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

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           –——-  INDEX OF ARTICLES  ——–
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By Viktor Rybachenko, The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, June 27, 2006

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

Ukraine-U.S. Business Council
Action Ukraine Report (AUR), Kyiv, Ukraine, Thu, June 29, 2006

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


REUTERS, Potsdam, Germany, Wednesday, June 28, 2006
Anna Ivanova-Galitsina,Dow Jones Newswires
Moscow, Russia, Tuesday, June 27, 2006

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

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

                 Strong performance in Ukraine, Russia and Kazakhstan
By Michael Carolan, Dow Jones Newswires
London, United Kingdom, Tuesday, June 27, 2006


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


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

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

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

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

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

                                INFORMED ABOUT NATO

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


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

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

                             A NEW EUROPEAN GAS CRISIS
    “It seems like all the makings of a perfect storm,” said Jeffrey Woodruff.
Cbonds News, St. Petersburg, Russia, Monday, June 26, 2006
                           IN GAS SUPPLIES TO UKRAINE 
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006
23.                                 “WITH BEST WISHES”
                   Meeting Robert Conquest at Stanford University
By Vasyl Marochko, Ph.D. (History),
Head of the Association of Holodomor Researchers, Kyiv
The Day Weekly Digest in English, #21
Kyiv, Ukraine, Tuesday, 27 June 2006
              “Kyiv of the 1910s-1930s was the mecca of ‘leftwing artists'”
By Olena SHAPIRO, special to The Day
The Day Weekly Digest in English #21
Kyiv, Ukraine, Tuesday, 27 June 2006

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

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

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

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

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

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

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

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

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

Asked if he was appointed to Ukraine because he is considered an anti-crisis
manager, Ambassador Taylor smiled and said that he has indeed worked in
some “hot spots” and is now glad to come to a peaceful country.   -30-

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

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

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

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

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

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

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

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

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

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

He confirmed then that U.S. President Bush would very much like to visit
Ukraine, but he is waiting for the Ukrainian government to be formed.

NOTE: Another article on the new US Ambassador William Taylor:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

boys who can play soccer.”

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

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

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

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

Soccer could be a chance to bridge the gap.

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

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

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

accused last year of encouraging eastern Ukraine toward separatism.

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

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

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

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

wrote in a telegram to the team.

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

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

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REUTERS, Potsdam, Germany, Wednesday, June 28, 2006

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

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

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

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

Friday’s game in Hamburg kicks off at 2000 BST and the winner will face
either Germany or Argentina.                        -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

MOSCOW – Ukrainian mobile phone operator Kyivstar Tuesday said it

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

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

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

goes on to meet Italy in a quarterfinal match June 30.
Kyivstar, Ukraine’s largest mobile phone operator by subscriber numbers,
is majority owned by Norway’s Telenor ASA (TELN). Company Web
site:                       -30-
Anna Ivanova-Galitsina, Dow Jones Newswires;
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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By Martin Gelnar, Dow Jones Newswires
Zurich, Switzerland, Wednesday, June 28, 2006

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

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

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

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

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

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

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

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

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

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

Nestle’s turnover in Ukraine was more than UAH1.6 billion, (UAH1=$0.20) in
2005, which is around 0.4% of Nestle’s global turnover. Nestle Ukraine
employs about 3,000 people and exports to Russia, the Czech Republic,
Slovakia and the Baltics, among other countries.        -30-
By Martin Gelnar, Dow Jones Newswires; +41 43 443 8042;
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                 Strong performance in Ukraine, Russia and Kazakhstan

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

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

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

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

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

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

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

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

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

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

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

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

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

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

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

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

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

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

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

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

of the company’s supervisory board Roman Lunin, 12% to eight financial
institutions (mainly private European funds and asset management companies).
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006 (16:47)

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

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

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

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

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

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

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

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

Cersanit produces bath and toilet equipment, shower cabins and furniture for
bathrooms. The company is running three factories in Poland. It has been
operating on the Ukrainian market since 1998. The company produced goods
worth USD 150 million in 2004.                            -30-
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Ukrainian News Agency, Kyiv, Ukraine, Monday, June 26, 2006

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

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

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

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

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

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

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

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

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             Send in a letter-to-the-editor today. Let us hear from you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Naftohaz Ukrainy National Joint-Stock Company intends to pump 16 billion
cubic meters of natural gas into underground storage facilities before the
start of the 2006-2007 cold season.                         -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At the same time, Ukrhaz-Energo and RosUkrEnergo concluded a contract for
the supply of natural gas to Ukraine at the rate of USD 95 per one thousand
cubic meters for the period until the end of 2010. Gazprom controls 45% in
RosUkrEnergo, Dmytro Firtash 45% and Ivan Fursin 5%.      -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

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

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

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

this in an interview with Russia’s Vedomosti publication.

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

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

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

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

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

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

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

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

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

On the same day, Ukrhaz-Energo and RosUkrEnergo signed a contract for
delivery of natural gas to Ukraine at the price of USD 95 per 1,000 cubic
meters until the year 2011. Russia’s Gazprom owns 45% of the shares in
RosUkrEnergo, Firtash owns 45%, while Ivan Fursin owns 5%.   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

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

the press service of the company.

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

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

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

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

Philip Morris Ukraine produces Marlboro, Parliament, Chesterfield, Muratti,
L&M, Bond Street, and Next cigarettes.               -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                                INFORMED ABOUT NATO
Ukrainian News Agency, Kyiv, Ukraine, Tue, June 27, 2006

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

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

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

TV and radio,’ Tymoshenko said.

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

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

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

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

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
NTV Mir, Moscow, in Russian 0900 gmt 26 Jun 06
BBC Monitoring Service, United Kingdom, Mon, June 26, 2006
MOSCOW – Crimea will henceforth celebrate two Victory days. The traditional
May holiday [Victory Day on 9 May] will be complemented by another one in
June. [Passage omitted]

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

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

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

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

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

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

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

[Correspondent] Participants in the anti-NATO protests have decided to
rename Priportovaya Square as Anti-NATO Square and to set up an anti-NATO
museum in the city. One of the items from this museum was temporarily hanged
on a pole. [Video of an effigy of a NATO serviceman strung up on a telegraph
pole] [Passage omitted]                          -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                             A NEW EUROPEAN GAS CRISIS
     “It seems like all the makings of a perfect storm,” said Jeffrey Woodruff.

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

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

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

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

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

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

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

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

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

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

Fitch expects that Gazprom, which supplies up to 17 billion cubic meters of
gas to Ukraine per year, would be quick to pass on these higher costs. In
addition, successful price increases by Turkmenistan to supply gas to Russia
would also likely lead to direct price increases for Ukraine, which receives
approximately 40 billion cubic meters from Turkmenistan per annum.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                           IN GAS SUPPLIES TO UKRAINE 

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

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

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

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

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

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

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

Naftohaz Ukrainy and RosUkrEnergo on February 1 set up a joint-venture
closed joint-stock company, Ukrhaz-Energo, to manage gas supplies to
Ukraine.                                                -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
23.                               “WITH BEST WISHES”
                    Meeting Robert Conquest at Stanford University

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                   “Kyiv of the 1910s-1930s was the mecca of ‘leftwing artists'”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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      SigmaBleyzer/The Bleyzer Foundation Economic Reports
                “SigmaBleyzer – Where Opportunities Emerge”
The SigmaBleyzer Emerging Markets Private Equity Investment Group
and The Bleyzer Foundation offers a comprehensive collection of documents,
reports and presentations published by its business units and organizations.
All publications are grouped by categories: Marketing; Economic Country
Reports; Presentations; Ukrainian Equity Guide; Monthly Macroeconomic
Situation Reports (Romania, Bulgaria, Ukraine).
You can be on an e-mail distribution list to receive automatically, on a
monthly basis, any or all of the Macroeconomic Situation Reports (Romania,
Bulgaria, Ukraine) by sending an e-mail to

              (Folk Art) and ContempoARTukraine MAGAZINES
For information on how to subscribe to the “Welcome to Ukraine” magazine
in English, Ukrainian Folk Art magazine “Narodne Mystetstvo” in Ukrainian, 
or ContempoARTukraine in English please send an e-mail to Complete information can be found at
                              Action Ukraine Report (AUR)
               Holodomor Art and Graphics Collection & Exhibitions
          “Working to Secure & Enhance Ukraine’s Democratic Future”

1.  THE BLEYZER FOUNDATION, Dr. Edilberto Segura,
Chairman; Victor Gekker, Executive Director, Kyiv, Ukraine;
Washington, D.C.,
   Additional supporting sponsors for the Action Ukraine Program are:
Chairperson; Vera M. Andryczyk, President; Huntingdon Valley,
3. KIEV-ATLANTIC GROUP, David and Tamara Sweere, Daniel
Sweere, Kyiv and Myronivka, Ukraine, 380 44 298 7275 in Kyiv,
4.  ESTRON CORPORATION, Grain Export Terminal Facility &
Oilseed Crushing Plant, Ilvichevsk, Ukraine
5. Law firm UKRAINIAN LEGAL GROUP, Irina Paliashvili, President;
Kiev and Washington,,
6. BAHRIANY FOUNDATION, INC., Dr. Anatol Lysyj, Chairman,
Minneapolis, Minnesota
7. VOLIA SOFTWARE, Software to Fit Your Business, Source your
IT work in Ukraine. Contact: Yuriy Sivitsky, Vice President, Marketing,
Kyiv, Ukraine,; Volia Software website: or Bill Hunter, CEO Volia Software,
Houston, TX  77024;
8. ODUM– Association of American Youth of Ukrainian Descent,
Minnesota Chapter, Natalia Yarr, Chairperson
Dr. Susanne Lotarski, President/CEO; E. Morgan Williams,
SigmaBleyzer, Chairman, Executive Committee, Board of Directors;
John Stephens, Cape Point Capital, Secretary/Treasurer
Brown Brook, New Jersey,
Ihor Gawdiak, President, Washington, D.C., New York, New York
12. U.S.-UKRAINE FOUNDATION (USUF), Nadia Komarnyckyj
McConnell, President; John Kun, Vice President/COO; Vera
Andruskiw, CPP Wash Project Director, Washington, D.C.; Markian
Bilynskyj, VP/Director of Field Operations; Marta Kolomayets, CPP
Kyiv Project Director, Kyiv, Ukraine. Web:
13. WJ GROUP of Ag Companies, Kyiv, Ukraine, David Holpert, Chief
Financial Officer, Chicago, IL;
14. EUGENIA SAKEVYCH DALLAS, Author, “One Woman, Five
Lives, Five Countries,” ‘Her life’s journey begins with the 1932-1933
genocidal famine in Ukraine.’ Hollywood, CA,
15. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
16. SWIFT FOUNDATION, San Luis Obispo, California
17. TRAVEL TO UKRAINE website,,
A program of the U.S-Ukraine Foundation, Washington, D.C.
If you would like to read the ACTION UKRAINE REPORT- AUR,
around five times a week, please send your name, country of residence,
and e-mail contact information to Information about
your occupation and your interest in Ukraine is also appreciated.
If you do not wish to read the ACTION UKRAINE REPORT please
contact us immediately by e-mail to  If you are
receiving more than one copy please let us know so this can be corrected
                        PUBLISHER AND EDITOR – AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer
Emerging Markets Private Equity Investment Group
P.O. Box 2607, Washington, D.C. 20013, Tel: 202 437 4707
Mobile in Kyiv: 8 050 689 2874;
    Power Corrupts and Absolute Power Corrupts Absolutely. 
return to index [Action Ukraine Report (AUR) Monitoring Service]

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