AUR#756 Sept 13 Legal Framework For Business; Fuel That Grows In The Field; Globalized Village; Vat Refunds Up Donetsk Region; Old-New Broom; Ugly Truth

                  An International Newsletter, The Latest, Up-To-Date
                       In-Depth Ukrainian News, Analysis and Commentary

                        Ukrainian History, Culture, Arts, Business, Religion,
           Sports, Government, and Politics, in Ukraine and Around the World       

Mr. E. Morgan Williams, Publisher and Editor  
                Help Build the Worldwide Action Ukraine Network
 Send the AUR to your colleagues and friends, urge them to sign up
               –——-  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
                 The current legal basis is not only inadequate, but to a large
         extent it sabotages the development of a market economy in Ukraine.

PRESENTATION: Dr. Irina Paliashvili, President and Senior Counsel
Russian-Ukrainian Legal Group, P.A., Kyiv and Washington, D.C.
Organisation for Economic Co-operation & Development EU/TACIS Program
Roundtable on Enterprise Development & Investment Climate in Ukraine
Kyiv, Ukraine, Tuesday, 13 June 2006

              Confederation president Kozachenko calls for lower taxes.
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

3.                            FUEL THAT GROWS IN THE FIELD
By Svitlana Chystiakova, Kherson
The Day Weekly Digest in English, #27
Kyiv, Ukraine, Tuesday, 12 September 2006


                              10% IN UKRAINE, GDP AT 6-7%
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

By Mykhailo Vasylevsky, The Day, Iziaslav raion, Khmelnytsky oblast
The Day Weekly Digest in English, #27
Kyiv, Ukraine, Tuesday, September 12, 2006


Action Ukraine Report (AUR) #756, Article 7
Kyiv, Ukraine, Wednesday, September 13, 2006
                     MANUFACTURER OJSC FARMAK EUR32M
Interfax-Ukraine, Tuesday, September 12, 2006

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006


Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

                VAT refunds in Donetsk region twice as much as planned
Ukrayina Moloda newspaper, Kiev, in Ukrainian 6 Sep 06; p 1, 5
BBC Monitoring Service, United Kingdom, Thursday, Sep 07, 2006


Interfax-Ukraine news agency, Kiev, in Russian 1400 gmt 11 Sep 06
BBC Monitoring Service, United Kingdom, Monday, Sep 11, 2006


                  Ukrainian prime minister outlines cabinet programme
PARLIAMENT SPEECH: By Viktor Yanukovych, Prime Minister, Ukraine
Den, Kiev, Ukraine, in Ukrainian 6 Sep 06; p 5
BBC Monitoring Service, United Kingdom, Friday, Sep 08, 2006

        Yanukovych team expands efforts to gain control over all of Ukraine
By Yulia Mostovaya

Zerkalo Nedeli On The Web, Mirror Weekly, No. 34 (613)
International Social Political Weekly
Kyiv, Ukraine, Saturday, 9 – 15 September 2006

The Ukrainian Observer monthly magazine, #74/7
The Willard Group, Kyiv, Ukraine, September 2006


                  Hocus-pocus: poof to democracy and back to the USSR
ANALYSIS & COMMENTARY: By Oksana Bashuk Hepburn, Canada
Maidan website, Kyiv, Ukraine, Thursday, August 31, 2006

COMMENTARY: By Nina Khrushcheva
Japan Times, Tokyo, Japan, Friday, Aug. 25, 2006

By Natalia Malimon, Lutsk Raion, Volyn oblast
The Day Weekly Digest in English, #27
Kyiv, Ukraine, Tuesday, September 12, 2006
                 The current legal basis is not only inadequate, but to a large
          extent it sabotages the development of a market economy in Ukraine.

PRESENTATION: Dr. Irina Paliashvili, President and Senior Counsel
Russian-Ukrainian Legal Group, P.A., Kyiv and Washington, D.C.
Organisation for Economic Co-operation & Development EU/TACIS Program
Roundtable on Enterprise Development & Investment Climate in Ukraine
Kyiv, Ukraine, Tuesday, 13 June 2006



In light of the fundamental and systematic economic reforms needed in
Ukraine and the pronounced “rule of law” (“verkhovenstvo prava”) policy,
as well as on-going dramatic increase in foreign and domestic investment,
it is imperative to ensure that Ukraine’s legal system is prepared to serve
as a modern and adequate legal basis for the economy.

The current legal basis is not only inadequate, but to a large extent it
sabotages the development of a market economy in Ukraine.

There has been for many years various efforts made by the Government,
international institutions, business organizations to conduct an inventory
and evaluation of everything that has gone wrong with the legal framework
for business in Ukraine.

This evaluation, to a large extent, already has been accomplished: the
problems and the proposed solutions were identified in great detail in
several major recent reports, including:

     (i) the OECD Report on Improving the Conditions for Enterprise
Development and the Investment Climate for Domestic and International
Investors in Ukraine: Legal Issues With Regard to Business Operations
and Investment;
     (ii) the UNDP Blue Ribbon Commission for Ukraine’s “Proposals for
the president: A New Wave of Reform”;
     (iii) the EBA Report on Barriers to Investment in Ukraine.

The main priority for the Government, therefore, should be to act, and to
act swiftly and decisively.

Ukraine’s legal system can be improved immediately and dramatically just by
cancelling the most archaic and damaging legislation, using the so called
“guillotine” principle, which worked successfully in other countries that
undertook modernization reforms.

What is also very important for this work is that the Government stays in
constant contact with the business and investment communities.

To this end, a number of practical measures is suggested, which basically
center on making Government available for on-going dialogue with the
business and investment communities, represented by various business groups
(such as the European Business Association, AmCham, reputable industrial
and trade associations, associations of small and medium-sized businesses,
the business press, etc.).

In particular:
     (i) the Cabinet should designate a Vice Prime Minister and one Deputy
Minister in each Ministry, and assign to them the responsibility to act as a
liaison with the business and investment communities;
     (ii) Government officials should actively participate in business
conferences in Ukraine and abroad (which very rarely happened in the past);
     (iii) Government officials should attend meetings of various business
groups and take immediate action on their concerns;
     (iv) the Government should create an analytical/monitoring body
(perhaps on the basis of the current Committee on Entrepreneurship and
Regulatory Policy) that will research, collect and summarize the problems
that businesses are facing and swiftly react to them and hold Government
bodies and individual officials accountable for violations.

OECD has been working for several years in close cooperation the Ukrainian
Government, international institutions, and private sector to improve
Ukraine’s legislative environment and make the country more attractive to
domestic and foreign investors alike.

Based on this work, five key substantive problems in the current legal
system were identified and the solutions were developed and recommended,
as described below.

On 1 January 2004 two separate Codes, Civil Code and Commercial Code,
took effect, becoming the new legal basis for civil and business relations
in Ukraine.

Both Codes were developed over the course of several years by two
different drafting groups with very little or no coordination between them.

The Civil Code covers relations among both individuals and legal entities
and generally market-oriented, but contains many conflicted rules and flaws,
which act as an impediment to enterprise development and investment.

The Commercial Code covers relations among legal entities, and the State,
and is clearly anti-market.

For example, the Commercial Code severely restricts the freedom of contract
and replaces such basic types of contract as sale-purchase with the archaic
“supply” contract, which was used under the Soviet system.

Moreover, the Commercial Code specifies that “supply” contracts will be
further regulated by decrees from the Cabinet of Ministers.

With the two opposing Codes, Ukraine ended up with two fundamental laws,
regulating largely the same subject, but being conceptually opposite and
containing numerous specific conflicts.

Moreover, each of these two Codes has many internal conflicts, and both

of them conflict with other existing laws.

Today, drafting any simple contract in Ukraine is a frustrating and
impossible exercise in reconciling artificially created irreconcilable

numerous other unnecessary obstacles and hidden charges (some of them are
described below) were created by both Codes that make full compliance with
the law virtually impossible.

The consequences of this situation include not only serious impediments to
enterprise development and investment, but also overwhelming number of
court disputes, and create breeding ground for corruption in the regulatory
authorities and in the court system.

Based on a thorough study of both Codes and two years of practice, OECD
came to a recommendation, which is similar to the one made in the UNDP Blue
Ribbon Commission Report’s Key Recommendation #8 (out of 12): there is an
urgent need “to abolish the anachronistic Economic [Commercial] Code and
improve the market-oriented Civil Code”.

The “guillotine” principle should be applied in this case, and should bring
an immediate and unequivocal end to the long and fruitless academic debates
about which Code is better and how to reconcile them.

The Civil Code should be quickly and substantively improved, based on the
Dutch Civil Code, which in a slightly transformed format, has been
successfully applied in Russia and Kazakhstan for the last 10 years.

Corporate legislation suffers from two major gaps: Ukraine urgently needs a
Law on Joint-Stock Companies and a Law on Limited Liability Companies,
which are the two most often used corporate structures in Ukraine.

However, the good quality corporate laws cannot be developed until the
problem of the irreconcilable Civil and Commercial Codes is resolved.

The unnecessarily broad and ambiguous antimonopoly legislation of Ukraine,
which regulates coordinated actions and economic concentrations, and the
formalistic and extremely low monetary thresholds for transactions requiring
prior approval from the Antimonopoly Committee of Ukraine (“AMC”), force
companies to seek AMC prior approval of actions that really have no bearing
on competition in the Ukrainian market at all.

In practice the AMC’s prior approval requirement is frequently ignored,
knowingly or unknowingly.  The AMC, however, has extensive instruments
for applying large and often unjustified sanctions for even minor

The solution would be:
     (i) to remove the prior approval requirement in many cases altogether,
or to replace it in some cases with notification requirement; and
     (ii) to considerably increase the monetary thresholds for transactions
requiring the AMC prior approval.

Under the previous political regime, Ukraine was notorious for its
bureaucratic red tape, its unnecessary barriers and serious charges that
were disguised as various fees, fines, mandatory intermediary and
commission payments, etc.

Immediate and drastic measures are required to eliminate such
unnecessary obstacles and hidden charges.

Just a few examples:

For example, a mandatory notarisation requirement was imposed on many
routine transactions between legal entities for a notary fee of a hefty 1%
of the value of the transaction.

Thus, the new Civil Code introduced an unnecessary rule that all lease
agreements, including between companies, whose term is one year or longer,
are subject to notarisation, forcing all such lease agreements to carry a
burden of an extra 1% for no added value.

Another problem, partially created by the new Civil Code and partially by
subsequent regulations, is complications with issuing powers of attorney,
which businesses use in their operations all the time.

First, an underlying contract is now required for a power of attorney to be
issued  (a requirement that does not exist in most legal systems of the
world) and second, a power of attorney no longer can be broad, but must
be very specific.

Considering that the cost of notarising each power of attorney is around
UAH 50 ($10), this adds unnecessary complications and costs to doing

The following measures are recommended for putting notarisation under

     (i) immediate cancellation of all unnecessary notarisation
     (ii) reducing notary fees for all remaining notarisations;
     (iii) returning to a simple power of attorney system with no underlying
contract requirement and reintroducing a possibility for giving broad

     [2] 90-DAYS RULE.
This is a rule that was designed some time ago, allegedly to prevent capital
flight, and which while failing this task, put a tremendous financial burden
on legitimate business operations.

Specifically, the tax authorities impose severe fines and sanctions when a
Ukrainian business fails to receive hard currency proceeds from sales (in
case of export contracts), or goods (in case of import contracts), under its
international contracts within 90 days of the due date.

Moreover, the fines are not limited to the amounts that the Ukrainian
company in question failed to receive within 90 days, meaning that the
imposition of fines continues indefinitely and can exceed the original
unreceived amount by many times, and could theoretically bankrupt a

The best recommendation here would be to remove this outdated 90-days
rule altogether, because it has proved incapable of preventing capital
flight, and only serves as an absurdly heavy burden on doing legitimate

Modern business operations are often conducted electronically; the contracts
are signed via fax or electronic mail and corporate seals are not used in
most developed countries.

It is interesting to note that in Ukraine, until the new Civil Code came
into effect in 2004, the law only required that parties to a contract agree,
in appropriate form, on certain essential terms and conditions.

The lack of an imprint of a corporate seal on a signed agreement in most
cases did not constitute a violation of the form of the agreement.

The new Civil Code, however, demands that all contracts, domestic and
international (including addenda, amendments, and other contractual
documents) be signed with an original corporate seal affixed.  Lack of a
corporate seal can make the contract invalid.

This is a big step backwards and a major inconvenience, so businesses
continue making contracts ignoring the corporate seal requirements, which
obviously puts the validity of numerous contracts in doubt and provokes
unnecessary disputes.

The recommendation with regard to this problem is to modernize the
requirements as to the form of contracts, including accepting contracts made
by fax and other electronic means of communication and removing the
corporate seal requirement altogether.

     (i) overregulation of ordinary financial activities (for example, in
order to issue a simple parent guarantee, a company needs to be registered
with the State Commission of Ukraine for Regulation of Financial Services
Markets of Ukraine);
     (ii) the requirement that any sale-purchase of Ukrainian securities
(even outside of Ukraine between non-residents) must be carried out only
with the participation of a Ukrainian securities trader;
     (iii) restrictions on inter-company loans;
     (iv) excessive licensing requirements by the NBU with regard to foreign
currency transactions and payments outside Ukraine; and many others.


Another tremendous problem, which affects all businesses operating in
Ukraine at all times, is the chaotic, arbitrary, excessive and incredibly
costly overregulation and interference by the authorities in all spheres of

It is loosely referred to as the “permits system”, or by the broader,
internationally known term “regulatory governance”.

Several half-hearted attempts to “deregulate” were made by various Ukrainian
Governments, but in the absence of true political will, they generally
resulted in more overregulation and more chaos.

The latest effort to eliminate several thousands regulatory acts in 2005 did
not achieve considerable results because the cancelled acts turned out to be
archaic documents, which had little to do with business regulation and were
not applied in practice in any case.

The solution to the above problem has been proposed by the OECD which,
as a first step, suggested adopting a framework Law on Fundamentals of the
Permits System as soon as possible, which shall achieve two major goals:

     (i) stop the abuse of entrepreneurs; and
     (ii) give a head start to establishing a modern, transparent and
liberalized permits system, setting up its principles and its framework,
including for enforcement, monitoring, appeals procedure and liability (for
the abuse of the system by Government officials) mechanisms.   -30-

E-mail: Dr. Irina Paliashvili,; Chronicle of Recent
Developments in Ukrainian Legislation:
NOTE:  The formatting of the article was edited by the Action
Ukraine Report (AUR), Washington, D.C.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
              Confederation president Kozachenko calls for lower taxes.

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

KYIV – Ukraine’s agriculture associations have asked the cabinet to
reconsider taxes imposed on farmers in 2007. President of the Ukrainian
Agrarian Confederation Leonid Kozachenko said at a press conference on
Monday that the associations are planning to send a request to Premier
Viktor Yanukovych.

Kozachenko said that on January 1, 2007 the grace period of VAT payments

for farmers expires. Moreover, from January 1, payment of a fixed agriculture
tax on the remuneration of labour will grow by 20%. He forecasted that the
losses of farmers next year will be around UAH 4.6 billion.

Kozachenko said that the government and the associations should jointly work
out a strategy for the further taxation of the agriculture sector, and if
taxes are reduced, an effective scheme for supporting farmers should be set

He said that the associations hope to meet with the Ukrainian premier to
discuss possible options for improving the situation in the sector and
drawing up schemes for taxation and support of the sector. “[The
associations] agreed that such a meeting should be held,” Kozachenko said.

Head of the Association of Farmers and Private Landowners of Ukraine Ivan
Tomich said at the press conference that the current taxation system for
farmers could be reformed if the state gives farmers UAH 6.5 billion in
support in 2007. He said that subsidy and fund distribution schemes

should be improved.

Deputy Agriculture Minister Yuriy Luzan told the press that the ministry is
elaborating amendments to the taxation system for the agriculture sector for
2007. The ministry, in particular, proposes to set VAT at 12%, and change
requirements on the enterprises under the grace system.

He said that the ministry proposes to give the right to use the special
taxation regime to enterprises that produce 75% of the country’s agriculture
products. Luzan said that the scheme for 2007 foresees a special regime for
enterprises that produce other types of products worth no more than UAH
300,000.                                          -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
3.                        FUEL THAT GROWS IN THE FIELD

By Svitlana Chystiakova, Kherson
The Day Weekly Digest in English, #27
Kyiv, Ukraine, Tuesday, 12 September 2006

To some people the rape plant has an unusual name. Even so, this crop is
attracting increasing attention. What is rape? Even people with little
connection to agriculture often see this crop in the fields, particularly
its bright yellow color.

Rape not only gladdens the eye; it is also an inexhaustible source of useful
agents that are absolutely indispensable to people. On the one hand, it is a
popular source of vegetable oil used in many branches of industry; on the
other, it is good fodder.

Rapeseed oil contains 40-47 percent of fat, 20 percent protein, and 5
percent cellulose. It is also very beneficial to people who live a healthy
lifestyle. This plant is also a wonderful herald of winter crops.

Ukraine’s market demand for rape is between 500,000 and 800,000 tons a year,
but actual yields amount to some 150,000 tons. Winter rape is mostly grown
in Kherson oblast, where winter crops have twice the yields of spring crops.

In the last few years winter rape plantings have considerably expanded. The
agriculture and food department of the Kherson Oblast State Administration
reports that these crops occupy 9,000 hectares, the largest planting in all
the years of its cultivation.

Rape can be planted all over the region, although it is most popular in Hola
Prystan raion, where it occupies over one-third of all arable soil.

Large plots of winter rape are sown in Skadovske and Kakhivka raions.
Meanwhile, this precious crop is practically ignored in Velyka
Oleksandrivka, Vysokopillia, Verkhnii Rohachyk, and Ivanivka raions of
Kherson oblast.

The expansion of areas devoted to rape is facilitated by hybrids recently
developed by German breeders. These seeds can be sown 15- 20 days
later than the Ukrainian varieties.

It is thus possible to use damp soils in September and the first 10 days of
October. A farmer who plants rape once will plant it every year. There are
several advantages to growing winter rape.

[1] First, it means selling rape and receiving money in July, when it is
especially needed for harvesting early grain yields and preparing for winter
crop sowing.

[2] Scientists say that the world’s oil deposits will last only another
50-80 years. Even a country, like Iran, with its large deposits of black
gold, is growing rape to produce biofuel. Biofuel is methyl ether (90%
rapeseed oil plus 10% methyl alcohol).

In order to ease the ecological burden, 5-35 percent of biofuel is added to
petroleum-based diesel oil. Biodiesel can be obtained at production plants
(up to 200 tons of biodiesel a month, working only one shift). This is not
being done yet in Ukraine. In 2005, 201,400 hectares were devoted to rape

[3] There’s no denying the fact that these little yellow flowers generate
solid profits. In recent years the price of commercial winter rape has
sharply increased, and this crop has become competitive and profitable.

Statistics compiled by the agriculture and food department of the Kherson
Oblast State Administration indicate that last year the cost price of one
centner [=100 kg – Ed.] of winter rape was 54-60 hryvnias, 30 percent less
than for sunflower. Good rape yields bring 30-40 hryvnias’ worth of profit
from every hectare of rape compared to sunflower.

What are the prospects for growing winter rape? They are obvious. In
countries, like Germany, every farmer receives 300 euros from the government
for every hectare of rape sown. Every year two million tons of biodiesel are
produced from rapeseed in that country.

In Poland, farmers who grow rape receive social subsidies. A Polish farmer
is not too worried about whether he will sell his rape because the
government subsidies are large. In Ukraine, it is 60 hryvnias.

In world agricultural production, rape is in second or third place after
cotton and soybeans. One hectare of winter rape yields 1,100 kg of oil. By
way of comparison, one hectare of soybeans produces 310 kg, and one
hectare of sunflowers, 600 kg.

A scientific method is also used to fasten the upper section of rape with
elastic. This prevents the husks from cracking and increases crop yields by
25-30 percent.

Kherson oblast plans to sow 136,000 hectares of winter rape in 2010 and
produce at least 340,000 tons of rapeseed. In 2006, 30,000 hectares of rape
were sown, but the bad weather in the fall (lack of humidity and low winter
temperatures) prevented sprouting in the entire sown area.

Agricultural producers, however, are glad that 10,000 hectares survived
these harsh conditions, allowing them to harvest 13.3 centners per hectare.
The regional administration plans to sow some 80,000 hectares with winter
rape for next year’s crops.                                -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

                          10% IN UKRAINE, GDP AT 6-7%

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

KYIV – The World Bank forecasts inflation in Ukraine in 2007 to be below
10%, GDP growth at least 6-7%, and the budget deficit about 2% of the GDP.

“I believe the inflation will be lower then 10%, and the GDP will grow at
least 6-7%,” the head of the World Bank’s mission to Ukraine, Dusan Vujovic,
said during a press conference in Kyiv on Tuesday given to mark his leaving
the post.

According to Vujovic, the budget deficit in 2007 will not exceed 2% of GDP.
He said a 2% budget deficit is not a problem if there is a reduction in
unreasonable social expenditure and if the resources are used efficiently.
Much can be done with a 2% budget deficit, he said.

According to him, over the next several years Ukraine will have to attract
assets via domestic and foreign loans in order to finance the budget
deficit, due to its costly social programs in it.

The World Bank is a major creditor of Ukraine. Since 1992, the World Bank
has approved $4.6 billion worth of credits for Ukraine, $3.2 billion of
which have already been received.                          -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

KYIV – Some $700 million worth of projects are currently being drafted for
Ukraine by the World Bank, head of World Bank’s mission to Ukraine Dusan
Vujovic said in Kyiv on Tuesday.

Speaking during a press conference given to mark his leaving his post,
Vujovic said the projects are being drafted as part of the present strategy
of cooperation between the World Bank and Ukraine.

According to him, the new projects will be implemented in such spheres as
improving the water supply network in the regions, reforming the
electricity, ecological, and judicial systems, food safety and other areas.

The World Bank is a major creditor of Ukraine. Since 1992, the World Bank
has approved $4.6 billion worth of credits for Ukraine, $3.2 billion of
which have already been received.                            -30-

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

By Mykhailo Vasylevsky, The Day, Iziaslav raion, Khmelnytsky oblast
The Day Weekly Digest in English, #27
Kyiv, Ukraine, Tuesday, September 12, 2006

Someone had left a copy of the Italian Ukrainian Gazette on a table in the
tavern. It turns out that this newspaper has been in circulation since
February 2006. Although it was early in the morning, the tavern was crowded.

The assortment of ordered drinks was a reminder that Pluzhne has long been
living under the sun of the free market. Tipsy customers, mostly young
people, were not interested in discussing the Ukrainian Gazette.

The village council building is located nearby. Liudmyla Hrebeniuk, the
secretary of the local self- government, was in her office.
                              GEOGRAPHY OF PLUZHNE
“You can use our migrant workers to study world geography. They are
everywhere: Portugal, Italy, and the UK. Many of them are in Moscow. Yes,
they remember their native village and come back for a short rest, but then
they return to where they come from,” says Hrebeniuk, who has occupied her
post for 20 years.

Viktor Maksymchuk is the veteran council chairman of the village. “They
elected him for the third time, on an alternate basis. He took a leave of
absence and went for a vacation at the seaside,” says Hrebeniuk. “At one
time he also saw the world through a migrant worker’s eyes. He no longer
does; he says he can’t because of his status.”

Olha and Ihor, a young married couple, visited their native Pluzhne in July.
Olha’s mother Liudmyla was the first to travel to Italy about 10 years ago,
and it looks as though she will never come home.

She has remarried there. It is said that families are made and wrecked in an
international manner because of the migration process, when a husband
travels in one direction and a wife in the other.

“Our village is large, so I can’t be sure about everyone’s destiny,”
explains Hrebeniuk.

There are 3,341 residents on the official register of Pluzhne, which is
located 18 km from Iziaslav, a remote district center. It is a typical
backwater. “Our population is shrinking.

Since the beginning of the year, 23 birth and 37 death certificates have
been issued, and then you have the ones who are leaving for different parts
of the world,” says the village council secretary sadly, commenting on
natural and migration trends.

But, as she points out, the village did respond to one of President
Yushchenko’s “Ten Steps toward the People.” The state’s financial
childbirth incentives have yielded some results: in previous years the
local baby-transporting storks were lazier than in 2006.
For some reason or other, Pluzhne’s history is silent about all those
Magellans and Columbuses who blazed a trail from this village to foreign
countries, close or faraway.

The fact remains that globalization has not spared this village, one of the
largest in the region. Pluzhne has effectively integrated into the world
labor market – out of dire need, of course.

“What else could those people do? The district labor registry office has 702
of our residents on its lists,” says Hrebeniuk, who sympathizes with her
unemployed fellow villagers.

Apparently, the founders of the Ukrainian Gazette in Italy have the gift of
foresight, at least where the “bright” prospects of Pluzhne and other
villages are concerned.

The front page of the issue in question provides detailed explanations on
where the modern followers of Magellan can acquire legal status, and how and
where to obtain work permits. One of the authors of the article predicts:
“The migrant worker trend among our women will never cease.”

Here’s another topic: the glorification of the Ukrainian woman, “who gives
up her personal comforts and lives for the sake of her children” – in Italy,
while her children live in Pluzhne. The poor woman has to be in constant
telephone contact with her offspring just to keep track of their education.

The Ukrainian newspaper published in Italy offers an answer to the main
question of today: who is to blame for wives abandoning their husbands and
small children and going off as migrant workers? Its headlines and articles
are full of words, like “Octopus” and “Mafia” – of course, not the Italian
Mafia. This is the voice of the distant homeland.

“I’ve been away from home for a year. I brought 1,500 euros,” says a tipsy
voice. “And look what’s happening here,” a middle-aged man says to the man
with the euros. “Have another drink, my treat,” says the migrant worker,

encouraging him to set out on his search for the truth.

At another table you can hear the following dialogue:
“I told my old lady to go to England. People say the English are different
from the Italians. They are indifferent to women. But she went to Italy. Me?
I figured that after working so hard, I wouldn’t want anything; 13 hours at
an asphalt plant. No, sir! I went to a brothel.

Our women were there too, but I’ve met enough of them at home. One of their
women? In one hour you kiss goodbye to what you’ve earned in three days.
They’re all the same. Now then, tell me how you people have been keeping
here all this time.”

“Not much to tell. We milked our cows and sold the milk for one hryvnia a
liter. And then that war came out of the blue. Before, the suppliers wanted
our milk for their plants, but now they have reduced the price by two times.
Half a hryvnia!

They said we could either accept their prices or drink our milk. We
slaughtered our cattle to sell meat – what else could we do? That wasn’t our
war. And a thief stole my horse from the pasture.”

These are some of the conversations I heard. After all, summer is the same
in Portugal, Italy, Great Britain or Poland: vacation time.
Pluzhne has four hangouts like this. There used to be a children’s cafe, but
today it caters to local adult customers and village guests.
                                 OUR OWN “OCTOPUS”
An anonymous local chronicler, writing about the village’s “achievements
during 60 years of Soviet power,” left this for posterity: “Pluzhne is the
center of the village council. The population numbers 4,009.

The Druzhba [Friendship] Collective Farm, whose central office is in
Pluzhne, owns 2,600 hectares of arable soil. The collective farmers grow
grain crops and beets. Dairy animal husbandry, gardening, and bee-keeping
are well developed.

In 1969, a pharmaceutical plant for the production of biomycin was set up on
the premises of a distillery built in Pluzhne in the early 20th century; the
new plant has a staff of 170.

Among its other enterprises, the village has a Silhosptekhnika [agricultural
technology] branch with well-equipped workshops, motor pool, oil base,
warehouses, brickyard, and a communal enterprises combine.”

During the 15 years of the new era Pluzhne has experienced many changes.
Friendship Company, the successor to the collective farm of the same name,
no longer has orchards or bee-keeping; and dairy animal husbandry is in its
death throes. Well, we all know that dead bees don’t buzz.

“Druzhba bakes bread. The 120 workers receive their wages in the form of
bread-payment in kind. Then they brought in a shoe factory, and people were
getting shoes instead of a salary,” says Hrebeniuk, outlining the company’s
socioeconomic situation. But the founders of Druzhba are humane: “If
someone needs an operation, they will pay for it.”

For some reason the globalization of Pluzhne has had little impact on the
population’s vocabulary. They seldom use words, like octopus or mafia.
They prefer to call a spade a spade.

“The bandits cut up the bakery with its 170 workers. Where did they come
from? Kyiv, they say. They came here, loaded up all the equipment, and
scrapped it,” says the secretary of the village council.

Neither did the “bandits” spare the Silhosptekhnika branch with its
“well-equipped workshops and brickyard.” That wasn’t the end of it. The
trees that were planted in the forested areas around Pluzhne in honor of the
USSR’s 60th anniversary are being cut down. The villagers believe the timber
is being sold in Poland.

“Our village council chairman Maksymchuk has been writing to all the people
in power to make those bandits calm down a little and bring them to justice.
He has sent several letters to the president, but to no avail,” complains

Pluzhne does not expect the government to carry out the rest of the promised
“steps toward the people” after issuing childbirth incentives. Instead, it
continues to increase the readership of the Italian Ukrainian Gazette.

Why not? After all, there is a market supply to meet increasing demand.

Ukrainian migrant workers provide their fellow villagers with financial
support. They facilitate local business initiatives. But these initiatives
run up against the organization of trade and the food industry. Every Friday
vendors from all over the district gather in Pluzhne, serving customers any
way they please.

In market conditions, there is only one way out of the situation: personal
participation in globalization. This process is accompanied by irreparable
losses – and not just for Pluzhne. Statistics show that the demographic
situation is worsening.                                      -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Action Ukraine Report (AUR) #756, Article 7
Kyiv, Ukraine, Wednesday, September 13, 2006
KYIV – Several representatives of U.S. companies doing business in Ukraine
met with U.S. Ambassador Williams Taylor in Kyiv last Friday.  The meeting
was arranged by Morgan Williams, Director, Government Affairs, Washington
Office, SigmaBleyzer Emerging Markets Private Equity Group.  Williams
serves as Chairman of the Executive Committee of the Board of Directors
of the Ukraine-U.S. Business Council in Washington.
Vadym Bodayev, Head of the Kyiv Representative office of SigmaBleyzer,
briefed Ambassador Taylor on the latest developments concerning the
ongoing issue regarding the U.S. Overseas Private Investment Corporation
(OPIC) and the work to resolve an outstanding insurance claim OPIC has
against the government of Ukraine.  The unresolved claim has the OPIC
program shut down for Ukraine at the present time.
Dr. Irina Paliashvili, President and Senior Counsel, Russian-Ukrainian
Legal Group, P.A., Kyiv and Washington, D.C., discussed with the
Ambassador the present status of the legal framework for doing business
in Ukraine and the highest priority legislative reforms that need to be
adopted by the Parliament. [see article one above by Irina Paliashvili,
AUR Editor]
Paliashvili said, “he current legal basis for doing business in Ukraine
is not only inadequate, but to a large extent it sabotages the development
of a market economy in Ukraine. The main priority for the Government,
therefore, should be to act, and to act swiftly and decisively.

Ukraine’s legal system can be improved immediately and dramatically just

by cancelling the most archaic and damaging legislation, using the so called
‘guillotine’ principle, which worked successfully in other countries that
undertook modernization reforms.”
David and Tamara Sweere, founders of the Kiev-Atlantic Agricultural
Group, provided information about the great agricultural potential that
still exists in Ukraine, especially in the production of crops for energy.
David Sweere told Ambassador Taylor, “Because of the shift in world-wide
food and energy economics, and based on its unique land mass and climate
to this important region of the world, Ukraine has a significant opportunity
to develop an entirely new, highly profitable industry based on the production
of efficient, clean and profitable bio-based energy. 

While there has been some talk and efforts made towards the support and

development of the bio-diesel industry from vegetable oil in Ukraine, the
fundamentals of ethanol production for energy from corn and other grains
are far more compelling.”
Sweere said the development of this opportunity for Ukraine is nearly 100%
related to the acceptance, understanding, support and will of the Government
of Ukraine to provide the required dependable assurances (such as opening
US OPIC for example) that would be required to warrant the open playing
field to allow the industry to develop and the products to be mandated for
use and distribution without threat or interference by the well established
traditional energy sources and interests. 
“Maybe this is too much to expect, but, the alternative for Ukraine is not
bright as it relates to its competitive posture in both the field of agriculture
production and/or energy without moving into the 21st Century with the
rest of the world,” Sweere told Ambassador Taylor.
Morgan Williams discussed the ongoing program of the Ukraine-U.S.
Business Council with the Ambassador.  Council members would like to
see many more legislative reforms adopted in Ukraine that would improve
the business environment, a clear-cut level-playing-field program of
VAT tax refunds, and a much improved legal system for the protection
of property and contract rights.
Ambassador Taylor said he has had several meetings with Ukrainian
government officials about moving critical economic and business related
reforms forward yet this year.  The Ambassador said he will be working
closely with U.S. businesses in Ukraine and asked the business leaders
to stay in contact with him regarding the business climate in Ukraine.  -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
     NOTE: Send in a letter-to-the-editor today. Let us hear from you.

Interfax-Ukraine, Tuesday, September 12, 2006

KYIV – The European Bank for Construction and Development may issue

a EUR 32 million credit to Kyiv-based OJSC Farmak, one of Ukraine’s
leading pharmaceutical producers, the EBRD said on Tuesday.

The credit will be partially syndicated by other banks, the EBRD said. The
bank’s board plans to consider the project on October 17.

The general volume of the project, aimed at modernizing and creating new
production facilities according to GMP standards, is EUR 86 million.

Farmak is among Ukraine’s three major pharmaceutical producers. Its net
income from sales in 2005 grew by 20.8%, to UAH 243.72 million, while its
net profit grew by 45.6%, to UAH 32.48 million.

The EBRD’s credit portfolio in Ukraine by the end of May included 114
projects worth a combined EUR 2.27 billion.         -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

KYIV – Sweden’s Capital Oil and Sadkora Energy AB plan to invest 40

million euros in 2006-2008 rehabilitating the Maidan and Kubash oil fields in
Ukraine’s Ivano-Frankivsk region.

The Swedish companies have signed an agreement to rehabilitate the fields
with Bohorodchanynaftogas, a subsidiary of the Nadra Ukraine company.

They will spend EUR 20 million overhauling wells and buying drilling and
other equipment and 20 million euros on routine operations. The companies
plan to rehabilitate 40-50 wells with a combined average daily output of
300-400 tonnes of oil.

The Swedish company will receive 84% of the profit if that volume is
achieved and 83% if another 100 tonnes per day is achieved.

The wells were thought to be unviable and were mothballed in the 1960s.
Oil started to rise to the surface in the early 1990s.             -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, September 12, 2006

KYIV – Investment Options Group LLC (the United States) bought a

95.556% stake in OJSC Berdiansky Zhatki (Berdiansk in Zaporizhia region)
on September 4, the OJSC has reported in the mass media.

The company said that international direct investment funds ukrn i new
capital growth co. ltd. (a 44.2672% stake) and ukrn ii future capital growth
co. ltd (a 41.831% stake) under the control of SigmaBleyzer Investment
Company, which owned over 10% voting stocks in the company, sold their
stakes on September 4.

As reported, as of early 2006, along with the above-mentioned investment
funds, UKRN III New World Growth Co. Ltd (under SigmaBleyzer’s control

as well) owned a 9.458% stake in the company.

In August, the Antimonopoly Committee of Ukraine allowed Investment

Options Group LLC to buy over 50% of the stocks in the company. The
U.S. company is planning to invest in Ukraine.

Berdiansky Zhatki produces beams, mounted and trailer reapers, pick-up
attachments and machines for sunflower harvesting.

In 2005, the company’s net revenues dropped by 12.2%, to UAH 15.6
million, its net losses grew by 4.3 times, to UAH 4.05 million.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
               VAT refunds in Donetsk region twice as much as planned

Ukrayina Moloda newspaper, Kiev, in Ukrainian 6 Sep 06; p 1, 5
BBC Monitoring Service, United Kingdom, Thursday, Sep 07, 2006

Companies from Donetsk Region received twice as much VAT refunds as
planned, and neighbouring Luhansk region received 50 per cent more, while
VAT refunds to other Ukrainian companies have been cut significantly, a
propresidential paper has said. The Yanukovych government is unsure of
its political future, the paper added.

The following is the text of the unattributed article entitled “Does the
government pack its suitcases?” published in the Ukrainian newspaper
Ukrayina Moloda on 6 September:

[Prime Minister Viktor] Yanukovych’s and [First Deputy Prime Minister
and Finance Minister Mykola] Azarov’s team obviously does not feel
self-confident, as it abruptly began “withdrawing cash”: Donbass has
received double VAT refund for August at the expense of robbing the rest
of the regions.

The closer the winter is, which means imminent adoption of the budget for
the next year, conclusion of new contracts for gas supplies with Russia and
consequently, fulfilment of the promises given to the Ukrainian people, the
fewer victorious reports are heard from the new “coalition” government.

Even the major herald of progressive accomplishments of the Cabinet of
Ministers, Mykola Azarov, who combines the posts of the first deputy prime
minister and the finance minister, keeps silent and seems to be sad.

Indeed, there are no grounds to be in high spirits when tariffs are growing,
people are furious, and in addition, economists seem to be jeering: in
response to the government’s statements about a certain crisis left by the
previous Cabinet of Ministers, they turn their fingers round their temples
[gesture implying that someone is crazy] and present figures which confirm
indices of brilliant inputs in the national economy made by [former Prime
Minister Yuriy] Yekhanurov’s cabinet.

Therefore, victorious statements remain statements, but a good military
commander cannot but think about preparations for a retreat.

The “regional” government [dominated by the Party of Regions], fully stuffed
with people from Donetsk, seems to be keeping a possibility of rapid retreat
“in reserve”.

At least, this is the first impression that comes to mind while studying an
analysis of budget implementation in August in VAT refunds to exporting
domestic producers.

Let us remind you that there were media reports three weeks ago saying that
the Finance Ministry had decided to suspend VAT refunds at all.

Then the minister in charge, Mykola Azarov, denied this information, having
explained that the government had just inspected the register of the
enterprises contending for VAT refunds, and it disclosed that one-half of
them were “puffery” and “bubble” ones. Therefore, value added tax was
reportedly compensated only to those enterprises which deserved this,

But now try to guess in one attempt: in what Ukrainian region are these
“deserving” firms and companies located, the ones to which VAT had to
be not just compensated, but even the relevant plan had to be over-fulfilled
twofold? The answer is right.

A document obtained by Ukrayina Moloda from reliable sources confirms that
enterprises from Donetsk Region were the ones to have received VAT refunds
in the amount of as much as 696,235,000 hryvnyas [about 137.9m US dollars]
instead of 313,934,000 hryvnyas [about 62m US dollars] in August.

Moreover, 153,801,000 [about 30.5m US dollars] of them were received during
the last banking day! What was the need for this rush?

By the way, government officials from Donetsk did not treat badly the
neighbouring Luhansk Region: 87,395,000 hryvnyas [about 17.5m US dollars] of
compensation were allocated here in August instead of 66,818,000 hryvnyas
[about 13.2m US dollars] envisaged in the budget.

Meanwhile, let us take Kiev as an example: a number of exporting enterprises
are also located there, while the government has “donated” “as much as”
60,243,000 hryvnyas [about 12m dollars] out of the planned 376,020,000
hryvnyas [about 74.5m dollars]. Poltava Region received just 6,887,000
hryvnyas [about 1.36m dollars] out of 57,824,000 hryvnyas [about 11.5m US

As for Volyn Region, it received only… [ellipsis as published] 459,000
hryvnyas [about 90,000 dollars] out of 16,836,000 hryvnyas [about 3.3m

The experts questioned by Ukrayina Moloda admit, in particular, that these
astonishing proportions can be a proof that the government headed by
Yanukovych has little confidence in its near future.

Therefore, they are trying to “stock up” to be on the safe side: nobody
knows what one can expect in economic and budget spheres during the coming
turbulent autumn, and therefore one should fill his pockets well before it
is too late… [ellipsis as published]
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

 If you are receiving more than one copy of the AUR please contact us.

Interfax-Ukraine news agency, Kiev, in Russian 1400 gmt 11 Sep 06
BBC Monitoring Service, United Kingdom, Monday, Sep 11, 2006
KIEV – Ukrainian President Viktor Yushchenko has issued a decree
approving a concept for overcoming corruption, which is called “Moving
towards integrity”.
He also submitted for parliamentary consideration a package of draft laws
aimed at meeting Ukraine’s international commitments to combat corruption.
The presidential press service told Interfax-Ukraine today that he submitted
the following bills for parliamentary consideration: “On ratifying the UN
Convention against Corruption”, “On ratifying the Criminal Law Convention on
Corruption” and “On ratifying the Additional Protocol to the Criminal Law
Convention on Corruption”.
Ratifying these conventions will facilitate the confirmation of a positive
image of Ukraine as a state where a favourable political climate is being
created for large-scale and mutually beneficial cooperation with all
countries, including in terms of combating corruption, the press service
The following two bills were also sent to parliament: “On the basics of
preventing and combating corruption” and “On amending legislative acts
dealing with responsibility for corruption crimes”. [Passage omitted:
details of the draft laws]
The president also sent to parliament a bill “On the responsibility of legal
entities for corruption crimes”, which envisages introducing responsibility
for legal entities which commit corruption crimes and a procedure for
bringing them to responsibility. [Passage omitted: details of the bill]
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
             Send in a letter-to-the-editor today. Let us hear from you.
                     Ukrainian prime minister outlines cabinet programme

PARLIAMENT SPEECH: By Viktor Yanukovych, Prime Minister, Ukraine
Den, Kiev, Ukraine, in Ukrainian 6 Sep 06; p 5
BBC Monitoring Service, United Kingdom, Friday, Sep 08, 2006

KIEV – Ukraine’s new prime minister has addressed parliament outlining the
basic tenets of his government’s action plan. Viktor Yanukovych said his
government’s main task was to give Ukraine a strong, “transparent” economy
and become a “post-industrial state”.

He said the country should certainly join the WTO, but pay due regard to
giving certain sectors of the economy transition periods. He said Ukraine
should present itself to Brussels as “a strong, self-capable and hence
interesting partner”, while restoring good relations with Russia.

The following is the text of Viktor Yanukovych’s speech before parliament,
entitled “Learning from victories: what Ukraine’s economy should be like in
conditions of political reform”, as published in Den on 6 September,
subheadings have been inserted editorially:

With the transition to a parliamentary-presidential form of government, the
executive power in Ukraine has ceased to be an instrument in the fight
between various political forces in the government.

It has been transformed into an instrument for serving the people. The
current government is the first Ukrainian Cabinet of Ministers to act under
the conditions of political reform.

For the first time in the new history of our state, the executive power
plays the role of hired help, serving at the behest of the ruling
parliamentary coalition and consequently, the majority of voters.

At the same time, never before has responsibility for the results of running
the government been so personified.

The criticism of our opponents with regard to the colourful nature of the
coalition and the presence of differences in the programmes of its subjects
probably are of little concern to voters.

In reality of power, it is important to voters how successfully it provides
for their interests. And if changes for the better are not seen, then there
is someone to personally complain to for poor work.

In contrast to previous years, now there is a chance for synchronizing the
actions of the president, parliament, and the Cabinet of Ministers.

The incarnation of political reform in life is a very painful process and
the first steps of activity by the new government have once again convinced
us of this. For constitutional reform also envisions the division of
authority. And this demands very sure and thoughtful steps.

The process of transferring authority is a painful process and one must
relate to it with the understanding and patience which all branches of power
should show. We should tread this difficult path in tolerance and, I would
even say, delicately. In any case the government is prepared for a process
with exactly this, shall I say, tone.

Besides everything else, political reform is a unique chance to establish a
system of effective and responsible power, power capable of providing the
reforms the state really needs.

There are very important political, economic and social reforms among the
priorities which the government has put into its programme.
                                 A TRANSPARENT STATE
Foremost among them are steps to root out corruption which is the main
reason slowing economic reform.

We will create a transparent investment climate in the state. We will build
a realistic and transparent tax policy and create a realistic civil code and
make the court system independent.

Establishing a transparent economy is one of the most important tasks which
we will address.

We will also carry out key reforms, in particular, reforms in the pension
system and in health and education. And the essence of these reforms lies in
putting the person and not the system at the centre of the government’s

We will change the accent and the principles of financing. And will provide
funds not to education overall, but for specific students; and not for
health in general, but for the patient, the person who needs recovery. This
will lower the level of corruption in the budget sphere and optimize

It is this very type of approach which we will apply in administrative
reform, in reforms of state management and state service.
In carrying out tax reform, we will do everything so that the tax system
stimulates manufacturers, so that conditions are created for transparent
relations between business and the authorities.

Reform of the financial system will give the government the conditions
needed to develop the financial market, new financial instruments for the
movement of securities.
We must recognize that real estate in our country, beginning with large
enterprises and ending with regular dwellings, is undervalued.

By preaching the inviolability of private property, we will create the
conditions for capitalizing business and valuing property of various forms
of ownership. IPO’s [initial public offering of shares] will give us the
chance to increase not only the value, but the transparency of business.

Restructuring the local government and communal housing and management are
among the first reforms which are priority tasks for our government. The
problem of developing infrastructure demands special attention.

Coordinating the legislative activity of all branches of power will make it
possible to quickly carry out these reforms and help to overcome the crises
in all important spheres of life in Ukraine and put our state on track to
accelerated social and economic development.

For every branch of power in our state has one goal – to raise people’s
standard of living, to improve the life of every citizen. That is our common
task and that is our highest priority. For both the government, the
parliament and the president.
Being conscious of our responsibility before the Ukrainian people, the
cabinet of ministers has prepared a government action plan and draft
strategy of economic and social development for Ukraine for 2007-2011 which
it is ready to present to parliament for review.

These documents envision bringing the Ukrainian economy to stable speed in
economic growth in the first stage from 2006 to 2008.

In the second stage – the period from 2009 to 2011 – conditions will be
created for moving to a stage of post-industrial economy of general welfare.

The draft includes identifying issues which cannot be delayed and which
demand solutions in 2007 as well as basic goals which need to be achieved in
the course of the next 12 months and a list of priorities and tasks which
will allow us to reach these goals.

We must not repeat the mistakes of past years. And we must foremost rid
ourselves of populist methods. As is known, they lead to the share of demand
on the state budget being expanded without grounds.

Social payments increase, while the speed of economic development slows.
This leads to stagnation in the economy and as a result, domestic investment
begins to curtail and revenue to the budget slows.

Our government will return to the investment-innovation model of developing
the economy, which will give it increased growth and consequently, higher
social standards.

Under such a model, social payments will cease to be as people say, “paper”
which loses its value every month for a lack of goods to back it up. Social
payments will turn into real money, which can really provide for increases
in people’s standards of living.

It is very important that we find a common language with domestic goods
manufacturers. Removing stimuli for those who were ready to increase
production, renew technology bases and install state of the art technology
led to our feeling a lack of domestic goods on the market and replacing them
with imported goods, for which flung the doors were opened wide and customs
barriers removed.

Opening the domestic market led to a negative trade turnover and subsequent
erosion of state gold and currency reserves – the foundation of a stable
national currency.

Recognizing the complexity of the situation in which the domestic economy
finds itself, the government has adopted and is realizing a programme of
anti-crisis actions which lay the fundamental foundations for rebuilding and
modernizing leading sectors.

The mechanism for achieving this goal will be restoring the optimal balance
between consumption and accruement.

The industrial potential which gave us the ability to develop last century
has been practically used up. In three to five years, the safety life of the
entire thermal energy system will expire. Fixed assets in metallurgy are 80
per cent worn out.

Consequently, colossal amounts of funding are needed for modernization. For
just the first steps to replace the thermal energy system we need to
allocate over 15bn hryvnyas.

In this situation, we plan to increase the share of savings in the economy
which will be directed for renewing, modernizing and increasing production.
With this goal in mind, the 2007 budget envisions lowering the
redistribution of GDP by about 30 per cent.

In this way, about 36bn hryvnyas will remain in the economy. This resource
will give our manufacturing the push to increase growth and create a new
quality of domestic goods.

In addition to this, we will provide state budget support for priority
programmes, restore stimuli for investment projects and in this way achieve
the task of renewing the investment-innovation model of development.

As a result, the economy will begin to “pull itself out of the crisis” on
its own and provide non-inflationary manufacturing and social growth. This
will open the path to raising wages, payments to the Pension Fund and the
revival of purchasing power on the domestic market. By the end of 2007, we
plan to make the budget for the Pension Fund non-deficit.
                                      JOINING THE WTO
One extremely important issue is Ukraine’s joining the WTO. The government
has given itself a firm task – to consistently take our state into the WTO,
since this meets Ukraine’s own interests. And the sooner we accomplish this
process, the better for our country.

But we plan to go there without a rush, but surely, with transitional
periods good for our sectors of the economy and with a requisite level of
protection for the domestic market.

For the first time in the history of Ukraine, we will instill the principle:
privatization is a resource for creating new, modern capacities. Funds from
privatization will not be eaten away as was done before, but will be used
for realizing serious investment projects.

Solving immediate economic tasks will make it possible to resolve problems
we have in the humanitarian sphere.

The state’s foreign policy should serve the achievement of the state’s
strategic goals. We are deeply convinced that the main task of Ukrainian
diplomacy should lie in turning Ukraine into a state with a developed
economy in as short as time as possible, and that means being a stable and
predictable partner on the international arena.

Economic stability will be the key to the determined strengthening of
democratic institutions, providing basic human rights and freedoms in
accordance with the Copenhagen criteria.

The civilized world is not striving to draw new dividing lines, including on
the European continent. However, it is forced to do so in fear of the
threats which are contained in being economic behind.
                         RELATIONS WITH EU AND RUSSIA
In viewing European integration as a strategic goal of the Ukrainian state,
the new government sees its task lying in having the beggar in the European
negotiation process, which role Ukraine has played recently, being replaced
with a strong, self-capable and hence interesting partner for Brussels.

We should do everything we can to harmonize our legislation with that of the
European Union as soon as possible.

A special place in this should be reserved for restoring mutually,
good-neighbour relations with Russia. We are convinced that this is a
necessary condition for bringing the state onto the track of accelerated
economic development.

At the same time, I would like to emphasize our firm intent to provide
stable supplies of energy resources to Ukraine and through Ukraine to the
European Union.

We are a reliable partner for both Russia and Europe and will confirm this
in the further reputation of our state, building on this an energy policy
which will meet Ukraine’s interests.

The time when the European integration rhetoric on the Ukrainian side was
mostly declarations must go into the past.

We should not try to convince the world that we are an exception. It is hard
to convince the world of anything, especially in today’s era of
globalization and the exacerbation of contradictions between the basic
centres of world politics. We must simply do a lot of work, being directed
only by national interests.

When Bismarck united German lands, he acted exclusively in the interests of
Germany, and not, say, of Austria. We must do our work, not sparing effort
and with no right to rest until the first hopeful signs appear. A miner
toils with diligence and drive, digging into the earth with his untiring
hammer in order to get the coal that people need.

We have the strength to do this, because the Ukrainian national character is
not lined with empty words and chatter, with which certain of our
politicians suffer, but with a love of work.

The new government fully realizes that the key to our successful activity is
smooth cooperation with parliament and the president. It is with this goal
that we have prepared the concept for organizing the cooperation of the
Ukrainian Cabinet of Ministers and the Supreme Council [parliament] in the
system of state power.
                           LEGISLATIVE  INITIATIVES
The government’s activeness in realizing its legislative initiatives must
play a key role here. The constitutional definition of the status of the
Cabinet of Ministers gives it the right to provide for realizing its state
policies on the legislative level.

It is worth noting that in a state with a link between the parliament and
government, 75 to 80 per cent of bills are submitted by the latter.

With this in mind, we have prepared 42 bills which we submit for review to
parliament in the context of the tasks outlined in the declaration of
national unity, the agreement of establishing the anti-crisis coalition and
the plan of immediate steps for overcoming the crisis in the economic and
social spheres.

The government also intends to work together with the opposition, in which
it would hope to see a watchful controller of the state of affairs in
society and a constructive critic of its actions.

We view the opposition not as an opponent, but as a partner in strengthening
the economy of the state and the democratic foundations of life in Ukrainian

From the moment the ruling parliamentary coalition was set up and the
coalition government was formed, the Ukrainian people finally got the chance
to turn the page of strength-sapping internal fighting.

The prospect of living in a state where stability and predictability rule
has appeared before them, a state where in the heat of the political battle
statesmen do not forget their main goal – serving the interests of those who
brought them to power. The government is ready to fulfil this mission.

We call upon the Supreme Council, the president and all leading political
forces to support out programme of action. We believe in success, because we
do not have the right to fail.

As the president has said, we must learn from victories. And so let us
conquer them by our common efforts.                      -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
      Yanukovych team expands efforts to gain control over all of Ukraine


Zerkalo Nedeli On The Web, Mirror Weekly, No. 34 (613)
International Social Political Weekly
Kyiv, Ukraine, Saturday, 9 – 15 September 2006

The first stage in expanding the clout of the Yanukovych team is practically
over. As a result, the Prime Minister’s associates have gained control over
the country’s main cash flows and key bureaucratic positions.

In the next stages, they are likely to focus on regional governments, mass
media, law enforcement and diplomatic missions.

The recent personnel reshufflings are bound to yield immediate results, and
that segment of the Ukrainian business elite that had to survive on
“starvation rations” over the last two years will have the feast of their

In the meantime, they are negotiating the menu: [MP] Rinat Akhmetov throws
regular dinner parties to chat informally with [the State property Fund
Chair] Valentyna Semeniuk and [Kyiv Mayor] Leonid Chernovetsky; [Minister
for Fuel and Energy] Yuriy Boiko frequents Moscow to discuss bright
prospects of UkrGasEnergo as a potential backbone of the “private National
Joint Stock Company” and a member of the gas transportation consortium;
[Vice prime Minister] Andriy Kliuyev takes care of Feodosiya-based
state-owned (at least, for the time being) enterprises and of converting
power-generating enterprises into joint-stock companies.

Pragmatists have taken advantage of the situation: land prices within 30 km
from Kyiv have risen by one third, managers and drivers are deserting the
old oligarchs for the new ones.

Law enforcement authorities at different levels are confused: some officers
admit, off the record, that in 2005 they submitted to the Prosecutor General’s
Office, Security Service, and Ministry of Interior complete sets of
documents proving a number of new appointees’ involvement in criminal

Of course, the professionalism and ethics of the newly appointed officials
in the Secretariat of the Cabinet of Ministers, UkrGasEnergo or NJSC
NAFTOGAS UKRAINY are questionable, to put it mildly, but President
Yushchenko’s administration had more than eighteen months to prosecute the
criminals and the quality of the orange team’s governance (which turned into
sabotage due to the team members’ incompetence) was no better.

Which of the previous functionaries could serve as a role-model? Gladkykh?
Vasiunyk? The new leaders of the fuel-and-energy sector should be closely
watched to insure that they are expediting national interests and the
country’s energy security; there should be no doubt of that.

However, the previous NAFTOGAS management, including CEO Olexiy

Ivchenko, should first account for the spending of UAH 13.2 billion from
the company’s budget.

This issue was raised in the Prime Minister’s recent talk with the SBU
Chief. Rinat Akhmetov should also be watched for compliance with the
principles of fair competition and free market in expanding his metallurgic

But again, was the license to develop strategic titanium deposits granted to
Mr. Firtash in full compliance with the principles of a market economy? And
who will have the courage to do the watching? As matters stand, there are no
people in Ukrainian politics that would be morally entitled or daring enough
to it.

The debate about whether or not “Our Ukraine” should join the ruling
coalition is still underway. Those in the OU who think it should be in the
opposition, hope for their better political future.

Those OU faction members who think of their better political present, with
positions in power and illusory access to resources, claim they are prepared
to join the coalition with the Party of Regions, Socialists, and Communists,
thus sacrificing themselves for the sake of the President and in exchange
for the leverage, albeit limited, in the shaping of the country’s political
and economic course.

As for the leverage, it will be limited, indeed, even within the OU quota of
ministries: the budget is in Azarov’s hands, governmental committees are
under control of the Party of Regions, a parliamentary majority already
exists without the OU faction, the faction whose support the Party of
Regions will use whenever it disagrees with the Socialists or Communists on
some minor matters.

Moreover, “Our Ukraine” has very little to do with the ministerial quota in
the Yanukovych Cabinet: Baloha, Poliachenko, Pavlenko, and Lykhovy

represent the President rather than the party.

Whether or not the OU faction joins the coalition, Viktor Yushchenko’s
ministers will stay in Viktor Yanukovych’s government, as agreed between the
President and Prime Minister.

Here is another example: Roman Bezsmertny, while still Vice Prime Minister,
tried to restrict the number of vice prime ministers and ministries. Viktor
Yushchenko was the first to foil those plans by getting the NSDC to pass a
resolution on creating two additional ministries: for coal mining and

The Party of Regions enlarged the number of vice prime ministers. Now the OU
representatives at the coalition talks suggest setting up three more vice
prime ministerial positions: for military-industrial complex (which, of
course, was not Anatoliy Kinakh’s idea); for legal issues (one should not
associate Roman Zvarych with this initiative); and for European integration
(Roman Bezsmertny never thought of Oleh Rybachuk as the best candidate for
the post).

Did anyone on “Our Ukraine” ever analyze what real powers some of the
coalition ministers have? Did anyone ever ask the head of one of the richest
ministries how he feels in a tight ring of vigilant regional deputies
obstructing his every order? I do not think so.

“Our Ukraine” is busy camouflaging its political failure from the electorate
and themselves.

Some OU members voice their concerns about the coalition. They insist they
should be told more about the contents and outcomes of the eight-hour-long
discussion between Yushchenko, Azarov, and Yanukovych that preceded the
nomination of the latter.

They believe they should first study the budget the coalition is going to
come up with. They argue they should look at the public response to the
expected sharp increase in the rent and utilities tariffs. Those concerns
seem well justified.

The incipient tendencies and processes are likely to have an adverse effect
for the Party of Regions in respect of both business relations and popular

I will explain what I mean. The Party of Regions is invading new territories
too aggressively. The more impudent they are, the more enemies they make.

So far, casualties have been minor because the party on the offensive has
had the grace to negotiate available options with their potential business
victims: “You should decide if you are in the opposition or in business.

If you are in the opposition, go to Parliament and hone your censuring
skills there. If you are in business, respect the authorities as
businesspeople do.

If you want to be both in the opposition and in business, let us first find
out how you got a controlling stock in Kyiv energy distributing company

and whether you deserve to hold it.”

The question is how the potential victims are going to react: will they
surrender one by one or will they unite to defend themselves?

The authorities could set the law enforcement on intractable businessmen,

it is true. Yet it is also true that the system for coercing the opponent
(known under the previous regime as the “administrative resource”) is so
corrupt that the opponent can bribe any of its integral parts.

The top brass may give an order but the rank-and-file (police,
investigation, tax or fire inspection, etc) officers can carry it out
poorly. The same applies to courts: wealthy people can always get a
favourable judgment, no matter what their political allegiance might be.

Or thugs can be hired to do away with opponents.

Of course, in this case, the entire world will know who did it and why, and
all hopes for capitalization, respectable partnerships, and high IPO prices
would have to be abandoned. Thus the large non-Donetsk business is in

So is the population, apprehensive of the new rent, water, gas and
electricity bills, of “adjusted” prices for petrol and foodstuffs. Mykola
Azarov is not inclined to play populist games, bearing in mind either the
experience of his confrontation with Yuliya Tymoshenko or his own policy on
the eve of the presidential elections when pensions were raised, which made
a huge hole in the 2004 state budget.

The First Vice Prime Minister intends to cut back social programmes. He
could be right, after all, but neither he nor his political force will be
able to convince the overwhelming majority of the population that this is
the only viable solution for the national economy.

People will believe what they see and they will see startling bills. They
will also see that the Cabinet’s draft budget aims to redistribute funds in
favour of large business and state-owned companies.

The Ministry of Finance [headed by Mr. Azarov] plans to revive free economic
zones, most of which used to be financial “black holes”. It also proposes to
“keep the money in the economy”, i.e. to reduce the allocation of funds via
the state budget by 30%.

This will imply, inter alia, allowing state-owned enterprises to operate on
equal terms with the private ones.

This is a market-oriented initiative that should be welcome in any civilized
economy! In the Ukrainian context, however, it will mean that, due to the
traditional concealment of profits, the money “kept in the economy” will
never return to the budget as tax revenues.

And the assets of large state-owned enterprises and state monopolists will
be used for the benefit of those with the authority to sign or of their
“bosses”. The money will be washed out from the budget and lost for the

Later it might return in the form of Austrian, British, Delaware, or other
investments to create new jobs.

Yet this is a long process, and the popular protests could break the chain
at some stage. The opposition will make the increased costs that Ukrainians
will inevitably have to bear starting next month look particularly dramatic
by promoting draft laws on reducing the tariffs of electricity and other
utilities, on raising doctors and teachers’ pensions to 90% of salaries, and
the like.

Under the circumstances, the role of the opposition is vital. By and large,
there are three modes of behaviour that the opposition could choose from:
Yuliya Tymoshenko as the opposition leader works to boost her popularity
with the voters, works for the country, or does both. She has not succeeded
in any yet.

The Party of Regions is making and will continue to make lots of mistakes,
and the opposition should learn to take advantage of them. It does not mean
that the opposition should become a substitute for the law enforcement, no
matter how inefficient the latter might be. Its task is not only to identify
mistakes, irregularities, and abuse, but also to prevent them.

Unless Yuliya Tymoshenko wants to become a second Natalia Vitrenko, she
should set clear priorities for her political force and the larger
opposition movement. Hopefully, the Ukrainian opposition will be wise enough
to recognize the government’s successes and propose solutions for rectifying
its errors.

The opposition (and the county) will gain if it stops parasitizing on the
authorities’ drawbacks and turning them into its own electoral advantages.
Instead, it should, for example, draft laws capable of “turning lemons into
lemonade” and raise public awareness of these laws.

Today, everyone wonders what stance Viktor Yushchenko will take. Some
politicians still hope he will be proactive enough to enhance the system of
checks and balances between branches of power. Others have their doubts.

The blitzkrieg-like personnel reorganization by the Party of Regions is not
just a result of the constitutional amendments. In its key issues, it was
coordinated with and approved by the President.

Examples are plenty: appointing Mykola Azarov as the First Vice Prime in
spite of the previous agreement to reserve this post for Petro Poroshenko;
assigning Kyreyev to head the State Tax Administration; replacing top
management in Ukrzaliznytsia [Ukrainian Railroad Company] and others.

Furthermore, in view of the President’s character and the little interest he
has shown so far in the ministries’ performance, and given the curtailing of
his powers under the latest constitutional amendments, there is only one
chance for Viktor Yushchenko to remain an active player in Ukrainian
politics, and that is if he manages to find an effective and proficient head
for his Secretariat and/or a potent NSDC Secretary.

Oleh Rybachuk is likely to preserve his post, at least for some time. Yet
the latter position is still vacant, since Volodymyr Horbulin is too old for
the official appointment, although he has everything it takes to promote the
national and presidential interests in the political game of today. None of
the presently cited candidates is his match.

The Party of Regions is prepared to give Viktor Yushchenko a “warm bath”

This term, which I first heard from one of their MPs back in May, means they
offer him an outwardly respectful attitude, affluent life, generous
sponsorship for his humanitarian projects, efficient and hardworking
personnel trained in Donetsk to assist with the Secretariat’s operation, and
control over the uniformed ministries with no assets of their own and over
the foreign policy with no initiatives needling Russia. That is it.

Will the President accept these terms? Viktor Yushchenko is the only person
who knows the answer. He is not a man of the barricades. Yet should he prove
to be a political eremite, he will never make it for the full second term.

Those who count on neither the opposition nor the President and, at the same
time, are not at all enthusiastic about the new rulers and their methods,
look forward to the Party of Region’s eventual decline and fall. Joint
struggle in the opposition unites political forces, but power puts them to
the test.

Internal tensions are already felt within the economic segment of the
government, amongst the new fuel-and-energy sector leaders. A host of party
activists, particularly representatives of regional elites, have been
unhappy about the distribution of portfolios: they did not receive any posts
in the central government and there is no guarantee they will be offered a
complete license locally.

Relations between the Party of Regions’ leader and major shareholder are not
as serene as it might seem. Yanukovych and Akhmetov are close but they do
not always agree on priorities for using their newly acquired power.

The Prime Minister seems to believe he is more responsible for the entire
country than for the headway of one man’s business.

Viktor Yanukovych could continue to be torn between his duty and commercial
obligations. His internal conflict is essential at this stage in the country’s
life when, for the most part, tangible power is vested in effective
businessmen with dubious, if any at all, moral values. We will see very soon
what will come of the country with the old-new broom.      -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                                                 2004 & 2006

The Ukrainian Observer monthly magazine, #74/7
The Willard Group, Kyiv, Ukraine, September 2006

Orange voters in Ukraine and abroad did not have a good summer. After four
months of tortuous, non-transparent and back channel negotiations, neither
of the two coalitions that everyone had expected materialized; neither a
revived Orange nor a “grand” coalition of Our Ukraine and the Party of

Instead, Orange supporters were stunned to see the return of Viktor
Yanukovych. It was bad enough, we had all thought, that the “bandits” had
slipped through the net of the prosecutor’s office during President Viktor
Yushchenko’s many foreign visits in 2005.

But, that they had even entered parliament and were now back in government!
Of Ukraine’s 13 Prime Minister’s since independence, Yanukovych is the only
Prime Minister to serve a second term.

Unlike his twelve predecessors, who served an average of only 12-15 months
each, Yanukovych could well stay prime minister until the next election
cycle in 2009-2011.

Following constitutional reforms, the president no longer has the option to
dismiss the prime minister if, for example, the incumbent’s popularity
becomes too high, a common cause for the government’s dismissal prior to

Ironically, Yushchenko used this power for the last occasion in September
2005 when he dismissed the Yulia Tymoshenko government after a record of
only seven months in government.

Even if the parliamentary National Unity coalition were to collapse, the
government would not automatically fall. Following a host of tactical
mistakes after Yushchenko came to power, Yanukovych could well be with us
for the medium term.
Disillusionment among Orange voters first appeared in September 2005 when
the Tymoshenko government was removed and President Viktor Yushchenko
signed a memorandum with Viktor Yanukovych.

In other words, the Universal signed on August 3 between all of the
parliamentary forces, except Tymoshenko, is already the second of such

In both September 2005 and July-August 2006, President Yushchenko was
willing to sacrifice his principles by signing deals with Yanukovych when
his back was against the wall; the first when his candidate for prime
minister (Yuriy Yekhanurov) failed to win parliamentary approval and the
second when he had to choose between two unpalatable steps, early elections
or putting Yanukovych forward as prime minister.

In both cases, Yushchenko had been boxed into a corner by his own team’s
tactical mistakes and poor strategy.

This is also the second occasion in Ukraine’s history when the Communists
have entered government, the first being in 1994 with Prime Minister Vitaliy
Masol and the second in 2006. The dates are not coincidental, as President
Yushchenko increasingly resembles former President Leonid Kravchuk.

Kravchuk brought back Masol to replace Leonid Kuchma in a vain attempt to
attract Communist voters in the summer 1994 presidential elections.
Kravchuk’s betrayal of his post-1991 shift towards Ukrainian statehood by
bringing in a representative of a party that opposed Ukrainian statehood
failed to lead to his re-election for a second term.

Yushchenko and Our Ukraine insisted that the Communists be removed from
the Anti-Crisis coalition before they would consider joining it. The
coalition members refused, the Communists stayed in the coalition and

government, and Yushchenko nevertheless approved the entrance of Our
Ukraine into government.

The confusion that surrounds Ukrainian politics since this year’s elections
has therefore not disappeared; Our Ukraine is both in “opposition” and in
government, an untenable position.

Both Kravchuk and Yushchenko will be remembered for having brought about
independence (Kravchuk) and the Orange Revolution (Yushchenko). But,
Kravchuk failed to be re-elected in 1994 and Yushchenko is unlikely to be
re-elected in 2009 because they both proved to be weak, indecisive and
non-listening presidents.

Voters in 1994 did not think of independence achieved three years earlier,
but were instead preoccupied with the previous years’ hyperinflation and
incompetent economic policies of the Kuchma government.  They went on to
punish Kravchuk by not re-electing him for a second term.

Similarly, in the 2009 elections, Orange voters will not remember the Orange
Revolution but instead the fact that President Yushchenko permitted
Yanukovych (the “bandit” and twice former convict in Yushchenko’s 2004
election rhetoric) to return to government, thus permitting defeat to be
snatched from the jaws of victory.
Some Western academic experts have downplayed the significance of the return
of Yanukovych. After all, they argue, the Orange Revolution has changed the
rules by which Ukrainian politics is played.

To reach this conclusion one has to possess a very optimistic view of the
ability of human personalities to quickly change.

Of the 24 members of the government, only four are new people, while 20 are
representatives of the Kuchma era or were in the Tymoshenko government, such
as Minister of Justice Roman Zvarych, who proved to be very economical with
the truth about his U.S. education.

Five areas point to Yushchenko failing to play by the rules of the Orange
Revolution but instead by rules initiated by his opponents since 2000 when
he first entered politics.

As one commentator wrote in Ukrayinska Pravda (August 10), “there are
grounds to believe that in August 2006, Yushchenko lost the elections begun
in 2004. The triumphant inauguration in January 2005 was only the victorious
“end of the first phase.”

[1] First, Ukraine has a multi-party coalition that includes representatives
from four out of five of parliament’s political factions. All four –
Regions, Our Ukraine, Socialists and Communists – signed the Universal.

When Yushchenko was prime minister in 2000-2001 he refused to accept demands
from pro-Kuchma centrists to create a multi-party coalition government.
National democrats and centrists had removed the left-wing leadership of
parliament in a “velvet revolution” in January 2000 and created, for the
first time in Ukraine’s history, a non-left parliamentary coalition.

Yushchenko’s refusal to transform his government by including
representatives from the different political groups in the parliamentary
coalition, principally centrists, had two ramifications. Tymoshenko was
arrested in January 2000, spending 3 weeks in jail.

In April 2000, parliament voted no confidence in the Yushchenko government
and replaced it with one led by Anatoliy Kinakh. As is common with all
Ukrainian political groups, Kinakh first joined the pro-Kuchma “For a United
Ukraine” bloc in the 2002 elections and then defected to Yushchenko in round
two of the 2004 elections.

[2] Second, during the Orange Revolution, Yanukovych proposed as a solution
to the crisis that he continue as prime minister while Yushchenko become
president. But, Yushchenko refused to have any dealings with what he then
termed “bandits”.

Following the creation of the National Unity parliamentary coalition and
government, Yushchenko and Yanukovych are jointly running the country.

Government competencies are divided between Yushchenko (humanities, culture,
law enforcement, foreign and defense policy) and Yanukovych (economics,

[3] Third, regional divisions inflamed by Russian political technologists,
the shadow Yanukovych campaign (run by Deputy Prime Minister Andriy Kluyev)
and Viktor Medvedchuk’s presidential administration were successful in
creating a near 50:50 split in the vote.

Yet, even in the relatively free re-run of round two of the elections on
December 26, 2004, Yushchenko won by only 8 per cent.

Compare this to the 97 percent won by Mikheil Saakashvili in the January
2004 Georgian elections where his opponents received less than 2 per cent
each. In Georgia there is little chance of Saakashvili’s opponents returning
to power.

The Razumkov Ukrainian Center for Economic and Political Studies, which
provided many of the analysts for the 2004 Yushchenko campaign, points out
that President Yushchenko did nothing to resolve Ukraine’s regional divide
between coming to power in January 2005 and the March 2006 elections.

If he had undertaken steps during this fifteen-month period, it would have
been welcomed as the sincere efforts of a president with political will.

The Razumkov Center states, “In addition, Viktor Andriyovych did not wish to
recognize the problem, described it as contrived, and spoke in the name of
the nation himself,” (Zerkalo Tyzhnia, August 19-25).

Yushchenko only sought the mantle of President Lincoln as “unifier” after
his back was against the wall and he had to choose between two unpalatable
choices. The regional divisions inflamed by the 2004 elections, coupled with
the failure to heal them following those elections, were in the end
successful in bringing Yanukovych back to power.

[4] Fourth, only one reprivatization has taken place following the Orange
Revolution. After only a week in power, the Yanukovych government issued
instructions to the State Property Fund, Security Service and Prosecutors
Office to halt further investigations of past privatizations.

The Orange Revolution was about many factors, including blocking Yanukovych
from becoming president, anger at the treatment by the authorities of the
population in the 1990s and support for democratic rights and freedoms.

What it was also about was removing “bandits” from government and society.
It was never made clear who these “bandits” were, but Orange supporters
assumed they were Kuchma era senior officials and oligarchs.

The oligarchs can now rest easy as they are, in former Prime Minister Yuriy
Yekhanurov’s words, “national bourgeoisie”. Rinat Akhmetov and Hryhoriy
Surkis were both included by President Yushchenko in this year’s honor’s
lists for state medals.

Fifth, constitutional reforms to transform Ukraine from a presidential to a
parliamentary republic were first developed by Socialist leader Oleksandr
Moroz in 2000-2001 during the Kuchmagate crisis.

These were then developed by Kuchma and Medvedchuk in 2002-2003, failing
to find parliamentary approval in April 2004, but were then agreed to in a
“compromise package” in December 2004 and introduced in January 2006.

Yushchenko won a breathing space for himself by ensuring that constitutional
changes would not take place until 2006, rather than immediately following
the 2004 elections, as Kuchma, his centrist allies and the left pushed for.

Yushchenko therefore had a whole year, at his insistence, with Kuchma’s
extensive powers.

Yet, surprisingly, these powers were barely used; the one occasion when they
were was when he removed the Tymoshenko government. In reality,
Yushchenko’s detached personality is more comfortable as a president under
the new constitution, rather than as the micro manager Kuchma under the
1996-2005 constitution.
Why has Ukraine developed in this way since the Orange Revolution?  To
understand this we need to first and foremost unpack the myths about

Yushchenko has been unable to become a revolutionary president and we are
right to dismiss the comparison made by the presidential secretariat between
US President Abraham Lincoln and Yushchenko.

President Lincoln never compromised on his principles, such as abolishing
slavery, and never countenanced appointing the leader of the confederacy as
his vice president.

President Yushchenko, whose career developed during the thirteen years of
the Kravchuk and Kuchma eras, has been unable to institute a break with the
Kuchma era and introduce a new system of governance in Ukraine.

The Razumkov Center wrote, “Who then won? Leonid Danylovych won! We
saw a Ukraine without Kuchma, and it resembled something similar to Ukraine
with him (Kuchma),” (Zerkaklo Tyzhnia, August 19-25).

Yushchenko was unable to utilize the possibilities offered to him by the
Orange Revolution to become an Abraham Lincoln and John F. Kennedy in one,
having no truck with the personalities and policies of the Kuchma era while
proposing a new democratic and European vision for Ukraine.

Yushchenko may escape having to face early elections but Ukraine will still
have a new president in 2009. Only this time Ukrainian voters will be able
to choose for the first time between a man and a woman.     -30-
Taras Kuzio, PhD, Senior Transatlantic Fellow, German Marshal Fund of the
USA, Adjunct Professor, Elliott School of International Relations, George
Washington University and President of Kuzio Associates. See The views contained herein are those of the author and
do not reflect those of the German Marshal Fund of the USA.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

               Hocus-pocus: poof to democracy and back to the USSR
ANALYSIS & COMMENTARY: By Oksana Bashuk Hepburn, Canada
Maidan website, Kyiv, Ukraine, Thursday, August 31, 2006

The incredible happened in Ukraine a few weeks ago. The former fraudulent
presidential candidate ousted by the Orange revolution, Victor Yanukhovych,
became the Prime Minister. Yesterday’s criminals are today’s political
leaders. The President, someone’s puppet. The people duped. Democracy

This hocus pocus was accompanied by noble talk. Poof! Parliament united
under the Party of Regions is the right thing for Ukraine’s national unity.
Poof, poof!! It will avert a national crisis.

Don’t believe it. This is smoke and mirrors in the best of the former USSR
tradition. In democracies, unity in parliament is not a virtue. Parliament
requires at least two strong players from opposing camps to bring up
national differences and debate issues. Major democracies-the United States,
Britain, Germany, Canada– are not monolithic.

They are united despite major geographic, linguistic, religious and other
polarizations. They balance different, often conflicting interests, on a daily
basis. Their conflicts are no different from those in Ukraine. The difference
between the successful democracies and today’s Ukraine is the manner in
which political issues get resolved.

Successful democracies resolve their issues in parliament. The post March
election scenario in Ukraine was played outside its rules. Indeed, the
manner in which President Victor Yushchenko called upon the current
government to serve undermines parliament and is a dangerous step back
towards dictatorship.

Let’s recall what happened. The real winners of the March elections, Yulia
Tymoshenko’s Bloc and the Orange coalition which obtained a slight majority
of seats, were stalled for four months from sitting in parliament by the

This was shocking and offensive to democrats around the world. To
temper the negative reaction, his inaction was given a seductive, but false
spin: the President is deliberating what is best for national unity.

Hocus-pocus nonsense. The stalling was taking place because the voters made
the “wrong ‘choice as far as the wealthy oligarchs were concerned. The
people wanted Yulia Tymoshenko as their prime minister. The Party of Regions
did not. Nor did it want to play according to democratic rules. It would not
take the rightful place of the minority and become the opposition in
parliament. It refused to recognize that it had received only 36% of the
votes. It worked hocus-pocus magic to have the people’s choice reversed.

The President went along as if the elections did not matter. He did not press
the rules of democratic behaviour: parliament must be constituted by
creating the government side from those who have the majority; and on the
opposition from those who received fewer votes. The democratic process
was by passed for months. Then it was too late. The powerful few, not the
people, got their way. It was a step backward in democracy.

The back-sliding continues. Ukraine’s political leaders, including the
President and his newly appointed Prime Minister, claim to want to resolve
its differences -east/west, pro Russia/pro West. This, to be done by
creating a unified political force in parliament. Some of the President’s
Nasha Ukrajina members have already agreed to serve in the Yanukhovych
cabinet. His last prime minister, Yurij Yanukhurov is now parliament’s deputy
head, the strange Roman Zwarych, the Justice Minister.

Political forces that aim to “unite” Ukraine politically do not stray far
from the Communist model. Today’s situation in Ukraine is so deja vu, so
Soviet in style and execution: undermine freedom and democracy and confuse
the situation by spinning pretty words and slogans. The reconstitution of
parliament along the one unified team is nothing less than a reversal to the
one party system of the former USSR. It is bad news for Ukraine.

Of course the USSR’s single Communist party kept the country united. It
was done by terror, brute force, control of the press, and total obedience to
the one-party system. This unity cost Ukrainians four famines, the biggest in
1933 taking a toll of some 10 million people. Plus, some seventy years of
tyrannical unity where opposition was suppressed by death or the Gulag.

What is going on in Ukraine that after 15 years of millions upon millions of
dollars heaped in training, re-educating, showing the Ukrainians how
democracy works in the West, government exchanges, money spent on

producing MA’s in public administration, that allows such political perversions
to happen? The situation in Ukraine is as much our shame as its own.

The events of the last four months underscore how meager the results are and
how shallow the changes. Shallow in understanding what democracy is and how
it works and shallow in the way its key players have evolved as democrats.

And shameful. It is scandalous that today’s Prime Minister is yesterday’s
cheating contender for the presidency. That his entourage comprises men like
Renat Akhmetov who at thirty-six has acquired enough billions to be in
Fortune magazine’s list of the world’s wealthiest men while an average
Ukrainian lives in dire poverty with about two hundred dollars a month to
sustain him.
It is scandalous that President Yushchenko denied his people their choice
for prime minister and succumbed to manipulations like the best
of the world’s puppet leaders. Even more so, now, he is mouthing that the
Orange revolution is but a myth and a legend. The Prime Minister, in the
meantime, boasts of having participated in it to build a just nation.
Hocus -pocus.

It is scandalous that the West won the war against Communism, saw the Soviet
empire crumble, supported Ukraine during its feisty Orange revolution, only
to allow this ally in global democracy building slip so perilously close to
the edge. Even more scandalous: the West may have orchestrated this in order
to have good business relations with the oligarchs.

Things might have been different. The best case scenario for democracy would
have been for the President to have stood with his people rather than betray
them. Seeing their will disregarded, the people might have returned to the
streets where they scored victory two years ago, to demand a re-elections or
his resignation.

The West might have become furious and called in its ambassadors to exert
pressure. And told its consulting firm that it is more in America’s interest to
have a democratic Ukraine, than to have it perverted in the name of doing
business for a fee. ( How is this any different from having Germany’s Gerhard
Schroder’s sellout to Russia’ Gasprom?)

It did not happen. Democracy has had a set back. The only bright spot on
Ukraine’s political horizon now is Yulia Tymoshenko. She has declared that
she will not join the Party of Regions et al to form a united front in
parliament. She will lead the opposition and will deal with the real
national crisis: the unbridled intention of the oligarchs to control all
aspects of Ukraine’s life.

When Ukraine got its independence in 1991, hope very quickly turned to the
realization that in fact little had changed. The Communist gang that had
ruled Ukraine was still at the helm. Hocus-pocus, it had wrapped itself in
Ukraine’s blue and yellow flag instead of the red one with the hammer and
sickle, this, to amass great state wealth. Yet some hard fought gains were
made– free elections and greater freedoms, especially in the media. Now, it
is feared, even that has been lost.

The fear is real. Restrictions have already begun. Freedom of speech and
press have been attacked. Last month some journalists were beaten and
several independent media outlets closed. In the Rada, there were moves last
week to undermine the political checks and balances system by further
restrictions of the President’s powers. This, perhaps, in anticipation that
the next one might be more difficult to control.

Today, more than ever, Ukraine needs a strong opposition. Yulia Tymoshenko
has a huge job in front of her. The West must wake up. It must rally behind
democracy and help her do a good job as the watch-dog of the people. All

aid focus should be directed towards resuscitating democracy there.
In turn, Ukraine’s citizens need to monitor how she fights for their well being
and help her. If she does well, they will reward her in the next election. And
punish the hocus-pocus tricksters.                           -30-
Oksana Bashuk Hepburn, President U-CAN a consulting firm, is writing
a book about the current situation in Ukraine. (
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: By Nina Khrushcheva
Japan Times, Tokyo, Japan, Friday, Aug. 25, 2006

NEW YORK — It is now 15 years since the failed coup of August 1991 against
Mikhail Gorbachev. At the time, Gorbachev’s policies of perestroika and
glasnost were seen by Soviet hardliners as a sellout of communist Russia to
the capitalist West.

But it is now clear that the KGB and the military who launched the coup were
not defending the idea of communism.

They were protecting their idea of Russia’s imperial mission, a notion that
had given the Kremlin commissars greater control of the vast Russian empire,
and of Russia’s neighbors, than any of the czars had ever enjoyed.

Gorbachev’s reforms not only liberated ordinary Russians from the
straitjacket of Marxism-Leninism, but also released the national aspirations
of people who had been locked in the empire for centuries.

Having seen the peoples of Central Europe free themselves from Soviet
domination just two years before, the constituent nations of the Soviet
Union were beginning to seek the same freedom for themselves.

The Baltic republics of Estonia, Latvia and Lithuania were the first to
insist on traveling their own national path, and have since linked their
fate to Europe as members of the European Union and North Atlantic Treaty
Organization. Others soon followed. By December 1991, the Soviet empire was
no more.

But only the Baltics have secured the sort of independence dreamed of in
1991. Georgia, which is both European and Asiatic, teeters on the edge of

Traditionally Asian Uzbekistan and Turkmenistan have resumed the tribal
forms of autocracy they practiced throughout the centuries. Azerbaijan and
Kazakhstan have in essence become their presidents’ wholly owned family

Ukraine’s break with Russia was perhaps the most wrenching, both for those
in the Kremlin nostalgic for imperial control and for ordinary Russians who
see Ukraine as the wellspring of Russian civilization. The Orange Revolution
of 2004, which overturned a rigged presidential election, proved that
Ukraine was no longer a Malorossiya (a small Russia), an inferior and
subordinate Slavic brother.

That peaceful revolution, led by Viktor Yushchenko and Yuliya Tymoshenko,
was a reminder of how enlightened Kievan Rus had been before it was forced
to give way to the despotic princes of Moscow.

Two years after the Orange revolt, Yushchenko (a politician who seems out of
his depth) has now accepted the Kremlin placeman Viktor Yanukovich, the foe
he had vanquished in 2004, as his new prime minister.

Nonetheless, the Orange movement — now led by Yushchenko’s former partner
and prime minister, Tymoshenko — has not fully lost its way, and still aims
to preserve Ukraine as a truly independent and free country. Malorossiya,
for the majority of Ukrainians, remains a thing of the past.

Despite all these epochal changes, Russians cannot accept the loss of their
imperial role. The dream of empire is, indeed, the gulag that imprisons the
Russian mind.

Most Russians do not regard Europe’s approach to their country’s borders as
a sign that they have, at long last, fully united with the civilization of
which they are a part, but as a source of insecurity.

Something more is at work here than mere nostalgia. During the chaotic years
of Boris Yeltsin’s presidency, it was perhaps understandable that Russians
regretted their loss of great power status.

Something had to be blamed for their dire economic conditions. Yet under
President Vladimir Putin, with the economy growing robustly, these feelings
have hardened, not diminished.

Russians are reverting to the past — to the grand pronouncements of Russia
as a unique great nation, destined to rule the world.

As before the advent of Gorbachev — indeed, restoring a centuries-old
tendency — Russians yet again believe that the people should be willing to
forfeit their freedoms for the sake of the greatness of the state, which
wins wars and launches Sputniks. A free press, free speech and free
elections, it is feared, may diminish the brute power that is needed for
Russia to assert itself.

Russians have long boasted of their various unique forms of greatness: first
it was the holy Russian soul, so superior to Western practicality. In the
15th century, Moscow was declared a “Third Rome,” the savior of spiritual

The 17th century united this spiritual mission with imperial expansion,
which eventually encompassed a landmass spanning 11 time zones. In the early
20th century, the imperial and spiritual mission became one, as Russia
became the bastion of world communism.

All these forms of greatness, however, demanded that ordinary Russians
accept debasement and enslavement. Development is not seen as a means of
improving people’s lives, but as helping Russia prove itself to be superior
to everybody else.

So, ultimately, the material achievements of Russian development always come
with a body count. Josef Stalin’s industrialization killed millions — and
became obsolete in only 30 years.

Putin’s Russia doesn’t go in for mass killing, yet it has not lost the
country’s “superiority” complex.

For Russia’s elite, a restaurant bill cannot be too expensive, and one can
never have enough bodyguards waiting out front for you.

 On a grander scale, Putin’s Russia has become a great power in terms of
energy production, but that looks to be temporary, as scant investment is
being made to maintain and improve the oil and gas fields. What matters is
selling the reserves and being rich now, not finding more for later.

So, as always, the trouble with Russia is that the state develops, but
society doesn’t. The good of the people is sacrificed for the good of the
nation. The dream of great Russia remains the gulag of the Russian mind.
Nina Khrushcheva teaches international affairs at The New School University.
[return to index] Action Ukraine Report (AUR) Monitoring Service]
     You are welcome to send us names for the AUR distribution list.

By Natalia Malimon, Lutsk Raion, Volyn oblast
The Day Weekly Digest in English, #27
Kyiv, Ukraine, Tuesday, September 12, 2006

While their descendants are erecting obelisks to the insurgents, if only to
console themselves temporarily with the feeling of being “patriots of
Ukraine,” the remaining participants and eyewitnesses of those events are
quietly passing away without sharing their memories.
                       500 VILLAGE HOMES BURNED DOWN
On the feast day of the Transfiguration of our Lord memorial slabs
commemorating the events of 1943-1945 were unveiled in my native village
of Lavriv.

They were dedicated to two memorable battles fought by the Ukrainian
insurgents. Of course, the first one, which took place on Aug. 20, 1943,
could not have possibly reversed the course of history.

Nevertheless, it played a historic role in the destiny of this village and
its residents. I first heard about this when I was a little girl. Shortly
after that battle almost all of Lavriv was burned down – over 500 village
homes were consumed by fire in three days.

“The Germans walked from one house to the next, carrying torches, and the
cattle were roaring in the closed barns. It was like the end of the world.
People fled to the forest and neighboring villages,” recalled my late
mother, Liubov Pylypivna.

She almost never told me anything about the battle that preceded the fire.
She had probably never gotten over those experiences that had taught her to
hold her tongue. The Soviet government used fire and sword to eradicate all
memories of the Ukrainian insurgents.

My mother died this spring, three days before Easter, at the age of 84. She
almost died when she was a young woman; on two occasions bullets narrowly
missed her head. A month before the German troops burned down the village,
they set fire to the church.

The wooden church of St. Mary the Protectress stood on top of the same hill
as the current brick church. It had a precious ancient icon with gold
ornamentation, and gold and silver bowls. Some people even said that the
church was burned down by a local night watchman, because “he had given the
relics to the Germans.” In order to cover his tracks, he threw a red herring
across the path.

But there is a more plausible version of events: the church was razed to the
ground because it was a gathering place, where people discussed the struggle
against the Germans. Shortly before the fire, the Nazis opened fire on a
crowd of villagers, who had gathered in front of the church after the
service. One of the bullets barely missed my mother.

Today the participants of that memorable battle of 1943 are no longer among
the living, but some eyewitnesses who are still alive remember it. One of
them is Nadia, the wife of Mykhailo Korolchuk, a political prisoner, who was
repressed and exiled to Siberia in 1940.

She recalls that the insurgents ambushed a German convoy of three trucks and
one car in the vicinity of Mukhavets (the name of a street in Lavriv), in a
place known as Seredokhresnia. The convoy was traveling from the direction
of a railway substation called Pereparov.

There was an entire company of insurgents led by Vladik Herasymchuk. He was
nicknamed Vykhreshcheny, probably because one of his relatives was Jewish.
He had served in the tsarist army. He knew how to fight. The Germans were
stopped because they were supposedly going to burn the village down. The
insurgents killed them all.

Later the Germans lured them to Prince Lubomirski’s former estate and shot
nearly all of them. Vladik was killed in that battle, along with his son and
son-in-law. They all died for Ukraine.

In retaliation, the Germans, together with the Poles, burned down Lavriv a
few days later. Afterwards, when Mother and I tried to recall whether a
single old house in Lavriv had survived the fire – even just for show – we
could barely count a few dozen, and most of those were located in remote

The inhabitants of Lavriv built dugouts on the ash- heap of the burned
village. These dugouts survived – along with the bunkers of scattered
Banderite detachments in the neighboring forests – until the early 1950s. I
was born in 1955 in such a dugout, on the burned-out site of our house.

During a village party in 1945, a “Soviet” soldier named Mykola entered the
dugout home of our neighbor, Granny Yaryna. When he was playing with his
rifle, it went off, apparently by accident.

“He was sitting opposite us and Yaryna’s daughter Nastia was sitting beside
me. After the smoke dispersed, he asked: ‘Whom did I shoot? Did I shoot
Liuba?’ There was a tiny hole in Nastia’s forehead from the bullet, and a
drop of blood. Mother often talked about this.”

After that bloody village fete, our young people were often dragged off to
the NKVD station in Lutsk; they wanted a statement that Nastia was killed by
one of the “forest brothers.”

“We cried and said it wasn’t true, but the investigating officer laughed:
‘Moscow doesn’t believe in tears.'”
                    HELLO, SISTER! FAREWELL, BROTHER!
While the people of Lavriv have more or less accurate memories about the
battle of 1943 (perhaps due to the compelling association with the ensuing
fire), there is only one surviving insurgent, who in the winter of 1945 took
part in a three- hour battle outside the village with the members of an NKVD
extermination battalion, in which about 50 of them were killed.

His name is also Volodymyr Herasymchuk (no relation to Vladik Vykhreshcheny;
Herasymchuk is a common surname in Lavriv). This ailing survivor lives in
Lutsk. The chairperson of the Lavriv village council, Svitlana Herasymchuk,
says that his recollections are blurry.

“Natalka, why didn’t you ask your mother?” I heard this phrase many times
from my fellow countrymen.

My mother had a good memory and didn’t have to read any notes to recall
individual episodes from the village’s history (things she had witnessed) as
well as facts from the life stories of many families.

Her accounts were never tainted by opportunism; she related facts as they
really happened, and she never spared anyone for the sake of historical

“I saw Jews being shot in the place where the collective farm’s hencoop was
later built. Our mother told us to climb up to the attic, and we watched
through the window. They were surrounded on four sides; the large pit that
was quickly filled heaved for a long time, with blood oozing out. Do you
think only Germans did it? Our people were among them, wearing their

I asked her a lot of questions, but I didn’t have time to ask many more. And
now I can’t. Shortly before my mother died, Halyna Tabakovska-Zakoshtui, the
niece of Ananiy Zakoshtui, our neighbor and Krai leader of the OUN, who led
the insurgents to their last battle with the NKVD in 1945, sent her several
old photographs from Lithuania, where she has been living since returning
from exile: “Let them remind you of Lavriv in those days,” she wrote.

The pictures were taken by her uncle. A small faded photo shows the boys
from the forest. Any older Lavriv resident takes one look at it and
identifies them as the men from that insurgents’ detachment. My mother told
me their names.

She would get mad at me for pestering her with such questions, saying “These
people died a long time ago.” But I never wrote down their names, and now no
one can identify them.

After Ukraine became independent, a memorial complex was built for these
insurgents in Lavriv, opposite the Church of St. Mary the Protectress,
including a gravestone for Ananiy Zakoshtui and stellae engraved with a long
list of names of victims of the purges, UPA soldiers, and people from Lavriv
who were shot in Lutsk Prison on June 23, 1941. Entire families lie buried

Some victims have no graves – no traces or memories are left. They are alive
in other peoples’ memories, but these memories do not seem to interest the
independent Ukrainian government.

“Oh, my God, is that Sonia?” Nadia Korolchuk whispered to me when a woman
bent with age and wearing a simple embroidered blouse approached a
microphone during the unveiling ceremony.

“Who is she? Who is that woman?” Voices were heard in the crowd that had
been patiently but absentmindedly listening to excruciatingly correct
speeches of the powerful.

I escorted Sofia Ilchuk-Zubkovych, the only surviving participant of those
events, to Nadia Kovalchuk. In a moment both women were so immersed

in their reminiscences, they didn’t notice anything happening around them.

They had been friends in the mid-1940s, when the insurgents were still
strong. Kovalchuk’s brother also went to the forest.

“My father begged him not to go, but he went because ‘someone has to fight
for Ukraine.’ And he died for it when he was 17 years old. He was buried
near the village of Kalnatychi, now in Rivne oblast, past Sukhovolia, near
Stavriv. I visited my brother’s grave and met Sonia’s father.

He used to be a lumberjack in our forest, and for a time he lived in our
dugout. Their house was burned down because they had links with the
insurgents. So they installed a stove in the cellar and lived there.

“Natalka, did you hear Sonia’s story about the baby that she was looking
after? That girl was the daughter of Maksym Rudiak, a Lavriv resident. He
and his wife fled the village, running for their lives, and they left their
child to be looked after by fellow villagers, and she ended up with Sonia’s
father. I saw the child at that time.

Later I heard about her as she was growing up. The NKVD started looking for
her. All of the Rudiaks died fighting for Ukraine; some of them were shot or
they died in the camps of Kazakhstan.”

Sonia and her parents were also deported. She served her sentence in
Vorkuta. The girl, Svitlana Rudiak, escaped, and later in Bakivka she
married a Slovak named Josyp Tarchu, and the two of them later went to
Aunt Halka, one of my relatives, is eating a blessed apple. Opposite the
memorial dedicated to the heroes of the national-liberation struggle stands
the restored Church of St. Mary the Protectress. My aunt sighs sadly:

“Those widows whose husbands served in the Soviet army keep receiving
pension increases. My husband limped on his wounded leg until he died; they
all know that he had fought for Ukraine, but this state isn’t paying us
anything for them.”

The few former Banderites who live in Lavriv can be counted on the fingers
of one hand. Age is taking its toll. I remember when the village was sent
into a paroxysm of excitement a few years ago when an UPA veteran arrived
all the way from Great Britain.

Half the villagers “recognized” him as one of their old friends or a
relative believed to have perished long ago in a bunker. They say he kissed
the earth of Lavriv after being driven to the village boundary from Lutsk,
but he never gave his name and refused the invitation of the then village
council chairman Arsen Sydorchuk to pay homage at the ancestors’ graves.

“What do you mean, he’s unidentified?” exclaims Sydorchuk, now the deputy
head of the Lutsk oblast state administration. “I went to Lviv to pick him
up. His name is Hnat Yushko. But he was not born in Lavriv, that’s for sure.
He was not interested in anything there, not in the people or the history.

When our church burned down (St. George’s Church in the old graveyard) I
wrote so many letters asking for help! One letter was published in a journal
read by Ukrainian emigres all over the world. Hnat got in touch with the
editor, Pavlo Dorozhynsky, and asked how much he could trust those people
and whether his donation would be of any use.

“While he was visiting Lavriv, Yushko lived with the family of Stepan Dyl,
Mykhailo Korolchuk’s son-in-law. His Uncle Yosyp Dyl has lived in Great
Britain for a long time; he found his way there after World War II.

“This man Yushko was not active in the Ukrainian community. My uncle was the
head of the community in Nottingham, and we have lots of acquaintances
there, including people from Hnat’s village. My wife and I have visited
Great Britain 11 times, but no one seems to know him. He stayed at my place
for several days.

He said he was born in Vyshenky, a village in Ternopil oblast. I told him I
could take him to his native village, no problem. He said no. He visited it
only once after the war. His sister and nephews lived there.

He started sending money to them, but then there were some
misunderstandings, and he stopped sending money. He had a British wife and
two children, but then something went wrong and he moved to the Ukrainian
Club where he was given shelter. When we were in Britain, we called him and
hoped that he would invite us over. He didn’t and then all our contacts
broke off.”

The Banderite “stranger” donated 5,000 dollars to the church in Lavriv. The
roof was covered with tin and icons were purchased.
Quite a few Lavriv insurgents have died without ever talking about the past.

Recently we found a photograph of Leonid Romaniv, another participant in the
battle of 1945. He was not even 20 years old when he was wounded and died
for Ukraine.

This village, which found itself at the crossroads of the great highways of
history – invaded by Tatars, Turks, the French, Austrians, Cossacks,
Germans, and Poles – is immortalizing history on its own small scale. But
without state recognition, all these memorials will remain monuments without
memory.                                              -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

    If you are receiving more than one copy of the AUR please contact us.
    Please contact us if you no longer wish to receive the AUR.    
       You are welcome to send us names for the AUR distribution list.
   If you are missing some issues of the AUR please let us know.
         A Free, Not-For-Profit, Independent, Public Service Newsletter
                With major support from The Bleyzer Foundation
      Articles are Distributed For Information, Research, Education
                Academic, Discussion and Personal Purposes Only
                                  Additional readers are welcome.
      SigmaBleyzer/The Bleyzer Foundation Economic Reports
                “SigmaBleyzer – Where Opportunities Emerge”
The SigmaBleyzer Emerging Markets Private Equity Investment Group
and The Bleyzer Foundation offers a comprehensive collection of documents,
reports and presentations published by its business units and organizations.
All publications are grouped by categories: Marketing; Economic Country
Reports; Presentations; Ukrainian Equity Guide; Monthly Macroeconomic
Situation Reports (Romania, Bulgaria, Ukraine).
You can be on an e-mail distribution list to receive automatically, on a
monthly basis, any or all of the Macroeconomic Situation Reports (Romania,
Bulgaria, Ukraine) by sending an e-mail to

                                   (Folk Art) MAGAZINES
For information on how to subscribe to the “Welcome to Ukraine” magazine
in English, or the Ukrainian Folk Art magazine “Narodne Mystetstvo” in
Ukrainian, write to Complete information is
                              Action Ukraine Report (AUR)
               Holodomor Art and Graphics Collection & Exhibitions
          “Working to Secure & Enhance Ukraine’s Democratic Future”

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

If you do not receive a copy of the AUR it is probably because of a
SPAM BLOCKER maintained by your server or by yourself on your
computer. Spam blockers are set in very arbitrary and impersonal ways
and block out e-mails because of words found in many news stories.
Spam blockers also sometimes reject the AUR for other arbitrary reasons
we have not been able to identify. If you do not receive some of the AUR
numbers please let us know and we will send you the missing issues. Please
make sure the spam blocker used by your server and also the one on your
personal computer, if you use a spam blocker, is set properly to receive
the Action Ukraine Report (AUR).

                        PUBLISHER AND EDITOR – AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer

Emerging Markets Private Equity Investment Group
P.O. Box 2607, Washington, D.C. 20013, Tel: 202 437 4707
Mobile in Kyiv: 8 050 689 2874;
    Power Corrupts and Absolute Power Corrupts Absolutely. 
return to index [Action Ukraine Report (AUR) Monitoring Service]

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s