Daily Archives: July 11, 2006

AUR#729 Jul 11 Curtain Drops On Maidan Stage. Will The Audience Leave In Silence?; Tymoshenko Says Her Bloc Moving To The State Of Most Radical Battle;

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    So it is the end of story about the orange coalition. Officials at all levels will
                 now take large pictures of Maidan off the walls in their offices.
                          The curtain has dropped on the Maidan stage. 
                                  Will the audience leave in silence?
                                                   (Article One)
  Tymoshenko: “We won’t yield Ukraine to venal, weak-willed, spineless politicians.”
          Tymoshenko stressed that “the Yuliya Tymoshenko Bloc will find itself
             absolutely clearly in opposition and we believe that all treachery, all
          moral falls, all bribery and corruption which led to such a format of the
        coalition in parliament, and, in effect, the Communist-oligarchic format of
             the coalition, all this treachery, bribery, rape and moral falls will not
         provide a normal basis, a normal foundation for the building of a just and
            democratic state, and that is why we are moving to a state of the most
            radical battle and will not allow Ukraine to remain in that sorry state to
                    which corrupt, servile politicians have brought Ukraine to”.
                                                  (Article Two)
Mr. E. Morgan Williams, Publisher and Editor  
             –——-  INDEX OF ARTICLES  ——–
            Clicking on the title of any article takes you directly to the article.               
  Return to the Index by clicking on Return to Index at the end of each article
1.                   CURTAIN DROPS ON MAIDAN STAGE
 So it is the end of story about the orange coalition. Officials at all levels will
   now take large pictures of Maidan off the walls in their offices. The curtain   
        has dropped on the Maidan stage. Will the audience leave in silence?
By Yulia Mostovaya
Journalist and Chief Editor, Zerkalo Nedeli On The Web,
Mirror Weekly, No. 26 (605), International Political Social Weekly
Kyiv, Ukraine, Monday, Saturday, July 8-14, 2006

                      “We are moving to a state of most radical battle.”
UNIAN news agency, Kiev, in Ukrainian 1255 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

RIA Novosti, Moscow, Russia, Monday, July 10, 2006

        She says Ukrainian president leaning towards dissolving parliament
Ukrayinska Pravda web site, Kiev, in Ukrainian 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

      Oleksandr Moroz accused of treason by resigning leaders of his party
INFORM, Newsletter for the international community providing
views and analysis from the Tymoshenko Bloc (BYUT).
London, United Kingdom, Issue 5, Monday, 10 July 2006


Associated Press (AP), Kiev, Ukraine, July 10, 2006

TV 5 Kanal, Kiev, in Ukrainian 1903 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

                                    ORANGE COALITION
Interfax-Ukraine news agency, Kiev, in Russian 0933 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

9.                          POLITICAL ANIMAL MOROZ
    New speaker of Parliament Moroz proves he’s Ukraine’s most cunning 
   politician. It looks like Oleksandr Moroz’ union with the Party of Regions

           has put a final stop to the romance of the Orange Revolution.
By Kyrylo Orovetskyy
Ukrayinska Pravda web site, Kiev, in Ukrainian Friday, 7 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006
TV 5 Kanal, Kiev, in Ukrainian 1130 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

International Herald Tribune (IHT), Paris, France, Mon, July 10, 2006

                  Cautions Ukraine and Georgia against joining NATO
Interfax-AVN military news agency website, Moscow, in Russian 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

    Legislators call for all Ukrainian metals to be stopped from entering Russia

By Yuriy Humber, Staff Writer, St. Petersburg Times
St. Petersburg, Russia, Monday, July 10, 2006

                 Russian regulators forced more than 60 radio stations to stop
By Peter Finn in Moscow, Washington Post Foreign Service
The Washington Post, Washington, D.C., Friday, July 7, 2006; Page A01

Associated Press (AP), Kiev, Ukraine, July 10, 2006 


                                   BEAT 3% FORECAST FOR 2006
Newratings.com, NY, NY, Monday, July 10, 2006

Robert Evans, Reuters, Geneva, Switzerland, Tuesday, July 11, 2006

Chiara Carcia, NAM, AIDS MAP Website
London, United Kingdom, Tuesday, July 11, 2006

                       FIGURE OF $740 MILLION FOR DIVIDENDS
Interfax-Ukraine, Kyiv, Ukraine, Monday, July 10, 2006


Interfax-Ukraine, Kyiv, Ukraine, Monday, July 10, 2006
    Central Banks from Omen to Ukraine increasing their holdings of pounds
Bloomberg, New York, New York, Monday, July 10, 2006
William Fotheringham, The Guardian, London, UK, Mon, July 10, 2006
  So it is the end of story about the orange coalition. Officials at all levels will
   now take large pictures of Maidan off the walls in their offices. The curtain   
      has dropped on the Maidan stage. Will the audience leave in silence?

Journalist and Chief Editor, Zerkalo Nedeli On The Web,
Mirror Weekly, No. 26 (605), International Political Social Weekly
Kyiv, Ukraine, Monday, Saturday, July 8-14, 2006

Olexander Moroz’ surprise move has shocked the country. The Socialist leader
was in a weak position combined with the party’s equally poor parliamentary
election results. Yet he managed to win the race for speaker of the Supreme

In February 1997, I wrote an article about Olexander Moroz’ sincere and
tender relations with his wife Valentyna Andriyivna, which helped to the
form a public image of Moroz as a person and politician with high moral

A year later, Olexander Moroz ceased to be a moral authority to me – during
the 1998 election campaign; the Socialist Party printed millions of leaflets
with my article. When I asked Moroz why he allowed the exploitation of what
was supposed to be very personal story and why my article was turned into
propaganda, he cynically replied, “You’ll have half of our election result
as compensation.”

The Socialist party was paid as political mercenaries to vote for Anatoliy
Kinakh as prime minister back in 2000; participation in Medvedchuk’s reforms
based on financial rather than ideological interests; questionable reasons
(mostly monetary) for supporting Yushchenko in the run-off of the
presidential elections; the numerous and unexpected commercial talents of
the socialist party members; a 2006 parliamentary campaign lavishly funded
from the proceeds of selling positions on the party list; calls for a
boycott of the Ukrainskaya Pravda newspaper and allegations against Olena
Prytula – all contribute to the image of an artificially perfect diamond.

Thus, the situation in Parliament Friday was not totally unforeseen. It
proved, yet again, that Olexander Moroz has other merits, apart from “high
moral standards”: he is cleverer and more skillful than his rivals. He is an
accomplished chess player.

He proved it ten years after he had last sat at the “big chess board” (i.e.
in the Speaker’s chair). He has won and is now watching the others’ games.
How will they respond?

Each player has several options. Parliament took a recess until Tuesday,
which means that the Party of Regions has not yet made a final decision to
form a coalition exclusively with the SPU and CPU. Presumably, this is for
two reasons.

[1] First, the new administration, would never be recognized by the
international community.

[2] Second, the Party of Regions needs the President and Our Ukraine. They
need Yushchenko as a guarantor of peace and confidence that the “limited
liability company” they are putting together will operate unfailingly and
that nobody will initiate criminal proceedings against their wives for
avoiding Pension Fund contributions when purchasing cars ever again. That is
why the Party of Regions postponed the elections to create a new government
of the Supreme Rada that it could have easily pushed through at the session
on Friday.

Inter-party circumstances surrounding the voting for Olexander Moroz are
indicative of the spirit and essence of Viktor Yanukovych’s political
squadron. Many argue that the faction used Mykola Azarov “at random.”

He, like the overwhelming majority of the faction, believed until the very
moment of voting that the Party of Regions would support him.

Just imagine a reversed situation: Our Ukraine nominates Poroshenko for the
Speaker; right after that, the president calls to Parliament and gives new
instructions, and the whole faction votes for Moroz – without questions,
without objections. Even Petro Poroshenko would not vote for himself. You
say it is impossible, and you are right.

This is OU’s strength and weakness; this is the Regions’ weakness and
strength. Only three people in the Party of Regions – Akhmetov, Yanukovych
and Kliuyev – make decisions and everyone else obeys. In Our Ukraine the
decision-making process is more democratic and, thus, more complicated.

What options does OU (Our Ukraine) have?

[1] The first option is to join the opposition, as Roman Bezsmertny
announced impulsively in a heartfelt statement. Yet joining the opposition
means losing half of the faction that will immediately contact the ruling
Party of Regions; the remaining half (in opposition) will then subsequently
lose the next election to the more charismatic Yuliya Tymoshenko.

It would be strategically wise for the OU faction that chooses opposition to
unite with Yuliya Tymoshenko’s political bloc and create a new party,
although the probability of this scenario happening is one percent.
Consultations could be held, of course, but these former coalition partners
are more likely to point fingers at each other and exchange accusations.

[2] Option two for OU is to join the re-formatted coalition. No sooner had
the speaker been elected when envoys from the Party of Regions knocked on
the OU doors: “We are ready to resume negotiations on the previous terms
(i.e. the prime minister is yours).” Yet according to our information, on
Friday, the Regions were no longer so generous.

An influential source within the Party of Regions said: “No matter whether
Our Ukraine joins the coalition or not, the candidate nominated by the
Regions of Ukraine will become prime minister. And the only candidate we
have is Viktor Yanukovych.”

Our Ukraine and [the Presidential Office on] Bankova Street underestimated
the insult taken by the Regions when the orange coalition was formed.
Yanukovych’s party insists that OU failed to appreciate the concessions that
the Regions was ready to make by agreeing to let them have the prime
ministerial position and, therefore, does not deserve another chance.

“Our doors are open to new coalition members,” – declared the Party of
Regions, which would form the core of a new coalition together with the
Socialist Party. The Communists are situational allies that could stay in
the coalition but could also be content alone, with compensation.Our Ukraine
is welcome but as a prisoner of war, rather than an equal partner. At least,
this is what the party’s decision-makers are saying today.

Our Ukraine is waiting for the President’s advice. What can he say? Who can
he blame? Meanwhile, some faction members suspect the President knew
about the Regions’ plan to elect Moroz, while others argue it came as a
total surprise to him, which was one of the reasons why OU had no

response strategy.

One third of OU insisted on abiding by all orange coalition agreements,
despite Moroz’s treason; another third kept silent, while the rest wanted to
form the coalition with the Party of Regions but without Moroz. Some MPs
from OU believe, with the President, that Regions will be loyal, tolerant
and ready to cooperate because they need Yushchenko on their side.

With the President’s support, they could demand that a coalition would
include both the Party of Regions and Our Ukraine, and that Moroz be
dismissed. Thus Poroshenko would be avenged, the traitor – punished; and the
President – saved from the ultimate re-distribution of constitutional powers
in favor of Parliament and the Cabinet, up to the abolition of the

Yet according to our source, the Party of Regions would not sacrifice
Olexander Moroz. Therefore Roman Zvarych’s statement that OU consider
a coalition with Regions, under the condition that all positions are divided
between the two forces only, will hardly find a sympathetic ear in
Yanukovych’s party.

OU is still reeling from the blow and reacting too emotionally to any
suggestion of a “OU+PR+SPU” coalition. Yet, it will never be able to unite
with the Communists. The Communists’ participation in the coalition is being
negotiated by the President, OU and PR leaders.

As of Friday, the two unchangeable items on the Region’s agenda are as
follows: Moroz remains Speaker, and PR nominates its candidate for prime
minister. Anyone want to join?

Yuliya Tymoshenko’s prospects are clear. She is in opposition. She must
be tired of being in opposition, of observing the process while stopping to
label it “corrupt” and looking more and more marauding. She must be
unwilling to observe the process leading to a large-scale re-distribution of
resources, irrespective of the final shape of the coalition. She was eager
to work.

Of course, not all of her plans were flawless, but she wanted to make a
second try and she almost got it. On Thursday, not only did she witness the
collapse of the coalition she had been building for almost a year, but was
also dismissed as the prime minister for the second time.

Tymoshenko will also lose some of its party members in Parliament and in
local governments. She will not give up, of course, but she will not have
the committees that she was prepared to reserve for the opposition when the
orange coalition” came in power.

At the same time, her party is the only force outside the white-and-blue
camp that has consistently been in the public eye. Unlike the SPU and OU,
this is a force that has not been assimilated. It preserved its niche and a
springboard for the next elections, the timing and rules of which nobody can
predict now that the Party of Regions has come to power.

In fact, today’s situation is conducive to the establishment of a bipartisan
system in the country. On the other hand, both the opposition and those in
power have plenty of time to make new mistakes that could bring forward new
political forces and faces the country needs so badly. Yuliya Tymoshenko has
some time to correct her past mistakes, in methodology and personnel.

Today, people are asking themselves if there was a chance for the orange
forces to succeed, to stop the revanchists.

[1] Yes, there was a chance in September last year when the YTB and OU
could have made peace but started self-destructive in-fighting in the wake
of the government dismissal.

[2] There was a chance in March when they could have accepted Roman
Bezsmertny’s proposal to act in accordance with the election results and
form a coalition much faster.

[3] There was a chance in May when OU members invited Yuliya
Tymoshenko to negotiate coalition terms not only with the President but
with their party as well.

[4] There was a chance in June when the President, preferring the orange
coalition to the white-and-blue one, could have blessed a less controversial
candidate for speaker than Petro Poroshenko and stripped Moroz of the
pretext to dissent on behalf of his party.

[5] There was a chance in July, on the voting day, when Our Ukraine reached
an agreement with the Party of Regions that in the case of a package voting
the Regions will get the post of the first vice-speaker and support the
orange candidates for other positions.

According to OU members, Tymoshenko consented to it, but Tomenko

did not. In any case, Olexander Moroz broke his promise and did not vote
for the coalition agreement as a package.

So it is the end of story about the orange coalition. Officials at all

levels will now take large pictures of Maidan off the walls in their
The curtain has dropped on the Maidan stage.
Will the audience leave in silence?
LINK: http://www.mirror-weekly.com/ie/show/605/53906/
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                    “We are moving to a state of most radical battle.”
UNIAN news agency, Kiev, in Ukrainian 1255 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

KIEV – Yuliya Tymoshenko, the head of the Yuliya Tymoshenko Bloc, is in
favour of holding a new parliamentary election and her party is moving into
“radical opposition”. UNIAN reports that she said this to journalists today
after the end of a meeting of the Yuliya Tymoshenko Bloc faction.

Yuliya Tymoshenko stressed that she can say today that an illegitimate
majority has been formed in the Ukrainian parliament.

She that, first and foremost, this majority is illegitimate politically
because at the parliamentary election [in March 2006] the Socialist Party of
Ukraine declared Orange values, and “a joint manifesto in unison with
[propresidential] Our Ukraine and the Yuliya Tymoshenko Bloc and “the fact
that today they have supported a clan is totally unexpected for the voters
of the Socialist Party”.

The same relates to the Communist Party, whose members told their voters
that they oppose oligarchs, corruption and clans but “the Communist faction
has today supported the clans, criminals and oligarchs, by creating a joint
coalition with the Party of Regions. This means that people did not vote for
such a coalition and so no political legitimacy exists in this coalition”.

Yuliya Tymoshenko also doubted the legitimacy of the anti-crisis coalition
from the moral standpoint. She stressed that “today, communist oligarchs
created the coalition and that is why it is communist clan or communist
criminal [coalition]. The morals of our population will never agree to do

This is, in effect, means taking Ukraine back several decades and returning
to that which we fought against during the [Orange] revolution.”

Yuliya Tymoshenko also noted in legal terms this coalition is also
illegitimate as all procedures were violated, in particular. Especially all
the time periods stipulated by the Constitution of Ukraine for forming the
coalition were not observed.

In her view, there are more than enough grounds for holding an early
parliamentary election. She said that “I can say for sure that if the
democratic political forces do not have the courage to stop what amounts to
a coup, then you should believe that there are no worthy politicians in
Ukraine”, adding that this issue will be discussed within the faction and
the bloc but, in her personal view, an early parliamentary election is

She stressed that the anti-crisis coalition in Ukraine has no future and
that is why her political force will do everything so that such a coalition
will not be effective, “so that such a coalition does not live”.

Tymoshenko stressed that “the Yuliya Tymoshenko Bloc will find itself
absolutely clearly in opposition and we believe that all treachery, all
moral falls, all bribery and corruption which led to such a format of the
coalition in parliament, and, in effect, the Communist-oligarchic format of
the coalition, all this treachery, bribery, rape and moral falls will not
provide a normal basis, a normal foundation for the building of a just and
democratic state, and that is why we are moving to a state of the most
radical battle and will not allow Ukraine to remain in that sorry state to
which corrupt, servile politicians have brought Ukraine to”.

[The anti-crisis coalition was formed on 7 July and consists of the Party of
Regions, Socialist Party of Ukraine and Communist Party.]    -30-

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

RIA Novosti, Moscow, Russia, Monday, July 10, 2006

KIEV – A charismatic leader of Ukraine’s “orange” revolution said Monday
that her party would go into radical opposition against a new coalition
majority formed in the country’s parliament by three leftist parties.

“People have not voted for such a coalition, so it has no political
legitimacy,” Yulia Tymoshenko said.

The coalition was set up last week under a deal struck between the Socialist
Party, the pro-Russian Party of Regions and the Communists following the
Socialists’ withdrawal from an “orange” alliance with the Yulia Tymoshenko
Bloc and the pro-presidential Our Ukraine party.

An ally of President Viktor Yushchenko in the 2004 opposition protests that
swept a pro-Western government into power, Tymoshenko called the new
coalition a mafia of “communist oligarchs.”

She said Ukrainian society would never give it the go-ahead to form a
government, as “this actually means driving Ukraine several centuries
backwards and returning to precisely what we fought against during our

Tymoshenko called for an early legislative election: “I am certain there is
a need for new parliamentary polls. If the democratic forces prove not
brave enough to halt what, in fact, is a coup d’etat, it will mean there are
no worthwhile politicians in Ukraine.”

She said Ukraine had no future with the current coalition majority and that
her party “will do everything it can to make that coalition unviable and
bring about its demise.”                            -30-
LINK: http://en.rian.ru/world/20060710/51147491.html
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

        She says Ukrainian president leaning towards dissolving parliament

Ukrayinska Pravda web site, Kiev, in Ukrainian 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

KIEV – Yuliya Tymoshenko, the leader of the Yuliya Tymoshenko Bloc,
held a two-hour meeting today with [Ukrainian President] Viktor Yushchenko
on the next actions in the new political situation.

Ukrayinska Pravda learnt this from Andriy Shevchenko, an MP of the Yuliya
Tymoshenko Bloc’s faction. According to Shevchenko, Tymoshenko told

her allies that Yushchenko is leaning towards dissolving parliament.

Shevchenko said that ” Yuliya Tymoshenko has created a special group of
lawyers, which is preparing a legal conclusion with different options on the
dissolution of parliament.

He said that a meeting of MPs of the Yuliya Tymoshenko Bloc will hold a
meeting tomorrow morning at which they will decide on the methods for
blocking the work of parliament.                       -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
        Send in names and e-mail addresses for the AUR distribution list.
       Oleksandr Moroz accused of treason by resigning leaders of his party

INFORM, Newsletter for the international community providing
views and analysis from the Tymoshenko Bloc (BYUT).
London, United Kingdom, Issue 5, Monday, 10 July 2006

In a bizarre twist bordering on farce, Ukraine’s Verkhovna Rada (parliament)
was plunged into disarray following the shock defection of the Socialist
Party (SPU) from the orange coalition.

The election of its leader Oleksandr Moroz as chairman (speaker) of the
Verkhovna Rada was a prelude to the SPU signing a coalition agreement

with the Party of Regions (PRU) and the Communist Party (CPU).

The new coalition, announced last Friday, is a paradoxical political
grouping that brings together old-style communist hardliners with capitalist
oligarch clans in what one observer described as an “unholy alliance.”

If it is able to form a government, the coalition is likely to slow the
fight against corruption and could seriously delay Ukraine’s accession to
the World Trade Organisation. It also threatens to derail Ukraine’s plans to
join the European Union and NATO.

The surprise turn of events began last Thursday when SPU leader Oleksandr
Moroz, going against many from his party and contravening the orange
coalition agreement, proposed his name for speaker of the Verkhovna Rada.

The pro-presidential Our Ukraine bloc (OU) candidate, Petro Poroshenko,
withdrew his candidacy and called for Moroz to do the same. But undeterred,
Moroz was duly elected, receiving 238 votes garnered from the pro-Russian

Tymoshenko bloc (BYUT) MPs abstained from the vote. In an outflanking
manoeuvre, reminiscent of the Soviet era, not one MP voted for the PRU
candidate, Mykola Azarov. Moroz’s apparent defection angered many in his own
party. Yosyp Vinskyi, first secretary of the political council of the SPU,
rounded on President Yushchenko and Moroz for the collapse of the coalition.

“I openly state that the first initiator of the breakdown is the President
and the second one is Moroz, as he did not give an opportunity to form the
coalition on March 26. The memorandum was ready, but they started their
games,” declared the deputy.

Vinskyi then resigned as first secretary of the party: “I have been a member
of the Socialist Party since its foundation. I have come an uneasy way with
the party. Today it is evident to me that the party has betrayed those
millions of Ukrainian citizens who trusted us and voted for us.”

Several other prominent members of the SPU resigned on Friday in protest

at their leader’s actions, as BYUT and OU assessed their options.

Moroz claimed his change of heart was to thwart Poroshenko’s appointment as
speaker, which he believed would have caused renewed infighting leading to
the collapse of the coalition government.

The leaders of BYUT, although hardly ecstatic over his Poroshenko’s
candidacy, nevertheless supported him and made it known that they would
honour the agreement. “Politicians are not all angels – no one waits for
compliments from each other – we gather not to be friends, but to work,”
remarked BYUT leader, Yulia Tymoshenko, at the time.

Talking about the most recent events, Tymoshenko said, “The people are

well and truly disillusioned by what they have seen. I’m convinced those
that voted for the Socialists would not have wanted their party to throw
their lot in with the oligarchs, this is a total anathema that is nothing short
of betrayal.”

The President hinted he could exercise his constitutional right to call for
new elections if a new government is not confirmed by the deadline set by
the constitution, which is 25 July.

He appealed for calm. “No matter what coalition we speak about, I would

ask all the parties not to make hasty decisions which might reduce the
maneuverability of coalition partners at negotiations,” said President
Yushchenko. The President went on to express his reluctance to approve
any government that would not support the major economic and foreign
policies he had set.

BYUT will review the legalities of this latest development and meet as a
party to determine a course of action. It could be argued that the orange
coalition did not achieve legal status and that as such Ukraine’s
constitution was breached, giving President Yushchenko the right to

dismiss the parliament.

“In many ways it would be fairer for all if a new election as called,” said
Tymoshenko, “however, we are undertaking a thorough legal review of what

has transpired and will meet as a party group to review our options.”
Commenting on the new coalition, Tymoshenko said, “I believe it throws
together parties with such contradictory ideologies that it is destined to fail.

After tip-toeing in one direction for the past year, Ukraine has reached a
fork in the road. The choices are stark and neither road will be easy, one
fork goes towards democratic government, openness and economic prosperity,
while the other leads to shady deals, corruption and potential domination by
foreign powers. For the sake of the nation we must evaluate our options
carefully as to travel in the wrong direction would be truly disastrous.

“One thing is certain, we will not enter into a coalition with the Party of
Regions and we will not betray our electorate.”          -30-

NOTE:  For questions or comments contact: taras@byti.org.ua.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


Associated Press (AP), Kiev, Ukraine, July 10, 2006

KIEV, Ukraine – President Viktor Yushchenko said Monday Ukraine’s

reformist and pro-Western course must not be altered despite the collapse
of the Orange Revolution coalition that helped put him in power.

The coalition fell apart when Socialist Party leader Oleksandr Moroz
abandoned his former allies after he was elected parliament speaker last

Moroz won the vote with the backing of the Party of Regions and the
Communists. The next day, his party signed a new coalition agreement with
the two pro-Russian parties.

As prime minister, the new coalition has said it will nominate Viktor
Yanukovych, whose fraud-marred presidential victory sparked massive street
protests in 2004 that became known as the Orange Revolution. The movement
forced a new election that Yushchenko won.

Yanukovych’s return to power would mark a bitter of reversal of fortunes for
Yushchenko, who promised to set his former Soviet nation on a path of
integration with the West after defeating the Moscow-backed candidate in the
fiercely fought presidential battle.

The new coalition will hold 240 seats in the 450-member parliament.

Yushchenko met Monday with Moroz and said Ukraine must not deviate from

its pro-Western course seeking membership in NATO and European Union.

“I firmly declare and will proceed from the position that the current
domestic and foreign policy course will be unchanged,” Yushchenko said. “I
expect that this demand will be sufficiently reflected in the activity of
the future coalition.”

Moroz said there will not be any changes in Ukraine’s foreign policy. “We
are for the European choice with a restoration of normal relations with
Russia,” he said.

The new pro-Russian coalition has insisted its door is open to other
parties, including Yushchenko’s bloc of six smaller parties.

Yulia Tymoshenko, who under the Orange coalition was slated to return to the
premiership from which Yushchenko had fired her last September, declared her
party was going into opposition.

She called the new hastily created coalition a “coup d’etat” and said that
her party was ready for “the most extreme struggle.” “We won’t yield Ukraine

to venal, weak-willed, spineless politicians,” Tymoshenko said.

Tymoshenko became prime minister after the Orange Revolution and was fired,
only to bounce back in parliamentary elections in March with more votes than
her potential coalition partners combined.

That election was hailed as Ukraine’s most democratic ever. But no party won
enough seats to form a government, setting off the jockeying to form a
viable government.                                 -30-

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

TV 5 Kanal, Kiev, in Ukrainian 1903 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

KIEV – Ukraine’s biggest propresidential party, the Our Ukraine People’s
Union, is starting preparations for a fresh parliamentary election, the
party’s council head, Roman Bezsmertnyy, has said.

Speaking to journalists shortly after a meeting by the council on 10 July,
he said there were grounds for parliament to be dissolved following the
Socialists’ decision to quit the Orange coalition and join an alliance with
the opposition Party of Regions and the Communists.

He also ruled out the possibility of the Our Ukraine People’s Union joining
their coalition. If a new election is called, the party may run together
with a bloc headed by Orange Revolution figure Yuliya Tymoshenko,
Bezsmertnyy said. The honorary chairman of the Our Ukraine People’s

Union party is President Viktor Yushchenko.

The following is the text of Bezsmertnyy’s remarks broadcast live by
Ukrainian television TV 5 Kanal on 10 July:

[Bezsmertnyy, shown in progress of speaking to journalists]

[1] First, to authorize the presidium of the council of the Our Ukraine
People’s Union party to develop a new political strategy and take steps
necessary to implement programme objectives and tasks of the Our

Ukraine People’s Union party.

[2] Second, to task the party’s presidium with preparing the party for an
early parliamentary election.

[3] Third, to recognize as impossible the Our Ukraine faction’s
participation in the coalition consisting of the Party of Regions, the
Communist Party and the Socialist Party. That is all.

The next decision that was taken separately, enlarging the presidium of the
party’s council. Petro Poroshenko has been made a presidium member.

[An unidentified woman’s voice] Three questions, please.
[Questioner] Is there a split inside the faction?
[The woman] Which faction?
[Questioner] The Our Ukraine faction.

[Bezsmertnyy] I would like to inform you that when we voted for this
proposal at the party council meeting, four or five people abstained. Thus,
it is unreasonable to say that there are any kind of contradictions inside
the party regarding this decision.

[Questioner] Has anyone voted against?
[Bezsmertnyy] No, no-one voted against.
[Questioner] Is a repeat election possible? An early parliamentary election?

[Bezsmertnyy] Actually, we have adopted a decision that the presidium

should prepare the party for an early election.

[Questioner] Why? What are the reasons behind this decision? Do you
seriously believe that an early election is possible? Are you going to
propose this to the president?

[Bezsmertnyy] Our position is that there are some grounds for this. It is
not clear how things will develop. It is up to the president to decide. But
the party will be getting ready for a repeat election.

[Questioner] Will you have a joint election list with the Yuliya Tymoshenko

[Bezsmertnyy] This is subject to negotiations with the Yuliya Tymoshenko
Bloc. If the talks bring any results, and if a repeat election is called, it
is clear that there will be a joint election list. If the decision is not
taken, the party [Our Ukraine People’s Union] will run in the election on
its own.

[Questioner] [Opposition] Party of Regions MP Volodymyr Rybak said today
that the Party of Regions actually had a constitutional majority [i.e. 300
votes in the 450-seat chamber], implying that Our Ukraine’s faction will
join them. How would you comment on this?

[Bezsmertnyy] I see Mr Rybak’s words as an attempt to impact through the
media the positions of faction members, the Our Ukraine faction and other
factions. You are probably aware that during the vote when [Socialist Party
leader Oleksandr] Moroz was elected speaker, only two members of our faction
took part in the vote, these are [Volodymyr] Zaplatynskyy and [Oleksandr]

The decision on both Zaplatynskyy and Volkov will be taken by the Party of
Industrialists and Entrepreneurs following the request from the faction, as
they both entered the Our Ukraine’s Bloc on this party’s quota.

[Questioner] Do you intend to block the parliament’s rostrum together with
the Yuliya Tymoshenko Bloc?

[Bezsmertnyy] The decision regarding our faction’s actions tomorrow will be
taken in the morning, at a faction meeting at 0800 [0500 gmt]. We consider
this as a possible option.

[Questioner] Today this decision was taken by only one party. What about
other members of the Our Ukraine Bloc? Again, I would like to ask is there
any split?

[Bezsmertnyy] There are no two opinions about it, let us put it this way. As
you know, the parties [comprising the Our Ukraine Bloc] have considered this
issue and some of them even made statements that they cannot take part in
the bloc with the parties I have listed before [the Party of Regions, the
Communist Party and the Socialist Party].

Thank you very much, all the best.                       -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
     NOTE: Send in a letter-to-the-editor today. Let us hear from you.

                                   ORANGE COALITION

Interfax-Ukraine news agency, Kiev, in Russian 0933 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

KIEV – This morning the office of [the propresidential bloc] Our Ukraine
received a notification letter from the Socialist Party of Ukraine that said
the party had left the coalition of democratic forces.

Our Ukraine’s press service said that the letter, signed by Socialist
faction leader Vasyl Tsushko, was registered with the parliament
administrative office at 2100 [1800 gmt] on Friday 7 July.

As reported earlier, today the leader of the Our Ukraine faction, Roman
Bezsmertnyy, requested that the parliament office say whether the Socialist
faction had informed other members of the democratic coalition about its

On Friday [7 July] the leaders of the factions of the Party of Regions, the
Socialist Party and the Communist Party signed an
agreement on the formation of an anti-crisis coalition. The document was
signed by Viktor Yanukovych, Oleksandr Moroz and Petro Symonenko

The agreement on the democratic coalition was signed earlier by the Yuliya
Tymoshenko Bloc, Our Ukraine and the Socialist Party.    -30-         
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
9.                  POLITICAL ANIMAL MOROZ
      New speaker of Parliament Moroz proves he’s Ukraine’s most cunning
    politician. It looks like Oleksandr Moroz’ union with the Party of Regions

             has put a final stop to the romance of the Orange Revolution.

COMMENTARY: By Kyrylo Orovetskyy
Ukrayinska Pravda web site, Kiev, in Ukrainian Friday, 7 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

Ukraine’s new speaker is the country’s most experienced and cunning
politician, Kyrylo Orovetskyy writes. He says that Socialist Party leader
Oleksandr Moroz’ use of recent political reforms proves he understands
Ukrainian politics better than any of his rivals.

However, the coalition formed when Moroz left the Orange Coalition to join
the Party of Regions and Communists may also be doomed to failure as its
members have different ideologies. He said that while the new arrangement of
forces may appeal to many political players, it could end up ruining Moroz’s
long-term future.

The following is the text of the article by, entitled “Political animal
Moroz”, published on the Ukrayinska Pravda website on 7 July, subheadings
appear as in the original:

In becoming speaker of the Supreme Council [parliament] on Thursday [6
July], [Socialist Party of Ukraine (SPU) leader] Oleksandr Moroz once again
showed himself to be an outstanding political animal. And that definition is
in no way an attempt to offend Oleksandr Oleksandrovych [Moroz]. Simply, he
once again outplayed his opponents in the Darwinian competition called
“Ukrainian politics”. He was not any more cynical or any more unprincipled.
He simply turned out to be more experienced.

                                        WIN OR GET OUT
Mr Moroz spectacularly grasped the main principle upon which the political
mechanism of the entire country works: in the absence of fixed rules, moral
umpires and political traditions, the winner is the one who:

a) acts exclusively on the basis of what is expedient;
b) never loses his desire for power in any situation; and
c) has the intellectual ability to build the game.

In the competition on expediency, he won against Ms [Yuliya] Tymoshenko
[prime minister designate before Moroz changed his game plan], who did not
make any steps towards a coalition with the Party of Regions, something
which could have ended the pointless coalition race in one blow long ago.

Of course, the internal mechanics of this non-decision are murky for those
looking in from the outside, but in general it looks like Ms Tymoshenko has
remained true to the principles of the Orange Revolution.

In the competition on the desire to get power at any price, Oleksandr
Oleksandrovych won against President [Viktor] Yushchenko and his cohorts
from Our Ukraine. It turns out that for them, power is not an end unto

What is power today, when thousand-year old Scythian totems are watching us
from the burial mounds? It is no more than an instant from the point of view
of eternity! So is there any sense in trying to grab it?

Finally, one must have the intellectual potential of the Party of Regions in
order, having won the election, to give your victory into the hands of a
politician whose faction is one-sixth the size of the Party of Regions.

Once again, Moroz showed that only he understands to the end how key the
speaker’s post is. Prime ministers can come and go, but just you try to get
the speaker out of his most wonderful seat!

Oleksandr Oleksandrovych was not simply defending political reform with
obstinacy. He knows just how to use its fruits correctly.

Another component of the political game is the ability to build a strategy
and not blunder at the key moment.

Remember how back in the winter of 2005-2006, Mr Moroz said the SPU

was like an axis which would unite the poles in parliament? At the same time,
Our Ukraine blindly believed in its all-conquering rating, YTB was steadily
reducing this rating, and the Party of Regions was fighting both of them
with inactivity.

Mr Moroz is probably laughing at all those who think power is just a pretext
for getting profits and bribes.

He is creating the rules, not the income. And so he wins over those who see
the political game as a competition between wallets and a way to fill

So from the point of view of expediency, desire for power and the chessman’s
mind set, Moroz proved on Thursday that he is the best Ukrainian politician.

After [former President] Leonid Kuchma left politics – something he aided in
a few key moments – Mr Moroz is left as the most experienced, big-calibre
schemer in Ukrainian politics.

In the past – the truth is out there – he lost several times to Mr Kuchma.
Both when he was not elected speaker and when he was unable to become

But competition is in the past now, and it is clear who the winner is.

(By the way: where are his wonderful partners from the Kaniv four now [a
group of politicians including Mr Moroz, who hoped to defeat Kuchma in the
presidential election in 1999]? Those who annihilated Mr Moroz’ hopes for a
win in 1999?)

It is especially pleasant for Oleksandr Oleksandrovych [Moroz] that he was
the one who applied a lot of effort in the processes that pushed Leonid
Kuchma out of power in 2004.

The new speaker feels himself no less honoured for being co-author of
political reform. The fruits of which – in contrast to the ex-president – he
can use.
                                            CHESS MOVES
It looks like Moroz has created a universal solution to the parliamentary

Here both the sheep and wolves are satisfied! And Oleksandr Oleksandrovych’s
enthusiasts can convince us that the golden balance and the single possible
compromise have been found.

The president should be happy that Ms Tymoshenko did not get the prime
minister’s chair. On the one hand, this pushes the energetic woman further
from success in the next presidential election. On the other hand – this
saves the economy from the creative destruction in which Yuliya Tymoshenko
knows no equal.

Based on another version of this same logic, Yuliya Volodymyrivna
[Tymoshenko] gets a wonderful soapbox for the next presidential election:
minimum responsibility and a maximum of important parliamentary committees.
After the 2006 election, she can also bet on the reputation of “the single
principled” politician “in this unprincipled swamp”.

The Party of Regions is simply happy that they have their own prime
minister; and as everyone knows, power as the Party of Regions understands
it is a one-way ticket to bigger dividends. It is not comfortable for them
to imagine being outside of power. And there is one more very important
aspect – one political move finally went right for them!

                                  FLIP SIDE OF VICTORY
Now about the other side.

Oleksandr Moroz’s current status is not likely to be completely safe. If
only because in the end the government will fall apart in the absence of a
coalition, and parliament will be at risk of being disbanded.

And so the question – how effective will a coalition between Communists,
Socialists and capitalists be even if they have a certain consensus on
issues of NATO, the neighbour to the east [Russia], and the state language?

Well, of course it will exist, if its only goal is to provide enough for the
pensions of old fighters in the SPU and Communist Party of Ukraine [CPU].

But how can one not understand that always being tied to the Party of
Regions will kill any chance of an independent political role for either of
the dwarf parties in the next election?

Their voters are no longer so numerous, and there are no young ones coming

There is also doubt the old rivals can live long within the confines of one
team. Who said that SPU and CPU with their everlasting quarrels are better
partners than Our Ukraine and YTB?

Where is the way out? Changing the coalition every time the need arises?

Is it so hard to imagine Oleksandr Oleksandrovych [Moroz] beginning to talk
of the Orange ideals again after a time and forming a coalition among YTB,
the SPU and Our Ukraine? Of course not, but that would be putting him in a
position of weakness.

Another way out of the situation would be to give the constitutional court
the green light and change the rules of the game.

For example, one could try to change the conditions for forming a coalition,
or to revoke political reform or individual clauses in it.

But in the end, such bouts could end in a situation when all trust in Mr
Moroz is finally lost and he becomes unneeded to all the weaker political
players and they simply decide to send him off on a political pension after
Mr Kuchma.

Especially as time is playing against this experienced, but no longer young,
                                 WHAT WE’RE LEFT WITH
It looks like Oleksandr Moroz’ union with the Party of Regions has put a
final stop to the romance of the Orange Revolution.

References to service on Independence Square [the focal point of the
revolution] will not be accepted as payment and will not be acknowledged as
real money. Its just empty candy wrappers now.

Can you imagine George Bush’s face during the summit in St. Petersburg when
someone accidentally says the word “Ukraine”?

And can you imagine the cunning frown of [Russian President] Vladimir Putin
whose entire expression is speaking of Ukraine even when he himself is not
uttering a word?

It is most likely that we can expect many more dramatic events in

Ukrainian politics brings many surprises and the word “treachery” might
entirely disappear from political dictionaries. Certainly you can think up
any number of euphemisms instead?

Meanwhile, something forces you to doubt the ability of President
Yushchenko, Speaker Moroz, Prime Minister [Mykola] Azarov and main
opposition activist Tymoshenko to act together in solidarity with our
welfare, dear reader – yours and mine.

It looks again and again and again like the sum of the personal

victories of Ukrainian politicians appears smaller than the united
interests of the citizens of this country.

May the reality be better than the premonition.      -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

TV 5 Kanal, Kiev, in Ukrainian 1130 gmt 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

Ukrainian Socialist Party leader Oleksandr Moroz, who was recently elected
parliament speaker, has defended his decision to quit the Orange coalition.
Speaking at a news conference, he rejected accusations of betraying his
erstwhile allies and said the coalition would have fallen apart anyway.

He also said that parliament would swear in Constitutional Court judges
shortly, but said a review of the constitution reform – which handed many of
the president’s powers over to parliament – was unlikely.

Moroz also said that Ukraine’s foreign policy priorities would stay
unchanged, and added that “normal” relations should be built with Russia.

The following is an excerpt from Moroz’s news conference, broadcast live by
Ukrainian 5 Kanal TV; subheadings have been inserted editorially:

[Moroz] Good afternoon. [Passage omitted: Moroz sets out an agenda for 10

[Correspondent] Mr Moroz, when will the Constitutional Court be formed? Are
you not afraid that once it has been formed, constitutional reform [which
handed over much of the presidential powers over to parliament] can be
cancelled because the president no longer has any obligations to you?

[Oleksandr Moroz] No-one here has any obligations to anyone, except to
voters. This includes the president, me and all MPs. I believe this is a
good basis for communication and for the development of mutual relations
based on compromises.

As for the Constitutional Court, the president [Viktor Yushchenko] put
forward several candidates for judges. Since there is no legal obstacle to
swearing in candidates that were nominated more than a month ago, there will
be no problem. The Supreme Council [parliament] needs to elect five more
judges to the Constitutional Court.

I discussed this during today’s agenda-setting council with representatives
of different factions. It seems to me that we share the opinion that each
faction can nominate candidates, thus ensuring that the vote is effective.

If I am not mistaken, we have four-plus-one Constitutional Court judges
nominated by the assembly of judges. One of them was nominated in late 2004,
another one in 2005. The rest were nominated in 2005 as well.

Once parliament has elected the Constitutional Court judges – I think this
will be done next week – we will swear them all in at once.

One more thing. I am not afraid of what you said about threats to political
reform because our president abides by the constitution, and Constitutional
Court judges must be guided by constitutional norms. It is not up to the
judges to decide on the contents of the constitution. I think this is a
guarantee that everything will be fine.

[Passage omitted: Moroz urges propresidential bloc Our Ukraine to join the
Socialists’ coalition with the Party of Regions and the Communists.]

[Correspondent] Moroz, since you discussed the home and foreign policy

with the president, did you discuss how foreign policy can change when the
so-called left-of-centre coalition comes to power? If they do, in what
direction? It seems they will follow the Russian direction, or not?

[Moroz] The coalition can hardly be called left-of-centre, in my opinion.
The composition of the coalition was defined not by representatives of
political parties but by voters who delegated their own representatives to
parliament. When we have 400 followers of liberal policy, the is no reason
to talk about the left-of-centre nature. This is indeed the reality that
might not make me happy but this is the way it is.

As for foreign policy, this course was defined by the agreement that we
signed within the democratic coalition and that was initialed by Our
Ukraine and the Party of Regions. This norm remands unchanged. Thus there
will be no changes. We stand for the European choice even though we insist
and will stand for establishing normal relations with Russia.

[Passage omitted: Moroz says raising the status of the Russian language can
be debated in parliament.]

[Correspondent] Mr Moroz, what kept you from announcing the pullout from

he coalition [with Our Ukraine and the Yuliya Tymoshenko Bloc] prior to the
election of parliament speaker, because this vote was a complete breach of
all the coalition agreements that you had signed? Have you reached any
agreement with the Party of Regions by then?

[Moroz] The coalition still existed at the time of voting. In order to
disband the coalition, one has to make some specific legal steps. They were
not made. Therefore, I acted in strict compliance with the law and with my
own beliefs.

[Correspondent] What about the moral side of the issue, Mr Moroz?

[Moroz] Most of those who criticize me are concerned about the moral side of
this. I know this. But when I was addressing parliament, I answered this
question. You can quote it once again.

Who makes these moral accusations and so on? I am convinced that I did the
right thing. You never ask about the moral side of those who had been
dragging their legs while engaged in intrigues in order to provoke a
conflict in the government and then get rid of those that they planned to
ally with initially.

Therefore, you might have a lot of information but I know more about some
things. That is my full answer.

[Passage omitted: Moroz says Party of Regions figure Yevhen Kushnaryov
should not be rude about the Orange Revolution.]

[Correspondent] Did you discuss the prime minister’s nominee with the
president today?

[Moroz] We did not discuss this issue. Because, on one hand, it is up to the
coalition council and the whole of the coalition, on the other hand, it is
up to the president to decide. This issue will call for more consultations
to ensure that the choice is right and well received by the society.

[Correspondent] Mr Moroz, you said that your partners from the democratic
coalition were involved in some intrigues and that they set you up. How did
they do this and who was involved?

[Moroz] I do not care who was behind the intrigues. I am more interested in
the essence of this intrigue. Let me remind you of a few things. The
memorandum was signed by 26 March and initialed by representatives of all
three factions. It outlined the distribution of posts. I agreed that we
would not claim any key posts and signed the document.

After the ballots were counted, Our Ukraine saw that it would not come
first, but second. Then it officially rejected the memorandum. Several
difficult weeks of discussing the contents of the [coalition] agreement
followed. We had a serious discussion on [appointing] the prime minister,
whether or not we can elect or nominate Mrs Tymoshenko.

Then our party put forward the following demand: since we were one of the
three forces that helped decide on the change of government and on the
election of the president, and since Our Ukraine is represented by the
president who is the top authority in the country and the Yuliya Tymoshenko
Bloc justifiably claims the prime minister’s post, we can claim the post of
parliament speaker. Polls showed that society would welcome this better, as
you and we know.

Our Ukraine then chose to say they did not accept ultimatums. Some of the
agenda-setting councils failed due to Our Ukraine’s position. Later on I
understood that it fits the framework of an intrigue well.

[They thought], here is one who can be blamed for everything. It is the
Socialist Party and its chairman who puts forward demands that do not fit
coalition procedures and ruins the coalition. Naturally, now the coalition
should have another format.

This is what Our Ukraine was always aiming at from the very beginning. And
it was quite reasonable, because the election turnout and the situation in
Ukraine did call for that. Therefore, it was necessary to set up a coalition
of Our Ukraine and the Party of Regions.

They started so-called consultations and finally initialled a well-known
agreement. The issue would have been settled then, had it not been for some
people from the Yuliya Tymoshenko Bloc and the president. It was decided
that a coalition of the three should be set up.

Later on, in order to ruin this prospect, they nominated Petro Poroshenko
[for speaker]. The goal was obvious – to clash two political parties in
order to kill such coalition or to make bloc leader Yuliya Tymoshenko drop
her prime minister’s aspirations. And this collision lasted for a long time.

And if someone is accusing me of betrayal and of signing anything, I would
say this is not the point. On many occasions at meetings with the president,
Yuliya Tymoshenko, [Our Ukraine faction leader] Roman Bezsmertnyy or during
coalition council meetings attended by Petro Poroshenko and others I told
them it was unacceptable, and they knew it.

Moreover, I have some other evidence that it was planned to be this way: to
establish a coalition that would last several months and then ruin it
following the scenario of last September [when Yuliya Tymoshenko’s
government was sacked]. Another coalition was planned to be formed later.

So I asked them if they were planning to take our political force hostage.
What prospects would we have then? We do not agree to this option.

Therefore, everyone knew this and openly said that most members of Our
Ukraine, the Yuliya Tymoshenko Bloc, let alone our faction, did not accept
the candidacy of Mr Poroshenko. Even though he is an individually trained
person for this kind of job, he has good managerial and professional skills.

Therefore, at that [parliamentary] session I came up with this initiative
with some more reasons in mind. I was aiming at maintaining the party’s
integrity because our faction voted almost unanimously for the head of our
party. Therefore, I believe everything was done in accordance with the

[Passage omitted: Moroz says two nominations for prime minister cannot

be submitted to the president.]                 -30-

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

International Herald Tribune (IHT), Paris, France, Mon, July 10, 2006

KIEV – Orange or blue? West or East? EU or CIS? Ukraine seems to be
confined to making either- or choices and thus condemned to cutting the
Gordian knot.

But must it be like this? For Ukrainians and those interested in Ukraine,
the answer is no.

Geographically, we are located between the European Union and Russia.
From a cultural standpoint – in language, religion and history – our
heritages are intertwined. From an economic standpoint, we exchange

almost equal amounts of goods and raw materials with the EU as we do
with Russia.

Such a position should push us toward building bridges rather than erecting
walls. We should be thinking more of “and” and less of “or” – not Russia or
the European Union, but Russia and the European Union.

It is not in our interest to allow Ukraine to be a pawn in a geostrategic
game between East and West. For the good of Ukraine, we must develop
our own ambitious, proactive and modernizing approach based on a clear
assessment of our strategic needs.

Our relationship with Russia is essential, historic and strategic for the
future. One third of the Ukrainian population has Russian as its mother
tongue and about 20 percent considers itself ethnic Russians.

We also have strong and important economic links with Russia, including
energy. It is therefore vital for us to develop our cooperation and not
damage our relationship.

This is why, for example, the majority of Ukrainians do not support Ukraine
joining NATO. It would be more divisive than uniting; the benefits are not
clear, but the risks are.

On the other hand, I believe that rapprochement with the European Union is
essential, as Ukraine faces three specific challenges:

[1] The first is the development of a more robust democracy, one that serves
both the will of the people and the good of the country. Ukraine has made
undeniable progress over the last years. But holding free and fair elections
is far from being enough. Participative democracy, a professional and
effective civil service and mature and dedicated political servants are
needed to build upon the progress.

[2] The second challenge is building a society governed by the rule of law.
We must move from justice à la carte to justice dispensed by an efficient,
non- corrupt and independent judiciary.

[3] The third challenge is the nurturing of a legitimate, prosperous and
independent market economy, free from political interference.

Much remains to be accomplished in order to modernize the economy, to
simplify its regulatory and fiscal framework, and to create an environment
that is favorable for investment and job creation. Political leaders need to
understand what the Soviets taught us: A government cannot successfully
micromanage a market economy.

I believe that rapprochement with the EU is the project that can unite
Ukrainian society and goad our political elites toward painful but essential

Ukraine should start an EU integration process – not because my country
should turn West and not East, but because the process of joining the EU
is a way to force change. It is also in the EU’s best interest to have a
thriving, democratic neighbor.

This will require much work because neither the EU nor Ukraine are ready
to discuss membership. That is why more than two years ago I took the
initiative with others of launching the Yalta European Strategy (YES), an
international network aimed at promoting and supporting the membership
of Ukraine in the European Union.

The path (the reforms) matter more than the objective (EU membership).
No one knows what the EU of the future will look like when Ukraine is
ready to take its place there.

If the EU wants to play an important role on the international stage and
defend its interests, it will have to extend its influence and consequently
its perimeter. In that context, Ukraine’s accession will become a necessity,
not a question, as will the strengthening of the EU’s ties with Russia.

My dream is that today the EU will initiate rapprochement with Ukraine in
order to help and encourage my country to institute reforms. And that
tomorrow, an EU with a vision and a plan for the future will unite all the
countries of Europe and defend our common interests and values in an
ever more complex world.                         -30-
LINK: http://www.iht.com/articles/2006/07/10/opinion/edpin.php

AUR EDITOR: Victor Pinchuk is considered Ukraine’s second wealthiest
businessman and is a son-in-law of former President Leonid Kuchma.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
 If you are receiving more than one copy of the AUR please contact us.
                  Cautions Ukraine and Georgia against joining NATO

Interfax-AVN military news agency website, Moscow, in Russian 10 Jul 06
BBC Monitoring Service, United Kingdom, Monday, Jul 10, 2006

MOSCOW – Russia will do what it takes to bolster its security should Ukraine
and Georgia join NATO, Sergey Ryabkov, director of the Russian Foreign
Ministry’s pan-European cooperation department, told Interfax news agency

Asked how Russia might adjust its foreign policy if those two countries join
the alliance, Ryabkov commented that “Russia will of course carry out all
required measures to strengthen its security”.

He stressed that “it’s very difficult to comment on a hypothesis, since
there is no real prospect at present of Ukraine and Georgia being invited to
join NATO”.

“Naturally, every country independently chooses the ways and means of
ensuring its own security, including membership of military alliances.
Nobody disputes that right. But when you approach such important issues

you must also take into account the interests of other states,” he added.

“Recent events have unfortunately shown that the alliance’s acceptance of
new members has not helped the state of our relations with them, and it has
also been accompanied by the emergence of anti-Russian themes in their
policies. Such as, for example, attempts to distort our actions in the
post-Soviet zone and to put a political spin on energy security that is
unfavourable to Russia,” Ryabkov continued.

Russia’s interest is in “good-neighbourly and friendly relations with our
neighbours, such as Ukraine and Georgia, and in strengthening and increasing
political, trade and investment, cultural and other exchanges with them”, he
said, adding that Russia’s attitude towards NATO expansion remains

“NATO expansion is a big mistake for those who thought it up and are
carrying it out”, Ryabkov said. Membership of the alliance “means that new
members must assume the obligation of collective defence”, he continued.
“But the question is – defence against whom? Who could pose a threat to
Ukraine and Georgia?”                             -30-
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    Legislators call for all Ukrainian metals to be stopped from entering Russia

By Yuriy Humber, Staff Writer, St. Petersburg Times
St. Petersburg, Russia, Monday, July 10, 2006

MOSCOW – Russian-Ukrainian relations have soured in yet another field as
legislators Friday called for all Ukrainian metals to be stopped from
entering the Russian market.

The State Duma’s Environment Committee on Thursday urged a moratorium

on all Ukrainian metal imports, asking the government to stop what it called
scrap metal from Chernobyl being sold in Russia.

The head of the committee, Vladimir Grachev, cited customs data for 2005
and 2006 as evidence that Ukrainian steel was contaminated by radiation,
alleging that much of it was smelted from scrap gathered in the Chernobyl

The announcement comes as political tensions continue to mar relations
between the two countries and Russia and Ukraine squabble over gas prices.

In the spring, Russia banned all imports and sales of Georgian and Moldovan
wines, saying they were a danger to public health, in a decision that was
widely seen as political.

On Friday, the Federal Customs Service refused however to support
legislators’ calls for metals imports to be barred, leading experts to
suggest that the proposed ban is yet another move by Russian lawmakers
inspired by political rather than economic considerations.

“Neither pipes nor metal roll from Ukraine have ever been stopped by Russian
customs because of radiation,” Vladimir Zubkov, a spokesman for the customs
service, said Friday by telephone. “This is some kind of nonsense.”

Meanwhile, a Ukrainian government press secretary told Kommersant that Kiev
could reply in kind and review the procedure for importing Russian steel.

The allegations came just two days after the Economic Development and Trade
Ministry launched an anti-dumping investigation into Ukrainian imports of
cold-rolled steel.

The ministry acted on a complaint by three of Russia’s top steelmakers,
Magnitorgorsk Iron & Steel, Severstal and Novolipetsk Steel, or NLMK.

However, Anton Bazulev, deputy CEO of NLMK, stressed Friday that the
investigations into price dumping and radioactivity were completely

Ukrainian metals producers hold under 6 percent of the 65 million ton
Russian steel market, and mostly sell pipes, cold-rolled steel and rods. The
rivalry between Ukrainian and Russian steelmakers is “psychological,” with
the neighboring producers both cash-rich and still in the process of carving
up the market since the breakup of the Soviet Union, said Olga Okuneva, a
Deutsche UFG analyst.

“These trade wars are frequent,” Okuneva said, noting that the Economic
Development and Trade Ministry initiated four anti-dumping investigations
into various Ukrainian metal products last year. “Our producers are fighting
for their place under the sun,” she said.

Adriy Gostik, a metals analyst with Concorde brokerage in Kiev, disagreed.
Both the radiation and the anti-dumping claims were politically motivated,
he said.

Sanctions against Ukrainian cold roll producers would affect only two
steelmakers, Zaporozhstal and the Ilyich Mariupol Iron and Steel Works,
Gostik said. “They can just as easily divert sales to Asia and the Middle
East,” he said.

The Russian market is worth about $650 million for the Ukrainians,
Kommersant said, citing official figures. Russian steelmakers, with 17.5
percent of the Ukrainian market, stand to lose nearly $1 billion should Kiev
bar them in turn, the paper said.                        -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                 Russian regulators forced more than 60 radio stations to stop

By Peter Finn in Moscow, Washington Post Foreign Service
The Washington Post, Washington, D.C., Friday, July 7, 2006; Page A01

MOSCOW, July 6 — Russian regulators have forced more than 60 radio
stations to stop broadcasting news reports produced by Voice of America
and Radio Free Europe/Radio Liberty, according to radio managers and
Russian officials.

The regulators cited license violations and unauthorized changes in
programming format. But senior executives at the U.S.-government-funded
broadcast services and at the stations blame the Kremlin for the crackdown,
which has knocked the reports off stations from St. Petersburg in western
Russia to Vladivostok in the Far East.

“We focus primarily on domestic developments, and those are exactly the
things the Kremlin has problems with,” said Jeffrey N. Trimble, acting
president of Radio Free Europe/Radio Liberty — commonly known as Radio
Liberty. “This really hurts our ability to reach today’s decision-makers.”

The two services’ straight-up reporting, often by journalists on the ground
in Russian communities, has at times challenged the political establishment
here. In a country where the news media increasingly avoid controversial
subjects, millions of Russians had made the broadcasts a listening staple.

U.S. diplomats, managers at the two news services and their board of
governors have held repeated discussions with Russian officials in recent
months seeking a compromise, to no avail. “We’ve tried to be collegial,
tried to work within the system, but this is a most unfortunate
development,” said Kenneth Y. Tomlinson, chairman of the U.S.
Broadcasting Board of Governors, which oversees both services.

Later this month, the leaders of the Group of Eight leading industrialized
countries will gather for a summit hosted by Russia in St. Petersburg. The
meeting has prompted increased scrutiny here and abroad of the Kremlin’s
steps to consolidate power since the late 1990s.

Control of the mass media, particularly news and debate on national
television channels, is a critical part of the Kremlin’s management of
political discourse in advance of parliamentary elections in 2007 and
presidential elections in 2008.

After Vladimir Putin became president in 2000, the country’s major TV
channels, the most important media because of their reach, were quickly
brought under state control or shut down. State-controlled or state-friendly
businesses have been buying up newspapers and radio stations. Outside
Moscow and St. Petersburg, media outlets routinely come under the sway
of local governors, most of whom are loyal to the Kremlin.

Independent newspapers and radio stations continue to operate. But with
their largest audiences in the country’s two largest cities, their influence
in national politics and voting is marginal.

Radio Liberty and Voice of America are underwritten by the U.S. government
but produce independent journalism in many languages, including Russian,
though the White House has proposed ending Voice of America’s
Russian-language content. Both services developed a network of media
partners across Russia after the break-up of the Soviet Union in 1991. Those
stations had been airing about an hour of news from the services in the
morning and evening, along with some shorter bulletins.

Of the 30 affiliate stations Radio Liberty had in Russia in 2005, it now has
only four, according to Trimble. Of the 42 stations that rebroadcast
material from Voice of America in 2005, only five are still working with the
organization, according to the board of governors.

Russian stations in Moscow and St. Petersburg, where there is much greater
official tolerance for media diversity, continue to broadcast programming
from the organizations. Radio Liberty also operates its own frequency in
Moscow. “But elections are won and lost in the provinces,” said a manager
at Radio Liberty.

The first sign of the change came last September, when the Culture Ministry,
which handles the licensing of broadcasters, began a series of audits of
these stations and others.

In interviews, officials at the ministry characterized the audits as a
normal and legal part of the ministry’s mission and said there was no
targeted attempt to force the American radio services off the air.

Rather, they said, officials were ensuring compliance with Russian law,
which states that when broadcasters obtain their licenses they must indicate
whether they intend to re-broadcast material from other entities. None of
the affected stations had followed the law, officials said.

“We do not have any problem with Radio Liberty or Voice of America,” said
Yevgeny Strelchik, an adviser to the Culture Ministry’s top mass media
official. “But if our radio stations change their concept, they should say
so, and then the commission will decide whether to approve it or not. They
can’t broadcast somebody else’s product without having the license for it. .
. . This is the law.”

He also said: “You should ask the general director of Radio Russia how hard
it is to get a license to broadcast in the U.S. He tried many times. Their
requirements are much stricter.”

Russian partners of the U.S. services said in interviews that they valued
the American programming but feared they would lose their licenses if they
continued to carry it.

Managers and journalists at Russian stations said they felt clear pressure
from bureaucrats to drop the programming and to make no attempt to get a
license that would allow the American material to remain on the air. Two
stations that did apply for revised licenses to broadcast Radio Liberty were
denied, according to U.S. and Russian officials.

One radio manager said: “Of course, I felt the pressure. . . . They never
tell you anything directly. Instead they come up with numerous complaints
trying to find faults, they start their checkups, they would be looking at
your license over and over again. But the message is clear.”

Management and employees at the station spoke on condition that they and
their stations not be identified, because they feared that if they commented
publicly, their stations would be shut down.

“It’s sad because the programs were very popular,” said a manager at another
station. “The owners decided that they would rather have their license,
because if they kept the programming they would have been in trouble.”

Radio Liberty, with about 60 staff journalists in Russia and nearly 200
freelance contributors, is one of largest news organizations in the country.

Last year Radio Liberty journalist Andrei Babitsky interviewed Shamil
Basayev, the Chechen warlord who asserts responsibility for the
hostage-taking at a school in Beslan, which ended with the deaths of 331
people, most of them schoolchildren. Radio Liberty opted not to run the
material, but it was later broadcast on ABC’s “Nightline.” The Russian
government was outraged and decided not to renew the accreditations of
ABC journalists.

Staff and management at Radio Liberty, Voice of America and their board of
governors suspect that the dispute led the ministry to act against the news
organizations.                                  -30-

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

Associated Press (AP), Kiev, Ukraine, July 10, 2006 

KIEV – The U.S. launched a $1 million program on Monday to help upgrade
energy infrastructure in Ukraine, which has been struggling to cope with
sharp price hikes after Moscow declared it would no longer subsidize its

Ukraine is one of the world’s largest energy consumers, and one of the most
inefficient. Some 20% of all energy produced is lost through faulty or poor
transmission lines – about three to five times as much as in Western Europe.

The U.S. Agency for International Development program, launched in the Black
Sea port of Odessa, will provide energy audits and low-cost financing for
energy conservation projects in local industry and promote partnerships
between Ukrainian energy service companies and their foreign counterparts.
The program will also help the government develop a national energy-saving
strategy, USAID said in a statement.

Ukraine, which receives its gas supplies from Russia, was forced earlier
this year to pay double what it previously paid after a bitter dispute with
Moscow’s state-run gas company. Gazprom temporarily turned off the taps

to Ukraine at the height of winter.

The move also triggered a brief shutdown of supplies to Western Europe
through Ukrainian pipelines. The dispute was solved when Ukraine agreed to
the increase, with possible future hikes.

Ukraine’s pro-Western President Viktor Yushchenko has made increasing
Ukraine’s energy independence and the adoption of energy-saving measures a
top priority, but his government has acknowledged that little progress has
been made.                                   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

                              BEAT 3% FORECAST FOR 2006

Newratings.com, NY, NY, Monday, July 10, 2006

LONDON – Analysts at Alfa Bank say that Ukraine’s industrial growth
is likely to be ahead of the government’s 3% forecast for this year.

In a research note published this morning, the analysts mention that
Ukraine’s industrial production rose by 9.6% y/y in June and by
3.6% y/y in the January-June period. The government raised its official
forecast for industrial growth for 2006 in June from 2% to 3%, the
analysts say.

Alfa Bank believes, however, that the forecast is conservative and that
the positive trend in the country’s industrial production could outstrip
expectations.                               -30-

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

Robert Evans, Reuters, Geneva, Switzerland, Tuesday, July 11, 2006

GENEVA – A huge Ukrainian ship canal project slicing through the Danube
Delta threatens serious damage to wildlife in one of Europe’s most prized
wetlands, a scientific report for the United Nations said on Monday.

The canal would destroy nesting and feeding sites for unique bird colonies
and spawning and nursery areas for fish important to economies in both
Ukraine and Romania, it said.

“The report leaves no doubt that the project as currently envisaged will
have a very negative effect on the ecology on both sides of the frontier,”
said one UN official, speaking on condition of anonymity.

The region, the second largest river delta in Europe after that of the
Volga, is a major annual gathering point for millions of migratory birds.

It is also home to Europe’s largest pelican colony and several endangered
fish species, rich in unique plant life, and includes a UN World Natural
Heritage Site.

The Bystroe Canal project has sparked tensions between Ukraine and Romania,
which share the Delta, and drawn sharp criticism from the European Union and
environmental groups.

Ukraine, which says the canal will give a boost to the depressed economy on
its side of the border, began dredging and construction work in 2004 without
formally notifying Romania.

Romania asked the UN’s Economic Commission for Europe (ECE), which
manages the 1991 Espoo Convention committing signatories to consult on
development projects which could affect their neighbours, to set up the
study the same year.

The finding of the scientists, headed by a Dutch professor and including
Ukrainian and Romanian experts, “show that the Convention must be applied
in this case,” said Kaj Barland, director of the ECE’s division handling
environmental issues.

The report was delivered to the ambassadors of Ukraine and Romania at the
ECE on Monday. The ambassadors indicated their governments would now
consult on how to tackle the problems, officials said.

Under the convention, Ukraine will also have to discuss the project with
inhabitants of the Delta and non-governmental organisations. Ukrainian
environmentalists have been among the most vociferous opponents of the

The scientists, the report said, found unanimously dredging for the canal,
aimed at linking the Danube and the Black Sea, would destroy flood plain
areas and pollute marine waters with spoil dumped at sea.

Maintenance and shipping traffic once the canal was in operation could make
recovery difficult, it said.

The Espoo Convention, named after the town in Finland where it was signed,
has no provision for sanctions if a signatory violates its provisions. This
is the first case since it went into effect in 1996 that has reached dispute

But diplomats say it has a constraining effect and no country would want to
be seen openly flouting it.                           -30-
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Chiara Carcia, NAM, AIDS MAP Website
London, United Kingdom, Tuesday, July 11, 2006

Women diagnosed with HIV during pregnancy in Ukraine are now more likely to
have acquired HIV through sexual transmission than through injecting drug
use, and by 2004 the majority of women who acquired HIV through sexual
transmission were not aware of any direct sexual contact with injecting
drug-using partners, according to findings from a pan-European comparison of
mother-to-child HIV transmission rates published in the June 26th edition of
the journal AIDS.

The HIV epidemic fully emerged in Eastern Europe during the mid-1990s, with
highest incidence rates in the Russian Federation and Ukraine, driven by
injecting drug use. By 2004 HIV prevalence had reached 1% in Ukraine,
according to UNAIDS, and a substantial epidemic of mother-to-child HIV
transmission was emerging.

Researchers from the European Collaborative Study (ECS) compared 20 years of
data on mother-to-child transmission (MTCT) of HIV-1 in Western Europe with
data now available from the first Ukraine cohort of HIV-infected pregnant
women and their babies (2000-2004).

The prospective cohort study included 5,967 mother-child pairs, of which
4,537 (76%) were enrolled in western European centres during the period
1985-2004. The remainder of cases were collected during 2000-2004 in Poland
(179 cases – 3%), and in Ukraine (1,251 cases – 21%). Data were collected on
mother and infant characteristics as well as type of delivery.

Despite the still growing number of infected women, triple combination
antiretroviral therapy, elective Caesarean Section (CS) delivery and no
breastfeeding have contributed to reducing and stabilising MTCT to around
250 cases per year in western Europe during the period 2000-2004. In
comparison Ukraine recorded 2,115 cases of mother-to-child transmission in
2004 alone.

In the Ukrainian cohort, nevirapine (sdNVP) was administered intrapartum to
793 (63%) women, of whom 503 (40%) also received zidovudine (ZDV)
monotherapy as a short course regimen starting at a median of 35 weeks of
pregnancy; 208 (17%) women received ZDV monotherapy alone, and 27 (2%)
received highly active antiretroviral therapy (HAART). Elective caesarean
section (CS) was performed in only 33% of cases.

Similar PMTCT protocols were implemented in western/central Europe before
the introduction of HAART, with only 17% of deliveries being by elective CS
during the period 1990-1994, but with an increase to 66% CS and 72% of women
on HAART in 2000-2004. Mother-to-child transmission decreased significantly
in western Europe, from 16.1% in 1992-93 to 1.7% in 2002-2003 (X2 trend =
0.76; p < 0.0001), but no significant trend was identified in Ukraine in
2004 (p = 0.76).

The transmission rate seen among women exposed to HIV through injecting
drug use in Ukraine in the 2000-2004 period was similar to the rate seen in
western Europe amongst all women in the period prior to the introduction of
perinatal antiretroviral therapy (pre-1994) (15.4% vs 19.8%), suggesting
poorer access to treatment and antenatal care for this group of women in

Ukrainian women are, however, still 83% less likely to be diagnosed before
pregnancy than women in western Europe (AOR 0.17; 95% CI 0.15-0.21).

Diagnosis of mother-to-child HIV infection was based on the development of
AIDS and HIV-associated mortality in children born at least 18 months before
the time of the analysis (twelve children), persistence of HIV antibodies
beyond 18 months (24 children), or detectable virus in two or more blood
samples taken on different occasions (six children).

Mother-to-child transmission rates were 4.2% in the Ukrainian centres among
women on sdNVP and/or short course ZVD (95% CI 1.8 – 8.0). In western
Europe in 2000-2004 mother-to-child transmission rates in women on HAART
were 1% (95% CI 0.4-1.9). Women on HAART were more than 90% less likely
to transmit infection than those untreated and 75% less likely than women on
mono or dual therapy (AOR 0.25; 95% CI 0.12-0.54).

The investigators conclude that in Ukraine making HAART universally
available and integrating HIV services into the primary healthcare system
would reduce mother-to-child transmission. However, they note that the low
levels of transmission seen in Ukraine when using sdNVP and AZT highlights
the fact that “a reduction in MTCT rates to very low levels without
widespread access to HAART is possible in non-breastfeeding, non-trial
settings.”                                       -30-
Reference: European Collaborative Study. The mother-to-child HIV
transmission epidemic in Europe: evolving in the East and established in the
West. AIDS 20: 1419-1427, 2006.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                   FIGURE OF $740 MILLION FOR DIVIDENDS

Interfax-Ukraine, Kyiv, Ukraine, Monday, July 10, 2006

KYIV – Switzerland’s RosUkrEnergo, a joint venture between Gazprom and
Ukrainian businessmen Dmitry Firtash and Ivan Fursin, will use more than 96%
of 2005 net profit for dividends, Gazprombank said in an annual IAS
financial report.

RosUkrEnergo shareholders voted in March to pay dividends and Gazprombank,
the owner of 50% of the company, will receive $356.158 million, the report

Thus, total RosUkrEnergo dividends for 2005 could be $712 million, which is
more than 96% of total 2005 net profit of $740 million.

The financial report also says that under Swiss law, RosUkrEnergo dividends
for 2005 depend on the financial state of the company in 2006 during the
period before dividend payments. “The group’s management said there is a
good chance of getting RosUkrEnergo dividends for 2006,” Gazprombank said.

RosUkrEnergo was the operator to supply Turkmen gas to Ukraine in 2005.

The company is the exclusive supplier of imported natural gas to Ukraine.
RosUkrEnergo is also coordinating gas exports to Europe with Gazexport.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Interfax-Ukraine, Kyiv, Ukraine, Monday, July 10, 2006

KYIV – The European Atomic Energy Community (Euratom) and the European

Bank for Reconstruction and Development (EBRD) have confirmed readiness
to start lending under a project for upgrading the second Khmelnytsky nuclear
unit and the fourth Rivne nuclear unit.

“With the establishment of a Decommissioning Fund, Ukraine has met the last
outstanding condition for the disbursement of loans from the European Atomic
Energy Community (Euratom) and the EBRD in context with the safety upgrade
for unit 2 of Khmelnytsky and unit 4 of Rivne nuclear power plants (K2R4),”
reads an EBRD press release posted on the official Web site.

On behalf of Euratom, the European Commission is providing $83 million to
Ukraine’s Energoatom, the state-owned nuclear power generator, while the
EBRD’s loan is worth $42 million.

The programme for the safety upgrade of K2R4 was developed by Ukrainian

and Western experts and comprises 147 measures. Of them, 77 were completed
before the commissioning of the two units, while the remaining 70 will be
completed, financed by the two loans, by end-2007.

In addition, Ukraine has also achieved significant progress in enhancing
nuclear safety on a broader level: the independency and efficiency of the
nuclear regulatory authority has been strengthened, all first generation
Soviet designed reactors at Chernobyl have been shut down, and a
modernisation programme for all nuclear power plants in Ukraine currently
being implemented will upgrade all 13 nuclear reactors to internationally
recognised nuclear safety level by 2010.

The European Commission and the EBRD recognise the substantial efforts
undertaken by Ukraine and welcome the consistent and successful
implementation of the internationally agreed measures.      -30-
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    Central Banks from Omen to Ukraine increasing their holdings of pounds

Bloomberg, New York, New York, Monday, July 10, 2006

LONDON — Central banks from Oman to Ukraine are increasing their
holdings of British pounds, contributing to the currency’s biggest
first-half gain against the dollar in 16 years.

National banks boosted holdings of pounds to $115 billion, or 4 percent
of total reserves at the end of March, the most since the International
Monetary Fund began publishing data in 1999. The increase is helping
Britain’s economy by holding down government bond yields.

“The pound is very attractive because it has a good return on interest
rates,” Hamoud Al Zadjali, president of the Central Bank of Oman, said in a
telephone interview last week. Oman holds 5 percent of its $4.7 billion of
reserves in pounds, he said.

The pound’s share of reserves has risen from 3.7 percent at the start of
last year and 2.7 percent in March 2004. Britain’s currency surpassed the
yen in December as the third-most popular after the dollar, which makes up
66.3 percent and the euro, at 24.8 percent. The IMF includes data from 114
countries that hold $4.4 trillion worth of foreign currencies.

The 7.4 percent rally from January through June was the best first half
since the pound gained 19.7 percent in 1990. That surge was sparked by the
decision to tie it to European Union currencies, including Germany’s
deutschemark and the French franc.
Soros Profits

Two years later, billionaire George Soros and other speculators bet Prime
Minister John Major would pull out of the European Monetary System. They
pressured the Bank of England to abandon the link and triggered a 20 percent
drop over the next three months. Soros made $1 billion for his Quantum fund
on the wager.

Investors, traders and strategists surveyed by Bloomberg are predicting more
gains. Fifty-six percent of participants in a July 7 survey said the pound
will rise in the coming week. Seventeen percent recommended selling the
currency and 27 percent see little change. The pound gained 0.25 percent
last week against the dollar to $1.8516, using London prices. It traded at
$1.8417 at 4:20 p.m. in New York today.

The survey also showed 61 percent of the 56 people polled advised selling
the dollar against the euro, up from 50 percent the week before. Fifty-seven
percent urged selling it against the yen, up from 52 percent. The survey
anticipated last week’s dollar decline. It has forecast the dollar’s
direction in 27 of the past 52 weeks against the euro and in 30 versus the

The euro gained 0.15 percent versus the dollar last week to $1.2810. The
dollar fell 0.33 percent against the yen to 114.04.
Emerging Markets

Demand for pounds is being propelled from central banks, mainly in
developing countries. Emerging-market countries including China and oil
exporters such as Russia now hold $2.9 trillion in reserves, about two
thirds of the total. They accounted for almost all of the growth since 2004,
according to an analysis by Deutsche Bank AG.

The pound is attractive in part because of Prime Minister Tony Blair’s
success in slowing inflation and spurring growth. Consumer price gains have
averaged 1.4 percent since May 1997, when Blair took office. The inflation
rate averaged 4 percent in the five previous years. Economic growth of 2.3
percent in the first quarter was faster than the average for the 12 nations
sharing the euro.

Central-bank purchases of the pound reduced 10-year U.K. bond yields by as
much as 150 basis points from June 2004 through the end of last year, said
Gertjan Vlieghe, an economist at Deutsche Bank who worked at the Bank of
England for seven years. “We have seen a big increase in central bank buying
of sterling, and those purchases have helped keep yields low.”

U.K. 10-year bond yields fell to 4.64 percent last week from 4.70 percent
the week before. In the U.S., 10-year Treasury notes yield 5.13 percent.
                                 UKRAINE, LATVIA, POLAND
“We will increase our reserves in pounds,” Mykola Melnychuk, treasurer at
Ukraine’s central bank in Kiev, said in a phone interview last week. The
size of Britain’s economy gives the pound “attractiveness,” he said.
Ukraine had the equivalent of $16.8 billion of reserves as of April.

Latvia may buy pounds after it joins the euro, Raivo Vanags, head of market
operations at the Latvian central bank, said in an interview from Riga, the
capital. Latvian Economy Minister Aigars Stokenbergs said last month 2010 is
a “realistic” target for joining.

Poland has increased its share of reserves in pounds to about 10 percent
from 9.6 percent in 2004, said Izabela Swiderek, a spokeswoman at the
National Bank of Poland in Warsaw.

                                    BRAZIL, SOUTH KOREA
Some of the biggest central banks said they aren’t increasing their bets on
the U.K. currency.

Japan, which has the world’s second-largest reserves after China, “does not
have any plan to change” the share of its holdings in dollars, Masatsugu
Asakawa, director of the Ministry of Finance’s foreign-exchange division,
said in an interview last week from Tokyo.

“We haven’t been seeking to diversify into other currencies,” said Yoon Man
Ha, director general of the Bank of Korea’s foreign-currency bureau in

Brazil wants its central bank reserves to mirror the composition of its
international bonds, leaving the pound with a “small” role, said Jocimar
Nastari, a spokesman at Brazil’s central bank in Brasilia.

Higher interest rates in the U.K. have made the pound attractive to some
industrialized countries. The Bank of England’s benchmark rate is 4.5
percent, compared with the European Central Bank’s 2.75 percent.

“I doubt we’ve seen the peak in central bank buying yet,” Michael Saunders,
London-based chief economist for Western Europe at Citigroup Inc., said in
an interview last week.

                                    NORDIC HOLDINGS
Iceland has maintained the pound at 15 percent of its foreign-exchange
reserves over “the past few years,” Ingimundur Fridriksson, assistant
governor of the Sedlabanki in Reykjavik, said in an interview last week. The
share is triple the amount the bank holds in
yen, he said.

Sweden’s allocation to pounds is 10 percent, more than double the average
for the IMF’s members, central bank data show. Norway’s Norges Bank
dedicates 9.7 percent of its reserves to pounds, up from 9.4 percent in
2004, said Bjorn Taraldsen, deputy head of staff in investment management.

The currency’s heyday came when Queen Victoria ruled an empire that
stretched from India and Southeast Asia to Egypt and the Caribbean. It was
the unit of trade for about 60 percent of goods and services exchanged
around the world from 1860 to 1914, according to Barry Eichengreen, a
professor of economics at the University of California, Berkley. The pound
was displaced as the global standard after World War II, Eichengreen said.
To contact the reporter on this story: Rodrigo Davies in London at
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

William Fotheringham, The Guardian, London, UK, Mon, July 10, 2006

For the first time since 1999 there is no team time-trial in this Tour de
France but in one sense there might as well have been. Going into the first
rest day the overall standings were dominated by the T-Mobile team just as
they would have been had the German squad won a collective contre la

montre in Saturday’s 32-mile individual test at Rennes.

Even without Jan Ullrich and Oscar Sevilla, who had left the Tour the day
before the start after their implication in the Spanish doping inquiry was
revealed, T-Mobile managed to place four men in the first eight led by the
Ukrainian Serhiy Gonchar but critically including Andreas Kloden in sixth
overall as well as Michael Rogers third and Patrik Sinkewitz fourth.

Two of the other three T-Mobile team members Matthias Kessler and Eddy
Mazzoleni were also lurking 11th and 14th, a show of strength which prompted
Lance Armstrong’s former team manager Johan Bruyneel to speculate that if
Ullrich had made it to Rennes the Tour might have been as good as over at
the weekend.

Speculation is the favoured pastime within the Tour caravan – along with
hefty doses of local produce at the buffets produced by the stage towns –
and Gonchar is a fertile subject. First, his first name, as he clarified on
Saturday, is actually spelt with a G, but an administrative error in his
adopted homeland Italy [real homeland is Ukraine] had it spelt with an H,
which has stuck.

That no one is quite sure of his name is perhaps an unfair reflection on the
impact he has made in his 10-year career spent largely in relatively obscure
Italian teams. Gonchar has a world time-trial title to his credit but of
more interest in the context of this race is his record in the Tour of
Italy, where he has finished in the top 10 eight times in the past nine
years, with a highest placing of second overall.

With the proviso that this is a Tour where anything seems to happen and
probably will, this is not the palmares of a man who is going to keel over
in the mountains even though he time-trials with the awkward roll of a
Breton trawler in a Force 9 gale off Finisterre.

“He is capable of making the podium in Paris because the climbs in the Tour
will suit him better than they do in the Giro, where they are far steeper,”
is the view of Sean Yates, a team manager at Armstrong’s old team Discovery,
which on Saturday suffered their biggest setback on any key day in the past
eight Tours and find themselves in the novel position of having to fight for
the yellow jersey rather than merely defend it.

Their best time-triallist George Hincapie lost almost 3min to Gontchar,
their fancied Ukrainian Yaroslav Popovych a little more and their double
Tour of Italy winner Paolo Savoldelli limited his losses to 2min 12sec,
respectable enough for a man of his climbing talent.

Of the other names expected to figure this week in the Pyrenees Floyd Landis
has emerged the best from the first week, and was the only man to finish
anywhere near Gonchar on Saturday. Behind, a little group has emerged,
packing well between sixth and 13th overall: Kloden, the Russian Vladimir
Karpets, Cadel Evans of Australia, another Russian Denis Menchov, France’s
Christophe Moreau and Savoldelli.

Saturday’s biggest losers were Levi Leipheimer and the former Giro d’Italia
winner Damiano Cunego, both six minutes adrift. David Millar completely
bombed compared with his personal expectations and was muttering about a
“wake-up call” and “a reality check”.

Serhiy Gonchar claimed the yellow jersey for a T-Mobile team shorn of Jan
Ullrich with the time-trial at Rennes.                -30-

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