AUR#706 June 5 Potential Energy Tragedy; Putin, We Subsidized Ukraine For 15 Years, Enough; Amb Taylor To Be Sworn In; Ivan Vasiunyk In Town; Vanco Wins

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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       

 
     POTENTIAL ENERGY TRAGEDY THREATENS UKRAINE
 
     “Today another form of potential energy tragedy threatens Ukraine — the
     country’s dependence on imported gas and shady contracts. The cutoff of
     Russian gas in January demonstrated Ukraine’s reliance on external supply
     and its vulnerability to political pressure. The deal Ukraine and Russia
     negotiated to restore supply does not protect Ukraine’s interests or reflect
     normal market practices:” [Article one, by Carlos Pascual] 
                        
ACTION UKRAINE REPORT – AUR – Number 706
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., MONDAY, JUNE 5, 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.                                 CHERNOBYL’S LESSON
                A State’s Lies Threaten its People and its Sovereignty
       Today another form of potential energy tragedy threatens Ukraine
OP-ED:
By Carlos Pascual
Special to WashingtonPost.com
Washington, D.C., Friday, June 2, 2006

2.   PUTIN: RUSSIA, UKRAINE & EUROPE IN ENERGY SECTOR
       “Russia has subsidized Ukraine economy by a sum that amounted
        to three to five billion USD each year. Why should we pay for that?”
EXCERPT FROM:
Transcript of President Putin’s Meeting with
the Leaders of the News Agencies of G8 Member Countries
Kremlin.ru, Novo-Ogaryovo, Russia, Friday, June 2, 2006
 
3.                 KIEV PREPARES ULTIMATUM FOR PUTIN

           USA announced its intention to oversee not only the foreign,
                          but also the domestic policy of Ukraine
Report by Tatyana Ivzhenko, Nezavisimaya Gazeta
Moscow, Russia, Thursday, May 18, 2006

4WILLIAM B. TAYLOR, JR. TO BE SWORN IN AS AMBASSADOR
           OF THE UNITED STATES OF AMERICA TO UKRAINE
             Monday, June 5, 2006, United States Department of State
Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #706, Article 4
Washington, D.C., Monday, June 5, 2006

5.    IVAN VASIUNYK, TOP AIDE TO PRESIDENT YUSHCHENKO, IN
WASHINGTON FOR MEETINGS ON GOVERNMENT REORGANIZATION
               Meeting with members of the Ukraine-U.S. Business Council
Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #706, Article 5
Washington, D.C., Monday, June 5, 2006

6.    RUSSIAN MEDIA: FROM DICTATORSHIP TO DEMOCRACY?
    Olena Prytula, Editor-in-Chief, Ukrayinska Pravda, an on-line newspaper
  based in Kyiv said journalist solidarity is essential for independent media
Annual Press Freedom Roundtable, World Association of Newspapers
Moscow, Russia, Sunday, June 4, 2006

7.          THREAT COMING FROM THE SECURITY SERVICE
Propresidential Ukrainian newspaper expects reprisals from security service
By Bohdan Pereyaslavets, Ukrayina Moloda, Kiev, in Ukrainian 3 Jun 06
BBC Monitoring Service, United Kingdom, Sunday, June 4, 2006

8 U.S. COMPANY VANCO WINS THE FIRST UKRAINIAN TENDER
     FOR EXTRACTING MINERALS FROM THE BLACK SEA SHELF
By Pavlo Berest, Kyiv Weekly, Kyiv, Ukraine, Wednesday, May 31, 2006


9DEUTSCHE TELEKOM: EASTERN EUROPE A GOOD INVESTMENT
            Would look to bid on telecom companies in Serbia & Ukraine
Nina Sovich, Dow Jones Newswires, Bonn, Germany, Fri, June 2, 2006

10.                 ALL ROADS LEAD….THROUGH UKRAINE?
         Condition of roads in the country inhibit Ukraine playing this role
By Yaroslav Senchenko, Kyiv Weekly, Kyiv, Ukraine, Wed, May 31, 2006

11.     UKRAINIAN PRESIDENT CALLS ON YOUNG PEOPLE TO

             CHOOSE UKRAINIAN AS THEIR NATIVE LANGUAGE
Ukrainian Radio First Programme, Kiev, in Ukrainian 3 Jun 06
BBC Monitoring Service, United Kingdom, Sat, June 03, 2006

12.      TYMOSHENKO CALLS KHARKIV REGION RUSSIAN
         LANGUAGE DECISION ANTI-CONSTITUTIONAL MUTINY
Interfax-Ukraine news agency, Kiev, in Russian 1645 gmt 3 Jun 06
BBC Monitoring Service, United Kingdom, Saturday, Jun 03, 2006

13.        WILL ZUZAK UKRAINE POLITICAL REPORT, PART II
Zuzak Ukraine Political Report; Part II

Politics@Infoukes.com, Toronto, Canada, Friday, June 2, 2006

14RESPONSE TO THE QUESTIONS YOU POSED FOR PONDERING
           BY STUDENTS OF UKRAINE-RUSSIA RELATIONSHIPS
LETTER-TO-THE-EDITOR: By Walter Anastas, J.D.
Professor-emeritus, Wm. Mitchell College of Law, St. Paul, MN
Action Ukraine Report (AUR) #706, Article 14
Washington, D.C., Monday, June 5, 2006

15MRS. YUSHCHENKO, YOU’VE GOT A FRIEND IN PENNSYLVANIA
        Ukraine’s First Lady’s Ideas Find Resonance throughout Philadelphia’s
                         Medical, Business and Ukrainian Communities
By Heather Fernuik, Assistant Editor
Action Ukraine Report (AUR) #706, Article 15
Washington, D.C., Monday, June 5, 2006

16FIRST LADY VISITING USA REGARDING HOSPITAL TO HOSPITAL
        PROGRAM TO BUILD A NEW CHILDREN’S HOSPITAL IN KYIV
             Her visit sponsored by Genesis Eurasia Corporation, Houston
Press Office of President Viktor Yushchenko
Kyiv, Ukraine, Monday, May 29, 2006

17. PRESIDENT YUSHCHENKO APPOINTS YUKHNOVSKYI DIRECTOR
          OF UKRAINE’S INSTITUTE OF NATIONAL REMEMBRANCE 
Ukrainian News Agency, Kyiv, Ukraine, Wed, May 22, 2006

18CABINET OF MINISTERS CREATES A UKRAINIAN INSTITUTE

                            OF NATIONAL REMEMBRANCE 
    Take measures toward commemorating victims of great famines, political
        repressions, & solders who participated in national liberation battles
Ukrainian News Agency, Kyiv, Ukraine, Friday, June 2, 2006

19VARTKES’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
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1
                      CHERNOBYL’S LESSON
                 A State’s Lies Threaten its People and its Sovereignty

       Today another form of potential energy tragedy threatens Ukraine

OP-ED: By Carlos Pascual
Special to WashingtonPost.com
Washington, D.C., Friday, June 2, 2006

In April 1986, Soviet lies turned the world’s worst nuclear disaster at
Chernobyl into a larger human tragedy. Twenty years later, lack of
transparency in Ukraine’s energy sector again threatens Ukraine’s
sovereignty, this time due to murky gas deals, set to expire in June.

Unlike in 1986 when Soviet leaders tried to cover up Chernobyl’s threat,
Ukraine’s leaders now have the opportunity to respond to alarm bells in the
gas sector and forestall an impending danger to its own sovereignty and
European energy security.

The Chernobyl tragedy was symptomatic of what was fundamentally
wrong with the Soviet Union: false promises about technology, disregard
for the environment, secrecy and obfuscation, and greater concern for
national prestige than for its own people.

It was appropriate and ironic that reform of many of those Soviet practices
secured Chernobyl’s closure in December 2000. For years, Ukraine’s leaders
refused to consider closure, arguing that it would cause blackouts and
threaten industry. In fact, Ukraine had excess capacity, but lacked market
prices and systems to collect revenues in order to pay for fuel, replace
obsolete plants, and ensure adequate supply. Electricity reforms that began
in 2000 now allow Ukraine to export electricity to Hungary and Slovakia.

Today another form of potential energy tragedy threatens Ukraine — the
country’s dependence on imported gas and shady contracts. The cutoff of
Russian gas in January demonstrated Ukraine’s reliance on external supply
and its vulnerability to political pressure. The deal Ukraine and Russia
negotiated to restore supply does not protect Ukraine’s interests or reflect
normal market practices:

       [1] The contract does not ensure stable prices for Ukraine past

mid-year, nor do the terms provide for a predictable, non-politicized
procedure for setting future prices (as in Russia’s gas deals with
Germany and France).

       [2] Russia does not guarantee to supply minimum volumes but,

rather, may supply gas up to a stated ceiling. In other words, Russia
decides what it wishes to supply.

      [3] Ukraine guarantees Russia access to its gas transit system but

Russia is not required to pay if that capacity is not used.

      [4] The gas pipeline tariff for Russia is set for five years, with no

escalator clause, even though Ukraine’s gas import price is only fixed
for six months.

      [5] Transit rights and sole gas import rights are given to a new

company, RosUkrEnergo, that does not have physical or financial
assets that can be seized if it does not meet its obligations, and whose
ownership structure is murky and possibly associated with organized
crime.

Ukraine has already fallen into serious arrears under the new agreement with
Russia. It is unclear why revenues from gas sales and transit have not
covered Ukraine’s payment obligations. We can write the scenario now for
what will happen in June when the current price deal expires. As it has in
other countries, Russia may well seek as payment a “fire sale” ownership
stake in Ukraine’s gas system or in major gas-consuming industries, which
are the lifeblood of Ukraine’s economy.

If Ukraine’s new leadership is committed to acting on the lessons of
Chernobyl, it will seek international help to restructure these agreements
and will be fully transparent about the supply arrangements.

Forestalling a crisis is also in the interests of the EU, United States and
Russia. The EU cannot afford to be passive. Almost all European gas imports
from Russia — nearly one-third of Europe’s gas supply — transit Ukraine.

The United States hardly needs another crisis in the Russia relationship as
we seek Russia’s help in preventing a nuclear Iran. Russia needs neither an
irate European customer nor a fight with diplomatic partners seeking to
prevent an Iranian nuclear bomb.

Some practical steps:

 
       [1] Ukraine’s leaders must break with past practices of corruption
and lack of transparency in the energy sector. Ukraine should seek
international help in addressing its gas supply problems and technical
assistance in reviewing the terms of existing contracts.

       [2] The EU and the U.S. should engage Ukraine and Russia before

the crisis erupts and offer to facilitate negotiation of normal commercial
arrangements.

       [3] The World Bank, EBRD and bilateral donors should support

programs in Ukraine to increase energy efficiency and to create and
enforce regulations that promote efficiency and transparency in the
gas transit system.

      [4] When the G-8 takes up energy security in its July meeting,

transparency in market structure, ownership, and supply arrangements,
as well as fair competition and access to transit infrastructure, should
be core themes. Russia should welcome such discussions as being in
its long-term interests.

Ukraine’s friends have reflected on Chernobyl and said “never again.” Today,
“never again” means that Ukraine’s friends and its leaders must work to
ensure that lack of transparency in Ukraine’s energy sector does not threaten

the sovereignty for which Ukrainians have persevered.        -30-
————————————————————————————————
Carlos Pascual is the Vice President for Foreign Policy Studies at the
Brookings Institution in Washington, D.C., and was U.S. Ambassador
to Ukraine from 2000 to 2003.
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 http://www.washingtonpost.com/wp-dyn/content/article/2006/06/01/AR2006060100875.html
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2.  PUTIN: RUSSIA, UKRAINE & EUROPE IN ENERGY SECTOR
         “Russia has subsidized Ukraine economy by a sum that amounted
         to three to five billion USD each year. Why should we pay for that?”

EXCERPT FROM: Transcript of President Putin’s Meeting with
the Leaders of the News Agencies of G8 Member Countries
Kremlin.ru, Friday, June 2, 2006, Novo-Ogaryovo, Russia

QUESTION FROM TROTA: Mr President, many thanks for agreeing
to meet with us.

I would like to come back to the energy issue. For over 40 years Russia
and Europe’s energy relations were harmonious ones. However some
partners are now arguing about the reliability of Russian deliveries of
energy resources. Europeans look a bit strangely at Gazprom’s efforts
to start working in the European market.

On the other hand, there are many countries who want more liberalization
in the Russian energy market and I would say that they are trying to obtain
their share of the Russian gas and oil markets. Is this a temporary
phenomenon? Or is it the end of harmonious relations between Russia
and Europe in the energy sector?

VLADIMIR PUTIN: I consider that our business partners, especially
European ones, never doubted and today do not doubt that their Russian
partners are responsible. And we see such issues and their positions as a
means to incite us to make one-sided decisions which would satisfy our
partners and but would not be in the interests of the Russian economy.
In our opinion this is just competition.

[1] Russia has been delivering energy to Europe for 40 years. There was
never a day or any hour that witnessed a failure. And at the beginning of
this year Russia provided full, and I want to stress it, the full amount of
deliveries to our western European partners and European consumers.

To understand why Ukraine, a transit country, illegally siphoned off a
significant part of European resources you must not ask us you must
ask Ukraine. And let’s not complicate things unnecessarily. Let’s talk
directly and honestly about this problem.

Our western friends supported the ‘orange events’ in Ukraine in a very
active way. We see perfectly well what is happening there the whole time.

The country has been faced with a great deal of problems. But if you
want to support what happens there in the future, then you will have to
pay for it. Why should we pay for that?

FOR 15 YEARS RUSSIA HAS SUBSIDIZED UKRAINIAN ECONOMY
Everyone is well aware that over the last 15 years Russia subsidized
the Ukrainian economy by a sum that amounted to three to five billion
USD each year. I want to emphasize that we did this every year. And
each year we raised the issue of whether we should change to the
European regime for determining prices.

Let’s work out uniform rules together. You, for example, represent a
German news agency. Why should German consumers pay 250 USD
for a 1000 cubic metres and Ukrainians 50? If you want to give Ukraine
such a gift why don’t you pay for it? Why do you want us to give such
presents?

Take these three to five billion USD, take them from the pockets of
German taxpayers, and explain to them why you are doing so. We
have nothing against this. Pay up. That’s the first thing.

                  ACCESS TO OUR ENERGY SYSTEMS
[2] The second concerns access to our energy systems. I want to
emphasize that they are our energy systems. The transport systems
have been paid for by Russian money and the deposits belong to the
Russian people. We have a very responsible energy policy. We are
very cooperative during this teamwork. But we will always look for
mutually acceptable decisions. Just recently at the Russia-EU summit
we discussed these problems in a very frank, companionable and
even friendly way, and this was very pleasant for me.

I asked our partners a question and I can ask you the same question.
What are we talking about when you try to convince us to ratify an
energy charter and other agreements? We are talking about access to
two types of infrastructure ­ infrastructure used in extraction and for
transportation, which is first and foremost our main pipelines.

It should be a shared, mutual decision. So it is natural that we are asking
the question: okay, our partners are allowed to use our infrastructure for
extraction and transport but what will you let us do? Where are the
deposits that we can help exploit? There are simply none.

As a matter of fact it is very one sided. And many of our partners with
whom we met recently in Sochi at the Russia-EU summit agreed that
together we need to look for methods of cooperation that would satisfy
both sides.

With the German company BASF we found such a solution. We
allowed them to start extracting in one of the major Russian
deposits. We evaluated their transport possibilities in Germany,
actually an independent evaluation was made, and BSSF allowed us
to use its network for distributing gas. We consider that this is a very
good example of cooperation and establishes a really new level of
trust that joins our economies and establishes the necessary conditions
for teamwork and trust. But no one-sided solutions will be accepted.
           “————————————————————–“
——————————————————————————————
EXCERPT FROM: Transcript of President Putin’s Meeting with
the Leaders of the News Agencies of G8 Member Countries
Kremlin.ru, Friday, June 2, 2006, Novo-Ogaryovo, Russia

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3.          KIEV PREPARES ULTIMATUM FOR PUTIN

          USA announced its intention to oversee not only the foreign,
                         but also the domestic policy of Ukraine
 
Report by Tatyana Ivzhenko, Nezavisimaya Gazeta
Moscow, Russia, Thursday, May 18, 2006

Last weekend, for the first time at an official level, the USA announced its
intention to oversee not only the foreign, but also the domestic policy of
Ukraine. The U.S. Congressional Committee on Foreign Affairs has
comprehensively reviewed the Ukrainian question, starting with the
(projected) times for the country’s entry into the WTO (World Trade
Organization) and NATO, and ending with gas deliveries and formation

of the government.

William Taylor, who will be appointed as the new American ambassador to
Ukraine in the nearest time, publicized his program of action in the role of
such a “curator.”

Taylor announced that Washington “is very interested in Ukraine’s securing
membership in NATO.” He believes it is possible to achieve this goal in
2008. Already in the Fall, Kiev may enter the first stage of implementation
of the Plan of Action for Ukraine-NATO, which would give Kiev a chance to
join NATO in 2 years, the future ambassador believes.

“If my candidacy is approved (to the post of U.S. Ambassador to Ukraine–),
I will do everything in my power to provide assistance to Ukraine in
implementing political, economic and defense reforms, as well as reforms in
the sphere of security necessary for its possible membership in the
community united by the common NATO values.”

Recently in Washington, the question of the attitude toward the temporary
basing of the Russian Federation’s Black Sea Fleet in Sevastopol was
principally resolved. Previously, it was believed that there cannot even be
any discussion about the country’s joining NATO until 2017, when the term of
the base expires.

At the end of April, the official representative of the NATO Secretary
General, James Appaturai, announced at a press conference that the Russian
fleet is no longer viewed as an obstacle to Ukraine’s full-fledged
membership in the alliance: “All 26 NATO member states support the
Euro-Atlantic integration of Ukraine, not only politically, but practically
as well. And the question of the base in Sevastopol will not stop this
(progress toward Ukraine’s entry into NATO–).”

NATO Secretary General Jaap de Hoop Scheffer also expressed his attitude
toward this problem: “If Ukraine joins NATO prior to expiration of the term
of temporary basing of the Russian Black Sea Fleet (before 2017–), this
will not become a problem for NATO.”

Russia’s attitude toward this process was made public in recent days by
Federation Council Speaker Sergey Mironov: “We do not welcome this
(Ukraine’s entry into NATO–). And we will draw conclusions.” In his words,
the Russian side may discontinue cooperation with Ukraine in a number of
vital directions: “These are tens, hundreds, and thousands of jobs; This is
technology, trade and export. Therefore, let them weigh everything (in
Kiev–), and then make their decision.” At the same time, Russia perceives
NATO as a military bloc, and speaks out against its expansion and movement
toward Russian borders.

William Taylor’s words may be considered a “curtsy” in the direction of
Moscow. “Good expanding relations of Ukraine with the USA and the
Euro-Atlantic structures are entirely compatible with Ukraine’s good
relations with Russia,” he said. Almost simultaneously with this statement,
Viktor Yushchenko officially invited the presidents of the USA and the
Russian Federation, George Bush and Vladimir Putin, to Kiev. The official
reason (for this invitation) was the 65th anniversary of the tragedy at
Babiy Yar. An international forum honoring the memory of the victims of
fascism will be held in Kiev in September.

While the long-planned visit by Vladimir Putin to Kiev has already been
postponed many times, George Bush himself recently expressed a desire to
visit Ukraine. On 26 April, the newspaper,, commented on this desire as
follows: “The USA would like it if Ukraine joined the Plan of Action on NATO
Membership by September, before the November NATO Summit in Riga.

This would give that country the opportunity to become a member of NATO
before George Bush leaves office at the beginning of 2009.”

By that moment, Washington is evidently planning changes in Ukraine, which,
from the outside, appear as an attempt to ensure the country’s maximal
independence from Russian influence. It is indicative that one of the main
topics of the new American ambassador’s statement in Congress was the
question of providing Ukraine with energy resources.

William Taylor openly expressed the dissatisfaction of the American side
with the current Ukrainian-Russian agreements on deliveries of gas, which
involve the RosUkrEnergo Company. He noted: “If the new government (of
Ukraine–) decides that it wants to review the deal, then we (the USA–)
would support such a step. We have already made this known. We will

provide assistance to Ukraine on this question.”

At the same time, Washington’s official representative promised that the
Ukrainian government would be formed within “several weeks, and not months.”
Taylor noted that, in his opinion, Viktor Yushchenko’s bloc, “Nasha
Ukraina,” would form a parliamentary coalition, which would appoint a
government, not with the Party of Regions, but with the bloc of Yuliya
Timoshenko.

By a confluence of circumstances, immediately after this statement,
Yushchenko supporters stopped discussing the possibility of cooperating with
Yanukovich’s party, and the president himself for the first time admitted
the possibility of appointing Timoshenko to the post of prime minister.

There have also been some notable changes in the domestic policy of Ukraine.
Thus, already last week in Kiev, statements were heard regarding the
possibility of withdrawing from the CIS. Although official MFA (Ministry of
Foreign Affairs) representatives specified that, for the present day, there
have only been Ukrainian-Georgian consultations regarding the effectiveness
of activity of the Commonwealth structures. The head of the MFA of Ukraine,
Boris Tarasyuk, assured journalists that the matter has not gone beyond
statements. “For the present day, the question of withdrawal from the CIS is
not on the agenda,” he said.

However, Yushchenko noted at the end of last week in Poland, that Ukraine
would not lose anything if it withdrew from the CIS: “From the standpoint of
the present day, there are no such agreements that would lead to losses due
to withdrawal from the complement of the CIS.” In Yushchenko’s words, the
Commonwealth is turning into a political club. At the same time, Ukraine is
still hoping for “rationalization” of the association, which may become
economically advantageous for the members of the CIS.

First and foremost, Kiev is demanding the introduction of a free trade zone,
without limitations or exceptions. If Vladimir Putin comes to Kiev, it
appears that this question may be posed in the form of an ultimatum. We
cannot rule out the possibility that Presidents Putin and Yushchenko
discussed the question of bilateral cooperation of Ukraine and Russia,
including within the scope of the CIS, in the course of their telephone
conversation yesterday. However, nothing is being reported about any
specific agreements.

William Taylor is the chief adviser to the U.S. State Department Coordinator
on Questions of Reconstruction and Stabilization. He also worked in Kabul as
coordinator on Afghanistan, in the U.S. State Department Administration on
South Asian Countries.                             -30-

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4. WILLIAM B. TAYLOR, JR. TO BE SWORN IN AS AMBASSADOR
            OF THE UNITED STATES OF AMERICA TO UKRAINE
              Monday, June 5, 2006, United States Department of State

Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #706, Article 4
Washington, D.C., Monday, June 5, 2006

WASHINGTON — William B. Taylor, Jr. will be sworn in as Ambassador
of the United States of America to Ukraine on Monday afternoon, June 5,
2006 at the United States Department of State Benjamin Franklin room.

The U.S. Senate confirmed William B. Taylor, Jr. to be U.S. Ambassador
to Ukraine on Friday, May 26th. He was nominated by President Bush for
the post on May 1st.

I had the opportunity to work with Ambassador Taylor when he was
Deputy Coordinator, then Coordinator for U.S. Assistance to Europe
and Eurasia (initially called Assistance to the  NIS).

As Deputy Coordinator from late 1991, he was responsible for developing
many of the initial U.S. assistance programs for Ukraine and the other
countries of the former Soviet Union; and as Coordinator, he was U.S.
chair of the U.S.-Ukraine Coordinating Committee for Economic
Cooperation that covered the entire range of macroeconomic, financial,
energy, and commercial issues.

Since 2004 until just recently, Amb. Taylor was at the U.S. Embassy in
Baghdad, Iraq, as Director of the Iraq Reconstruction Management Office.
Before that, in July 2003, he was appointed as the Afghanistan Coordinator
the U.S. Department of State, after having served in Afghanistan as the
Special Representative for Donor Assistance to Afghanistan.

Prior to his coordinating roles in the 1990’s for U.S. assistance to the
NIS, Amb. Taylor served as the Special Deputy Defense Advisor to the

U.S. Ambassador to NATO; directed an in-house Defense Department
think tank at Fort McNair; and earlier served for five years on the staff
of U.S. Senator Bill Bradley. 
 
The people who work on Ukrainian issues in Washington and in Kyiv
are very pleased to have Bill Taylor as the next U.S. Ambassador to
Ukraine. He has a strong reputation as a professional diplomat, has a
high degree of knowledge and considerable experience related to
Ukrainian issues, is very personable, friendly and a person who is
willing to meet and discuss the practical issues faced by real
businesspeople and investors.                        -30-
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5.    IVAN VASIUNYK, TOP AIDE TO PRESIDENT YUSHCHENKO, IN
WASHINGTON FOR MEETINGS ON GOVERNMENT REORGANIZATION
              Meeting with members of the Ukraine-U.S. Business Council

Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #706, Article 5
Washington, D.C., Monday, June 5, 2006

WASHINGTON – Ivan Vasiunyk, First Deputy Chief of Staff of President
Viktor Yushchenko’s Secretariat, is in Washington this week for a series
of meetings.

While in Washington, Mr. Vasiunyk will have meetings at the White House
and National Security Council, leading Senators and Members of Congress,
various U.S. government officials and the International Republican Institute
(IRI).

The main purpose of the trip is to start the implementation of a program
funded by the U.S. Department of State and managed by the International
Republican Institute (IRI) to provide assistance to the staff of the
Presidential Secretariat in Kyiv in the areas of structural reorganization
and management.

Ivan Vasiunyk will meet with the members of the Ukraine-U.S. Business
Council at a working lunch on Wednesday.  Also attending will be Mr.
Vasiunyk’s chief of staff, Sergey Rokhmanov, Charge d’Affairs of the
Ukraine Embassy Victor Niktiuk, and Trade and Economic Mission Chief
Yevgen Burkat.

Mr. Vasiunyk is from western Ukraine and has held a variety of private
and government positions.  He was the deputy chief of staff for Viktor
Yushchenko when he was Prime Minister.  Vasiunyk then became a
member of the Ukrainian Parliament from the Our Ukraine bloc. Ivan
Vasiunyk has been a very close and trusted aide to President Yushchenko
for many years.

I first met Ivan Vasiunyk ten years ago when he was in charge of a
think-tank in Kyiv in cooperation with Viktor Pynzenyk, who is now

acting Minister of Finance. Ivan has also worked closely with Kateryna
and Viktor Yushchenko on their activities related to the commemoration
of the millions of victims of the Holodomor (genocidal famine-terror) in
1932-1933.  I have recently worked with Ivan on the planning for
Holodomor activities related to the 75th commemoration of the tragedy
in 2007-2008 in Ukraine and around the world.      -30-
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6. RUSSIAN MEDIA: FROM DICTATORSHIP TO DEMOCRACY?
    Olena Prytula, Editor-in-Chief, Ukrayinska Pravda, an on-line newspaper
    based in Kyiv said journalist solidarity is essential for independent media

Annual Press Freedom Roundtable,

World Association of Newspapers (WAN)
Moscow, Russia, Sunday, June 4, 2006

Strikingly different lessons from Russia’s neighbours provided both hope
and a warning Sunday for the future of Russian press freedom, as
journalists from the region came together in an international seminar to
examine the main issues facing the Russian press.

The hope came from Ukraine, where journalists working together for the
common good succeeded in lifting censorship and winning reforms.

The warning came from Belarus, which suffers from domination by
state-controlled media and where harassment of independent journalists is
a regular occurrence. Some fear that Russia is following in its footsteps.

“I can’t say we have some ready medicine or pill that we can prescribe to
our Russian colleagues, but we have some experiences that can be shared,”
said Olena Prytula, Editor-in-Chief of Ukrayinska Pravda, an on-line
newspaper based in Kiev.

Ms Prytula, speaking at the World Association of Newspaper’s annual
press freedom round table, said that increasing repression in Ukraine
brought journalists together and gave them a strong community to fight
censorship successfully — something that Russian panellists agreed had
not happened yet in Russia.

Ms Prytula said journalistic solidarity was essential for creating
independent media. Getting support from management is also essential.

And working in media where censorship is difficult –like the internet —
is also important.

The lessons from Belarus, Europe’s only totalitarian regime, are quite
different. “They are really taking the media into their own hands,” said
Andrej Dynko, editor of Nasha Niva, speaking of the government, “and
there are fears this can happen in Russia at well.”

The WAN press freedom roundtable was held Sunday, on the eve of
the World Newspaper Congress, World Editors Forum and Info Services
Expo 2006, the global meetings of the world’s press. More than 1,700
newspaper publishers, editors, other senior newspaper executives and
their guests are in Moscow for the events, which open Monday.
President Vladimir Putin is schedule to address the opening session.

Participants in the press freedom roundtable were asked to examine the
main issues holding back development of the independent press in Russia.
For Petr Godlevsky, Director General of Izvestia, the “first and foremost”
issue is the lack of media business training for journalists and editors.

“In order to have a newspaper, you need to have managers — not just
journalists — and it took people awhile to figure this out,” he said.

Another problem is “the desire of state and civil servants to hold back
the press. This is something that exists in all countries since the first
newspaper was published.” A third problem, he said, was apathy among
the general public.

Nikolai Svanidze, a presenter for RTR TV, also focused on the problem
of an apathetic audience, contending that Russian society had become
“tired of all the different choices it had in the media.”

“Our guests from the United States and European countries may not
understand what I’m talking about, but the classic Russian reader is not
used to having a variety of opinion, he’s used to having one opinion
handed to him on a platter. It is fatiguing to have a choice because you
have to think.”

Mr Svanidze also argued that Russia’s regional press did not really want
freedom because it was more interested in the economic support it
received from its masters. Both of these contentions led to much
opposition from both audience and panellists.

But Mr Svanidze did agree with the majority on the need for journalistic
solidarity. “We need to try and somehow create a journalists community
which does not exist yet,” he says.

Also on the panel were Yury Purgin, CEO of Altapress publishing house,
and William Dunkerley, a media consultant from the United States. The
panel was chaired by George Brock, Editor of the Times (UK) Saturday
edition and President of the World Editors Forum.

WAN also organised two other round tables Saturday — one on “The
Digital Explosion: Exploiting the Potential of Our Media”, and one
on initiatives to attract young readers.
—————————————————————————————–
Details about the World Newspaper Congress, World Editors Forum
and Info Services Expo 2006 at www.moscow2006.com.

The Paris-based WAN, the global organisation for the newspaper
industry, defends and promotes press freedom world-wide. It
represents 18,000 newspapers; its membership includes 73 national
newspaper associations, newspapers and newspaper executives in
102 countries, 11 news agencies and nine regional and world-wide
press groups.

Inquiries to: Larry Kilman, Director of Communications, WAN, 7
rue Geoffroy St Hilaire, 75005 Paris France. Tel: +33 1 47 42 85 00.
Fax: +33 1 47 42 49 48. Mobile: +33 6 10 28 97 36.
E-mail: lkilman@wan.asso.fr.
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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7.    THREAT COMING FROM THE SECURITY SERVICE
 Propresidential Ukrainian newspaper expects reprisals from security service

By Bohdan Pereyaslavets, Ukrayina Moloda, Kiev, in Ukrainian 3 Jun 06
BBC Monitoring Service, United Kingdom, Sunday, June 4, 2006

A Ukrainian daily edited by presidential adviser Mykhaylo Doroshenko has
said it expects to come under pressure from the Security Service. Top SBU
officials are planning to “sort things out” use “KGB tricks” against the
paper’s journalists after they alleged that the service is controlled by
Russia.

The following is the text of the article by Bohdan Pereyaslavets, entitled
“Threat Coming from the Security Service”, published in Ukrayina Moloda

on 3 June; subheadings have been inserted editorially:

The president [Viktor Yushchenko] has instructed his secretariat to
investigate the high-profile Ukrayina Moloda article about the staffing
policy at the Security Service of Ukraine [SBU], while the SBU does nothing
but issue denials and has started probing “the topic of the paper’s
editor-in-chief, Mykhaylo Doroshenko”.

The article published in Ukrayina Moloda the day before yesterday [1 June],
“The Security Service of Urkaine [play on the slang word “urka”, meaning
“criminal”]? SBU Chief Ihor Drizhchanyy has the SBU serve the clans and
Moscow”, has had a tremendous impact. Many prominent politicians,
law-enforcement veterans and active middle-ranking employees of the security
services have expressed support for our newspaper over these few days.

Of course, the latter are for now forced to express their support and thanks
unofficially, because their leadership at the head SBU office at 33
Volodymyrska is “fuming mad” and trying to whitewash the affair with
counterstatements from the press office and is planning to make use of
methods of quickly “sorting things out” with our journalists – methods well
forgotten after the years of Kuchmism [after former President Leonid
Kuchma]. But more about that later.

The presidential press secretary, Iryna Herashchenko said: “the president is
familiar with the article which was printed in the newspaper. The president
has instructed the head of the presidential secretariat and lawyers working
in the secretariat to study the allegations herein and in particular those
which concern the staffing policies at the SBU.”

Interestingly enough, the president yesterday met the leaders of
law-enforcement agencies and expressed his dissatisfaction with the activity
of the law-enforcement agencies in the sphere of defending human rights and
national interests as well as in the fight against corruption. Instead of
the SBU chief [Ihor Drizhchanyy], a deputy SBU head came to the presidential
secretariat.

Even before the above reaction of the president, the main figures in our
damning story tried to snarl back. No, not Ihor Drizhchanyy, the SBU chief
happens to be on a business trip (the SBU did not say where exactly), but
the statement by the press office very much recalls its style of reacting to
previous high-profile allegations about him and his entourage.

                   NEWSPAPER READY TO GO TO COURT
Well, of course we actually expected this real panic from the “Chekists”
[after Cheka, the Bolshevik secret police]. An “openly slanderous” article,
one “made to order”, and the appearance of which is “linked to a number of
staffing changes, since in the past eight months the SBU has investigated
the abuse of position by several highly-placed SBU employees, over which
investigation the Prosecutor-General’s Office has opened criminal cases” –
these are the unconvincing arguments of the current leaders at 33
Volodymyrska Street.

Mr Drizhchanyy is on a business trip, but after he gets back does he plan to
personally address the editor-in-chief of Ukrayina Moloda with a demand the
newspaper make a retraction and apologize? It’s not worth it.

If he is really interested in “dotting all the i’s in issues linked both to
the content and goals of the article”, then he should go straight to court,
because Ukrayina Moloda has all the necessary confirmation of the facts
outlined in the newspaper.

Because we made use of more than one source of information. “We are ready

to go to court and will prove that the article is true. People will come to
court who will confirm the facts. And the building next to the SBU is not
going anywhere – those who wish can go there and ask who lives in it,” says
Mykhaylo Doroshenko, adding that the article will be continued.

                     SBU SAID PLANNING RETRIBUTION
Meanwhile, the main heroes of our article have decided to fall back on good
old, tried and true methods from the Kuchma era. According to data Ukrayina
Moloda has, there was a meeting of the leaders in the main office of the SBU
at 33 Volodymyrska Street, at which deputy SBU chiefs Valeriy Pidbolyachnyy,
Ivan Herasymovych, Volodymyr Pshenychnyy and Mr Tsyhanok received
instructions to quench the scandal as quickly as possible and get to work on
Mykhaylo Doroshenko.

So what’s this? A return to the acts of provocation and other tricks of the
old KGB? And so we ask that the publication of this information to be an
official appeal to the Prosecutor-General’s Office pursuant to the Law of
Ukraine “On the mass media”.
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
     NOTE: Send in a letter-to-the-editor today. Let us hear from you.
========================================================
8. U.S. COMPANY VANCO WINS THE FIRST UKRAINIAN TENDER
     FOR EXTRACTING MINERALS FROM THE BLACK SEA SHELF

By Pavlo Berest, Kyiv Weekly, Kyiv, Ukraine, Wednesday, May 31, 2006

The Company Vanco International Limited (USA) won the first tender for
extracting minerals from the Ukrainian part of the Black Sea Shelf. The
winning company has been extracting oil in Africa and South America.
The British Company JNR is partnering with the Vanco Company.

Vanco International, Ltd. announced that it is ready to fill the Odesa-Brody
pipeline with oil. The company will compensate for some significant
exploration, and will have the right to take control of 80% of all extracted
resources.

The tender won by the American company was the first in the whole series
of tenders, which the government intends to use to solve the problems of
diversification of the energy supply and rely less on their imports.

The winner of the tender gets the opportunity to do geological exploration
and then use the resources found for the next 30 years. The winner is
planning to lay underwater gas pipes to Kerch and connect with the existing
system of gas transportation. The government will choose where to deliver
oil from the rigs: into the Southern Port or to Odesa. If the Odesa-Brody
oil pipeline starts operating full force, Vanco is willing to fill it with
extracted oil.

The alternative to the pipeline is distribution by railroad tankers all over
Ukraine. In the beginning stages, the winning company plans to make 2
exploration boreholes. Each borehole will cost US $60 bn. The first
industrial oil can be extracted in 4 years.  In general, oil well
development may last from 5 to 10 years.

Participants paid US $10,000 each to apply for the tender. There were 7
participants in the tender:  Hunt Oil Company of Ukraine, Vanco
International Ltd., Shell, Exxon, Mobile, Turkiye Petrolleri A. O., and
Alphex One Ltd. Although before the tender it was announced that only
foreign organizations were allowed to participate, the application of
ChornomorNaftoGas (Black Sea Oil and Gas Company) was accepted as well.

The Ukrainian company took part in the tender jointly with American Hunt Oil
Company. Up until this point, ChornomorNaftoGas was the only company that
extracted oil, gas and gas condensate in the Black Sea Shelf and in the Sea
of Azov.

The winner will pay a bonus of US $500,000 to the government during the
signing of the agreement and will invest at least US $15 mn into geological
exploration. If oil and natural gas are found, it will have to pay US $2 mn
more.

ChornomorNaftoGas General Director Oleksandr Horoshkevych,  stated:
“There is no objective information about this tender. They are not public
and the winner is not our partner.”

The companies that lost the tender are still optimistic and are going to
participate in the next one to explore the Scythian oil and gas deposits not
far from Zmiyiniy Island, where the sea is 100-2,000 meters deep and the
prospected resources (oil and gas) are 54.3 mn tonnes. The exploration in
this part of the continental shelf is expected in the near future.

The potential participants of the tender should remember that the
territorial issue around the Zmiyiniy Island has not been completely
resolved between Ukraine and Romania. So the actions of the winner might
be limited on the shelf until the situation is regulated.  Significant
natural gas and oil deposits were found a long time ago in the Ukrainian

part of the shelf in the Black Sea and in the Sea of Azov.

These days, the situation with importing energy resources has become more
complicated, so extraction of Ukraine’s own oil and gas should expand the
resource base and allow for diversifying the country’s energy supply. This
is the reason why the Ukrainian government has initiated to do a series of
tenders to develop Ukraine’s deposits. The noticeable results of that
strategy will be seen no sooner than in a few years.

                                       COMMENTARY
[1] Gene Van Dyke, Chairman and CEO of the Vanco Energy Company:

“The Ukrainian side demonstrated its commitment to a fair and transparent
tender process. We are very happy with the result. The success of this
exploration project will be a major boost to Ukraine’s efforts to become
more energy independent. While deepwater exploration is very risky, I
believe that Ukraine’s Black Sea represents an extremely attractive
opportunity for Vanco. And, Vanco in association with JNR, has the required
deepwater expertise and financial wherewithal needed to successfully explore
the tender area.”

[2] Yuriy Boiko, former head of NaftoGas Ukraine:

“The idea to bring in a foreign investor to extract natural gas and oil from
the shelf is not justified. We are not Libya or Kuwait, and we don’t have so
much natural gas to share. We have 1.2 trillion cubic meters of conventional
fuel in our shelf. It is located deep down, on the bottom of the Sea. We
need Norwegian platforms to extract it. In my opinion, we need to attract
investments, buy these platforms, station them and extract the fuel on our
own.”
                                       BACKGROUND
Seismology exploration found 109 deposits of natural gas and oil in the
waters of the Black Sea. The level of mastering these resources is still
very low – about 4%.

 The exploratory research predicts more than 1.5 bn tonnes of conventional
fuel in the natural gas equivalent, including:

-North-western Shelf of the Black Sea – 604.1 mn t
-the continental slope and the deep-see canyon of the Black Sea – 346.0 mn t
-Kerch Shelf of the Black Sea – 257.0 mn t
-the waters of the Sea of Azov – 324.8 mn t of the conventional fuel

The area presented at the tender is located in the sea, 13 km from the Kerch
peninsula. Its area is nearly 13,000 square km. The depth of the sea there
is 70-2,000 meters. If the forecast is confirmed, 3 mn tons of oil and 4 bn
m3 of natural gas per year can be extracted there. Experts predict that up
to US $2 bn can be invested into implementation of this project.

Vanco International, Ltd. (Bermudas) is a branch of Vanco Energy Company
(US), created in 1997 to carry out operations outside the U.S., primarily in
Western Africa.

Vanco International, Ltd. specializes in oil and natural gas extraction from
the African Shelf of the Atlantic Ocean and owns rights to explore deposits
on the shelves of Morocco, Cote-d’Ivoire, Ghana, Equatorial Guinea, Gabon,
Madagascar and South America. It extracts 10.5 mn tons of oil per year. The
turnover of the company has not been disclosed.

The company JNR, Ltd. introduces the interests of Nathaniel Rothschild and
his family in the former Soviet countries of Central and Eastern Europe.
The investment interests of the company range from energy production and the
coal industry, to providing financial and real estate services.   -30-
————————————————————————————————-
LINK: http://www.weekly.com.ua/?art=1149026022
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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9. DEUTSCHE TELEKOM: EASTERN EUROPE A GOOD INVESTMENT
              Would look to bid on telecom companies in Serbia & Ukraine

Nina Sovich, Dow Jones Newswires, Bonn, Germany, Fri, June 2, 2006

BONN — Deutsche Telekom AG (DT) considers state-run telecommunication
companies in Eastern Europe as good investments despite a customer flight
from fixed-line to mobile services, a company executive said.

Elek Straub, chief executive of Deutsche Telekom’s Hungarian subsidiary,
Magyar, told a telecom conference the company would look to bid for telecom
companies in Serbia, Ukraine, and to build a telecom company from the ground
up in Romania.

Unlike in Western Europe, where most phone companies make more money

from fixed-line services by drawing in customers to phone, Internet and
television services, Eastern Europe is mostly a market for mobile phone
users.

Roughly a fifth of Hungarian households don’t have a fixed line, Straub
said, and progress introducing more expensive services such as high-speed
Internet access is limited.

Fixed-line customers in Hungary spend EUR20 a month, while an average

mobile customer will spend less than that, Straub said.
Competition in fixed-line services is also fierce. “We see competitive
threats to fixed-line, such as mobile substitution and triple-play from
cable operators,” Straub said.

Nevertheless DT, which has already acquired incumbent operators in Hungary,
Macedonia, and Albania and also acts as a wholesale carrier in Ukraine,
Bulgaria, and Romania, is looking to deepen its reach in Eastern Europe.

“Eastern Europe is the last region in Europe where you can buy something at
a reasonable price because of the risk factor,” Straub said on the sidelines
of the conference.

DT is already shortlisted to buy a 51% stake in the country’s second-largest
mobile phone operator, Mobtel, and will look to buy other state-run telecom
companies if they become available in Serbia, Ukraine and possibly Bulgaria,
Straub said.

He said private-equity firms, as well as France Telecom (FTE), Telekom
Austria AG (TKA), private Russian investors, Greek firm Hellenic
Telecommunications Organization SA (OTE) and Cesky Telecom AS

(BAATELEC.PR) were competing to pick up state-run companies in the
region.

“Private equity is looking for restructuring opportunities to create value
and almost all the state-run telecoms need to be restructured,” he said.
———————————————————————————————–
By Nina Sovich, Dow Jones Newswires; Nina.sovich@dowjones.com.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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10.             ALL ROADS LEAD….THROUGH UKRAINE?
          Condition of roads in the country inhibit Ukraine playing this role

By Yaroslav Senchenko, Kyiv Weekly, Kyiv, Ukraine, Wed, May 31, 2006

Ukraine is vying to become an important transit state connecting West and
East, the Black Sea and the Baltic Sea. Experts argue that the conditions of
roads in the country at this point inhibit Ukraine’s playing this role.

The government program for the development of roads in 2005-2010, which
was recently adopted, stipulates attracting around US $7 bn over the next 5
years for the implementation of investment projects involving investors and
international financial organizations.

Investors, however, might be scared away by Ukrainian bureaucracy,
imperfect legislation and the absence of investment return mechanisms.

Over the past 10 years, the number of vehicles in Ukraine has grown by at
least eight times. At the same time, according to official information, up
to 90% of Ukrainian roads need to be repaired and half of them require

major repairs.

According to official statistics, around 70% of the roads (106,000
km) in the country are 6-7 meters wide with a speed limit 90 km/h. Since
most of the transport vehicles travel on such roads, this causes substantial
damage to transported products and increases fuel consumption.

Ukraine has only 2,200 km of 1st category roads (highways), which is 1%
of the total length of roads in the entire country. Some oblasts don’t have
roads of the 1st category at all. In short, the internal roads require
investments.

Up until this moment foreign investors stayed away from the road
construction industry due to typical Ukrainian obstacles, such as a high
level of corruption, poor level of protection of investors’ rights,
bureaucratic “red tape” and flaws in the legislation.

The Law On Concessions for Construction and Maintenance of Automobile
Roads only considers the construction (without reconstruction) of a new
road to be an object for concession.

Low traffic intensity (the optimal intensity is planned to be reached by
2010) and, first and foremost, the low purchasing power of the average
driver stretches out the period of recoupment of concession projects for
decades. For this reason the industry is banking on cheap loans from
international financial organizations (for example, the EBRD).

Availability of alternative toll-free highways is determined by the law as a
condition for introducing a toll on highways. This is not very inspiring for
potential concession investors. In the neighboring Belarus, the
Brest-Minsk-Russian border highway charges a toll and there is no
alternative toll-free road.

In France, where last year’s expenses per 1 km of highways amounted to over
US $30,000 (ten times more than in Ukraine), motorists on the main highways
of the country are charged a toll. Germany spent a little less on roads,
namely US $27,300 per 1 km.

After settling the issue of charging a toll for using highways, Ukraine’s
road authorities will have to find an optimal mechanism of toll collection.
The most widespread method is installing automated toll booths, though this
may not work in Ukraine as its motorists can always figure out how to bypass
tolls by taking a different route.

In this case, charging tolls with the help of the GPS system seems to be the
most progressive method, which these days is gaining in popularity all
throughout Europe. The mechanism of toll collection used in the Czech
Republic, Slovakia and Hungary could be viewed as a more likely and cheaper
alternative to the GPS. In these countries a motorist pays a toll for the
right to use a highway for a limited period of time, anywhere from several
days to one year.
                                      BACKGROUND
There are 6 international transport corridors going through the territory of
Ukraine:

[1] Crete/Helsinki Transport Corridor No. 3, direction Krakowec-Kyiv,
road surface of the 1st category – 50%;
[2] Crete/Helsinki Transport Corridor No. 5, direction Kosyny-Chop-
Lviv, road surface of the 1st category – 9%;
[3] Crete/Helsinki Transport Corridor No. 9, direction Odesa-Chernihiv,
road surface of the 1st category – 51%;
[4] Baltic Sea – Black Sea, direction Yahodyn-Odesa, road surface of
the 1st category – 15%;
[5] Europe-Caucasus-Asia, direction Yahodyn-Odesa, road surface of
the 1st category – 15%;
[6] Black Sea Transport Corridor, direction Reni-Novoazovsk, road
surface of the 1st category – 3.8%.

In terms of roads per one square kilometer, the territory of Ukraine is in
one of the last places in Europe with 280.9 km. Only Finland and Russia

have lower indicators, namely 225.5 km and 44 km respectively.

Russia, however, spends almost four times more per 1 km of road than does
Ukraine, namely US $12,200/km. Ukraine also has the lowest indicator of road
surface availability per 1,000 population (3.5 km) in Europe, while France
has 14.6 km, Spain – 8.2 km and Poland – 8.1 km.

Reconstruction and construction of roads using EBRD loans:

1. Reconstruction of the Kyiv-Chop highway (2 stretches with a total length
of 210 km) in 2003-2005. Amount – 75 mn euro.
2. Construction of side road in Striy and the village of Olesko along the
Kyiv-Chop highway. The loan agreement took effect in August 2005. The
amount of the loan is 100 mn euro. To date, 6.3 mn euro have been allocated.
UkrAvtoDor (Ukrainian Road Authority) is planning to invest 37.3 mn euro
into the project.
3. A loan agreement for the amount of 150 mn euro for the construction of
the 427 km stretch on the Kyiv-Chop highway to the city of Brody is planned
for signing.

The total sum of the project amounts to 364 mn euro, including 150 mn euro
contributed by the European Investment Bank, and 64 mn euro by UkrAvtoDor.
—————————————————————————————————
LINK: http://www.weekly.com.ua/?art=1149026305
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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11. UKRAINIAN PRESIDENT CALLS ON YOUNG PEOPLE TO
       CHOOSE UKRAINIAN AS THEIR NATIVE LANGUAGE

Ukrainian Radio First Programme, Kiev, in Ukrainian 3 Jun 06
BBC Monitoring Service, United Kingdom, Sat, June 03, 2006

KIEV – Ukrainian President Viktor Yushchenko has called on young people

to make a conscious choice in favour of Ukrainian as their native language,
while being multilingual.

Speaking in a weekly radio address devoted to children’s and youth problems
on 3 June, Yushchenko restated his position that Ukrainian should remain his
country’s only state language as stipulated by the constitution. The
language issue has recently come to a head after a number of eastern
Ukrainian Russian-speaking regions have declared Russian their “regional
language”.

“I stand for a diversity of languages in communication. The more languages

a person knows, the higher the chance of that person realizing himself
creatively. But I am opposed to speculation on the language issue. The
Constitution of Ukraine clearly stipulates that the only state language is
Ukrainian. Ukraine is the only country that is obliged to preserve and
develop the Ukrainian language,” Yushchenko said.

He stressed the importance of the language to the national culture: “Great
and wise nations understand that language is not only a means of
communication, but also a way of thinking and a foundation of culture.
Therefore, they not only preserve, but also develop their languages,
demanding that other people respect their languages.”

He said he was pinning his hopes on young people in the language issue: “I
am happy to see increasingly more young people, who have a brilliant command
of Russian and speak fluent English, French and German, using Ukrainian for
communication. I welcome the youth that has taken a patriotic stance and
says – We are Ukrainians and our native language is Ukrainian. The younger
generation is wise, patriotic and educated. As president, I pin great hopes
on young people.”

He urged young people to “make the Ukrainian language and

everything Ukrainian respected in the world”.

In the address, Yushchenko also talked about the positive demographic impact
of the 11-fold increase in the one-off payment to a mother on the birth of a
child. He said he wants the new parliament and government to double state
financial assistance to mothers looking after children under three years of
age.

He focused on his administration’s efforts to improve medical services for
children and to home in on the problem of homeless children. Yushchenko

also vowed to eradicate corruption from education, making it “corruption-free
territory”.                                         -30-
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12.  TYMOSHENKO CALLS KHARKIV REGION RUSSIAN
      LANGUAGE DECISION ANTI-CONSTITUTIONAL MUTINY

Interfax-Ukraine news agency, Kiev, in Russian 1645 gmt 3 Jun 06
BBC Monitoring Service, United Kingdom, Saturday, Jun 03, 2006

KIEV – Parliament faction leader [and former prime minister] Yuliya
Tymoshenko has condemned the Kharkiv Region council for giving Russian

the status of a regional language, Tymoshenko’s press service said.

“I strongly oppose the anti-constitutional decisions on language issues. The
spread of language separatism across Ukraine means that the very statehood
is at issue and that an anti-constitutional mutiny is under way and should
be stopped immediately,” Tymoshenko said, commenting on the decision by

the Kharkiv Region council.

Tymoshenko also condemned the council’s no-confidence vote in Kharkiv
Region governor Arsen Avakov. Tymoshenko said that she would personally
defend Avakov.                                  -30-
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13.   WILL ZUZAK UKRAINE POLITICAL REPORT, PART II

Zuzak Ukraine Political Report; Part II

Politics@Infoukes.com, Toronto, Canada, Friday, June 2, 2006

In my 02May2006 report as a Canadian Observer of the 26Mar2006
parliamentary elections in Ukraine, I concluded that:

“On 26 March 2006, the Ukrainian people democratically elected and
legitimized the 450 “criminals” (with immunity from prosecution for
criminal acts) to the Verkhovna Rada. In other words, although the
election procedures were fair and legitimate, the legitimacy of the
politicians ranked in the “party lists” of the various Parties is
questionable. I hope to expand on this issue at a later date.”

Despite the boisterous hoopla of the campaign rhetoric, the underlying
sentiment of the people was bitterness and cynicism towards all
politicians. When I remarked on this cynicism to a young waitress in
Kyiv, she simply shrugged in resignation and said bitterly, “What can
we do?” There was obvious disenchantment with the Orange
Revolutionaries.

After the elections, when I was no longer constrained from entering
into political discourse, everyone agreed that immunity from
prosecution of the deputies of the Verkhovna Rada must be abolished.
The argument that this would require a constitutional change only
heightened the cynicism. Even conceptually, it is impossible to fight
corruption, if the corrupters themselves are elected to the Verkhovna
Rada.

The people’s attitude to the leaders was instructive. Supporters of
Viktor Yushchenko were apologetic and almost embarrassed. Yulia
Tymoshenko was either a saint to her fans or a dangerous demagogue to
her detractors. I received pens, photographs, an audiocassette and
declined a huge poster from her supporters in Kharkiv and Kolomyia.
Viktor Yanukovich was almost a non-entity. To the voters, the Party of
Regions and its pro-Russian orientation were obviously more important
than its leader.

The campaign advertising (at least, in Kyiv and Kharkiv) was very
ostentatious and expensive — with huge billboards, TV commercials,
tents, handouts, etc. I suspect that only very rich oligarchs could
finance such campaigns. The results demonstrated that news media hype
works in Ukraine just as effectively as in North America and that
“name recognition” is very important.

NOT IMPRESSED WITH PROPORTIONAL REPRESENTATION
Frankly, I am not at all impressed with the “proportional representation”
system adopted for these elections, where voters are forced to vote
for a party list rather than an individual. The reality of this system is as
follows. The “oligarch” creates a Party (usually with himself at the head)
and then sells positions 2 to 450 to the highest bidder.

It was rumoured that the first ten positions on some of these lists
fetched about $1.5 million U.S. And, since a deputy’s position
provides immunity from prosecution for criminal acts, the highest
bidders can be expected to be criminals attempting to escape
prosecution and to protect there ill-gotten gains.

Party lists are submitted to the Central Electoral Commission at the
beginning of the election campaign. Perhaps decisions as to rankings
on party lists should be removed from the party hierarchy and placed
in the hands of either the general electorate, or members of the
particular party, or even the very people on the lists (via secret
ballot).

Whether this should be done, before the election campaign,
during the election campaign or even after the elections is unclear.
One can also envision the Central Electoral Commission conducting
scientifically rigorous polling in this regard. Whatever the optimum
solution, it is absolutely necessary for the electorate to have some
oversight or “checks and balances” on the composition of the party
lists.

I was rather concerned that on the first three ballots all the same
parties were competing in National, oblast (provincial) and raion
(municipal) elections. This provides for a perfect opportunity for
“vertical integration” of corruption. However, when I suggested that
there should be a complete separation between national, provincial and
local politicians, my “journalistka” threw up her hands in
exasperation and said that it was hard enough to familiarize oneself
with the platforms of the existing 45 parties, let alone an extra 90!

Nevertheless, the responsibilities of the elected politicians are
different at each of these levels. They should be as independent as
possible from being influenced by the other levels to the detriment of
their constituents.

   OLIGARCHS HAVE ROBBED UKRAINIAN PEOPLE BLIND
Since the demise of the Soviet Union and the proclamation of an
independent Ukraine on 24Aug1991 — legitimized by the referendum of
01Dec1991, wherein 91% of Ukrainians supported independence — the
economic performance of the Ukrainian state has been abysmal. For the
last 15 years, so-called “oligarchs” have robbed the Ukrainian people
blind.

They have seized control of property and firms at a fraction of
their real worth. They have illegally siphoned off and deposited
billions of dollars in “safe havens” in North America, Europe and
elsewhere. Sadly, this was often done with the collusion of Western
banks, institutions and so-called intellectuals promoting
“privatization” and “shock therapy”. Many books have already been
written on this subject.

            OLIGARCHS CRIME AGAINST HUMANITY
In my view, what the oligarchs have done to the Ukrainian people is a
crime against humanity. The billions of dollars stashed in “safe
havens” should have been invested in the Ukrainian economy, where one
dollar invested can be expected to increase the gross national product
by a factor of seven. Perhaps then millions of Ukrainians would not
have to go begging for work in Europe and the rest of the world.

Still worse, many of these oligarchs were simply fronts for organized
crime — where blackmail, bribery, coercion and death were the
operative norms. The whole society was reverting back towards
Stalinist terror until the Orange Revolution associated with the
presidential elections in the fall of 2004 appears to have arrested
this trend.

Whatever the composition of the parliamentary coalition scheduled to
be revealed in the Verkhovna Rada on 07Jun2006, the primary
responsibility of the deputies (many of whom are just mouthpieces for
oligarchs) must be to the Ukrainian people. They will have an
opportunity to redeem their souls. And the Ukrainian people have a
huge responsibility to provide “checks and balances” on the
government. After all, the Constitution clearly states that it is the
people, and not the government or courts, that is the final arbiter of
the Ukrainian nation.

                        “KRIPAKY” TO THE OLIGARCHS?
The word “kripaky” in the Ukrainian language translates into ”serfs”
in the English language. Ukrainians were “kripaky” in the Russian
Tsarist and Austro-Hungarian Empires during the middle ages up to the
twentieth century. The Ukrainian (and Russian) people were “kripaky”
in the Bolshevik/Communist Empire in the twentieth century. Will they
end up being “kripaky” to the Oligarchs in the twenty-first century?

Respectfully submitted
Will Zuzak; 2006-06-02; mozuz@telusplanet.net
Archived as zuzak20060602UkrPolitics.doc
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14. RESPONSE TO THE QUESTIONS YOU POSED FOR PONDERING
           BY STUDENTS OF UKRAINE-RUSSIA RELATIONSHIPS

LETTER-TO-THE-EDITOR: By Walter Anastas, J.D.
Professor-emeritus, Wm. Mitchell College of Law, St. Paul, MN
Action Ukraine Report (AUR) #706, Article 14
Washington, D.C., Monday, June 5, 2006

RE: Letter-to-the-Editor: By Mikhail A. Molchanov, Ph.D.
Professor, St. Thomas University, Canada
Published in the AUR#705, Article, 20, Sunday, June 4, 2006

Dear Sir:
I am responding to your letter-to-the-editor of the Action Ukraine Report
which appeared in issue # 705 [article 20] of that excellent electronic
publication dated June 4, 2006. In response to the questions you posed
at the end of your letter, for pondering by students of Ukraine-Russia
relationships:

1. Yes, Russia will survive without any support coming from Ukraine. It is a
rich, self-sufficient country which does not need any support from Ukraine
and, I don’t believe is getting a lot of such support. I only wish (and
fervently so) that Russia would confine itself to developing its own society
and powerful economy, rich in natural resources, and stay out of
empire-building, or more accurately, re-building.

2. Ukraine will be better off without Russia, in the political sense.
Presumably this would not rule out normal business and trade relations, such
as Russia now has with Germany and other Central and Eastern European
countries. You ask :Why?

Because past experience (the best but also a strict and merciless, teacher)
has shown that the entire history of Ukrainian-Russian relations, and not
just the last 90 years of it, is unmistakably and indelibly marked by brutal
political domination of Ukraine and Ukrainians, a vicious social and
economic oppression, a determined denial of their separate national
identity, their separate language, separate Church, in fact their very
existence.

Instead, Ukraine and Ukrainians are categorized as either just another
“branch” of the Great Russian nation, or as an East-Slavic “tribe” that must
necessarily exist as part of a triune Russian-Byelorussian-Ukrainian
combined “great nation.” On the other hand, Ukraine. even at the peak of its
power in the Medieval Era, never denied the separateness, or the right to a
separate existence, of the Russian nation, known to the world until the 18th
century as the Muscovite State, or the separateness or distinctness of the
Russian language.

Sir, I have some qualifications for expressing these views. Like yourself,
I was born in Western Ukraine (Ivano-Frankivs’k oblast’); similarly to
yourself, I am a U.S. citizen. Unfortunately, I did not have your advantage
of getting any degrees in Ukraine because, while you were doing that, I was
a survivor of one of Hitler’s camps in Germany; prior to that, at the ripe
age of 9 years I had the advantage of being interrogated in Western Ukraine
by that Ukrainian-friendly NKVD (the predecessor to the KGB).

So all my education beyond high school (gymnasium) has been in the U.S.
where I earned a B.A. degree in economics and a Juries Doctor degree in law.
Following that I taught law for 21 years and am a professor-emeritus of the
Wm. Mitchell College of Law, St. Paul, MN. In between, I served for 2 years
as a draftee in the U.S. Army, 1951-1953.

The facts you have stated about yourself lead me to the conclusion that I
have been in the U.S. longer than you have been in Canada.That does not mean
that I am out of touch with events and conditions in Ukraine, as I have been
there on two occasions for several months at a time for purposes of a
scholarly nature.

Unlike you, my health did not permit me to go to Ukraine as an observer in
the 3rd round presidential election in 2004, but I flatter  myself that I
had some influence on my adult American-born son who did go in that capacity
and who shared his observations with me. In addition, my wife has a number
of close relatives in Ukraine with whom we remain in contact.

I do share one lapse with you. For complex reason for which there is no room
here, I have anglicized my first name from Volodymyr (not Vladimir) to
Walter. As a native of Western Ukraine, I notice that you have russified
your first name from Mykhailo to Mikhail.

I am certain that was as a result of social pressures in your new country,
where Canadians must prefer Russian-sounding first names to
Ukrainian-sounding ones.

Walter Anastas, J.D., Professor-emeritus
Wm. Mitchell College of Law
St. Paul, MN, anast001@netzero.com
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15. MRS. YUSHCHENKO, YOU’VE GOT A FRIEND IN PENNSYLVANIA
         Ukraine’s First Lady’s Ideas Find Resonance throughout Philadelphia’s
                         Medical, Business and Ukrainian Communities

By Heather Fernuik, Assistant Editor
Action Ukraine Report (AUR) #706, Article 15
Washington, D.C., Monday, June 5, 2006

 “Mrs. Yushchenko, remember: you’ve got a friend in Philadelphia,” said Dr.
Volodymyr Bandera, closing the Ukrainian Federation of America’s luncheon
with Kateryna Yushchenko and two successful days of meetings for the First
Lady of Ukraine in Philadelphia.

Kateryna Yushchenko arrived Tuesday evening to the World Affairs Council
of Philadelphia’s “conversation” and dinner with the First Lady. Congressman
Curt Weldon first addressed the audience, citing democratic Ukraine’s
revolutionary ripple effects on Kyrgystan, Lebanon, and other countries
throughout the world and emphasizing the US’s partnership with Ukraine.

Next Buntzie Churchill, the Council’s long-time President, took the stage
and posed several questions to Mrs. Yushchenko during the program’s first
portion, then opened up the floor to include questions from the audience.
Topics discussed throughout the evening included the First Lady’s plans for
a children’s “Hospital of Hope” in Kyiv, policy challenges facing Ukraine,
Ukraine’s achievements, Polish-Ukrainian relations, obstacles to foreign
aide.

As always, Kateryna energetically and brilliantly engaged with her hostess
and the audience. While the Q&A format made the evening more personable,
the audience had hoped to hear more directly from Mrs. Yushchenko regarding
her priorities and purpose for this visit to the States.

Kateryna Yushchenko clearly stated her purpose for coming to the States this
week: to raise funds and donations for Ukraine’s projected Hospital of Hope
and to establish partnerships for the Hospital-to-Hospital program.

Ukraine’s First Lady began her Wednesday meetings with a breakfast organized
by Dr. Zenia Chernyk, Chair of the Heathcare Commission of the Ukrainian
Federation of America, at the Leonard and Madaline Abramson Research
Center of the Children’s Hospital of Philadelphia (CHOP), America’s first
pediatric hospital.

Headed by the hospital’s President and CEO Dr. Steven Altschuler, CHOP
division directors and doctors, many of whom were of Ukrainian descent,
discussed unique programs and facilities at CHOP and expressed willingness
to partner with the First Lady in working to raise the standard of
children’s healthcare in Ukraine.

During the breakfast it became apparent that CHOP and the Yushchenkos’
“Ukraine 3000” international fund already have much in common. Breakfast
participants received a booklet describing CHOP’s wonders of the past,
present and future, just as Mrs. Yushchenko summarized in addresses the
threefold mission of Ukraine 3000 in  preserving the past, addressing the
present, and looking to the future.

CHOP’s motto is “Hope lives here,” where booklets outlining the First Lady’s
pediatric hospital plans pose the question on the cover, “Can a child hope?”

Following the breakfast, Drs. Altschuler and Manno led Mrs. Yushchenko
and her delegation on an extensive tour of CHOP’s unique, multi-faceted
facilities.  She later said of the experience, “When I travel, I always try
to visit a few hospitals to get ideas. This time I am overwhelmed with
impressions” from what she called “the best hospital in the world.”

Later that afternoon Mrs. Yushchenko received a tour of the University of
Pennsylvania’s Museum of Archeology and Anthropology on her way to meet
with representatives from the World Trade Center of Greater Philadelphia,
healthcare companies and other businesses in the museum’s Nevil Gallery.

Luncheon participants took opportunity to discuss business opportunities in
Ukraine and ways to contribute to building this world-class Hospital of
Hope. Mrs. Yushchenko stated that while any assistance is welcome,
contributions in the following three areas are of top priority: funds,
technology (gifts in kind-machines, pharmaceutical equipment and medicines,
etc.), and partnerships (exchange of expertise).

The First Lady also re-emphasized in this setting the need for developing
Ukraine’s small-medium enterprise sector to ensure long-term stability and
prosperity in Ukraine’s economy.

Vira Andreyczyk, President of the Ukrainian Federation of America (UFA),
organized the working luncheon with co-sponsorship from Marks &
Sokolov, LLC.                                  -30-
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Contact: Heather Ferniuk: HFerniuk@SigmaBleyzer.com
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16. FIRST LADY VISITING USA REGARDING HOSPITAL TO HOSPITAL
        PROGRAM TO BUILD A NEW CHILDREN’S HOSPITAL IN KYIV
             Her visit sponsored by Genesis Eurasia Corporation, Houston

Press Office of President Viktor Yushchenko
Kyiv, Ukraine, Monday, May 29, 2006

KYIV – Kateryna Yushchenko is now in the United States of America to visit
Washington, Philadelphia, San Francisco, and Los Angeles. She is going to
involve American businessmen, public leaders and medical institutions in
taking part in the Hospital to Hospital program to build a Center for
Maternal and Child Health in Kyiv.

Her visit is sponsored by Genesis Eurasia in accordance with the March 2006
memorandum signed by Ukraine 3000 and Genesis Eurasia Corporation when
a capsule was placed in the foundation of the center.

On Sunday, May 28, Mrs. Yushchenko met with Daniel D. Roscom, GE
President and CEO. They discussed ways to raise funds for the center in
the United States.

On Monday, May 29, the First Lady will meet with the Ukrainian community
and visit Georgetown University. In Washington, she will also meet with
Mike Leavitt, U.S. Secretary of Health and Human Services.

In Philadelphia, the President’s wife will address the World Affairs Council
and then meet with businessmen, doctors and philanthropists. They will
discuss ways to improve health care for Ukrainian children and areas of
potential cooperation. She will also visit Children’s Hospital of
Philadelphia.

In California, Mrs. Yushchenko will visit Lucile Packard Children’s Hospital
of Palo Alto in San Francisco and Ronald McDonald’s House. She is
scheduled to open an art exhibition of Ukrainian orphans “Hearts for Art.”

In Los Angeles, the First Lady will visit Cedars Sinai Medical Center. She
will then attend a forum of the Academy of Achievements.      -30-
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LINK: http://www.president.gov.ua/en/news/data/5_8609.html
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17. PRESIDENT YUSHCHENKO APPOINTS YUKHNOVSKYI DIRECTOR
           OF UKRAINE’S INSTITUTE OF NATIONAL REMEMBRANCE 

Ukrainian News Agency, Kyiv, Ukraine, Wed, May 22, 2006

KYIV – President Viktor Yuschenko has appointed Ihor Yukhnovskyi
director of the Institute of National Remembrance.

The President announced this at the ceremony of commemorating repression
victims on the territory of the Bykivnia Graves memorial preserve.

Ihor Yukhnovskyi, 80, is member of the Verkhovna Rada’s Our Ukraine
faction and Doctor of Physics and Mathematics, member of the National
Academy of Science.

The Institute of National Remembrance is set up as a government body – the
State Committee of National Remembrance – for conducting state policies of
restoration and preservation of Ukrainians’ national remembrance and
coordinating other government agencies in this field.

The Institute will help Ukrainians study history in detail, including
repressions against Ukrainians to which totalitarian regimes resorted in
different time periods.

The committee’s task will be to perpetuate the memory of victims suffered
from famines and political repressions, as well as participants in the
national liberation struggle.

Sunday morning Yuschenko took part in the ceremony of commemorating
victims of the Stalin’s regime on the territory of the Bykivnia Graves
memorial preserve.

The President laid flowers at the memorial and a wreath at the stele on the
preserve’s territory. During the ceremony, the clergy of Ukrainian churches
held a service for the dead. According to scientists, 100,000-120,000
repression victims are buried in Bykivnia.

At the same time, the figure may be higher since existing data on
repressions are not full and may be corrected.

As Ukrainian News earlier reported, in July 2005, Yuschenko commissioned
the Cabinet of Ministers to set up the Ukrainian Institute of National
Remembrance to the Day of Remembrance of Famine and Political
Repression Victims, which is marked on November 26.           -30-

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========================================================
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18. CABINET OF MINISTERS CREATES A UKRAINIAN INSTITUTE
                            OF NATIONAL REMEMBRANCE 
    Take measures toward commemorating victims of great famines, political
        repressions, & solders who participated in national liberation battles

Ukrainian News Agency, Kyiv, Ukraine, Friday, June 2, 2006

KYIV – The Cabinet of Ministers has decided to create a Ukrainian Institute
of National Remembrance as a central executive agency with a special status.
Ukrainian News learned its press report that contained a reference to
resolution No.764 of May 31.

The main objectives of the institute will be to attract more attention of
the public to their own history, distribute objective historical information
in Ukraine and abroad, implement the government policy and coordinate
efforts aimed at restoration and preservation of national memory among the
Ukrainian people, take measures toward commemorating victims of great
famines, political repressions, and solders who participated in national
liberation battles.

The Cabinet gave two months to the National Remembrance Institute, the
Ministry of Finance, the Ministry of Economy, the Ministry of Justice to
submit proposals on the institute, agree on its material, technical, and
financial support, and decide on personnel size.

As Ukrainian News earlier reported, President Viktor Yuschenko appointed
Ihor Yukhnovskyi director of the National Remembrance Institute on May 21.

In July 2005, Yuschenko commissioned the Cabinet of Ministers to set up the
Ukrainian Institute of National Remembrance to the Day of Remembrance of
Famine and Political Repression Victims, which was November 26, 2005.
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19. 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
COURTHOUSE
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
that 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
ice 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.”                    -30-
———————————————————————————————-
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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