 15 years of
Ukrainian politics that we are trying to form a working majority in
parliament”.

The accord, clinched nearly three months after an election, ended weeks of
talks which all but shut down the assembly.

The three parties won 243 of 450 assembly seats, though only 239 were
registered in the coalition. The Regions Party of Viktor Yanukovich, which
fell to the Orange Revolution, finished first with 186 seats, but could not
govern on its own.

Under new constitutional rules, the president has ceded many powers to
parliament, which was required to form a majority within a 30-day deadline
expiring this week. The chamber chooses the prime minister and has 30 more
days to produce a cabinet.

In Brussels, European Union External Relations Commissioner Benita
Ferrero-Waldner said she hoped the coalition would secure approval of laws
to enable Ukraine to join the World Trade Organisation — one of
Yushchenko’s unfulfilled policy goals. That would pave the way for talks on
a free trade agreement.

Addressing deputies earlier, Tymoshenko pledged judicial reform to “make our
country democratic and free of corruption”. Business magnates, she said,

would no longer escape the law.

“The first reform we will conduct will be judicial to enable us to say that
it is not the mafia who decides what is right or wrong or who gets a factory
for nothing,” she said.

The opposition said the new coalition was doomed to fail. “We say it again:
we do not believe in any long-term or constructive prospects for this
coalition,” said Mykola Azarov, a senior Regions Party leader. “We are all
too aware of the deep contractions of this coalition and its disparate
nature.”                              -30-

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12. NEW GAS CRISIS THREAT AS UKRAINE SIGNS COALITION PACT

By Steven Lee Myers in Moscow, The New York Times
New York, New York, Thursday, June 22, 2006

MOSCOW – The woman poised to return as Ukraine’s prime minister vowed
today to review a disputed deal with Russia on natural gas imports, setting
the
stage for a new confrontation that could disrupt the country’s economy and
threaten supplies of Russian gas to Europe.

The announcement came as three political parties once closely allied with
President Viktor A. Yushchenko, and then deeply divided, formally signed an
agreement to create a parliamentary coalition – and, eventually, a new
government that would follow the pro-Western course the president has set.

The agreement ended nearly three months of political paralysis, but it left
unaddressed many of the issues that divided Mr. Yushchenko’s supporters
after he took office in Jan. 2005.

Yulia V. Tymoshenko, who served as Mr. Yushchenko’s first prime minister
for eight months last year, returned to the political oratory that made her
hugely popular, even as it worried foreign investors and angered her allies
in what became known as the “orange revolution.”

She vowed to fight corruption, judicial machinations and shadowy
privatization deals made under Mr. Yushchenko’s predecessor, Leonid D.
Kuchma. Her policies as prime minister provoked internal battles and mutual
accusations of corruption, and ended with her dismissal last September.

“Today we begin our fight for our country to be democratic and cleansed of
the dirt of corruption,” she told Parliament while announcing the coalition,
prompting both applause and jeers.

Ms. Tymoshenko also vowed to challenge a complicated compromise agreement
with Russia, made after she left office, that nearly doubled the price
Ukraine pays for Russian gas after a New Year’s confrontation that briefly
shut down gas supplies to much of Europe.

That agreement has proved deeply divisive and, for Ukraine’s leaders,
politically troublesome. On Wednesday, even as a parliamentary coalition was
being negotiated, thousands of Ukrainians protested two rounds of increases
now being passed on to consumers.

“I think all agreements on gas supplies to Ukraine need a further profound
revision,” Ms. Tymoshenko told journalists in televised remarks from the
capital, Kiev. She said she would soon visit Ukraine’s main suppliers,
including Russia and Turkmenistan, to renegotiate, though she pledged to do
so in a friendly way.

The United States and Europe have expressed concerns about the terms of the
agreement and its lack of transparency. But it appears unlikely that Ms.
Tymoshenko will be able to revise the deal without jeopardizing the current
price of $95 per 1,000 cubic meters of gas, compared with $50 before.

Under the terms of the compromise reached in January, the price could rise
as soon as next month, and Russia’s gas monopoly, Gazprom, has vowed to seek
further increases. That seems even more likely following an announcement by
Turkmenistan this week that it would seek to raise the price it charges
Russia.

Much of the Turkmen gas, which now costs $65, is shipped to Ukraine,
effectively subsidizing its supply through a controversial arrangement with
a gas trading company, RosUkrEnergo, controlled by Gazprom.

A spokesman for Russia’s gas monopoly, Gazprom, warned that Ms.
Tymoshenko’s remarks opened “the way to a new gas crisis,” the Interfax
news agency reported.

Since the agreement was reached, Ukraine’s gas company has fallen behind in
payments, and Russian executives continue to criticize Ukraine, saying it
should pay prices closer to the average for Western Europe, which was $190
per 1,000 cubic meters last year. Gazprom announced today it would raise the
price it charges Moldova, Ukraine’s neighbor, to $160, from $110 now.

Ms. Tymoshenko’s eponymous bloc of candidates won the largest number of
seats in March’s parliamentary election among the three blocs that formed
the new coalition. Under a lengthy agreement that outcome positions her to
become prime minister – though she must still face a vote in Parliament
sometime in the next month before taking office and creating a new
government.

With today’s announcement, the coalition has 239 seats, a narrow majority in
the 450-seat parliament. The other parties are Mr. Yushchenko’s Our Ukraine,
which finished a distant third, and the Socialists.

The opposition leader, Viktor F. Yanukovich, whose party won the most seats
in March, but failed to assemble a coalition, predicted that the new
government would result in “a second orange catastrophe.”  -30-

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13. RUSSIA WARNS UKRAINE OF DANGER OF DISINTEGRATION

ANALYSIS & COMMENTARY: By Tatyana Stanovaya
RIA Novosti, Moscow, Russia, Thu, June 22, 2006

MOSCOW – Political battles being waged in Ukraine for the creation of a
coalition government are nearly over. Russia has said that it is not the
makeup of the coalition that matters to it but the strength of Ukraine’s
territorial integrity.

Strategically, the issue is not who forms the government, but the policy
such a government would pursue. Ukraine has been split ideologically, and
excessive pro-Western sentiments may have very serious consequences.

Russian President Vladimir Putin said recently at the summit of the Shanghai
Cooperation Organization that the Ukrainian authorities should forget about
their personal ambitions and act in the interests of the common people.

He said that Ukrainian President Viktor Yushchenko would most probably
succeed in creating a coalition. It may be “orange or yellow, or any other”
he said, “provided it is viable. The main objective is to do everything to
strengthen the country’s territorial integrity.” Putin added that Russia “is
in no way trying to interfere in Ukraine’s internal affairs.”

For some reason, it is believed that what Russia wants in Ukraine is not an
“orange” coalition, but a union of the pro-presidential block Our Ukraine
and the Party of Regions led by 2004 presidential candidate Viktor
Yanukovich. During the latest presidential elections Russia placed its stake
on Yanukovich.

But how pro-Russian is Yanukovich? This question will become even more
difficult to answer if his party joins the ruling coalition, which is a
possibility even if the latter is predominantly “orange”.

On the one hand, Viktor Yanukovich may respect Russia’s interests more than
anyone else; he has to because he relies on the southeastern electorate,
which has a closer affinity to Russia.

About one-third of Ukraine’s population considers Russian its native tongue,
but the figure is about 85% in the Crimea, more than 60% in the Lugansk and
Donetsk regions, and about 50% in the Kharkov, Zaporozhye, and Odessa
regions. The southeastern regions are strongly critical of the Euro-Atlantic
bent in Ukraine’s policy, and are keen on promoting close, friendly
relations with Russia.

Yanukovich as a politician has to take these sentiments into account. On the
other hand, he is a pragmatic and much more realistic man than the
ideology-dependent politicians from the western parts of Ukraine.

He has agreed without any hesitations to join a coalition with his former
rivals, who advocate accession to NATO and oppose the idea of granting
Russian the status of a second official language even at the regional level.

Yanukovich also sharply criticized the January 4, 2006 gas agreements with
Russia, though they were clearly in the latter’s interests. And lastly,
Yanukovich was the heir apparent of Leonid Kuchma, the previous
“pro-Russian” president, who had also called for joining NATO, despite
Russia’s opposition, and abandoned the idea only to win Kremlin support for
Yanukovich’s presidential campaign.

Would Russia benefit from Yanukovich as a member of the ruling coalition? Or
does it want him to remain the opposition leader? And the crucial question:
Will the coalition’s policy depend on its makeup?

If Yanukovich’s Party of Regions joins the “orange” coalition, he would have
to make fundamental ideological concessions, sacrificing the interests of
his electorate for political advantages. This would distort his
representation of the interests of Ukraine’s eastern regions.

If the Party of Regions remains in opposition, Yanukovich would keep intact
a substantial part of his political identity. His party would have little
access to administrative resources, which would encourage it to
energetically build up its political strength.

In short, if the Party of Regions stood in opposition to the government, it
would potentially be a much more pro-Russian force than if it joined the
coalition.

Geopolitically, Russia should create a situation where the pro-Western
Ukrainian government would have to take into account the interests of the
eastern parts of the country. As of now, the “orange” authorities only
represent the views of the western Lvov, Ternopol and Ivano-Frankovsk
regions and are completely out of touch with the eastern regions.

But this situation would not benefit Moscow. When Putin spoke about the
strengthening of Ukraine’s territorial integrity, he referred to the risks
of a growing ideological divide, which would have unpredictable consequences
for Ukrainian unity.

An “orange” government balanced by a strong opposition relying on the
pro-Russian electorate would be much better for the country’s territorial
integrity than an “orange” government including an “orange-tinged”
Yanukovich, with Yulia Tymoshenko’s much more pro-Western bloc as the
opposition force.

In any case, the only way to narrow the divide is to stop forcing
pro-Western views on the eastern regions. This would suit the interests of
Ukraine more than the interests of Russia.           -30-
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NOTE: Tatyana Stanovaya is chief expert at the Center for Political
Technologies. The opinions expressed in this article are those of the author
and may not necessarily represent the opinions of the editorial board.
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14.  GAZPROM ACCUSES UKRAINE OF PUTTING GAS SUPPLIES
                                  TO EUROPE AT RISK AGAIN
 
 
AFX, Moscow, Russia, Thu, Jun 22, 2006

MOSCOW (AFX) – Gazprom has accused Ukraine of putting supplies of gas to
Europe at risk once again, as happened last winter, after Yulia Tymoshenko
said today that Ukraine’s gas supply deal with Russia will be reviewed.
Gazprom supplies about 25 pct of the EU’s gas needs, and most of the gas
bound for Europe transits Ukraine.

Tymoshenko is expected to become prime minister again in Ukraine’s new
governing coalition. Her remarks follow a statement by Gazprom on Tuesday,
saying it aims to raise the price of gas supplies to Ukraine.

In January, the two sides reached a six-month deal under which Ukraine pays
95 usd per 1,000 cubic metres for gas from RosUkrEnergo, which pays 230 usd
per 1,000 cu m for gas from Gazprom, and mixes it with cheaper central Asian
gas.
Gazprom spokesman Sergey Kuprianov said today on Russian television:
“Carrying out the threats declared today in Ukraine would open the way to a
new gas crisis.”

He added: “We consider that the words of Yulia Tymoshenko once again prove
the fact that Ukraine is the weak link in the chain of supply of Russian gas
to Europe.”

Interfax had quoted Tymoshenko as saying today: “All relations concerning gas
deliveries to Ukraine today require deep additional revision, review and, of
course in a friendly fashion, the building of new agreement relations with
Russia and Turkmenistan.” newsdesk@afxnews.com afp/jsa

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15.             GAZPROM EXTENDS REACH IN EUROPE

By Gregory L. White in Moscow, The Wall Street Journal
New York, New York, Friday, June 23, 2006

MOSCOW — Russia’s OAO Gazprom has lined up a series of agreements in recent
weeks to expand its reach into European markets, a sign that the Continent’s
hunger for natural gas appears to be overriding concerns about increasing
dependence on Russian supply.

“These transactions are the best answer to the speculation about security of
supply,” Gazprom Deputy Chief Executive Officer Alexander Medvedev said in
an interview this week after signing a 20-year contract with Denmark’s
state-owned DONG Energy A/S that will bring Russian gas to the Danish market
for the first time starting in 2011.

“For us, Gazprom is a very reliable company,” said Kurt Pedersen, executive
vice president at DONG. “This really strengthens our supply.”

Mr. Pedersen said DONG had been seriously negotiating with Gazprom for about
six months, the period in which Gazprom’s reputation took the toughest
beating. The problems came after supplies to Europe were briefly reduced
just after Jan. 1, when Gazprom cut off shipments to Ukraine in a pricing
dispute. Europe gets a quarter of its gas from Russia, and the majority of
that comes through Soviet-era pipelines that run across Ukraine.

The January crisis shocked many in Europe, fueled criticism that Russia was
using its vast energy reserves to exert political pressure on Ukraine’s
pro-Western government and spurred calls for Europe to reduce its dependence
on Russian fuel.

Moscow added to the angst in April, when President Vladimir Putin and top
Gazprom executives issued veiled threats to shift their focus to new markets
in Asia if European governments sought to block the company’s efforts to
expand into distribution and marketing in Europe.

While the rhetoric hasn’t cooled, Europe’s energy companies aren’t showing
much alarm. This month Dutch energy company NV Nederlandse Gasunie agreed to
take a stake in Gazprom’s planned pipeline to carry gas across the Baltic
Sea to Germany and other markets in Europe.

Wednesday Gazprom signed an agreement with Hungarian oil and gas group MOL
Rt. to look at building a pipeline to carry Russian gas and to expand
underground storage facilities for the fuel, potentially making Hungary a
hub for Russian exports.

“There is a disconnect between politicians and the media and the business,”
said Jonathan Stern, a gas specialist at the Oxford Institute for Energy
Studies. “The business is carrying on.”

Gazprom executives say the public tensions are an inevitable result of a
shift in the global gas market, where big producers now have the upper hand.
“The epoch of cheap resources is over,” Mr. Medvedev said.

Italy, which was among the countries hardest hit during the winter by
disruptions to Russian supplies, has been particularly aggressive about
courting Gazprom. Late Tuesday Italian Premier Romano Prodi was in the
Kremlin to sign an agreement with Mr. Putin aimed at stimulating investment
in each other’s energy sectors.

The same day, Paolo Scaroni, chief executive of Italian energy titan ENI
SpA, was in Moscow courting Gazprom, seeking a chance to swap access

to his market for a stake in some of Gazprom’s reserves.

Mr. Scaroni said the January crisis had done “very little” damage to
Gazprom’s reputation, and he rejected the idea that Gazprom is strong-arming
its customers. “We see no blackmail at all,” he said. “Quite the opposite,
we are looking for larger agreements.”

Analysts say Gazprom’s drive to buy distribution assets in Europe could
improve the security of supplies. “You’re not going to expand your business
interests in all the distribution and marketing infrastructure just to say,
‘OK, we’re going to sell all our gas to China,’ ” said Hilary McCutcheon, a
Russian-gas specialist at United Kingdom consultants Wood Mackenzie.

Gazprom rejects arguments that it is using energy for political purposes.
“The threat of Gazprom was invented to frighten kids,” Mr. Medvedev said,
joking.

ENI’s Mr. Scaroni echoed Gazprom’s assertion that Ukraine was to blame for
the disruptions in January because it took Russian gas destined for export.
He also warned that Kiev’s failure to build up adequate reserves of gas
could threaten another disruption in supplies next winter.

Gazprom’s fuel is a compelling value for Europe, analysts say, as the
company commands the largest gas reserves in the world and a vast pipeline
network to bring them to European markets. Alternatives are either more
costly, as in the case of liquefied gas from other producers, or politically
unpalatable, such as nuclear power. Europe’s own gas production is
declining, just as demand for the clean-burning fuel is expected to rise
sharply.

The International Energy Agency, of Paris, as well as some Western
governments have criticized Gazprom for not investing enough in developing
new fields to replace its current ones, most of which are in decline.

Mr. Medvedev rejected those criticisms, saying the company is spending about
$5 billion a year on investment in fields, supplemented by billions of
dollars more in joint projects with foreign companies.

Gazprom expects to bring on about 90 billion cubic meters (3.15 trillion
cubic feet) of additional annual production by the end of the decade,
offsetting declining output from existing fields and enabling the company to
boost overall production.

In the bitter cold snap that gripped Russia and much of Europe early this
year, Gazprom increased production to meet demand, showing that it could
boost annual output to a record 620 billion cubic meters if needed, Mr.
Medvedev said. Gazprom expects to produce 548 billion cubic meters this
year, because there isn’t enough demand to absorb more, he said. -30-

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16.          UKRAINE’S GREENHOUSE EMISSIONS DIVE,
                              RISK SWAMPING KYOTO

Gerard Wynn, Reuters, London, UK, Friday, June 23, 2006

LONDON – Ukraine’s greenhouse gas emissions fell by a bigger than expected
57 percent in 2004 from 1990 levels, UN data showed on Thursday, potentially
undermining wider climate change aims of the Kyoto Protocol.

Kyoto obliges 35 industrialised countries to cut emissions of heat-trapping
gases overall by 5.2 percent by 2008-12 from 1990, but it allows countries
whose emissions are over target to buy emissions reductions from those
below.

Former communist countries’ emissions have dived since 1990 because of an
industrial collapse following their transition to liberalised markets, and
while this is good news for climate change goals, it risks swamping the
Kyoto trading tool.

The worry among green groups is that emissions cuts in eastern Europe are
just because of the 1990 target baseline, and trading such margins would
avoid real emissions cuts by other industrial countries.

Ukraine’s Kyoto target is zero change on 1990 by 2008-12 and the 57 percent
fall by 2004 would give it an annual 510 million tonnes carbon dioxide
emissions reduction to sell.

This compares to an expected annual excess from 2008-12 of 200-300 million
tonnes, according to the Japan Bank for International Cooperation (JBIC).

Ukraine is expected to have the second biggest such excess after Russia — 
which has not yet published its 2004 data — while Japan, Canada and the
European Union are expected to be the furthest behind their Kyoto goals.

Ukraine’s current surplus emissions reduction would exceed the expected
annual demand for cuts of the EU, Japan and Canada combined between
2008-12 — at 496 million tonnes CO2 — according to JBIC data.

But western countries will be under pressure to make up their emissions cuts
elsewhere — either by pollution reduction at home, or through a Kyoto
Protocol trading tool called the Clean Development Mechanism (CDM), where
rich nations fund actual pollution cuts in poor ones.

The Ukraine report was posted on the UN website this week. The European
Union said on Thursday that greenhouse gas emissions by the 15 “old” nations
of the now 25-member bloc rose by 0.3 percent in 2004, potentially leaving
them further off-track on Kyoto.                       -30-
———————————————————————————————–

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========================================================
17.  PRESIDENT BUSH COMMEMORATES 50TH ANNIVERSARY OF
           HUNGARY’S BLOODY REVOLT AGAINST COMMUNISM

Terence Hunt, Associated Press, Budapest, Hungary, Fri, Jun 23, 2006

BUDAPEST – Fifty years after Hungary’s revolt against communism, U.S.
President George W. Bush said that war-weary Iraqis can learn from this
country’s long and bloody struggle against tyranny. “Liberty can be delayed
but it cannot be denied,” the president said.

“Iraq’s young democracy still faces determined enemies, people who will use
violence and brutality to stop the march of freedom,” Bush said Thursday in
a speech concluding a quick trip to Hungary and Austria. “Defeating these
enemies will require sacrifice and continued patience, the kind of patience
the good people of Hungary displayed after 1956.”

Bush spoke to several hundred people at Gellert Hill with a panoramic view
of Budapest, the twisting Danube River and the hills beyond.

Warily watching developments in Iran and North Korea, the Bush
administration prodded Tehran to respond as early as next week – and by
mid-July – to an offer of incentives to suspend its disputed nuclear
program. It also said preparations were “very far along” for a possible test
launch of a long-range missile by North Korea but it was not certain if it
would, indeed, be fired.

“What we hope they will do is give it up and not launch,” said National
Security Adviser Stephen Hadley, traveling with Bush.

The Iraq war is widely unpopular in Europe as it is in the United States,
and Bush sought to compare the U.S.-led drive to implant democracy in
Baghdad with uprisings that led to the collapse of the Soviet empire. But
Bush also faced European concerns about secret prisons for terror suspects,
U.S. abuse of Iraqi inmates and the U.S. detention center at Guantanamo Bay,
Cuba.

“It is my firm belief that our common responsibilities, duty now, is to
fight terrorism,” Hungarian President Laszlo Solyom told Bush in a gilded
room at the Sandor Palace. “This fight against terrorism can be successful
only if every step and measure taken are in line with international law.”

It was Bush’s 15th trip as president to Europe and he will return in just a
few weeks for the annual summit of industrialized democracies in St.
Petersburg, Russia. He also will meet with German Chancellor Angela Merkel
in what was East Germany under Soviet rule. Russian President Vladimir Putin
has been irritated by Bush’s attention and visits to former Soviet states.

Bush talked with Hungarian officials about how to reassure Putin that
promoting democracy and freedom among Russia’s neighbors “is not some kind
of effort to encircle Russia but is, in fact, a good thing for Russia
because democratic states make good and peaceful neighbors,” Hadley said.

The stop in Hungary was hurriedly arranged when a visit to Ukraine was
shelved because of delays there in forming a new government. The White House
settled on Hungary because October marks the 50th anniversary of the
Hungarian revolution in which students and workers demanded freedom from
Moscow.

Twelve days later, Soviet forces brutally crushed the rebellion as
Hungarians appealed in vain for America’s intervention. “They crushed the

Hungarian uprising but not the Hungarian people’s thirst for freedom,” Bush
said.

“In 1989 a new generation of Hungarians returned to the streets to demand
their liberty and boldly helped others secure their freedom as well,” the
president said. “By giving shelter to those fleeing tyranny and opening your
border to the West, you helped bring down the Iron Curtain and gave the hope
of freedom to millions in Central and Eastern Europe.”

Bush also recalled his surprise trip to Baghdad last week and suggested
similarities between Iraq and Hungary. Bush said Iraqi Prime Minister Nouri
al-Maliki “is committed to the democratic ideals that also inspired
Hungarian patriots in 1956 and 1989.”

“The success of the new Iraqi government is vital to the security of all
nations,” he said, “and so it deserves the support of the international
community.”                                         -30-

———————————————————————————————–
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18. 100 MARIYA PRYIMACHENKO FOLK-ART PAINTINGS STOLEN
             Ukrainian President Yushchenko worried over painting theft

Office of the President of Ukraine, Kyiv, Ukraine, Thu, June 22, 2006

KYIV – Ukrainian President Victor Yushchenko has requested Interior

Minister Yuriy Lutsenko and Acting Prosecutor General Serhiy Vynokurov
to help investigate today’s theft of more than one hundred paintings by
Mariya Pryimachenko.

“I demand that you should immediately take exhaustive measures to recover
the paintings.,” he said. The President is worried that Ukrainians will
never again see these priceless art treasures after the disgraceful larceny.

On June 22, the family of Fedir Pryimachenko, the painter’s son, was robbed
in the village of Bolotna.                        -30-

———————————————————————————————–
FOOTNOTE:  Mariya Pryimachenko is one of the premier, world class
folk art painters. Her works are a national treasure of Ukraine.  This is
a terrible crime against Ukraine, the people of Ukraine and the art of
Ukraine. You can find information about Mariya Pryimachenko posted
on my personal website.  See links below.   AUR EDITOR
———————————————————————————————–
———————————————————————————————–
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AUR#716 Jun 22 Tymoshenko, Prime Minister; Poroshenko, Parliament Speaker; Ukraine VS Tunisia; Yushchneko Meets Amb Taylor, SBU: Armenian Genocide

=========================================================
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       

 
       UKRAINE PARTIES BREAK DEADLOCK
                    YULIA TYMOSHENKO: PRIME MINISTER
         PETRO POROSHENKO: SPEAKER OF PARLIAMENT
                                                         
ACTION UKRAINE REPORT – AUR – Number 716
Mr. E. Morgan Williams, Publisher and Editor  
PUBLISHED FROM KYIV, UKRAINE, THURSDAY, JUNE 22, 2006
           –——-  INDEX OF ARTICLES  ——–
         Clicking on the title of any article takes you directly to the article.               
Return to the Index by clicking on Return to Index at the end of each article
1.  PRO-WEST PARTIES FROM COALITION TO LEAD UKRAINE
By Alan Cullison, The Wall Street Journal
New York, New York, Thursday, June 22, 2006; Page A6
2.                  UKRAINE PARTIES BREAK DEADLOCK
By Roman Olearchyk in Kiev, Financial Times
London, United Kingdom, Thursday, June 22 2006

3“OUR UKRAINE” TO NOMINATE POROSHENKO FOR SPEAKER
Ukrayinska Pravda, Kyiv, Ukraine, Wednesday, June 21, 2006

Ukrainian News Agency, Kyiv, Ukraine, Wed, June 21, 2006
5. TYCOON POROSHENKO SAYS HE WILL JUSTIFY NOMINATION
RIA Novosti, Moscow, Russia, Wed, June 21, 2006

6COACH WARNS AGAINST OVERCONFIDENCE AFTER UKRAINE
                           RECAPTURES FIGHTING SPIRIT 
Martyn Graham in Berlin, The Independent, London, UK, Wed, Jun 21, 2006

7.          COACHES STRIVE TO MOTIVATE UKRAINE, TUNISIA
Erica Bulman, Associated Press, Germany, Thursday, June 22, 2006

8. UKRAINE’S FIRST DEPUTY FOREIGN MINISTER ANTON BUTEYKO
                  HAS HEART ATTACK AND MASSIVE STOKE
                  Buteyko was Ambassador to the USA in 1998-1999
UNIAN news agency, Kiev, in Ukrainian 21 Jun 06
BBC Monitoring Service, UK, Wednesday, June 21, 2006

9PRESIDENT YUSHCHENKO MEETS US AMB WILLIAM TAYLOR

Office of the President, Kyiv, Ukraine, Wed, June 21, 2006
Ukrainian News Agency, Kyiv, Ukraine, Wed, June 21, 2006

11UKRAINE: COOPERATION STRATEGY WITH INTERNATIONAL
          FINANCIAL ORGANIZATIONS APPROVED BY CABINET
Ukrainian News Agency, Kyiv, Ukraine, Wed, June 21, 2006 (19:57)

12“THE SECURITY SERVICE OF UKRAINE? SBU CHIEF IHOR
DRIZHCHANYY HAS THE SBU SERVE THE CLANS AND MOSCOW”
   SBU Employees themselves speak of the Degradation of the Department
   Ukrainian Security Service (SBU) Sold Out To Certain Political Parties
ANALYSIS & COMMENTARY: By Vira Chorna
Ukrayina Moloda, Kiev, in Ukrainian 1 Jun 06, p 1, 7-9
BBC Monitoring Service, United Kingdom, Tue, Jun 06, 2006

13VARTKES’S LIST & THE VICTIMS OF THE ARMENIAN GENOCIDE
         Of the million or more Armenians executed by Ottoman Turks 90 years
          ago, thousands had insurance from New York Life. A slip-and-fall
        lawyer uncovered the list of policyholders and, by forcing the company
                   to pay their heirs, gave voice to the victims of genocide.
Article By Michael Bobelian, Legal Affairs magazine
The Magazine at the Intersection of Law and Life
New Haven, Connecticut, March/April, 2006
========================================================
1
.   PRO-WEST PARTIES FROM COALITION TO LEAD UKRAINE

By Alan Cullison, The Wall Street Journal
New York, New York, Thursday, June 22, 2006; Page A6

The parties behind Ukraine’s Orange Revolution agreed to a coalition
government led by pro-Western populist Yulia Tymoshenko, in a deal that is
likely to aggravate tensions with Moscow over natural-gas supplies.

Ms. Tymoshenko has promised closer integration with Europe and says she
wants to wean Ukraine from its heavy dependence on Russian natural gas,
which she says the Kremlin is using to exert its influence in her country.

She has called for renegotiating a January deal that nearly doubled steeply
discounted prices for Russian gas, Ukraine’s main energy source. Moscow has
indicated those prices could rise even further when the current agreement
runs out at the end of the month. When the last round of negotiations in
January hit an impasse, Russia reduced shipments to Ukraine, which in turn
disrupted supplies to Europe.

Ms. Tymoshenko, a telegenic leader of the Orange Revolution street protests
that overturned rigged presidential elections in 2004, showed no signs of
backing off from her pro-Western rhetoric yesterday. “We won democracy for
Ukraine,” she told Parliament. “The very creation of the coalition defines
Ukraine’s course for many years ahead and will move Ukraine into the
European community.”

Moscow has warned Ukraine against pursuing closer relations with the North
Atlantic Treaty Organization, in a tug of war with the West for influence
over the France-sized country of 47 million.

The agreement comes after nearly three months of bitter haggling that
exposed the fragility of the West-leaning coalition of former protest
leaders, businessmen and socialists who have dominated Ukraine’s government
since the Orange Revolution.

Ms. Tymoshenko served as Ukraine’s prime minister after the coalition took
power last year, but was fired by President Viktor Yushchenko in September
after he accused her of running the economy into the ground with populist
rhetoric.

Ms. Tymoshenko’s strong showing in parliamentary elections in March gave her
leverage to demand her old job back. Her party pushed Mr. Yushchenko’s bloc
to third place in the polling, making her the de facto leader of Ukraine’s
pro-Western liberals.

The pro-Russian faction in Parliament, led by former Prime Minister Viktor
Yanukovych, won the most seats but couldn’t muster a majority. Mr.
Yanukovych said he would back new elections if the Orange parties couldn’t
finalize their coalition deal by the end of the week.

Roman Bezsmertny, the lead negotiator for President Yushchenko’s Our Ukraine
bloc, said the parties in his alliance still must formally approve the deal,
after which Ms. Tymoshenko’s nomination would be submitted to Parliament for
approval. The coalition would control 243 out of 450 seats in Parliament.

While the coalition will likely be welcomed in Western capitals, some
analysts warn that Ms. Tymoshenko’s populism, combined with persistent
divisions within the government, portend disruptions for Ukraine’s economy.

While prime minister last year, Ms. Tymoshenko boosted pensions,
experimented with price controls on foodstuffs and fuel, and spooked
investment by suggesting the government was considering a massive review of
the privatizations conducted under the former president, Leonid Kuchma.

Economic growth fell to 2.6% last year from 12% in 2004. The poor economic
data were due partly to a drop in world metals prices, and erroneous
economic statistics, according to Katya Malofeyeva, analyst at Renaissance
Capital brokerage in Moscow. But Ukraine’s economy is saddled with large
debts that are a legacy of the Tymoshenko government, she said.

“It is very dangerous for a government with so little money to have people
depending on the government,” said Ms. Malofeyeva.

Changes to Ukraine’s constitution that took effect this year gave the prime
minister’s office greater powers in economic planning, and would make Ms.
Tymoshenko less accountable to the president. But in the coalition agreement
released yesterday, Ms. Tymoshenko’s partners appeared to be taking steps to
rein in her influence.

Mr. Yushchenko’s bloc gets to appoint the speaker of Parliament, and
lawmaker Mikhaylo Pozhyvanov said the party was determined to provide a
strong counterweight to her in the post.                    -30-
————————————————————————————————-
Write to Alan Cullison at alan.cullison@wsj.com
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2.                    UKRAINE PARTIES BREAK DEADLOCK

By Roman Olearchyk in Kiev, Financial Times
London, United Kingdom, Thursday, June 22 2006

The three main political groups that backed Viktor Yushchenko’s presidential
bid in the Orange revolution of 2004 have agreed to end months of wrangling
and form a coalition that will bring the fiery Yulia Tymoshenko back into
government as prime minister.

The coalition agreement, due to be signed tomorrow after last-minute details
are worked out, is seen as a big concession on the part of Mr Yushchenko,
who fired Ms Tymoshenko in September after a seven-month term as prime
minister marked by cabinet infighting.

Ms Tymoshenko, viewed as a rival to Mr Yushchenko in Ukraine’s next
presidential election, in 2009, boosted her chances of returning after her
bloc mustered the largest support of pro-western camps in a March 26
parliamentary vote.

Other members of the “Orange coalition”, so called because they supported
the 2004 Orange revolution that lifted Mr Yushchenko to Ukraine’s
presidency, include the Our Ukraine bloc, loyal to Mr Yushchenko, and the
Socialist party. Together they hold 243 of parliament’s 450 seats, with
strong voter support in the central and western Ukrainian-speaking regions
where backing for western integration is high.

Hryhory Nemyria, a member of Ms Tymoshenko’s bloc, said that the main snags
in the talks included Nato integration plans and the distribution of top
posts in the government and parliament. Mr Yushchenko’s Our Ukraine backs
speedy integration into the alliance, although public support remains low.
Ms Tymoshenko wanted the Nato issue kept out of the coalition agreement.

A compromise was reached with the Socialists who do not support Nato
integration. A clause in the agreement envisaged accession to the military
alliance after a nationwide referendum, Mr Nemyria said, adding that
accession was unlikely to be before 2010.

Yevhen Kushnyarov, a member of the Moscow-leaning Regions party that has
opposed Nato membership, warned that his party represented millions of
eastern and southern Ukrainians and that their interests could not be
ignored.

Ms Tymoshenko said the coalition deal had taken so long because it would
decide “Ukraine’s course for many, many years”.
http://www.ft.com/cms/s/5d0c841c-018b-11db-af16-0000779e2340.html

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.  “OUR UKRAINE” TO NOMINATE POROSHENKO FOR SPEAKER
 
Ukrayinska Pravda, Kyiv, Ukraine, Wednesday, June 21, 2006
 
KYIV – “Our Ukraine” is proposing to nominate Petro Poroshenko for the
position of a Speaker [of Parliament.]
On Wednesday noon, the presidium of the “People’s Union Our Ukraine”
(NSNU) had decided to propose to the council of NSNU to nominate Petro
Poroshenko, as a speaker for the party Tetiana Mokridi told Ukrayinska
Pravda.
Another solicitor, Roman Bezsmertny, declined his own nomination,
followed by the same motion from [Prime Minister] Yuriy Yekhanurov.
A meeting of the council of NSNU, which will consider the proposal of
nomination of Poroshenko and the coalition agreement, should convene on
Wednesday afternoon.                             -30-
————————————————————————————————
The English translation of this article was provided by the New Project
for Democracy. Find more at http://www.newproject.org.
————————————————————————————————
FOOTNOTE:  Around Kyiv yesterday there was great relief that it looks
like finally a coalition has been formed but also great disappointment in
the fact that Petro Poroshenko is reported to be the Speaker of the
Parliament. AUR EDITOR
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4. OUR UKRAINE: NOMINATE POROSHENKO FOR RADA SPEAKER
 
Ukrainian News Agency, Kyiv, Ukraine, Wed, June 21, 2006
KYIV – The Our Ukraine bloc intends to nominate Petro Poroshenko for
the post of parliament speaker. The press service of the Our Ukraine bloc
announced this to Ukrainian News.

The presidium of the Our Ukraine bloc decided on Wednesday to table
Poroshenko’s candidacy for consideration at a meeting of the bloc’s council.

According to the press service, the other candidates for the post, Roman
Bezsmertnyi, the head of the Our Ukraine bloc’s political council, and
acting Prime Minister Yurii Yekhanurov withdrew their candidacies.

The meeting of the council of the Our Ukraine bloc at which Poroshenko’s
candidacy and the draft agreement on formation of a parliamentary coalition
will be considered, will take place at 16:00 on Wednesday.

As Ukrainian News earlier reported, the Yulia Tymoshenko Bloc and the
Socialist Party have approved the final text of the agreement on creation of
a parliamentary coalition with the Our Ukraine bloc.

The Yulia Tymoshenko Bloc, the Our Ukraine bloc, and the Socialist Party
have announced their intention to form a parliamentary coalition on June 23.

The Socialist Party’s leader Oleksandr Moroz said on June 14 that he was
prepared to abandon his claim to the post of parliament speaker. The Yulia
Tymoshenko Bloc, the Our Ukraine bloc, and the Socialist Party discontinued
negotiations on formation of a parliamentary coalition on June 10 because of
disagreement over the post of parliament speaker.          -30-
————————————————————————————————

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5.  TYCOON POROSHENKO SAYS HE WILL JUSTIFY NOMINATION

RIA Novosti, Moscow, Russia, Wed, June 21, 2006

KIEV – Petro Poroshenko said Wednesday he would justify the trust put in him
of pro-presidential bloc Our Ukraine, which nominated him earlier for the
post of parliamentary speaker.

“I will do everything possible not to let down and justify the trust in me
of the party’s council,” the businessman and former national Security
Council secretary said.

The party’s press service said earlier that two other nominees – acting
Prime Minister Yuriy Yekhanurov and the head of Our Ukraine’s political
committee, Roman Bezsmertniy – had withdrawn their candidacies.

Bezsmertniy said earlier three pro-Western groups – Our Ukraine, the bloc of
former prime minister Yulia Tymoshenko, and the Socialist Party – had
clinched a deal to form a majority coalition in Ukraine’s parliament. He
said Tymoshenko would be appointed prime minister.

But a Tymoshenko bloc spokesperson was cautious about the deal, saying it
had to be signed ahead of a Friday deadline after which President Viktor
Yushchenko could dissolve parliament and call fresh elections.

Poroshenko, one of President Viktor Yushchenko’s closest associates and
Ukraine’s richest men, owns a number of food industry enterprises and headed
the Ukrainian National Security Council in February-August 2005.

He added that Our Ukraine had recommended that the other two parties sign
the coalition agreement. “We decided [at the meeting] that we approve the
agreement on the formation of the ‘orange’ coalition and ask the deputies
elected from Our Ukraine bloc to sign the agreement,” he said.

————————————————————————————————-
LINK: http://en.rian.ru/world/20060621/49855064.html
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6.  COACH WARNS AGAINST OVERCONFIDENCE AFTER UKRAINE
                           RECAPTURES FIGHTING SPIRIT 

Martyn Graham in Berlin, The Independent, London, UK, Wed, Jun 21, 2006

Ukraine must come back down to earth quickly after Monday’s 4-0 crushing of
Saudi Arabia if they are to get past Tunisia and secure a place in the
second round at their first World Cup finals, according to their coach, Oleg
Blokhin.

Helped by Andrei Shevchenko’s return to form and by four changes to their
starting line-up, the eastern Europeans bounced back from a 4-0 drubbing by
Spain that had left Blokhin incensed by their mental approach and lack of
fight.

Blokhin said his main task now would be to stop his team growing
overconfident before they face a Tunisia side who frightened the life out of
Spain on Monday and know only a win can see them through.

“This game gave us a big boost mentally,” he said. “But we have to
re-establish the mental basis for victory after this and it will be harder
to motivate the players this time because we won.”

With Spain through, Ukraine lead the running for second place and a berth in
the last 16, with three points. Saudi Arabia and Tunisia have one point each
and must win their last games to stand a chance of advancing. Ukraine play
Tunisia in Berlin on Friday while Saudi Arabia take on Spain in
Kaiserslautern.

The eastern Europeans proved on Monday that they are far from the one-man
show some have suggested. Shevchenko, a former European Footballer of the
Year, looked sharp again after a month off with injury, but it was Sergei
Rebrov and Maxim Kalinichenko who engineered the victory in midfield.

Though a bit-part player with Spartak Moscow, Kalinichenko took the Fifa man
of the match award, scored the fourth and supplied the barrage of pinpoint
crosses that were the key to victory.

“I have always said he is a great player and a great passer of the ball,”
Rebrov said of his team-mate. “He hasn’t played much for Spartak and I don’t
know why this is. But he is a good friend and a good person. Today he showed
what he can do, but he can do even better.”

Rebrov said the side could now do justice to their fans’ expectations after
they were the first European team to qualify for the finals from a group
including Denmark, Turkey and the European champions, Greece. “In
qualification we were best in the group and every-body sees Ukraine as a
strong team, but now we have to show it,” he said.

“I think after the way we played today, Tunisia will really be preparing for
us well. After losing 4-0 to Spain, I think Saudi Arabia didn’t prepare well
for us and thought we were not any good any more. We have to take this
performance to the next game … but we have shown we are capable of doing
something at the World Cup.”

Although Tunisia finally capitulated against Spain in an absorbing match on
Monday, the nature of their performance gave their coach, Roger Lemerre,
hope they can reach the last 16.

For 70 minutes the North Africans stifled Spain’s creative flair and hung on
to the lead given to them by Zied Jaziri in the eighth minute, only for Raul
and Fernando Torres to punish them for late lapses. Nevertheless, Lemerre
said their was plenty to be hopeful about as they prepare for their must-win
game with Ukraine.

“I’m not an optimist, I’m a realist,” the Frenchman said, looking towards
the match against Ukraine. “This performance gives us hope and we have to
convert that into a result against the Ukrainians. If we win, we could find
ourselves in the round of 16, but it’s going to be very tough. In a way both
sides are in the same situation.”

Lemerre could only look with envy at Spain’s substitutes’ bench, packed with
attacking flair in the form of the Real Madrid striker Raul, Arsenal’s
livewire midfielder Cesc Fabregas and Real Betis’s Joaquin. His own options
up front are limited, especially as his leading striker, Francileudo Santos,
is still recovering from a shin injury and has only a 50 per cent chance of
featuring.

“At this moment the answer is no,” Lemerre said when asked if the
Brazilian-born forward would play against Ukraine. “My squad players are
nearly as good as the ones on the pitch, but you only had to look at Spain’s
substitutes’ bench to see the difference between the sides.”    -30-
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7.     COACHES STRIVE TO MOTIVATE UKRAINE, TUNISIA

Erica Bulman, Associated Press, Germany, Thursday, June 22, 2006

GERMANY – Defense and concentration are the chief concerns of the coaches
from both Ukraine and Tunisia as they count down to their decisive group
matchup on Friday that will determine who advances to the second round of
the World Cup. Both sides have shown a leaky defense and both could use more
focus.

Ukraine coach Oleh Blokhin is looking to restore some humility to his team
following its 4-0 thrashing of Saudi Arabia on Monday. His side was
similarly beaten 4-0 by Spain only five days earlier.

The World Cup newcomers simply need to draw with the Africans to lock up
runner-up position in the group behind Spain, which is already through. Only
the top two teams advance. Tunisia must beat Ukraine to have a chance of
qualifying.

“The victory against Spain was important because it renewed our confidence,
especially with the margin being so large. But we need to re-establish our
emotional balance,” Blokhin said. “And it will be harder to motivate the
players this time because we won so easily.”

Tunisia coach Roger Lemerre said Tunisia had “suffered enormously” in
Monday’s 3-1 loss to Spain, but had taken great heart from its performance.
Tunisia drew 2-2 with Saudi Arabia and showed improvement against the
Spanish, despite the loss.

Lemerre now needs to coax a full 90 minutes out of his players. His team led
both of its previous games, but allowed late goals in each. “We have to
concentrate better, show more ability and engage them more offensively,” the
former France coach said. “Victory is imperative. There is nowhere to hide.
No more calculations to make.”

Lemerre explained the late goals by underlining that several of his players
are recovering from injury or have not played regularly for their clubs. He
said his players were worn down physically by Spain, but hoped Tunisia’s
training schedule would allow them to peak for Ukraine.

Midfielder Mehdi Nafti said adrenalin should carry them through one more
game. “Ninety minutes is nothing when you are playing for qualification to
the next round of a World Cup,” he said. “You have to grit your teeth.”

Tunisia is unlikely get a long-awaited boost from Francileudo Santos, who
missed the first two games because of a leg injury. The team was awaiting
results of another scan Tuesday but Lemerre said he was a “big doubt” for
Friday.

Lemerre said his defensive 4-5-1 formation had been tactically correct but
was disappointed some of his defenders lost concentration at crucial
moments.

Though Ukraine has recovered defender Vladyslav Vashchyuk – who missed
Ukraine’s match against Saudi Arabia due to red card received against
Spain – it still has defensive worries.

From the start, Ukraine has suffered a shortage of defenders with
international experience who can play cohesively as a unit.

In addition, defender Volodymyr Yesersky – who sat out the match against
the Saudis because of a thigh injury – is still doubtful.

Blokhin will need to decide whether to rely on quick counterattacks and aim
for a draw, or take a more aggressive tack as they did against the Saudis,
where Maxim Kalinichenko played a crucial role in three of four goals after
sitting out against Spain.

Blokhin could simply direct his team to simply prevent the Tunisians from
scoring for the early part of the match to fatigue them, making them
vulnerable to fast counterattacks, as they were against Spain.

“It’s a team that lets you think you are in control, but can undo you in two
or three passes, especially with Rebrov and Shevchenko up front,” Nafti
said. “They’re not on the same level as Spain but they have other assets,
especially their physical strength.”                   -30-
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8. UKRAINE’S FIRST DEPUTY FOREIGN MINISTER ANTON BUTEYKO
                  HAS HEART ATTACK AND MASSIVE STOKE
                  Buteyko was Ambassador to the USA in 1998-1999

UNIAN news agency, Kiev, in Ukrainian 21 Jun 06
BBC Monitoring Service, UK, Wednesday, June 21, 2006

KIEV – First Deputy Foreign Minister Anton Buteyko has been hospitalized
following a heart attack and a massive stroke,

UNIAN learnt from the Feofaniya hospital, where he was taken. Buteyko
was taken to hospital after he suffered a heart attack yesterday. Today, he
suffered a massive stroke.

UNIAN note: Buteyko was born in 1947. He has been a diplomat since 1974. In
particular, he was Ukraine’s ambassador to the USA (1998-99) and to Romania.

In September 2003 he resigned as Ukrainian ambassador to Romania in protest
against Ukraine’s accession to the Single Economic Space [led by Russia and
also involving Belarus and Kazakhstan].                -30-
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9. PRESIDENT YUSHCHENKO MEETS US AMB WILLIAM TAYLOR
 
Office of the President, Kyiv, Ukraine, Wed, June 21, 2006

KYIV – William Taylor, the newly appointed U.S. Ambassador to Ukraine,

has presented his credentials to Victor Yushchenko.
They discussed Ukrainian-U.S. relations and both expressed confidence that
our strategic cooperation would develop.
Mr. Taylor said U.S. President George Bush wanted to build closer ties with
Ukraine. He also confirmed the President’s intention to visit our country
this year.
Ukraine’s Foreign Minister Borys Tarasyuk was present at the ceremony.
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10.   US AMB BILL TAYLOR CONSIDERS HIS APPOINTMENT AS
                     REWARD FOR WORKING IN CRISIS SPOTS  
 
Ukrainian News Agency, Kyiv, Ukraine, Wed, June 21, 2006
KYIV – United States Ambassador to Ukraine William Taylor considers his
appointment to the post as his reward for working in crisis spots. Taylor
stated this at his first press conference following his appointment.

‘I think that they decided in Washington that I have already performed my
duty in difficult spots, and they sent me to a good place,’ he said.
According to him, he served in Afghanistan, Iraq, and Israel before he was
posted to Ukraine.

Asked whether the United States appointed him as ambassador to Ukraine
specifically because it considered the situation in Ukraine to be critical,
Taylor said this was not the case.

According to him, his predecessors in the post of ambassador to Ukraine
envied him for his appointment to the post when he was being sworn in.

Taylor intends to tour Ukraine for some time, visiting the eastern and
western regions of the country. However, he said that his first action would
be to travel to the south. Taylor said he needed to speak to residents of
various regions of Ukraine.

As Ukrainian News earlier reported, Taylor took office on June 21, when he
presented his credentials to President Viktor Yuschenko. Before his
appointment as ambassador to Ukraine, Taylor was the Department of

State’s coordinator for reconstruction and stabilization.     -30-
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11. UKRAINE:  COOPERATION STRATEGY WITH INTERNATIONAL
          FINANCIAL ORGANIZATIONS APPROVED BY CABINET

Ukrainian News Agency, Kyiv, Ukraine, Wed, June 21, 2006 (19:57)

KYIV – The Cabinet of Ministers has approved a cooperation strategy with
international financial organizations for 2006-2008. The Strategy was
approved by Cabinet of Ministers Resolution No. 844 issued on June 20.

The Strategy provides for a gradual transfer from projects for state support
for national budget and economic reforms to self-sustaining investment
projects enabling the introduction of effective free-market economic
management instruments, infrastructure development and enhancement of
competitive capacity of Ukrainian goods and services.

Ukraine is going to enhance its role in preparation for and implementation
of projects, in particular at their phases involving project initiation and
soliciting international technical assistance.

The Cabinet of Ministers intends to reduce to the minimum new government
loans for implementation of institutional projects, excepting those
associated with security of human lives, health protection and education.

In cooperation with the International Monetary Fund (IMF), the Cabinet of
Ministers, given that macroeconomic situation has stabilized in Ukraine,
intends to proceed to relations without credits, in particular consultations
on shaping macroeconomic policy and soliciting technical assistance for
implementing recommendations to be given on issues of this kind.

In cooperating with the International Bank for Reconstruction and
Development (IBRD), the Cabinet of Ministers is going to concentrate on the
implementation of investment projects for the development of infrastructure,
municipal economy and energy, and enhancing competitive capacity of the
private sector of the economy and upgrading information and communications
technologies.

The Cabinet of Ministers is planning to step up cooperation with the
Multilateral Investment Guarantee Agency (MIGA) by providing foreign
investors operating in Ukraine with guarantees against noncommercial risks
and creating institutional and technical conditions for creating an
investment friendly environment.

The Cabinet of Ministers wants to get more credits from the European Bank
for Reconstruction and Development (EBRD) for the development of the public
and private sectors of the economy, while crediting of small-scale and
medium-scale companies remains a priority.

The Strategy treats as priority Ukraine’s entry to the Asian and Pacific
Bank for obtaining investments for the development of transport,
telecommunications and energy and financial sectors, as well as industry and
foreign trade.

The document also provides for Ukraine’s participation in the creation of
the Baltic Sea-Black Sea-Caspian Sea Bank for Development to ensure
long-tern funding of infrastructure projects in Ukraine.

The Cabinet of Ministers has directed the Economy Ministry to proceed from
the Strategy in drawing up drafts of annual plans for cooperation with
international financial organizations.

As Ukrainian News reported before, Ukraine is a member of the IMF, IBRD,
IFC, MIGA, the International Development Association (IDA), the Black Sea
Bank for Trade and Development and the EBRD. Membership in these
organizations opens the gateway to relatively cheap low-interest credits.

According to statistics available as of May 1, 2006, over the overall period
of cooperation with international financial organizations, Ukraine secured
USD 11 billion worth of credits, including USD 4.41 billion from the IMF,
USD 4.3 billion from the IBRD, USD 470 million from the IFC, USD 97.5
million from the Black Sea Bank for Trade and Development and EUR 2.27
billion from the EBRD.

In 2005, Ukraine inked framework agreements with the European investment
Bank and the Nordic Investment Bank.                   -30-
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12.  “THE SECURITY SERVICE OF UKRAINE? SBU CHIEF IHOR
DRIZHCHANYY HAS THE SBU SERVE THE CLANS AND MOSCOW”
   SBU Employees themselves speak of the Degradation of the Department
   Ukrainian Security Service (SBU) Sold Out To Certain Political Parties

ANALYSIS & COMMENTARY: By Vira Chorna
Ukrayina Moloda, Kiev, in Ukrainian 1 Jun 06, p 1, 7-9
BBC Monitoring Service, United Kingdom, Tue, Jun 06, 2006

The Ukrainian Security Service is compromised by leadership which has sold
out to certain political parties, a newspaper has reported. The author said
that concerned officers in the Security Service [SBU] had no where to go
with their complaints but to the media, since their appeals were not being
forwarded to President Viktor Yushchenko.

In particular, career officers are allegedly disturbed by the appointment of
Ihor Drizhchanyy as chief of the SBU in late 2005, she said adding that many
recent appointments show that two opposition parties have been placing their
people in the Service to their own political benefit.

She also said that Moscow became privy to many weaknesses in the Service
when a former officer sought refuge and gave up valuable information in
return.

The following is the text of the article by Vira Chorna, entitled “The
Security Service of Ukraine? SBU Chief Ihor Drizhchanyy has the SBU serve
the clans and Moscow”, published in Ukrayina Moloda on 1 June, subheadings
appear as in the original:

It was a sunny day in December 2005. The centre of Kiev. A 600-series
Mercedes parked on Malopidvalna Street and an important man, looking no less
imposing than the car, got out. He walked 100 meters on his own to the turn
onto Volodymyrska Street, watching carefully around him. He was met near the
stone building of the Security Service of Ukraine [SBU] by another
important-looking man. They went inside… [ellipsis as published]

The gentleman from the Mercedes is Viktor Pshonka, the Deputy
Prosecutor-General of Ukraine back during the Orange Revolution (they say he
was one of the people to initiated the “strong” means of quelling the Maydan
[protests on Independence Square in Kiev at the height of the Orange
Revolution which brought current President Viktor Yushchenko to power in
2004], and former prosecutor from Donetsk Region and now – one of the
prominent members of the [opposition] Party of Regions and messenger of
[major Party of Regions figure] Rinat Akhmetov and Co.

Near the “office” he was met by Anatoliy Mudrov – the current deputy chief
of the SBU and in the past another employee of the prosecutor general’s
office. Mudrov took Pshonka to SBU chief Ihor Drizhchanyy – they were to
have a meeting. What did they talk about? We can only guess.

Of course, there is nothing criminal in the chief of a state body, even the
Security Service, meeting with an emissary of the opposition. At the same
time, the rendezvous of the SBU chief and [Party of Regions leader Viktor]
Yanukovych’s trusted man, took place in a confidential regime and was not a
one-time event.

Before Pshonka, Drizhchanyy met another Donetsk messenger [the Party of
Regions being primarily associated with politicians from Donetsk Region],
Mykola Obikhod (under [former President of Ukraine Leonid] Kuchma – the
odious deputy prosecutor-general and chief of the SBU).

There was also a secret meeting between Ihor Drizhchanyy and the leadership
of the United Social Democratic Party of Ukraine [USDPU] and the Bloc of
Volodymyr Lytvyn [former speaker of parliament] at the SBU’s “special site
number one” in Chapayivka near Kiev.

These are links in one long chain which the current leader of the SBU has
since a certain time decided to tie himself to “Blue-and-White” forces [the
Party of Regions campaign colours were blue and white as opposed to
Yushchenko’s famous orange], just in case. We will talk about this picture a
bit later.

Talk about the degradation of the SBU is not something journalists have
invented. SBU employees themselves speak of the degradation as another “de-“
in the development of the country’s main special services – after
de-communization, de-KGB-ization and de-militarization. And they not only
speak about it, they try to sound the alarm, they write reports to the
leadership of the agency, to the government and the state.

It is quite another thing that Presidential Secretariat chief Oleh Rybachuk
has very friendly relations with Ihor Drizhchanyy, and so letters from
well-known and honest officers are often ignored at Bankova Street [the
address of the secretariat] and they do not reach the president to whom they
are addressed.

What are concerned SBU employees to do? Make contact with the press. And
that is how journalists at Ukrayina Moloda became privy to a topic which is
complicated and nearly out of reach of the media.

THE MISTAKE MADE IN SEPTEMBER
We remind our reader that the 44-year old Maj-Gen of Justice, Ihor
Vasylyovych Drizhchanyy came to the SBU from the prosecutor’s offices where
he had worked since 1987. He grew to become a deputy prosecutor-general. At
Volodymyrska 33, he became deputy chief of the SBU under Ihor Smeshko.

According to one version (which he himself confirms, though not very
actively), during the heat of the Orange Revolution Drizhchanyy was the
co-author of a loud statement of a group of SBU officers in support of the
democratic expression of the popular mass of people, this appeal was typed
on his computer and then agreed with [then Presidential Chief-of-Staff
Viktor] Medvedchuk, but Ihor was not able to get to the stage on the Maydan
to read it simply because he got caught in a “traffic jam” of people not far
from the steps to the podium.

Yet, much ill has been spoken of his pre-revolutionary activity. Drizhchanyy
allegedly took direct part in following opposition figure Yuliya Tymoshenko
[subsequently prime minister before being dismissed in September 2005], and
“put pressure” on the fallen SBU general Valeriy Kravchenko who created a
scandal in Germany when he released information on attempts by the
then-leadership of the SBU to spy on the leaders of the opposition while
abroad and to pass that information to Kiev.

People also said Drizhchanyy was not against the infamous pogroms against
the opposition in Mukacheve [when the police beat the opposition during a
contested municipal election in the Western Ukrainian city]. And that
Drizhchanyy’s “patron”, the odious leader of the USDPU Viktor Medvedchuk,
was behind his transfer to the SBU. And about the largesse of money
Drizhchanyy made in a less-than-honest way.

The press service at Volodymyrska 33, unequivocally denies such talk about
its new leader, instead noting that it was under the efforts of Ihor
Drizhchanyy in fall 2004 that the SBU carried out only 12 “anti-terrorist”
searches against the [then-opposition] Pora activists instead of the 200
demanded by Bankova Street.

One should note that Ihor Drizhchanyy became the new chief of the SBU in
September 2005. Until then he quietly worked as the deputy to the
“revolutionary” chief of the SBU, Oleksandr Turchynov. Turchynov – one of
the leaders of the Yuliya Tymoshenko Bloc [YTB] wrote his letter of
resignation at the very beginning of the long, hard day when the president
[Viktor Yushchenko] cleaned the central authorities of Yuliya Tymoshenko,
her team and her government.

And Turchynov’s deputy was named with surprising speed – the head of the
presidential secretariat introduced the new chief of the SBU Ihor
Drizhchanyy in a few hours. And President Viktor Yushchenko in presenting
the leader of the special services said, “I am concerned that the fight
against corruption is being nullified today… [ellipsis as published]

You must give an answer, which would confirm to the facts (the matter
concerned accusations by the former state secretary [Oleksandr] Zinchenko
against [then secretary of the National Security and Defence Council Petro]
Poroshenko, [presidential aide Oleksandr] Tretyakov and others – author). I
demand a thorough review of every statement. An officer’s honour must speak
from your lips”.

It must now be admitted that the appointment was a mistake. Negative
predictions regarding Ihor Drizhchanyy working in the high position have
been confirmed. And in raising the question of Drizhchanyy’s responsibility
in the post of chief of the SBU one must also ask about the responsibility
of those people who recommended him for Yushchenko’s confirmation.

SBU GREG CARDINAL RADCHENKO AND “HAND OF MOSCOW”
How the SBU leadership carries out security is certainly an intriguing
question. At the same time it is also interesting: who is carrying out this
leadership? A close look shows that the SBU is not being led by its chief,
Drizhchanyy.

Though it is not pleasant to admit, after the victory of democracy on the
Maydan, the SBU slipped a bit from under state control. And the worst part
is that in this situation, state bureaucrats are not trying to steer
Volodymyrska, but rather clans and even people from abroad.

Concerning the latter, of course it is Moscow. And our home-grown clans –
yes, the same ones which tried to influence the SBU with their wide presence
within the ranks of the authorities – are now influencing the SBU while
being in the opposition. We are talking about the USDPU and the Party of
Regions.

We will talk about the mechanism of influence a below, but for now we must
say that Ihor Vasylyovych has turned out to be a weak leader. Perhaps the
reason is his weakness for the green serpent [alcohol] (and even Mykhaylo
Potebenko mentioned his dangerous high-alcohol content habits when he was
prosecutor-general and tried to “remove” his then-subordinate from the shot
glass).

Perhaps, the dependence is even more serious being attached to the human and
financial factor. Perhaps there is something to the circumstance that Ihor
Vasylyovych comes from the prosecutor’s offices and has never become one of
the SBU’s “own”…[ellipsis as published] Whatever the case, Drizhchanyy is
not the most notable figure in the current SBU.

If one could look at a schematic showing the ties within the special
services and the influence on the SBU from without, then you will see that
the biggest arrow points to Volodymyr Radchenko – the very same one who
headed the SBU under Kuchma, from 2003-2004 and who was first deputy
secretary of the NSDC from 1998-2001. After this short “intermission”, the
well-versed special services man Radchenko returned to leadership at
Volodymyrska in a new, more refined form.

Now Volodymyr Ivanovych [Radchenko] is bit by bit developing not only his
own business, but putting people in place in the SBU to his advantage and to
the advantage of his partners, in particular influencing the appointments of
deputy SBU chiefs and the leaders of regional departments. And Radchenko’s
partners and friends include not only Ukrainian tycoons, but also long-time
comrades from Moscow.

In particular, there is information that Volodymyr Ivanovych was in the same
university class with the current head of the Russian Federal Security
Service [FSB] Nikolay Patrushev, and was even his neighbour in the
dormitory. And as they say in Moscow, “friendship is getting stronger”.

In December last year, Radchenko once again flew to visit Patrushev. There
is also information that runners make regular flights to Moscow from
Kharkiv, which currently plays a special role in the SBU hierarchy – that
they agree on certain steps on managing the Ukrainian Security Services and
confirm personnel proposals and so on.

Besides other things, Volodymyr Satsyuk, the deputy chief of the SBU of 2004
and one of the participants in the “poison” dinner with Viktor Yushchenko
[the evening in September 2004, when Yushchenko had dinner with members of
the SBU leadership immediately prior to becoming seriously ill from apparent
dioxin poisoning] is living in Moscow.

He is supposedly “on the run”. And he is now one of the important
participants in the polygon over Volodymyrska 33, Drizhchanyy, Radchenko and
several Ukrainian opposition figures and influential Russian businessmen.

TURNCOAT WHO HOOKED VOLODYMYRSKA 33 IS HOOKED BY FSB
If one is to speak of the “hand of Moscow” in influencing the leadership of
the SBU, then one must bring up one other scandalous story – one linked to
former SBU Col Valentyn Kryzhanovskyy. The media wrote a lot about him last
year. In 2004, Kryzhanovskyy came to the SBU from the Defence Ministry’s
Main Investigative Directorate, the so-called “Island”.

In the SBU he was the assistant to the chief of the Directorate K – on
fighting corruption and organized crime, one of those responsible for
selling confiscated goods and arrested and unclaimed property.
Kryzhanovskyy, working in one of the investigative operations groups, says
he initiated a criminal case on the illegal compensation of VAT worth nearly
330m hryvnyas to nearly 40 companies.

When the former colonel drew closer to overly influential persons, he began
to get shunted off the matter and finally was dismissed, as Kryzhanovskyy
said in an interview with journalist Oleksandr Korchynskyy, “in line with
personnel shuffles”.

And not long after, a case was opened against him – for his allegedly
illegally aiding a close firm in acquiring a large shipment of goods for a
clearly deflated price while in charge of confiscated goods. After this the
show began, and he was called in for questioning with violations of
procedure and an order for arrest.

Kryzhanovskyy, who was especially trying to hide, was detained on the
Ukrainian-Russian border and was put into a remand centre. He left on bail
of 225,000 hryvnyas (he allegedly incurred losses to the state in this
amount), and when the persecution resumed he stated rather accusingly that
someone wanted to settle a score with him and he finally left for Russia.

He sought asylum there and got it in return for valuable information
concerning the Ukrainian Security Services, intelligence, state officials
and so on. It must be said that this was a colossal blow to the SBU. Now
Moscow has additional levers of influence on the Ukrainian Security Services
since Mr Drizhchanyy and the other boys are firmly hung on the hook of
compromising material.

THE POLITICAL GAMES OF THE SBU-MEN
Left out of the game, or more than a game?” – that was the title of Ihor
Drizhchanyy’s interview in Zerkalo Nedeli not long after being appointed
chief of the SBU (14 October 2005). The parliamentary election had only then
just begun and Ihor Vasylyovych practically took certain political
obligations upon himself in that interview.

“The role of the SBU lies in the task of defending statehood and the
constitutional regime. In this difficult process we have to be equally
distant from all political centres and all forces which possibly would
desire to influence these processes by making use of the Service. We should
be participants, we should observe the situation. And influence it in such a
way that it remains as stable as possible.

In the worst case for us, we can take upon ourselves the role of
intermediates between sides in the conflict in order to make it less severe,
less radical and to in no case allow the expression of extremism or anything
that would then harm everyone”.

And one more citation, a bit lower in the text: “The regionalization of the
electoral process is very clear. I am concerned by what is being called a
schism. It is of grave importance to get rid of the reasons behind it. And
this must be done in a positive way with results”.

What has really happened? Unfortunately, both Drizhchanyy and the SBU under
his direction have not been able “equally distance itself from all political
centres”, instead it has become a “participant” in political “games”. And it
hasn’t chosen the best side.

In one report entitled “Information on negative processes in the SBU”, one
reads that within a month of his appointment as chief of the SBU, Ihor
Drizhchanyy began to work closely with the Party of Regions in the person of
Andriy Klyuyev (who was one of the main “shadow” players in Yanukovych’s
campaign headquarters in both the 2004 [presidential] election and the
parliamentary election [in 2006]).

SBU officers who are displeased with their boss’s sympathies explain this as
his desire to provide “for his own political future”. They say Drizhchanyy
saw how the Party of Regions’ rating was growing and naturally foresaw the
success of the Donetsk people in the election and strove to obtain their
support. And so at first the intermediary between Drizhchanyy and the Party
of Regions was his long-time friends Mykola Obikhod (now a consultant to
Klyuyev on security issues), and later – Pshonka.

Ihor Drizhchanyy has now fully blocked the investigation on criminal case
number 236 opened over criminal groups in Donetsk Region stealing VAT of
nearly 1bn hryvnyas, which was used in Viktor Yanukovych’s election
campaign.

THE HAND OF DONETSK: THE HOUSE THAT RINAT BUILTt
But the real story of the Party of Regions’ direct influence on the SBU
leadership began earlier. But when the above-mentioned Volodymyr Radchenko,
then chief of the SBU, in a not-quite-transparent and as people say, not
very legitimate manner sold wealthy and practical head of the Regional,
Rinat Akhmetov, a land plot located next to Volodymyrska 33 and which
belonged to the SBU.

Akhmetov built an elite residential building on this spot of land at the
address Patorzhynskyy 14, and the Donetsk elite moved in. On the top floor
there is Rinat Akhmetov’s own splendid penthouse with a swimming pool and
other comforts of the “new Ukrainians”. Under him is Volodymyr Radchenko’s
more modest residence.

In this way, we have a double closing of one of the clans and a state power
structure: on the one hand, business and property and on the other
“geographic” (if you stand near the turn by the SBU, which exits onto
Volodymyrska, you can see that this legendary structure of grey granite
practically “leans up against” Rinat and company’s impressive building).

And there is one thing more to the mutually beneficial relations of
Radchenko and the Donetsk people. One could suppose that the members of the
Party of Regions who are not used to make empty promises, are expressing
their thanks to Volodymyr Ivanovych for stepping aside for Viktor Yanukovych
as candidate for president.

Much was then said about the scenario of electing a “Ukrainian Putin” and
that Volodymyr Radchenko could be this person for our voters, since he was
one of the favourites and possible successors to Leonid Kuchma. Possibly the
election campaign for officer Radchenko from the SBU would have been more
successful than the twice-convicted Yanukovych. But the “single candidate
[Yanukovych]” was then put forward by the Donetsk people. And they are
thanking Radchenko in the proper way, even though they lost.

Personnel decides everything. And who is putting the personnel in place and
why?

It is easiest to see the presence of two centres of influence on the SBU
coming from the opposition by looking at the personnel appointments which
are proposed to it. Let us look at a few pretty instances which are based
not only on the reports of rank-and-file officers, but in official
documentation. Let’s take a look at who has come to leadership positions in
the SBU after Drizhchanyy’s promotion.

After Vasyl Krutov and Andriy Kozhemyakin – “Turchynov’s men” – were
dismissed, people were appointed to the deputy SBU chief posts who can be
called “Radchenko’s men”. These are Valeriy Pidbolyachnyy (who was the
director of the SBU in Ternopil region), Volodymyr Pshenychnyy, Vladyslav
Korshunov (who headed the fourth SBU department) and also Anatoliy Mudrov
from the general prosecutors’ who was mentioned above.

People say that Pidbolyachnyy and Pshenychnyy allegedly give “protection” to
Mr Radchenko’s business and that the SBU chief in Rivne Region Sadovnyk is
doing the same.  As for Korshunov, within business circles he is said to
have common interests with the former head of the Kharkiv state
administration, and one of the current leaders in the Party of Regions and
leader of the Party of Regions 2006 election campaign, Yevhen Kushnaryov.

Lt-Gen Mykola Kurkin became another deputy SBU chief; before he moved to
Kiev, he was the chief of the SBU in Dnipropetrovsk Region and from 2001 to
2004 he was a “first deputy” in the SBU directorate in Kharkiv Region. He is
considered to be accountable to Radchenko as well as to the head “Regional”
in Kharkiv Region, Vasyl Salyhin and local magnate Hoshovskyy and
Yaroslavskyy and is also believed linked to the Russian Chornyy brothers.

Forty-three-year-old Maj-Gen Andriy Mukhatayev became chief of the
Department of Internal Security at the SBU; he is considered accountable to
Radchenko and Kurkin. In the spring-time, he managed to be fairly cheerful
in an interview with Zerkalo Nedeli on the topic of “cleaning the ranks” in
the SBU.

But if you dig a bit deeper into his dossier, then you will come across such
entries as this: during the presidential campaign in 2004, Mukhatayev used
his wife Olena’s friendship with Yevhen Kushnaryov’s wife to assist in
establishing friendly contacts between then leader of the SBU’s foreign
intelligence Oleh Synyanskyy with the team of presidential candidate Viktor
Yanukovych.

The official situation was actively used to obtain information in the
interests of the Yanukovych headquarters, subordinates were invited to the
foreign intelligence service for various “acts of assistance” to the “future
presidential team of Yanukovych”. In the closing days of the Orange
Revolution – on 28 December 2004, Mukhatayev received the rank of general
for such services.

After the victory of the Maydan, Mukhatayev was removed from his position of
leadership over the intelligence department of the foreign intelligence
service, but in November 2005 with the assistance of the new deputy SBU
chief Kurkin, he was appointed director of the Department of Internal
Security at the SBU.

Those of an unkind bent point out that these two gentlemen both figure in
rumours of pocketing a sum of nearly 3m hryvnyas from sales of confiscated
goods. Of course, we do not believe that people in control of the
“cleanliness” of SBU employees after the Orange Revolution themselves got
spotted by corruption working for the SBU in Kharkiv at the end of the
1990s. And further legal development on this topic did not progress (the SBU
was then led by Leonid Derkach, Kurkin’s “patron”).

Now Mr Mukhatayev – an ambitious man and one not without selfish
intentions – kept close ties to SBU Chief Drizhchanyy, whom he convinced of
his own utter loyalty. Under the pretext of “cleaning the SBU of Turchynov’s
people”, Andriy Oleksandrovych made changes to the leadership of units in
Internal Security in 21 regions to his favour. Mukhatayev’s next place of
work was the post of chief of the SBU in Kharkiv Region and he received that
appointment Monday.

Before then, Maj-Gen Anatoliy Pavlenko had been in place there – another
Radchenko “representative”. But on 29 May a presidential decree was issued
and the day before yesterday Ihor Drizhchanyy introduced Pavlenko as the new
chief of the SBU in Kiev city. Before this, the Kiev SBU department had been
run by Oleh Chornousenko – a general whom the entire service respected and
still respects, and who was responsible for Viktor Yushchenko’s security
during the intense campaigns of 2002 and 2004.

“And who “swallowed” Chornousenko?!”, rank and file SBU employees can hardly
contain themselves, “Mukhatayev!”
As we see, in this case the “Drizhchanyy-Radchenko lobby”, running against
logic, has turned out to be President Yushchenko’s “dear friends”.

Korshunov, Kurkin, Mukhatayev and his people from the internal security
directorate, Semerov and Sokolov, as well as deputy chief of the economic
department “Oversight”, are allegedly linked to the dubious Maksym
Kurochkin – they all come from the SBU in one regions – Kharkiv. With all
the contingent ties and interests.

People who spoke with Ukrayina Moloda, to put it figuratively, call the
Rinat Akhmetov the “client and producer” of their appointment and Volodymyr
Radchenko the “director”.

            THE HAND OF SOCIAL DEMOCRATES: GODFATHER OF

MEDVEDCHUK’S CHILD HEADS ANTICORRUPTION DEPARTMENT

Another pole of influence on the SBU is a bit weaker than the Party of
Regions, but just as noticeable – the good old USDPU who besides everything
else have better in’s with Moscow.

People have already spoken of the common business interests of this clan and
Mr Drizhchanyy, and this has been actively disputed. Medvedchuk and
[Hryhoriy] Surkis have contact with Radchenko and with Pidbolyachnyy and of
course with Smeshko and Satsyuk. The latter couple represents USDPU’s in
with the SBU after the USDPU marvellously failed in the 2004 and 2006
elections.

You recall that [USDPU leader] Viktor Medvedchuk closed himself up in his
ranch in Transcarpathian Region and is writing his memoirs? One proof of the
opposite is the recommendation to President Yushchenko to appoint Ivan
Anatoliyovych Herasymovych as another deputy SBU chief.

This colonel, who is from Transcarpathian Region, has close relationships
with Medvedchuk senior and his brother Serhiy and is officially the
godfather of Viktor Medvedchuk’s child and gives this “family” all kinds of
support and receives the requisite thanks. Herasymovych was appointed to the
post of deputy chief of Department K under the “Medvedchuk-Smeshko-Satsyuk”
scheme and now people say he personally controls three “players” in Odessa
Region where structures belonging to Medvedchuk a [USDPU member Nestor]
Shufrych are allegedly active.

The leader of the USDPU had a great desire to elevate his child’s godfather
to the post of deputy chief of the SBU – as chief of the Main Directorate on
fighting Corruption and Organized Crime (“K”). Now there’s a lobby! With
this kind of godfather you don’t even have to win the election!

By the way, as far as former deputy SBU chief Volodymyr Satsyuk who is
carrying out his state duties in Moscow (when he is not relaxing at
resorts), the above mentioned Mukhatayev is allegedly “searching” for him.
It is not hard to predict the results of such “searches”.

And in wrapping up the topic of personnel policy in the “renewed” SBU, it is
worth publishing some letters which were given to President Yushchenko by
former SBU employee Oleksandr Vasylyovych Horyaynov, who is now a
businessman. Illustrating the arbitrariness of the “Office” with the example
of his being persecuted by the same SBU, Horyaynov draws conclusions about
Mukhatayev, Kurkin, and Drizhchanyy and the inappropriate level of attention
being given by the leadership of the country…[ellipsis as published]

“The leadership of the SBU is openly ignoring the policies of the high
leadership of the state”

If one was to speak of the state achievements of the SBU over the past
little while, one can note the reform of the SBU. But you cannot call it a
success.

According to the cries of some experts, the developments in reform have in
fact copied the old ones developed in 1991 and 1992, and which do not meet
the modern stage of development in the Ukrainian state or the social,
political and economic processes in the world and do not take into account
the real, existing threats to Ukraine’s national security.

They say that the idea of making the special services less effective by
“reforming” it belongs to Mykola Obikhod and was supported by Ihor
Drizhchanyy at the beginning of 2005.

The project for reforming the SBU which they prepared and which envisages
separating and closing several key units, including rejecting carrying out
law enforcement functions (fighting terrorism, espionage, corruption and
organized crime and so on) and provoked deep indignation among real
professionals.

And in closing it is worth quoting confused, but honest – as an axe –
quotations from some letters of simple SBU officers addressed to the head of
state.

During the Ukrainian presidential election, the middle ranks of the
leadership of the SBU and the operative ranks, in fulfilling their oath of
allegiance to the people of Ukraine, sincerely upheld that people’s
democratic choice. These employees hopes that the supremacy of the
constitution and the laws of Ukraine would prevail in the state and that the
direction of the SBU’s work would change positively…[ellipsis as
published]

However, the appointment of Ihor Drizhchanyy has been perceived extremely
negatively by the majority of the SBU employees, who know him to be a loyal
representative of the former authorities, unprofessional and a person with a
low moral and business nature.

He does not have the experience of leadership in state bodies in general or
in organizing the law enforcement activities of the SBU in particular.
During his work in the Service, he was known for the brutal persecution of
officers who infringed on his personal business interests…[ellipsis as
published]

As chief of the SBU at the present time (speaking of the period of the
parliamentary election, when Drizhchanyy played to the Party of Regions –
author), Ihor Drizhchanyy practically paralysed the work of the SBU, which
did not carry out its functions, including objectively informing the
president of threatening internal and external social and political
processes which encroach on the constitutional order in Ukraine…[ellipsis
as published]

The leadership of the SBU is openly ignoring the policies of the higher
leadership in the country and is actively engaged in issues of its own
future employment (secret negotiations are being held with various political
forces)…[ellipsis as published]

The intentions to ruin the SBU, which are cased in slogans of “reforming”
it, will lead to the violation of the legal balance within the state, which
is expressed in weakened authorities, and an increase in tension in society.

These processes have an extremely negative influence on the body of officers
in the SBU. As a result, there is a change of orientation in patriotically
inclined officers who see no sense is prolonging their loyal service for the
good of the people of Ukraine.”                 -30-

———————————————————————————————–
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13. VARTKES’S LIST & THE VICTIMS OF THE ARMENIAN GENOCIDE
         Of the million or more Armenians executed by Ottoman Turks 90 years
          ago, thousands had insurance from New York Life. A slip-and-fall
        lawyer uncovered the list of policyholders and, by forcing the company
                   to pay their heirs, gave voice to the victims of genocide.

Article By Michael Bobelian, Legal Affairs magazine
The Magazine at the Intersection of Law and Life
New Haven, Connecticut, March/April, 2006

VARTKES YEGHIAYAN ENTERED THE LOS ANGELES FEDERAL
OURTHOUSE more nervous than on any other day of his career. He wore
the fraying navy suit that had seen him through many victories in the
slip-and-fall cases that he typically handled. Sixty-five, his hair white
and body plump, the lawyer Yeghiayan was 14 years into a different kind of
case, a class action lawsuit against an insurance company that had failed to
honor his clients’ policies.

To the surprise and anger of his colleagues, Yeghiayan had turned down a
substantial settlement seven months before. For reasons that don’t often
enter into the calculations of a legal dispute, Yeghiayan wanted more for
his clients than the amount the insurer had offered.

His ancestors were Armenian, and for most of his life he had heard stories
of a day in April 1915 when Ottoman soldiers rounded up Armenian families
to begin a slaughter that would last for eight years and claim at least a
million lives.

His clients, some 2,300, were heirs of the slaughter’s victims who had
purchased life insurance policies that had never been redeemed. Yeghiayan
wanted the insurer to pay his clients so that they would get the money they
were owed, but also as an act of public recognition for a genocide that most
Armenians believed had been too little noticed—and that its perpetrators had
consistently denied.

In Yeghiayan’s view, a settlement could serve both purposes only if it were
large enough to attract the world’s attention. Otherwise, he would seek the
recognition that his people deserved by trying the case in court.

That November morning in 2001, Yeghiayan was on his way to a last-minute
settlement conference before a hearing on whether his case would be
dismissed. He walked into a small room off the lawyers’ lounge near United
States District Judge Christina Snyder’s courtroom. It was filled with
lawyers from each side of the case.

The judge had given them 30 minutes to see if they could reach agreement,
but Yeghiayan didn’t need that much time. The entire group had worked out
terms that they hoped he would accept, and a lawyer slid a settlement
proposal across the table.

“I’m not going to sign,” Yeghiayan said.

THE SOUTHWESTERN CAUCASUS IS A REGION OF RUGGED
MOUNTAINS between the Black and Caspian seas, with deep valleys that
intersect like the boulevards of a
city. Mount Ararat dominates the landscape and marks the center of the
ancient Armenian civilization. In the spring, melting snow and ice flow down
the slopes to rivers like the Aras. The ground surrounding the mountain is
dark with lava and scattered with embedded stones—some beige and hard,
others red and brittle, still others glossy and black.

Armenians emerged in the Caucasus during the first millennium B.C. It is not
known whether they traveled there from Asia Minor, as the ancient Greek
historian Herodotus claimed, or were native to the land. In A.D. 301, King
Trdat III made Armenia the first Christian nation. Mythology has it that he
converted his empire from paganism in gratitude to a Christian monk, who
made the king human again after he went on a killing spree and was changed
into a wild boar.

About a century later, another monk created the Armenian alphabet, and the
combination of a written language and a state religion solidified the
Armenian culture, allowing it to resist assimilation by Arabs, Tatars, and
others who invaded Armenia over the following centuries.

By the 1800s, most Armenians lived under Ottoman rule. The few inhabiting
the Turkish capital, Constantinople (now Istanbul), were among the empire’s
wealthiest merchants and intellectual elite, while the rest worked as
farmers and artisans in regions to the capital’s south and east. The Islamic
Ottomans treated the Christian Armenians as second-class citizens, though,
and Armenian demands for equality soon shattered what had long been a
largely peaceful relationship between the peoples.

In 1894, the growing tension provoked Armenians to protest against their
Turkish rulers, and Sultan Abdul Hamid II, the head of the Ottoman Empire,
ordered mass killings of Armenians. The massacres started in the Black Sea
city of Trebizond, 650 miles east of Istanbul, and quickly spread throughout
the empire. The deadliest incidents occurred in Urfa, near the Syrian border
to the south, where soldiers burned a cathedral with 3,000 Armenians inside.

Between 100,000 and 300,000 Armenians perished in the violence from 1894 to
1896. In 1908, troubled by growing disorder in the sprawling Ottoman Empire,
a group of army officers called the Young Turks seized power from Abdul
Hamid and promoted pan-Turkism, a nationalist ideology that advocated
eliminating minorities like the Armenians. In their first year in power, the
Young Turks orchestrated the execution of between 15,000 and 25,000
Armenians.

As this new wave of violence swept the empire, a middle-class merchant named
Setrak Cheytanian watched with horror from his home in Kharput, a city in
central Turkey and a stop on the Silk Road, an ancient system of caravan
trails from China to the Mediterranean Sea. Fearing the worst for himself
and wanting to provide for his wife, parents, and two children, the
35-year-old Cheytanian bought a life insurance policy from an agent of New
York Life Insurance Company in July 1910.

For an annual premium of 155.73 French francs, the policy obligated the
company to pay Cheytanian’s named beneficiaries 3,000 francs (about $580
at the time) plus dividends upon his death or, if he outlived the policy’s
20-year term at his request.

Life for Cheytanian and other Armenians grew more precarious as World War I
approached. Concern for the Christian minority had prompted France and
Britain to support Armenian rights and, to some extent, restrain the
Ottomans from greater abuses. But in 1914, Turkey entered World War I on
Germany’s side, cutting off Armenians from their European supporters.

At the insistence of her father and her brother-in-law Cheytanian, Yegsa
Marootian and her 9-year-old daughter, Alice, left Kharput for New York City
to join Cheytanian’s brother, who had emigrated there several years before.
As they left, Cheytanian gave Yegsa his life insurance policy, figuring that
if anything happened to him, it would be easier for her to collect on the
policy in New York, where the insurer was headquartered.

VARTKES YEGHIAYAN WAS BORN IN 1936 to a wealthy family in Ethiopia
hat sheltered him excessively, even from the family’s history. His mother’s
close ties to the nation’s imperial family—her godmother was the wife of the
Emperor Haile Selassie—allowed him entry to the best schools and, at age 11,
he attended an American boarding school in Cyprus.

There he befriended many Turkish students, and he was puzzled when some of
his fellow Armenians would call the Turks “murderers.” Why they should be
called murderers remained a mystery for Yeghiayan through high school and
into college at the University of California, Berkeley, where his father
insisted that he go because, his father explained, “The future is in
America.”

Yeghiayan started as a pre-med major at Berkeley and switched to history, a
course of study that might have explained the connection between Turks and
murder, but Yeghiayan’s teachers never mentioned the topic. Other Armenian
students told him stories of their families’ hardships in Turkey, and he
pretended to know what they were talking about, offering the little he could
gather from his reading about Turkey at the library.

But it was not until 1961, when his father died and he attended the funeral
in Ethiopia with his relatives and the aging friends of his father, that
Yeghiayan began to understand his family’s—and his people’s—unspeakable
past.

In the early days of World War I, when the Ottoman military included
Armenian soldiers, an assault on Russian forces at Turkey’s eastern front
backfired, costing the Turks about 90,000 men. Humiliated and looking for a
scapegoat, the Turkish commander blamed the treachery of Armenian soldiers
for the disaster and arranged for their expulsion from the military.

At about the same time, Turkey’s leading Islamic cleric declared a jihad, or
holy struggle, against all Christians except those living in Germany and
other Turkish allies. By 1915, the Armenians were isolated, largely unarmed,
and the targets of a religious death warrant. Dr. Khachig Boghosian, a
prominent psychologist and leader of the Armenian community in Istanbul,
described in his memoirs what happened on the night of April 23:

After supper, I went to the house of my neighbor . . . and we passed the
time playing backgammon and piano. I left and came home at 1:30 a.m. and
went to bed; everything was calm, both inside and outside of the house. I
had just lain down and was on the verge of falling asleep, when the outside
doorbell rang loudly three times. My sister Esther hurriedly went
downstairs, opened the door and, after exchanging a few words, rushed
upstairs and knocked on my door, telling me that the police wanted me.

Similar scenes played out across Istanbul as 250 Armenian leaders were
arrested and sent to camps in central Turkey. The head of the Armenian
Church pleaded with the United States for help. At the request of America’s
Secretary of State William Jennings Bryan, the U.S. Ambassador to Turkey,
Henry Morgenthau, asked Turkish leaders to stop their campaign against the
Armenians.

His appeals were ignored, and the United States, then neutral in the war it
would enter two years later, could only repeat its request. The Turks began
to execute Armenian leaders across the empire, hoping to preclude any
organized resistance to the massacres that it planned to undertake soon. The
Young Turks declared that they would make Turkey for the Turks alone.

Throughout the spring and summer of 1915, Turkish death squads
systematically assembled large groups of Armenians in Erzerum, Kharput, and
other Armenian enclaves and hung or shot the adult men. Among the dead in
Kharput was the merchant Setrak Cheytanian.

The gangs then evicted women and children and forced them to march through
the desert to camps in central Turkey and, finally, to the outskirts of the
Ottoman Empire in what is now Syria. Carrying almost nothing to eat or
drink, the deportees fought over provisions during the marches.

All were vulnerable to the kidnappings, rapes, and murders that the Turks
and Kurds guarding them committed at random. Countless women were sold
as concubines. Children were pried from their mothers’ arms and given to
Turkish families. Describing the deportations, Leslie Davis, the American
consul in Kharput, wrote to his superior in Istanbul, “I do not believe it
is possible for one in a hundred to survive, perhaps one in a thousand.”

By 1923, the Turks had systematically executed between 1 million and 1.5
million Armenians and evicted 500,000 more from a homeland that they had
occupied for 2,500 years. It was one of the century’s first instances of
mass extermination, and it would become known by Armenians, and later by
much of the world, as the Armenian genocide.

Among the genocide’s survivors was Yeghiayan’s father, Boghos. None of
Boghos’s friends who later attended his funeral could tell Yeghiayan exactly
how or when, in the course of the war and the massacres, Boghos lost his
parents and four sisters in Konya, a city in southwestern Turkey. Arab
nomads found the nine-year-old Boghos and disguised the green-eyed,
flaxen-haired boy with girl’s clothing so that he could survive in their
company.

In 1919, according to his friends, he walked out of the desert and appeared
in Aleppo, a city in northern Syria where tens of thousands of Armenian
refugees were gathered after the war. Going through his father’s possessions
after the funeral, Yeghiayan found in Boghos’s wallet a photograph showing
Boghos dressed in shepherds’ robes.

Yeghiayan had never seen the photo before, because Boghos had apparently
never shown it to any member of his family. He had shared his memories of
Turkey and the massacre of Armenians only with fellow survivors.

THE WAR AND THE DISAPPEARANCE OF SO MANY ARMENIANS

hopelessly complicated the efforts of the New York Life Insurance Company
to operate in Turkey. By 1921, an attorney at the company’s offices in Istanbul
had authorized the payment of death benefits on 1,300 of the 3,600 policies
held by Armenians, but, with no one trying to collect on the other policies,
“that was the closing of the book at that point,” William Werfelman Jr., a
vice president at New York Life, explained recently. The insurer pulled out
of Turkey later in 1921.

By then, Yegsa Marootian had been living in Staten Island, N.Y., for several
years, and her family had grown to include three children in addition to her
daughter Alice. Yegsa was largely cut off from news of Turkey and her
Armenian relatives, but somehow she had gotten word by 1925 that her
brother-in-law Cheytanian was dead. She had kept the life insurance policy
that he had given her, and, with her family financially strapped, Yegsa was
eager to collect the death benefit of 3,000 francs, by that time worth about
$143 (and roughly $1,600 today).

As Cheytanian had instructed, she contacted the New York headquarters of New
York Life about redeeming the policy, and a company agent told her that she
needed a certificate of inheritance—essentially, a death certificate—to
prove that Cheytanian had died. The agent recommended that she get one
through the Armenian Church, as many other Armenian beneficiaries had done.

There is no record of Yegsa’s response to the agent or of her life over the
following 30 years, but by 1956 she had moved to Los Angeles and obtained
the certificate of inheritance. According to a letter dated in June of that
year, New York Life instructed Yegsa to come to its offices in Pasadena,
Calif., to “discuss the matter” of her brother-in-law’s insurance policy.

AFTER GRADUATING FROM BERKELEY IN 1959, Yeghiayan worked

at a law firm and
earned a degree from Lincoln Law School of San Jose, a night school, in
1965. He soon joined California Rural Legal Assistance, a nonprofit group
that represented agricultural workers and, after Ronald Reagan became
governor in 1967, gained notoriety as a thorn in Reagan’s side. But
Yeghiayan’s attention never strayed far from his Armenian heritage.

The genocide stories that he had heard from his college classmates and his
father’s friends stayed with him, and, beginning in the late 1960s, on every
April 24—the anniversary of the genocide—he tried to lead Armenians in
demonstrations at the Turkish consulate in Los Angeles. “My view was the
Turks . . . tried to exterminate us and failed,” he explained. “On April 24,
we should remind them of that failure.”

When he could not be in Los Angeles, Yeghiayan joined Armenians wherever
he was to commemorate the loss. In 1980, after serving five years as an
assistant director of international operations for the Peace Corps in
Washington, D.C., Yeghiayan set up a law practice in Glendale, Calif. He
helped Armenians immigrate to the United States and handled personal injury
cases for the local Armenian community, which is now the largest in America.

But Yeghiayan says it was not until 1987, as he approached his 51st
birthday, that he stumbled on the cause that would become his passion. While
reading Henry Morgenthau’s memoir, he came across a passage that recounted a
conversation between the former ambassador to Turkey and his frequent
interlocutor, Mehmet Talaat Pasha, the Turkish interior minister and one of
the leading Young Turks. Talaat was committed to the elimination of
Armenians from Turkey, and while the slaughter was occurring, he mentioned
to Morgenthau the substantial business that New York Life and other American
insurers had done with Armenians:

“I wish,” Talaat now said, “that you would get the American life insurance
companies to send us a complete list of their Armenian policy holders. They
are practically all dead now and have left no heirs to collect the money. It
of course all escheats to the State. The Government is the beneficiary now.
Will you do so?” This was almost too much, and I lost my temper. “You will
get no such list from me,” I said, and I got up and left him.

Morgenthau was appalled by the Turk’s greed in trying to squeeze profit from
the Armenians’ slaughter, and the story caught Yeghiayan’s attention. What
happened to these policies? Were they ever paid? If so, to whom?

He investigated, beginning with a letter to the U.S. State Department. He
was referred to the National Archives, and after further conversations he
received 600 pages of correspondence and other documents on microfiche.
As best Yeghiayan could determine, the death benefits on thousands of
unredeemed insurance policies remained unpaid.

Yeghiayan saw how he could do more for Armenians than protest in front of
the Turkish consulate every April 24. By his calculation, New York Life and
other insurance companies owed the heirs of genocide victims millions, maybe
tens of millions, of dollars in benefits. So far, the world had largely
ignored the Armenian genocide.

Insurance benefits weren’t reparations, but they would give the victims’
heirs something of value and, more important, forcing their payment could be
a way of getting people to recognize that something horrible had happened in
Turkey more than 70 years before. “I knew we had to file a lawsuit,”
Yeghiayan said. “The question was, Do we have a client?”

THROUGH THE EARLY 1970s, few Armenians spoke publicly of the massacre,
and most of the survivors were interested more in rebuilding their lives
than in
demanding justice. That seemed fine to much of the world. The Soviet Union,
which had invaded and annexed Armenia in 1920, prohibited Armenians from
discussing the genocide. The Soviets did not want to stir nationalist
sentiments that might provoke unrest, and they were eager to gain Turkey as
an ally.

In the United States, the phrase “starving Armenians,” used in the 1920s by
mothers to remind their children why they should eat their vegetables, was
quickly forgotten. The American lapse of memory resulted more from neglect
than policy, but there was little incentive to remind people of the tragedy:
The United States wanted to remain an ally of Turkey, a valuable buffer
between the Soviets and the Middle East.

In Turkey itself, the government and most Turks denied that the genocide had
occurred, a position established soon after the founding of the Republic of
Turkey in 1923 by Mustafa Kemal Ataturk, Turkey’s most successful World
War I general and the leader of a nationalist movement to rid the nation of
minorities and foreign influence.

Under Ataturk, official history held that a purely Turkish republic emerged
from a war of liberation with imperialist Europe rather than, in large part,
from a campaign to cleanse Turkey of its Armenian minority.

By describing the nation as “a new birth,” this revision of history allowed
Turks to forget the past. It permitted them to avoid the shame and other
“psychological crises generated by the legacy of the past,” explained the
historian Taner Akcam, a visiting professor at the University of Minnesota
who, in the 1970s, became one of the first Turkish academics to publicly
acknowledge the genocide.

After 1923, Turkish schools taught that thousands of Armenians died during
World War I as an unfortunate consequence of disease, famine, and war.
Other Armenians were executed or deported because they participated in
insurrections, students were told, but total deaths and deportations
numbered far less than a million, because not that many Armenians lived in
Turkey at the time. The Turkish government reinforced these teachings by
prosecuting anyone who publicly questioned them, including Akcam, who was
sentenced in 1976 to 10 years in prison, though he escaped to Germany after
a year.

Despite a half century of reticence, many Armenians believed it was
essential to prove that the defining event of their history was not fiction
and, during the 1970s, they began to speak out. In the United States they
created national advocacy organizations like the Armenian Assembly, started
in 1972, and in 1975 they persuaded the U.S. House of Representatives to
designate April 24 as a national day of remembrance for the genocide (the
Senate did not pass the resolution).

Armenian terrorists struck Turkish targets in Europe, the Middle East, and
the United States, killing dozens of Turkish diplomats. In 1981, they took
60 hostages at the Turkish consulate in Paris. These and other efforts to
gain recognition for the genocide made Turkey even more determined to block
that recognition. In the United States, the Turks exploited their strategic
value as a military counterweight to the Soviet Union.

During a 1987 House debate, Congressman James M. Leath, a Texas Democrat,
explained his opposition to legislation that characterized the events of
1915 to 1923 as genocide. “It does not have anything to do with genocide,”
he said. “It does not have anything to do with our feelings against what
happened to the Armenians. The bottom line is that . . . the president of
Turkey, the Turkish people, say if you do this, you hurt your security.” The
legislation failed to pass.

THERE IS NO RECORD OF WHAT HAPPENED after New York Life invited
Yegsa Marootian to its Pasadena offices in 1956. She may not have gone, or
she may have failed to complete some other step required to claim death
benefits
under the life insurance policy. In any event, the company never refused to
pay her. When Yegsa died in 1982, the policy was still outstanding.

Alice Asoian, Yegsa’s oldest child, inherited the policy but thought little
about it until 1989, when she noticed an advertisement in a local newspaper
seeking “insurance papers.” The ad had been placed by Yeghiayan. It had been
running for several weeks, prompting dozens of local Armenians to send him
photos of deceased relatives but no insurance policies or other evidence
that the relatives were insured.

Yeghiayan despaired of finding a client who could get his lawsuit off the
ground, but then he received a phone call from Alice. When he visited her
home in Irvine, she brought out a shoebox containing the original life
insurance policy of Setrak Cheytanian, all the premium payment stubs, and
correspondence between Yegsa and New York Life dating back to the 1920s.
Yeghiayan, it seemed, had a client.

But the reality was not so simple. In 1994, as Yeghiayan prepared the
lawsuit, Alice died, and the policy’s beneficiary changed again. This time,
it was Alice’s brother, Martin Marootian. Fortunately for Yeghiayan, Martin
took to the role of plaintiff with enthusiasm.

A retired pharmacist and gentle-spoken grandfather, Marootian, 90, was proud
to recount his family’s saga. “This is the man in question,” he said during
a recent interview, pointing to his Uncle Cheytanian wearing a fez and a
walrus moustache in a 1905 photograph. Of the 11 Armenians in the photo,
only Marootian’s mother, Yegsa, and his sister, Alice, had survived the
massacre. He stressed that he appreciated the historic opportunity that the
lawsuit represented for him and for other Armenians. “I wanted,” he said,
“to tie the genocide to our case.”

YEGHIAYAN PLANNED TO MAKE THE CASE A CLASS ACTION

LAWSUIT on behalf of every
beneficiary of every life insurance policy purchased from New York Life by a
victim of the genocide. On the basis of historical records, he estimated the
class at 2,300 people. But the case presented a monumental challenge for
Yeghiayan and his four-lawyer firm in Glendale. His wife, who helped run the
firm, was an immigration lawyer, and Yeghiayan had worked mostly on small
personal-injury cases.

Alone, they could not cover the extraordinary expenses of a lawsuit that
would surely take years or handle the thousands of documents that would be
traded between the parties. Yeghiayan knew that he needed help, and in 2000,
after he filed the case in U.S. District Court in Los Angeles, he hired two
Los Angeles-area lawyers with experience in class actions and an interest in
seeing the Armenian genocide recognized. One was Brian Kabateck, whose
grandparents had survived the genocide. The other was William Shernoff, who
had worked on lawsuits seeking reparations for the Holocaust.

The team faced serious legal obstacles almost immediately. The biggest was
the expiration of the statute of limitations, the legally prescribed time
limit for suing over the policies. “The only way I was going to get around
the statute of limitations,” acknowledged Yeghiayan, “was to say . . . there
is no statute of limitations on genocide.” He knew it was a weak argument,
and he reached out again for help, this time to California’s politically
powerful Armenian community.

With the assistance of former California Governor George Deukmejian and
state Senator Charles Poochigian, both of Armenian ancestry, Yeghiayan
persuaded the California Legislature to extend the statute of limitations.
With that obstacle to the lawsuit removed, lawyers on both sides reached a
tentative settlement for $10 million in April 2001.

Kabateck, Shernoff, and New York Life issued press releases announcing the
settlement. But when Marootian learned of the deal, he rejected it, saying
the lawyers were pressuring him to give up. Yeghiayan immediately denied
having agreed to settle and accused his colleagues of going behind his back.
Later in April, he fired Shernoff and Kabateck.

The falling out threatened to end the lawsuit, but Yeghiayan persuaded Mark
Geragos, another lawyer of Armenian descent, to join him, and Geragos talked
Yeghiayan into reconciling with Shernoff and Kabateck. No sooner was the
team back together, though, than it had to face the motion to dismiss that
New York Life had filed before the settlement fell through. Among other
points, the insurer argued that the plaintiffs could not sue in Los Angeles,
because the policies specified French or English courts as the forums for
any legal disputes.

Yeghiayan’s team responded that it would be unfair to require elderly
clients like Marootian to sue abroad, but the lawyers feared that the case
was on shaky ground. Almost every suit tied to compensation for long-ago
injustices, from the Holocaust to American slavery to South African
apartheid, had failed because of problems like a lack of evidence. Though
this suit was based on insurance contracts, only Marootian had a documented
policy.

On November 28, 2001, the day of the hearing on the motion to dismiss,
Yeghiayan entered Judge Snyder’s courtroom minutes after rejecting the
settlement offer from New York Life. He placed his litigation bag on the
wooden table facing the judge’s bench and sat down. The Marootians were in
the audience behind him, and around them sat dozens of Armenians whom
Yeghiayan had invited.

As they waited for Judge Snyder to take the bench, her clerk appeared from a
side door and announced an unexpected development. There would be no
hearing, because the judge had reached a decision on the motion to dismiss.
The clerk approached the dozen or so lawyers with copies of the judge’s
written ruling, and, almost simultaneously, they turned to the last page of
the decision. “All I wanted to see was that last sentence,” Yeghiayan
recalled. It said, “NYLIC’s motion to dismiss . . . is hereby DENIED.”

THE VICTORY FORCED NEW YORK LIFE BACK TO THE

NEGOTIATING TABLE, but the case
was not over. The company still blamed the rejection of the April 2001
settlement on Yeghiayan, and it “didn’t trust him after that,” said
Shernoff. “They would say, ‘If he agrees today, how do we know he’s not
going to turn on us tomorrow?’ “

Mediations before two retired judges and dozens of negotiating sessions
failed to bring the parties closer, and in 2003, Geragos and Kabateck asked
California Insurance Commissioner John Garamendi to get involved. Garamendi
had helped negotiate settlements between insurance companies and plaintiffs
seeking reparations for the Holocaust.

In the fall, he flew to New York City to meet with Seymour Sternberg, the
CEO of New York Life, and after two sessions they broke the deadlock. In
January 2004, New York Life agreed to pay $20 million, twice the amount
offered in 2001. Yeghiayan knew that it was enough.

Dozens of documents gathered as evidence in the lawsuit—including the first
list of the names, addresses, and occupations of many of the massacre’s
victims—were put online, providing fresh details of the slaughter. Last
October, the French insurance company AXA settled a similar lawsuit (also
Yeghiayan’s) for $17 million, prompting Aram I, a spiritual leader of the
Armenian Church outside Armenia, to praise the two settlements for “raising
awareness” of the Armenian genocide.

Hundreds of newspapers and television stations reported the settlements and
mentioned the genocide. The Turkish Daily News, published in Ankara, was one
of the newspapers that ran a story. It referred to the genocide as “the
disputed events between the Ottoman Empire and its Armenian citizens at the
beginning of the 20th century.”
———————————————————————————————-
Michael Bobelian is a lawyer and freelance journalist based in New York.
———————————————————————————————
http://www.legalaffairs.org/issues/March-April-2006/feature_bobelian_marapr06.msp

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AUR#715 Jun 20 Ukraine 4 Saudi Arabia 0, Vital World Cup Win; Massive Deficit Of Gas; Crumbing Before Putin; Ukraine Rudderless; Puzzles; Norway & Ukraine

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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       

 
                                   EIGHTY-SIX DAYS
               SINCE UKRAINIAN PARLIAMENTARY ELECTION 
                   NO MAJORITY COALITION AGREEMENT YET
  The Action Ukraine Report (AUR) brings you the news from Ukraine.
     Send the AUR to your colleagues and friends..keep them informed!   
             
ACTION UKRAINE REPORT – AUR – Number 715
Mr. E. Morgan Williams, Publisher and Editor  
PUBLISHED FROM KYIV, UKRAINE, TUESDAY, JUNE 20, 2006
           –——-  INDEX OF ARTICLES  ——–
         Clicking on the title of any article takes you directly to the article.               
Return to the Index by clicking on Return to Index at the end of each article
1. UKRAINE OUTCLASSES SAUDI ARABIA, VITAL WORLD CUP WIN 
By Luke Phillips, Agence France-Presse (AFP)
Hamburg, Germany, Monday, June 19, 2006

2.     UKRAINE FLIPS AFTER FLOP, SHREDS SAUDI ARABIA 4-0
By Erica Bulman, Associated Press, Hamburg, Germany, Mon, Jun 19, 2006

3UKRAINE FACES MASSIVE DEFICIT OF NATURAL GAS THIS YEAR
RIA Novosti, Moscow, Russia, Monday, June 19, 2006

4.      UKRAINIAN GOVERNMENT TRANSFERS AIRPORTS TO
   TRANSPORT AND COMMUNICATION’S MINISTRY’S CONTROL
Interfax Ukraine, Kyiv, Ukraine, Monday, June 19, 2006

5.                                 CRUMBLING BEFORE PUTIN
OP-ED Columnist: Jackson Diehl, The Washington Post
Washington, D.C. Monday, June 19, 2006; Page A21

6.                               RESTAURANTS, TAXIS, GIRLS
     Grigori Yavlinsky diagnoses the Russian political-economic system                

By Mikhail Vorobiev, Vremya Novostei
Moscow, Russia, Wednesday, June 7, 2006

7PUTIN’S RUSSIA NO PLACE FOR DEMOCRATS TO HOLD A SUMMIT
COMMENTARY: by Konstanty Gebert
Leading Polish security analyst and commentator
The Daily Star, Beirut, Lebanon, Saturday, June 03, 2006

8.     UKRAINE RUDDERLESS AS POLITICAL SEAS GET ROUGHER
Factions take advantage of leadership void, push country toward Russian orbit
COMMENTARY:
By David Marples, The Edmonton Journal
Edmonton, Alberta, Canada, Monday, June 19, 2006

9.                                              PUZZLES
         The puzzle picture is still incomplete and the political leaders
                       have another weekend to put it together.
ANALYSIS & COMMENTARY:
By Yulia Mostovaya
Zerkalo Nedeli On The Web, Mirror-Weekly, No. 23 (602)
International Social Political Weekly, Kyiv, Ukraine, Sat 17-June 23 2006

10PREMIER OF ALBERTA VISITS LVIV AND IVANO-FRANKIVSK
                         TO ENHANCE SISTER PROVINCE TIES
              To announce Alberta-Ukraine genealogical research project
Maple Leaf News, Canadian Embassy in Ukraine
Vol. 69, Kyiv, Ukraine, Monday, June 19, 2006

11CANADIAN GUEST CONDUCTOR WES JANZEN LEADS THE KYIV
  SYMPHONY ORCHESTRA & CHORUS IN HAYDN’S “THE CREATION”
         Conductor Janzen’s ancestral heritage is German/Ukrainian/Canadian
By Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #715, Article 11
Kyiv, Ukraine, Tuesday, June 20, 2006

12VOLYN UKRAINIAN SONG & DANCE CO STARTS CANADIAN TOUR
       Performance embodies the best Ukraine has to offer in the art of spectacular
             folkloric dance, song, and music. Volyn is the Spirit of Ukraine!
Abaze Productions, Toronto, Ontario, Canada, Monday, June 19, 2006

13UKRAINIAN CULTURE CENTER OF LOS ANGELES PRESENTS
    “A MUSICAL SALUTE – GOD BLESS AMERICA” FRIDAY, JUNE 23
Bohdan Knianicky, President, Kobzar Ukrainian National Choir
Ukrainian Culture Center of Los Angeles
Los Angeles, California, Monday, June 19, 2006

14.     VISIT OF KATERYNA YUSHCHENKO TO LOS ANGELES
               We are lucky to call Kateryna Yushchenko our first lady

LETTERS-TO-THE-EDITOR: By Eugenia Dallas
Action Ukraine Report (AUR) #715, Article 14
Kyiv, Ukraine, Tuesday, June 20, 2006

15NORWAY AND UKRAINE – A RENEWAL OF AGE-OLD TIES
   We have a common past and we can build a common future. A European
      future. Ukraine’s traditions, beliefs and language have grown from the
        same cultural roots as those of other present-day European nations.
SPEECH:
Jonas Gahr Store, Minister of Foreign Affairs, Norway
Mohyla Academy, Kiev, Ukraine, Wednesday, 31 May 2006
=========================================================
1
UKRAINE OUTCLASSES SAUDI ARABIA, VITAL WORLD CUP WIN 

By Luke Phillips, Agence France-Presse (AFP)
Hamburg, Germany, Monday, June 19, 2006

HAMBURG  Ukraine outclassed Saudi Arabia in their crunch Group H game,
firmly setting their stuttering World Cup campaign back on track with a
convincing 4-0 win.

Redemption for the 4-0 mauling Ukraine suffered at the hands of Spain in
their opening match came in a brace of goals either side of the interval
from Andriy Rusol, Serhiy Rebrov, Andriy Shevchenko and the impressive
Maksym Kalinichenko.

The World Cup debutants, boasting four changes from the Spanish debacle,
showed their attacking intent against a toothless Saudi team from the start.

They took the lead in the fourth minute, Rusol’s knee connecting with an
inswinging Kalinichenko corner to send the ball bouncing between Saudi
goalkeeper Mabrouk Zaid’s legs and into the goal – the former Soviet
republic’s first at the World Cup.

Rebrov doubled the lead after 36 minutes, the former Tottenham and West

Ham player blasting in a curling 35-yard shot that left Zaid rooted to the spot.

Shevchenko made it three straight after the interval, the European
footballer of the year rising above his Asian counterpart Hamad
al-Montashari to head a home another Kalinichenko free-kick.

Kalinichenko got a deserved goal with six minutes remaining, calmly burying
a beautifully-weighted Shevchenko cross past a despairing Zaid.

“We really gave it our all today because it was our last chance. It was
either win or go home, and none of us wanted to do that,” said Ukraine
striker Andriy Voronin.

“We can play better and we showed that here. We played in a more attacking
way than against Spain when we were a bit too defensive.”

With the Saudi back four under constant pressure, Kalinichenko and Oleg
Rusov proved a real handful down the wings. The recalled Rebrov rifled in a
cross that former Dynamo Kiev team-mate Shevchenko couldn’t latch on to
after 10 minutes.

Shevchenko, the Ukraine captain who recently became Chelsea’s new record
signing, could have doubled the lead after 14 minutes, defender Ahmed Dokhi
glancing his header off the line into the path of Rebrov, whose follow-up
shot was blasted over the crossbar.

Shevchenko had yet a second chance four minutes later, just failing to get
on the end of a Kalinichenko through ball that split the edgy Saudi defence.
The captain almost became provider on 20 minutes, his cross just too fast
for the onrushing Andriy Voronin who had a clear sight on goal.

Saudi Arabia’s best chance of the first-half came in the 24th minute, a
curling cross by Dokhi deflected by Rusol towards goal and tipped around

the post by Oleksander Shovkovsky.

Any half-time pep talk from Saudi Arabia’s Brazilian coach Marcos Paqueta
was quickly dispelled by Shevchenko’s goal a minute after the restart.

But the Saudi team, bolstered by the introduction of attacking left-back
Abdulaziz Khathran, did manage to mount some attacks but the final touches
were clumsy and left ineffectual captain Hussein Sulimani wildly
gesticulating at his team-mates.

Omar al-Ghamdi’s one penetrating run into the Ukrainian box ended
disappointingly as well, the midfielder rightly shown a yellow card by
English referee Graham Poll for diving.

It was Kalinichenko who proved to be the real thorn in the sides of the
“sons of the desert”. One blistering 20-yard shot in the 64th minute hit the
crossbar, but his efforts were later rewarded with the fourth goal.

The result means that Saudi Arabia, whose squad play entirely for clubs in
the desert kingdom, have not won a match since their first appearance in the
1994 World Cup when they reached the second round.

They have a point from their 2-2 with Tunisia from their first match.  Later
Monday, Spain can make sure of their place in the last 16 with a win over
the north Africans.                                -30-

————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.  UKRAINE FLIPS AFTER FLOP, SHREDS SAUDI ARABIA 4-0

By Erica Bulman, Associated Press, Hamburg, Germany, Mon, Jun 19, 2006

HAMBURG, Germany – This time Ukraine scored the quick goal and meted

out the punishment. After a rude awakening in its debut against Spain last week,
Ukraine regained a measure of pride Monday by delivering a similar lesson to
Saudi Arabia for its first World Cup victory, 4-0.

Where the Ukrainians gave up a goal in the 13th minute against Spain, they
came back to score within four minutes against the Saudis. Where their prize
striker Andriy Shevchenko looked impotent against the Spaniards’ slick
defense, this time he both assisted on one score and added his first World
Cup goal. Where Ukraine surrendered meekly to the Spaniards, it won by the
same score against the outmanned Saudis in Group H.

“It was difficult to lose 4-0, but everyone understood at that stage that
the tournament was far from finished, and we had to concentrate on the next
two games if we wanted to go through,” Shevchenko said. “Ukraine is a strong
team and we have to show we are strong.

“The goals came at an important time. It was very good for us to have the
first very fast goal at the beginning of the game, and in the second half.”
So it didn’t take long for Ukraine to get its World Cup bid back on track.

Though Shevchenko was expected to lead his nation on the German grass, it
was defender Andriy Rusol who opened the scoring. Off a corner kick by Maxim
Kalinichenko in the fourth minute, Rusol’s one-timer off his left knee found
its way through the legs of Saudi goalkeeper Mabrouk Zayed.

The goal, Ukraine’s first of the tournament, prompted an emotional Blokhin
to scream in approval and violently whip the grass with his towel.

“It’s like the tale of Cinderella,” Blokhin said. “The pumpkin turned into a
beautiful coach and the rats into magnificent horses. That’s what happened
to us today and we were able to turn things around.”

Serhiy Rebrov scored one of the best goals of the tournament with a 35-yard
shot in the 36th minute. Zayed might have reached it on time but slipped on
the wet grass, letting the ball go into the top corner.

Barely 30 seconds into the second half, Shevchenko got his goal with a
header from Kalinichenko’s long free kick. The newly signed Chelsea striker,
only recently back from a nagging knee injury, appeared in much better form
than in Ukraine’s loss to Spain where he failed to take a single decent
shot. And Kalinichenko got his own, scoring on a pass from Shevchenko to
close the scoring.

The victory came on the anniversary of Blokhin’s first of two World Cup
goals exactly 24 years ago to the day, in the Soviet Union’s 3-0 victory
over New Zealand. His second came four years later in a 2-0 loss to Canada.
“This means as a coach I retained the fighting spirit I had as a player,”
Blokhin said.

Ukraine is the first former Soviet republic other than Russia to qualify for
the World Cup; Russia played in 1994 and 2002.

“I think our chances of going all the way are not huge because there are
stronger teams, but we will fight,” Blokhin said.

Blokhin knew his team had to go on the offensive in the absence of two key
defenders, Volodymyr Yesersky to a thigh injury, and Vladyslav Vashchyuk,
who served a one-game suspension for a red card he received against Spain.

Ukraine and Spain both have three points, while Tunisia and Saudi Arabia
each have one. Spain played Tunisia later Monday and Ukraine would be helped
by a Spanish win.

The Saudis didn’t manage one shot on goal, yet coach Marcos Paqueta was
content. “Our boys fought the whole game and never gave up,” he said. “They
tried and tried all game, and when you make your best effort you are
satisfied and your conscience is at peace. They should be able to get over
this and make a different impression next game.”

Saudi Arabia lost with Prince Sultan bin Fahd watching from the VIP box.
Saudi Arabia’s players prefer sultry temperatures, but the hot, muggy
daytime conditions they wished for turned into wind and rain just an hour
before the match, much to the Ukrainians’ delight.            -30-

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3. UKRAINE FACES MASSIVE DEFICIT OF NATURAL GAS THIS YEAR

RIA Novosti, Moscow, Russia, Monday, June 19, 2006

KIEV – Ukraine’s fuel and energy ministry said Monday the country faces a
massive deficit of natural gas this year, and said negotiations are needed
with Russia and Turkmenistan to solve the problem.

Ukraine is largely dependent on the two other former Soviet republics for
natural gas. At the beginning of the year it was involved in a bitter
pricing spat with Russia that was only resolved when the two countries’
leading energy companies reached an agreement after Russia briefly cut
supplies.

The ministry said the Ukrainian government should hold urgent negotiations
“with the Russian and Turkmen sides to sign contracts on supplies of 10.7
bln cu m of gas to Ukraine in 2006 to ensure the gas balance in the
country.”

Earlier Monday, the ministry said Fuel and Energy Minister Ivan Plachkov’s
visit to Turkmenistan had been postponed. Ukrainian officials also said the
country would seek a resumption of direct gas supplies from Turkmenistan.

Rosukrenergo, which was the key company in a deal to end a bitter price row
between the former Soviet neighbors early this year, is 50% owned by a
subsidiary of Russian energy giant Gazprom, with the other 50% held by
Austria’s Raiffeisen Investment.

In early January, Russian energy giant Gazprom signed a five-year contract
for supplies of 17 billion cu m of Russian natural gas to Ukraine.   -30-
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4.     UKRAINIAN GOVERNMENT TRANSFERS AIRPORTS TO
   TRANSPORT AND COMMUNICATION’S MINISTRY’S CONTROL

Interfax Ukraine, Kyiv, Ukraine, Monday, June 19, 2006

KYIV – The Ukrainian government has transferred the country’s airports to
the control of the Transport and Communications Ministry, which restored its
State Department for Aviation Transport (Ukraviatrans) in late May-early
June.

As Transport and Communications Minister Viktor Bondar reported, the

cabinet took the according decision during a meeting last week.

As earlier reported, the government restored Ukraviatrans in the structure
of the ministry with its resolution of May 23, which came into force after
President Viktor Yuschenko in mid June introduced the according changes to
the orders that regulate the activity of State Aviation Service.

Among Ukraviatrans’ main objectives – participating in the state policy of
civil aviation development, the organization of civil passenger traffic, the
regulation of the use of air space, participation in prospective projects
and aviation development programs.                    -30-

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5.                          CRUMBLING BEFORE PUTIN

OP-ED Columnist: Jackson Diehl, The Washington Post
Washington, D.C. Monday, June 19, 2006; Page A21

Vladimir Putin must wait another month before he can play the coveted role
of host to the world’s most powerful democratic leaders at the Group of
Eight summit in St. Petersburg. But already the Russian president appears
close to accomplishing his principal objective: preventing a serious
response by the G-8 to his autocratic domestic policies and imperialist
bullying of neighbors.

A couple of months ago Western officials were confidently promising that
Putin would not be allowed to strut among the elected presidents and prime
ministers in St. Petersburg without being reminded that he is not their
political peer.

At the insistence of the Bush administration, Russia’s interventions in
Ukraine, Georgia and Moldova — former Soviet republics trying to establish
themselves as independent democracies — were placed on the agenda of G-8
preparatory meetings. U.S. diplomats pressured NATO to allow the first steps
toward membership this spring for Georgia and Ukraine.

In May, Vice President Cheney delivered a tough speech spelling out the case
against Putin: his embrace of dictators in Belarus and Uzbekistan, his use
of energy supplies as a tool of political blackmail, his elimination of
independent voices in Russia. President Bush agreed in principle to visit
Kiev before St. Petersburg, in order to bolster Ukraine’s beleaguered
pro-Western democrats.

In the past few weeks, however, the Western will to stand up to Putin has
crumbled. At a NATO ministerial meeting 10 days ago, France and several
other European governments rejected U.S. talk of an “enhanced dialogue” with
Georgia or a membership action plan for Ukraine — even as Russian-backed
demonstrations in the Ukrainian Crimea forced NATO to withdraw U.S. Marines
who had deployed there for an exercise.

The White House then announced the cancellation of Bush’s visit to Ukraine,
largely because of the inability of the pro-Western parties to agree on a
new government.

Cheney’s speech, meanwhile, produced a backlash not just from Moscow but
also in Western Europe, where the vice president was roundly criticized as
too provocative. As for Russian neo-imperialism: Administration officials
say they are still seeking to put Georgia and Moldova on the agenda of a
pre-summit foreign ministers’ meeting next week, but they don’t expect to
succeed.

“We’re dead in the water,” says Bruce Jackson, a conservative close to many
in the administration who heads the Project on Transitional Democracies.
“Russia is playing a more aggressive, thought-out game, and they are
outplaying us.”

Putin’s strongest move was his agreement to participate in a pending Western
bid to freeze Iran’s nuclear program. In exchange for its support Russia won
the postponement of a U.N. Security Council resolution that would have
ordered an end to the program; it also delayed a looming rift between Russia
and the West over sanctions against Tehran.

As long as Moscow is nominally on board with its most important foreign
policy initiative, the Bush administration is constrained from pressing the
issues raised by Cheney — though officials insist that they haven’t been
dropped.

European policymakers don’t suffer such scruples. In Washington and in
Brussels, they are arguing straightforwardly that Putin’s noxious policies
should be tolerated — not just because of Iran but also because of Russia’s
importance as an energy supplier.

Brussels has been intimidated: At a meeting at the Black Sea resort of Sochi
in late May, Putin flatly rejected European Union appeals that Russia loosen
its stranglehold on pipelines carrying gas and oil to Europe and allow
greater European investment in Russian fields. Last week his government
confirmed that Western companies will be allowed only minority stakes in all
but the smallest projects.

Putin’s intransigence has produced a response that a U.S. official summed up
in one word: “appeasement.” A senior European official explained the logic
to me this way: For the foreseeable future, European economies will depend
on Russian energy.

But that energy won’t be available unless Russia makes huge new investments
in the coming years and chooses to continue marketing its oil and gas in
Europe, rather than China. “That means we have no choice but to support a
powerful center in Moscow,” the official said, “so that the necessary
investments are made and the supplies are available to us.”

Faced with such European fecklessness, U.S. officials appear to have
resigned themselves to a summit at which Putin will portray himself as ruler
of a resurgent superpower. Georgians and Moldovans will watch Western
leaders toast Putin while the Russian boycotts of their exports and
promotion of separatism in their countries go undiscussed.

Russian democrats and independent civil society groups will, if they are
lucky, content themselves with meeting mid-level U.S. officials in Moscow.

And viewers in the rest of the world might understandably ask, does the
Group of Eight exist to serve Russia? Or is there some other purpose?
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http://www.washingtonpost.com/wp-dyn/content/article/2006/06/18/AR2006061800901.html
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6.                           RESTAURANTS, TAXIS, GIRLS
     Grigori Yavlinsky diagnoses the Russian political-economic system
                  An oligarchic system and peripheral capitalism

By Mikhail Vorobiev, Vremya Novostei
Moscow, Russia, Wednesday, June 7, 2006

The political-economic system that has taken shape in Russia is
incapable of elevating Russia to a leading position internationally.
If this system is retained over the next few years, Russia will not
only remain a raw materials appendage forever, but also risk losing
its territorial integrity.

      The political-economic system that has taken shape in Russia is
incapable of elevating Russia to a leading position internationally,
alongside the developed nations. And if this system is retained over
the next few years, Russia will not only remain a raw materials
appendage forever, but also risk losing its territorial integrity.

      Those were the basic points made by Grigori Yavlinsky,
economist and Yabloko party leader, in a conference paper delivered
yesterday at the Russian Academy of Education.

      Until now, Andrei Illarionov had been the only prominent
Russian economist to provide medical-style diagnoses of the Russian
economy’s problems, unflattering for the authorities. Grigori
Yavlinsky chose to refrain from using medical terminology, but that
didn’t make his diagnosis any less serious.

     He described Russia’s economic system as a system of peripheral
capitalism: “It’s on the periphery of the world economy, and the world
economy makes use of this system. We are increasingly becoming a raw
materials appendage, to the East as well as to the West.”

      In Yavlinsky’s view, this system is primarily characterized by
the exaggerated development of informal relationships of various
kinds. “It’s not just the shadow economy. Almost the entire economic
system operates within the framework of informal relationships, not
the law,” said Yavlinsky. The scale of the informal economy is so
great that it also requires an informal system of government, the
essence of which is control over any and all property, including
private property, via access to resources and the judiciary.

     Yavlinsky said: “The state does not act as a guarantor for
contracts. There are no guarantees for property rights, so there is
a continual redistribution of property – and that means everyone’s
position is temporary.”

      These circumstances, in Yavlinsky’s opinion, constitute one of
the main reasons for the low level of investment in the Russian
economy, and consequently Russia’s insufficiently rapid economic
growth. Yavlinsky cited some statistics: Russia’s existing
infrastructure is being replaced at a rate of 1-2%, while in the
developed world the equivalent figure is 12%, and in the USSR it was
8%.

      The informal economy and unofficial laws have led to corruption
becoming an institutionalized part of the economic mechanism, and an
oligarchic economic system being established. Yavlinsky said that at
least 70% of GDP is produced by enterprises belonging to only ten
tycoons, who make all the major decisions: and that is the essence
of an oligarchic system.

      Having grown accustomed to the established informal relationships,
this form of big business doesn’t want any changes to happen – and
therefore, according to Yavlinsky, “it really wants Vladimir Putin to
remain in office for a third term, or a fourth, or a fifth.”

      Yavlinsky said that any economic growth in an oligarchic system
and peripheral capitalism “will never improve living standards for
ordinary citizens.” That is, some living standards will improve –
but only for the 25% of Russian citizens who have some connection
with the fuel and energy sector or how its revenues are
redistributed. “The remaining 75% don’t even have any prospects of
securing a modern standard of living for themselves.”

      Yavlinsky said: “Therefore, this system is changing the essence
of our country, its socio-economic structure. In the West, the
middle class is made up of teachers, doctors, engineers, military
officers, academics. In Russia, the middle class means restaurants,
taxis, and girls – in other words, the services sector that redistributes
money coming in from the fuel and energy sector. This 25% of the
population is the bulwark of the system, and it will defend the system.”

      But Yavlinsky argues that the system must be broken down.
Otherwise, the outlook for Russia is grim.

      “In the 21st Century, I don’t think there will be any
developing nations – only developed and underdeveloped nations. This
will be a consequence of globalization – global economic processes,”
said Yavlinsky. According to him, if Russia “gets a grip on itself”
in the next 10-15 years, it still has a chance to become a developed
nation.

      To do so, it needs to solve three basic problems.

      [1] First: create a climate in which citizens trust the state
(“citizens
must have a sense of being participants, not just bystanders”).
     [2] Second: finally turning the judicial system into a fair and
independent system, free from bureaucratic pressure and executive
branch commands.
     [3] Third: overcoming the consequences of criminal privatization –
not by confiscating property, but by levying a special one-time
compensation tax.

      According to Yavlinsky, Russia needs to solve these problems if
it is to create an economy that can ensure its security in an
unpredictable, unstable environment. “Sixty percent of the world’s
economically viable natural resources are located in Russia, beyond
the Ural Mountains. But population density beyond the Amur River is
175 people per square meter.

      Do you think such a situation can continue indefinitely?” asked
Yavlinsky. Therefore, he maintains that Russia’s national idea for the
21st Century should be “to preserve Russia’s territory in its existing
borders, along with its history, culture, identity, and faith.”
—————————————————————————————–
 Translated by Elena Leonova
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7. PUTIN’S RUSSIA NO PLACE FOR DEMOCRATS TO HOLD A SUMMIT

COMMENTARY: by Konstanty Gebert
Leading Polish security analyst and commentator
The Daily Star, Beirut, Lebanon, Saturday, June 03, 2006

St. Petersburg is a great place in early summer, when the “White Nights”
bathe the city’s imperial palaces and avenues. Small wonder, then, that
Russian President Vladimir Putin likes to show off his hometown.

Three years ago, during the czarist capital’s 300th anniversary, Putin
hosted some 40 heads of state, ranging from George W. Bush and Gerhard
Schroeder to Belarus’ dictator, Alexander Lukashenka, and Turkmenistan’s,
Saparmyrat Nyazov, who styles himself “Turkmenbashi,” the “father of
Turkmen.”

 Human rights activists questioned the wisdom of endorsing the leader of a
growingly authoritarian Russia. Yet Putin managed simultaneously to
celebrate his anti-Iraq war cooperation with Europe, have the United States
swallow this, and be recognized in front of his local minions as a world
leader.

This summer, St. Petersburg (dubbed by local wits “St. Putinsburg”) may see
a repeat performance: Russia will preside over a G8 summit for the first
time in mid-July, despite increasing authoritarianism, the ongoing bloody
war in Chechnya, and now support for Iran’s nuclear program.

Deflecting mounting criticism, Bush rejects appeals to boycott the summit.
“I need to be in a position where I can sit down with him [Putin] and be
very frank about our concerns,” Bush said in late March at Freedom House in
Washington.

Is Bush wrong? The question of whether to meet with nasty but powerful
people has dogged diplomacy since its inception, and both ends of the
question have been argued endlessly – and inconclusively. So it is probably
best to examine the merits of each case separately, looking to precedents
and agendas for guidance.

What is now known as the G8 was launched in 1975 as an informal group of the
United States, Europe’s Big Four – Britain, France, Germany, and Italy – and
Japan, with Canada added as an afterthought. It expanded to include Russia
in 1998 for political, not economic, reasons.

Russia’s unhappy status as a democratizing, but still potentially
threatening, former superpower, played a role, as did its huge energy
reserves, which is why China, incomparably more powerful economically but
politically beyond the pale, was never invited to join. Indeed, though
supposedly grouping the world’s largest economies, the G8 now includes a
country with an economy the size of Holland’s, even if it is still excluded
from deliberations of the other members’ finance ministers.

In retrospect, Russian membership should probably be considered a mistake.
Russia has stabilized under Putin, but it has become markedly less
democratic. Its economy has boomed thanks to oil and gas exports, not to
healthy market developments. The state still controls the economy as it sees
fit, as the de-facto re-nationalization of Yukos has amply demonstrated.

On the other hand, the Kremlin has refrained from international adventurism,
and rather consistently supported the US in its “war on terror.” As European
economies grew more dependent on Russian oil and gas, and the US military in
Central Asia on Russian acquiescence, reversing the decision to admit Russia
to the G8 became politically unthinkable. The 2003 summit confirmed Russia’s
privileged position. A repeat performance this summer would make it all but
unshakeable.

Has “being frank about our concerns,” the justification for hobnobbing with
the likes of Putin, proven effective? Perhaps not. Nevertheless, although
Russia has been backsliding since Putin took power in 2000, his policies
might have been worse had he been ostracized. In any case, an American
boycott of the forthcoming summit would be a Russian triumph, as it would
throw the West into disarray.

But there need to be limits to the West’s tolerance, particularly given the
summit’s agenda, which features energy security, fighting disease, promoting
education, counter-terrorism, and non-proliferation. Is Russia a trustworthy
partner in these areas?

Russia is, in fact, the main provider of energy insecurity in Europe.

Its gas blackmail of Ukraine frightened the entire continent, and its new
Baltic pipeline to Germany has provoked howls of outrage from Poland and
the Baltic states, which are angry at losing the economic and political
dividends a land route gives them. They are also fearful that Russia will
use the energy weapon against them in the future, once the new pipeline
allows the Kremlin to do so without affecting Western Europe.

This made little impression on their German European Union partners –
unsurprisingly, since Schroeder chairs the consortium that will build the
pipeline. As former French Prime Minister Pierre Mauroy put it in 1981, when
he refused to cancel a gas deal with the Soviet Union over the imposition of
martial law in Poland: “Should the suffering of French people deprived of
gas be added to the suffering of Polish people deprived of freedom?” Old
habits die hard.

Russia’s record is equally bleak on other items on the summit’s agenda. It
heads the list on the spread of preventable diseases – not only HIV, but
tuberculosis, with 32,000 deaths last year alone – and its education
standards are in severe decline. On terrorism, Russia was the first country
to host an official Hamas delegation after the Palestinian elections, and it
continues to crush Chechen terror and resistance with methods that would
bring it to an international court, were it not a Security Council member.
On non-proliferation, just ask the ayatollahs in Tehran.

Putin’s Russia is not a place for democratic leaders to hold a summit,
especially after the paltry results of the last one. Nor does the summit’s
agenda justify holding it there. While Putin’s policies could have been much
worse – it is legitimate to give him credit where it is due – Russia should
not be allowed to take the West for granted. Nothing would be gained by
breaking with Russia and engaging in confrontation with it, but there is no
reason not to respond to realpolitik with realpolitik.
————————————————————————————————
Konstanty Gebert is a leading Polish security analyst and commentator. THE
DAILY STAR publishes this commentary in collaboration with Project Syndicate
(www.project-syndicate.org).
http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=5&article_id=24934
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8. UKRAINE RUDDERLESS AS POLITICAL SEAS GET ROUGHER
Factions take advantage of leadership void, push country toward Russian orbit

COMMENTARY: By David Marples, The Edmonton Journal
Edmonton, Alberta, Canada, Monday, June 19, 2006

An alarming series of events over the past few weeks, and the failure of the
various factions in parliament to form a ruling coalition, has resulted in a
leadership void in Ukraine.

President Viktor Yushchenko has refused to intervene, arguing that it is the
job of the new prime minister to put together a ruling team. Meanwhile, the
Party of the Regions, led by Viktor Yanukovich, aided and abetted by members
of the Russian Duma and regional governments, has begun to undermine the
very structure of Ukrainian society.

A month ago, deputies in the regional council of Donetsk Oblast declared
Russian to be the regional language. In taking this decision, they followed
the example of the regional councils of Kharkiv and Luhansk, as well as the
city council of Sevastopol in Crimea, the only part of Ukraine in which
ethnic Russians make up a majority. According to Deputy Prime Minister
Vyacheslav Kyrylenko, the regional councils are leaning on the European
Charter for Regional Minority Languages to support such decisions.

But as pointed out by the central government, Russian is hardly a minority
language, and elevating it to regional status only strengthens the position
of Russia vis-a-vis Ukraine.

On June 6, the Crimean parliament issued a statement declaring that the
peninsula was a “NATO-free territory.” The decision was made at a plenary
session and supported by 61 of the 78 deputies in the assembly. Thirteen
deputies did not participate in the vote and four abstained. No one voted
against the motion. Yanukovich has declared that “the people of Crimea rose
up to defend the constitution and the state’s interest.”

The statement comes after a serious international incident in the Crimean
port of Feodosiya on May 27, when residents blocked the port in order to
prevent a U.S. ship from unloading equipment, intended for use in a NATO
exercise called Operation Sea Breeze. Some 20 Regions MPS arrived in
Feodosiya to join in an anti-NATO rally, along with several MPs from the
Russian Duma.

Ukraine responded by banning the entry of the deputy speaker of the Duma,
Vladimir Zhirinovsky, and Duma member Konstantin Zatulin. Subsequently,
Britain also postponed a joint exercise with Ukraine called Tight Knot that
was scheduled to begin June 14.

The anti-NATO uproar is largely contrived by the Regions. Technically, the
entry of foreign troops onto Ukrainian soil requires approval by parliament.
But the assembly was in recess until June 14 and thus no decision was
possible prior to the British exercise.

It seems plain that in various parts of Ukraine, those opposing the
Yushchenko government have taken advantage of the lack of leadership and the
protracted debate over membership of the ruling coalition to cause havoc.
The Russian Duma has exacerbated the problem by warning Ukraine against
joining NATO.

Why has no coalition emerged? The answer lies partly in policies and partly
in personal ambitions. The three Orange parties seem to be in agreement —
albeit with some reservations — that Yulia Tymoshenko should reassume the
position of prime minister, which she held in the initial Yushchenko
government.

The Socialist party, on the other hand, would like the post of parliamentary
speaker to be held by its seasoned leader, Oleksandr Moroz. Our Ukraine, the
president’s faction, would prefer Prime Minister Yurii Yekhanurov to retain
his post.                                    -30-
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http://www.canada.com/edmontonjournal/news/opinion/story.html?id=5c3344bd-4869-4d20-9bbf-6ea206f44e37

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9.                                     PUZZLES
          The puzzle picture is still incomplete and the political leaders
                        have another weekend to put it together.

ANALYSIS & COMMENTARY: By Yulia Mostovaya
Zerkalo Nedeli On The Web, Mirror-Weekly, No. 23 (602)
International Social Political Weekly, Kyiv, Ukraine, Sat 17-June 23 2006

In any political game, if it is played for a result, there ought to be a
team, a goal, a set of moves and rules. In political gambling, there is no
team, nobody plays by the rules, all means justify the goals, and the goals
are changeable. As a result, there is no result.

For three months we have been watching an interesting political gambling
championship called “formation of a parliamentary coalition.” The formats,
means, and teams are variable, but there are two constants: the “orange”
hate to see Yulia Tymoshenko at the post of Prime Minister, and the
“white-and-blue” simply long for power.

Neither political force demonstrates team play because both are stuck in a
jumble of constants and variables. And whenever the coalition’s shape
becomes more or less discernable, the picture breaks apart in a medley of
puzzle pieces.

                                      THE PRESIDENT
The president is tossing and turning between a rock and a hard place: he
dislikes Tymoshenko but understands that he would lose his voters if Our
Ukraine allied with the Party of Regions (PR); he sees that the orange
coalition is unstable but understands that his influence would turn into
nothing if the coalition had more colors; he wants to retain or, if
possible, expand his powers, but there is no parliamentary configuration to
back his ambitions.

This is why he makes official statements in support of an orange coalition
and, at the same time, keeps in touch with his closest and most loyal
man—Prime Minister Yuri Yekhanurov, who is for allying with the PR.

This is why the president states in public that he has nothing against
Tymoshenko’s premiership and, on the same day, nodding his consent to giving
[Socialist leader] Oleksandr Moroz the post of parliament speaker, he tries
to persuade Moroz to speak up against Tymoshenko’s premiership.

This is why the president publicly calls upon everyone to abide by the
Constitution of Ukraine but demands that nominations to governorship and the
post of interior minister remain the presidential prerogative.

From the parliament rostrum, the president announces his immediate and most
active participation in forming a coalition, but the next day he says that
the president is above this. He holds the reins of the coalition talks
loosely, but he pulls them tight every time he disagrees with something the
negotiators have agreed upon.

So what is he after? From the angle of Ukraine’s external policy and
electoral support, Yushchenko ought to prefer an orange coalition. But in
light of today’s realities within the country, he is not against a “mixed”
coalition (on condition that Yekhanurov remains prime minister).

The absence of either coalition also leaves open two options, but both are
blind alleys. In the first case, the Yekhanurov government would stay in
office until a coalition is formed (and that may be a very long time) but
would be deficient without effective cooperation and coordination with the
supreme legislature. In the second case, the president would use his right
to dissolve this parliament.

He has every formal ground to punish the lawmakers for their helplessness.
On the other hand, such a step would disclose collusion between Yushchenko
and the Party of Regions (it is no secret that, in a new election, Viktor
Yanukovych would have a sure chance to win the majority and monopolize
forming the executive government).

                           THE PARTY OF REGIONS
In the bustle of the first weeks after the March election, Yanukovych
frequented the presidential office, but he seems to have misinterpreted
Yushchenko’s “yes” as consent or connivance. The PR kept in touch with many
OU top functionaries, who strongly disliked one another but had a common
dislike for Tymoshenko.

It worked: according to representatives of both the PR and OU, a score of
renegades deserted OU and the Tymoshenko Bloc for the Yanukovych team, and a
dozen tempted members of the Socialist faction were as good as ready to go
over.

OU leaders admit that the PR has done a good job: even if the orange
coalition were established de jure, its numerical strength would not be 226
de facto. Tymoshenko says that it is a bluff, but Andriy Kozhemyakin, the
chief of the bloc’s security, is not so optimistic.

The PR has initiated a so-called “inter-faction majority,” which looks quite
feasible arithmetically. But there is Article 83 of the Constitution, which
states unambiguously that “a parliamentary coalition shall be formed by the
majority factions.” The same is put in no uncertain terms in the Varkhovna
Rada Regulations. So even if the PR musters 226 votes on an inter-faction
basis, it has no legitimate right to nominate a candidate for the post of
prime minister.

O the other hand, the Tymoshenko Bloc, OU, and the Socialists, who have this
right, may fall short of votes for the candidatures they nominate. Ukrainian
MPs are faction-bound: those who go over to another faction must be stripped
of their MP mandates. Therefore, the inter-faction majority is another blind
alley, but it may as well create problems for the orange troika.

The PR, however, has two more strategies. It is ready to run for parliament
again should the president dissolve this parliament. Of course, the new race
would cost it a good deal of money, but in this situation it is not like
throwing good money after bad: five years of absolute monopoly would surely
pay.

The second strategy proceeds from a PR-OU coalition. But OU and Yushchenko
missed the opportunity when the PR was ready for compromise concessions. If’
from the very beginning, the “orange coalition talks” were meant to serve as
a cover, OU should have made the most of that period and secured such
concessions formally and publicly.

But instead, the talks never went any further than Tymoshenko’s personality
and the president never got the upper hand. Now that the PR leaders have
seen the orange troika’s impotence and all those squabbles inside the orange
camp, they understand that it is their chance to get hold of the first
fiddle. The only question is how far they are ready to go and whether they
will claim premiership.

This question is extremely important for the PR, because its presence in the
higher echelons of power hinges on premiership. A few weeks ago, it would
have been quite content with a few influential positions in the central
government and in standing committees. Now it is claiming premiership louder
and louder.

The explanation lies on the surface: even if the PR-OU coalition breaks up,
it does not mean the government’s automatic resignation. The prime minister
will stay in office as long as this political force controls 226 votes in
the parliament (which is not difficult with huge financial and
administrative resources at its disposal). Then a pro-Yushchenko or a
Socialist speaker may be replaced: the president’s consent is not required.

The picture is clear to the PR, OU, and the Socialists, but none of them
ventures to predict an outcome of this standoff. There is only one sure
fact: last Friday, the day before the leaders of the three orange factions
met with Yushchenko, OU conveyed the coalition’s draft action program and
regulations to the Party of Regions.

One week of active negotiations between OU and the PR revealed both points
of dispute, as well as common ground. The problems that had stalled the
coalition talks among the orange forces were lifted very quickly in the
PR-OU format. There remain several disputable issues, though: the status of
the Russian language in Ukraine, accession to NATO, premiership claims, the
status of state secretaries, etc.

On Friday morning, the OU team (at its own initiative) resumed coalition
talks with the Tymoshenko Bloc and the Socialists. In the afternoon, the
same team sat down to negotiate with the PR.

                                     OUR UKRAINE
Just like Leonid Kuchma was the consolidating factor for different political
forces during the Orange Revolution, Tymoshenko is the nail that now keeps
together the Our Ukraine bloc as an integral political force. She has a few
supporters there, but they hardly play leading roles in the faction. Only
two members—Katerynchuk and Knyazevych—did not applaud the decision to
start coalition talks with the PR, exposing themselves as “black sheep.”

The OU faction and its sponsors from Yushchenko’s close entourage considered
several alternatives to Yuri Yekhanurov as the candidate for premiership:
Igor Tarasyuk, Petro Oliynyk, Yuri Lutsenko, and Petro Poroshenko. But
Lutsenko was struck off as a strong irritant to the PR.

Poroshenko was rejected because the president would never allow him to head
the government, and the other two candidatures were no longer considered
after the president’s clear message that “Yekhanurov is Premier.”

This circumstance makes the future rather grim for many OU members, but
Yekhanurov need not care about his opponents in OU, having such a strong
numerical reserve of votes in the parliament, as well as the president’s
personal support. The question is whether the PR will give up its
premiership claim.

The only thing OU is really afraid of is the parliament’s dissolution: its
popularity rating is now estimated at between five and seven percent.

                     THE YULIA TYMOSHENKO BLOC
Members of her faction are not afraid of pre-term elections. They are even
making plans to initiate the dissolution procedure without the president’s
participation should OU leave them out of the coalition. All it takes is 150
volunteers ready to surrender their mandates.

Tymoshenko’s faction numbers 129. But are all of them ready to run another
race, having spent so much on this one? Besides, the Ukrainian voters are
already sick and tired of this protracted anarchy, so this initiative may
hit Tymoshenko’s rating.

Tymoshenko has repeatedly and firmly ruled out her bloc’s alliance with the
PR. Her principal demands are as follows: Turchinov must be interior
minister; there must be no governmental committees (as they would diminish
the prime minister’s powers and influence); governors must be appointed
through consensus among the orange allies; Moroz must be parliament speaker.

Tymoshenko wants all or nothing and does not agree to compromise solutions.
Perhaps, contrary to the general belief, she is not that willing to head the
government right now? Perhaps, being aware of the complicated economic
situation, she foresees an inglorious end to her premiership in six months?

The news about the start of coalition talks between OU and the PR did not
make Tymoshenko and her comrades happy, but it did not throw them off the
track either. Tymoshenko’s latest public utterances sounded like an
announcement of her presidential campaign. She has never deviated from her
strategic goals.

If she is left out of the coalition, her bloc’s factions in all
representative bodies—from the Verkhovna Rada to village councils—are
most likely to crumble very quickly. But at the same time, OU and the PR are
sure to lose a considerable part of electoral support. That is why
Tymoshenko is going to make the final decision, bearing in mind her main
goal: power for years, not months.

                                     THE SOCIALISTS
Oleksandr Moroz says that “things will work out for the best,” but it is
unclear how. The PR has almost gained over one half of the Socialist
faction. The other half believes that, if Moroz does not become parliament
speaker, the Socialist faction is doomed to crumble, so opposition is the
best niche for the Socialists.

Moroz met with Tymoshenko, Yushchenko, and [PR negotiator] Klyuyev. He
got some promises from each and promised something to each in return. In the
orange coalition, the Socialists have to sacrifice certain ambitions and
principles, but their presence is critical for the 242-strong troika.

Knowing that, they hold their ground.

They have fewer differences with the PR on the issues of NATO accession or
the status of the Russian language, but they hate to be small fish in the
big pond kept by Yanukovych and Yekhanurov.

There is another possible format: PR + Communists + Socialists, but simple
arithmetic can hardly outweigh ideological differences and long-standing
enmity among these political forces.

The puzzle picture is still incomplete and the political leaders have
another weekend to put it together.                         -30-
————————————————————————————————-
LINK: http://www.mirror-weekly.com/ie/show/602/53700/

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10. PREMIER OF ALBERTA VISITS LVIV AND IVANO-FRANKIVSK
                       TO ENHANCE SISTER PROVINCE TIES
            To announce Alberta-Ukraine genealogical research project

Maple Leaf News, Canadian Embassy in Ukraine
Vol. 69, Kyiv, Ukraine, Monday, June 19, 2006

Kyiv – Premier Ralph Klein will enhance ties with Alberta’s sister provinces
during his mission to Ukraine, June 13-22. In Ukraine Premier Klein will be
accompanied by Education Minister Gene Zwozdesky.

This visit reciprocates visits to Alberta by leaders of Alberta’s newest
sister provinces. “I am looking forward to visiting Ukraine for the first
time since we signed twinning agreements,” said Klein.

In addition to meeting government leaders, he will announce an
Alberta-Ukraine genealogical research project, which will enable over
300,000 Albertans of Ukrainian ancestry to access their family records in
Ukraine without having to leave Alberta.

An education cooperation project to enhance Ukrainian language instruction
in Alberta will also be announced. In Ivano-Frankivsk, Klein will open an
exhibit on Ukrainian immigration to Alberta.         -30-
———————————————————————————————-
Media enquiries may be directed to: Marisa Etmanski, Office of the Premier
Office: (780) 422-4897, cell: 232-7386; marisa.etmanski@gov.ab.ca
More information about Alberta’s twinned provinces in Ukraine is available
http://www.iir.gov.ab.ca/international_relations/world_relations_europe.asp.
———————————————————————————————–
Dmytro.Ostapenko@international.gc.ca; http://www.kyiv.gc.ca
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11. CANADIAN GUEST CONDUCTOR WES JANZEN LEADS THE KYIV
  SYMPHONY ORCHESTRA & CHORUS IN HAYDN’S “THE CREATION”
         Conductor Janzen’s ancestral heritage is German/Ukrainian/Canadian

By Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #715, Article 11
Kyiv, Ukraine, Tuesday, June 20, 2006

KYIV – A large cast of professional orchestra players and singers from The
Kyiv Symphony Orchestra and Chorus, under the direction of Canadian guest
conductor Wes Janzen presented the Franz Joseph Haydn musical masterpiece
“The Creation” to a large crowd in Kyiv on Monday evening, June 19 at the
St. Nicholas Catholic Church (National House of Organ and Chamber Music
of Ukraine.) The performance received a standing ovation from the audience.

Performed in Vienna every year since its successful premiere in 1798, The
Creation was an appropriate number to celebrate the arrival of summer in
2006, and the summer, fifteen years ago, in August of 1991 when Ukraine
declared its independence from the Soviet Union and found new freedom.

Soloists included bass Taras Shtonda (a leading soloist at Bolshoi and
National Opera of Ukraine), Oleksandr Ostrovskiy (soloist at National Opera
of Ukraine), Dmytro Ageev (soloist at National Opera of Ukraine and guest
artist throughout Europe and America), Alla Prigara (regular soloist with
Kiev Symphony Orchestra and Chorus) and Olga Chebotareva (a leading
student of opera at Tchaikovsky National Music Academy in Kiev).

                     CONDUCTOR FROM WESTERN CANADA
Wes Janzen is Professor of Music and Director of Choral Activities at
Trinity Western University in Langley, British Columbia, Canada. His choirs
have been heard on dozens of CBC national performances. They perform on a
regular basis with the Vancouver Symphony, Vancouver Chamber Choir and
CBC Orchestra. National broadcasts with Vancouver Symphony include ‘Berlioz
L’Enfance du Christ,’ ‘Britten War Requiem,’ ‘Verdi Requiem,’ and
‘Mendelssohn Lobgesang.’

National broadcasts with CBC Vancouver Orchestra and Vancouver Chamber
Choir include Bach Christmas Oratorio, Mozart Coronation Mass, Schubert
Magnificat and Beethoven Mass in C. Wes Janzen frequently serves on the jury
at some of Europe’s top choir competitions. He holds a DMA in conducting
performance/vocal pedagogy and has studied conducting with Eric Ericson in
Stockholm, Sweden.

Janzen and his wife Kimberly are also co-artistic directors of the Pacific
Mennonite Children’s Choir which won gold recently at the Riva del Garda
International Choir competition in Italy.

    JANZEN’S GRANDFATHER’S LIVED IN SOUTHERN UKRAINE
Conductors Janzen’s grandfather’s were members of the German agricultural
settlements in the Crimea Oblast along the Dniper River, an area then
considered part of the Czar’s Russia, which is now part of southern Ukraine.
His two grandfathers narrowly escaped from the area after World War I when
the Red Army was taking over the eastern and southern parts of the then
newly independent Ukraine.

Many members of his family and other German settlers were murdered by the
advancing Communists.  His ancestors ended up settling in western Canada.
They were the certainly the lucky ones as by the end of the 1930’s the
Soviets, under Stalin’s cruel leadership, had effectively taken most of the
land and assets away from the German settlers and had murdered most of
them by gun, starvation, or sent them to their death in Siberia.

By the beginning of WWII in the late 1930’s the Soviets has almost totally
destroyed all of the German agricultural settlements which had been built
along the Volga River in Soviet Russia and in the southern part of Soviet
Ukraine beginning in the late 1700’s and then again in the early 1800’s.

          THE KIEV SYMPHONY ORCHESTRA AND CHORUS
The Kiev Symphony Orchestra and Chorus has performed many of the great
choral masterpieces in Kiev and has toured America extensively. It has
premiered and presented works as varied as Bach Mass in B minor, Bach St.
Matthew Passion, Berlioz Requiem, Brahms Requiem, Handel Messiah, Mozart
Requiem, Mendelssohn Elijah, and Walton Balshazsar’s Feast. Its most recent
tour, a huge success, was to some of the major cities in Russia.

Under the direction of Roger McMurrin who founded the Kiev Symphony
Orchestra and Chorus in 1993, the KSOC has established a strong record of
musical excellence through recordings and public performances. The Kiev
Symphony Orchestra and Chorus is part of a larger organization which, among
other things, also provides humanitarian assistance to literally hundreds of
widows and orphans in Kiev. Additional information can be found on their
website: http://www.kievsymphony.com.               -30-
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 If you are receiving more than one copy of the AUR please contact us.
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12. VOLYN UKRAINIAN SONG & DANCE CO STARTS CANADIAN TOUR
       Performance embodies the best Ukraine has to offer in the art of spectacular
             folkloric dance, song, and music. Volyn is the Spirit of Ukraine!

Abaze Productions, Toronto, Ontario, Canada, Monday, June 19, 2006

TORONTO – The long awaited 22-city Canadian Tour by the world-class
VOLYN UKRAINIAN SONG & DANCE COMPANY of Lutsk, Ukraine,
will premiere at the Grand Theatre in London, ON, on Tuesday, June 20, 2006.
The performance starts at 8:00 p.m.

During their 1999 North American Tour their performance was described by
The New York Times as “Flawless,” while the Chicago Tribune exclaimed
“Glorious!”

Northstreams Inc., a top Canadian production house will be filming the
live performance. This television special is destined for the PBS, SCN,
BRAVO and other television networks around the world.

Tickets at the Hummingbird Center for the Performing Arts in Toronto are
going fast and furious, with customers snapping up the best seats. It is
projected that the Toronto performance on Saturday, June 24, at 8:00
p.m. will soon be sold out. Sales in other cities are going well.

Judging by the standing ovations, laudatory press reviews, and the
numerous compliments from patrons, the entertainment quality is superb!

From song to dance, and back again, the entire team on the stage keeps
us entertained, amused, and tapping our toes or clapping our hands.  The
well trained professional singers and disciplined dancers mix happily
with the peppy musicians in a congenial “neighbourly” way with a
Hollywood touch!   This is a world-class ensemble!

The Volyn Ukrainian Song & Dance Company is Ukraine’s premiere
goodwill ambassador to Canada.  Their performance embodies the best
Ukraine has to offer in the art of spectacular folkloric dance, song, and
music. Volyn is the Spirit of Ukraine!

Performances in Ontario will be held in:
[1] HAMILTON, ON; Wednesday, June 21 @ 8:00 pm
Hamilton Place, Tickets: By phone: 905-546-4040
http://www.ticketmaster.ca/

[2] WINDSOR, ON: Thursday June 22 @ 8:00 pm
Chrysler Theatre, Tickets: By phone: 519-252-6579
Toll free: 1-800-387-9181; In Michigan: 248-645-6666
On Line: http://www.ticketmaster.ca/
OR http://www.ticketmaster.com/

[3] TORONTO, ON: Saturday, June 24, 2006 @ 8:00 p.m.
Hummingbird Centre: Tickets: Box Office 416-872-2262
On line: http://www.ticketmaster.ca/
West Arka: 416-762-8751; Euro Deli:  905-290-0605

[4] OTTAWA, ON: Sunday, June 25 @ 3:00 p.m.
National Arts Centre: Tickets: Box Office 613-755-1111
On line: http://www.ticketmaster.ca/
By fax: 613-947-7112

[5] SUDBURY, ON: Wednesday, June 28 2006 @ 8:00 pm
Fraser Theatre, Tickets: By phone: 705-674-8381

Performances in other Canadian cities will be announced shortly!
To view a 12 minute video clip or hear the Volyn Ukrainian  Song & Dance
Company music or listen to the interviews, please CLICK onto the  LINK
below: http://www.ablaze-productions.com/Tour06/index.html

The sponsors of the Canadian Tour 2006 are:
Aerosvit Ukrainian Airline, OMNI Television, e-POSHTA, Caravan
Logistics, Multiculture Marketing,  Meest Ukrainian Weekly,
http://www.kviten.com/, and VISTACOM Media & Graphics

This is a presentation of Ablaze Productions in association with the
Volyn Oblast Administration of Ukraine, the Rt. Hon. Volodymyr N.
Bondar, Governor.                       -30-
———————————————————————————————-
For additional information contact:  Leonid (Leo) Oleksiuk, President
& CEO, Ablaze Productions Corp., 2323 Lakeshore Blvd., West Suite
911, Toronto, Ontario Canada, M8B 1B8; Tel.  416-521-9555;
Cell: 416-276-2872; E-mail: leo@ablaze-productions
Web: www.ablaze-productions.com
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========================================================
13.  UKRAINIAN CULTURE CENTER OF LOS ANGELES PRESENTS
   “A MUSICAL SALUTE – GOD BLESS AMERICA” FRIDAY, JUNE 23

Bohdan Knianicky, President, Kobzar Ukrainian National Choir
Ukrainian Culture Center of Los Angeles
Los Angeles, California, Monday, June 19, 2006

LOS ANGELES – The Ukrainian Culture Center of Los Angeles presents
“A Musical Salute – God Bless America”  starring Anthony Kearns of “The
Irish Tenors,”  New York Opera bass Stefan Szkafarowsky, film/TV actor
George Dzundza along with the Pasadena Community Orchestra and the
Kobzar Ukrainian National Choir.

Proceeds from the concert will go to the Freedom Alliance Scholarship Fund
which supports the children of America’s military heroes.

This benefit concert will be held at the Alex Theatre, 216 N. Brand Blvd.,
Glendale, CA on Friday, June 23, 2006 at 7:30 p.m.

For tickets call the Alex Theatre at 818-243-ALEX or www.alextheatre.com
“Salute” event info: Bohdan Knianicky, Kobzar Choir President 951-236-4085
kbohdan@hotmail.com
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14.  VISIT OF KATERYNA YUSHCHENKO TO LOS ANGELES
                We are lucky to call Kateryna Yushchenko our first lady

LETTERS-TO-THE-EDITOR: By Eugenia Dallas
Action Ukraine Report (AUR) #715, Article 14
Kyiv, Ukraine, Tuesday, June 20, 2006

Dear Editor Morgan:

Some Ukraine notes and info that your readers might find interesting. Pani
Kateryna Yushchenko recently visited Los Angeles to visit and research
children’s hospitals to aide in the children’s medical care center she is
committed to bring to Kyiv.

 
She honored us by attending the Los Angeles Ukrainian Genocide memorial
where she personally spoke to each of us, the only 4 survivors attending the
services.

As one of the four last witnesses of the horrible atrocities where during
the height of the famine, Ukrainian villagers were dying at the rate of 17
per minute, 1.000 per hour and 25.000 per day leaving only a few survivors
to keep the history alive, I was touched by Kateryna’s compassion.

As she embraced me I felt her strength and courage honor all of us. Some of
the other survivors were unable to speak and openly wept as we remembered
the pain and suffering we all went through.

 
I am one of the lucky one’s who has found some solace in sharing the terrible
experiences in my autobiography “One Woman, Five Lives, Five Countries”,
which was only possible because I wrote in English not my native tongue.

As Kateryna placed flowers at the memorial after we all spoke it was quite
evident that she is a symbol to all of us keeping alive a history and
forging a future for our children.

 
We are lucky to call Kateryna Yushchenko our first lady.I do hope that you
share with your readers the importance and humanity of this woman.

Sincerely, Eugenia Dallas, Los Angeles, CA.

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15.    NORWAY AND UKRAINE – A RENEWAL OF AGE-OLD TIES
   We have a common past and we can build a common future. A European
      future. Ukraine’s traditions, beliefs and language have grown from the
        same cultural roots as those of other present-day European nations.

SPEECH: Jonas Gahr Store, Minister of Foreign Affairs, Norway
Mohyla Academy, Kiev, Ukraine, Wednesday, 31 May 2006

Rector Briukhovetsky, Professors, Students,

When I think about Ukraine – a country with a population ten times that of
Norway – many associations come to mind.

Ukraine is Europe’s past. Ukraine is today proving to be Europe’s present.
And Ukraine is aspiring to be Europe’s future. A future that Norway will
share with you, a democratic future, a future for the rule of law, for
peace, progress and human development.

And right now, I am looking forward to watching the Ukraine football team in
the 2006 World Cup Finals. Norway missed the opportunity – so we will side
with you. Ukraine was the first European team to qualify for the Finals, and
I will be watching when Ukraine plays Spain in Leipzig on 14 June.

It is a great honour for me to be here today, and to address the students
and teachers at this venerable institution. Many foreign politicians have
had this opportunity, which reflects that the Mohyla Academy promotes free
political thinking and a concern for contemporary political challenges.

I imagine that many of you were involved in the historic Orange Revolution.
I followed these events on television. You were part of them.

The colour orange became a symbol of peaceful change, of involvement and
participation, of democracy and freedom. A continuation of the peaceful
changes that swept through Eastern and Central Europe in the 1980s and ’90s.

        A LONG STEP BACK IN TIME TO THE VIKING ERA
I will now take a long step back in time, to the Viking era. The great
Norwegian explorer Thor Heyerdahl promoted the theory that the people of
Scandinavia originally came from this part of Europe, from Azov. The
historical ties between our two countries date back more than a thousand
years. Old Norse literature records close contacts between the people of
Kievan Rus and the kingdoms of Norway, Sweden and Denmark.

So “globalisation” is not an entirely new phenomenon. People from different
parts of the world met, exchanged views and found wives many centuries ago.
Longboats carried people far across the seas and down great rivers, as the
web does today.

Norway’s hero king, Olav Tryggvason, spent his teenage years at the court of
Vladimir the Great, in Novgorod, and later moved to Kiev, around the year
980. He was followed by Olav Haraldson, who was later canonised. Saint Olav
spent the last year of his life here in Kiev as a guest of his friend
Yaroslav the Wise, leaving his young son Magnus behind with Yaroslav.

Soon afterwards, Olav Tryggvason’s half-brother Harald Hardraade, later King
of Norway, came to Kiev. He married Yaroslav’s daughter Elizaveta, who
became Queen of Norway.

This is Europe. There are ties among people, cultures and traditions. It is
exciting to be back among old relatives, so to speak, and to connect with
our shared history.

One hundred years ago, the Norwegian writer Bjørnstjerne Bjørnson, an ardent
champion of Norwegian independence, campaigned vigorously in European
newspapers for the right of Ukrainians to use their native language, which
was – as you know – restricted under the rule of Polish nobles and Russian
tsars.

In (October) 1906, he published an influential article in Le Courrier
Européen defending the rights of oppressed Ukrainians in Halychina. Ivan
Franko, the great Ukrainian writer and nationalist, translated many of
Bjørnson’s works into Ukrainian.

A couple of decades later, the Norwegian explorer, scientist and humanist
Fridtjof Nansen helped save many Ukrainians from starvation in the famine
that followed the end of World War I and the Soviet Revolution.

Today, I have paid my respects to the victims of the systematic programme
of starvation of the early 1930s. Those were terrible times.

WE HAVE A COMMON PAST AND CAN BUILD A COMMON FUTURE

Dear friends, The main point of my address to you here today is this:

We have a common past and we can build a common future. A European future.
Ukraine’s traditions, beliefs and language have grown from the same cultural
roots as those of other present-day European nations.

Ukraine is at the heart of Europe, where East and West, and North and South
meet, and this makes your nation an important partner for the European Union
and for other international organisations. And for Norway.

The EU is now the primary economic and political force shaping the future of
the continent, and Ukraine has made membership one of its strategic goals.
Ukraine’s participation in the European Neighbourhood Policy is an important
step in this direction. It offers new opportunities for the Ukrainian
people.

  THREE MAIN TRACKS OF NORWAY’S FOREIGN POLICY
Before I explain my own country’s relations with the EU, let me briefly
outline our foreign policy, which, in response to the many global challenges
of our times, follows three main tracks:

[1] The first track is Norway’s support for the development of an
international legal system that regulates the use of force and prevents the
domination of the weak by the strong. A system that promotes the benefits of
cooperation between the world’s nations and peoples to find common solutions
to the major issues. I believe one of the most important tasks is to
strengthen and reform the UN and other multilateral institutions.

[2] The second track of our foreign policy is partnership with our friends
and allies. Our membership of NATO is a key pillar, so are our close ties
with the EU countries. We have a close partnership with the United States,
and with Russia – our common neighbour. Norway can only promote its own
values and interests if there are other like-minded countries that are
prepared to listen, understand and support our views.

[3] The third track is the role we play in promoting peace, reconciliation
and development around the world. We are privileged to be engaged in a
number of peace processes. And the fact that we are in a position to play
this role gives us a responsibility. Our involvement in Sri Lanka, Sudan and
the Middle East may be well known to some of you.

Let me then return to Europe’s political landscape and the question of our
relations with the European Union.

The Norwegian people have twice – in 1972 and in 1994 – rejected EU
membership in national referenda. And yet Norway is an integral part of
Europe, and we have established a good working relationship with the EU. We
have close allies, neighbours and long-standing friends in the organisation,
as well as our most important economic partners. We are pursuing a proactive
European policy, contributing towards the common European goals. We take

our share of the continent’s responsibilities.

We are closely linked to the EU through a series of formal and informal
arrangements. The most important of these is the European Economic Area
Agreement – the EEA Agreement – between the EU and the three of EFTA
countries (Iceland, Liechtenstein, and Norway). The EEA unites the 25 EU
Member States and these three EFTA States in an internal market
characterised by the free movement of goods, persons, services and capital.

The Agreement ensures that Norway takes part on an equal footing with the EU
members. Our companies, our workforce and our consumers are benefiting.
Important new opportunities are arising every day. The figures speak for
themselves: 80 per cent of our exports go to the EU, and 70 per cent of our
imports are from the EU.

                                MEMBERSHIP IN THE WTO
But there are many global trade mechanisms, and I believe that Ukrainian
membership of the World Trade Organisation – the WTO – is an important step
towards future EU membership. Ukraine is on its way – but there is still
ground to be covered. I am aware that some economic reforms are still needed
and a new government needs to send clear signals that reform will continue.
I would like to underline that Norway supports Ukrainian accession to this
world organisation.

An important part of European cooperation in the field of justice and home
affairs is cross-border investigations and prosecutions. Norway is part of
the Schengen cooperation, aimed at securing a common border control regime.
We take part in police cooperation initiatives both within the EU and with
other countries. We must stand together in the fight against international
organised crime.

Norway fully supports the EU European Neighbourhood Policy, which includes
partnerships and an action plan for Ukraine that promotes democratisation
and the rule of law. We will support cross-border projects between Ukraine
and Poland, and Hungary and Slovakia, with a view to enhancing local
democracy, development and projects in fields such as environment, justice,
education and civil society.

Membership of the OSCE and the Council of Europe has been – and still is –
an important part of both our countries’ paths towards integration into
Europe. As you know, the OSCE played an important role during the Orange
Revolution.

                                    NATO MEMBERSHIP
A safe environment means a secure, stable and peaceful environment –
including peace with neighbouring countries. I have noted Ukraine’s further
ambitions as regards Euro-Atlantic integration, including its strong pursuit
of NATO membership.

NATO membership has been one of the cornerstones of Norway’s foreign policy
for nearly 60 years, and remains so today, in an era of changing political
landscapes and expansion of NATO’s role on the global stage.

Ukraine has persistently shown that it is willing to follow democratic rules
and principles. The elections in March were described beforehand as an
important test, and Ukraine passed with great success.

This has made a strong impression on the international community, and I
believe it has strengthened Ukraine’s prospects of further Euro-Atlantic
integration. Now, Ukraine needs to follow up.

We expect the new government of Ukraine to be formed in the near future. I
hope it will show a strong commitment to continued democratic reforms and
even closer ties with Europe and NATO. There is still some way to go – and
more challenges to meet – on the nation’s road towards democratic, economic
and judicial reforms in various sectors.

I would also like to mention how much I value the stabilising role that
Ukraine is playing in both regional and wider contexts. And I particularly
welcome the active approach Kiev is taking to securing progress in the
complex Transnistrian conflict.

Now that we are talking about the wider region, I must add that I am gravely
concerned about the political situation in Belarus. We must stand together
to support the democratic movement in your neighbouring country. I am glad
to note Ukraine’s support for basic democratic rights in Belarus. The
Belarus people must – like the Ukrainians – have the opportunity to elect
their own leaders, and to elect them in a truly democratic and transparent
manner.

Norway also appreciates the increasingly important role Ukraine is playing
in both NATO and UN operations. This is further evidence of your efforts to
become more closely integrated into Euro-Atlantic structures – where you
belong.

Norway supports Ukraine’s ambition to join NATO. The Alliance pursues an
open door policy. The decision to apply is for Ukraine to take. Then Ukraine
must continue on its process of reform.

Ukraine has already made good use of the Intensified Dialogue process with
NATO. The discussions on the role of the armed forces in a modern democracy
have brought real progress. But the hard work must continue. If the new
government confirms Ukraine’s intention to join NATO, your country will be
facing the challenge of reforming its armed forces. It is a challenge worth
pursuing.

Norway has extensive experience of assisting new and aspiring NATO members
in carrying out the reforms required, and we are ready to assist Ukraine, in
cooperation with our Nordic and Baltic allies. Such cooperation could be an
important step towards further strengthening relations between our defence
forces. I am confident that your working with NATO member countries would
help to consolidate the democratic standards that we now see taking root in
Ukraine.

At the moment, a relatively low percentage of the Ukrainian population
supports NATO membership, and support varies significantly between the
eastern and western parts of the country. This is, of course, a challenge.
It is important for the new government to provide the public with
well-balanced information, so that the people can have a sound basis for
making a decision on the question of NATO membership. As students you should
take an active role in the debate.

Ukraine’s geographic location poses certain challenges – as was demonstrated
during the energy crisis early this year. Our common neighbour, Russia, is a
solid – but challenging – partner. Russia’s democracy is in developing.
There are promising signs, but also concerns, especially in the field of the
rule of law.

At times Norway and Russia have differing views on certain issues, but we
also cooperate successfully on a wide range of issues, such as energy,
fisheries, environmental protection and education. We also have a wide range
of cross-border people-to-people contacts. And our relations are expanding.
Russia is our main partner in the High North, and will continue to be.
Norway’s policy towards Russia is cooperative, firm and consistent.

We have open and frank discussions on issues of national interest to both
countries, such as fisheries. And we are developing a strategic energy
partnership in the High North. At the same time we are careful to consult
our other neighbours and our allies in questions of vital interest in the
north.

My point is: the end of the Cold War is making it possible for us to develop
close relations with both Russia and the rest of Europe and North America.

Due to historical and political factors, Ukraine’s relations with Russia
are, of course, different. You face particular political and economic
challenges, but you also have the opportunity to be an important partner in
efforts to promote an atmosphere of confidence and cooperation in the entire
Euro-Atlantic area. Norway strongly supports Ukraine’s focus in this regard.

  NEED FOR ADEQUATE, AFFORDABLE & ACCESSIBLE ENERGY
Let me turn to energy, which is a very important issue both for Norway as a
producer, and for Ukraine as a consumer and transit country.

The need for adequate, affordable and accessible energy has put supply
security at the top of the agenda all over the world.

Norway takes its role as a stable and reliable provider of energy to Europe
seriously. We are the world’s third largest exporter of both oil and gas
and, together with Russia and Algeria, we are the main provider of gas to
Europe.

As petroleum activities continue to move further north into the Barents Sea,
we see new opportunities arising. The Barents Sea is regarded as one of the
world’s most interesting petroleum provinces, and cooperation with Russia
will be very important.

One of our common challenges will be finding technological solutions that
make it possible to operate in an extremely cold and inhospitable region.
Our companies are at the forefront in this field, and we have already
developed advanced underwater production technologies.

But environmental protection and management of renewable resources, such as
important fish stocks, are equally important factors.

Current oil prices are a major concern for Ukraine, as they are for many
other countries. While Ukraine has benefited from rising global coal prices,
it is suffering under record oil and gas prices. Everyone, including the
major oil-producing countries, agrees that oil prices that hover around 70
dollars a barrel for any length of time are unhealthy for the global
economy.

The solution to this problem does not lie with an individual nation or a
small group of countries. It requires cooperation on a global basis. And it
will take time and dedicated effort.

In short, we need to address the challenges of bringing adequate energy to
the market at affordable prices, without destroying our environment. In
order to achieve this, we need to develop transparent global energy markets.

Access to energy transportation networks, predictable investment regimes and
energy efficiency measures are central issues. We need greater emphasis on
research and development on new and improved technology. But, equally
important, this requires human resources. We need to make sure that careers
in research are attractive to students like you.

It is now 20 years since the nuclear disaster at Chernobyl – a catastrophe
that caused terrible suffering in Ukraine, and also hit neighbouring
regions, including Norway. This reminds us that our continent is vulnerable,
and that many of the gravest challenges can only be met if we stand
together. Norway has been assisting Ukraine in dealing with the consequences
of this accident through the nuclear action plan. We must all strive to
ensure that an accident such as this never happens again.

Environment and energy are just two of several issues in which the Norwegian
Government is engaged on a global scale.
More importantly, efforts to promote peace and stability as a basis for
human development are at the core of Norway’s foreign policy, as I have
already mentioned. Reports show that in the last 15 years, the world has
suffered 100 conflicts, about 30 of which are still continuing today. Nearly
all of them are internal conflicts.

One effect of globalisation is that we are all affected by these conflicts.
Today’s greatest challenges – terrorism, international organised crime,
human trafficking, environmental degradation and the spread of infectious
diseases – originate in conflict areas far away.

However, nowhere is really far away anymore. Local, internal and regional
conflicts are a global problem, a global challenge.
Our efforts for peace, reconciliation and development are therefore an
important part of our security policy. By helping others, we are helping
ourselves.

Much of what we do is possible only because of our involvement in
international cooperation efforts, our partnerships and our alliances. Our
participation in UN-led initiatives has given Norway international
credibility. Our peace efforts are rooted in our belief that the UN, NATO,
the OSCE and European cooperation are the best means of promoting respect
for human rights on a global scale.

  HUMAN RIGHTS CORNERSTONE OF MODERN CIVILISATION
Human rights are the cornerstone of modern civilisation, and respect for
human rights has improved greatly in Ukraine since it gained independence.
This development brings Ukraine into the Euro-Atlantic and global community
of shared values. I would like to congratulate Ukraine on its election as a
member of the newly established UN Human Rights Council.

One of the many global challenges we are facing in the human rights area is
trafficking in human beings. By its very definition, human trafficking
constitutes a denial of all fundamental human rights.

So this is an issue that lies close to my heart, and it affects both of our
countries. Trafficking is a threat to our democratic values and a threat to
the stability and security of our world today. It is a major source of
income for those involved in international organised crime.

We need to strengthen international police cooperation to catch the
traffickers. And we need to provide an environment that protects children
against abuse.

Our two countries have a common interest in combating this evil. Both Norway
and Ukraine have signed the European Convention on Action against
Trafficking in Humans Beings, which was adopted in May 2005. Our two
countries should work more closely together to make this convention a
forceful instrument in the fight against trafficking in our region.

     GROWTH IN CONTACTS BETWEEN NORWAY AND UKRAINE
Dear friends,

In conclusion, I would like to emphasise how much I welcome the growth in
the bilateral political, economic, educational and cultural contacts between
Norway and Ukraine over the last few years.

We can see the results of this here, at the Mohyla Academy. For two years,
the Norwegian Institute of International Affairs [NUPI] has been conducting
teaching programmes in political science, ecology and international trade
relations in cooperation with the Academy. Students recently attended a
seminar on Norway’s relationship to the EU.

Later today, this cooperation will be expanded even further through the
opening of a Telenor-financed electronic study room in this building, and a
training programme for students from the Academy.

I would like to add that since 2003, Bodø University College in Northern
Norway has been providing introductory courses in business administration
for decommissioned officers in Sevastopol and Simferopol, supported by the
Norwegian Government.

We have also supported some of the activities of the student organisation
European Youth Parliament.

It is vital to give support to networking, to exchanges and to the younger
generation. They – I mean, you – will be the future leaders of Ukraine. You
will be able to travel across borders much more easily than your parents.
You are already able to search for all the information you need. [And all
the information you don’t need!].

Good relations between nations – like ours – consist primarily of contacts
between people, including students, artists and journalists, and between
schools, businesses and civil society organisations.

Today, governments’ foreign policy strategies are supplemented by – as well
as challenged by – input from a whole range of public diplomacy players.
Exchanges lead to changes. Networks create new workplaces.

Friends, I am confident that there is scope for further expansion of
Norwegian-Ukrainian cooperation in the field of research and higher
education. Now that Ukraine has become a member of the Bologna process,
we share the goal of creating a common European area for higher education.

I believe that we should strengthen the practical cooperation between
universities and research institutions in Norway and Ukraine. And I believe
the relevant authorities on both sides should meet as soon as possible to
identify concrete projects.

For my part, I am prepared to discuss a new, long-term framework agreement
aimed at supporting educational reforms in Ukraine, and at developing
undergraduate and graduate exchange programmes.

Higher education, openness, democratic standards and more open borders are
vital for the free passage of ideas and impulses back and forth between our
countries.

                     NORWAY AS A TOURIST DESTINATION
I am therefore delighted to see that Ukrainians are also beginning to
discover Norway as a tourist destination and as a place to work. A growing
number of visas are issued at our Kiev Embassy, almost three times more
today than in 2002.

The proposed visa facilitation agreement between the EU and Ukraine will be
followed by a similar agreement between Norway and Ukraine. Simplifying the
procedures should mean even more visitors.

I would like to commend Ukraine for taking a first and important step
towards easing border restrictions by abolishing visa requirements for the
citizens of most European countries.

More frequent visits and closer contacts will also lead to more business
activity and growth. Our bilateral relations are now expanding rapidly in
the economic area. Trade and investment are surging. Norwegian companies,
especially the telecom company Telenor, are investing in Ukraine.

A growing number of non-governmental organisations dedicated to safeguarding
democratic rights have also been established in Ukraine. Norway has offered
support to these NGOs on an ad hoc basis, and we will continue to do so.

It is important that your civil society grows independently, utilising its
own resources. I am pleased to note the contacts between our organisations
and yours. International NGO networks are also very useful, as they can
assist Ukraine in its integration into the Euro-Atlantic community.

One of the main achievements of the Orange Revolution is that Ukraine has
now established full freedom of the media. Ukrainian journalists made a
significant contribution to the struggle for full democratic freedoms. It is
important that media freedom is defended and preserved as it is a
fundamental pillar of democracy.

I remember listening to a BBC interview with the Ukrainian writer Andrei
Kurkov [in September 2005]. When asked what has changed since the Orange
Revolution, he said:

“There is a greater sense of democratic accountability now. People know that
if they do not like the government, they can throw it out when they vote.
And the politicians know that too.”

Dear friends, this year marks the 100th anniversary of our great playwright
Henrik Ibsen’s death. Ibsen was primarily a citizen of the world, and it is
fitting that his plays are being performed in Kiev and Lviv – and in many
other parts of the world – in the course of the year.

Ibsen speaks with a clear and bold voice. He brings important issues onto
the agenda, and his work remains innovative and provocative in the context
of our times, touching as it does on themes such as personal morals, gender
equality, freedom of expression, corruption and abuse of power.

He once wrote to King Carl XV of Sweden of Norway that he wanted to “arouse
his countrymen out of their lethargy and direct their attention to the great
questions of life”, adding that his most important task was to “awaken the
people and inspire them to think about the bigger issues”.

Thinking about the bigger issues – this is no mean task. But we should allow
ourselves to be inspired by it.                   -30-
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