Daily Archives: June 26, 2006

AUR#718 Jun 26 Ukraine Needs 5-6% GDP Growth Per Year For Next 5-7 Years; World Bank, IFC; World Cup; 2008 NATO Hopes Fading; Anti-NATO Enemy Within

                 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    

          Instability, non-implementation of required reforms, in particular tax
                 reform, is hindering Ukraine’s development. (Article One)
Mr. E. Morgan Williams, Publisher and Editor  
           –——-  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
         Instability, non-implementation of required reforms, in particular tax
                         reform, is hindering Ukraine’s development.
With Kamen Zahariev, EBRD Director, Ukraine
By Pavlo Berest, Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006


Dr. Irina Paliashvili, President, Russian-Ukrainian Legal Group, P.A. (RULG)
Action Ukraine Report (AUR) #718, Article 2
Washington, D.C., Monday, June 26, 2006

By Catherine Belton, Staff Writer, Moscow Times

Moscow, Russia, Thursday, June 22, 2006

Some funds to be channeled to loans to small and medium farming enterprises
Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006


Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006
                           FOR SEVERAL PROJECTS IN UKRAINE
IntelliNews – Ukraine Today, Kyiv, Ukraine, Monday, June 26, 2006
           Wide scale meeting of business lawyers from twelve countries
                  29-30 June 2006, Radisson SAS Hotel, Kiev, Ukraine
Vakhtang Mikadze, Forum Coordinator
Russian-Ukrainian Legal Group, Kyiv, Ukraine, Monday, June 26, 2006

Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 22, 2006

Reuters, Kiev,Ukraine, Friday, Jun 23, 2006 

Interfax-Ukraine, Kyiv, Ukraine, Thursday, June 22, 2006

UNIAN, Kyiv, Ukraine, Thursday, June 22, 2006


                       Ukrainian Students Exchange Program (USEP)
: By Yaroslav Kovalchuk, 2nd-year student,
Faculty of Romance and Germanic Languages,
National University of Ostroh Academy
The Day Weekly Digest #20, Kyiv, Ukraine, Tuesday, Jun 20, 2006

REUTERS, Cologne, Germany, Monday June 26, 2006

14.                                    UKRAINIAN GLEE
Sport Illustrated magazine, New York, NY, Monday, June 19, 2006

15.                  UKRAINE: NATO HOPES FADING FOR 2008
ANALYSIS: Jane’s Intelligence Digest, London, UK,  Fri, 23, 2006

16.                         THE ANTI-NATO ENEMY WITHIN
COMMENTARY: By Oles Lisnychuk
Kuras Institute For Political and National Studies
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

17.                               MAKING A DIFFERENCE
COMMENTARY: By Arkady Moshes, Senior Researcher
The Finnish Institute of International Affairs
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

18.                                 THE ORANGE ORDER
           Ukraine now has a second chance to pursue pro-Western reform
The Times, London, UK, Thursday, June 22, 2006


Action Ukraine Report #718, Article 19, Kyiv, Ukraine, Mon, June 26, 2006

Action Ukraine Report #718, Article 20, Kyiv, Ukraine, Mon, June 26, 2006

Why do we revere him so much? Because he lived the way Man should live.
By Iryna Yehorova, Lviv, The Day Weekly Digest in English #20
Kyiv, Ukraine, Tuesday, June 20, 2006

By Maryna Antonova, Head of the Press Office
Ukraine 3000 Foundation, Friday, June 23, Kyiv, Ukraine
        Instability, non-implementation of required reforms, in particular tax
                         reform, is hindering Ukraine’s development.

INTERVIEW: With Kamen Zahariev, EBRD Director, Ukraine
By Pavlo Berest, Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

The EBRD Director in Ukraine Kamen Zahariev is hoping that his boss, the
EBRD President Jean Lemierre, will lose his wager with the Ukrainian premier
concerning the rate of GDP growth in Ukraine.

Zahariev is hoping that Ukraine, wins. In an interview for KW, Zahariev said
on many occasions that he believes in Ukraine and its future noting,
however, that corruption and inefficiency of the state system are remain
obstacles to the country’s development.

KW: What is your assessment of current Ukraine’s investment attractiveness?

KZ: After the Orange revolution, investment attractiveness of Ukraine has
improved in the West. A serious interest appeared among large investors.
Those who came to Ukraine in the middle of 1990s, looked and left seeing
that the situation did not dispose to normal work, were especially active.
Naturally, what they see now is also not ideal.

However, on the government level, there is an understanding now of those
main factors, which condition improvement of investment climate. There is
understanding among all key political players that Ukraine must be open to
civilized world in order to be rich and prosperous country.

KW: What are the main factors fulfillment of which could lead Ukraine to
become a developed European country?

KZ: Firstly, it is necessity to improve competitive level of the Ukrainian
economy due to the pressure applied on the country due to escalation of
prices for energy resources. Now, everybody in Ukraine understands that the
energy needs to be saved, investments should be made with this objective and
the country needs to be open to serious foreign investors, which is one of
the factors of improving the efficiency of the economy.

Holding of open fair tenders among investors for sale of large companies and
geological prospecting is a positive step. Let’s hope that such processes
will continue in all sectors of the economy. Other factors, which will lead
to further changes in the economy and investment attractiveness of the
country, include accession into the WTO and closer economic cooperation

with the EU within the Neighborhood program.

Another positive trend is when portfolio investors, which earlier actively
invested into central European countries are actively working on variants of
investing into Ukraine. Investors understood that there is a big promising
country with dynamically developing economy on the map of Europe.

Just the other day I spoke with several investors in the sphere of
construction, insulation materials, woodworking industry and car parts.

Naturally Ukraine is competing for investments mainly with Russia. That is
why further steps for “opening” the country are required. Because the
problems remain, namely: corruption, inefficiency of state system, problem
with registration of enterprises, receiving licenses and other permissions.
Nevertheless, even despite this, the clear improvements have been made.

KW: How does current political uncertainly influence economic development
of the country?

KZ: Instability, non-implementation of required reforms, in particular tax
reform, is hindering Ukraine’s development. Without stable parliamentary
majority, which has clear program of the country’s development, it is
impossible to implement the required reforms.

Lack of clarity in the policy of the country concerning privatization,
possible re-privatization, etc., also does not add confidence for investors.
Resolving tension in relations with Russia in gas and other spheres also
depends on what the new government will be like.

All these factors have negative effect, but not so serious to stop the
powerful flow of investments, which has recently been observed in Ukraine.

In the first half of the year, over US $900 mn has been invested into
Ukraine. These are not only large one-time investments, but a rather
powerful flow of smaller investors who bring money into the Ukrainian

Political uncertainty holds back local investors more than foreign ones.
They do not know what the rules of the game will be and that is why they
don’t invest to the extent they could. However, there are other examples too.

Already now, some Ukrainian companies are working for the future. For
example, at the moment we are working on  several large projects with

Donbas Industrial Union and some other big industrial groups.

KW: What projects does the EBRD intend to implement in Ukraine in the
near future?

KZ: We have rather strongly activated our effort over the past 2-3 years. In
2000-2003, the total level of our investments amounted to 160-170 mn euro
per year, while in 2004 – 260 mn euro and last year – 530 mn euro. We are
looking optimistically on development of Ukraine and its prospects.

We intend to invest into reconstruction of railways, highways, port
infrastructure. The bank is planning active involvement in projects on
construction of roads and also in railway and air transport.

Our participation could influence, among other things, methods of
procurement, consolidation of the industry and facilitate effective
privatization. The EBRD is financing air navigation facilities, air
transport infrastructure, etc.

Another sphere is the municipal  utilities sector. Over a third of all gas
consumed in Ukraine is used in the housing utilities sector.

Implementation of our district heating projects will help reduce consumption
of gas and electricity in this sector. Although, according to the Ukrainian
legislation, we can implement projects only in cities with population over
800,000 so far.

In the municipal and environment protection sphere, the bank focuses on the
plan of primary capital investments/not sure what do you mean by this/ for
financing most important investments into water supply and purification of
run-off water in large industrial cities.

Jointly with the Ukrainian government, the EBRD is working on implementation
of administrative and tariff reform aimed at improvement of quality of the
services provided to the population.

The third sphere is financial sector. Through opening credit lines through
local banks, we finance small and medium enterprises, perform
micro-financing. In this sphere, the volumes of loans have already reached
US $300 mn.

The EBRD emphasizes the significance of growth of its portfolio in the
private sector through increasing financial resources allocated for private
small and medium enterprises, direct financing of private enterprises,
support of development of private banks and direct financing of the
development of infrastructure, in particular, in such sphere as energy and

Special attention is given to energy, including assistance in privatization
of the sphere and improvement of energy efficiency of the country. The
projects with participation of the bank are implemented in the energy saving
and energy efficiency, nuclear safety and new technologies of electricity
production, construction of high-voltage transmission lines, financing of
generating capacities, etc. Special efforts are given for development of
wide potential of the agriculture.

Industrial energy saving is the new direction, which recently became
especially relevant. In this sphere, we implement projects with such giants
as Mittal Kryviy Rih and Alchevsk Steelworks.

In six months of 2006, we implemented projects for over 200 mn euro and
expect that in the end of the year we will achieve around 500 mn euro mark.

KW: Recently the EBRD President Jean Lemiere said he was ready to accept
the bet proposed by Premier Yuriy Yekhanurov concerning GDP growth in
Ukraine in 2006. Who has better chances to win?

KZ: In his response letter, president Lemiere said he hoped to lose, that is
the question is not about who wins. We are hoping that in the end Ukraine
wins, that there will be a higher GDP growth than experts are expecting.

I think that everybody understands that that was said by the Ukrainian
premier and the EBRD president in the spirit of very friendly relations that
exist between the bank and Ukraine. I hope that with the new government we
will have the same constructive, mutually beneficial relations.

KW: After Yekhanurov’s statement, the EBRD improved its GDP growth
forecast for Ukraine from 1.2%, which was given in the beginning of the year,
to 2%. What was the reason for that?

KZ: This was due to new statistical data. According to it, there is a
positive trend and revival of the industrial sector. Even despite escalation
of prices for gas, industrial growth of around 10% is observed.

One cannot say that one can be satisfied with such GDP growth. Will it be
1.8% or 2.8% is not so important. This is not the growth Ukraine needs in
order to catch up with other countries in central and eastern Europe.

Ukraine needs 6-8% growth per year at least for the next 5-7 years.

Ukraine needs 6-8% growth per year at least for the next 5-7 years. That is
why it is important that the new government immediately takes steps to
ensure such growth of the economy.

KW: What do you think about near prospects of Ukrainian economy
development? How much will economy depend on the politics?

KZ: I would like to say that configuration of the new coalition is not the
key problem. The most important thing is that there should be certainty.

Business likes stability and predictability. Naturally you cannot say that
it does not matter what the government will be like. A lot will depend on
which program it will be implementing. We believe that it is best for
Ukraine to take the course towards liberalization of the economy and
creation of equal opportunities for all players.

It can no longer be said that Ukrainian economy will depend on politics
only. The situation in the country has changed. For example, we had problems
in the past when former governments had difficulties working with us.

The problem was that by our procurement rules, an open tender must be held,
then the money is paid not to the borrower, but to the executor only for
provided services or materials. That is why we did not have problems with
non-targeted use of loans. It seems for some people it was not beneficial.

Now, we no longer have such problems. But there are still problems with
ratification of our agreements. All projects, which are implemented under
state guarantee, must be ratified by the Verkhovna Rada.

Sometimes, due to political reasons this did not happen. For example, EBRD
allocated a US $120 mn loan to UkrZaliznytsya, the largest carrier of
passengers and cargoes, in August 2004. The loan was allocated under the
government guarantee; the agreement was signed, but not yet ratified by the
VR. As a result, Ukraine is paying commission for the loan it cannot use.

But I remain optimistic. I think that Ukraine has a very good future for the
next 10 years. There are certain framework conditions in the country, which
allow to work in a civilized manner, but they need to be improved.

As of May 1, 2006, the European Bank for Reconstruction and Development
signed 114 projects in Ukraine (including regional investments) in the total
amount of over 2.27 bn euro. The investments were made into the food
industry, finance, oil and gas, transport, services in agriculture,
telecommunications and municipal infrastructure.

The EBRD is one of the managers of “Shelter” Chornobyl Fund, founded in
December 1997 by the countries of the G7 and other contributors for
providing assistance to Ukraine in transforming the existing sarcophagus
into a safe and environmentally stable system.             -30-
LINK: http://www.weekly.com.ua/?art=1150838123

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

Dr. Irina Paliashvili, President, Russian-Ukrainian Legal Group (RULG)
Action Ukraine Report (AUR) #718, Article 2
Washington, D.C., Monday, June 26, 2006

Dear Morgan:

Our firm has just published the May edition of our popular “Chronicle of

Recent Developments in Ukrainian Legislation”, a monthly summary of the
most important legislative developments in Ukraine in the area of business
and corporate law, available in English and Russian.

In addition to the regular monthly Chronicle, we also issue Legislative
Alerts from time to time on the most urgent legal topics in Ukraine.

The Chronicle is a token of our appreciation to our esteemed clients and

friends, therefore, it is distributed as a free subscription. The Chronicle is
prepared in an effort to capture news of greatest interest to the widest
cross-section of our firm’s clientele, without restating all legislation
published and drowning our readers in too much information.

The principal contributors to the Chronicle are Rich Smith, Senior Counsel
at our Washington, D.C. office, and Yelena Korshikova, Counsel at our
Kyiv office.

Archived editions of the Chronicle are available for viewing and download

on our website, http://www.rulg.com/chronicle.asp. Future editions are
distributed via e-mail by the middle of each month, and will summarize the
legislative developments of each preceding month.

In order to begin receiving the Chronicle direct to one’s e-mail box, a

person just needs to fill out the subscription form at

The Chronicle will only be distributed to subscribers who fill out this
form. The “unsubscribe” option will be available at any time.

Due to the winnowing process necessary when preparing the Chronicle,

we cannot guarantee that it contains a comprehensive list of all Ukrainian
legislation relevant to business.

Finally, please bear in mind that this summary does not constitute legal
advice; it is an informational service only. Should anyone wish to receive
further information or actual legal advice, please do not hesitate email us
at chronicle@rulg.com.

Thank you and we look forward to welcoming readers of the Action
Ukraine Report (AUR) as subscribers to the Chronicle!             -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
By Catherine Belton, Staff Writer, Moscow Times
Moscow, Russia, Thursday, June 22, 2006

Ukraine is scurrying to form a government coalition and head off a gas
crisis that could hit July 1, when its controversial supply deal with Russia

Leaders of Orange Revolution factions announced Wednesday they had

reached a last-minute coalition deal. But with just two days left to collect
signatures before parliament must be dissolved, Turkmenistan announced it
could cut off gas supplies.

Turkmenistan’s Foreign Ministry said Wednesday it could turn off the taps if
Gazprom did not agree to nearly double the price it pays for gas to $100 per
1,000 cubic meters. Gazprom sells on most of the gas it buys from
Turkmenistan to Ukraine.

“Ukraine is in a very tough spot,” said Olexander Chaliy, an independent
energy expert, who led Ukraine’s gas negotiations with Russia as deputy
foreign minister from 1998 to 2004. “An energy crisis could develop within
the country and internationally in the next six months to one year.”

The Ukrainian economy is already struggling with the effects of a gas price
hike in January that followed a politically charged standoff in which Russia
briefly turned off the taps to Ukraine. Cheap Turkmen gas supplies were
crucial in bringing down the price from the $230 per 1,000 cubic meters that
Gazprom was demanding. Under the January deal, Ukraine ended up with a

final price of $95 after mixing in Central Asian supplies also sold to it by

A hike in the price of Turkmen gas could tip the balance when the deal
expires at the end of June.

“Ukraine can’t afford to pay more for gas,” said Chris Weafer, chief
strategist at Alfa Bank. “A lot of issues are now coming to a head. They are
reaching a crisis point.”

A spokeswoman for Yushchenko, Irina Gerashchenko, declined to comment

on the proposed price hike, and said Ukraine intended to send negotiators to
the Turkmen capital, Ashgabat, next week.

Ukraine’s government has been in political limbo since January, when the gas
deal prompted parliament to fire the Cabinet. During parliamentary elections
in March, the gas deal was a central campaign issue between blocs headed by
Yushchenko and Tymoshenko. The two former allies have been deadlocked over
how to form a new government ever since.

At stake is not only Ukraine’s economy but also its bid for greater
integration into Europe and independence from Russia < issues that lay at
the heart of the Orange Revolution. Ukraine is a transit country for 80
percent of Russian gas supplies into Europe, and the gas standoff has
provoked fears over energy security in capitals across the continent.

It was unclear Wednesday whether Yushchenko’s Our Ukraine bloc and
Tymoshenko’s faction would be able to build their coalition on time, despite
an announcement the two sides had struck a deal late Tuesday after nearly
two months of talks.

Relations between the two leaders have been strained. Tymoshenko has
insisted on scrapping the gas deal, calling it a national security threat.

A spokesman for Tymoshenko’s bloc said the two sides had two days to collect
the 226 signatures – a majority in the parliament – necessary to form the
coalition and push ahead with the formation of a Cabinet.

“It’s too early to celebrate yet,” said the spokesman, Taras Pastushenko.
Viktor Yanukovych’s Party of the Regions, which won 30 percent of the vote
in the March elections, could still spoil the coalition, Pastushenko said.

Delays in forming the government mean that Ukraine may not be prepared for
the next round of gas talks when the current deal expires.

“The Ukrainian government should have been very actively developing a
strategic position on gas negotiations with Russia and the European Union in
the context of the future of our country,” Chaliy said. “But there is no one
to do this.”

“It is just weeks before the G8 summit in St. Petersburg, and we haven’t
heard anything from Ukraine’s leaders on what they want to say to the G8
about energy security.”

Turkmenistan briefly cut off gas supplies to Russia in January 2005 over a
price dispute. Analysts said the call for a price hike started a round of
price increases across the CIS, which have underlined the arbitrary and
opaque way prices are set in the former Soviet Union, where the costs of
extracting gas can be as little as $5 per 1,000 cubic meters.

It is unlikely that Turkmenistan will go ahead with its threat to turn off
the gas for long. When the Central Asian republic turned off gas supplies in
the late 1990s, it nearly went bankrupt.

Gazprom’s demand that Ukraine pay $230 per 1,000 cubic meters has had a
domino effect, sparking a race for Turkmen gas that could upset the gas
balance across the entire region.

Gazprom could be forced to pay more, analysts said.

Following the deal, China began courting Turkmen President Sapurmurat
Niyazov in an effort to persuade him to send gas east instead of west. When
Niyazov made a five-day trip to Beijing earlier this year, he came back with
an agreement to ship gas.

“Turkmenistan is unhappy selling gas at such a low price. It’s pretty clear
that it has been made a better offer by China. It’s now in a position to
raise the stakes,” Weafer said.

The standoff could affect security across the region. Russia also relies on
supplies of cheap Central Asian gas to make up for shortfalls in its own
production. Unified Energy Systems CEO Anatoly Chubais on Tuesday said that
Gazprom was not supplying enough gas to Russian power stations, even during
the summer months.

The International Energy Agency warned recently that a lack of investment by
Gazprom in boosting production could mean it will be unable to meet its
supply contracts by 2010.

Gazprom spokesman Sergei Kupriyanov insisted Wednesday that the company’s
contract to buy gas from Turkmenistan for $65 per 1,000 cubic meters was
valid for all of 2006, and not just the first half of the year, as the
Turkmen Foreign Ministry said Wednesday. Kupriyanov said negotiations
concerned only “extra supplies” covered by that $65 contract.

In April, Gazprom CEO Alexei Miller traveled to Ashgabat for talks with
Niyazov but returned without a deal.

Kupriyanov said by telephone Wednesday that negotiations with the Turkmens
were still ongoing.

Any negotiations on a new deal with Ukraine as a result of Central Asian
price hikes would be handed by RosUkrEnergo, the Swiss-registered trader
that won a monopoly on all gas sales to Ukraine under the January deal,
Kupriyanov said.

If Ukraine is hit with a new price hike, the European Union could be forced
to step in with subsidies to help out, Weafer said. “Ukraine has relied
heavily on political support from the EU to try and win independence from
Russia. Now it has reached the point where it needs financial assistance to
be able to do that,” he said. “The EU is going to have to put its money
where its mouth is. The question is whether it will do so or not.”

“How this is handled could determine whether Ukraine will have a real
economic crisis with gas shortages,” Weafer said,. “If Turkmenistan starts
supplying China, it will be a double blow for Europe.”          -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Some funds to be channeled to loans to small and medium farming enterprises

Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006

KYIV – The World Bank has issued a USD 150 million credit to Ukraine for a
project to expand access to financial services markets. The credit contract
was signed in a ceremony June 23 by the World Bank director for Ukraine,
Belarus and Moldova Paul Bermingem and the deputy Finance Minister,
Volodymyr Matviichuk.

According to the WB, the council of the bank’s executive directors approved
the credit at its meeting on June 22.

According to Matviichuk, USD 125 million of the loan will be channeled to
crediting small-scale and medium-scale farming enterprises via authorized
banks, while the remainder USD 25 million will pay for institutional
development of the State Regulatory Commission for Financial Services
Markets and the State Mortgage Organization.

The USD 150 million credit will fund for implementation of the initial phase
of the project during four years, after which the parties will consider
extending the project further.

This credit has been issued at a standard interest rate which the bank
applies to single-currency LIBOR credits in the U.S. dollars, and should be
repaid during 20 years, with five years of grace period, the WB report says.

Matviichuk also said that the World Bank and the Finance Ministry may add
another two banks to the three already selected for servicing the project in
order to eliminate the irregularities revealed during the competition
between banks for the right to service the project.

As Ukrainian News reported before, the World Bank and the Finance Ministry
in February selected three banks – redytprombank, Nadra Bank, and
Pryvatbank – to service the World Bank’s project for expanding access to
financial services markets.

The World Bank said that Ukraine may be issued a credit of up to USD 250
million for the project. Nineteen banks submitted their bids. In November
2005, the Finance Ministry selected seven banks as candidates for servicing
the project.

Ukraine has received over USD 4.5 billion in World Bank loans for
implementation of more than 30 projects since becoming a member of the

World Bank in 1992.                            -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.
Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 25, 2006
The National Joint-Stock Company Naftohaz Ukrainy and the RosUkrEnerho
company have reached an agreement on additional natural gas supplies for
filling underground gas storage facilities. This was disclosed to Ukrainian
News by a usually well-informed source.

“So far, agreement has been reached on additional volumes so that to reach
the level of 20+ [billion cubic meters] of active gas by the end of the gas
filling period,” he said.

According to the acting Naftohaz Ukrainy board chairman, Oleksandr Bolkisev,
3.2 billion cubic meters of natural gas will be pumped into Ukraine’s
underground gas storage facilities over this month.

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

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

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

The Naftohaz Ukrainy National Joint-Stock Company intends to pump 16 billion
cubic meters of natural gas into underground storage facilities before the
start of the 2006-2007 heating season.

Russia’s Gazprom gas monopoly said on May 5 that the volumes of Russian gas
pumped by Ukraine into underground storage facilities to ensure
uninterrupted transit of gas to European consumers were insufficient.

Gazprom believes that about 18.5 billion of cubic meters of gas should be
pumped into Ukraine’s underground storage facilities before the heating
season starts in order to ensure uninterrupted transit of Russian gas to
Europe in the winter.

Naftohaz Ukrainy owns 13 underground storage facilities with a combined
capacity of 32 billion cubic meters of natural gas, mainly located in
western Ukraine.                                   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                           FOR SEVERAL PROJECTS IN UKRAINE
IntelliNews – Ukraine Today, Kyiv, Ukraine, Monday, June 26, 2006
KYIV – EBRD is examining the possibility to give EUR 40mn credit to Polish
Barlinek Invest for building a wooden floor production plant in Vinnytsya
region. The credit can be syndicated with commercial banks. Polish
BarlinekSA listed in Warsaw stock exchange owns 99% of Barlinek Invest.

At the end of 2005 Barlinek Invest announced that it intended to build a
plant with annual production capacity equal to 2mn m² of wooden floors in
Vinnytsya region. The company planned to invest UAH 204.3mn (PZL 58.4mn)

in the project. The company has already attracted PZL 58.4mn via IPO on
Warsaw stock exchange. The rest it planned to borrow from financial institutions.

The plant will be built in 12-15 months. Barlinek is 5 the world largest
wooden floor producer. Also EBRD can give EUR 46.8mn credit to Polish
Cersanit Invest that plans to build ceramic tile production plant in
Zhytomyr region. The bank will make the final decision regarding the project
on Jul 25.

In mid 2005 the company unveiled its plans to build a plant in Vinnytsya
region, but later changed its mind and decided to relocate the plant in
Zhytomyr region due to cheaper cost of land. Cersanit has already agreed
with Ukrainian-French  joint venture Osnova-Solcif on building the plant.

The fist stage of the project costs UAH 54.6mn. EBRD has already financed
projects in the country worth EUR 2.27bn as of May 1, 2006 .    -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
           Wide scale meeting of business lawyers from twelve countries
                  29-30 June 2006, Radisson SAS Hotel, Kiev, Ukraine

Vakhtang Mikadze, Forum Coordinator
Russian-Ukrainian Legal Group, Kyiv, Ukraine, Monday, June 26, 2006

KYIV – We are pleased to announce the CIS Local Counsel Forum, being

held at the Radisson SAS Hotel in Kiev on Wednesday, June 28 – Friday,
June 30, 2006.
The Forum is the first ever wide-scale meeting of business lawyers from the
CIS economic region, representing Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine
and Uzbekistan.

The Forum will bring together CIS law firms with the international legal
community, represented by international law firms from all over the world
and corporate counsel from a number of major multinational companies.

The Forum is a non-political gathering of more than 100 leading business
lawyers from 30 countries who share the Mission of the Forum, which is
“Bringing together the CIS and international legal communities with the aim
of creating joint business opportunities and long-term cooperation”.  The
Mission of the Forum reflects the 21st century reality, in which global
investors view the CIS countries as a broad economic region with intertwined
business connections and comparable legal systems.

Consequently, this region also represents, on a global scale, a larger legal
services market. The Forum will provide Delegates with an opportunity to
meet each other, share their experiences and news on legal and business
developments in their countries and establish new connections.

Based on the results of the Forum, a CIS Local Counsel Association will be
established. Subsequent Forums will be held annually in other CIS capitals
on a rotating basis.

Starting out with a Welcome and Introductory Remarks from the Conference
Co-Chairs Dr. Irina Paliashvili, Russian-Ukrainian Legal Group, P.A., and
Mr. John Whittaker, Clyde & Co., the Forum will feature a mix of panels
focusing on the legal and business climates of each CIS country, a separate
panel showcasing Ukraine, presentations by international law firms and
corporate counsel, as well as substantive panels on specific areas of
business law, such as Mergers & Acquisitions, Commercial Dispute Resolution,
Corporate Social Responsibility and others.

Keynote speakers at the Forum are Mr. Mykola Onischuk, a People’s Deputy of
Ukraine, and Mr. Serhiy Budkin, Managing Partner, FinPoint Investment
Advisers. A number of prominent members of Ukraine’s business, diplomatic,
legal and cultural communities have been invited as the Forum’s honored
guests.                                           -30-
Visit the Forum’s Website http://www.rulg.com/cisforum or contact the Forum
Coordinator, Mr. Vakhtang Mikadze, at vakhtang.mikadze@ulg.kiev.ua to learn
more. Because of space limitations, media representatives, who would like to
cover the Forum, should contact Mr. Vakhtang Mikadze to register at:

+38 044 502 1024.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 22, 2006
KYIV – The International Financial Corporation (IFC), which is a part of the
World Bank, has allocated a credit worth USD 9 million to Slaviansk-based
Italian-Ukrainian Zevs Ceramics company the producer ceramic tiles. The IFC
has disclosed this in a statement, text of which Ukrainian News has.

The credit is to be directed to the company’s production increase and
development of the business structure. In particular, the company plans to
double the production and to considerably extend the range of the produce.

As Ukrainian News earlier reported, Zevs Ceramics is registered as closed
joint stock company. According to the enterprise, 35% of its shares belong
to Pivdenno Zhovtnevi Hlyny South enterprise, Italian Emilceramica S. P. A
and SIMEST S.P.A. hold 46% and 19% respectively.

The company produces 10 varieties of ceramic granite tile. In January-March
2006, the company increased the production by 289.3% 512,680 square, meters
of ceramic and granite tile. In March, the IFC opened a credit line worth
USD 7.25 million to Zevs Ceramics for the purchase of the production line.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


Reuters, Kiev,Ukraine, Friday, Jun 23, 2006 

KIEV – Ukraine denied Russian allegations that it was stealing gas and
said on Friday it was trying hard to store enough underground to
ensure that smooth supplies would reach Europe through pipelines
across its soil this winter.

Oleksander Bolkisev, acting head of state oil and gas firm Naftogaz Ukrainy,
said a company delegation had just held talks with Russian gas monopoly
Gazprom (GAZPq.L: Quote, Profile, Research) in Moscow, designed to
ensure a dependable flow.

“We settled questions on additional volumes to avoid problems in winter,”
said Bolkisev, Ukraine’s top gas official. Gazprom supplies a quarter of
Europe’s gas needs and delivers up to 80 percent of this via Ukraine.

But tensions over Moscow’s decision to increase the low price that Russia
charged Ukraine for gas led to interruptions in supplies to Western Europe
in January.

They flared again this week after Yulia Tymoshenko, set to return as
Ukraine’s prime minister, signalled on Thursday that she would seek a cut in
the price, prompting a Gazprom spokesman to say such actions could lead
to a new gas crisis in Europe.

A senior Gazprom manager also accused Ukraine of taking gas to which it
was not entitled from pipelines, potentially risking shortages in western

Ukraine’s Bolkisev said this charge was groundless but admitted that there
had been problems with adequate storage. “We do not violate the framework of
the signed technical agreements. There are no grounds for the accusations,”
Bolkisev told reporters during a government meeting.

We can underperform and that’s why we are lagging behind with pumping gas
into underground storage areas.”
Gazprom and Italian energy company ENI have expressed concern that the low
stocks in Ukraine’s reservoirs could affect deliveries to Europe when demand
soars in winter.

The row over gas was among issues that prompted U.S. Vice President Dick
Cheney to say Moscow was playing power politics with its energy resources
and warn in May against any attempt to turn oil and gas into tools of
intimidation or blackmail.                              -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Interfax-Ukraine, Kyiv, Ukraine, Thursday, June 22, 2006

KYIV – The World Bank (WB) has sent Transport and Communications

Minister of Ukraine Viktor Bondar a report on an analysis of the governance
and management of the road system in Ukraine conducted by a WB mission.

The report was drawn up by the World Bank international consultants –
VicRoads International’s advisor for road safety Eric Howard and chief
expert for road safety Gina Brean, the ministry’s press service reported.

According to the experts, the growth in the number of road traffic accidents
in Ukraine can be stemmed through a range of measures by governmental
bodies, as foreseen in a new national strategy for road safety in a relevant
action plan.

There is a need to agree on the duties of various ministries and bodies in
the road safety management sector, and to set up an organization in charge
for main issues in the sector, according to the report.

The experts said that they recommend assigning the Transport and
Communications Ministry the functions of a coordinating body to drawing up
policy in the sector.

The analysts from the World Bank said that a public information program
aimed at highlighting the risks and consequences of poor driving should be a
key tool in ensuring road safety.                        -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


UNIAN, Kyiv, Ukraine, Thursday, June 22, 2006

KYIV – The Russian and Ukrainian nitrogen fertilizer industry is currently
experiencing a remarkable growth in profits and nitrogen production,
according to a press-release of Integer Research Ltd., posted at the

A study of the 20 Russian and Ukrainian nitrogen fertilizer producers
published by Integer Research has revealed that Russian and Ukrainian net
profits reached US$600 million in 2004, up from US$60 million in 2000.

“Total revenues for the 20 companies in the report was US$2.6-2.8 billion
between 2000 and 2002, then increased rapidly, rising by US$0.9 billion in
2003 and then by a further US$1.8 billion in 2004,” says Integer Research
Director, Oliver Hatfield.

“The biggest fertilizer revenue increase among the Russian producers was at
Togliatti Azot, followed by Kuibyshevazot, and then the two EuroChem
nitrogen operations, Novomoskovsk and Nevinnomyssk,” says Hatfield. “The
study shows a similar growth for Ukrainian producers. The biggest increase
was seen at Stirol, followed by Severodonetsk and OPZ.”

“For the same period, production of ammonia has risen from 14.8 million
tonnes to 17.5 million tonnes. This growth is despite the fact that there
are increasing gas prices and logistical costs to port,” says Integer
Research Director, Tim Cheyne.

“Investment in the industry is booming, and profits are being reinvested.
Confidence in Russia in this environment is growing strongly. Investors from
the CIS and Western banks are competing to lend to the industry. On the
other hand, the Ukrainian producers face an uncertain future as gas prices
are influenced by politics.”

“Gas prices continue to rise for Ukrainian companies. For example, delivered
Ukrainian gas is now about US$3.5 per MMBtu, up from 2.5 in November last
year. It is possible that it could increase to US$5.0 per MMBtu next month.
The new prices are more in line with those worldwide, but many of these
Ukrainian companies are only profitable because of the low costs of gas and
high product prices,” continues Cheyne.

“Gas prices are increasing, and product prices are expected to decline,
which makes the future of the Ukrainian fertilizer producers unsure. With
this in mind, some investors have delayed investing in these companies, and
will play a wait-and-see game.”

“It is impossible to ignore the influence of the Russian and Ukrainian
companies on the global Fertilizer industry. Export prices From the Black
Sea are still the benchmark for the rest of the world, and CIS producers are
increasing their export capacity, challenging their overseas competitors. It
is for this reason that Integer Research has spent the last 12 months
looking at the 20 nitrogen producers in Russia and Ukraine,” says Hatfield.

Integer Research’s report, ‘Energy, Costs & Trade – Progress in the Russian
& Ukrainian Nitrogen Sector’ is the most in-depth analysis of the nitrogen
fertilizer industry in Russia and Ukraine to date. Integer Research is a
leading supplier of fertilizer market analysis and consultancy.   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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                       Ukrainian Students Exchange Program (USEP)

COMMENTARY: By Yaroslav Kovalchuk, 2nd-year student,
Faculty of Romance and Germanic Languages,
National University of Ostroh Academy
The Day Weekly Digest #20, Kyiv, Ukraine, Tuesday, Jun 20, 2006

After Ukraine gained its independence, a considerable number of Ukrainian
students, as well as other young people, began to rave about traveling
abroad. Everybody had his/her own reasons for this kind of dream.

In most cases, young people, finding themselves in dire straits as a result
of the mid-1990s economic crisis in Ukraine, saw no alternative but to leave
their native land for a few years in order to earn some money and then come
back home and thus secure a cloudless future for their families. Their chief
motivation was not a lack of patriotism but the lack of any prospects to get
a job in their fatherland.

With this idea in mind, many students went after graduation to the coveted
“Eldorado” to see with their own eyes the “land flowing with milk and honey”
in the Western civilized world. Instead, once overseas they found nothing
but a lot of not so sweet daily bread and the constant awareness of their
“otherness,” differences in mentality and perception of the surrounding
reality of Americans and Ukrainians.

Another category of foreign travel fiends are students, who as tourists
dream of gaining many new impressions and invaluable experience – in other
words, their chief goal is to see how people live over there.

Fortunately, or perhaps unfortunately for the Ukrainian nation, there are a
lot of exchange programs for any taste and at any price, which allow a young
person to study, work, or vacation everywhere, but most often, at the
student’s wish and at the suggestion of the other side, in Canada, the US,
and the European Union.

Who can say how many exchange programs there are in Ukraine, which enable
young people to attend various universities and exchange experience that is
really useful in the context of our realities, not foreign ones? This
question can baffle a layman because even if such projects exist in Ukraine,
information about them is very limited.

Previous issues of The Day have already spotlighted the initiative of its
editor-in-chief Larysa Ivshyna and Ostroh students to establish an Ostroh
Academy-based club for free and informal contacts of young people from all
the regions of Ukraine.

It is gratifying to note that the idea of intra-Ukrainian youth projects has
aroused interest among students of different specialties.

This article is perhaps one of the first attempts to shed light on Ukrainian
exchange programs in general and one of them in particular. An organization
called the Ukrainian Students Exchange Program (USEP) was set up at the end
of last month exclusively on the initiative of students, which some may say
is rather unusual.

On their way home from the Kharkiv-based All-Ukrainian University English
Language Olympiad, students from three western Ukrainian higher educational
institutions – Uzhhorod National University (Andriy Husti), National
University of Ostroh Academy (Yuliya Lukyanchenko), and Rivne State Liberal
Arts University (Anton Rohashko) – agreed, at first half-jokingly and then
in earnest, to launch a program that in its general outlines would resemble
existing time-tested international ones.

The main difference is that program participants are not supposed to go
abroad but travel within the borders of Ukraine, visiting various
universities and comparing their systems of teaching and organized student
life. This makes it possible to drastically cut the program’s duration
because it only takes two days to visit each institution, which is quite
enough to see the city, attend lessons, and hold roundtable debates with
students about the introduction of the Bologna System in Ukraine.
Incidentally, the Bologna System calls for a more active exchange of
experience among universities. So far, it only calls for, but does not
ensure, this.

According to the approved schedule, a group of 10 Uzhhorod students visited
National University of Ostroh Academy and Rivne State Liberal Arts
University. Students from Ostroh and Rivne paid a return visit to Uzhhorod
on May 26-29. I am not exaggerating when I say that they gained masses of
lasting impressions and sincere emotions. Making new friends, seeing a new
city, and visiting an unknown university in which everything seems different
from your “native” one is an enviable experience.

One of the most acute problems that the program organizers faced was lack of
funds, so almost all costs were covered by participating students. Strictly
speaking, this cooperation was between academic departments rather than

As it turned out, it is more to the point to make such exchanges between
students of the same or related specialties (in this case, Romance and
Germanic languages) because it is easier for the participants to find a
common language and effectively analyze differences in teaching and other

While faculty deans offered some support for this program, Yuriy Maiboroda,
head of the Transcarpathian branch of the Ukrainian League of Industrialists
and Entrepreneurs, sponsored a considerable part of the program’s Uzhhorod

It is normal to support an initiative both morally and materially. USEP
organizers will be applying for a US embassy grant, but there is a glut of
people in Ukraine who are not so poor, and it would not hurt them to acquire
some practice in the art of sponsorship and help this project become an
annual, rather than a one-time, event.

After all, USEP serves a noble purpose.

The participants of this exchange program come to know more about their
own country and analyze the cultural and ethnic differences among different
regions. The realization that ours is a beautiful and inimitable fatherland
in turn forms the feeling of national dignity, identity, and patriotism.

Political spinmeisters will never unite Ukraine. All they can do is cut our
land into pieces in the Caesarean spirit of “Divide and rule” and manipulate
public sentiments before an election, trying to win shaky political
dividends at the expense of an embittered electorate over which they
supposedly agonize.

Programs like USEP make it possible to realize that there are no Left-Bank,
Right-Bank, northern, or southern Ukrainians but one Ukrainian nation. Yes,
we may differ in our customs, traditions, or even languages, but it is we
who are creating a Ukrainian nation today and building an independent
Ukraine, no matter how bombastic this may sound.         -30-
LINK: http://www.day.kiev.ua/164017/
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REUTERS, Cologne, Germany, Monday June 26, 2006

COLOGNE – Journalists hoping to find out Ukraine coach Oleg’s Blokhin’s
thoughts ahead of his side’s World Cup game against Switzerland were left
baffled on Sunday.

The Ukraine team failed to provide a translator at his news conference,
leaving the majority of the 40 or so international journalists clueless
about what he was saying. An unsurprising lack of questions drew the
briefing to a rapid end, triggering anger about the lack of organisation.

“We need an English translator,” shouted one journalist as Blokhin was
leaving the room. The coach’s answer was surprising.
“Me too,” he replied in English.

A FIFA spokesman said it was the team’s responsibility to provide a
translator and that soccer’s world governing body only provided them for
official post-match news conferences. Ukraine face Switzerland in their
second round match in Cologne on Monday.               -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
14.                                    UKRAINIAN GLEE
Sport Illustrated magazine, New York, NY, Monday, June 19, 2006

NEW YORK — The guy selling $10 Ukraine T-shirts out of three cardboard
boxes wasn’t happy. No one was buying. “Everyone’s upset,” said Oleh
Mykhaylyshyn, who drove up from Trenton, N.J., with a half-dozen different
shirt styles. “We lost to Spain, so now I don’t sell much.”

The bartender was getting surly too, muttering that he expected a crowd
three or four times the size of what turned up. “I’ve been counting money
since before you were born!” Jaroslaw Kurowyckyj boomed at one patron who
seemed to be struggling with his command of American currency.

I shuddered to think what the mood inside the Ukrainian Sport Club must have
been like on Wednesday, when the country’s first-ever World Cup squad was on
the wrong side of a 4-0 match with Spain.

But on this afternoon, the Ukrainians were dominating Saudi Arabia, and
there was that score again. It was 4-0, Ukraine, and the 100 or so expats
inside this members-only club in Manhattan’s Little Ukraine could finally
allow themselves to celebrate.

“I’m goal hungry,” Kurowyckyj says. “I wanted to see a fifth goal.” Yet
Kurowyckyj, 73, happily settled for a win that put his beloved homeland’s
name back on the global sports map. He began reeling off the names of
Ukraine’s best-known sporting exports, from Olympic gold medal winners to
track and field stars to heavyweight boxing champions.

“Oksana Baiul, Denys Yurchenko, the Klitshckos,” said Kurowyckyj, whose
family has run the Kurowyck Meat Market around the corner for three
generations. “When your athletes win, then people learn about your country.
“And it’s not Russia,” he says, cracking a smile.

Kurowyckyj guided me to a corner of the 83-year-old club to show off
trophies and a scrapbook documenting a Ukrainian soccer team that brought
him as much pride — if not more so — than the one that was cruising to
victory on the televisions overhead.

The New York Ukrainians — based out of this same Second Avenue clubhouse —
won the 1965 U.S. Open Cup, defeating a team from Chicago. Kurowyckyj was
the team’s manager, and in the lovingly crafted scrapbook, he appeared in a
few photographs, standing proudly next to his team’s players.

“This is me in my young days,” he said, before pointing me to the photocopy
of a congratulatory letter sent to the Ukrainian Sport Club from Sen. Robert

After Saudi Arabia was officially dispatched, Ukraine’s soccer present
looked every bit as promising to Kurowyckyj as that 1965 scrapbook season.
Even Mykhaylyshyn could celebrate, as he finally sold several T-shirts as
soon as the match ended.

“Now we’re in business,” said the suddenly cheerful T-shirt salesman.     -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
15.              UKRAINE: NATO HOPES FADING FOR 2008

ANALYSIS: Jane’s Intelligence Digest, London, UK,  Friday, 23, 2006

The US plan to ‘fast track’ Ukraine into NATO following the enlargement
summit scheduled for 2008 is looking increasingly untenable. Jane’s
Ukraine correspondent reports on Kiev’s fading prospects for early

At first glance, the situation might not appear too bleak. An invitation
to enter NATO’s Membership Action Plan (MAP) at the Riga summit in
November remains likely, regardless of the outcome of the post-election
coalition negotiations in Kiev. Meanwhile, on 8 June, the North Atlantic
Council gave a positive signal in support of Ukraine’s MAP aspirations.

Immediately after Ukraine’s 26 March parliamentary elections, US
Vice-President Dick Cheney telephoned Ukrainian President Viktor
Yushchenko to lobby for the creation of a revived ‘Orange Coalition’. In
return, Washington would support a MAP for Ukraine and fast track an
invitation to join NATO in 2008, followed by membership two years later.

Other senior US officials from the National Security Council and
Department of State have continued to push the same informal agreement,
with newly appointed US Ambassador William B Taylor expressing his
support for a fast-track process. The US administration’s line is being
backed by Britain, as well as NATO members from the former Eastern Bloc.

Meanwhile, western EU member states are proposing their own informal
agreement with Ukraine. This would amount to not blocking Ukraine’s fast
track into NATO in exchange for Ukraine reducing its demands on the EU.

The EU’s ‘carrot’ is the offer of a deep free trade area following
Ukraine’s entry into the World Trade Organisation (WTO), which is most
likely to take place later this year, ahead of Russia’s entry. Such a
trade agreement would be part of an ‘enhanced agreement’ between Ukraine
and the EU that would replace the 10-year-old Partnership and
Co-operation Agreement that ends in 2007.

Unfortunately, international support for Ukraine’s membership of NATO
and the EU is not being reciprocated inside the country. Opposition to
NATO membership, which averaged 30 per cent in the 1990s, has doubled to
more than 60 per cent since 2000. This is seen as a response to NATO
intervention in Kosovo, the US-led invasion of Iraq in 2003 and the
anti-US campaign waged during the 2004 elections in Ukraine. In
contrast, support for NATO membership has fallen from around 30 per cent
in the 1990s to just 13 per cent according to recent polls.

Low public enthusiasm has fuelled calls for an early referendum on
future NATO membership – a move backed by political parties with a
strong anti-NATO platform. Yushchenko and his Our Ukraine bloc are
seeking to postpone any referendum until the eve of the country’s

Meanwhile, the prospect of a visit by US President George W Bush failed
to materialise, as it had been made conditional on an Orange government
emerging from the coalition negotiations. Washington’s agenda in
proposing the visit was to support pro-Western Orange Revolution
politicians in the face of mounting pressure from Moscow.

Nevertheless, Bush might still visit Ukraine ahead of the G8 Summit in
St Petersburg in mid-July, assuming that a coalition government is in
place in Kiev. It remains unclear whether a US presidential visit would
still go ahead if a coalition deal were brokered that included the
pro-Moscow Party of the Regions.

The Ukrainian leadership seems slow to appreciate the growing
disillusionment in Washington following the long delay in hammering out
a coalition deal. There is also concern over Yushchenko’s increasingly
weak political leadership.

More importantly, the failure to broker an ‘Orange Coalition’ has
created a power vacuum in Kiev, along with increasing doubts about the
feasibility of fast tracking Ukraine into NATO between 2008 and 2010.

If the country is not ready in time for the NATO enlargement summit in
2008, Ukraine could well drop back into a fourth enlargement group,
together with Georgia. If so, only three western Balkan states would be
invited to join in 2008, followed by Georgia and Ukraine in 2014-2016.

Although the Party of the Regions is officially opposed to NATO
membership for Ukraine, the party does include a pragmatic, pro-business
faction. However, although it is excluded from coalition negotiations,
the Party of the Regions is making good use of the current political
stalemate in Kiev to disrupt Yushchenko’s pro-Western foreign policy
agenda. The party also dominates the ruling coalition in the Crimean
parliament, which has issued a resolution declaring the strategically
important peninsula to be ‘NATO free’.

The political impasse is delaying the formation of a parliamentary
coalition and a new government and is also preventing the National
Security and Defence Council and the Constitutional Court from
functioning. The Security Service of Ukraine is also being criticised
for its inaction in the Crimea. This situation has enabled Moscow to
step up its efforts to fuel opposition to NATO.

Russian-backed non-governmental organisations (NGOs) and politicians –
together with the wives of Russian Black Sea officers – joined a series
of anti-NATO demonstrations that prompted Ukraine to ban visits by
leading Russian parliamentarians, such as State Duma Deputy Speaker
Vladimir Zhirinovsky. In response, the Russian Duma issued a resolution
backed by over 400 members of parliament condemning Ukraine’s moves
towards joining NATO.

Against this background, Kiev’s fast-track membership is now
increasingly unlikely for 2008. Meanwhile, if the Party of the Regions
enters government following the collapse of efforts to create an ‘Orange
Coalition’, Ukraine’s hopes of joining NATO could be postponed – perhaps
indefinitely.                                     -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
16.                       THE ANTI-NATO ENEMY WITHIN

COMMENTARY: By Oles Lisnychuk
Kuras Institute For Political and National Studies
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

Ukraine is considerably closer to gaining NATO membership. At the same time,
NATO opposition forces in the country have became more active. Progress and
counteraction to the tenets of Euro-Atlantic integration are closely related
to the internal political situation in Ukraine.

Political experts had mixed assessments of the recent demonstrations in the
Crimean port city of Feodosia against the holding of Sea Breeze military
training exercises. Most of them agreed that Russia’s external factor is
included in this anti-NATO campaign. Meanwhile, observers were surprised by
the lack of new coverage of these events.

The closer the opportunity for NATO membership is, the stronger the
anti-NATO lobby in the Ukrainian political spectrum. This includes a whole
group of political forces oriented towards molding the attitude of the
better part of Ukrainian society. According to a public opinion poll,
approximately one half of Ukrainian citizens are ready to vote against
Ukraine’s NATO membership in a possible referendum.

The anti-NATO lobby consists of both ideological opponents to Ukraine’s
Euro-Atlantic integration and those who are exploiting this issue just for
the sake of speculation and manipulating public opinion. At the same time,
there is a definite application of PR techniques in the anti-NATO lobby.

The idea of counteracting Ukraine’s entry to NATO began to be actively
exploited during the last parliamentary elections. The electoral bloc “Ne
Tak” was extremely vocal in promoting anti-NATO slogans and appeals.

The Social-Democratic Party (SDPU(o)) was a part of this bloc with its
faction in the previous parliament. When this party was in power, the
deputies of this faction constantly supported all draft laws on Ukraine’s
entry to NATO. During the parliamentary elections in 2006 the SDPU(o) became
an opposition force and called for holding a nationwide referendum on this

Ukraine’s membership in NATO is one of the most poignant issues in the
rhetoric of the radical left-wing populist Natalia Vitrenko, who speaks
against any kind of relations between Ukraine and European or Euro-Atlantic
organizations. Neither the Ne Tak Bloc nor Natalia Vitrentko’s Bloc won
seats in the Verkhovna Rada during the parliamentary elections in 2006.

Instead, representatives of these political forces received deputy positions
in city councils in the eastern and southern parts of the country, as well
as in the parliament of the Autonomous Republic of Crimea.

It is quite difficult to assess the attitude of the Party of Regions, the
largest faction in the newly elected parliament, towards NATO. In 2004
“regional” deputies made no observations and voted for the laws foreseeing
intensive cooperation with NATO.

After Viktor Yushchenko’s victory in the presidential election in 2004-2005,
criticism of the goals of the new government regarding NATO entry became a
part of the programmed ambushes by “regional deputies”. Representatives of
this party indeed took part in the protest act in Feodosia and turned it
into a purely political issue.

As soon as the opportunity arose for the Party of Regions to become a part
of the coalition, representatives of this force became more reserved in their
expressions. The issue of the European integration is one of the main differences
between the Party of Regions and its potential allies in Nasha Ukraina (Our

In the current situation it is not difficult to predict that if the Party of
Regions returns to power, it sacrifices its anti-NATO rhetoric. It is highly
likely that the “regionals” could agree to continue following the country’s
current foreign policy course and preserve the rhythm of Ukraine’s relations
with the Alliance in exchange for satisfying their own goals.

The possibility of the Party of Regions pulling out of the “anti- NATO
 lobby” does not mean that this political force will automatically become
the conductor on the course of Euro-Atlantic integration. The Party of
Regions could well turn a cold shoulder towards this issue and their
behavior could be manifested in politics like a kind of “soft sabotage” of
the country course towards NATO and postpone Ukraine’s entry into the

Other participants of the anti-NATO lobby will try to exploit this possible
collusive cynicism of the Party of Regions to strengthen their position.

We can expect that the Communists, the Natalia Vitrenko Bloc and the SDPU
(o) will boost their anti-NATO efforts.

The Socialist Party, which during the formation of the “orange coalition”
did not conceal its dissatisfaction with Ukraine’s course towards NATO. In
fact, should they become a part of the opposition, they might just join the
anti-NATO alliance.

The anti-NATO lobby in Ukrainian politics is purely a project based on
circumstances. Its main weapon is anti-NATO rhetoric for its own political
self-affirmation. Needless to say, this lobby is quite capable of slowing
down Ukraine’s mutual relations with NATO. Finally, the successful
suspension of the Sea Breeze international joint milita ry training
exercises in Crimea is merely the first step in this process.           -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
17.                                MAKING A DIFFERENCE

COMMENTARY: By Arkady Moshes, Senior Researcher
The Finnish Institute of Internaitional Affairs
Kyiv Weekly, Kyiv, Ukraine, Wednesday, June 21, 2006

The EU remains extremely reluctant to discuss even a remote and hypothetical
possibility of Ukraine’s membership in the Union.

Certainly, Brussels’ attitudes and concerns are not difficult to understand.
The EU, as they say, already has “too much on its plate”. It has yet to
fulfil integration promises made to the Balkan countries, not to mention

Many member states would like to avoid complications with Russia, which
would hardly be possible if Ukraine were given a prospect of membership.
Some European capitals do not like the idea of expansion eastwards as they
think that eastern enlargements make the EU more open to the influence of
the United States.

Against this reasoning, the group of Ukraine’s advocates consisting of
several Central European and Baltic states does not look powerful and
skillful enough to lobby their case successfully.

On the eve of the Finnish EU presidency, this paper argues that the European
Union and its member states should further increase their commitment in
Ukraine, improve the effectiveness and visibility of their actions and
pursue a policy that not only encourages but substantially helps Ukraine to
complete its transformation work. Europe cannot afford to be or to appear
indifferent to the outcome of reforms in Ukraine for a number of reasons.

First, Ukraine matters to Europe. Second, it has a fairly good chance of
succeeding. Third, the transition there can still fail or stall, if the
country is left to its own devices, which would hardly be in the interests
of Europe.

                                    THE STRATEGIC CASE
Up until recently, Europe had difficulties in understanding the importance
of Ukraine. On the one hand, while not playing power politics on its
periphery and building a partner relationship with Russia, the EU was not
keen to adopt the well-known argument of Zbigniew Brzezinski, according to
which Russia without Ukraine would cease to be an empire – an argument that
implicitly valued Ukraine as a potential bulwark against its eastern

As it turned out, Europe’s cautious stance was justified, as the
prioritization of geopolitics by other international actors had undoubtedly
contributed to the emergence of the oligarchic system under Ukraine’s former
president, Leonid Kuchma.

On the other hand, apart from issues of nuclear safety – it is, after all,
the country of Chornobyl – soft security risks coming from Ukraine were,
relatively speaking, not too challenging. Compared to the conflagration in
the Balkans or even to the Baltic states with their Russian-speaking
minorities, Ukraine looked peaceful.

Ukraine can be viewed primarily through the prism of opportunities. To start
with, Ukraine possesses a huge demonstrative potential vis-a-vis Russia. If
it could be proven that a large post-Soviet country with a multi-million
strong Russian population could modernize and prosper not by means of
strengthening the “power vertical” but by gradually adapting to democratic
norms and values, there is an increasing likelihood that Russia might one
day follow suit.

In the foreseeable future, intensive contacts between Russian and Ukrainian
people will be preserved, which makes it possible to count on the transfer
of positive experience.

The success of transition in Ukraine would usher in a critical contextual
change for achieving the goals of European policy in Belarus, Moldova and
the whole Black Sea region, as Ukraine can serve as an anchor and a key link
of regional stabilization and democratization. Now that the countries of the
Caucasus are included in the European Neighbourhood Policy (ENP), this fact
should not be underestimated.

Finally, a reformed and economically transparent Ukraine could play a
significant role in Europe’s strategy of diversifying its energy supplies
and constructing new transit connections to the energy resources of the
Western Caspian. It is in this capacity that the future of Ukraine now
matters for Europe, perhaps, most immediately and tangibly.

What to do? The following can be done to help the country meet them.

European engagement in Ukraine should be primarily focused on systemic
internal transformation, not on consolidating foreign policy choices. There
should not be grounds for suspicions that Europe is simply playing a
zero-sum game with Russia in the shared neighborhood. All developments in
Ukraine ought to be scrupulously monitored.

If the policies conducted by Kyiv look dubious and incompatible with
European standards, the criticism should be public, transparent and firm. No
impression should be created that slogans of Euro-Atlantic integration may
be used to obtain support vis-?-vis Russia.

The transformation in Ukraine will require a massive transfer of expertise
in adaptation. This experience is available both in the new member states of
the EU and in some old members. But the work has to be coordinated and
financed. The European Union could help Ukraine address its energy concerns.
In the longer run the EU and Ukraine share a common interest in building a
new infrastructure for the transit of Caspian energy.

It is important to create success stories in bilateral relations that would
prove the emergence of the integrative pattern. Large numbers of Ukrainian
students and civil servants could be educated and trained in Europe to
facilitate the adoption of European norms in the country.

A special mechanism for consultations could be set up to give Ukraine a de
facto seat at the Common Foreign Security Policy table, when questions of
direct relevance to it are discussed. Most evidently, a profound
liberalization of the visa regime in EU countries for Ukrainian citizens
could be considered.

En route to these and other success stories, the list of potential
incentives may put conditionality in EU policy to work. Sooner or later,
depending on the progress made, the question of Ukraine’s EU membership will
have to be addressed. The membership incentive worked in ensuring the
success of the transformation in Central Europe. There is every reason to
believe that it would also work in Ukraine.                 -30-
LINK: http://www.weekly.com.ua/?art=1150836287

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18.                                  THE ORANGE ORDER
           Ukraine now has a second chance to pursue pro-Western reform

EDITORIAL: The Times, London, UK, Thursday, June 22, 2006

Two important deadlines finally persuaded the political parties that led the
Ukrainian Orange Revolution to end their bickering and form a new coalition
government: the threat of fresh elections if parliament was unable to
resolve the deadlock; and the approaching G8 summit at which energy and a
possible renewed Russian threat to Ukraine’s gas supplies will be a central

It is three months since the general election, held in the wake of the
bitter split between President Yushchenko and Yuliya Tymoshenko, the out-
spoken former Prime Minister whom he sacked last September. The election
brought a spectacular return for Viktor Yanukovych, the pro-Moscow former
President whose party was accused of having a hand in the poisoning of Mr
Yushchenko and which won the most seats.

So bitter was the animosity within the Orange camp, however, that its three
main parties were unable to agree on a new coalition – leaving Mr Yushchenko
with the bizarre option of having instead to do a deal with his personal and
ideological opponent, Mr Yanukovych.

The wrangling has gone on since March, harming Ukraine’s economy and
damaging its image abroad. Mrs Tymoshenko has insisted on retaining three of
the most sensitive posts in any coalition – the ministries of Finance and
Energy as well as the office of Prime Minister, to which she proposes to
return herself.

To this, the President has clear objections: he is suspicious of Mrs
Tymoshenko’s fiery Ukrainian nationalism, which translates into a virulent
hostility to Russia and makes her unpopular in eastern Ukraine; he is wary
of her economic policies, which encompass a renationalisation of companies
sold off cheaply to cronies by the previous Government; and he knows that
she is deeply hostile to the complex deal reached with Gazprom that ended
the stand-off with Russia last December over gas prices.

But unless he had been able to announce a government by the end of this
week, he would have been forced to call for a fresh vote.
This coalition deal is not yet fully tied down. But Ukraine knows that it
now faces new pressure from its neighbour over gas.

Moscow has just warned Kiev that gas prices may rise sharply again in
January. Turkmenistan has threatened a cut-off in supplies to Gazprom if the
giant Russian supplier does not agree to a 30 per cent price rise, and
Gazprom will certainly pass on any increase.

Ukraine, which has portrayed itself as the victim of Russian blackmail,
needs to speak with one voice as Western nations, to whom the Orange leaders
want to draw closer, prepare for a dispute with President Putin over energy

The Orange Revolution has one more chance to reform itself and the country.
If the new coalition is to hold together, it must work out a pragmatic
relationship with Russia, tackle endemic corruption, agree a policy on
economic reform and set aside corrosive personal enmities. The future, for
the moment, is Orange. But is it bright?               -30-
LINK: http://www.timesonline.co.uk/article/0,,542-2237000,00.html
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Action Ukraine Report #718, Article 19, Kyiv, Ukraine, Mon, June 26, 2006

RE: THE ORANGE ORDER (article 18 above)
Ukraine now has a second chance to pursue pro-Western reform
EDITORIAL: The Times, London, UK, Thursday, June 22, 2006
Sir, Your portrayal of Yulia Tymoshenko, likely to be reappointed as
Ukraine’s Prime Minister soon, as someone driven by “fiery Ukrainian
nationalism which translates into virulent hostility to Russia..[and which]
makes here unpopular in Eastern Ukraine,” in your editorial piece ‘The
Orange Order’ 22nd June 2006, is erroneous.

The March 2006 parliamentary elections showed Mrs. Tymoshenko lags

behind local politicians, including Viktor Yanukovych, in popularity, but
nevertheless she is the most popular ‘Orange’ politician in Eastern Ukraine.
Her popularity is growing there.

President Viktor Yushchenko’s ‘Our Ukraine’ is strongly opposed to raising
the status of the Russian language to that of a state language in Ukraine,
something Viktor Yanukovych’s ‘Party of Regions of Ukraine’ is demanding.
But this topic is a non-issue for Mrs Tymoshenko’s eponymous BYuT party.

Tymoshenko’s party is keen of closer relations with Europe, but is decidedly
‘lukewarm’ on Ukraine’s entry into NATO, unlike Mr Yushchenko’s ‘Our

You are quite right to point out that Mrs. Tymoshenko is “deeply hostile to
the complex deal reached with Gazprom” by means of which Ukraine purchases
large quantities of vital Russian and Turkmen gas. The deal involves opaque
intermediary companies which skim-off billions of dollars for the benefit of
ruling elites both in Russia and Ukraine, to the detriment of the citizens
in both countries. Attempting to tackle this, one of BYuT’s biggest election
platform planks, is not anti-Russian policy.

In 2005 Tymoshenko’s ‘second-in-command’ and Ukraine’s security services
chief at the time, Oleksandr Turchynov, was getting close to uncovering
involvement of some of Mr. Yushchenko’s closest associates in massive fraud
in Ukraine’s gas procurement.

These frauds originating from the days of President Kuchma and were not
dealt with when Yushchenko became President, as promised during the Orange
election campaign during Autumn 2004. This was the main reason Yushchenko
dismissed Tymoshenko and her government last September.

Your editorial piece also wrongly elevates Viktor Yanukovych to the status
of ‘former President’ whose party was “accused of having a hand in the
poisoning of Mr Yushchenko”. Yanukovych is a former Prime Minister. There

is no evidence of his party being linked to Mr Yushchenko’s mysterious
poisoning. There is some suspicion that agents from other countries may have
been involved.

Levko (Leo Iwanycky)
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Action Ukraine Report #718, Article 20, Kyiv, Ukraine, Mon, June 26, 2006

Dear Eugenia,

Thank you for your Letter to the Editor which appeared in Action Ukraine
Report yesterday (AUR#715, June 20, 2006, Article 14).  The more I think
about the Famine Genocide the more I come to believe that the tragedy will
not become widely known until the Kremlin acknowledges the ways of its past.

Unlike Germany, which has atoned the best it can for Nazi atrocities
generations ago, the Kremlin remains in a state of denial for over 70 years
and lives in a glass house.  One country is going forward and the other is
going nowhere.

Until the Kremlin acknowledges its past, it is unlikely eastern Ukraine and
Crimea will understand its nation’s past.  And with so many Russians
‘transplanted’ in these regions generations ago it is unlikely they even
feel part of it.

Nation building is not easy and Ukraine’s government has most certainly its
work cut out for it.  If only somehow it could leverage the gas transit or
Sevastopol port rental matter in order to make it happen.

It would likely be the final major step toward releasing truth in the world,
a truth that the world needs to know for there to be order.  Everytime the
radio plays John Lennon’s “Back in the USSR” it makes one realize just how
naive the world is.

A fundamental understanding of the meaning of human rights also poses a
roadblock to the Kremlin acknowledging that which it needs to acknowledge.

If it is not prepared to acknowledge it at present then the nation needs to
collapse even more until it falls at the feet of justice with the rest of
the developing world and comes to believe in the same values.  A truth is a
truth is a truth, and the world has a need to know.  By suppressing its past
the Kremlin suppresses its future.

It was a true honour to have you come to Calgary to speak at our joint
Ukrainian Canadian Professional and Business Association’s (UCPBA) and
Ukrainian Canadian Congress (UCC) monthly meeting on November 25, 2004
and to read your personally autographed book.  The current executive is
preparing to hand over the reigns to a new executive for the next two years
at tomorrow’s annual general meeting.

Also, please extend my regards to Volodomyr Klitschko on his recent success
in the ring.  Upon reading a recent full backpage article in a prominent US
sports magazine (likely Sports Illustrated) comparing he and the dubious
Mike Tyson I learned that he lives and trains in LA.

Kindest regards, Terry Lys, Calgary (Canada)                 -30-
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      Why do we revere him so much? Because he lived the way Man should live.

By Iryna Yehorova, Lviv, The Day Weekly Digest in English #20
Kyiv, Ukraine, Tuesday, June 20, 2006

When the bitter news of Mykola Kolessa’s death came, the residents of Lviv
not only plunged into the throes of agonizing grief, but also fell into a
sort of childish confusion. Something of the kind happens in families,
whenever the eldest dies and someone else must assume his duties and

The most painful thing is that this person carries away certain traditions,
habits and a part of the soul that embraces and brings everyone together, as
if protecting the family.

Today we can speak of the outstanding composer, conductor, and citizen, who
contributed to Ukraine’s prestige throughout his life; the son of a century
(born on Dec. 6, 1903), a legend of Ukrainian culture, Hero of Ukraine,
People’s Artist of the USSR, Meritorious Figure of Ukrainian Arts, winner of
the Shevchenko State Prize and every kind of Order of Merit.

We can also enumerate all his honorary titles and awards, and list his
world-famous pupils as well as all the symphonies and suites that he
composed. But the main thing is that the epoch that he embodied is passing,
never to return.

All those who saw this man at least once in their life – those who had the
privilege of knowing the patriarch personally and visiting his home, those
who saw his amiable smile from the parterre (because he usually sat in a
theater box when his jubilee was being celebrated), and even those who
simply knew that there was a Mykola Kolessa living on a quiet Lviv street –
felt as if they had just been orphaned, not just his family that lavished
love and care on Kolessa, protected him from pushy journalists, and tried to
persuade him to stop smoking that pipe. We have all been orphaned and feel

It is unlikely that Kolessa would have liked this, for he loved life and
people too much. It is difficult to think of a person whom he may have hurt
or to imagine that he could fail to greet someone he knew – he usually did
so in a respectful and dignified manner by tipping his hat and making a
slight bow.

Only elderly Lviv residents greeted people like this. This habit has
disappeared now, as is the special constitution of a soul that tends to
reject the speeds that kill spirituality.

Mykola Kolessa was born in Sambir into the family of the prominent
folklorist Filaret Kolessa. The father named his son Mykola in accordance
with the wishes of the Ukrainian music classic Mykola Lysenko and thus
determined his destiny, the difficult destiny of a musician who devoted
himself to promoting the culture of his people.

To tell the truth, it took some time for the son to sense his vocation: he
began to study medicine but quickly realized that he had to devote himself
exclusively to music.

He graduated from the Prague Higher School of Music, where he was taught by
the well-known Czech composer, Professor Vitezslav Novak. Kolessa composed
symphonic music, chamber and choral pieces, romances and other songs, as
well as film scores.

His artistic manner is easily recognizable: “With deep and well-developed
Ukrainian roots, it dates back to the period when the human voice was the
only musical instrument.

In this case, this voice finally began to sing in Ukrainian.” Incidentally,
Kolessa used to add other instruments to the orchestra so that it sounded
more like a Hutsul folk music ensemble.

Kolessa was always brimming with energy: when he taught at the Lysenko
Higher Musical Institute, he founded Western Ukraine’s first professional
conductors’ courses, which gave birth to the fine traditions that
distinguish representatives of the Lviv school of conducting from other
Ukrainian and foreign performers.

Why do we revere Kolessa so much? Because he lived the way Man should live.
“It was my father who handed down his life’s credo to me,” he once
confessed. “Nulla dies sine linea – ‘Not a day without a line.’ I try to
‘tick off’ every day that I live and ask myself every evening, what good I
have done.”

When asked whether he was happy, he usually said, “Moments of happiness
occur when you are working and things go smoothly. It is such a great
pleasure when you are working with flying colors! Inspiration… I don’t
know what to call it exactly, perhaps a desire to work. In that case it was
so easy and cheerful to work. So I miss this feeling.”

I once asked the composer to recall the moments of his life that were burned
into his memory. He was silent for a few seconds and then told me that when
he was a little boy, he once ran after the ambulance that carried his mother
to hospital. In the stormy days of the 1918 Ukrainian-Polish show-down she
was working at an outdoor “field kitchen” in Lviv.

She was going home one day when she was shot at through the fence
surrounding the Armenian cathedral. He remembers standing next to the door
of his father’s room, listening to a red-haired man singing a Ukrainian folk
song, while father was writing down the lyrics. That was Ivan Franko.

Or he would recall the days of World War II, when he regularly traveled from
Lviv to Stanislav to take part in choir rehearsals: this helped his family
to keep its head above water. One time he was returning home very late after
curfew, and he had to hide. He said he still remembered how hard his heart
was beating in his chest and how tasty the tea seemed, when he finally
reached his friends’ place. 

He wished he had known how to fight with his fists and be aggressive. He
kept silent at a conservatory meeting in Stalinist times, when the bosses
censured Vasyl Barvinsky whom he greatly respected and loved. “In those
days I was forced to sit and keep silent. Those were terrible times.

Then Barvinsky was arrested, and later it was our turn. I tried to speak at
that meeting. For a long time after I could not recover from my spiritual
trauma, which affected my subsequent creativity.

So when people claim that today’s young people are ill-mannered, brusque in
speech, and never smooth things over, while people of our generation would
certainly have done so, I say that I see no regress: today’s people are more
determined, energetic, and free of complexes. But I am very worried that
money and profit have now supplanted much more important things.”

Music, including the music of life, was his obsession. This is why he always
kept a bicycle in his apartment corridor, the one he used to ride in his
younger years. It seemed to me today that an old bruise still hurts me – I
bashed my leg painfully against the pedal, either because of nervous tension
(I am talking to Kolessa himself!) or my natural clumsiness.

Kolessa apologized several times and then tried to smooth over the
situation: he made a few jokes, showed me his collection of pipes, the
pencil with which he wrote in his school years, and old musical scores.

Oddly enough, in spite of his asceticism, he took special care of the things
that reminded him of his friends, relatives, and children, as well as of the
way he had matured. Regrettably, many people consider this a trifle today.

Last Sunday Lviv paid its last respects to Mykola Kolessa.   -30-
LINK: http://www.day.kiev.ua/164026/
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By Maryna Antonova, Head of the Press Office
Ukraine 3000 Foundation, Friday, June 23, Kyiv, Ukraine

KYIV – Kateryna Yushchenko, Chairperson of the Board of the Ukraine

3000 Foundation, and First Lady of Ukraine took part in the opening of a
renovated oncology clinic at the Kyiv Oblast Cancer Center on Thursday,
morning, June 22, 2006

In her speech Kateryna Yushchenko noted “the most important thing is that
modern medicine offers new technology and treatments for cancer. Our main
goal is to be able to effectively diagnose these diseases, find ways to
provide high quality treatment to our citizens, gain access to new
technology and innovations in the area of health care, and to build new and
renovate older hospitals.

The development of better medical programs for people with cancer is a
priority for President Viktor Yushchenko and for a large number of
and non-government organizations in Ukraine. I would like to express my
sincere gratitude to all those who were involved in renovating this Oncology
Clinic that will offer its services to thousands of patients”.

On behalf of the Ukraine 3000 Foundation and the pharmaceutical company
“Zdorovya”, Kateryna Yushchenko presented a certificate indicating that
anti-cancer drugs and other medications worth one million hryvnya were
being donated to the Kyiv Oblast Cancer Center and other participants in the
Hospital to Hospital Program.

She also presented the Clinics an icon and an old traditional Ukrainian
embroidery towel from the private collection of the Yushchenko family.

The newly renovated clinic at the Cancer center is a state-of-the-art
facility that provides a wide range of services to its patients. The Center is

able to provide service to over sixty-thousand patients a year. The Center is
equipped with modern diagnostics and treatment facilities and is able to
operate dozens of new technologies and treatment procedures to patients.

Currently there are thirty-four thousand people in the Kyiv Oblast have been
diagnosed with cancers, and every year 6,000 more people are added to this
list.                                             -30-
Contact:  Maryna Antonova, Head of the Press Office, Ukraine
3000 Foundation, Kyiv, presa@kateryna.org.ua.

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