Monthly Archives: October 2006

AUR#782 Oct 27 Economic Performance, How Strong?; Retail Stores Expand; WTO When?; Who Will Win Race For Power?; Recognizing Genocide

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 ACTION UKRAINE REPORT – AUR           
                  An International Newsletter, The Latest, Up-To-Date
                       In-Depth Ukrainian News, Analysis and Commentary

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

                                                                                   
ACTION UKRAINE REPORT – AUR – NUMBER 782
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., FRIDAY, OCTOBER 27, 2006
                
               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.        HOW STRONG IS UKRAINE’S ECONOMIC PERFORMANCE?
PRESENTATION: by Dr. Edilberto Segura, Director and Chief Economist
SigmaBleyzer Private Equity Investment Group/The Bleyzer Foundation
Ukraine and NATO Membership, VII Roundtable
Ukraine’s Quest for Mature Nation Statehood,
Washington DC, Wednesday, October 18, 2006
Action Ukraine Report (AUR) # 782, Article One
Washington, D.C., Friday, October 27, 2006

2UKRAINE’S ECONOMIC RECOVERY SHOULD HAVE BEEN EXPECTED
OP-ED: By Valentin Zelenyuk, Economist and Professor
Kyiv Post, Kyiv, Ukraine, Thursday, Oct 26 2006

3  UKRAINE: GDP GROWTH 6%, INFLATION 10% 2006-07 SAYS IMF
Interfax-Ukraine, Kyiv, Ukraine, Wednesday, October 25, 2006

4UKRAINIAN CARGO AIRWAYS IN NEGOTIATIONS TO PURCHASE
                                BOEING B-747-200 AIRPLANES
Ukrinform, Kyiv, Ukraine, Thursday, October 26, 2006

5.        FRENCH RETAIL STORE OPERATOR AUCHAN REPORTED

                         PLANNING AN EXPANSION TO UKRAINE
Business Digest, Sophia, Bulgaria, Thursday, October 26, 2006

6UKRAINE RETAIL OUTLETS EPICENTER K, ATB-MARKET EXPAND

Business Digest, Sophia, Bulgaria, Thursday, October 26, 2006

7.   UKRAINIAN MFG OF VOLKSWAGEN & SKODA CARS OBTAINS
             EUR22.5 CREDIT PACKAGE TO EXPAND OPERATIONS
Interfax-Ukraine, Kyiv, Ukraine, Thursday, October 26, 2006

8UKRAINE TO BRIEF RUSSIA ON ITS PROGRESS TO WTO, SAYS
PM YANUKOVYCH, BUT WILL KEEP ON SCHEDULE FOR ACCESSION
Interfax-Ukraine, Kyiv, Ukraine, Thursday, October 26, 2006

9. YUSHCHENKO HOPES UKRAINE MAY JOIN WTO BY END OF YEAR
Itar-Tass, Moscow, Russia, Thursday, October 26, 2006

10.      WHAT’S THE NEXT STEP FOR EU-UKRAINE RELATIONS?
                          Energy issues loom large over the summit
Jabeen Bhatti, Deutsche Welle, Germany, Friday, October 27, 2006

11EU/UKRAINE CLINCH VISA DEAL, DOUBT ON FUTURE RELATIONS
Andrew Rettman, Euobserver, Brussels, Belgium, Friday, October 27, 2006

12.     POLAND LOOKING TO DIVERSIFY ITS ENERGY SOURCES
By Judy Dempsey,  International Herald Tribune
Paris, France, Thursday, October 26, 2006

13.   YULIA TYMOSHENKO BLOC SAYS RUSSIAN GAS TALKS FAIL 

Ukrainian News Agency, Kyiv, Ukraine, Thursday, October 26, 2006

14PRES: UKRAINE ABLE TO DEFEND NATIONAL SOVEREIGNTY 

Interfax-AVN, Helsinki, Finland, Thursday, October 26, 2006

15.           UKRAINE: WHO WILL WIN THE RACE FOR POWER?
ANALYSIS & COMMENTARY: By Serhiy Hrabovskyi
Deputy Editor-in-Chief of Suchasnist periodical
Ukrayinska Pravda, Kyiv, Ukraine, Monday, October 16, 2006

16.                     POLICE GOVERNMENT IN UKRAINE?
ANALYSIS & COMMENTARY: By Volodymyr Chemerys

Board member of Respublika (republic) Institute,

Board member of Ukrainian Helsinki Human Rights Group
Ukrayinska Pravda, Kyiv, Ukraine, Monday, October 16, 2006

17.            FAMINE MEMORIAL’S CONCEPTUAL CONFUSION
LETTERS TO THE EDITOR: Andrew Sorokowski, Rockville, MD
The Ukrainian Weekly newspaper, No. 43, Vol. LXXIV
Ukrainian National Association (UNA)
Parsippany, New Jersey, Sunday, October 22, 2006, page 7

18.                             “RECOGNIZING GENOCIDE”
EDITORIAL, The Ukrainian Weekly newspaper
Ukrainian National Association (UNA), No. 43, Vol. LXXXIV
Parsippany, New Jersey, Sunday, October 22, 2006, page 6

19.        CROSSROADS: MODERNISM IN UKRAINE, 1910-1930
            Major Exhibition of Early 20th Century Ukrainian Modern Art
     The Ukrainian Museum, NY, NY, November 5, 2006 – March 11, 2007
The Ukrainian Museum, New York, NY, Friday, October 27, 2006

20CONGRESSMAN CURT WELDON: ADVOCATE AND FRIEND TO
 UKRAINE AND UKRAINIAN-AMERICANS HONORED AT RECEPTION
By Andrea Porytko-Zharovsky, Jenkintown, Pennsylvania, October 2006

 
21.                    ‘WHY DON’T YOU DRESS UP AS A GIRL?
  It was just after the Second World War in Germany at a camp for displaced
  persons — so-called DPs. Buchok had fled from the Carpathian mountains
  in Ukraine, escaping his village with a loaf of bread and a chicken his mother
  had killed and cooked.
By Lesley Simpson, The Hamilton Spectator
Hamilton, Ontario, Canada, Tuesday, October 17, 2006
 
22.               SOVEREIGN FOOTBALL: A POLITICAL FABLE
COMMENTARY: By Celeste A. Wallander, Moscow Times
Moscow, Russia, Friday, September 29, 2006
 
23.   RUSSIA HALTS ALL ACTIVITIES OF MANY INTERNATIONAL
                  NONGOVERNMENTAL ORGANIZATIONS (NGOS)
    National Democratic Institute, International Republican Institute, Adoption
    Agencies, Doctors Without Borders, Amnesty International, All Shut Done
By Peter Finn in Moscow, Foreign Service, The Washington Post
Washington, D.C., Friday, October 20, 2006; Page A01
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1
HOW STRONG IS UKRAINE’S ECONOMIC PERFORMANCE?

PRESENTATION: by Dr. Edilberto Segura, Director and Chief Economist
SigmaBleyzer Private Equity Investment Group/The Bleyzer Foundation
Ukraine and NATO Membership, VII Roundtable
Ukraine’s Quest for Mature Nation Statehood,
Washington DC, Wednesday, October 18, 2006
Action Ukraine Report (AUR) # 782, Article One
Washington, D.C., Friday, October 27, 2006

Despite the political uncertainties that Ukraine has faced over the last two
years, its economy has continued to perform very well. In fact, during the

last five years, from 2000 to 2005,  few countries in the world can match
the following combination of economic achievements of Ukraine:

     [i] a high average rate of economic growth at about 8% pa;
     [ii] a low average annual inflation rate of less than 7% pa;
     [iii] a low average fiscal deficit of about 1% of GDP;
     [iv] an average current account surplus of about 6% of GDP;
     [v] fairly stable foreign exchange rates,
     [vi] increasing Foreign Direct Investments,
     [vii] high international reserves in excess of three months of imports; and
     [viii] a very low ratio of external public debt to GDP of about 20%.

Even in 2005, when political uncertainties were high, the economic
performance of the country was much better that originally expected.

[1] First, GDP performance in 2005 was reasonable. Although the official
statistics indicate that in 2005 GDP grew at a relatively low rate of 2.6%,
the actual rate may have been higher, possibly around 5%.

This is because in 2004, the rate of growth of exports was probably
overestimated due to some irregularities in the statistics of free economic
zones.

This “high base” for exports in 2004 led to poor results in 2005, with
exports declining by 11%.  Although some export decline did take place in
2005 (particularly metals), it was probably not as high as reported in the
official statistics.

On the other hand, in 2005 the major component of GDP, private consumption,
expanded by a significant amount of about 16.6% – which encouraged banking
and retail trade — while investments declined only slightly by 0.3% due to
political uncertainties.

[2] Second, the fiscal budget performance in 2005 was also better than
expected:  At the beginning of 2005, many analysts had feared that the
fiscal deficit in 2005 would be as high as 5% of GDP.  These fears did not
materialize.

Despite sizable increases in fiscal expenditures, the record high growth of
budget revenues, backed by elimination of tax privileges and exemptions and
the elimination of free economic zones, made it possible to end the 2005
fiscal budget with a reasonable fiscal deficit of -1.8%, in accordance with
IMF recommendations.

[3] Third, the Current Account showed a reasonable surplus of about $2.5
billion (3.1% of GDP).

[4] Fourth, the current account surplus and high growth of foreign direct
investments resulted in a more than twofold increase in the National Bank’s
(NBU) foreign reserves, which reached $19.4 billion at the end of 2005. As a
result, the national currency appreciated by 4.8% from UAH/$ 5.31 in 2004 to
UAH/$ 5.05 by the end of 2005.

[5] And fifth, sound monetary policy made it possible to keep inflation on a
lower than initially expected level of 10.3% yoy.
                                     OUTLOOK FOR 2006
The year 2006 is also showing better economic performance than initially
forecast.  Even thought the January 2006 increase in the price for imported
gas may have dampened the rate of growth of GDP in 2006 by about 2%,

GDP in 2006 is expected to grow by a reasonable rate of about 5.5% yoy.

The GDP increase in 2006 is due to a strong recovery of industrial growth,
construction, transportation and trade. Within industry, the most dynamic
sectors are machine-building, chemicals, metallurgy and food processing.

Furthermore, the successful implementation of plans to introduce energy
saving technologies may boost GDP growth further and compensate partly

the effect of gas price increases.

In fact, Ukraine badly needed the incentives to save energy as the country
consumes almost 3 times more energy per unit of GDP than Western Europe.

The fiscal budget performance in 2006 is also expected to be reasonable:
during the first eight months of 2006, despite increases in public
expenditures, the consolidated fiscal budget showed a surplus of 0.8% of
period GDP.

This surplus occurred because consolidated budget revenues continued to
increase rapidly, while expenditures were below targets.

VAT, profit and income taxes continued to generate the lion’s share of the
budget fiscal revenues (about two-thirds of consolidated budget revenues),
supported with surging retail trade, growing household incomes and improving
financial performance of enterprises.

For the entire 2006 year, the fiscal budget is likely to show a manageable
deficit of about 2.5% of GDP, in line with IMF recommendations.

The postponement of gas price increases (originally expected in July 2006)
will also result is a lower rate of inflation for 2006.  The annual
inflation rate in August 2006 was around 7.4% yoy.  By the end of the year,
inflation is likely to remain in single-digits, at about 9.5%.

The merchandise trade account deficit is another indicator which is
improving.  Although the trade account is still negative, the deficit has
been narrowing since March 2006.  As a result, the cumulative current
account deficit for the first half of 2006 was about 2% of period GDP.

For the entire year, the current account deficit is likely to be less than
2% of GDP, a number that can be easily financed by foreign direct
investments and manageably increases in foreign debt.
                                OUTLOOK BEYOND 2006
Over the next year or so, the Ukrainian economy is likely to continue
perform reasonably well. However, there is a growing realization in the
government that future high rates of economic growth will depend on the
ability of Ukraine to improve the country’s Business Environment to
encourage higher levels of foreign and domestic investments.

The agenda of economic reforms to achieve improvements in the business
environment is now well-known by most people in Ukraine.  The problem

is not in defining or understanding “what” needs to be done.

The problem is “how to do it”, in “what sequence of steps” and “at what
costs”.  The issue is the lack of implementation capacity in the country.
 PUBLIC ADMINISTRATION REFORM A TOP PRIORITY
In order to successfully implement reforms that would improve Ukraine’s
investment climate, the new government must start with reforming itself into
an administration that is capable of designing and implementing economic
policy efficiently.  A comprehensive Public Administration Reform should

be now a priority for Ukraine.

Ukraine’s current government structure retains many of the problems
inherited from the former Soviet Union, including cumbersome decision-

making, bureaucracy, and unclear responsibilities among government
agencies.
The existing system of developing, passing and implementing economic
policies stalls implementation of economic reforms that would improve
the country’s business environment.  There is now an urgent need to
“de-sovietalize” public institutions.

Without transforming the way government agencies presently work, it is
likely that the current numerous obstacles to investment will be removed
very slowly or will be quickly reversed or substituted by new regulations.

On the contrary, if well done, public administration reform will stimulate
fast implementation of other reforms, make the public sector less prone to
corruption and red-tape, and improve the country’s image, thereby putting
the country on a different path, on an accelerated course to attract
investment and faster development and growth.

Public administration will become a facilitator rather than an obstacle to
implementation of other economic reforms.

The reform of public administration is a lengthy process with many stages.
The government should start the reform by approving a plan of action for
implementing the concept of administrative reform.

The plan of action should take into account the experiences of other
countries, which shows that a comprehensive and drastic reform of public
administration has a better chance of succeeding than piecemeal or
incremental reform.

A number of countries have experienced success in reforming their public
administration (such as Canada, New Zealand, Poland, and Ireland).

The reform of public administration would require the following steps:

     (i) clearly define the Objectives/Role of the Government limiting it to
         “public” goods and support – not substitution – of the private sector;
     (ii) undertake a comprehensive “audit” of all government programs, with
          a view to transfer some of them to local governments, sub-contract

          others to the private sector and eliminate unnecessary/overlapping
          activities;
     (iii) develop the concept of well-defined ‘Programs and projects” for
           all government activities (this will help to improve administrative 
           efficiency, deal with corruption and also bring equilibrium to the
           fiscal budget);
     (iv) improve the efficiency in retained “core” government activities 
           and local governments, increasing public transparency and access
           to government information; and
     (v) carry out a civil service reform introducing effective “Incentives”
           and “Control” Systems.
            ADDITIONAL REFORMS NEEDED IN UKRAINE
In addition to Public Administration Reform, other reforms that are critical
to improve Ukraine’s business environment include the following:

[1] Improve macroeconomic stability by strengthening fiscal policies
(improving tax administration, reforming the pension system, decentralizing
financing), monetary policies (developing techniques for inflation
targeting -open market operations, forecasting models) and foreign

exchange rate policies (abandoning the exchange rate anchor)

[2] Improve the legal environment by:

     (i)  improving the practice of “public” consideration of any
          legislative act to be adopted, including their correspondence with
          existing legislation;
     (ii) improving the functioning of the Judiciary and securing its
          independence by inter-alia enacting the draft laws on the Status of

          Judges and on the Functions of the Judiciary (Organization, Court
          Procedures, and Court system) and further improving the financing
          of courts; and
     (iii) improving court enforcement procedures.

[3] Accelerate further quick deregulation and liberalization of business
activities (permits, licenses).

[4] Develop sound corporate governance practices by enacting key pending
legislation (e.g., the Joint Stock Companies law), abolishing the Commercial
Code while amending the Civil Code, developing corporate governance

codes, and accelerating the adjustment of Ukrainian accounting standards to
international accounting standards.

[5] Liberalize trade, join the WTO, sign free trade agreements with the EU,
CIS, and other countries, and simplify trade clearance procedures.

[6] Strengthen the financial sector, particularly by enforcing banking
regulations and supervision.

[7] Implement a prevention program to deal with corruption.

[8] Improve the country’s image by strengthening an Investment Promotion
Agency and implement specific activities for large investors (identify major
projects, carry out targeted promotional campaigns, identify niches/sectors)
and for small/medium firms (access to bank credit, better information on
laws, etc).                                                -30-

————————————————————————————————
CONTACT: Walter Zaryckyj, Program Coordinator, Ukraine’s Quest
for Mature Nation Statehood Roundtables, Center for US-Ukrainian
Relations, New York, NY, waz1@nyu.eduhttp://www.cusur.org.
————————————————————————————————-
NOTE:  The SigmaBleyzer Emerging Markets Private Equity Investment
Group is a member the Ukraine-U.S. Business Council in Washington.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2. UKRAINE’S ECONOMIC RECOVERY SHOULD HAVE BEEN EXPECTED

OP-ED: By Valentin Zelenyuk, Economist and Professor
Kyiv Post, Kyiv, Ukraine, Thursday, Oct 26 2006

Remember the anecdotal incident that happened in May of 2006, when the
president of the EBRD, Jean Lemier, publicly accepted a bet from Yuriy
Yekhanurov (at that time the Ukrainian prime minister) that Ukraine’s
economy would grow at a much faster rate than EBRD economists had
forecasted?

The stake was quite peculiar: if Yekhanurov were to lose then he would have
to praise the professionalism of the EBRD economists during his lectures in
economics at his university.

On the other hand, if Yekhanurov were to win, then according to the bet, the
EBRD must increase its investments into Ukraine by 100 million euros for
each 0.1 percent above the EBRD forecasted growth rate for Ukraine.

The timing of the bet is coming to an end, and someone must get prepared to
lose. Who do you think that will be? Well, at the beginning of 2006, the
EBRD believed that Ukraine would grow only at 1.2 percent (in terms of real
GDP) and later updated its forecast, but only to 2 percent.

Already at this point, it should have been clear that the EBRD was highly
underestimating Ukraine’s capability to return to high economic growth this
year.

For example, if we compare August 2006 to August 2005, the Ukrainian
economy grew at a rate of 5.7 percent (according to the State Statistics
Committee), and by our estimates it is expected to attain an annual growth
rate of about 8 percent (plus or minus about 1 percent, depending on the
international market conditions for metals and energy products).

This means that the EBRD had better prepare enough cash – about 5 to 7
billion euros – to invest into the Ukrainian economy, while Yuriy Yekhanurov
ought to probably get a medal of honor from the Ukrainian people.

Was it hard to see that Ukraine would return to a decent growth rate at that
time? I think Yuriy Yekhanurov must have known what he was doing when
suggesting the bet.

By looking a little bit back into history, one should note that before the
hectic year of 2005 and since 2000, Ukraine was growing at an average rate
of about 8 percent.

What is also important to consider is that it was a recovery-driven growth,
and Ukraine was just at the beginning of the recovery path -from a deep,
decade-long economic crisis that brought Ukrainian official real GDP in
1999 down to about 40 percent compared to that of 1990.

So, even after an extraordinary growth of 12.1 percent in 2004, Ukraine’s
real GDP was still under 65 percent compared to that of 1990. So, under
‘normal’ circumstances (which assumes gradual implementation of important
reforms to liberalize the market), the recovery process should have
continued for at least five more years with an average growth of about seven
to nine percent.

The problem was that in 2005, Ukraine did not have  ‘normal’ circumstances,
but rather a post-revolutionary mess that Yekhanurov managed to clean up by
the end of that year. Indeed, one of the main reasons for the unexpected
underperformance in 2005 (2.6 percent relative growth) was the ‘shakeout of
property rights.’

It was not even  re-privatization per se, but the real threat of having a
massive re-privatization, fueled by the disagreements within the Orange team
that scared away many investors.

Ironically, the investment climate was spoilt for both the losers and the
winners of the Orange Revolution: many investors were just busy fighting to
secure or take over the existing assets of others, instead of starting new
business projects. Or they were just waiting for things to calm down.

Another important reason for the sudden underperformance was frequent
government intervention into markets, which scared many investors even
more.

By the way, it seems that among Western economists, it was only Anders
Aslund who openly and widely criticized the Orange team for these problems,
being the first to predict the resulting problems of 2005, while the
majority of Western economists had great expectations.

The property-rights shakeout was finally pacified in September of 2005,
and this is perhaps the main contribution of Yuriy Yekhanurov  as prime
minister.

The other main contribution of Yekhanurov was further liberalization of the
economy. Although not many formal reforms happened,  his government
substantially reduced interventions into private businesses and markets.

These two contributions were critical in helping to revive private
investment and to make Ukraine substantially more attractive for foreign
investors.

In 2005 and 2006, most of the foreign investors were banks and financial
companies, but these are just the ‘first birds’ that arrive to later
accommodate the entrance of others.

What about the prospects for 2007 and further on? Well, under normal
conditions, the economy must continue its recovery. The exact rate of future
economic growth in Ukraine will certainly depend on many factors, and so it
is extremely hard to predict and very easy to make a mistake in the
forecast.

In fact, most of the official forecasts of Ukraine’s economic growth, made
by various renowned institutions, both foreign and domestic, both for 2005
and 2006, failed because of this difficulty.

What is certainly clear, however, is that the growth rates for the following
years will strongly depend on the success of the country’s reforms (mainly
tax, administrative and land reforms) as well as world market prices for its
main exports (steel, machinery, chemicals) and for the main imports (oil and
gas).

In particular, if the government manages to substantially  reduce the tax
burden (specifically, to reduce corporate taxes and VAT) then the economy
should boom with a high rate of about 8 percent for the coming three to four
years.

Noteworthy is the fact that, according to the estimates of various
international scholars and the World Bank, the shadow economy in Ukraine
is huge: about 50 percent relative to the official GDP, and much of it is
due to the excessive tax burden.

So, in principle, even higher economic growth is possible, 10 to 15
percent -that is if the new government successfully implements the necessary
economic reforms to improve economic conditions for both local and foreign
investors, and encourage existing businesses currently operating in the
shadow to go legit.

Finally, if we are to go back to that bet, the huge investment from the EBRD
into Ukraine should help boost the long-term growth of the Ukrainian
economy.

The impact of this investment should be especially large if it is directed
into strategic sectors like high-tech production and services, as well as
production and provision of transportation  and public services.

Last but not least, there is also a hope that the EBRD would hire some
Ukrainian economists (e.g., Yekhanurov) to help with forecasting of
economic growth and development in Ukraine.
—————————————————————————————————
Valentin Zelenyuk has a Ph.D in economics; is a senior economist at the
Kyiv Economics Institute (KEI),  and a  professor of EERC (Kyiv-
Mohyla Academy). The views expressed in this article are his own and
not those of the above institutions.
—————————————————————————————————
LINK: http://www.kyivpost.com/opinion/oped/25298/

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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3. UKRAINE: GDP GROWTH 6%, INFLATION 10% 2006-07 SAYS IMF

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, October 25, 2006

KYIV – The International Monetary Fund (IMF) is predicting that Ukrainian
inflation will be around 10% in 2006-2007, Albert Jaeger, head of an IMF
mission that is visiting Ukraine from October 12-25, said at a Wednesday
press conference.

Inflation will be around 10% in 2006. It could remain at this level in 2007
based on the policies the government conducts, he said. Jaeger said that one
of the biggest inflationary risks is a increased price for imported natural
gas.

The improved IMF forecast for GDP growth in Ukraine – to 6% – is based

on higher-than-forecast steel prices on the international market and on a
growth in consumption in Ukraine, Jaeger said.

Existing economic risks will remain in 2007 because of possible further
price hikes for imported natural gas and a possible drop in steel prices,
Jaeger said.

This could have a negative effect on the current accounts balance, which is
why the IMF is forecasting that Ukrainian economic growth will slow to 4.5%
in 2007. Although the current accounts deficit is expected to grow next
year, it will be easier to finance because of the inflow of capital to the
country, he said.

The current forecast is based on an expected price for imported natural gas
for Ukraine of $130 per 1,000 cubic meters, Jaeger said.

The IMF said it would be acceptable for Ukraine to post a 2007 federal
budget deficit of 2.5% of GDP, Jaeger said. We think the government’s
intention is correct to keep a low fiscal deficit at 2.5%, he said.

He also gave a positive assessment to a reduction in the social burden
envisioned in the draft 2007 federal budget. The revenue part of the draft
2007 budget is too optimistic and real tax payments to the budget could be
lower than planned, Jaeger said.

Moreover, the IMF is not recommending establishing tax breaks for free
economic zones and said it is feasible to introduce a new tax regime for the
value added tax (VAT) for agriculture. Ukraine’s decision to introduce
quotas for grain exports is a negative signal for investors, Jaeger said.

He said he was concerned over delays in compensating for VAT. This

problem needs to be dealt with and solved, he said. Jaeger also said fees
for conducting foreign currency cash operations need to be abolished.

The draft 2007 budget envisions reducing fees for mandatory state pension
insurance in buying or selling cash foreign currency to 1% from 1.3% of the
amount of the operation. The IMF is also recommending full payment of
natural gas for key consumers, Jaeger said.                  -30-
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4.    UKRAINIAN CARGO AIRWAYS IN NEGOTIATIONS TO
                 PURCHASE BOEING B-747-200 AIRPLANES

Ukrinform, Kyiv, Ukraine, Thursday, October 26, 2006

KYIV – The state-run “Ukrainian Cargo Airways” is, presently, engaged in
negotiations with the Boeing company on acquisition of planes B-747-200,
Director General of the “Ukrainian Cargo Airways” Vitaliy Popov told a news
briefing in Kyiv.

According to Vitaliy Popov, the company performs diversification of its
equipment as the Il-76MD planes, ran by the company, function at a loss. The
company intends to utilize as many as 50 plains Il-76 and An-26 out of the
general 120.

The Director General of the Ukrainian Cargo Airways noted that the company
intends to purchase 10 planes An-70-100 in case the Antonov Aircraft Design
Manufacturing Complex will agree to elaborate the machine.

In 2006 the company performed 55 flights to Afghanistan and 34 flights
within the framework of the “Sea Breeze” program. The company has purchased

the Mi-8MTV helicopter and rented three similar ones.             -30-
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5.     FRENCH RETAIL STORE OPERATOR AUCHAN REPORTED
                     PLANNING AN EXPANSION TO UKRAINE
 
Business Digest, Sophia, Bulgaria, Thursday, October 26, 2006
French retail store operator Auchan, reportedly planning an expansion to
Ukraine, will endanger the market share of German rival Metro AG and local
hypermarkets, local daily Delovaya Stolitsa reported on October 19, 2006.

The German chain operator, currently the leader in the hypermarket segment
in Ukraine, will see its sales go down after Auchan’s entry, mainly due to
the broader product range of the French operator and Metro’s reluctance to
shift its focus from wholesale to retail, Lyudmila Komrakova, head of the
Ukrainian arm of Russian retailer Paterson, said in an interview for the
daily.

Auchan’s presence could affect the sales volume of all domestic
hypermarkets, as the number of visits to Auchan’s Moscow outlet stands at

10 million a year, none of Auchan’s peers in Kyiv can boast such popularity,
noted Oleksandr Lanetskyi, an executive with Ukrainian retailer BM Trade,
owner of the Bumi Market brand.

Competition will further sharpen if rival chains choose adjacent retail
locations, which is unlikely to happen in the near future, added Lanetskyi.

The Kyiv regional administration has offered several sites for Auchan’s
consideration, including locations along the ring road and on the left side
of the Dnepr river, Yuriy Kovbasyuk, deputy head of the administration, told
the daily.

Downtown locations are not excluded, sources from the town hall told the
paper. Sites in the region’s larger towns of Belaya Tserkov and Fastov have
also been put forward, although the French chain is more likely to go for a
location in Kyiv’s closer vicinity.                           -30- 

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Delovaya Stolitsa, http://dsnews.com.ua
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6. UKRAINE RETAIL OUTLETS EPICENTER K, ATB-MARKET EXPAND

 
Business Digest, Sophia, Bulgaria, Thursday, October 26, 2006
KYIV – Ukrainian leading DIY chain EpiCenter K opened on October 21,
2006 its first construction materials outlet in the central city of Poltava.

The new shopping centre, which covers an area of 10,000 sq m, will offer a
total 100,000 items for construction, decoration and furnishings from some
800 suppliers.

EpiCenter K opened an outlet in the western city of Lviv on October 7, 2006,
in addition to three other stores already operating in the capital Kyiv. The
chain operator also plans to set up outlets in the southern cities of Odessa
and the western Chernivtsi by the end of 2006.

Ukrainian supermarket operator ATB-Market, based in the eastern
Dnipropetrovsk region, opened on October 26, 2006 its first discount store
in the region’s town of Dneprorudnoye. The outlet covers an area of 521 sq
m, company public relations (PR) manager, Anna Lichman, said.

ATB-Market, set up in 1993, runs 158 stores in 35 Ukrainian cities under the
ATB brand. ATB-Market is part of Ukrainian food group ATB, which

operates in the confectionery and meat sectors. Link: www.rynok.biz
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7. UKRAINIAN MFG OF VOLKSWAGEN & SKODA CARS OBTAINS
           EUR22.5 CREDIT PACKAGE TO EXPAND OPERATIONS

Interfax-Ukraine, Kyiv, Ukraine, Thursday, October 26, 2006

KYIV – CJSC Eurocar, Ukrainian producer of Volkswagen and Skoda cars,

has attracted a syndicated credit worth EUR22.5 million.

“Implementing the second stage of large project for Volkswagen car
production in Ukraine, CJSC Eurocar has attracted a syndicated loan worth
EUR 22.5 million. The loan was issued for seven years,” a company press
release reads.

According to the company, the participants of the credit are HVB Munich
(Bayerische Hypo- und Vereinsbank AG: Munich, Germany), DEG (Deutsche
Investitions- und Entwicklungsgesellschaft mbH: Koln, Germany) and HVB
Ukraine bank (Kyiv).

The assets will be used to finance construction, purchase new equipment,
create infrastructure and replenish the company’s circulating assets.   -30-
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8. UKRAINE TO BRIEF RUSSIA ON ITS PROGRESS TO WTO, SAYS
PM YANUKOVYCH, BUT WILL KEEP ON SCHEDULE FOR ACCESSION

Interfax-Ukraine, Kyiv, Ukraine, Thursday, October 26, 2006

KYIV – Ukraine is ready to inform Russia about its progress on the path to
joining the World Trade Organization and will adhere to its schedule for
accession to the WTO according to Prime Minister Viktor Yanukovych.

“We will keep to the schedule of the WTO accession. We are planning that the
issue of Ukraine’s membership in the WTO will be put on the agenda of the
WTO General Council next year in February,” Yanukovych said.

He stressed that the government is actively working to allow Ukraine to join
the WTO as soon as possible. “The fact that Ukraine and Russia are connected
with close trade ties is good grounds for informing our trade partner about
our intentions while passing decisions on European integration or WTO entry,
as well as for finding joint decisions on disputed issues,” he said.

Similar actions should be made in solving other issues; “for example, in the
area of foreign policy,” Yanukovych said. “The economy and common sense
should prevail” in Ukraine’s foreign policy. “It is normal and right to be
honest and predictable with our partners.

The main concept of our policy remains invariable: we have acted and will
always act based on Ukraine’s national interests,” the prime minister said.
Russian-Ukrainian relations should be based on “mutually beneficial
cooperation and the mutual respect of national interests.

A clear position by the state on all cooperation issues and predictability,
as well as the skill to reach the needed balance of interests, is required,
he said. WTO entry is not “a race, this is a serious issue that requires
thoroughly verified steps,” the premier said.

Possible negative consequences for Ukrainian producers, which should have
the opportunity and time to adjust to new conditions preserving
competitiveness, should be taken into consideration while the Verkhovna Rada
passes WTO bills, he said. “That is why we will insist on a transition
period, which many country did,” the premier said.

The government’s goals at the final stage of Ukraine’s accession to the WTO
is to guarantee the adoption of some 20 bills to harmonize national
legislation with WTO standards, as well as to complete the signing of
protocols on mutual access to the market of commodities and services with
Kyrgyzstan and Taiwan, Yanukovych said.

The parliament has already received five bills, while the government will
discuss several other bills with associations of Ukrainian producers, he
said. One will be able to speak about concrete terms of Ukraine’s entry to
the WTO after the aforementioned tasks are solved, the prime minister said.

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9. YUSHCHENKO HOPES UKRAINE MAY JOIN WTO BY END OF YEAR

Itar-Tass, Moscow, Russia, Thursday, October 26, 2006

HELSINKI – Ukrainian President Viktor Yushchenko said he is hopeful that his
country will be able to join the World Trade Organisation (WTO) till the end
of this year.

Yushchenko, who is currently in Helsinki on an official visit, told
journalists on Thursday that parliament would debate all package of
documents on Ukraine’s accession to the WTO till November 20.

The Ukrainian president said he would meet the leadership of parliament and
government to discuss this issue. In his words, Ukraine-Europe future
integration talks will be based on the country’s membership in the WTO.
“Ukraine had no such chance to become a WTO member,” Yushchenko added.

Yushchenko comes against synchronising Ukraine’s and Russia’s accession to
the WTO. In the run up to the meeting with Russian Prime Minister Mikhail
Fradkov, Yushchenko had not given support to this idea.

The head of state holds that each country has its own logic, its own
priorities, acceding to the WTO, and it is illogical to synchronise them.
Yushchenko said Ukraine’s earlier accession to the WTO would pose no danger
to Russia.

The Ukrainian president had earlier urged parliament to endorse a package of
documents regarding the WTO by mid-November for the country’s accession to
the organisation in December 2006.

Meanwhile, Ukraine’s First Deputy Premier and Finance Minister Nikolai
Azarov, who attended the Yushchenko-Fradkov meeting the other day, said, “By
synchronising the WTO accession the Russian premier meant the protection of
Russian and Ukrainian markets against goods from third countries.

Azarov pointed out that Ukraine and Russia would have different regimes of
tariff protection of the markets in the WTO framework.

At the same time, the two countries are conducting talks on the creation of
the common economic space. The first deputy prime minister suggested that
Fradkov’s idea on the synchronisation should not be differently construed.

“I do declare that nobody talked about synchronising the date of Russia’s
and Ukraine’s accession to the WTO. The matter was not even raised, and is
not raised, since we conduct our talks and they conduct their talks,” Azarov
said.

Addressing a news conference upon the conclusion of the first meeting of the
committee on economic cooperation in Kiev, Fradkov said there is a need to
arrange bilateral plans regarding the WTO. “We must synchronise the
negotiating process on the two countries’ accession to the WTO,” he said.

“A spate of problems of arranging economic relations of Russia and Ukraine
arises with Eurointegration – transportation, industrial cooperation,”
Fradkov said. “All the matters are interrelated and must be settled without
getting stuck with some or other matters. It is necessary to be guided,
above all, by the interests of the countries, the interests of regions.” “It
is a world task,” Fradkov said.                  -30-

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http://www.itar-tass.com/eng/level2.html?NewsID=10927605&PageNum=0
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10.   WHAT’S THE NEXT STEP FOR EU-UKRAINE RELATIONS?
                       Energy issues loom large over the summit

Jabeen Bhatti, Deutsche Welle, Germany, Friday, October 27, 2006

At an EU-Ukraine summit Friday, EU officials will discuss trade, visas and
energy. But the subtext of the meetings is the future of EU-Ukrainian
relations after a pro-Russian prime minister took over in September.

There is always plenty to talk about when a former Soviet satellite state
knocks on the EU’s door. This time around, at the EU-Ukraine summit in
Helsinki on Friday, the agenda is longer than usual.

That is because Russian President Vladimir Putin angered western leaders by
refusing to sign an energy agreement guaranteeing access to Russian oil and
gas last weekend.

Thus, energy will be the hot topic when Ukrainian President Viktor
Yushchenko meets with Finnish Prime Minister Matti Vanhanen and EU
officials, including European Commission President Jose Manuel Barroso.

Both sides want to reassure EU member states there will be no repeat of last
year’s fiasco, when a Russia-Ukraine showdown over gas prices threatened
supplies that transit through the Ukraine to EU countries.

It reminded Europeans of their Russian energy dependence, some 80 percent of
Russian gas supplies to Europe pass through the Ukraine.

A deal made between Ukraine and Russia on Tuesday secured supplies through
2007, guaranteeing Ukraine cheap fuel at almost half the market rates in
exchange for closer cooperation between the two countries on foreign policy,
particularly Ukrainian aspirations to join the World Trade Organization and
NATO.

“I would say quite openly that we need to synchronize the negotiation
process of our countries regarding WTO,” Russian Prime Minister Mikhail

Fradkov said after announcing the deal.
                         PRO-RUSSIA STANCE PAYING OFF
These days a new chapter has begun in EU-Ukrainian relations as well as in
Russian-Ukrainian relations.

Pro-Russian former Prime Minister Viktor Yanukovych again became prime
minister in August after chaotic elections earlier this year and has worked
to improve relations with its large neighbor.

In some ways, this has paid off for the Ukraine and the EU so far —
Yanukovych was always the favored candidate of Russia, especially during the
2004 elections that ushered in his opponent Yushchenko and the so-called
Orange Revolution.

It was Yushchenko’s pro-EU stance that many say led Russia to punish the
Ukraine — and its heavily energy intensive steel and chemical industries —
by trying to double energy prices in January.

“Ukraine is in a difficult situation as they must constantly maneuver
between the west and Russia,” said Alexander Rahr, an expert on Russia and
the former Soviet states at the Berlin-based German Council on Foreign
Relations. “And they are particularly dependent on Russia, even if they
don’t like it.” That dependence is putting a damper on Yushchenko’s EU
aspirations.
                             LOOKING FOR A ‘BEACON”
In advance of the summit, the pro-western president said he wants the EU to
be a “beacon” for the Ukraine.

“A ship must always know what its destination harbor is,” Yushchenko told
Finnish newspaper Helsingin Sanomat. “The same holds true for our strivings
for Europe. We would like to see the shine, the light that shows our country
and our people what the destination is.

“Please note that we are not asking when,” he added. “We are only talking
about the aim, the goal that should stay more or less in place. Everything
else is the responsibility of my people and my country.”
                                           HAT IN HAND
Although he has not asked for formal talks on EU or NATO accession, the
president is not coming to Finland without requests.

One is that the EU set up a free trade zone with Kiev — the bloc is
Ukraine’s largest trade partner with exports valued at 7.7 billion euros
($9.8 billion) in 2005.

Travel is another of the issues on the Ukrainian president’s card. Ukraine
wants a simplified process for visas issued to its citizens and in some
cases a waiver of fees, an initiative preliminarily agreed to this month.

The main subtext of the summit, however, is the future of EU-Ukraine
relations. The EU lent strong support to Yushchenko and the Orange
Revolution in 2004, but since then, the country’s orientation has become
more uncertain as the government split, with only Yushchenko and the foreign
and defense ministers appointed by him looking to the west.

Most of the rest of the government — and the majority of Ukrainians who
still back Yanukovych — do not.

The EU states have come to realize that “these people are back,” Rahr said,
adding that the Ukraine’s pro-Russian prime minister might not be such a bad
thing for the EU.

“Western leaders might feel relieved that they need not keep promises made
at an emotional time,” he said. “Yanukovych is better able to negotiate with
Russia and takes a more pragmatic approach, something badly needed. And
since he enjoys such support at home, maybe he can achieve more regarding
the internal situation of the country.”                         -30-
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LINK: http://www.dw-world.de/dw/article/0,2144,2215697,00.html
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11. EU/UKRAINE CLINCH VISA DEAL, DOUBT ON FUTURE RELATIONS

Andrew Rettman, Euobserver, Brussels, Belgium, Friday, October 27, 2006

BRUSSELS – The EU is set to relax visa rules for Ukraine at a summit in
Helsinki today (27 October) but bilateral relations are becoming
increasingly ambiguous as Brussels refuses to clarify its position on Kiev’s
EU accession hopes and Ukraine prime minister Viktor Yanukovych begins to
rebuild relations with Russia.

“I am very pleased that the agreements on visa and readmission have been
agreed,” European Commission chief Jose Manuel Barroso said on Thursday.
“This means that Ukrainians will now be able to travel more freely and
easily while maintaining efforts to clamp down on illegal migration.”

The move means Ukrainians will continue to pay Euro35 to enter the EU from
2007 onward, avoiding scheduled price hikes to Euro70, in return for taking
back any illegal migrants found to have entered the EU via Ukraine after a
two year grace period on “readmission” expires in 2009.

Experts clinched the visa deal on Wednesday after bitter haggling over the
grace period – the EU wanted one year and Ukraine three years in line with
what Brussels gave Moscow – that saw Ukraine diplomats complaining the EU
was giving Russia favourable treatment while denigrating Ukraine support for
EU policies in the region.

The visa debate points to wider tension in EU-Ukraine relations, with Kiev
pushing Brussels to insert the phrase “the EU recognises the European
aspirations of Ukraine” into the preamble of a new post-2007 “Enhanced
Agreement.”

“We hope that the discussions tomorrow will present us with a good
initiative, with a clear mandate…for our role in the future negotiations
with the EU,” Ukraine president Viktor Yushchenko said in Helsinki on
Thursday night, AP reports. “One of the strategic goals is to get a European
perspective in our foreign policy.”

Mr Yushchenko’s camp has been pressing for an EU accession promise since

the Orange Revolution in 2004, arguing that his transitional country needs an
EU goal to stay on track with painful reforms after severing historical ties
with major energy supplier Russia.

President Barroso said merely that “the EU has greatly appreciated the
progress Ukraine has made since the Orange Revolution in the field of
political reform” on Thursday. “On this basis, the EU and Ukraine can aspire
to a qualitatively higher level in their relationship.”

Earlier in the week he told Polish daily Gazeta Wyborcza that “[Ukraine] is
a European country and as such must have a European perspective,” with the
remarks prompting commission spokespeople to explain that Mr Barroso meant
“European” in the “geographic” rather than political sense.
                          THE YANUKOVYCH QUESTION
The return to power in September this year of Kremlin-friendly PM Viktor
Yanukovych – accused of cheating in the 2004 elections and tainted with
suspicion in a plot to poison president Yushchenko – has also injected a new
element of uncertainty into future EU-Ukraine relations.

Addressing MEPs this week, external relations commissioner Benita
Ferrero-Waldner said “we were worried if the new Ukrainian government would
change tack on the issue” of supporting EU border monitors [EUBAM] in the
breakaway Moldova region of Transdniestria – an operation disliked by
Russia.

EUBAM is safe for now, with analysts such as CEPS’ Michael Emerson
saying Mr Yanukovych is too canny to push a hard pro-Russia line due
to the strong sense of independence and national identity that unfolded in
post-revolutionary Ukraine.
                                         TIME WILL TELL
But Europe has to wait and see if Mr Yanukovych’s pro-EU rhetoric will
translate into pushing EU-compliant and WTO-compliant bills through
parliament and if the prime minister’s political camp will be able to work
with the strongly pro-western party of president Yushchenko.

Moscow gave Mr Yanukovych a soft deal on Russian gas prices for 2007 this
week, but the deal appeared to come with strings attached on delaying
Ukraine’s NATO-entry process and tying Ukraine’s WTO-entry to Russia’s
WTO agenda, The Times’ Moscow correspondent reports.

“I would say quite openly that we need to synchronise the negotiation
process of our countries on WTO,” Russian prime minister Mikhail Fradkov
said after signing the gas price deal, with Ukraine WTO entry forming a
pre-requisite for opening a free trade zone with the EU in future.  -30-
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LINK: http://euobserver.com/9/22751?rss_rk=1

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12.    POLAND LOOKING TO DIVERSIFY ITS ENERGY SOURCES
 
By Judy Dempsey,  International Herald Tribune
Paris, France, Thursday, October 26, 2006

WARSAW – The conservative government in Poland plans to invest well over
Euro1 billion in the energy sector in an attempt to modernize its
infrastructure, and perhaps more crucially, reduce its dependence on Russia,
its main supplier of oil and gas.

The plans reflect growing fears in Poland that the Russian president,
Vladimir Putin, will use his country’s energy clout as a political hammer,
something he was judged to have done in January when Gazprom, the giant
state-owned energy monopoly, cut its gas deliveries to Ukraine in a dispute
over gas prices.

Ukraine agreed last week to a 36 percent increase in the cost of natural gas
supplied by Russia next year.

Warsaw is also concerned that a Russian-German pipeline project in
development will result in a loss of gas supplies to Poland.

“We want to diversify because we fear that Russia will use the export of its
gas as a political tool,” Piotr Naimski, secretary of state in charge of
energy security in Poland’s Economy Ministry, said in an interview Thursday.

Poland is not alone in Europe in its uneasiness over energy independence and
Moscow’s ascendant role in the industry, before the Continent’s energy
market is fully opened to greater competition next year.

Lithuania, for instance, plans to build a nuclear power plant to reduce its
dependence on Russia. France is attempting to merge utilities, Suez and Gaz
de France, in a bid to maintain a healthy and locally owned energy sector.

Over 70 percent of Polish energy needs consist of imports, of which 95
percent comes from Russia and other countries belonging to the Commonwealth
of Independent States. The rest is provided by domestic production,
particularly coal.

Naimski said the investments, when complete, would mean that Poland would
not have to increase its imports of gas from Russia even as domestic energy
consumption increases. “The level of Russian imports would remain stable,”
Naimski said. His goal is to eventually meet a third of Poland’s energy
needs outside Russia and the Commonwealth.

One investment is the construction of a large liquefied natural gas terminal
to be located in either the ports of Gdansk or Szczecin, both on the Baltic
Sea.

“We are in the final preparations for sending out the bids,” Naimski said,
putting a price of “several hundred million euros” on the project. “The
preparations and feasibility studies should be ready by the end of November
or early December.”

In addition, the Polish Gas and Oil Company is negotiating with Gassco, the
state-owned Norwegian gas transport operator, to take a stake in a new
off-shore pipeline which could be extended to the Polish coast if Poland
commits to buying a certain minimum amount of gas.

Gassco kicked off the process of developing that 7.3 billion Norwegian
kroner, or $1.1 billion, pipeline this month, saying it would open
negotiations with Norwegian and Swedish companies.

It would run from a point near Stavanger to Norway’s Grenland region and
then to western Sweden.

Inside Poland, Naimski said the government intended to invest Euro1 billion,
or $1.26 billion, in modernizing the country’s transmission and distribution
gas networks. The financing, spread over five years, would be made available
through the EU’s structural funds.

The government plans to complete the LNG terminal by 2010, when the
Russian-German Nord Stream pipeline is expected to be finished.

The pipeline will run under the Baltic Sea and allow Gazprom for the first
time to send gas directly from Russia to northern Germany, where it would
become a hub for distributing this gas to other parts of Western Europe.

Gazprom advanced those plans last week, announcing it had bought a
disbanded mine in northern Germany which would be converted into a
large underground gas storage facility.

Poland is concerned that once the Nord Stream pipeline starts sending gas to
Europe, Gazprom may close for repairs part of another pipeline, the Yamal,
that runs across Belarus into Poland.

Naimski said that Western Europe would not be affected by such repairs
because any shortfall would be met by the Nord Stream’s available capacity,
but Poland would suffer because the Nord Stream does not reach Poland.

“That is why the need to diversify is so important,” he said. “That is why
the Nord Stream pipeline is against our interests.”              -30-
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LINK: http://www.iht.com/articles/2006/10/26/business/polgas.php

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13. YULIA TYMOSHENKO BLOC SAYS RUSSIAN GAS TALKS FAIL
 
 Ukrainian News Agency, Kyiv, Ukraine, Thursday, October 26, 2006

KYIV – The Bloc of Yulia Tymoshenko says that the gas talks with Russia are a
failure. This follows from a statement by the bloc, a copy of which was made
available to Ukrainian News.

The bloc says that the government of Yanukovych has failed to carry out the
pre-election promises made by the Regions Party to reduce gas prices and
resume existing long-term inter-governmental agreements with Russia and
Turkmenistan regarding gas supplies to Ukraine.

“The government of Yanukovych is manipulating the facts, showing off their
unprofessional performance and incompetence as a triumph,” the statement
reads.

In the bloc’s opinion, the new price policy will push up tariffs for housing
and municipal services for the public, resulting in bankruptcy of housing
and public utility enterprises, NJSC Naftohaz Ukrainy, reducing profits of
industrial enterprises, cutting GDP and unbalancing the budget.

The current situation when the old clans headed by Yanukovych have returned
to the power is used for external governance of the country, the BYT says.

The bloc notes the biggest mistake in Ukraine’s energy policy is the
withdrawal of Yekhanurov’s cabinet from long-term inter-governmental
agreements on gas supplies until 2010 and elimination of the scheme that
bounded the gas price with the transit fee, while the government of
Yanukovych only increased negative results.

“The Bloc of Yulia Tymoshenko believes that the government’s full and
indisputable failure in the gas talks should result in the immediate
dismissal of the Cabinet of Ministers, not mentioning other shady schemes by
the “team of professionals,” including those with VAT, resumption of shadow
free economic zones, protection of RosUkrEnergo, “Mongol-Tatar” personnel
policy, etc.,” the statement reads.

According to the message, the BYT asked President Viktor Yuschenko and
National Security and Defense Council to immediately examine the gas policy
issue at a security council meeting.

As Ukrainian News earlier reported, on October 24, the Ukrhaz-Energo joint
venture and RosUkrEnergo signed an agreement on delivery of at least 55
billion cubic meters of natural gas to Ukraine at the price of USD 130 per
1,000 cubic meters in 2007.

Fuel and Energy Minister Yurii Boiko and the board chairman of Russia’s
Gazprom gas monopoly, Aleksei Miller, agreed during negotiations in Moscow
(Russia) on September 26-27 to retain RosUkrEnergo in the mechanism for
delivering natural gas to Ukraine.

Ukraine decided not to buy natural gas of Russian origin in 2007 because,
according to Boiko, it reached agreement with Uzbekistan and Kazakhstan on
annual delivery of 7 billion and 8.5 billion cubic meters of gas,
respectively and signed contracts for delivery of 42.5 billion cubic meters
of Turkmen gas per year.

RosUkrEnergo company is the exclusive supplier of natural gas to Ukraine.
Through Ukrhaz-Energo, the joint venture it created with the Naftohaz
Ukrainy national joint-stock company, RosUkrEnergo sells gas to industrial
consumers as well as to Naftohaz Ukrainy for the needs of the population,
municipal heat supply companies, and budget-financed organizations.

RosUkrEnergo sells gas at USD 95 per 1,000 cubic meters at the
Ukrainian-Russian border.

Ukraine consumes 76-78 billion cubic meters of natural gas per year.

On January 10, the Verkhovna Rada of the fourth convocation sacked the
cabinet after hearing the government reports of gas supplies from Russia.

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14. PRES: UKRAINE ABLE TO DEFEND NATIONAL SOVEREIGNTY 
 
Interfax-AVN, Helsinki, Finland, Thursday, October 26, 2006

HELSINKI – Ukraine has all the necessary means to defend its territorial
integrity and national sovereignty without other countries’ assistance,
President Viktor Yushchenko told journalists in Helsinki on Thursday.

“We have Ukraine’s military forces which are fulfilling this important
mission today. This is a function of the Ukrainian state,” Yushchenko said
after an Interfax correspondent asked him to comment on Russian President
Vladimir Putin’s statement announcing Russia’s readiness to protect Ukraine
from interference by a foreign country.

“On the other hand, if Vladimir Vladimirovich Putin means the guarantees
given by Russia within the framework of the nuclear disarmament agreement
together with the U.S. and other countries, we are grateful that this
position has been confirmed,” he said.

Answering a question from Sevastopol during Wednesday’s televised

question and answer session, Putin said that Crimea is Ukraine’s internal
affair, but Russia is ready to protect Ukraine from attempts by foreign
countries to influence the Ukrainian authorities’ decisions on such matters. 
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15.  UKRAINE: WHO WILL WIN THE RACE FOR POWER?

ANALYSIS & COMMENTARY: By Serhiy Hrabovskyi
Deputy Editor-in-Chief of Suchasnist periodical
Ukrayinska Pravda, Kyiv, Ukraine, Monday, October 16, 2006

Last week the Cabinet of Ministers addressed the Constitutional Court with
the request to officially interpret provisions of the Fundamental Law
concerning appointments and discharges of the governors.

The government wants to have the following issues cleared up:

[1] is the president empowered to appoint or discharge heads of local state
administrations without relevant decree issued by the government;

[2] in what form can the president adopt decisions on appointment or
discharge of the governor after local authorities passed a no-confidence
motion against him;

[3] what legal effects has non-approval of decision by the president if
local authorities passed a no-confidence motion against city mayor or a
governor. What happens in case local authorities receive no explanations
and legal grounds for that;

[4] what are the legal effects in case the president fails to approve the
decision on discharge of the governor if 2/3 of the city council passed a
no-confidence motion against him.

As we can see, nominally, the president and the government want to dispute
one issue in the court: who really controls local authorities?

In fact, the court decision will give the answer to the question if after
the Political Reform Ukraine will have a mixed political system
(semi-presidential) or it will become so called ‘bureaucratic’ republic,
instead of having purely parliamentary model.

In such a republic real power belongs to the government while the president
acts perhaps as a moral authority. The parliament just comes down to
formation of this government.

The character of relations between the president and the premier suggests
such conclusions. We may recall here the countersign conflict with the
presidential decrees and the interview of Vice-Premier Dmytro Tabachnyk with
Segodnya periodical in which he offered to review the principles of cultural
policy and teaching of history in the country.

The Cabinet of Ministers is working out the bill which will empower the
government to reject any bill at its own discretion so that it is not even
brought in for parliament’s consideration, irrespectively of its author.

So, the government is not too picky in the means they use to get total
control over the country. The revived President’s Secretariat, in its turn,
acts as the apologist of the Constitutional Reform, though strange it may
seem, trying to secure at least those president’s rights stipulated by the
classic ‘mixed’ government model.

However, Viktor Baloha seems to be willing to get wide powers, Viktor
Medvedchuk used to have de jure and what’s more important de facto.

At the same time nearly every day Viktor Yanukovych says that together with
President Yushchenko he wants to build a happy life for Ukrainian people.

At the same time Viktor Yushchenko stresses that together with Premier
Yanukovych he defends and will defend national interests for the sake of
Ukraine. That’s why, Yushchenko claims, the war between the government
and the President’s Secretariat is no more than an inevitable discord in the
cooperation of the abovementioned government bodies.

Is it an inevitable discord, indeed?

If one Viktor gathers governors the other Viktor does the same.  If one
Viktor visits regions the other Viktor also hits the road.

They go abroad almost at the same time. Though, for some reason foreign
policy vectors and the two Victors constantly tend to clash.

Thus, we may expect this race for power to cover new political realms soon.

As to the provisions of the Fundamental Law, even if the Constitutional
Court interprets the abovementioned issues in favor of the government the
president still has Article 118, part 8 which says: “Decisions brought by
the heads of local state administrations, which do not comply with the
Fundamental Law, Ukrainian legislation and other normative acts, may be
cancelled by the president or the head of regional state administration of a
higher level, as provided by Ukrainian legislation.”

What is the applicable law here? The Law on Local State Administrations?
If so, this bill has the provisions only concerning heads of local state
administrations of a higher level.

But the Constitution of Ukraine has a direct application itself, so the
government is welcome to get a total control over local authorities since
the president is empowered to cancel any decree issued by the Cabinet of
Ministers, if he (the president) ascertains its illegitimacy without
assistance of the Constitutional Court.

I doubt the government will argue each president’s decree in this court.

For the time being, the government is able to hamper implementation of
presidential decrees on appointment and discharge of ambassadors, reforms
in the court system, introduction of the emergency state and execution of
National Security and Defense Council (NSCD) decisions until the
Constitutional Court comes us with the relevant decision.

Let’s recall that the Cabinet of Ministers considers such ratification the
countersign, i.e. prior consent of the commissioners while the President’s
Secretariat believes it is the approval subjected to execution.

Obviously, the country may be paralyzed being plunged in the deep crisis
if the government intends to stand its ground till the last.

In this context attempts of the government to bind NSDC decision to the
Prime Minister’s signature look particularly interesting.

NSDC is a collective government body and its decision are collectively
adopted and implemented by the presidential decrees only.

So, following the logic of the Fundamental Law the president signs and
implements such a decree even if he voted against it.
The Prime Minister demands a veto right. If he gets it Ukraine is sure to
turn into parliamentary republic.

In fact, the government is able to change the mixed model to purely
parliamentary manipulating the State Budget. To achieve that the Cabinet of
Ministers needs to establish control over court system and security services
leveling the president’s rights as the Supreme Commander-in-Chief.

What can the president do in return? Not to approve the Draft State Budget?
It will result in the deep crisis again.

The government is also empowered to dismiss ministers who entered the
Cabinet of Ministers by the president’s quota. A simple parliamentary
majority is enough for that since Article 85 of the Fundamental Law says:
“the issues of appointments and discharges of the Cabinet of Ministers
members come within the Verkhovna Rada jurisdiction.”

However, there is no legal mechanism for that which is good for Viktor
Yanukovych if he de facto establishes control over the main government
bodies.

President Yushchenko, in his turn, may suspend all decrees and resolutions
issues by the government submitting them to the consideration of the
Constitutional Court with a view to ascertainment of their legitimacy.

There are lots of such documents. While the court will be in session to
consider each of them, lots of things may happen and emerge in the country.
Chaos, for instance. Or revolutionary situation.

The president is empowered to cancel any decrees issues by the government of
the Autonomous Republic of the Crimea run by Yanukovych’s closest allies.
That means the president will abolish this regional government body. Who
will run the peninsula then?

The president has the right to veto any bills adopted by the Verkhovna Rada.
As the coalition does not have constitutional majority the president is able
to paralyze the work of the parliament and hamper adoption of the State
Budget.

As mentioned above it will have unpredictable consequences for the country
but will enable the president to get control over financial leverage.

Finally, the president has the sole right to appoint and discharge high
command of all military units and to confer the highest military ranks. With
the political situation so unstable these authorities may have a decisive
role, although God save Ukraine from such situations. Don’t you think so?

However, there is one positive moment in this duel. We can see the numerous
discrepancies in the Fundamental Law after the ill-famed Constitutional
Reform came into force.

Ukraine has got the chance to bring the Fundamental Law in order, amending
it and taking into account decisions of the Constitutional Court. However,
to achieve that president’s and premier’s teams have to unite their efforts.

Meanwhile, they keep fighting.                               -30-
————————————————————————————————
Translated from Ukrainian into English by Eugene Ivantsov
————————————————————————————————
LINK: http://www.pravda.com.ua/en/news/2006/10/18/6593.htm
———————————————————————————————–
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16.                  POLICE GOVERNMENT IN UKRAINE?

ANALYSIS & COMMENTARY: By Volodymyr Chemerys

Board member of Respublika (republic) Institute,

Board member of Ukrainian Helsinki Human Rights Group
Ukrayinska Pravda, Kyiv, Ukraine, Monday, October 16, 2006

If you saw what was happening in Khreshchatyk Street on October 14th,
you’d think the authorities imposed the state of emergency in Ukraine.

Central and neighboring streets were barricaded; special tourniquets and
SWAT blocked all the streets in the centre of Kyiv. If you wanted to have a
walk there you had to have an ID the police would like.

On October 14th Ukraine showed the whole world it was a police country.

His Majesty Cop ran the state controlling movement of people in the capital
city.

“It wasn’t that bad even during Kuchma’s reign,” said my colleague,
participant of the protest action Ukraine Without Kuchma.
Indeed, opposite political forces planned to carry out their rallies which
could result in the street row like it was last year.

Indeed, Shevchenkivskyi District Court adopted the decision forbidding 5
political organizations to carry out rallies in the centre of Kyiv.

But why non-Party citizens who came to Khreshchatyk having no intentions

to slit noses of their ideological opponents were not able to get to the
underground or bus station?

After all, the court forbade rallies so that the marchers would not spoil
rest for Kyivers and guests of the capital. However, it was the policemen,
not the marchers, who spoiled them rest.

Having recovered from shock, a citizen must ask himself two questions and

of course have them answered by the authorities.

Question #1: was the prohibition of rallies legal? (October 14th is the day
of UPA (Ukrainian Insurgent Army) foundation and Orthodox religious

holiday Pokrovy).

Question #2: did the police act within its jurisdiction preventing mass
disorders in Kyiv?

On Friday, judge of Shevchenkivskyi District Court Natalia Buzhak passed a
judgment forbidding rallies for communists, nationalists and, for some
reason, Chornobyl veterans just because Kyiv City Council, Police Department
and President’s Administration believed that on October 14 street fights in
Khreshchatyk Street were highly probable.

Thus, this court decision is not based on legal arguments. The court just
‘legitimated’ wishes of the top state officials, including the president.

Regrettably, the decision was adopted by the court which in 2004 rejected
the claim of forbidding the rally which was destined to become the beginning
of the Orange Revolution.

However, we must state that on October 13 Shevchenkivskyi District Court
adopted a decision which does not comply with European Convention for

Human Rights, European Court practice, the Constitution of Ukraine and
Ukrainian legislation.

Also, the decision does not comply with the natural and indefeasible right
of Ukrainian citizens for peaceful assembly.

The thing is that the situation emerged in the streets of Kyiv on Saturday
is called ‘counter-rallies’ in European Court practice.
European Court has already adopted decisions concerning cases of
‘counter-rallies’.

Article 17 of the Law on Application of European Court Decisions says these
decisions are the source of law. In fact, these are mandatory decisions on
the territory of Ukraine.

One of the European Court decisions (as in case called Platform ‘Doctors

for Life Against Austria’) says: “Rallies may irritate or offend those who
oppose the idea of the rally. However, rally participants must have the
opportunity to carry out a rally having no fears of any violence from their
opponents; such fears might prevent other groups of people that support
general ideas or interests to express their viewpoint on the most
controversial issues for the society. The right for counter-rallies cannot
co-exist with the limitation of the rights for rallies in a democratic
country.”

Then, the European Court says any country that has joined European
Convention has positive obligations regarding peaceful assemblies and
associations.

That means the authority must secure the right for rallies both for
demonstrants and counter-demonstrants. These positive obligations are
provided by Article 11 of European Convention which guarantees all

Europeans the right for associations and assemblies.

So, the court does not have the right to forbid the rally just because
counter-rally is planned. Positive obligations of the police do not consist
in the limitation of the rights for all the citizens, even those, who were
not going to take part in the rallies on October 14th, but in securing the
rights of all citizens, including the right of assembly for those who was
going to take part in any rally on October 14th.

That means the policemen did not have to block Khreshchatyk Street for
everyone but to protect two rallies of supporters and opponents of UPA.

They had to protect and prevent mass disorders at that. The Law on Police
obliges them to act so.

Policemen used to say on Saturday: “How can we prevent fights if we do not
block Khreshchatyk?”

The author of this article could give the policemen some pieces of advice
but he will not do that as he is not a policemen. It is the budget financed
Interior Ministry that has to work out and implement all security measures.

After all Ukrainian policemen could study experience of the Northern Ireland
Police which manages to keep the peace during counter-rallies of the
Catholics and Orangists being in the far more difficult situation.

I will repeat that Ukrainians pay courts and the police not for the latter
infringes their rights but for the law-enforcement agencies secure these
rights, possibly posing no questions coming beyond cognizance of an

ordinary citizen.

Of course the easiest solution for the police is to impose a curfew and just
forbid people to show up in the streets. Then there will be no
demonstrations, mass riots and disorders. The police will get their wages
and enjoy rest instead.

The curfew is the author’s fancy, though. However, the events of October
14th showed the trend which may result in the curfew.

So, Ukrainian society has to stop Mr. Cop from the very beginning.
Otherwise it will be too late.

We have already answered the questions posed to ourselves on October 14th.
Now it is time the president, Interior Ministry and Kyiv mayor do the same.
————————————————————————————————-
Volodymyr Chemerys, board member of Respublika (republic) Institute,

board member of Ukrainian Helsinki Human Rights Group
————————————————————————————————-
LINK: http://www.pravda.com.ua/en/news/2006/10/16/6581.htm
————————————————————————————————-
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17.  FAMINE MEMORIAL’S CONCEPTUAL CONFUSION

LETTERS TO THE EDITOR: Andrew Sorokowski, Rockville, MD
The Ukrainian Weekly newspaper, No. 43, Vol. LXXIV
Ukrainian National Association (UNA)
Parsippany, New Jersey, Sunday, October 22, 2006, page 7

Dear Editor:

A monument is effective only if it represents a clear conception. Judging
from the report on the planned Famine commemorative complex in Kyiv
and Morgan Williams’s comments (September 17), there is some
conceptual confusion about the project.  Should it focus on the victims
or the perpetrators?  Should it be religious or political? Is it a
commemoration or a condemnation?

Underlying these uncertainties there is, I think, a deep ambivalence. On
the one hand, we want to build a monument that will symbolize the
suffering, death and resurrection of the Famine victims of 1932-1933.

This called for a mood of compassion and contemplation.  On the
other hand, we want to condemn the genocidal policies of the Soviet
Communist state.  That requires a bold political indictment.

Can a single monument do both?  Can we reconcile mourning and
outrage?  Or does spirituality mute the impulse to political action?
And does the triumphant narrative of resurrection blunt the tragedy
of death?  If we cannot answer these questions, we cannot create a
conceptually coherent monument to the Famine.

Yet we can answer these questions. Just as faith and joy in the
Resurrection hardly diminish our horror at Christ’s torments, so our
prayer for the Famine victims need not deter us from condemning the
crimes of the perpetrators. Nor should anything hold us back from
exposing the nihilistic ideology which, with inexorable logic, led to
a policy of annihilation.

But how can we embody such a complex conception in a concrete
memorial?  As described, the monument will have a binary symbolism,
tracing a path downward to death, then upward to renewed life – a
universal narrative (and, incidentally, not an exclusively Christian one).

The facilities for the study of the historical famine – the narrative of
death – would belong to the first part.  They should include the museum,
library, archive, genealogical and research center.  The chapel would
naturally belong to the second part – the narrative of resurrection.

Of course, many visitors might simply walk through the complex
without pausing.  There must be some way to convey the message to
them.  Here, as Mr. Williams suggests, the Holocaust Museum in
Washington could provide some guidance.  Perhaps engraving the
walls with the names of depopulated villages, together with their death
tolls, would be a fitting way to touch even the most casual visitor.

But these are matters for the planners and architects to decide.  I am
confident that Mr. Haidamaka and his associates will do so with
feeling and imagination.

Andrew Sorokowski, Rockville, MD                   -30-
—————————————————————————————–
The Ukrainian Weekly newspaper, Ukrainian National Association
(UNA), Parsippany, New Jersey, Roma Hadzewycz, Editor-in-chief.
Archive: http://www.ukrweekly.com; staff@ukrweekly.com.
———————————————————————————————–
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18.                          “RECOGNIZING GENOCIDE”

EDITORIAL, The Ukrainian Weekly newspaper
Ukrainian National Association (UNA), No. 43, Vol. LXXIV
Parsippany, New Jersey, Sunday, October 22, 2006, Page 6

On September 25, Ukraine’s Foreign Affairs Minister Borys Tarasyuk stated
in the U.N. General Assembly: “Ukraine calls upon the United Nations, as the
collective voice of the international community to contribute to the
commemoration of the 60th anniversary of the Convention [on the Prevention
and Punishment of the Crime of Genocide] by recognizing the Holodomor as
an act of genocide against the Ukrainian people.”

He noted that 7 million to 10 million people – about 25 percent of Ukraine’s
population at that time – died during the Famine-Genocide. Thus, he launched
Ukraine’s campaign to seek U.N. recognition of the Holodomor as a genocide,
hopefully in time for commemorations of the Famine’s 75th anniversary.

Back in 2003, Ukraine had succeeded in having 25 countries sign a statement
that condemned the murderous acts of the Stalin regime, but fell short of
characterizing them as a genocide. It was also in 2003 that Ukraine’s
Verkhovna Rada passed a resolution declaring the Famine “an act of genocide
against the Ukrainian nation.”

The resolution also stated that “in an independent Ukraine the terrible
truth of those years must be publicized by the state, inasmuch as the Famine
of 1932-1933 was organized by the Stalin regime and should be publicly
condemned by the Ukrainian nation and the international community as one
of the largest genocides in history in terms of the number of victims.”

Significantly, the Rada’s resolution cited the conclusion of the
congressionally mandated U.S. Commission on the Ukraine Famine that
the Famine was a genocide against the Ukrainian nation.

Though the commission’s report, which was released in 1988 put the U.S.
government on record as calling the Famine a genocide, a stronger iteration
of that position, embodied in Senate Resolution 202, never did pass as it
did not make it out of the Foreign Relations Committee. That resolution
clearly stated that “the man-made Ukraine Famine of 1932-1933 was an act
of genocide as defined by the United Nations Genocide Convention.”

Most recently, the Congress passed a bill, signed into law by President
George W. Bush on October 13, which authorizes the government of Ukraine
to establish in Washington a memorial “to honor the victims of the Ukrainian
Famine-Genocide of 1932-1933.” The Senate committee report on the bill
noted that “26 nations, including the United States, have recognized Stalin’s
‘famine’ as an act of genocide.”

A day earlier, Ukrainian President Viktor Yushchenko issued a presidential
decree on commemorations of the Famine and political repression on a
special memorial day scheduled for November 25 of this year.

His decree also directed: authorities to allocate land for a memorial to
victims of the Famine that is to be erected in Kyiv; the Cabinet to make
provisions in the budget for 2007 to fund the memorial and research the
Famine (the budget does not now provide for any such funding); and the
Foreign Affairs Ministry to be more active in seeking international
recognition of the Famine as a genocide, to study the possibility of
erecting Famine monuments in other countries, and to organize memorial
days at Ukrainian embassies.

Certainly, these are steps in the right direction. However, we strongly feel
that the appeal of the World Forum of Ukrainians, issued this past August,
which calls for a Holodomor memorial complex (not simply a memorial) to
be built in Kyiv is worthy of serious concrete support – not merely fine
words – from the Yushchenko administration, the Cabinet of Ministers
and the Verkhovna Rada.

If Ukraine does not take the lead in remembering the deaths of millions of
its own people and recording for posterity the history surrounding the
Holodomor, then we can hardly expect other nations to recognize this
genocide and to learn its all-important lessons.

President Yushchenko himself said in 2005: “The world must know the truth
about all crimes against humanity. Only in this way can we all be sure that
indifference will never again encourage evil-doers.”
————————————————————————————————

The Ukrainian Weekly newspaper, Ukrainian National Association
(UNA), Parsippany, New Jersey, Roma Hadzewycz, Editor-in-chief.
Archive: http://www.ukrweekly.com; staff@ukrweekly.com.
————————————————————————————————
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========================================================
19.   CROSSROADS: MODERNISM IN UKRAINE, 1910-1930
            Major Exhibition of Early 20th Century Ukrainian Modern Art
     The Ukrainian Museum, NY, NY, November 5, 2006 – March 11, 2007

The Ukrainian Museum, New York, NY, Friday, October 27, 2006

NEW YORK CITY – Crossroads: Modernism in Ukraine, 1910-1930, the first
major exhibition of early 20th century Ukrainian art to be shown in New York
City, opens November 5th at the new Ukrainian Museum, a state-of-the-art,
25,000-square-foot facility located at 222 East 6th Street. The exhibition
will be on view through March 11, 2007.

Featuring the best of high modernism from Ukraine, the exhibition includes
more than 70 rarely seen works by 21 Ukrainian artists; each of the works is
being shown for the first time in the United States.

Examples from the Avant-Garde, Art Nouveau, Impressionism, Expressionism,
Futurism and Constructivism movements are presented in a fresh, new light.

Crossroads:  Modernism in Ukraine includes the works of well known artists
such as David Burliuk, Alexandra Exter, and Kazimir Malevich as well as
those of many artists still unknown to American audiences.

Although the former are commonly associated with the Russian Avant-Garde,
one of the revelations emerging from the exhibition is that much of what has
been regarded as Russian modernism was, in fact, incubated in Ukraine.

The works in the show range from huge oil canvases to graphic arts to
theater and opera design.  The first impression is of an abundant use of
color. Another striking aspect of the works is the way they mesh the past
and the present, bowing to the influences of cultural traditions, but
expressing them through modernism.

The abstract works are rooted in the principles of Ukrainian folk art; they
also resonate with Byzantine aesthetics, with medieval ecclesiastical art,
and with the tensions inherent in classic 17th century Ukrainian Baroque.

According to one of its organizers, Nikita Lobanov-Rostovsky, the exhibition
is designed to show American audiences the talent and unique nature of
Ukrainian Avant-Garde artists. “Viewers will be able to observe that not
only Moscow and St. Petersburg were breeding grounds of new, non-

objective art of the 20th century,” he explains.

“Form and color were combined also in Kyiv and Kharkiv, where these ideas
prospered and succeeded since 1908.  Many “founding fathers” of this art in
the Russian Empire of that time were Ukrainians born and bred.”

The works on exhibition are from the National Art Museum of Ukraine, the
Theater Museum, and the Museum of Folk Art of Ukraine in Kyiv, the Art
Museum of Dnipropetrovsk, and private collections.

They were selected by Professor Dmytro Horbachov and Nikita
Lobanov-Rostovsky, who are dedicated to preserving and disseminating
knowledge about the Ukrainian Avant-Garde.

The show was organized by the Foundation for International Arts and
Education with the National Art Museum of Ukraine.  The Foundation, a
non-profit organization was created to help preserve and protect artistic
and cultural legacies in the countries of the former Soviet Union through
exhibitions, financial support and education.

The National Art Museum of Ukraine was founded in 1904 and has grown
into a prestigious national institution, whose collections reflect the
history of art in Ukraine.

The Ukrainian Museum will be the second stop for this exciting exhibition,
which opened this summer at the Chicago Cultural Center.  A richly
illustrated, bilingual catalogue accompanies the exhibition.

The catalogue includes essays, written by leading international experts,
tracing Ukrainian artistic expression and experimentation over the years
1910-1930 while contextualizing the works that emanated from this period of
prolific creativity.  Professor John E. Bowlt of the University of Southern
California served as editor of the catalogue.

As volatile as Ukraine’s politics were in the months leading up to the
recent Orange Revolution, so too was the cultural exuberance beginning with
the turn of the century. This exhibition offers a taste of the electrifying
energy of that period that soon ended with the Stalinist purges that
decimated Ukraine.

A majority of the artistic output of this extraordinarily prolific period
was destroyed and most of the artists forced underground, exiled, or
executed.

Through this show, examples of modern Ukrainian art offer a rare glimpse
into a long-neglected area of modernist endeavor, of cultural endurance and
creative freedom.

The exhibition’s national tour is sponsored by by The Boeing Company and
Konstantin Grigorishin. Financial support has also been provided by AeroSvit
Airlines;  Chadbourne & Park, LLP; Nour USA, Ltd.; Mykola M. Shymone;
Oleksandr Tabalov; and The Trust for Mutual Understanding.

Additional support has been provided by the Mission of Ukraine to the United
Nations; the Embassy of Ukraine in Washington, D.C.; and the Consulate
General of Ukraine in New York.

The Ukrainian Museum, an institution showcasing Ukrainian culture and
history, has been serving its constituency and the public since 1976 through
exhibitions, educational programs, and public events.

Its purpose is to preserve the cultural heritage of Ukrainian Americans and
to document the contributions of Ukrainian immigrants to America’s cultural
treasury.

In 2005 the Museum inaugurated its new facility with a dynamic retrospective
exhibition of the works of Alexander Archipenko, a leading voice of
Ukraine’s modernist era.
      ACCOMPANYING PROGRAMS TO THE EXHIBITION
To provide additional information and expand on the topic of the exhibition,
the Ukrainian Museum will present lectures and films.

On Monday, November 6th at 6:30 p.m. Professor Dmytro Horbachov, an
authority on the avant-garde period in Ukraine and contributor of an essay
on Kazimir Malevich to the exhibition catalogue, will deliver a lecture (in
the Ukrainian language) entitled Formula for the Ukrainian Avant-Garde –
Europe + the Village.

Prof. Horbachov will also present his newly published book “He and I Were
Ukrainian: Malevich and Ukraine.”

On Sunday, November 12th, at 2:00 p.m. Dr. Myroslava Mudrak, Prof. of art
history at the Ohio State University, an expert on Ukrainian modernism in
art and contributing author to the exhibition catalogue, will deliver a
lecture on Color and Its Dynamics in Ukrainian Modernist Painting.

Co-lecturer, Dr. Oleh Ilnytzkyj, Prof. of the Ukrainian language and
literature at the University of Alberta, in Edmonton, whose expertise is
Ukrainian modernism and avant-garde, will speak about The Verbal and
Visual Arts in Ukrainian Futurism. Both lectures will be in English.

Dr. Yuri Shevchuk, founder and director of the Ukrainian Film Club of
Columbia University will introduce a selection of short contemporary
Ukrainian films by Ukrainian filmmakers. The event, presented in

conjunction with UFCCU will be held at the Museum on Friday, November
10th at 7:00 p.m.                              -30-
—————————————————————————————————–
The Ukrainian Museum, 222 East 6th Street (bet. 2nd and 3rd Aves.) New
York, NY 10003, Wed. thru Sun. 11:30 am – 5:00 pm (212) 228-0110
E-mail: info@UkrainianMuseum.org
LINK: http://www.ukrainianmuseum.org/ex_061105crossroads.html
——————————————————————————————————
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========================================================
20.  CONGRESSMAN CURT WELDON: ADVOCATE AND FRIEND TO
 UKRAINE AND UKRAINIAN-AMERICANS HONORED AT RECEPTION

By Andrea Porytko-Zharovsky, Jenkintown, Pennsylvania, October 2006

JENKINTOWN, PA – Ukrainian Americans do not forget their friends in
Congress. U.S. Rep. Curt Weldon (R., Pa.), a long-time advocate of Ukraine
and a friend of the Ukrainian American community, was honored at a
reception, Saturday, October 7, 2006, in the Main Hall of the Ukrainian
Educational and Cultural Center (UECC), in Jenkintown, PA.

Representing the 7th Congressional District in Pennsylvania and currently
serving his tenth term, Congressman Weldon has been a leader on committees
ranging from national security to the environment, as well as serving as
Co-chair of the Congressional Ukrainian Caucus, Vice-chair of the House
Armed Services Committee, and Vice-chair of the House Homeland Security
Committee.

As Co-Chair of the Congressional Ukrainian Caucus, Congressman Weldon is

the voice of Ukraine in Congress and has personally worked on improving
relations between the United States and Ukraine, successfully restoring the
presence of pro-democracy organizations in Ukraine such as the International
Republican Institute (IRI) and the National Democratic Institute (NDI),
developing a working relationship between the members of the United States
Congress and the Ukrainian Parliament in the Rada Exchange Program, and
recognizing the 1932-1933 Ukrainian Genocide.

Congressman Weldon was recently instrumental in the passing of legislation
H.R. 1053 to graduate Ukraine from the Jackson-Vanik Amendment on March

8, 2006.

A candidate in the U.S. General Election on November 7, 2006, Congressman
Weldon spoke at the reception enthusiastically about the issues that have
united him with the Ukrainian Diaspora and how he got involved with the
Ukrainian American community.

He voiced his regrets that he did not spend enough time on Ukraine’s
development in the early 1990’s and mid 90’s, and stated that the American
response to the Orange Revolution was not quick enough.

“Unfortunately, we did not take those steps. We did not act quickly enough
on Jackson-Vanik. We should have given Yushchenko Jackson-Vanik on

his first visit to America.”

Congressman Weldon believes that the Ukrainian Diaspora is a critical
component in allowing Ukraine to unleash its potential and its power and
pledged when re-elected that he will continue to work and push the issues
dear to the Ukrainian Diaspora.

“The Ukrainian-American relationship is one of the most important strategic
relationships in the world. We must stay the course, as Ukraine changes its
leaders, we must not waiver from our support to the Ukrainian people. There
is no nation with the potential in the world that Ukraine has – the
breadbasket of the world.”

Friends of Congressman Curt Weldon, with the participation of the Heritage
Action Council, formed to involve Ukrainian Americans in the American
political process, raised over $10,000, in a two-week period, from sponsors
in Pennsylvania, New Jersey, Maryland, Virginia and Delaware.

This was a true bipartisan effort with recent U.S. citizens originally from
Ukraine actively participating, in support of a friend to Ukraine and a
friend to the Ukrainian American community, who has a record of introducing
legislation and policy beneficial to Ukrainian Americans and Ukraine.

The evening concluded with a musical interlude by “Kalynonka”, a bandura
duet by Halyna Bodnar and Lada Pastushak.                  -30-
———————————————————————————————–
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21.             ‘WHY DON’T YOU DRESS UP AS A GIRL?
  It was just after the Second World War in Germany at a camp for displaced
  persons — so-called DPs. Buchok had fled from the Carpathian mountains
  in Ukraine, escaping his village with a loaf of bread and a chicken his mother
  had killed and cooked.

By Lesley Simpson, The Hamilton Spectator
Hamilton, Ontario, Canada, Tuesday, October 17, 2006

Mychailo Buchok was a pretty boy, 17 years old, with high cheekbones and
a face that had not yet felt a razor. He had broad shoulders, but they could
easily be disguised with the right attire.

When a girl caught his eye and spoke his Ukrainian language, it wasn’t long
before she whispered an offer he could not refuse.

It was just after the Second World War in Germany at a camp for displaced
persons — so-called DPs. Buchok had fled from the Carpathian mountains in
Ukraine, escaping his village with a loaf of bread and a chicken his mother
had killed and cooked.

“Here you’ll die. There you’ll live,” his mother ordered, making the sign of
the cross and kissing him goodbye in the darkness of night.

He prayed. He stole bread. He dug potatoes from fields. He begged. He
dodged bullets. He fled in the fall of 1944 as the Germans were retreating,
the Soviets moving in.

He walked for three months until he made it to the camp where he met the
Ukrainian girl who suggested a different adventure.

“Why don’t I dress you up as a girl?” she said. “You’ll get chocolate.”
She’d created her own survival strategy. She knew American soldiers would
give chocolates for pleasures of another kind. Buchok wasn’t new to
adventure. He was not afraid.

“I put my faith in God.” He’d been active in the Ukrainian resistance during
the war. In his Hamilton dining room more than 60 years later, a framed
photo of Jesus sits on a hutch near a floral arrangement, like a family
member.

In the German camp, the Ukrainian girl had a date with an American soldier
who had a buddy who wanted a date, too. She said she’d bring a friend.
She gave Buchok a skirt, a blouse and a handkerchief to cover his hair.

She arranged his blouse, puffing it up to make it look as if he had breasts.
He sat. She attached clip-on earrings. She applied lipstick. She lent him
the requisite heels. The “girls” walked to a nearby park to meet their
dates. Then Buchok’s friend left with her date.

Buchok didn’t speak English. His American date didn’t speak German or
Ukrainian. They exchanged what few words they knew, sitting together on a
park bench.

The soldier gave Buchok chocolate and Buchok put it into his pocket. He put
his arm around Buchok and moved closer. Then the soldier made his move:

“All I know is when he put his hand under my skirt, I started to shiver,”
recalls Buchok, now 79, and speaking from his Hamilton home. Buchok
pretended he had to go to the washroom. He bolted. “I never returned.”

He raced back to the camp, washed off the makeup, threw his blouse and skirt
under his bed and crawled under the covers. Shortly after he heard a loud
knocking. He closed his eyes and pretended to sleep. It was the American
soldier, searching, yelling, “Where is my girl? Where is my girl?”

The story is true. A fictionalized version, A Bar of Chocolate, by Buchok’s
daughter Natalia, is featured in a new book about the Ukrainian experience
called “Kobzar’s Children: A Century of Untold Ukrainian Stories” (Fitzhenry
& Whiteside, $14.95.)

It’s one piece of levity in a collection that explores famine, concentration
camps, immigration and death machines, from Soviet repression to Nazi
Germany.

Buchok came to Hamilton around 1950. He is the only local person whose
story is featured in this national collection edited by Marsha Forchuk
Skrypuch, an award-winning Canadian writer.

About 3,000 people in the Hamilton area identified themselves as ethnic
Ukrainian in the last census. Across the country, there are more than 1.2
million Canadians of Ukrainian background, according to the Ukrainian
National Congress.

For Ukrainians, the word kobzar is loaded with multiple meanings. Kobzars
were blind musicians. “Kind of like singing Homer, not Peter, Paul and Mary.

Like the minstrels in medieval Europe, or the elders of our First Nations,
they were the repository of oral culture in the days before newspapers,”
suggested Lubomyr Luciuk, a professor of political geography at Royal
Military College in Kingston.

The kobzars played a stringed instrument called a kobza. Kobzars were like a
merger of television, Internet and radio. They told stories. They performed
poems. They travelled from village to village. They were welcomed, clothed
and fed. The word is also used to mean overcoming artistic repression.

For many, the word would trigger the name Taras Shevchenko, Ukraine’s
best loved poet whose first collection of poetry was called Kobzar. For
non-Ukrainians, the story of the kobzars is the movement of a culture
reclaiming its identity and history.

The kobzars’ repertoire evolved to include stories of Soviet famine,
repression and terror. Soviet leader Joseph Stalin heard about the kobzars.

He ordered a national meeting of the minstrels in the early 1930s in
Kharkiv, in eastern Ukraine. Hundreds came. They were arrested. Many
were shot.

And that’s when their stories and some of the storytellers — keepers of the
Ukrainian national consciousness — began to die.

There is a fictionalized story of the famine in this collection called The
Rings. In the famine in 1932-33 many millions died.

Estimates vary widely from 4.5 million to 10 million. But it was that kind
of story that got the kobzars murdered, said Skrypuch.

“Cannibalism was not uncommon. Human remains were for sale,” said Luciuk
who co-edited a book called The Foreign Office and the Famine. “This was
not a famine from drought. It was manmade. Politically engineered.”

Skrypuch received a death threat when she wrote about the famine for her
local newspaper, The Brantford Expositor, in the 1990s.

When she wrote a folk tale about how a girl and her father save a village
from famine, a children’s book called Enough, (illustrated by Michael
Martchenko published by Fitzhenry & Whiteside in 2000), she got hate mail.
Police accompanied her to one of her book events. “There are still people
alive who think Stalin was a good guy.”

Kobzar’s Children is an anthology of historical fiction, memoirs and poems
about the experience of Ukrainian-Canadians.

The collection begins with A Home of her Own, a homesteader tale of 1905,
and moves in chronological order to the election of Ukrainian President
Viktor Yushchenko in 2004.

“When you don’t write your own stories, others will write their own versions
for you,” said Skrypuch. “The injustices we forget we are bound to repeat.”
———————————————————————————————–
lsimpson@thespec.com; http://www.hamiltonspectator.com/
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22.         SOVEREIGN FOOTBALL: A POLITICAL FABLE


COMMENTARY: By Celeste A. Wallander, Moscow Times
Moscow, Russia, Friday, September 29, 2006

Once upon a time, there was a bright but slight young schoolboy named
Vladislav who, like most young boys, had a strong desire to fit in and,
well, be one of the guys.

He did well in school and used his brains to good effect by doing homework
for some of the tough boys on the playground. This won him their tolerance,
but it didn’t quite make him one of the guys.

Slava noticed that three of the toughest boys — Vladimir, Sergei and
Igor — always talked about someday playing in the big leagues. Knowing that
the global big league is football, Slava got the brilliant idea that his
playground toughs should form a team and become a great football power.

The three toughs were intrigued. How better to become rich and famous than
to become a great football power?

But there was a problem: While the boys were strong and clever, and could
dominate the neighborhood playground in any fight, they had never spent time
developing the skills necessary to win at football.

They were strong and athletic, but had little patience for passing, foot
speed or ball control drills.

As a result, when they did play football in the neighborhood, more skilled
teams could easily steal the ball, get past their defenses and score. As a
result, the young toughs tended to win some but mostly to lose.

Of course, that is the essence of competitive sports, but the boys did not
like to lose.

Besides, they pointed out to Slava, if we lose on our home turf, we cannot
be certain of becoming a great football power, so what’s the point?

Slava, being very clever, knew better than to suggest that his new team
spend time practicing its football skills to become a better and more
competitive team.

Instead, he recognized that the reason his tough friends tended to lose the
ball and get scored against was because they were limited by the rules of
the game to controlling and moving the ball with their feet.

“Just think!” he told Vladimir, “how we will dominate the football pitch if
we control the ball with our hands!”

“That’s a great idea!” Vladimir answered. “If we use our hands, we cannot
lose, and our domination of football at home will propel us to the big
leagues!”

And so, the team implemented its clever plan.

When other teams would call fouls for using their hands, Slava would argue
with them about the rules, while his team members went on scoring goals and
declaring victory. Referees who ruled against them would disappear from the
neighborhood and be replaced for the next match with friends of the toughs.

These friends had been coached to rule that in this form of neighborhood
football, the need for order and stability on the pitch meant that
Vladimir’s team (as it became known) must be allowed to use its hands.

“Besides!” playground supporters exclaimed, “they are on a winning streak
and have a chance to make it to the big leagues!”
“Isn’t it good for our neighborhood,” Slava cleverly argued, “for a team of
our own to go undefeated so we can climb into the ranks of the great
football powers?!”

And so, Vladimir’s team came to dominate football in the neighborhood, and
to claim a place in the upcoming great football power tournament. The great
football powers were impressed to hear of a new, undefeated aspirant to
their league, and looked forward to welcoming Vladimir’s team to the
competition.

The teams drew lots, and it turned out that the first match would be between
Vladimir’s team and George’s team. You can imagine what happened when the
whistle blew and play began: when Sergei, Vladimir or Dmitry ran with the
ball in his hands, or used his hands to knock the ball away from one of
George’s players, the referee would call a foul and stop play.

Not long into the game, the players on Vladimir’s team were being sent off
with red cards for their repeated violation of the most basic rule of
football: no hands. This went on all day, as Vladimir’s team played against
each of the big league teams.

The big leaguers were, of course, astonished to learn that Vladimir’s team
thought it acceptable to play football with their hands. They were
nonplussed that Vladimir, Slava and their teammates were unapologetic for
their behavior, and were even angry and resentful that the fouls called
against them were costing them game after game.

By the end of the day, the controversy reached such a fever pitch that the
great football power team coaches called out the new team’s coach, Slava, to
demand that his team play by the well-defined rules of football.

Slava was defiant. He knew that Vladimir and his team could not win if they
played by the rules.

They had not trained, practiced, or committed themselves to football. Their
dream of being a great football power, and his own of being one of the guys,
would fail if they played by the rules.

So Slava stood defiantly and declared to these great powers: “You can define
the rules of football however you like, and play only with your feet. We do
not mind. Have we ever complained?

But as a great football power, we have decided that we are not just playing
football, we are playing sovereign football. In sovereign football,
Vladimir’s team gets to play with its feet, or its hands or whatever it
wants.

We learned to play football on a tough playground in a tough neighborhood,
so this is how we have to play to win. Our fans like it, and we win. You
cannot tell us that we are not playing football; we are playing sovereign
football.”

It was a sad day for the world’s “beautiful game,” because the other teams
did not stand up for the game of football as it had been played in its
simplicity for generations of boys and girls.

With one prominent team claiming the right to play sovereign football, other
teams began to adopt their own rules to do whatever necessary to win. Soon
even small children in remote parts of the globe were using their hands to
play “football.”

Some followed Slava’s lead by claiming they were playing sovereign football,
but in the cynical treatment of honorable sport that developed, some began
to use entirely new terms for the strange games that developed.

It turned out that back home in the neighborhood where George’s team played,
the new version of football in which hands were used far more than feet
became very popular. They also called it football, which seems strange for a
game played hardly at all with one’s feet, but this shows you how messed up
things had become.

As with every fable, there is a moral of course.

But it may not be the one you expect. Yes, one of the morals is that when
you have something beautiful that brings out the best in children all over
the world, it is best to keep the standards high and the rules and
definitions intact. The point of playing football is not just to win, but to
train, and practice and truly to play.

Sovereign football was not football at all, and those who played and loved
the true game — win or lose — should have refused to play anything less.

However, the real moral of our fable lies in the ultimate fate of Vladimir’s
team. It turns out that it was able to win with sovereign football only when
everyone else played by the rules of true football. Once everyone started
cheating and making up rules as they went along, Vladimir’s team began to
lose.

They were not the only ones who were strong and clever, you see: once other
neighborhood toughs could make up their own rules, Vladimir, Dmitry and the
others often found themselves bruised, bloodied and bested by even more
determined aspirants to the big leagues.

Sovereign football escalated to violent contests. I heard that a team once
even brought weapons to the playground to ensure their win.

Pretty soon, the old neighborhood was so unsafe that none of the children
could play there, and everyone knew that it was Slava and Vladimir’s team
that had made it so.

So, the true moral of this fable is simple: When you cheat, you eventually
lose the truly important game.                            -30-
———————————————————————————————–
NOTE: Celeste A. Wallander is a visiting associate professor in the School
of Foreign Service at Georgetown University and a senior associate at the
Center for Strategic and International Studies.

———————————————————————————————-
LINK: http://www.russiaprofile.org/cdi/2006/9/29/4480.wbp
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
23.  RUSSIA HALTS ALL ACTIVITIES OF MANY INTERNATIONAL
             NONGOVERNMENTAL ORGANIZATIONS (NGOS)
National Democratic Institute, International Republican Institute, Adoption
Agencies, Doctors Without Borders, Amnesty International, All Shut Done

By Peter Finn in Moscow, Foreign Service, The Washington Post
Washington, D.C., Friday, October 20, 2006; Page A01

MOSCOW, Oct. 19 — Russia on Thursday suspended the activities of Human
Rights Watch, Amnesty International, the International Republican Institute
and more than 90 other foreign nongovernmental organizations, saying they
failed to meet the registration requirements of a controversial new law
designed to bring activists here under much closer government scrutiny.

Across the country, foreign grass-roots organizations that investigate human
rights abuses, promote democracy and work with refugees folded their tents
until further notice, informing staff that all operations must cease
immediately. The only work officially authorized was the paying of staff and
bills.

The law, signed by President Vladimir Putin at the start of the year, drew
broad criticism as part of a general rollback of democratic freedoms in
Russia. Activists said it was intended to rein in one of the last areas of
independent civic life here; Putin called it necessary to prevent foreigners
from interfering in the country’s political process.

On Thursday, officials said the suspensions resulted simply from the failure
of private groups to meet the law’s requirements, not from a political
decision on the part of the state. The groups would be allowed to resume
work once their registrations are completed, they said.

“No political order has been given . . . to tighten the screws,” said
Vladimir Lukin, Russia’s federal ombudsman, speaking at a Moscow forum
hosted by the Council of Europe, a 46-country human rights organization
based in Strasbourg, France. “Colleagues from international NGOs are not in
the habit of keeping their affairs and documents in order.”

Many nongovernmental organizations fear that the current bureaucratic tangle
might be the beginning of a larger crackdown on activism that is not
controlled by the Kremlin. They note too that successful registration would
not end their dealings with the Justice Ministry.

After that, they would have to report on planned activities for the year,
and they worry that officials could reject their plans or penalize the
groups if they deviate from the plans because of unexpected events.

Many of the suspended organizations are American, including adoption
agencies, the National Democratic Institute and the International Republican
Institute. The latter two are funded by the U.S. Congress but act
independently to promote democracy.

Other suspended groups include two branches of Doctors Without Borders, the
Danish Refugee Council and the Netherlands-based Russian Justice Initiative,
which helps Russians bring cases to the European Court of Human Rights.

Under the law, Russian nongovernmental organizations are also subject to new
regulation. But a Wednesday deadline to meet the paperwork requirements or
stop operation applied only to foreign groups.

Russian officials stressed that the suspensions, which went into effect at
midnight Wednesday, are temporary. “We are not speaking about closing
organizations; that is out of the question,” said a senior Justice Ministry
official, Natalia Vishnyakova, in a telephone interview.

Concerning the registration process, she said: “We are working properly, and
put all our efforts into making it even faster. It is not at all
complicated, believe me, absolutely not. It’s really their own headache. On
our part, we provided all necessary conditions.”

Activists complained, however, that the requirements of the law are so vague
and cumbersome that meeting the deadline was extremely difficult. Russian
officials, they said, nitpicked their way through the submitted documents.

The local Human Rights Watch operation, for instance, called itself the
“Representative Office of the Non-Governmental Organization Human Rights
Watch in the Russian Federation.”

Officials at the registration office rejected that description and said the
group should call itself the “Representative Office of the Corporation Human
Rights Watch Inc. (USA) in the Russian Federation.”

That change, among others, required Human Rights Watch to send its
submission back to its headquarters in New York to have the document revised
and re-notarized, then retranslated into Russian and re-notarized in Russia.

Officials at the Human Rights Watch office in Moscow said they could not
speak on the record to a reporter because they interpreted the strictures of
the suspension to extend to news media interviews. The law says that
suspended groups can do nothing that would advance the aims and goals of
their offices in Russia.

“We are registering, and we are complying with the law,” said Carroll
Bogert, associate director of Human Rights Watch, in a telephone interview
from New York. “But we have been really distracted from our work by the
onerous burdens that this law imposes. But this is not particular to us.
It’s a hassle for everyone.”

Other groups, however, said they found the registration office helpful. The
American Chamber of Commerce, for instance, said Russian officials there
pointed out errors before the organization formally submitted its documents,
allowing it to correct them and expedite the registration.

In all, the office accepted the registrations of 99 foreign organizations,
freeing them to continue their work, officials at the Justice Ministry said.
The American groups included the chamber, the Ford Foundation and the
Carnegie Moscow Center.

Amnesty International said it was exploring whether it could continue field
research in Russia by flying in researchers from its London headquarters.
“We are seeking clarification,” said Lydia Aroyo, a spokeswoman based in
London.

“But we are very unhappy. There were no clear guidelines as to what
documents were required or how to fill them out. The process was very
cumbersome and very time-consuming.”                  -30-
—————————————————————————————————
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/19/AR2006101900831.html
——————————————————————————————————————

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AUR#781 Oct 26 EU: A Guiding Star/ Lighthouse For Ukraine; IMF Says Cancel Grain Controls; Waiting For Russia On WTO?; Russia Attacks Genocide/Holodomor

==========================================================
 ACTION UKRAINE REPORT – AUR           
                  An International Newsletter, The Latest, Up-To-Date
                       In-Depth Ukrainian News, Analysis and Commentary

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

 
            YUSHCHENKO WANTS EU TO BE A GUIDING STAR
                             OR A LIGHTHOUSE FOR UKRAINE,
                            TO HELP STEER ITS SHIP OF STATE

         “A Ship Must Always Know What Its Destination Harbour Is”
                                                                                 
ACTION UKRAINE REPORT – AUR – NUMBER 781
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., THURSDAY, OCTOBER 26, 2006
                
               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1. VIKTOR YUSHCHENKO WANTS EU TO BE A GUIDING STAR OR A
   LIGHTHOUSE FOR UKRAINE, TO HELP STEER ITS SHIP OF STATE
              “A Ship Must Always Know What Its Destination Harbour Is”
INTERVIEW
: With Viktor Yushchenko, President of Ukraine
INTERVIEW BY: Kaija Virta in Kiev
Helsigin Sanomat International Edition Online
Helsinki, Finland, Sunday, October 22, 2006

2UKRAINE SAYS EU MUST RESPECT ITS MEMBERSHIP AMBITIONS
                  “We are not neighbors of Europe, we are part of Europe.”
Paul Ames, Associated Press (AP), Brussels, Belgium, Wed, October 25, 2006

3YUSHCHENKO LEAVES FOR FINLAND FOR UKRAINE-EU SUMMIT

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 25, 2006
UNIAN news agency, Kiev, in Ukrainian 1124 gmt 25 Oct 06
BBC Monitoring Service, United Kingdom, Wednesday, Oct 25, 2006

5. IMF RECOMMENDS UKRAINIAN CABINET OF MINISTERS CANCEL
QUOTAS FOR EXPORT OF GRAIN, HURTING INVESTMENT CLIMATE
Ukrainian News Agency, Kyiv, Ukraine, Wednesday, October 25, 2006

6UKRAINE GOVERNMENT TO INSIST ON GRAIN EXPORT LIMITS

Reuters, Kiev, Ukraine, Wed, October 25, 2006

7UKRAINIAN PRESIDENTIAL SECRETARIAT SEES NO POINT IN
  SYNCHRONIZING UKRAINE’S ACCESSION TO WTO WITH RUSSIA
Interfax-Ukraine, Kyiv, Ukraine, Wednesday, October 26, 2007

8.         UKRAINE ECONOMY: WAITING FOR RUSSIA ON WTO?
       Will PM Yanukovych move swiftly or will his foot-dragging continue?
COUNTRY BRIEFING:
EIU Economy – News Analysis
The Economist Intelligence Unit Limited
New York, New York, Tuesday, October 24, 2006

9.   UKRAINIAN PRESIDENT SAYS SHOULD BE NO LINK BETWEEN

                   GAS PRICE AND ISSUES LIKE NATO AND WTO 
Interfax-Ukraine news agency, Kiev, in Russian 1728 gmt 25 Oct 06
BBC Monitoring Service, United Kingdom, Wednesday, Oct 25, 2006

10.    UKRAINE GAS DEAL WITH RUSSIA MARRED BY FEARS OF

DWINDLING AUTONOMY, APPEARED TO HAVE STRINGS ATTACHED
By Tony Halpin in Moscow, The Times Online
London, United Kingdom, Wednesday, Oct 25, 2006

11.    UKRAINE CAN COPE WITH GAS PRICE RISE SAYS FORMER
                  U.S. AMBASSADOR TO UKRAINE STEVEN PIFER
INTERVIEW: With Steven Pifer, former U.S. Ambassador to Ukraine
INTERVIEW BY: Jan Maksymiuk, Belarus, Ukraine, & Moldova Report
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Tuesday, October 24, 2006

12UKRAINIAN PRIME MINISTER YANUKOVYCH SCOLDS FOREIGN
         MINISTER TARASYUK FOR SMILING AT CABINET MEETING
ICTV television, Kiev, in Ukrainian 1545 gmt 25 Oct 06
BBC Monitoring Service, United Kingdom, Wed, Oct 25, 2006

13.     UKRAINE-NATO RELATIONS: NATIONAL DEBATE NEEDED

                              The question “To join, or not to join.”
ICPS Newsletter Bulletin # 338
International Centre for Policy Studies (ICPS)
Kyiv, Ukraine, Wednesday, October 25, 2006

14.          RUSSIA BRISTLES AT UKRAINE’S PUSH TO DECLARE
                              SOVIET-ERA FAMINE A GENOCIDE 
Associated Press, Moscow, Russia, Wednesday, October 25, 2006 

15.                   WE CANNOT LIVE WITHOUT THE TRUTH
         A roundtable on the Holodomor in Ukraine held at Ukrainian House
             “Let us not forget: there is no statute of limitations on crimes
                             against humanity – above all, genocide.”
By Ihor Siundiukov, The Day
The Day Weekly Digest in English #33
Kyiv, Ukraine, Tuesday, October 24, 2006

16.    WHY ISN’T THE WORLD RECOGNIZING THE HOLODOMOR
                                    AS AN ACT OF GENOCIDE?
COMMENTARY: By Oleksandr Kramarenko
The Day Weekly Digest in English #33
Kyiv, Ukraine, Tuesday, October 24, 2006

17.   PRESIDENT YUSHCHENKO SENDS LETTER TO KYIV MAYOR
 CHERNOVETSKY ABOUT HELP TO HONOR HOLODOMOR VICTIMS
Press office of President Victor Yushchenko
Kyiv, Ukraine, Tuesday, October 24, 2006

18.      ROUNDTABLE ON TRADE AND INVESTMENT IN UKRAINE
           Current Prospects and Challenges, Viewpoints from US & Canada
                 You are invited to attend. Washington, D.C., Mon, Oct 30
Andrew Bihun, Director, Business Development Forum
The Washington Group, Wash, D.C., Wed, Oct 25, 2006

19THIRD WORKING SESSION OF U.S.-UKRAINE POLICY DIALOGUE
          HOSTED BY U.S.-UKRAINE FOUNDATION IN WASHINGTON
U.S.-Ukraine Foundation (USUF), Washington, D.C., October, 2006

20   ASSOCIATION FOR THE STUDY OF NATIONALITIES (ASN)
                   2007 CONVENTION IN NYC: CALL FOR PAPERS
                       “NATION, COMMUNITY, AND THE STATE”
               Proposal Deadline Reminder: Thursday, 2 November 2006
Dominique Arel, ASN President
12th Annual World Convention of the Association
for the Study of Nationalities (ASN) in 2007, New York, NY
Harriman Institute, Columbia University, NY, NY, Oct 25, 2006

 
21.   US HOLOCAUST MEMORIAL MUSUEM AND THE SECURITY
    SERVICE OF UKRAINE EXTEND COOPERATION 5 MORE YEARS
              US Holocaust Memorial Museum thanks the Security Service
                         of Ukraine for a “stellar level of co-operation.”
Embassy of Ukraine to the USA
Washington, D.C., Tuesday, October 24, 2006
========================================================
1
. VIKTOR YUSHCHENKO WANTS EU TO BE A GUIDING STAR OR A
    LIGHTHOUSE FOR UKRAINE, TO HELP STEER ITS SHIP OF STATE
                “A Ship Must Always Know What Its Destination Harbour Is”

INTERVIEW: With Viktor Yushchenko, President of Ukraine
INTERVIEW BY: Kaija Virta in Kiev
Helsigin Sanomat International Edition Online
Helsinki, Finland, Sunday, October 22, 2006

Ukraine is not asking the European Union for a specific day or year when it
might be accepted into the European Union. However, it would like to have
the light of a guiding star or a lighthouse to help steer its ship of state
in the right direction.

This is how Ukrainian President Viktor Yushchenko describes his
expectations in advance of his country’s summit with the EU, which will be
held in Helsinki on Friday.

He was interviewed in the Presidential Palace in Kiev by two Finnish
newspapers: Helsingin Sanomat and Hufvudstadsbladet.

The EU was a strong supporter of Yushchenko and his so-called Orange
Revolution movement in the fight for an honest Presidential election in late
2004.

After the election, the EU has nevertheless refused to open the door to
Ukrainian membership, even though Turkey and the remote Balkan countries
have been allowed to embark on this road.

“A ship must always know what its destination harbour is”, Yushchenko says,
metaphorically. Only then, he feels, can the wind speed, direction, and
other realities be sensibly taken into consideration.

Lighthouses are needed in navigation. “The same holds true for our strivings
for Europe. We would like to see the shine, the light, that shows our
country and our people what the destination is.”

“Please note that we are not asking when”, the President says. “We are only
talking about the aim, the goal, that should stay more or less in place.
Everything else is the responsibility of my people and my country.”

Yushchenko speaks in a pensive, calm, and even voice, even though the day
of the interview is not the calmest possible.

In the morning the President persuaded the reform-minded interior Minister
Yuri Lushenko to stay in the government, even though the Our Ukraine Party,
which is the main supporter of Yushchenko himself, had declared that it
would go into opposition.

At noon he gave moral support to a widow at the funeral of a close
supporter – a Member of Parliament who had died unexpectedly.

In the evening the EU’s Foreign Policy envoy Javier Solana was arriving in
Kiev, apparently to ask for clarification of Ukraine’s foreign policy line,
over which there was some uncertainty.

Yushchenko hardly smiles at all, and his grey eyes are extremely serious.
Nevertheless, the President’s face is much smoother than at the worst times
in 2004 after the shocking case of dioxin poisoning.

People have hardly ever been poisoned in that way before”, he says in a
detached and matter-of-fact manner. “I must be some kind of guinea pig.”

The crime has not yet been tried in court. The President says that the
investigation has taken a long time because the case is so unprecedented.

“The investigations must answer many, many questions if the criminal is to
be apprehended. What kind of a toxic compound was used, who
manufactured the poison, how it got into the system, and the most important
question is, what its effects are, what kinds of signs it has, what kinds of
symptoms it causes, and how soon does it show.”

The President says that international and Ukrainian experts have been
working hard on the case. “I could probably already answer the question of
who was behind the poisoning.”

He says that he knew the answer “already a long time ago”. “I have an idea
of who did it. But it is the task of the public prosecutor to make it
public.”

Ukraine’s foreign policy has not been easy to predict this autumn, now that
power is being shared by decision-makers who differ on the matter.

The President and the Foreign and Defence Ministers appointed by him
represent the Western orientation of the orange revolution. Prime Minister
Viktor Yanukovich and a large part of the government want to have closer
ties with Russia.

Viktor Yushchenko insists that the EU orientation does not vary according
to political cycles. In his view it corresponds with the Ukrainian way of
life. “Modern Ukraine is a European country. This is undeniable. We do not
need others to specifically recognise this fact.”

The President feels that under the EU’s own treaties, Ukraine has the
undeniable right to apply for membership. “Naturally, we must also speak
about the meeting of certain criteria. This is also required of other
countries, and therefore of Ukraine as well.”

He hopes that Ukraine and the countries in the west of Europe would develop
practical interaction regardless of political discussions. Ukraine has much
to offer in the energy industry, for instance, or in the building of ships
and planes, the President pointed out.

Under the constitution, the President also decides on Ukraine’s policy
toward Russia, under guidelines determined by Parliament, Yushchenko says.

“We understand how important it is to establish good and stable relations
with Russia, but relations must be based on equal partnership, in which
there is mutual respect for national independence.”

 “I am not saying that this kind of policy is easy to carry out, and I do
not say that the history of relations between Ukraine and Russia would have
been simple”, he admits.

However, he is conspicuously eager to demonstrate that Ukraine does not
seek to push the EU and Russia into a conflict with each other.

“We understand completely that it is a big country which has an important
role in both European and global politics. And because we feel that our
relations with the EU are strategically important, we understand that we
should find the right kinds of arrangements and right kind of harmony in our
policy toward Russia.”

In Yushchenko’s view, Ukraine has not made a single move during his
Presidency that would “weaken or destroy” relations with Russia.
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2. UKRAINE SAYS EU MUST RESPECT ITS MEMBERSHIP AMBITIONS
               “We are not neighbors of Europe, we are part of Europe.”

Paul Ames, Associated Press (AP), Brussels, Belgium, Wed, October 25, 2006

BRUSSELS – The European Union must offer Ukraine the prospect of full
membership and not to exile it from the European mainstream along with
nations in North Africa and the Middle East, the country’s envoy to Brussels
said Wednesday.

“We are not neighbors of Europe, we are part of Europe,” said ambassador
Roman Shpek, head of the Ukrainian mission at the E.U. “For us, it is not
pleasant to be in the same basket as Morocco, Libya or Israel,” he said
ahead of Friday’s E.U.-Ukraine summit.

Shpek also rejected suggestions that a gas deal signed with Russia Tuesday
would give Moscow a say on Ukraine’s aspirations to join the World Trade
Organization in the coming months.

“Next year Ukraine will become a full member of the WTO,” Shpek told
reporters. “Russians they have their own agenda and for us it’s not the
issue to compete with Russia.”

Ukraine’s President Viktor Yushchenko will meet European Union leaders in
Helsinki, Finland, for the annual E.U.-Ukraine summit. The talks are
expected to launch negotiations on a new economic and political cooperation
agreement.

The Ukrainians hope that will include the prospect of eventual membership.
The E.U. is noncommittal, reflecting growing wariness about expanding the
bloc which admitted 10 new countries in 2004, is about to take in Romania
and Bulgaria and is engaged in negotiations with Croatia and Turkey.

Shpek insisted under the treaty which underpins the Union, the E.U. must
keep its doors open to European nations that share its values of democracy,
human rights and free market economy.

“You cannot change values,” Shpek said. “European politicians should
recognize that Ukraine has the same rights as all European states.”

So far, the E.U. has refused to grant Ukraine a “membership perspective,”
including the former Soviet republic in its “neighborhood policy” along with
Belarus, Israel, the south Caucasus countries and several Arab nations
around the Mediterranean Sea.

Governments from the 25 EU nations are currently mulling a proposal from the
European Commission to open negotiations on a new cooperation agreement to
deepen relations with Ukraine by setting up a free trade zone, strengthening
diplomatic ties and boosting collaboration in areas such as energy, justice,
nuclear safety, and environment protection.                 -30-
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3. YUSHCHENKO LEAVES FOR FINLAND FOR UKRAINE-EU SUMMIT
 
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 25, 2006

KYIV – Ukrainian President Viktor Yuschenko has left on a two-day official
visit to Finland, where he is to take part in a Ukraine-EU summit.

On October 26, Yuschenko is to meet with Finnish President Tarja Halonen,
Prime Minister Matti Vanhanen and Parliamentary Speaker Paavo Lipponen.

The officials are to discuss economic, investment and energy ties between
Ukraine and Finland, the presidential press service reported.

During his visit, the Ukrainian president will open a business forum
“Ukraine: New Opportunities for Business and Investment,” organized by the
Confederation of Finnish Industry. He will also attend a ceremony to
establish a joint venture Budfarfor-Sanitek and visit the headquarters of
mobile phone giant Nokia.

On October 27, the president is to take part in the Ukraine-EU summit. He
will meet with European Commission President Jose Manuel Barroso and
Secretary General of the EU Council Javier Solana.

The summit will focus on the implementation of the Ukraine-EU Action Plan
and plans to sign a new framework agreement. Its participants are also going
to discuss the creation of a free trade zone and ways to complete the
Odesa-Brody-Plock oil pipeline project. They will sign agreements on
readmission and the liberalization of visa requirements.

The president is accompanied by Foreign Minister Borys Tarasiuk, Deputy
Secretariat Chief of Staff Oleksandr Chaly and National Bank Chairman
Volodymyr Stelmakh.                               -30-

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4. UKRAINE UPBEAT AHEAD OF EU SUMMIT IN FINLAND
 
UNIAN news agency, Kiev, in Ukrainian 1124 gmt 25 Oct 06

BBC Monitoring Service, United Kingdom, Wednesday, Oct 25, 2006

KIEV – Kiev expects to endorse the readmission agreement and the
agreement on the simplification of visa procedures [with the European Union]
at the Ukraine-EU summit in Helsinki on 27 October, deputy presidential
secretariat head Oleksandr Chalyy has told journalists at a briefing.

One of Ukraine’s main expectations from the summit is the beginning of
negotiations on a new framework agreement on cooperation between Ukraine

and the European Union, on its structure and content.

Another key issue will be the beginning of negotiations on the creation of a
free trade zone between Ukraine and the EU, Chalyy said.

Ukraine also expects that a new action plan will be signed at the summit in
the field of justice and internal affairs. Passage omitted: background information]

[UNIAN news agency, Kiev, in Ukrainian 0917 gmt 25 Oct 06 said that Ukraine
wanted to start talks on associated membership of the EU. The report said
quoting Ukrainian Deputy Foreign Minister Andriy Veselovskyy that Kiev
planned to sign a relevant agreement which would contain preconditions for
Ukraine’s political and economic integration into the EU.]       -30-
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========================================================
5. IMF RECOMMENDS UKRAINIAN CABINET OF MINISTERS CANCEL
QUOTAS FOR EXPORT OF GRAIN, HURTING INVESTMENT CLIMATE

Ukrainian News Agency, Kyiv, Ukraine, Wednesday, October 25, 2006

KYIV – The International Monetary Fund has recommended that the Cabinet

of Ministers cancel the quotas for export of grain. The IMF announced this
in a statement.

“The temporary introduction of a quota for export of grain and the
reappearance of the problem involving timely refund of VAT are negative
signals that need to be reversed in order to persuade investors that the
business climate is being corrected,” the statement said.

The IMF stresses that despite the Cabinet of Ministers’ declared intention
to create a market economy that is open and really works, several of the
steps that have been taken in the past few months do not correspond to the
declared intentions.

The IMF believes that improvement of the investment climate in Ukraine is
one of the main tasks of the government. In this context, the IMF believes
that adoption of non-market decisions in various sectors is inappropriate.

As Ukrainian News earlier reported, the Cabinet of Ministers recently
introduced a mechanism for setting quotas for export of grain. The

mechanism came into effect on October 17.

The total export quotas for 2006 are 400,000 tons for wheat and
wheat-and-rye mixture, 600,000 tons for barley, and 600,000 tons for

corn, and 3,000 tons for rye.

Prime Minister Viktor Yanukovych has said that the Cabinet of Ministers
intends to cancel the restrictions on export of grain after completing grain
purchases into government and regional government reserves.

The Cabinet of Ministers introduced licenses for export of wheat and
wheat-and-rye mixtures in September until the end of 2006.

Grain-market experts have said that grain prices are falling on the domestic
market due to the introduction restrictions on grain exports.     -30-
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6. UKRAINE GOVERNMENT TO INSIST ON GRAIN EXPORT LIMITS
 
Reuters, Kiev, Ukraine, Wed, October 25, 2006
 
KIEV – Ukraine’s government is unlikely to abolish grain export limits
introduced last week to protect local millers and feed and meat producers
from a possible shortage, analysts said on Monday.

Ukraine, having cut 7 percent from its 2006 crop forecast, will allow only
1.6 million tonnes of grain to be exported from mid-October to year-end.

The government said it could also boost control over exports and help to
keep bread prices stable.

“The export restrictions are profitable for all parties – except traders,”
UkrAgroConsult agriculture consultancy said. [Restrictions are also not

profitable for thousands of grain producers who badly need more income. 
Agricultural producers should not have to subsidize bread prices for sure.
If the government wants to subsidize bread prices they should do this out
of the budget not the pockets of farmers. AUR EDITOR]

The consultancy said traders’ appeals for unlimited sales would probably be
rejected and that the new trade regime might be enforced until the end of
the 2006/07 season and even beyond.

Several years ago, Ukraine introduced a 17 percent export duty on sunflower
seed. The limit is still in force, despite protests from traders and foreign
trade organisations. “It could be the same situation as with the sunseed
export ban,” UkrAgroConsult said.

Ukraine is likely to harvest about 34.7 million tonnes of grain in 2006 and
the government has said it would do its best to limit exports to about 9.0
million tonnes in the 2006/07 season, ending June 2007.

Ukraine exported about 13.5 million tonnes of grain in 2005/06. Traders and
analysts said the country exported about 4.0 million tonnes of grain in
July-September, while the government sees sales at about 5.5 million tonnes
so far this season.                            -30-

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7. UKRAINIAN PRESIDENTIAL SECRETARIAT SEES NO POINT IN
SYNCHRONIZING UKRAINE’S ACCESSION TO WTO WITH RUSSIA

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, October 26, 2007

KYIV – Ukrainian presidential secretariat deputy head Oleksandr Chaly has
branded as illogical the suggestion that Ukraine’s accession to the World
Trade Organization should be synchronized with that of Russia.

“There is no logic today in raising the question of synchronizing our
joining the WTO [with] Russia. The position of the Ukrainian president is
clear on that,” Chaly said at a briefing in Kyiv on Wednesday.

During a meeting between Ukrainian President Viktor Yuschenko and Russian
Prime Minister Mikhail Fradkov on Tuesday, Russia raised the issue of
possible negative consequences of Ukraine’s accession to the WTO ahead of
Russia in terms of re-export of products from third countries.

Chaly said Yuschenko was trying to convince Fradkov that there are enough
modern trade and economic policy mechanisms and tools to avoid this. “If
Ukraine joins the WTO earlier, this accession will not pose any danger to
the Russian Federation,” Yuschenko said.

The Ukrainian president and the Russian premier agreed to continue working
to alleviate Russia’s concerns on this score, Chaly said. “This dialogue was
positive,” he said.

Chaly recalled that President Yuschenko deems it strategically important to
complete all internal and external procedures within the next two months to
secure Ukraine’s WTO entry.

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========================================================
8. UKRAINE ECONOMY: WAITING FOR RUSSIA ON WTO?
      Will PM Yanukovych move swiftly or will his foot-dragging continue?

COUNTRY BRIEFING: EIU Economy – News Analysis
The Economist Intelligence Unit Limited
New York, New York, Tuesday, October 24, 2006

Ukraine is facing pressure from Russia to synchronise the two countries’
accession to the WTO-a move that would slow or stall Ukraine’s entry

and the start of a free-trade deal with the EU.

On balance, despite his pro-Russian leanings, Prime Minister Viktor
Yanukovych is unlikely to agree, for it is scarcely in his interests to do
so.

Still, there is considerable doubt over whether Ukraine will now move
swiftly to join the WTO or whether Mr Yanukovych’s foot-dragging will
continue.

In the wake of signing an agreement on October 24th on the price Ukraine
will pay for imported gas in 2007, Russian Prime Minister Mikhail Fradkov
urged Ukraine to hold talks with Russia over its accession to the World
Trade Organisation (WTO) and even to synchronise the two countries’ entry.

In practice this would amount to Ukraine slowing down its WTO entry, as

the country has an opportunity to wrap up this process by December.

Russia is a few steps behind Ukraine and while it could complete
negotiations and preparations in late 2006 or at some point in 2007-as the
Economist Intelligence Unit forecasts-there is a risk that the process could
be extended, or that Russia’s government could halt the process because it
doesn’t like the terms on offer.
                              RUSSIAN FRADKOV’S GAME
There are three main elements to Mr Fradkov’s proposal.

[1] First, there is a matter of prestige: Russia would prefer to “lead”
Ukraine (and Kazakhstan) into the WTO, rather than to follow its fellow
former Soviet states into the organisation.

[2] Second, Ukraine’s accelerated accession to the WTO would be followed
by the start of EU-Ukrainian talks on a free-trade agreement (FTA); this
would strengthen Ukraine’s Western ties and so run counter to Russia’s
foreign policy goals.
[3] Third, there is a threat to Russia’s leverage over Ukraine.

If Ukraine entered the WTO first, it could conceivably seek to influence the
terms of Russia’s entry. At present Russia has considerable leverage over
Ukraine, primarily because the latter depends on imports for around 75% of
its gas consumption and the pipelines delivering this gas are under Russian
control.

(Russia’s leverage is not absolute, however, as it depends on Ukrainian
pipelines to deliver 80% of its gas exports to Europe.)

If Ukraine were in a position to influence the terms of Russia’s WTO entry,
its leverage vis-à-vis Russia would improve. In an attempt to avoid this,
Russia seems to have persuaded WTO member the Kyrgyz Republic to

withhold its approval for Ukrainian accession to the WTO.
                                  SAYING “NO” NICELY
Mr Yanukovych is often described as pro-Russian, but this is only partly
correct. He enjoyed Russian support during Ukraine’s 2004 presidential
election and is certainly more favourably inclined towards Russia than the
election’s eventual winner, Viktor Yushchenko.

At the same time, under the rule of Eastern Ukrainian politicians such as Mr
Yanukovych, prior to 2005 Russian business was largely shut out of Ukraine.
So it does not follow that Mr Yanukovych, although he is from
Russian-speaking Eastern Ukraine, will grant Mr Fradkov’s wish.

Indeed, synchronisation of accession with the WTO has major drawbacks for

Mr Yanukovych. Domestically it would drive a huge wedge between his party,
Regions of Ukraine, and President Yushchenko’s Our Ukraine.

Accelerated WTO accession was a key element of the common agenda that

Messrs Yushchenko and Yanukovych agreed before the former named the
latter as prime minister.

For the president, swift WTO accession is vital because it increases Ukraine’s
international economic integration and paves the way for the start of talks
in February 2007 on an FTA with the EU.

Although Mr Yanukovych wields considerable power as a result of
constitutional changes that took effect at the start of 2006, he still has a
strong interest in good relations with Mr Yushchenko and Our Ukraine.

Synchronisation with Russia would also work against the interests of Ukraine’s
steel oligarchs, most of whom are Mr Yanukovych’s allies, as WTO accession
would increase export opportunities for Ukrainian steel.

For these reasons, the Economist Intelligence Unit does not expect Mr
Yanukovych to agree to synchronise WTO accession with Russia. The main
threat to this forecast is the question of gas prices.

At the start of 2006 Ukraine’s government agreed to buy Central Asian gas
from RosUkrEnergo-a venture owned jointly by Ukrainian businessmen and
Russian gas monopoly Gazprom-at a price of US$95 per 1,000 cubic metres,
which was nearly double the previous price.

However, this is still far below the “market price” prevailing in Western
Europe, which has been around US$240 per 1,000 cu metres for much of 2006,
and Russia has indicated its intention to push gas prices for all CIS states
towards European levels.

At their October 24th meeting, Messrs Fradkov and Yanukovych agreed that
Ukraine would pay US$135 per 1,000 cu metres for gas in 2007.

The Ukrainian government is confident that, at this price, industry will
continue to prosper. However, the authorities were hoping to fix the gas
price for several years rather than just 2007.

If Russia explicitly links future gas pricing to the issue of WTO accession,
it is possible that Mr Yanukovych might be swayed in favour of Mr Fradkov’s
proposal.
                                         SHOWTIME
Although Mr Yanukovych is unlikely to accede to the Russian request, it does
not follow that Ukraine will now move rapidly to gain entry to the WTO.

The prime minister has called for a thorough analysis of the impact of WTO
membership on Ukrainian industry and has hinted that some manufacturers

will be adversely affected by it.

For this reason, he has slowed down accession preparations and has raised
the prospect of further negotiations by requesting extended transition
periods with some WTO states.

On Mr Yushchenko’s initiative, the final 20 bills needed to meet the WTO’s
requirements were sent to parliament in October. However the prime minister
and Oleksandr Moroz, the parliamentary speaker, have dragged their feet on
passing the necessary legislation.

Mr Yanukovych has done this partly to protect Ukrainian business and
financial interests-although other business interests have been harmed by
this action-and partly in order to placate Russia ahead of the gas-price
negotiations.

The question now is whether, with the gas price agreed for 2007, Mr
Yanukovych will push ahead with WTO accession.

Mr Yanukovych’s public stance on the WTO question gives little reason for
optimism-but continued delay could threaten his relationship with Mr
Yushchenko, and thus his ability to govern, and will do little to endear him
to the owners of the steel sector that form the backbone of Ukraine’s
economy.                                             -30-

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9. UKRAINIAN PRESIDENT SAYS SHOULD BE NO LINK BETWEEN
               GAS PRICE AND ISSUES LIKE NATO AND WTO 

Interfax-Ukraine news agency, Kiev, in Russian 1728 gmt 25 Oct 06
BBC Monitoring Service, United Kingdom, Wednesday, Oct 25, 2006

KIEV – .Ukrainian President Viktor Yushchenko believes that gas
price and gas issues can in no way be linked to geopolitical issues like,
for instance, accession to NATO or the World Trade Organization

Yushchenko said this at a meeting with Deputy Prime Minister Andriy

Klyuyev, Energy and Fuel Minister Yuriy Boyko and the management of
the state joint-stock company Naftohaz Ukrayiny, the presidential press
service reported on Wednesday [25 October].

At the meeting they discussed the signing of gas contracts by Ukraine for
2006-07.

The Ukrainian president thinks it is important to sign a bilateral
intergovernmental protocol between Ukraine and Russia as stipulated by a
relevant interstate agreement.

During the meeting, Yushchenko raised the issue of the role of the [Russian]
Gazprom open joint-stock company in gas supplies, of what gas will be
supplied to Ukraine in 2007, as well as of how the transit payment for
Gazprom will be calculated.

The president pointed to the importance of establishing a gas transport
consortium, but he believes that this consortium should be set up on solely
transparent terms with the involvement of the European Union, Ukraine and
Russia.

Yushchenko also noted the importance of discussing energy supplies and

rates for both supplied energy and transit services in the CIS and the Single
Economic Space [a common market agreement involving Russia, Ukraine,
Kazakhstan and Belarus].

The meeting took place at Boryspil airport on Wednesday before the
president’s departure on an official visit to Finland where a Ukraine-EU
summit is to be held.                                -30-
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10.    UKRAINE GAS DEAL WITH RUSSIA MARRED BY FEARS OF

DWINDLING AUTONOMY, APPEARED TO HAVE STRINGS ATTACHED

By Tony Halpin in Moscow, The Times Online
London, United Kingdom, Wednesday, Oct 25, 2006

UKRAINE yesterday avoided a repeat of last winter’s gas crisis by agreeing
a new deal with Russia to secure fuel at heavily discounted prices.

But the agreement to supply Ukraine with gas at no more than $130 (£70) per
1,000 cubic metres appeared to come with strings attached that would
strengthen Moscow’s influence over its former Soviet satellite.

Prime Minister Viktor Yanukovych announced the deal after meeting his
Russian counterpart Mikhail Fradkov in Kyiv. He said that Ukraine would
receive at least 55 billion cubic metres of gas from Central Asia in 2007.

Mr Yanukovych was Moscow’s favoured candidate in the disputed presidential
election of 2004 that brought his rival Viktor Yushchenko to power in
Ukraine’s Orange Revolution. He has sought to rebuild relations with the
Kremlin since Mr Yushchenko appointed him Prime Minister in August.

The gas agreement was seen as a victory for Mr Yanukovych’s efforts, but it
appeared to have given Russia a voice in Ukraine’s drive to join the World
Trade Organisation and Nato.

Mr Fradkov said that the two neighbours should consult each other over their
entry into the trade body. He said: “I would say quite openly that we need
to synchronise the negotiation process of our countries on WTO.”

Ukraine still faces a sharp increase in energy costs this winter, since it
currently pays $95 per 1,000 cubic metres of gas. However, it had feared
that Moscow would insist on the price of $230 that the Russian energy giant
Gazprom had sought at the height of the “gas war” last January.

Mr Yanukovych said that gas supplies had been overly politicised and that
both sides were keen to move the issue into the commercial arena. He said
that Ukraine would guarantee gas import volumes and reliable transit “so
that European partners do not feel any discomfort”.

Russia stunned European Union countries earlier this year when it turned off
the supply tap to Ukraine in a bitter stand-off over gas pricing. Eighty per
cent of Russian gas supplies to Europe pass through Ukrainian pipelines and
the dispute exposed the EU’s vulnerability to economic pressure from Moscow.

The demand for a doubling of gas prices to Ukraine was seen as the Kremlin’s
revenge for Mr Yushchenko’s attempts to move his country closer to Europe
and out of Russia’s embrace.

Mr Yushchenko’s Our Ukraine party accused Mr Fradkov of seeking to put
“pressure on Ukraine aimed at influencing its foreign policy”. But Mr
Yanukovych said that there was no alternative to close cooperation between
Moscow and Kiev.

Yulia Tymoshenko, the leading opposition politician, accused the Government
of “treason” in signing the deal with Russia and said that Ukraine was
losing its independence.
HOW THE DRAMA PLAYED OUT: RUSSIAN/UKRAINE GAS DISPUTE
November 30, 2005: Russia declares that it wants to impose a sharp increase
in the price of gas it sells to Ukraine, starting from January

December 15: The showdown escalates as Gazprom, Russia’s state gas
monopoly, demands that the former Soviet republic agrees to a fourfold
rise in prices

December 31: The European Union calls an emergency meeting of energy
officials amid fears that its gas supplies could be disrupted by the dispute
between Russia and Ukraine. The meeting comes as Gazprom turns down
Ukraine’s offer to continue talks and repeats its threat to cut off the
country’s supplies

January 2, 2006: Russia cuts supplies to Ukraine, triggering fears of an
energy shortage across Europe. Britain’s Energy Minister warns that the
Kremlin’s decision to disconnect its former Soviet bloc ally could hit
prices here. The United States says it regrets Russia’s decision. Gazprom
accuses Ukraine of retaliating by stealing Russian gas destined for the EU.
(A quarter of all EU gas is piped from Russia via Ukraine)

January 3: Russia begins restoring gas flows to Europe after a suspension of
deliveries to Ukraine devastates supplies across the Continent. Gazprom
pledges to pump more gas through Ukraine to make up for shortfalls in
Germany, France, Italy, Austria and at least seven central and eastern
European countries

January 5: Russia declares a truce in the gas war with a complex, five-year
deal with Ukraine. However fears remain that it may prove to be only a
temporary solution.                                   -30-
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LINK: http://www.timesonline.co.uk/article/0,,5-2420369.html
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11. UKRAINE CAN COPE WITH GAS PRICE RISE SAYS FORMER
               U.S. AMBASSADOR TO UKRAINE STEVEN PIFER

INTERVIEW: With Steven Pifer, former U.S. Ambassador to Ukraine
INTERVIEW BY: Jan Maksymiuk, Belarus, Ukraine, & Moldova Report
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Tuesday, October 24, 2006

PRAGUE – Steven Pifer served from January 1998 to October 2000 as
the U.S. Ambassador to Ukraine.

On the sidelines of the Prague Energy Forum, organized by Radio Free
Europe/Radio Liberty in partnership with the Warsaw-based Institute for
Eastern Studies, Pifer spoke to RFE/RL’s Jan Maksymiuk about the
aftermath of the Orange Revolution, Ukraine’s gas price rise, and the state
of the proposed Russia-Belarus union.

RFE/RL: How do you assess the Orange Revolution in Ukraine in 2004
from the perspective of the nearly two years that have since passed?

Are there any practical results of the revolution for ordinary Ukrainians
today? Are you disappointed with the turn of political events in the country
following this year’s parliamentary elections?

Steven Pifer: Well, I think the turn in political events in Ukraine has
probably surprised many — the fact that [Prime Minister Viktor]
Yanukovych has returned. But he returned basically as a result of a free
and fair democratic process.

So, that’s hard to argue with. In the longer term, though, if you look at
the Orange Revolution, the impact is going to be seen in things such as a
media that I think today is stronger, feels more independent, and is
prepared to challenge the government, and a stronger
nongovernmental-organization sector.

You will have, I believe, a strong and vocal opposition in [former Prime
Minister and opposition leader Yuliya] Tymoshenko as an opposition
leader, unlike the kind that Ukraine has had in the past. So I think there
are different manifestations now that are good for Ukrainian democracy.

And, again, with regards to Mr. Yanukovych’s return, his party won in March
in a free and fair election; hopefully now it doesn’t bring some of the
baggage back from the [former Ukrainian President Leonid] Kuchma years.
But I think there will be a lot of people watching very carefully on this.

RFE/RL: The coming of President Viktor Yushchenko to power in 2004
became possible through the introduction of a constitutional reform that
limited presidential powers in favor of the prime minister and parliament.

Ukraine has moved from a presidential republic, which is characteristic of
most post-Soviet states, to a parliamentary-presidential system, which is
more typical of European democracies.

But this shift has triggered a bitter confrontation between Yushchenko and
Yanukovych over who should be the real ruler of the country. Don’t you
think that Ukrainians are not yet ready to break with their political
thinking in terms of the authoritarian power system established by Kuchma?

Pifer: I’d say, [1] first of all, that this change, the fact that Ukraine
has moved from a supra-presidency model to a parliamentary-presidential
model, is probably a good thing. Certainly one of the problems of the
Kuchma era was that you had too much authority in the president, with no
real checks and balances.

So now you have more serious checks and balances, first of all between the
Ukrainian executive branch and the legislative branch, and also between the
president and the prime minister.

Ukrainian large industry already understands that the price of energy is
going up, probably eventually to world market prices. And therefore, large
businesses are making decisions now in investing in energy-efficient
technologies, decisions that they didn’t make four or five years ago because
gas was so cheap and there was no economic reason.

[2] Second, I would point out, if you look at the countries in Central
Europe and the Baltic states that have successfully made the transition
after the collapse of the Soviet Union, after the collapse of the Warsaw
Pact, those countries that joined NATO and the European Union in 1999 and
2004, they all had the parliamentary-presidential model. This has been a
successful model in Central Europe.

Now, the problem that we’ve seen, and we saw it for example in the debate in
September, over whether Ukraine would seek a NATO membership action
plan, was that although there are new constitutional arrangements now in
effect, there’s some ambiguity, there’s not total clarity on issues such as
the NATO membership action plan.

Or on other questions, there may no precise guide as to what happens when
the president and the prime minister are in disagreement. I’m not sure that
this is something that can be fixed easily or quickly by looking at the
Ukrainian Constitution.

In the end, it may be very important that the two Viktors — President
Yushchenko and Prime Minister Yanukovych — are going to have to come to
terms together if they want to produce coherent policy that moves Ukraine
forward. And that’s going to be a challenge for both of them. But it’ll be
important for Ukraine that they meet that challenge.
             CAN UKRAINE HANDEL HIGHER GAS PRICES?
RFE/RL: Today Kyiv and Moscow are expected to sign a deal on gas supplies
for 2007. What is your prediction regarding the price Ukraine will have to
pay for imported gas next year? And what impact may this new price have on
Ukraine’s economy?

Pifer: Based on what I’ve seen, the expectation is that in 2007, Ukraine
will have to pay something on the order of $100-$135 per 1,000 cubic meters
of gas, which is an increase from the $95 per 1,000 cubic meters that
Ukraine has paid for imported gas in 2006.

What struck me when I was in Kyiv in September was when I talked to various
people, both in the government and also in industry, nobody seemed to see
that this would be a huge problem.

They seemed to understand that the price was going up, and they seemed to
believe that this would not be a huge blow to the Ukrainian economy.

And what I heard from multiple sources was that in fact, Ukrainian large
industry already understands that the price of energy is going up, probably
eventually to world market prices.

And therefore, large businesses are making decisions now in investing in
energy-efficient technologies, decisions that they didn’t make four or five
years ago because gas was so cheap and there was no economic reason.
So they’re making decisions now.

And several people said that if Ukraine has two or three years to make this
transition, they should be able to accommodate this, introducing new
energy-efficient technologies, and be able to absorb the price increases.

Now certainly it won’t be without some pain, but I was surprised in
September that most people talked about it as if Ukraine could manage it in
a way that people weren’t talking about managing energy price increases say
eight or 10 months ago.

RFE/RL: Yanukovych has said that Ukraine should be prepared for an even
more painful gas price hike beyond 2007. And Yushchenko has recently
signaled that Ukraine should return to talks on forming an international
consortium, with the participation of Russia, to run his country’s gas
transit pipelines.

Do you think Ukraine can ensure its energy security without giving control
over its gas transit infrastructure to Russia?

Pifer: There are two different questions here. [1] The first question is,
Ukraine ultimately needs to be prepared that it’s going to have pay world
market prices for energy.

I think it’s also fair for Ukraine to expect that there’ll be a certain
transition period, just as for example Russia, when it negotiated its WTO
bilateral agreement with the European Union, negotiated with the EU a
five-year transition in terms of raising domestic prices for energy within
Russia.

Russian Prime Minister Mikhail Fradkov arriving in Kyiv today for energy
talks (Ukrinform)But it makes sense both from an economic point of view,
but also from the point of view of energy security, that Ukraine plan that
it’s going to ultimately have to pay world market prices, and therefore
begin adapting toward that.

Because once Ukraine is paying global prices, it reduces the amount of
political leverage that Russia may have over Ukraine. If Ukraine’s getting a
special deal, there will be that temptation for the Russians to exploit that
question.

[2] The second question on the international consortium — this is something
that five or six years ago, when I was still in the American government, we
were very interested in, because we saw an international consortium to
manage the pipeline as a way to promote win-win solutions, both for Ukraine
and for the producers and shippers in Russia, but also for the consumers.

I think the consortium idea still has some merit. But it’s going to be very
important that Ukraine look at the exact terms of what the consortium looks
like.

The concern here is that when designing the consortium with Russia involved,
and they usually also talk about a consumer, maybe [German gas company]
Ruhrgas or somebody on the consumer side being involved.

Ukraine has to bear in mind that there always may be a convergence of
interests between the producer and the shipper in Russia, and the consumer
in Western Europe. And that convergence of interests is, of course, that the
shipper and the consumer want to minimize the transit costs.

So there is that alliance of interests which could work against Ukraine. So
Ukraine has to make sure that the consortium is designed in such a way that
its interests do not get short-changed.
                            THE RUSSIA-BELARUS UNION
RFE/RL: Belarus is a country that pays for Russian gas deliveries not so
much with money as with political loyalty.

In your opinion, for how long may Belarus expect to receive gas from Russia
at such a discount as now, when it pays just $47 per 1,000 cubic meters of
gas? Will Russia increase its gas price to Belarus next year? If so, by how
much?

Pifer: I’m a little bit less familiar with the gas and energy scene in
Belarus than in Ukraine, but I think it would be awfully optimistic for
Belarusians to continue to expect to enjoy that kind of deal. If you look
around, Ukraine will be paying $130, and in the Baltics it’s already $120
and it’s likely to go up.

Forty-seven dollars seems to be fairly much of a gift. And indeed, Gazprom
has already been making noises that they would like to raise the prices of
energy, because Gazprom also is a partially commercial entity, at least.

There’s a mixture there because it’s state owned, but Gazprom is also
looking to maximize its revenues, and it’s hard to see how Gazprom can
afford to continue to provide energy at that low price to Belarus. So I
think Belarus would be wise to begin thinking about what happens when the
prices of energy go up there.

RFE/RL: Some Russian and Belarusian analysts believe that Moscow has no
clear vision of what to do with Belarus.

Russian President Vladimir Putin proposed to Belarusian President Alyaksandr
Lukashenka three integration scenarios in 2002: (a) political absorption of
Belarus by Russia; (b) integration similar to that between the EU countries;
(c) putting into operation the 1999 union state treaty that has so far
remained mostly on paper.

Lukashenka rejected the first two options, stressing the equality of both
sides in a common state. What is your opinion about the future shape of the
Belarus-Russia Union? Could it be a viable political formation?

Pifer: That ultimately is going to depend upon Russia and Belarus. What has
struck me is that although the two countries have talked about a political
union since the mid-1990s, you really haven’t seen much in the way of real
progress.

Part of my assumption has always been that while the Russians talk about a
political union with Belarus, they didn’t want to make the practical steps,
because actually bringing Belarus into a union with Russia would probably
impose some significant economic costs, not only in terms of the energy
subsidies that Russia is already providing, but also other types of
subsidies to make that work.

It seems to me that up until now, Russia has been unwilling to make that
economic investment to make a political union. I also found it interesting
that when President Putin posed those two alternatives, either absorption or
an EU-type arrangement, it was almost designed as if he was trying to give
Mr. Lukashenka two alternatives that were very unpalatable.

It seems to me that while there may be talk about this political union, I
haven’t really seen much evidence that either side is moving to make that a
reality, which suggests that both sides may be comfortable with talking
about a union, but neither is really prepared to make the investment in the
costs, or the sorts of real changes that would be necessary to make that
happen. Both may be in fact comfortable with the current situation. -30-
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http://www.rferl.org/featuresarticle/2006/10/FB362C3A-971E-4A2E-ABD3-DFB3F3E35ABE.html
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12. UKRAINIAN PRIME MINISTER YANUKOVYCH SCOLDS FOREIGN
         MINISTER TARASYUK FOR SMILING AT CABINET MEETING

ICTV television, Kiev, in Ukrainian 1545 gmt 25 Oct 06
BBC Monitoring Service, United Kingdom, Wed, Oct 25, 2006

KIEV – [Presenter] It has become dangerous to smile during the cabinet
meetings. [Ukrainian Foreign Minister] Borys Tarasyuk paid for this today.
He allowed such a frivolity during [Prime Minister Viktor] Yanukovych’s
opening remarks.

Later, Tarasyuk said that he smiled as he was wishing happy birthday to
Defence Minister Anatoliy Hrytsenko. At that moment, Prime Minister

Viktor Yanukovych was repeatedly asking the cabinet ministers to visit the
Ukrainian regions in order to resolve all issues related to the heating
season. He could not understand why the minister was smiling.

[Yanukovych] Tarasyuk, your sense of humour – [changes tack]. I will later
tell you what kind of sense of humour it is going to be. You’d better listen
when I am speaking. If I were you, I would not smile.       -30-
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13. UKRAINE-NATO RELATIONS: NATIONAL DEBATE NEEDED
                              The question “To join, or not to join.”

ICPS Newsletter Bulletin # 338
International Centre for Policy Studies (ICPS)
Kyiv, Ukraine, Wednesday, October 25, 2006

KYIV – The question “To join, or not to join” has overshadowed the entire
debate on integration into the North Atlantic Treaty Organization.

The vast majority of supporters and opponents of NATO membership alike
have strong views on this issue, often formed on the basis of political,
foreign policy preferences or persistent stereotypes.

Instead of agreeing a list of national security issues and looking for
solutions based on this list, both camps seem to often work backwards from
set views, and formulating problems to matched pre-determined solutions.

The International Centre for Policy Studies believes that in order to get
beyond this current impasse, two key things are needed:
[1] rational, unbiased analysis and [2] open, constructive dialog.

For this purpose, ICPS organized and held an international conference called
“Intensified Ukraine-NATO Cooperation: Challenges and Benefits of
Accession to the Membership Action Plan,” with the financial support of the
NATO Information and Documentation Centre in Kyiv and the Embassy of
the Kingdom of the Netherlands to Ukraine
     CLARIFY THE PRESENT AND DECIDE THE FUTURE
The main theme of the conference was a phrase formulated by ICPS
specialists: “Clarifying the present and deciding the future.”

As a matter of fact, experts and some politicians and Government officials
are working already to clarify what is going on in the relations between
Ukraine and the Alliance.

The rest and the overwhelming part of Ukrainian voters do not have enough
information and only pick up on messages in the media that are frequently
politically biased or incomplete.

This is all happening at a time when Ukraine’s accession to NATO and joining
the European Union have been declared the main strategic goals of Ukraine’s
foreign policy.

ICPS specialists say Ukrainian society needs rational, unbiased analysis and
open, constructive dialog. This cannot establish 100% consensus among the
country’s politicians or the general public about the single right decision.

What it can do, however, is to build consensus about the criteria according
to which such decisions should be made and to ensure that both voters and
policy-makers are able to make well-informed decisions.
  CHANGING CONCEPTS: MAP IS NOT AUTOMATICALLY
                                   ACCESSION TO NATO
For much of 2006, Ukraine’s Government was preparing for the next stage in
Ukraine’s integration into NATO-accession to the Membership Action Plan
(MAP).

The very title of this document made it the focus of political controversy.
As a result, the new Government refused to implement the Plan, referring to
weak support for NATO membership among Ukrainian voters.

The Premier did not bother to mention the fact that, although the MAP is a
preliminary stage to NATO membership, it does not automatically lead to
membership and that only after implementing the MAP will the country be
able to make a decision to join or not join the Alliance.

ICPS specialists say that Ukraine needs the MAP primarily as the country’s
internal roadmap to political, economic and social reforms, internal
security, reinforcement of democratic institutions, protection of human
rights, and reform of the judiciary, the military and internal security. The
MAP does not provide for mandatory accession to NATO upon
implementation.

Yet, the MAP is NATO’s program for providing consultations, assistance

and practical support in implementing what are often costly internal
transformations.

Speaking at this conference, ICPS Director Viktor Chumak said that NATO’s
Membership Action Plan could play an important role for the Ukrainian
Government in both stimulating change and keeping it on track and making the
country’s reforms systematic.
 GOVERNMENT LOST CAMPAIGN TO POPULARIZE NATO
According to Serhiy Dzherdzh, president of Demokratychna Diya [Democratic
Action], an All-Ukrainian community organization, the assurance that a
public awareness campaign will succeed is its actual implementation.

Although UAH 5mn were allocated in the 2006 State Budget to carry out such
a campaign regarding NATO, there has been practically no effect.

A clear example of what can happen in an information vacuum was the events
in June around to the Sea Breeze 2006 military exercises. An ambiguous
situation over the fact that permission to actually conduct military
exercises in Ukraine had not yet been passed by the VR became the excuse
for a large-scale public campaign against NATO.

Although NATO has no direct relationship to these exercises and at that
point, Ukraine was acting in accordance with existing legislation, the
Yekhanurov Government had failed to explain its position effectively to
voters so that the public would properly know what was going on.

These protests showed just how totally ineffective Ukraine’s Governments
have been in promoting the idea of NATO among Ukrainians.

At the root of the NATO information campaign fiasco are both political
factors- on the eve of the Verkhovna Rada elections, the Government was
afraid to explain unpopular decisions-and institutional ones-the lack of a
working system in the Government to inform voters about its decisions.

In addition, the old Government program for informing voters is hardly
suitable for implementation in an environment where the media are free and
privately owned.

The most important thing is that responsibility for carrying out a public
awareness campaign is not clearly defined. Meanwhile, the main lesson of
democracy is that any political decision must be public, while the
appropriate minister carries personal responsibility.

The Ukrainian Government must understand one thing: NATO should not
and will not take responsibility for informing Ukrainian voters about
relations between Kyiv and Brussels.

It is the task of Ukraine’s own politicians to explain and to deliver their
intentions to Ukrainian citizens. Speaking at this conference, NATO
Headquarters Press Officer Robert Pszczel emphasized that a country
interested in joining the Alliance must focus as much as possible on
domestic public opinion.
                 HOW TO RUN A PUBLIC AWARENESS

                            CAMPAIGN THAT WORKS
EURISC Project Director Dr. Septimiu Caceu and LATO Secretary General
Murnieks Martins shared their experience in running public awareness
campaigns in Romania and Latvia. Romania set up a special center was set
up responsible for informing the public about NATO.

In addition to holding special seminars and conferences, this center also
organized workshops for young people. Among the factors that led to the
success of the public awareness campaign in Latvia were Government
financing and the active involvement of NGOs.

According to ICPS experts, there are two problems in Ukraine.

[1] Firstly, very little baseline data is available about the level of
knowledge about and attitudes towards the Alliance among different groups
of voters. This makes it difficult to plan opinion surveys effectively or to
measure possible changes after public awareness campaigns.

[2] Secondly, if a public awareness campaign is perceived as overtly
pro-NATO, it is unlikely to have the desired effect.

In Ukraine, a standard public awareness campaign may be insufficient. In
addition to informing the public, there needs to be a national debate on
security and defense issues in Ukraine.

Politicians and voters who have different attitudes towards NATO not only
need to hear objective information about problems and threats in this area,
but also to participate in a dialog on how to handle these problems, with
membership in NATO presented as one of several options.

At this conference, experts concluded that the success of any public
awareness campaign in Ukraine would depend on the application of new
formats.

As Government arguments do little to raise confidence among voters, policy
centers need to be involved in this public awareness campaign. As a rule,
such experts provide relatively unbiased, objective information, so their
opinions are more likely to be heard.

The international conference called “Intensified Ukraine-NATO Cooperation:
Challenges and Benefits of Accession to the Membership Action Plan” was
held as part of the “Public Campaign to Increase Public Awareness of
Government Defense and Security Policy” project.

This project is being implemented by the International Centre for Policy
Studies (ICPS) with financial support from the MATRA KAP Program, the
NATO Information and Documentation Centre in Kyiv, and the Royal
Embassy of the Netherlands to Ukraine.

For additional information, contact ICPS Director Viktor Chumak
via e-mail at vchumak@icps.kiev.ua.
——————————————————————————————
Andriy Starynsky, Client Relations Manager, International Centre for
Policy Studies; 13-a Pymonenka Street Kyiv 04050, Ukraine
E-mail: astarynsky@icps.kiev.ua; Web-site: http://www.icps.kiev.ua
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14. RUSSIA BRISTLES AT UKRAINE’S PUSH TO DECLARE
                       SOVIET-ERA FAMINE A GENOCIDE 

Associated Press, Moscow, Russia, Wednesday, October 25, 2006 

MOSCOW – Russia’s Foreign Ministry on Wednesday bristled at Ukrainian
officials’ push for declaring a Soviet-era famine that killed up to 10
million people as genocide, saying it was part of Communist repressions

that also affected other ethnic groups in the former Soviet Union.

Up to 10 million Ukrainians died in the 1932-33 Great Famine, which was
provoked by Soviet dictator Josef Stalin as part of his campaign to force
peasants to join collective farms. Ukrainian officials have called for an
official recognition of the famine as genocide.

The Russian Foreign Ministry on Wednesday criticized Ukrainian authorities
for what it called a “unilateral interpretation” of the famine. “It was
wrong to apply the notion exclusively to Ukraine, because it deals with a
sad page in our common history,” the ministry said in a statement.

Countries including the U.S., Canada, Austria, Hungary and Lithuania have
recognized the famine as genocide, but the issue remains highly charged in
Ukraine, since declaring the famine as genocide would amount to an
indictment of Soviet policies – something that Communists, Socialists and
many pro-Russian politicians are loathe to do.           -30-
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15.              WE CANNOT LIVE WITHOUT THE TRUTH
         A roundtable on the Holodomor in Ukraine held at Ukrainian House
              “Let us not forget: there is no statute of limitations on crimes
                                against humanity – above all, genocide.”

By Ihor Siundiukov, The Day
The Day Weekly Digest in English #33
Kyiv, Ukraine, Tuesday, October 24, 2006

When a person dies, the whole world dies with him. When an entire nation
is annihilated deliberately, systematically, with infernal cruelty, what
tempestuous scream of the soul will be commensurate with such a tragedy?

There may be no appropriate words for this in the Ukrainian language – or
any language for that matter. Even the words “doomsday,” “apocalypse,”
and “Last Judgment” sound feeble.

There are people in the world that know what genocide is. Humanity will
never forget the Nazi Holocaust of the Jews or the mass annihilation of the
Armenians by the Ottoman authorities in 1915.

Ukrainians, who experienced a planetary-scale catastrophe, which the
Holodomor of 1932-1933 was, also have the indisputable right to declare
that our nation has gone through genocide.

Understanding this manifest fact is an absolute imperative for us, who are
living in 2006. For we cannot live without the truth about the past, no
matter how horrific it was – nor can we live without the truth about the
Holodomor. Only then we will comprehend what a (post-genocidal) society
we are.

The main purpose of the roundtable, held at Ukrainian House under the
patronage of the Secretariat of the President of Ukraine and with the
assistance of the Institute of National Memory, was not just to organize a
public discussion of President Yushchenko’s initiative concerning the
political and legal assessment of the Holodomor of 1932-1933 in Ukraine.

The president has already submitted a corresponding draft law that will
recognize this terrible catastrophe as an act of genocide against the
Ukrainian nation. It was also a search for consensus on the main question:
how to prevent the repetition of anything similar in the future.

Before the discussion began, the participants watched the documentary
film Holodomor: Ukraine (The Technology of Genocide).

This film is only 10 minutes of restrained, severe narration, a sorrowful
seething memory, but these 10 minutes are truly shocking. The directors
of the film recount the famine terror only in one Ukrainian village –
Kapustyntsi, in Kyiv oblast.

In the village stands an obelisk in honor of the heroic natives of
Kapustyntsi who perished in the Second World War. Over a period of
four years 170 such obelisks were erected (all named individually).

During a five-month period, from November 1932 to April 1933, the Great
Holodomor claimed the lives of 1,124 people in this village alone.

Elderly people who still remember the Holodomor unhesitatingly answer the
question: what was more terrible, the famine or the war? – The famine. The
same answer is even given by an elderly woman who was in Auschwitz.

Opening the roundtable, the first deputy head of the Presidential
Secretariat, Ivan Vasiunyk, declared that in view of the 75th anniversary of
the Holodomor in 2008 the Ukrainian government wants to repay the debt
to its people and finally give a proper state-level political and legal
assessment of the events of 1932-1933 in Ukraine.

The parliaments of 10 countries (Australia, Estonia, Italy, Canada,
Lithuania, Georgia, Poland, the US, Hungary, and Argentina) have officially
recognized the Ukrainian Holodomor as our nation’s genocide.

But the Verkhovna Rada of Ukraine has not done this yet, even though more
than half of all Ukrainians polled by sociologists would definitely support
such an action.

The goal of the roundtable, Vasiunyk underlined, is not the struggle against
the shadows of the past, but the most drastic separation from the practices
of totalitarianism, Stalin’s regime, which annihilated up to one-quarter of
Ukraine’s population in the 1930s.

The specialists’ discussion at the roundtable, President Yushchenko hopes,
will help the Verkhovna Rada finally to carry out its duty to the Ukrainian
people and facilitate its recognition of the fact of the totalitarian
genocide.

According to the assessment of academic Ihor Yukhnovsky, the director of
the Institute of National Memory, the Holodomor was the logical completion
of a certain chain of events dating to 1918, not a sudden, instantaneous
catastrophe.

This was the opinion of all the scholars, who later presented papers: the
historians Vasyl Marochko, Ruslan Pyrih, Vladyslav Verstiuk, and Valentyna
Borysenko.

Dr. Marochko quoted a key statement of the well-known United Nations
Convention on the Prevention and Punishment of the Crime of Genocide of
December 1948, according to which genocide is “acts committed with intent
to destroy, in whole or in part, a national, ethnical, racial or religious
group.”

This speaker underlined that the key thing is concrete actions, not intent;
nevertheless there was undoubtedly intent – it is enough to mention Stalin’s
rabid “class struggle” against “the kurkul” (a Ukrainian peasant in fact),
“the blacklists” of “unreliable” villages (which in reality meant isolation
and the total annihilation of the majority of the population), detachments
that hemmed in the peasants, etc.

Thus, all the features of genocide are present; the question is only the
political will of the Verkhovna Rada. [See Footnote from the AUR
Editor on this subject after the next article.]

In his brief speech Ukraine’s Minister of Foreign Affairs Borys Tarasiuk
mentioned his recent journey to Poltava and his polemics with a convinced
communist, who stated the following: “Why are you, the government, duping
the people – all the way to the UN – with your Holodomor and genocide?”

Borys Tarasiuk asked rhetorically whether one can imagine a Jew or an
Armenian having such an attitude to his own nation’s catastrophe.

The foreign minister reminded his listeners about the 2003 Joint Declaration
of the General Assembly of the UN, supported by 63 countries, concerning
the Holodomor in Ukraine.

Unfortunately, as a result of harsh resistance from the Russian Federation
and a number of other countries, the word “genocide” does not appear in
this document.

In April 2006 Russia opposed a discussion of this question during a meeting
of the foreign ministers of the CIS states. Thus, exceptionally difficult
but absolutely crucial work is ahead.

The roundtable’s participants emphasized that there is a huge body of
documents that indisputably prove both the fact of the genocide and its
organized character (documents of the Moscow and Ukrainian republican
party bosses, secret directives of the OGPU and the People’s Commissariat
of Internal Affairs, population census data for 1926 and 1937, diaries of
eyewitnesses of these events, their oral testimonies).

But, as the historian Ruslan Pyrih remarked, none of these documents taken
individually or altogether give exact figures of the number of victims,
which is why these figures range from 3.8 to 12 million.

He repeated his emphasis that all the hallmarks of genocide, according to
the fundamental UN Convention, can be systematically substantiated by
documentation.

This is a scholar-historian’s view. Here are the recollections of a person
who witnessed all this horror. The floor was taken by 87-year-old Hryhorii
Haraschenko, a war veteran who was wounded 12 times, a courageous and
honest man, and a long-standing CPSU member.

This old but marvelously energetic man declared firmly: “It is a lie when
people say that there was a poor harvest in 1932-1933, which then led to
the tragedy. I say with all dependability: on the contrary, in our village
in Polissia we didn’t know what to do with the harvest!

But there was an absolutely merciless order of the GPU and local party
authorities: do not touch a gram of “state” grain – literally not a gram,
otherwise you could be arrested or even killed. The threshing was done
under the personal strict control of a GPU lieutenant …”

The words of the outstanding German Friedrich Schiller were repeatedly
mentioned during the roundtable: “World history is the world’s court of
justice.”

But this is true if you speak the language of conscience. In juridical
language, all those present at Ukrainian House insistently called upon
Ukraine’s parliamentarians to repay the debt to the sacred memory of those
who were unjustly killed and to recognize the fact of the genocide of
1932-1933.

Let us not forget: there is no statute of limitations on crimes against
humanity – above all, genocide.                   -30-
———————————————————————————————-
LINK: http://www.day.kiev.ua/171003/
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16.           WHY ISN’T THE WORLD RECOGNIZING THE

                   HOLODOMOR AS AN ACT OF GENOCIDE?

COMMENTARY: By Oleksandr Kramarenko
The Day Weekly Digest in English #33
Kyiv, Ukraine, Tuesday, October 24, 2006

This article was prompted by Minister of Foreign Affairs Borys Tarasiuk’s
recent appeal to the international community to recognize the Holodomor of
1932-1933 in Ukraine as an act of genocide. As with his previous appeals,
the world did not react to this one.

I think that Mr. Tarasiuk, who is an experienced diplomat, was not counting
on the success of that hopeless endeavor, just as he had not expected that
last year’s appeals to step up Ukraine’s integration into NATO would have
any positive effect.

Vivid proof of the unpreparednesss of the minister’s measures is the fact
that our own Verkhovna Rada still has not recognized the Holodomor as an
act of genocide.

So, it was no surprise that in response to some Ukrainian parliamentarians’
appeal to the Israeli Knesset to recognize the Holodomor as an act of
genocide, the Israeli parliament said it did not know anything about this
genocide.

This happened when Kyiv was marking the 65th anniversary of the Babyn
Yar tragedy, so our MPs must have expected the Jews, moved as they were
by the hospitality of the Ukrainian establishment during the ceremonies, to
reciprocate.

I think that those gentlemen from the Verkhovna Rada not only have a rather
vague idea about the Holodomor, they also failed to closely follow the
events in Babyn Yar.

They must have missed the speech delivered by Viacheslav Kantor, the leader
of the Jewish communities in Russia, who angrily rejected all attempts to
identify the Holodomor with the Holocaust because, in his opinion, the
famine of 1932-1993 was not genocidal and that many peoples of the former
USSR had also suffered.

We have heard statements like this before, haven’t we? Another possibility
is that Kantor, as a representative of such a democratic country as Russia,
simply had no choice.

Yet his sharp condemnation of Ukrainians who had allegedly massacred
Jews in Babyn Yar is evidence that he was voicing his own view.

Miracles do not happen in this world. The world will never recognize an act
of genocide that is not perceived as such by the absolute majority of the
people who suffered as a result of it.

The question does not concern just the Verkhovna Rada’s procrastination
(despite the fact that the parliamentarians are elected by those very
people).

Kantor’s speech in Kyiv must have been heard by our entire political
leadership, including the president, by people who are supposed to be at the
head of the movement to recognize the Holodomor as an act of genocide.

Yet we have not heard a single response to the Moscow guest’s insolent
statement. You must agree that against this background Ivan Dziuba’s speech
during the ceremony (published in The Day) was like Don Quixote fighting
windmills.

At the same time, there is an essential methodological error in statements
made by Tarasiuk and other politicians concerning the recognition of the
Holodomor as an act of genocide.

They all demand recognition of genocide with regard to Ukrainians in
Ukraine, whereas this tragedy affected all Ukrainians who lived in the USSR
at the time. Moreover, the consequences of that genocide were even more
horrifying for Ukrainians who lived outside Ukraine.

When the Russian opponents of the Ukrainian genocide declare today that the
famine took place not just in Ukraine but also in certain regions of Russia
(the central Chernozem area, the North Caucasus, Central Volga region) and
Kazakhstan, the Ukrainian side has no counterevidence.

The impression is that our leaders either lack information about the
Holodomor or are simply afraid to cross the Rubicon in their relations with
the “elder brother” because he may react unfavorably.

Be that as it may, one could respond to the Russians in different ways, for
example, by quoting Lenin’s right-hand man, Leon Trotsky, who can hardly
be described as a Ukrainophile:

     “Nowhere else did repressions, purges, suppressions, and all other
     kinds of bureaucratic hooliganism in general acquire such horrifying
     scope as in Ukraine, in the struggle against powerful forces concealed
     in the Ukrainian masses that desired more freedom and independence.”

True, this is an opinion voiced by a person who held a grudge against
Stalin, but one can introduce more objective evidence of the Ukrainian
genocide. Let us consider statistics-Soviet statistics, of course, but this
very fact is what makes them more eloquent.

The 1926 census points to 81,195,000 Ukrainians in the USSR, roughly the
same number as the Russian population in this period. In 1939 the Soviet
population showed an overall increment. There were considerably more
Russians, but almost three times fewer Ukrainians: 28.1 million.

Even if we take the Holodomor death toll according to the maximum research
figures (14 million victims), a big question remains. What happened to the
other 39,095,000 Ukrainians? There were no world or civil wars in the Soviet
empire between 1926 and 1939, and it was practically impossible to emigrate
from the USSR.

It is impossible to answer this question immediately. No matter how you try,
you have to begin looking for an answer from a distance.

I will start by quoting Andrei Sakharov, the world-renowned Russian
intellectual:

     “A large country was under communist control. Most of the population
     was hostile to the system. Representatives of the national culture and
     even a considerable part of the communists accepted Moscow’s rule
     only conditionally. From the party’s point of view, this was bad
     enough, but also because it represented a great danger for the regime
     in the future.”

The great scientist said this precisely in regard to those 81,195,000
Ukrainians (as a humanist, Sakharov was hardly likely to regard Ukraine as
only the territory determined by the Bolsheviks) of the 1920s, who, much to
the chagrin of Comrade Stalin and his milieu, had no problems with national
consciousness.

At the time the Russian Bolsheviks had to carry out Ukrainization in all
ethnic Ukrainian lands. They were able to conquer Ukraine during the Civil
War only on the third try.

They succeeded only because none other than Ulyanov-Lenin, the evil genius
of Bolshevism, realized in a timely fashion the mistakes of his chauvinistic
policy and granted Ukrainians throughout the whole empire (not only the
Ukrainian SSR) linguistic and cultural autonomy that would exist until the
early 1930s.

Hence, there were more than 80 million people who were anything but Soviet,
and on whom, strange as it may seem, the future of the Soviet empire
depended, with its collectivization and industrialization campaigns, owing
to the industrial and agricultural potential of the territories they
inhabited.

To understand this geopolitical discrepancy better, here is what V.
Ovsiienko, a human rights champion from Kharkiv, has to say on the
subject:

     “Ukrainians as an ethnos, with their profound religiosity,
     individualism, tradition of private property, and devotion to their
     plots of land, were not suited to the construction of communism, and
     this fact was noted by high-ranking Soviet officials.

     Ukraine had to be erased from the face of the earth, with the remainder
     of the Ukrainian people serving as material for a ‘new historical
     community,’ the Soviet people, the bulk of which were Russians and
     the Russian language and culture. Ukrainians as such could not enter
     communism in principle.”

But that is not all. Toward the end of the 1920s the Red Army did not have
enough tanks, aircraft, and artillery for this materiel to play a decisive
role in combat. In these conditions human resources and their combat
experience counted for more, and cavalry was the main factor of success
in battles.

All this was in the hands of the Ukrainians, who then occupied a large
swathe of territory (300-400 km north of the Black Sea and over 1,500 km
from the Zbruch River to the Terek. There were still Ukrainian veterans who
had fought in elite tsarist units during the First World War.

There were practically as many of them as the entire mobilization resource
of the Red Army. During the New Economic Policy (NEP) almost every
Ukrainian family had horses.

There were also the Kuban and Terek Cossacks. At the time ethnic Ukrainians
made up 83 percent of the Kuban population; 75 percent together with
Stavropole; and 64 percent in the Russian part of Slobidska Ukraine (Kursk,
Voronezh, and Belgorod oblasts).

The Don area, part of this Ukrainian danger zone for the empire, would
hardly have supported the Reds after the repressions against the White
Cossacks.

Moreover, various kinds of otamans who terrorized Bolshevik grain delivery
detachments would not lay down their arms until 1929, so in the event of an
all-Ukraine uprising they would serve as battle-hardened field officers.

All that such an uprising was missing was an organizer of the caliber of
Symon Petliura. Such a personality could have emerged from among the
nationally conscious Ukrainian communists or national intelligentsia, as
some of these intellectuals had a classical military education.

That was why Stalin and his henchmen annihilated the Ukrainian
intelligentsia and nationally conscious party members, dekulakized all
potential leaders of a possible Ukrainian uprising under the guise of
collectivization, and killed half the Ukrainian peasantry by famine.

The other half suffered moral and psychological damage during the
Holodomor, which has not healed to this day. This assumption is
confirmed by the fact that there was no Holodomor in compact Ukrainian
settlements in the Far East.

They had the same mentality that was unacceptable to the regime, but they
were safely isolated from the Ukrainian danger zone in the southwestern part
of the empire by vast distances and means of communication of those days.

Of course, the Cossack population of the Kuban and Stavropole suffered the
worst during that Bolshevik genocide. Those people were better organized in
military terms and, naturally, fought the Red terror with all their might.

Also, the Cossacks were forcefully Russified by a resolution of the CC AUCP
(B) and the Council of People’s Commissars of the USSR of Dec. 14, 1932.

The level of national consciousness of the Kuban people is attested by the
fact that, starving as they were, they rebelled against the campaign of
Russification, but were crushed by GPU troops.

The Bolsheviks shot and sent to concentration camps a total of 200,000
Ukrainians. All 17,000 residents of the Cossack village (stanytsia) of
Poltavska were deported. The stanytsia was then renamed Krasnoarmeiskaia
and resettled with Russians.

However, famine is one thing, but the Holodomor is another. The latter’s
peak dates to the second half of 1933. After that even the proud Cossacks
turned into miserable people without family or clan.

Thus, when they and other Ukrainians living outside the Ukrainian SSR were
invited to register themselves as Russians during the 1939 census, they did
not object.

Moreover, after the Holodomor a number of Kuban Ukrainians and those in

the Russian part of Slobidska Ukraine, after realizing why they had been killed,
voluntarily Russified their surnames.

That is how we now have Garbuzov instead of Harbuz, Matvienkov instead of
Matviienko, Zozulin instead of Zozulia, Primakov instead of Pryimak,
Chepurnov instead of Chepurny.

Ask some of your friends with such distorted surnames whether their
grandparents and great-grandparents were Russian. In most cases they will
reply in the negative. Ask them why they consider themselves Russian, and
you will hear something like, Kakaia raznitsa? (What difference does it
make?).

So here are your answers to the questions of what happened to the majority
of Ukrainians after the Holodomor in the USSR; why the population of the
Kuban has a low percentage of Ukrainians, what was that famine in the North
Caucasus and Central Chernozem region, and how this genocide,
unprecedented in the history of mankind, destroyed national consciousness.

The Stalinist totalitarian regime tried hard to ensure that everyone kept
silent about the Holodomor, even people who had survived it, as well as
their children and grandchildren; so that no one knew about this genocide
abroad, and if they found out about it, they would keep silent.

This is precisely what the Nazi regime did to conceal its genocide of the
Jews from the international community. Sad but true, the international
community pretended not to notice what was happening in both cases.

Nazi Germany was defeated by that community, and the bankrupt communist
regime in the USSR was transformed into an oligarchic regime, as instructed
by its leaders, doing so painlessly, primarily for those leaders.

That was why there was a Nuremberg for fascism but no Nuremberg for
communism. That is what the whole world knows about the Holocaust, while
even most of those whose relatives died a most horrible death by starvation
know nothing about the Holodomor.

I have visited villages in Luhansk oblast alone and as a member of a group
of representatives of the Association of Holodomor Researchers. This area is
inhabited by Ukrainians and Russians (mostly Don Cossacks).

In Russian villages old people were eager to talk about the famine of
1932-1933, and they mentioned fellow villagers who had not survived it.
They were all buried in village cemeteries, in accordance with tradition, in
separate graves. No one could remember a single case of cannibalism.

Ukrainian villages presented an altogether different picture. It was hard to
find a person willing to talk about the famine, as most old men and women
treated those who were asking questions with suspicion and distrust.

Those who agreed to answer our questions talked about the Holodomor as a
disaster and wept. None of them demanded justice for the murderers of their
parents, grandparents, brothers, and sisters.

There are also stories about cannibalism. The main difference between
Ukrainian and Russian villages was that elderly Ukrainians pointed to a
place, usually near a graveyard, where several hundred fellow villagers who
had starved to death lay buried. Crosses had been erected in some of these
places only recently.

In Luhansk oblast the distance between Ukrainian and Russian villages is
sometimes only several kilometers. I consider this vivid proof of the
Bolshevik genocide against the Ukrainians.

However, to prove this to the international community, I think our state
must open all these common graves in the presence of law enforcement
officials, historians, ethnographers, forensic medical experts, and
especially foreign journalists.

Only then will the world learn that in Ukrainian villages and at Soviet
railroad stations (and nowhere else) half the Ukrainian population died in
1933 alone (in some cases whole villages died). In fact, every Ukrainian
village, except in western Ukraine, has its small Bykivnia.

The state must implement such measures on a daily basis and for many a year.
Those who say that the famine encompassed all of the USSR at the time are
right, of course. Yet, unlike the Holodomor, the peoples of the USSR
survived that famine without such horrible losses.

Only Ukrainians have such horrifying common graves that must be shown to
the world. The presence of historians and ethnographers will be required in
case Russia also wishes to show such graves in its “Russian” villages in the
Chernozem region and in Cossack villages in the Kuban and Stavropole.

When all this happens, the international community will have no more
arguments to refute the Bolshevik genocide of the Ukrainians. Of course,
there will be no Nuremberg (there is no one left to stand trial), there will
be no compensations from Russia – we don’t need them anyway.

But perhaps the most important thing will happen; its historical memory will
finally be restored to the Ukrainian nation, and after that it will
understand many things and will not allow outsiders to treat it the way they
are doing now.

This is now understood by a handful of Ukrainians who already know the
truth about the Holodomor.                         -30-
———————————————————————————————–
LINK: http://www.day.kiev.ua/171008/ 

———————————————————————————————–
FOOTNOTE: The writer of the article above says: “Vivid proof of
the unpreparednesss of the minister’s measures is the fact that our own
Verkhovna Rada still has not recognized the Holodomor as an act of
genocide.” This statement is not entirely accurate. 
 
The Rada, in May of 2003, in a strong worded resolution, did recognize
the Holodomor as an act of genocide. The Rada did not pass an actual 
law stating the Holodomor was a genocide. The legislative bodies of
other countries have also passed resolutions about the Holodomor
being a genocide, not actual laws.
 
You can click on the following links for information about what the 
Rada actually did in May of 2003 in regards to declaring the Holodomor
a genocide:
 
 
In addition, the U.S. Congress, according to my understanding, has
only indirectly stated that the Holodomor was a genocide, contrary to
what it says in the article above.  There is considerable misinformation
being passed around by Ukrainian government officials about what the
legislative bodies of other countries have actually done in regards to
declaring the Holodomor a genocide.  The Ministry of Foreign Affairs
should distribute accurate information on this matter as soon as possible.
AUR Editor Morgan Williams
———————————————————————————————–
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========================================================
17.  PRESIDENT YUSHCHENKO SENDS LETTER TO KYIV MAYOR
CHERNOVETSKY ABOUT HELP TO HONOR HOLODOMOR VICTIMS

Press office of President Victor Yushchenko
Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Victor Yushchenko has written a letter to Kyiv Mayor Leonid
Chernovetsky with a request to help honor the Holodomor victims.

The President said a memorial commemorating the seventy-year anniversary
of the manmade famine should be constructed in Kyiv in accordance with
his decrees.

He added that a group of artists led by A. Haidamaka had won a contest
held to choose the best memorial project.

Mr. Yushchenko requested the mayor to help find a proper site for the
memorial.                                             -30-
———————————————————————————————-
LINK: http://www.president.gov.ua/en/news/data/1_11293.html 

———————————————————————————————-
FOOTNOTE: This is a rather strange letter President Yushchenko has
just sent to the mayor of Kyiv.  It sounds exactly like letters he used to
send to the previous mayor of Kyiv.  But this was before the Institute of
Memory was established and before it was fully recognized it was the
responsibility of the national government of Ukraine and not the city of
Kyiv to build the Holodomor Complex. 
 
This was also before the site where the Holodomor Complex would be
built had been officially decided and confirmed by the President.
 
So it is a total mystery as to why President Yushchenko is suddenly,
once again, asking the mayor of Kyiv for help to find a proper site for
the Holodomor Memorial. Looks like it could be very poor Presidential
staff work to me or decisions have been made that have not yet been 
publicly announced.  AUR EDITOR Morgan Williams
———————————————————————————————–
[return to index] Action Ukraine Report (AUR) Monitoring Service]
========================================================
     You are welcome to send us names for the AUR distribution list.
========================================================
18. ROUNDTABLE ON TRADE AND INVESTMENT IN UKRAINE
          Current Prospects and Challenges, Viewpoints from US & Canada
               You are invited to attend. Washington, D.C., Mon, Oct 30

Andrew Bihun, Director, Business Development Forum
The Washington Group, Wash, D.C., Wed, Oct 25, 2006

WASHINGTON – The Business Development Forum of The Washington
Group is sponsoring a roundtable and you are invited to attend.  The
roundtable is on:

                             Trade and Investment in Ukraine
                            Current Prospects and Challenges
                  Viewpoints from the United States and Canada
 
                                  Johns Hopkins University
                      School of Advanced International Studies
                           1619 Massachusetts Avenue NW,
                           Rome Auditorium, Washington, DC
                     Monday, October 30, 2006, 7:00 – 9:00 PM
 

FORMAT: Roundtable with a moderator and six-eight panelists – three-
four from the United States and Canada each.

The moderator and each panelist would take 5-7 minutes to present their
business experiences and views/assessments of prospects/challenges of
conducting international trade and investment in Ukraine in the
near/mid-term future.

The Embassy of Ukraine in Washington will welcome the participants with
opening remarks, and, along with relevant attending officials form the U.S.
government, will take an active role in our discussions.

Lively Q’s & A’s and discussions among panelists and the audience will
follow.

TOPICS: practical experiences in conducting business in Ukraine (pro’s
and con’s), most promising sectors for development, trade promotion
efforts and possibilities (missions and exhibitions), existence and access
to market information, effectiveness of investment facilitation mechanisms,
and anti-corruption campaigns.

Additional topics will include: dealing with central and local governments,
growth of trade associations in Ukraine, sufficiency and effectiveness of
business-related foreign technical assistance, and other topics as raised by
the panelists.

OBJECTIVES: hopefully, this roundtable will yield significant suggestions
on enhancing the development of Ukraine business support networks in
Canada, the United States, and Ukraine, and proposals for further Ukraine
business-related conferences, seminars, visits, trade exhibits, and other
events in the United States, Canada, Ukraine, or other venues.

Contact: Andrew Bihun, Director
Business Development Forum of The Washington Group
E-mail:  BDFDirector@thewashingtongroup.org
Or Adrian Pidlusky, President, president@thewashingtongroup.org
Website: www.TheWashingtonGroup.org
———————————————————————————————–
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========================================================
19. THIRD WORKING SESSION OF U.S.-UKRAINE POLICY DIALOGUE
          HOSTED BY U.S.-UKRAINE FOUNDATION IN WASHINGTON

U.S.-Ukraine Foundation (USUF), Washington, D.C., October, 2006

WASHINGTON, DC – The U.S.-Ukraine Foundation and its partners
hosted the third working session of the U.S.-Ukraine Policy Dialogue in
Washington, DC from September 25 – 29, 2006.

Funded by the U.S. Department of State, the U.S.-Ukraine Policy Dialogue
is designed to supplement and deepen the official bilateral dialogue between
leaders in Ukraine and the United States.

More than 60 policy makers from the United States and Ukraine met to
discuss U.S.-Ukraine relations through the prism of foreign policy and
national security; politics and governance; media and information; and
business and economics.
                           PROGRAM PARTICIPANTS
Program participants included deputies from Ukraine’s Parliament,
representatives of the U.S. Department of State, National Security and
Defense Council of Ukraine, the Secretariat of the President of Ukraine,
Ministry of the Economy of Ukraine, U.S. and Ukrainian think tanks,
non-governmental organizations, and media and business representatives.

The Opening Plenary Session, which was webcast live, commenced with
welcoming remarks by Nadia McConnell, U.S.-Ukraine Foundation
President, and Damon Wilson, Director for Central and Eastern Europe
at the National Security Council (NCS).

Noting the importance of the project Mr. Wilson stated “I appreciate very
much the role of the U.S.-Ukraine Foundation supporting this Policy
Dialogue.  It is a particularly opportune moment to have it here in
Washington and to be talking about U.S.-Ukraine relations.

After prolonged uncertainty there is a government and we have a partner to
work with in Ukraine.  It is the right moment for us in Washington to be
thinking through the next steps in the relationship and therefore the work
that you will be doing in this group over the coming days I think is very
useful.”

“Over the years, Policy Dialogue has been constructive in feeding into the
thinking here in Washington and hopefully in Ukraine as well among the
policy makers.  I think this is particularly relevant right now during the
stage we’re at,” stated Mr. Wilson.
                            FOUR POLICY TASK FORCES
Throughout the week, participants were divided according to their expertise
into four Task Forces:  Politics and Governance; Foreign Policy and
National Security; Economics and Business; and Media and Information.

Each of these Task Forces held numerous meetings with senior officials of
the U.S. government, representatives of NGOs, congressional committees,
and think tanks in Washington, DC, which provided further insight on
U.S.-Ukraine related issues.
      U.S. AND UKRAINIAN PARTNER ORGANIZATIONS
Co-chaired by high-level American and Ukrainian experts, the Task Forces are
managed by U.S. and Ukrainian partner organizations such as The Atlantic
Council of the United States, Razumkov Center for Economic & Political
Studies, International Center for Policy Studies, Kennan Institute at the
Woodrow Wilson International Center for Scholars, SigmaBleyzer Private
Equity Investment Group, and Europe XXI Foundation.

The U.S.-Ukraine Policy Dialogue concluded with a Closing Plenary Session
on September 28 at which Ukraine’s Ambassador to the United States Oleh
Shamshur gave closing remarks, and each Task Force presented its policy
recommendations for the U.S. and Ukrainian governments.

Afterwards, a reception to commemorate the U.S.-Ukraine Policy Dialogue
and to celebrate the 15th anniversary of the U.S.-Ukraine Foundation was
held at the Embassy of Ukraine hosted by Ambassador Oleh Shamshur.

Commenting on this special occasion, Nadia McConnell expressed that she
hopes “the Foundation’s next fifteen years will be as enjoyable and
productive as these first fifteen.  We know this will be so if we continue
to receive the kind of support that we have received thus far.

In particular, we recognize our partner institutions and all of the task
force members who have so generously donated their time and energy to
make Policy Dialogue a success. “

To learn more about the U.S.-Ukraine Policy Dialogue or to view webcasts
of the Policy Dialogue events and the 15th anniversary celebration, please
visit:  http://www.usukraine.org/pd06videos.shtml.        -30-
———————————————————————————————–
CONTACT: Marta Matselioukh, Project Coordinator, U.S.-Ukraine
Foundation, 1701 K Street NW, Suite 903, Washington, DC 20006,
martam@usukraine.org, http://www.usukraine.org
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20.   ASSOCIATION FOR THE STUDY OF NATIONALITIES (ASN)
                 2007 CONVENTION IN NYC: CALL FOR PAPERS
                     “NATION, COMMUNITY, AND THE STATE”
              Proposal Deadline Reminder: Thursday, 2 November 2006

Dominique Arel, ASN President
12th Annual World Convention of the Association
for the Study of Nationalities (ASN) in 2007, New York, NY
Harriman Institute, Columbia University, NY, NY, Oct 25, 2006

NEW YORK – The 12th Annual World Convention of the Association
for the Study of Nationalities (ASN) will be held in the International
Affairs Building, Columbia University, NY, 12-14 April, 2007.  The
Convention is sponsored by the Harriman Institute.

There will be 100 panels on the Balkans, the Baltics, Central Europe,
Russia, Ukraine, Belarus, Moldova, the Caucasus, Central Asia, Turkey,
Greece, Afghanistan, Pakistan, Kurdistan, China, and Mongolia. There
will also be a Special Section on Theoretical Approaches to Nationalism.

There will also be THEMATIC panels on Islam and Politics, Genocide
and Ethnic Violence, Anthropology of Identity, Citizenship and Nationality,
Conflict Resolution, Autonomy, Gender, EU Integration, and many more.

AWARDS will be presented for the best doctoral student papers and
there will also be the screening and discussion of new films and
documentaries.
PROPOSALS ARE WELCOME – DEADLINE NOVEMBER 2
The ASN Convention, the most attended international and inter-disciplinary
scholarly gathering of its kind, welcomes proposals on a wide range of
topics related to national identity, nationalism, ethnic conflict,
state-building and the study of empires in Central/Eastern Europe, the
former Soviet Union, Eurasia, and adjacent areas.

Disciplines represented include political science, history, anthropology,
sociology, economics, geography, socio-linguistics, psychology, and
related fields.

For a fifth consecutive year, the 2007 Convention will feature a section
devoted to theoretical approaches to nationalism, from any of the
disciplines listed above.

The papers in this section need not be grounded in an area of the former
Communist bloc usually covered by ASN, provided that the issues examined
are relevant to a truly comparative understanding of nationalism-related
issues.

In this vein, we are welcoming theory-focused and comparative proposals,
rather than specific case studies from outside Central/Eastern Europe and
Eurasia.

Since 2005, the ASN Convention has acknowledged excellence in graduate
studies research by offering Awards for Best Doctoral Student Papers in five
sections: Russia/Ukraine/Caucasus, Central Asia/Eurasia, Central Europe,
Balkans, and Nationalism Studies.

The winners at the 2005 Convention were Kelly O’Neill (Harvard U, History,
Russia/Ukraine/Caucasus), Yuriy Malikov (History, U of California, Santa
Barbara, Central Asia/Eurasia), Andrew Demshuk (U of Illinois at
Urbana-Champaign, History, Central Europe), and Tamara Pavasovic
(Harvard U, Sociology, Balkans).

Doctoral student applicants whose proposals will be accepted for the 2007
Convention, who have not defended their dissertation by 1 November 2006,
and whose paper is delivered by the deadline, will automatically be
considered for the awards.

The 2007 Convention is also inviting submissions for documentaries or
feature films made within the past year and available in VHS or DVD format.
Most videos selected for the convention will be screened during regular
panel slots and will be followed by a discussion moderated by an academic
expert.
    PROPOSALS FOR INDIVIDUAL PAPERS OR PANELS
The 2007 Convention invites proposals for INDIVIDUAL PAPERS or
PANELS. A panel includes a chair, three presentations based on written
papers, and a discussant. Proposals using an INNOVATIVE format are
also particularly encouraged.

Examples of new formats include a roundtable on a new book, in which the
author is being engaged by three discussants; a debate between two panelists
over a critical research or policy question, following rules of public
debating; or special presentations based on original papers where the number
of discussants is equal or greater than the number of presenters. Other
innovative formats are also welcome.
      OFFERS TO SERVE AS A DISCUSSANT WELCOME
The 2007 Convention is also welcoming offers to serve as DISCUSSANT
on a panel to be created by the program committee from individual paper
proposals. The application to be considered as discussant can be
self-standing, or accompanied by an individual paper proposal.

There is NO APPLICATION FORM to fill out in order to send proposals
to the convention. All proposals must be sent by email to Dominique Arel at
darel@uottawa.ca (backup address: darelasn@gmail.com).

INDIVIDUAL PAPER PROPOSALS must include the name, email and
affiliation of the author, a postal address for paper mail, the title of the
paper, a 500-word abstract and a 100-word biographical statement that

includes full bibliographic references of your last or forthcoming publication,
if applicable (graduate students must indicate the title of their dissertation
and year of projected defense. They can also submit the full bibliographic
references of a recent or forthcoming publication).

PANEL PROPOSALS must include the title of the panel, a chair, three
paper-givers with the title of their papers, and a discussant; the name,
affiliation, email, postal address and 100-word biographical statements of
each participant and include full bibliographic references of their last or
forthcoming publication, if applicable (graduate students can indicate the
title of their dissertation and year of projected defense).

PROPOSALS FOR FILMS OR VIDEOS must include the name, email and
affiliation of the author, a postal address for paper mail, the title, a
500-word abstract of the film/video and a 100-word biographical statement.

PROPOSALS USING AN INNOVATIVE FORMAT must include the title
of the panel, the names, emails, affiliations, postal addresses, 100-word
biographical statements of each participant (same specifications as above)
and a discussion on the proposed format.

INDIVIDUAL PROPOSALS TO SERVE AS DISCUSSANT must include
the name, email, affiliation, postal address, and areas of expertise of the
applicant, and a 100-word biographical statement (same specifications as
above).

All proposals must be included IN THE BODY OF A SINGLE E-MAIL.
Attachments will be accepted only if they repeat the content of an email
message/proposal, and if all the information is contained IN A SINGLE
ATTACHMENT.

DEADLINE: for proposals: 2 November 2006 (darel@uottawa.ca,
backup address: darelasn@gmail.com)

Participants are responsible for covering all travel and accommodation
costs. ASN has no funding available for panelists.

An international Program Committee will be entrusted with the selection of
proposals. Applicants will be notified in December 2006 or early January
2007. Information regarding registration costs and other logistical
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The full list of panels from last year’s convention, for the geographical
and thematic sections, and the section on Theories of Nationalism, can be
accessed at http://www.nationalities.org/ASN_2006_final_Program.pdf.
The film/video lineup can be accessed at
http://www.nationalities.org/ASN_2006_final_film_lineup.pdf. The
programs from past conventions, going back to 2001, are also online.

Several dozen publishers and companies have had exhibits and/or
advertised in the Convention Program in past years.

Due to considerations of space, advertisers and exhibitors are encouraged
to place their order early. For information, please contact Convention
Executive Director Gordon N. Bardos (gnb12@columbia.edu).

Participants are invited to join ASN by logging in to
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Members receive the journal Nationalities Papers quarterly, a subscription
discount to ASN’s new journal, Ethnopolitics, a registration discount at
the ASN Annual World Convention, and other perks.

We look forward to seeing you at the convention!

The Convention organizing committee: Dominique Arel, ASN President;
Gordon N. Bardos, Executive Director; David Crowe, ASN Chair of
Advisory Board; Sherrill Stroschein, Program Chair

The ASN convention’s headquarters are located at the: Harriman Institute,
Columbia University, 1216 IAB, 420 W. 118th St., New York, NY 10027
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21.  US HOLOCAUST MEMORIAL MUSEUM AND THE SECURITY
   SERVICE OF UKRAINE EXTEND COOPERATION 5 MORE YEARS
           US Holocaust Memorial Museum thanks the Security Service
                     of Ukraine for a “stellar level of co-operation.”

Embassy of Ukraine to the USA
Washington, D.C., Tuesday, October 24, 2006

WASHINGTON – The United States Holocaust Memorial Museum in
Washington and the Security Service of Ukraine have extended their
co-operation agreement for another 5 years.

During the signing ceremony the Director of the Museum, Sara Bloomfield,
thanked Ukraine for bringing their co-operation in the field of the exchange
of historic documents to a “truly stellar level”. Ukraine can serve as a
showcase for other European countries, she said.

The SBU archive director Serhii Bohunov and the head of the SBU
Information department Valerii Holod stressed that over last 5 years
Ukraine has shared with the United States more than 150 thousand files
on the history of the Holocaust.

Both sides expressed their hope to maintain the current level of
co-operation in the years to come.                   -30-
———————————————————————————————–
CONTACT: Volodymyr Samofalov, Embassy of Ukraine to the USA,
Washington, D.C., samofalov@ukremb.com.
US Holocaust Memorial Museum website: http://www.ushmm.org.
————————————————————————————————
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AUR#780 Oct 25 Ukraine: Prospects & Risks; WTO & Russia; IBM; Building Cars In Russia; ‘Our Ukraine’ Self-Annihiliation; Hungarian Revolution 50 Years Ago

=========================================================
 ACTION UKRAINE REPORT – AUR           
                  An International Newsletter, The Latest, Up-To-Date
                       In-Depth Ukrainian News, Analysis and Commentary

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

 
              THE HUNGARIAN REVOLUTION
                50 Years Ago When Hungary Took On The Soviet Bear 
             The Hungarian revolution and fight for freedom – 13 days between
                                   October 23 and November 4, 1956.
                                                                        
ACTION UKRAINE REPORT – AUR – NUMBER 780
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., WEDNESDAY, OCTOBER 25, 2006
                
               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.                                UKRAINE: PROSPECTS & RISKS
          A serious political conflict has erupted in Ukraine over foreign policy.
ANALYSIS & COMMENTARY:
By James Sherr
CSRC, UK Defence Academy, United Kingdom
Published by Action Ukraine Report (AUR) #780, Article 1
Washington, D.C., Wednesday, October 25, 2006

2.                                 A GATEWAY TO THE WEST
     Ukraine’s dash into NATO postponed for the time being. Post-socialist
    countries join NATO because Russia unable to offer attractive alternative.
COMMENTARY:
By Mikhail Delyagin, Nezavisimaya Gazeta

Moscow, Russia, Monday, October 23, 2006

3.       UKRAINE TO RECEIVE GAS AT $130 PER 1,000 M IN 2007
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

4.   UKRAINE AND RUSSIA SHOULD AGREE ON NATO, EU, AND

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

5‘OUR UKRAINE’ DOES NOT AGREE UKRAINE AND RUSSIA’S
           WTO NEGOTIATIONS SHOULD BE SYNCHRONIZED 
Ukrayinska Pravda website, Kiev, in Ukrainian 24 Oct 06
BBC Monitoring Service, United Kingdom, Tuesday, October 24, 2006

6.     WTO LAWS SHOULD BE PASSED AS SOON AS POSSIBLE,

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006
 
        REFORMS IN UKRAINE, WITH ASSISTANCE FROM JAPAN
UNIAN, Kyiv, Ukraine, Tuesday, October 24, 2006

9UKRAINE: BOGDAN CORP, ZAZ BUILD AUTO PLANT IN RUSSIA
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

10.  UKRAINIAN GOVERNMENT SPARING NO EFFORT TO MAKE
MARKET ATTRACTIVE TO INVESTORS, SAYS PRES YUSHCHENKO
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

11.     “OUR UKRAINE DOES NOT GIVE IN TO THE PRESIDENT”
          Pro-presidential party took another step towards self-annihilation.
ANALYSIS & COMMENTARY: By Oleksandr Chalenko
Segodnya, Kiev, Ukraine, in Russian 23 Oct 06; p 2
BBC Monitoring Service, United Kingdom, Tuesday, Oct 24, 2006

12.                  OUR UKRAINE ON VERGE OF MELTDOWN
INFORM, Newsletter for the international community providing
views and analysis from the Yulia Tymoshenko Bloc (BYUT), Issue 16
Kyiv, Ukraine, Tuesday, October 24, 2006
 

                 OF RUSSIAN LANGUAGE AS A PROVOCATIVE 
Ukrainian News Agency, Kyiv, Ukraine, Tuesday, October 24, 2006
 
14.                   “BUT WAS THERE DISCRIMINATION”
     Paper denies Russian reports on language discrimination in west Ukraine
ANALYSIS AND COMMENTARY: By Yaroslav Zahoruy
2000 newspaper, Kiev, Ukraine, in Russian 20 Oct 06 pp F1, F2
BBC Monitoring Service, United Kingdom, Friday, October 20, 2006
 
   TO BUILD NEW HOSPITAL IN KYIV ARE PRESENTED IN DONETSK
Press office of President Victor Yushchenko
Kyiv, Ukraine, Saturday, 21 October 2006

16.     UKRAINE’S PRESIDENT VIKTOR YUSHCHENKO & WIFE
KATERYNA HONOR LEADERS OF 1956 HUNGARIAN REVOLUTION
Press office of President Victor Yushchenko
Kyiv, Ukraine, Monday, October 23, 2006

17.     VICTOR YUSHCHENKO AND HIS WIFE KATERYNA MEET

                    WITH HUNGARY’S UKRAINIAN COMMUNITY
Press Office Of President Yushchenko
Kyiv, Ukraine, Sunday, October 22, 2006

18 THE 50TH ANNIVERSARY OF THE HUNGARIAN REVOLUTION
          STATEMENT: UKRAINIAN CANADIAN CONGRESS (UCC)
STATEMENT: Ukrainian Canadian Congress (UCC)
Winnipeg, Manitoba, Canada, Tuesday, October 24, 2006

 
19.      FIFTY YEARS ON FROM THE HUNGARIAN REVOLUTION
         They were three weeks that shook the world, when a revolt begun by
            students forced out both a government and hated Soviet forces,
                             only to end in bloodshed and repression.
By Peter Popham, The Independent, London, UK, Mon, 23 Oct 2006

20.              WHEN HUNGARY TOOK ON THE SOVIET BEAR
          The Hungarian revolution and fight for freedom – 13 days between
                                  October 23 and November 4, 1956.
By Sandor Szakaly, The Australian
New South Wales, Australia, Wed, October 25, 2006

========================================================
1
           UKRAINE: PROSPECTS & RISKS
       A serious political conflict has erupted in Ukraine over foreign policy.

ANALYSIS & COMMENTARY: By James Sherr
CSRC, UK Defence Academy, United Kingdom
Published by Action Ukraine Report (AUR) #780, Article 1
Washington, D.C., Wednesday, October 25, 2006

A serious political conflict has erupted in Ukraine over foreign policy
prerogatives. In principle, there are several grounds to hope that this
conflict, brought about by the new division of power between President
Viktor Yushchenko and Prime Minister Viktor Yanukovych, will not lead
to major changes in Ukraine’s foreign policy course.

In practice, institutional rivalries, external pressures, ignorance and
mistakes may combine to do so. Yanukovych’s foreign policy record and
the content of his 14 September speech in Brussels (calling for a ‘pause’
in NATO integration) are far less negative than often portrayed.

Nevertheless, one should not take for granted that Ukraine will continue
down the path that President Yushchenko set in January 2005.  Once again,
politics is undermining clarity of purpose and coherence of action.

The positive factors are these:

     [1] The ‘Universal’ agreement of 3 August established the framework for
a grand coalition of Yushchenko’s Our Ukraine and the ‘blue’ forces of 2004:
Yanukovych’s Party of Regions, Moroz’s Socialists and the now much
diminished Communist Party.

It also reiterated presidential prerogatives in foreign and security policy
already set out in the December 2004 OSCE brokered constitutional
agreement, as well as Article 106 of the Constitution.

     [2] The President’s Euro-Atlantic team-Foreign Minister Borys Tarasyuk
and Minister of Defence Anatoliy Hrytsenko-was swiftly reconfirmed by the
‘Verkhovna Rada’ (parliament), as were three other Yushchenko appointees
in the national security area, Minister of Interior Yuriy Lutsenko, SBU
(Security Service) Chairman Ihor Drizhchaniy and Minister for Emergency
Situations Viktor Baloha (who on 16 September left this post when he was
appointed State Secretary, head of the President’s Secretariat).

The President retains the power to designate the Secretary of the country’s
influential National Security and Defence Council (NSDC), which, according
to Article 107 of the country’s constitution, ‘coordinates and controls the
activity of bodies of executive power in the sphere of national security and
defence’.  After much speculation, he appointed Vitaliy Hayduk to this post
on 10 October.

     [3] As Prime Minister under President Leonid Kuchma, Yanukovych
pursued a generally positive line towards NATO.  He was an architect of the
NATO-Ukraine Memorandum of Understanding (MOU) on airlift (which
parliament rejected),  and he supported the drive for a Membership Action
Plan (MAP) at a time when Kuchma was losing credibility in the West.

     [4] Although repairing relations with Russia is his top priority,
Yanukovych is known believed to favour a multi-vector policy on a basis
that respects Ukraine’s national interests.  He has indicated on several
occasions that this will prove difficult unless the West remains firmly in
the equation.

He was humiliated by President Putin on at least one occasion during the
2004 electoral contest and is capable of drawing conclusions from Putin’s
warning (to Russia) that ‘only the strong are respected’ in international
affairs.  It is unlikely that he, any more than Kuchma, wishes to be a
‘vassal of Russia’.

     [5] This inclination towards balance is reinforced by very powerful
business interests in eastern Ukraine:  by the group of industrialists in
Rinat Akhmetov’s Systems Capital Management (which constitutes the
‘economic resource’ behind Yanukovych’s Party of Regions), as well as
the somewhat less powerful but very successful rival group, the Industrial
Union of Donbas (IUD), co-chaired by Hayduk up to the time of his
appointment to NSDC.

Both groups know how to work with Russian partners, but also have a number
of  competing interests, as well as a growing portfolio of investments in
Central and Western Europe. These industrialists rely upon a predictable
macro-economic framework with their eastern neighbour, but have learnt to
expect the unexpected. Although they have the capacity to absorb energy
price rises, they can only do so if the increases are predictable and
gradual.

But the negatives are telling:

     [1] THE INTERNAL STRENGTH OF REGIONS. The Party of

Regions, with its working ‘blue’ majority in parliament, believes it is in a
dominant position and is wasting no time in exploiting it.  As of January
2006, Ukraine is no longer a presidential republic.

Although the President retains the formal prerogative in foreign, defence
and security policy, Parliament’s control of the money and its power to
dismiss ministers risks confining this prerogative to paper.[i]   If Our
Ukraine is a loosely knit village,  Regions is an entity run on Leninist
principles with a lack of inhibition about using the power it has.

Yanukovych’s appointment of First Deputy Prime Minister Mykola Azarov
(former First Deputy PM  and head of the Tax Administration  under Kuchma),
and Deputy PM Andriy Klyuev (responsible for supervising the country’s
unreformed energy sector) should leave one in no doubt about this.

Both appointments risk restoring opaque, post-Soviet norms of governance.
Already, apprehensions have been voiced that Azarov might become the power
behind the throne, reviving the reviled precedent set by Viktor Medvedchuk,
head of ex-President Kuchma’s presidential administration (but  with the
added advantage of ministerial appointment).  Like Medvedchuk, Azarov is
striving to become master of the bureaucratic apparat as well as the Cabinet
of Ministers.

As architects of Kuchma’s administrative system, both of these figures
studiously turned state and public institutions into tools of presidential
interests.  In the short time since Azarov’s reappointment, he has already
replaced five regional heads of the once notorious Tax Administration, as
well as its Chairman.

The new Minister of Economy, Volodymyr Makuha,  (a supporter of
integration into the Russian sponsored Single Economic Space) and the
new Prosecutor General, Oleksandr Medvedko, are allies of Azarov.

Whilst Klyuev appears to have the ability and ambition to Offset some of
Azarov’s power at an institutional level, he shares the latter’s ‘kuluarno’
(private lobby) understanding of power, administration and the
relationship between business and government.

To a country whose greatest security problem is the relationship between
politics, business and crime, these figures are unlikely to offer guidance
or help.  Euro-Atlantic norms of accountability and transparency are not on
their agenda or in their bloodstream.

     [2] THE WEAKNESS OF REGIONS VIS A VIS RUSSIA. Russia’s
energy instruments remain in place:  a concessionary gas price (now $95 per
th cu m) subject to frequent review and a bankrupt state energy sector,
excluded  from the sources of income needed to repay its debts (thanks to
the damaging agreement between ‘Gazprom’ and ‘Naftohaz Ukrainiy’ of 4
January 2006).  The 15-16 August summit between Putin and Yanukovych
in Sochi did nothing to change this status quo.

Both sides were dissatisfied with the meeting:  Yanukovych, because the
Russians showed no inclination to change the rules; Putin, because
Yanukovych failed to make the concessions-control of the pipeline network
and full entry into the SES-that would induce him to change them.

But instead of refocusing Ukraine’s efforts on the Western vector, the
summit appears to have redoubled efforts to concede ground to Russia in
other areas.  There are grounds to fear that this might entail accepting a
‘de facto’ Russian veto on further steps towards NATO and the WTO (which,
in turn would put paid to the prospects of a free-trade agreement with the
EU).

The dominance of ‘Moscow retransmitters’ in Yanukovych’s apparat (and the
appointment of Anatoliy Orel, Kuchma’s former foreign policy adviser to the
analogous post under Yanukovych) has possibly propelled Yanukovych in this
direction, though it is possible that more balance will emerge with the
recent appointment of two other figures:  former Foreign Minister Konstantin
Hryshchenko and a young, independently minded refugee from Kuchma’s
Presidential Administration, Anatoliy Fialko.[ii]

 For the moment, the disposition to make concessions to Russia appears
to have worked brought relief.  On 12 October, the government delegation in
Moscow (parliamentary Speaker Moroz, Klyuev and Minister of Fuel and Energy
Yuriy Boyko) announced a ‘breakthrough’:  the delayed introduction of the
new price ($130) until 1 January.

As Moroz triumphantly asserted, ‘the price issue has been resolved, and we
can draw a line under these relations’.  Just how it has been resolved, he
did not say.[iii]

This combination of internal strength and external weakness has produced two
unfortunate developments:

     [1] THE BYPASSING OF THE PRESIDENT, MFA AND NSDC. Neither
Yushchenko nor Tarasyuk (let alone the Ukrainian delegation at NATO HQ)
knew what Yanukovych would say in NATO HQ until he said it.  The five-hour
meeting between Yushchenko and Yanukovych following the latter’s return
 produced an agreed position on NATO integration which survived until
Yanukovych’s first press conference.

     [2] THE UNDERMINING OF TARASYUK AND HRYTSENKO. In
contravention of its commitment to deepen public understanding of NATO,
Yanukovych’s government has disbanded the Interdepartmental Committee
on Euro-Atlantic Integration (which Tarasyuk chaired) and cut funds for the
government’s two NATO information programmes by 40 percent.

The budget for reform of the Armed Forces has been cut by half:  a cut which
makes it brazenly optimistic to suppose that the MOD will be able to match
projected force reductions with the funds required to re-house retired
officers.

It is unlikely that the architects of these cuts fail to understand the
relationship between these components of the State Programme,  the standing
of Minister Hrytsenko in the Armed Forces and the evaluation of Ukraine’s
defence reform by NATO.

It is, after all, this State Programme and Hrytsenko’s capable
implementation of it that has provided NATO with its strongest argument
for extending MAP to Ukraine.

In response, a president who was reluctant to use his powers when he had
them has now begun to fight a vigorous rearguard action:

     [1] AN INSTITUTIONAL COUNTER-OFFENSIVE. The first vehicle
in this fight, the Secretariat of the President, is a purely presidential
structure. After almost two years of frustration, infighting and
ineffectiveness, it looks as if it finally will be capably led and directed.

Although its new head, Viktor Baloha, is reputed to be a key figure in the
much reviled Mukacheve business group, he is also regarded as a strong and
competent administrator.

Noteworthy amongst his appointments is one of his two first deputies,
Arseniy Yatsenyuk, former Economics Minister;  and, amongst three deputies,
the urbane and well seasoned Oleksandr Chaliy, former Deputy Foreign
Minister and latterly Vice President of the Industrial Union of Donbas.
Yatsenyuk is also considered an ‘IUD man’.

These appointments suggest that the President is not only trying to defend
his foreign policy turf but limit damage on the domestic, economic front as
well and enlist a new set of allies to this end. But how will the
Secretariat succeed in the absence of the real levers of power that the
Cabinet of Ministers and Parliament now possess?

The President’s  second institutional vehicle is the National Security and
Defence Council (NSDC).  Although chaired by the President, its members
consist of ministers in Yanukovych’s government as well as other senior
decision makers with national security responsibilities.

The August agreements with the Prime Minister and Parliament have already
diluted the NSDC’s cohesion, bringing into the fold Prosecutor General
Oleksandr Medvedko, parliamentary Speaker Oleksandr Moroz and National
Bank Chairman Volodymyr Stelmakh.

Although it cannot be said that these figures lack national security
responsibilities, their priorities are certainly different from those of the
Minister of Foreign Affairs, Minister of Defence, Minister of Interior,
Chairman of the SBU (Security Service) and Chairman of the SZR (Foreign
Intelligence Service).

Moreover, Medvedko and Moroz are political opponents of the President,
and it was the latter’s  defection from the Orange coalition which brought
Yanukovych back to power.

Nevertheless, it is the Council’s Secretary who has tended to play the key
role in its affairs, not to say a key role in the strategic direction of the
state.  Under the initial stewardship of Volodymyr Horbulin (1996-99) the
NSDC was an effective and respected body, adhering strictly to its
constitutional remit and providing the rudiments of inter-agency
coordination in a country hobbled then (as now) by debilitating
institutional rivalries.

But under Horbulin’s successors, Yevhen Marchuk and Volodymyr
Radchenko, the Council was sidelined by President Kuchma and the head
of the Presidential Administration, Viktor Medvedchuk, who not only
usurped the Council’s traditional powers, but directly supervised ministers
and, despite his lack of an elected position or a constitutional role,
became the second most powerful figure in the country.

From the start, those who expected President Yushchenko to restore
constitutional norms were rudely disappointed. As Secretary
(January-September 2005), Yushchenko’s close associate, Petro Poroshenko,
used the NSDC as a foil against Prime Minister Yulia Tymoshenko and secured
presidential backing to widen its remit well beyond its statutory role.  The
result was a full blown crisis which broke up the Orange coalition only nine
months after the Orange revolution brought it to power.

After this trauma, it is not surprising that Yushchenko returned the NSDC to
safer hands:  former Prime Minister Anatoliy Kinakh (September 2005 to May
2006) and, after Kinakh took up a parliamentary seat, to Horbulin once again
(but as Acting Secretary). It was clear that Horbulin could only be a
stopgap.  On 10 October, Vitaliy Hayduk, Co-Chairman of the Industrial Union
of Donbas, was appointed to this post.

     [2] POLITICAL REALIGNMENT. The appointment of Hayduk, Chaliy and
Yatsenyuk (and the reappointment of Oleksandr Zinchenko as presidential
adviser) has brought the Industrial Union of Donbas into the core of
Yushchenko’s administration.  This gives the President allies on his
opponent’s turf.  In a country where those who own and those who run the
country are often indistinguishable, this is a significant development.

By taking this step,  Yushchenko has expanded his financial resources in
ways which he appears to believe will might improve his prospects for
re-election in 2009.  But well before then, he clearly hopes to limit the
ability of Regions to damage his foreign policy and monopolise the economy.

The by now exhaustively explored alternatives offered him no egress:  deeper
dependence on a diminished Our Ukraine and on ‘dear friends’ already
compromised by the events of 2005; or alliance with Yulia Tymoshenko, whom
both he and the ‘dear friends’ regard as ambitious, and uncontrollable and
too knowledgeable about the shortcomings of his administration. This
erstwhile inner circle also advised him not to appoint Hayduk, but he has
wisely ignored their advice.

For the Industrial Union of Donbas, the new developments are, of course,
propitious. >From the moment that Yanukovych and Azarov returned to power,
the IUD was made to feel the financial levers of Akhmetov and the
administrative resources of the Yanukovych/Azarov/Klyuev government.  Now
they will have administrative resources of their own.

They will also aim to counterbalance the geopolitical tilt of Regions’
economic policy.  Hayduk will almost certainly make energy security a major
priority at NSDC.  Central to this enterprise will be steps to counter the
covert Russification of Ukraine’s energy sector and electricity market-and
its not so covert proponents, Deputy Prime Minister Klyuev and the Minister
of Fuel and Energy, Yuriy Boyko.

The fact that Hayduk firmly opposed the January 2006 gas accords and the
formation of ‘RosUkrEnergo’ – which the President’s men negotiated and the
President defended – is an awkwardness that both men will have to manage.

The President now appears ready to support efforts to free Ukraine from the
vice that these accords created, as long as radical means-the denunciation
of the accords and a fresh gas crisis-are avoided.

Hayduk is not a radical, and he will pursue other, more subtle forms of
attack and defence.  As a major player in the economy-and, not incidentally,
a former Deputy Prime Minister under Yanukovych’s last government-he retains
all the necessary back channels to Regions.

He knows how to compromise as well as resist.  The appearance of another IUD
man, Konstantin Hryshchenko, in the Prime Minister’s team, will also keep
lines of communication open.

On the date that Hayduk was appointed, the breakdown of the ‘Universal’ had
a second political consequence. Our Ukraine announced that it was going into
opposition and called for the resignation of all ministers ‘appointed on
behalf of Our Ukraine’.  But just who belongs to that category?

Our Ukraine’s leader, Roman Bezsmertniy, insists that the entire
pro-presidential bloc in Cabinet belongs to it.  Minister of Defence
Anatoliy Hrytsenko, who belongs to no faction, is adamant that he does not.
So is Borys Tarasyuk, who whilst a member of Our Ukraine, does not owe his
appointment to its leaders, but to the President’s foreign policy
prerogative.

For his part, the President is holding ‘consultations’ on the issue, which
in accordance with his well established convention, appears to mean that ‘we
will make a decision on Friday, and on Tuesday we will make another’. As of
14 October, he also continues negotiations with Yanukovych to resurrect the
coalition.  The indecisiveness of the President survives.

But the die appears to have been cast. The experiment in unity between the
foes of 2004 has collapsed.  But instead of restoring old alliances, the
collapse is producing a new and more complex alignment .  Who in these new
circumstances will the President’s people now be?  What kind of opposition
will be formed and against whom?

On 12 October the leadership of Our Ukraine boldly announced the formation
of a nine-party opposition ‘confederation’ under the name European Ukraine.
Yet this format, if realised, will simply replicate the format of Our
Ukraine in 2001. The centrepiece of parliamentary opposition, Yulia
Tymoshenko’s bloc, has not been invited to join it.

The IUD’s men in parliament who, like Hayduk himself, enjoy good relations
with Tymoshenko, certainly will not join it.

Will the IUD’s men in the Secretariat and NSDC be able to stabilise the
relationship between the President’s team and hers? Will they give teeth and
ballast to the parliamentary opposition?  Will Tymoshenko’s bloc in turn be
able to give the IUD more of a political shape?  Where will Our Ukraine fit
into this matrix?  Is it capable of doing so, or will it retreat into its
village and its nostalgia?

                    A DANGEROUS OR FERTILE TENSION?
Although the ‘Universal’ set out a framework for civilised ‘dvoevlastie’
(bifurcated power), politics has set Ukraine on a course of antagonistic
‘dvoevlastie.’  Need that be a destructive course?  If the struggle were
played out along Orange-Blue lines, that would probably be the case.

Either Yanukovych’s Party of Regions would prevail (because Blue is
stronger), or both antagonists would lose (because Blue would win in
opposition to most of the country and the greater part of Ukraine’s foreign
and defence policy establishment).  The short and mid-term casualties would
be accountability, legitimacy and coherent policy.

Today’s developments point to the emergence of new lines of cleavage:
between  democratically orientated Euro-realists and the bastions of eastern
Ukrainian paternalism and the multi-vector approach.

By reaching out to the foils of Yanukovych and Akhmetov in eastern Ukraine
(and disregarding the counsels of those who only recently were his closest
confidants), President Yushchenko has either shown strategic wisdom or
achieved a strategic breakthrough by accident.

Yet the new alliance is unlikely to give much joy to idealists. The IUD are
not crusaders against corruption or ideologues of financial transparency and
G7 style corporate governance.

But they are self-interested proponents of a European future for Ukraine,
and they have set themselves in opposition to the key projects that would
turn Ukraine towards another future:  the Single Economic Space and the
Russian-Ukrainian energy consortium.

Unlike most of Yanukovych’s entourage, those brought into the NSDC
and President’s Secretariat understand Western institutions and impress
Western decision makers with their knowledge, pragmatism and competence.

The IUD team has also developed a productive relationship with Ukraine’s
most prominent opposition figure, Yulia Tymoshenko, whose public profile is
considerably more radical than their own.  >From the start, she, unlike the
leaders of Our Ukraine, has sought to move onto the opponent’s ground,
eastern Ukraine.

The past fortnight’s developments suggest that the struggle might be
shifting onto that ground.  If so, it is a good and necessary thing. Eastern
Ukraine is a region that many in the West have considered lost and that many
more in Russia have considered ‘nash’ (ours).  Yet it has never been a
monolith.

The East-West  political paradigm has repressed its divisions, ambivalences
and even its Ukrainian identity. Whereas President Kuchma managed for a
time to alter this paradigm, the electoral contest of 2004 revived it in
Orange-Blue form.   In that form, politics in Ukraine is fated to be a
process that weakens Ukraine.

The political course since Yushchenko’s inauguration makes it worth
reiterating that Ukraine’s greatest challenge is not integration with the
West, but the integration of Ukraine.  This will not be possible without the
diminution of the regional divide and the mutation and reconstitution of
today’s political blocs.

The short-term effect of this process of mutation  is bound to be
incoherence and an untidy, altogether Ukrainian accommodation to the mixed
agendas of key players.  But that might be a price worth paying if it breaks
the mould of Ukrainian politics.

That mould-the absence of an opposition able to operate on Regions’ own
turf-has not only handed eastern Ukraine’s electorate to Regions, it has
retarded the evolution of Regions itself. Those who believe in the
possibility of Regions’ evolution should welcome this process.

               CONCLUSIONS AND RECOMMENDATIONS
The events of recent days demonstrate once again that things are never as
good or as bad in Ukraine as they seem.  The emergence inside eastern
Ukraine of a capable bloc of pro-presidential allies is not only redressing
some of the imbalance between Yushchenko and Yanukovych.

It is shifting the ground of Ukrainian politics in ways that demand
examination by the West, not to say encouragement.  The alternatives
which have commanded so much attention are not viable.

A revived Orange coalition, like the original coalition, would have little
internal coherence and possibly an even shorter shelf life than the first.

The grand coalition has already fallen apart, and its instrument of unity,
the ‘Universal’, merely enabled Regions to come to power and exercise it
without too much regard for its provisions.   For the moment, a gross
imbalance persists.

Yanukovych and Regions are seeking to establish ‘de facto’ control over
foreign and security policy, and they believe they possess the tools to do
so.

Despite the President’s counter-offensive, they might be right.  The
struggle between Yushchenko and Yanukovych is no longer the only game
in town, but it remains the biggest game,  and it could prove to be a
destructive one.

That puts the West in a dilemma. How can NATO and the EU accommodate
to the reality of Regions’ ‘de facto’ power without legitimising it? In
today’s circumstances, the establishment of direct lines of communication
with Ukraine’s new government is essential.

In principle, there is no impropriety in establishing them. But there is a
difference between exchanging views with the Prime Minister and Cabinet and
transacting official business with them. Western governments will need to
get this balance right.  We dare not suggest by our behaviour that power and
money trump the laws and the constitution of Ukraine.

For its part, Regions will need to come to terms with three realities

     [1] The first is the West. Yanukovych and a good many others in his
entourage and government are hobbled by a lack of understanding of the West
and the working culture and ethos of its core institutions, NATO and the EU.

They exaggerate the extent of geopolitical competition for Ukraine and
underestimate the importance we attach to its democratisation, the
liberalisation of its economy and the modernisation of its institutions.

They also underestimate our knowledge of how Ukraine works, the depth and
extent of our relationships in the country and our ability to see through
the scams and deceptions of politics and daily life.

Finally, they overlook the magnitude of our other security problems and
underestimate the limits of our attention span and patience.  Unless we can
break through these misunderstandings we may be heading for trouble.

     [2] The new authorities might also underestimate the extent of
democratisation that has occurred in Ukraine itself:  the growing astuteness
and assertiveness of civil society, the knowledge and courage of journalists
and experts and the extent to which people have come to take liberty for
granted during the past two years.

We must not forget that despite the failings of Yushchenko, Yanukovych (who
secured 36 per cent of the vote in October 2004) secured only 32 per cent of
the vote in Ukraine’s freest elections to date, those of March 2006.  The
majority of Ukrainians do ‘not’ support him, and there is a risk that he will
overestimate the limits of their tolerance.

     [3] Finally, Regions might overestimate their ability to improve
relations with Russia. Yanukovych and most of his supporters are not tools
of the Kremlin, but Ukrainians who recognise that the achievement of good
relations with Russia will not be easy.

Nevertheless, they currently believe that ‘Yushchenko is to blame’ and hope
for real improvements that do not damage Ukraine’s independence.  It is
likely that this will prove to be an illusory hope.

Will Regions continue on a course of covert accommodations and incremental
capitulations, or at some point will they draw lines and seek help?  If they
have alienated the West before they reach that point,  then re-engagement on
our part might prove difficult.

On all three fronts, the learning curve is likely to advance slowly.  As
clearly as possible, then, it would be in the West’s interests to
communicate three messages:

    [1] We would like Ukraine to join the Euro-Atlantic community to the
extent that it is willing and able. It is Ukraine’s choice. But it cannot do
so on the basis of values and interests that we do not share.  A retreat
from democratic norms-not only in elections, but in media freedom,

administration and law enforcement-will have immediate and damaging
repercussions in Europe and North America.

    [2] NATO’s priority is not MAP or membership, but the deepening of
cooperation and the strengthening of the networks, mechanisms and
programmes that sustain it.  This depends on the survival of teams as well
as ministers-and the continuation of  their work to bring Ukraine’s defence

and security sector into the 21st century.  Much has been invested and
much achieved in this sphere.   A return to ‘integration by declaration’ will
thoroughly disenchant Ukraine’s Western partners.

    [3] There is an urgent need for Ukraine to demonstrate continuity and
credibility.   Without them, our relationship will unravel.  There is no
competition for Ukraine.  There is a competition for priorities and
resources inside the West.   If our joint work in Ukraine is dismantled,
Ukraine could find itself out of that competition.

For its part, the West needs to understand that a period of incoherence

will not necessarily be bad for Ukraine if it breaks down today’s outdated
divisions and alters the dysfunctional pattern of politics in the country.
Where Euro-Atlantic integration is concerned, it would also be best to
adopt the maxim, ‘better later, but better’.                      -30-
———————————————————————————————–
NOTE: The views expressed in this paper are entirely and solely
those of the author and do not necessarily reflect official thinking and
policy either of Her Majesty’s Government or of the Ministry of Defence.
————————————————————————————————
                                           ENDNOTES
[i] The President’s principal foreign, defence and security prerogatives are
set out in Article 106 Para 1 (he ‘guarantees the state’s independence,
national security.’) and Para 3 (he ‘exercises LEADERSHIP in the state’s
foreign political activity, conducts negotiations and concludes treaties’).
Whilst Article 116, Para 1 of the Constitution states that the Cabinet of
Ministers ‘ensures the state sovereignty and economic independence of
Ukraine [and] the IMPLEMENTATION of domestic and foreign policy of
the state’, even this article (which obliges the Cabinet to implement ‘acts of
the President’) implies that the policy to be implemented is that defined
by the President. [emphasis added by author]

[ii] Hryshchenko, a former ambassador to the United States, was believed to
have strong Euro-Atlantic sympathies until he replaced Foreign Minister
Anatoliy Zlenko in 2004 and then failed to support those fighting a
rearguard action against Viktor Medvedchuk and the entry of Ukraine into the
Single Economic Space.  His deference to Medvedchuk (who had placed the
Ministry under direct subordination to the Presidential Administration)
secured his departure from the MFA after the Orange Revolution.  One
casualty of Hryshchenko’s tenure was Deputy Foreign Minister Oleksandr
Chaliy, who had resigned over the issue of the Single Economic Space.  Yet
he, too, found himself shunned by Yushchenko after the Orange Revolution
and, as a result, he soon began to advocate a more equidistant position for
Ukraine.  Both Hryshchenko and Chaliy took up positions in the Industrial
Union of Donbas.  But whatever his leanings at present, Hryshchenko is an
extremely able and knowledgeable figure, who is bound to add balance and
ballast to Yanukovych’s alternative foreign ministry.

[iii] Interfax Ukraine, 12 October 2006, cited in “BBC Summary of World
Broadcasts: Former Soviet Union” (hereafter SWB).
————————————————————————————————
CONTACT: James Sherr, james.sherr@lincoln.oxford.ac.uk.

————————————————————————————————
FOOTNOTE: James Sherr was one of the leading speakers and panelists
last week in Washington, D.C., at Roundtable VII, “Ukraine and NATO
Membership” of the Ukraine’s Quest for Mature Nation Statehood series
of fall conferences.  The AUR will publish Mr. Sherr’s presentation at
the Roundtable within the next few days.  We thank Mr. Sherr for the
opportunity to publish his latest article, “Ukraine: Prospects & Risks.”
AUR Editor Morgan Williams
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.                         A GATEWAY TO THE WEST
   Ukraine’s dash into NATO postponed for the time being. Post-socialist
  countries join NATO because Russia unable to offer attractive alternative.

COMMENTARY: By Mikhail Delyagin, Nezavisimaya Gazeta
Moscow, Russia, Monday, October 23, 2006

NATO still performs its principal military duties, but its role
changed with the collapse of the USSR. These days, NATO is the key
instrument for the West’s absorption of post-Socialist countries
whose economies and legislation don’t yet meet requirements for
European Union membership.

NATO membership of the period of EU’s rapid expansion is a kind
of mandatory “preliminary phase” prior to membership of the European
Union itself. Crisis of the European Union makes membership of NATO
the only affordable form of integration with the West.

Moreover, this integration doesn’t really concern societies and citizens
whose lives are not really affected by military threats. It concerns first
and foremost the elites that prove their loyalty to the West and
particularly to the United States in this manner.

Ukraine’s membership of NATO is one of the central issues of
Russia’s future. Thanks to Zbigniew Brzezinski, everyone knows now
that Russia cannot exist as a major factor of international politics
without Ukraine.

That’s what makes Ukraine’s “European” or Western
choice a key element of the whole global arrangement in the wake of
the collapse of the Soviet Union. That is why membership of NATO is
so important for Western strategists and their partners in Ukraine
itself who believe that cooperation with Russia is fatal for the
fragile Ukrainian self-identity.

George W. Bush intended to visit Ukraine this summer to invite
Ukraine to join NATO. But Ukraine’s political crisis had left it
without a government, however, and there was no one to receive the
high-ranking guest. Mass protests against the American military in
Ukraine followed.

 In fact, it was the so-called Feodosia conflict that transferred the
issue of membership of NATO from bureaucratic to the political plane
and made the previously passive Ukrainian people active and therefore
 important for official Kiev. (Opinion polls indicate that only 20% of
Ukrainians support the idea of joining NATO.)

The NATO summit in Riga on November 28-29 will be “for
authorized personnel” only. Russia is not invited to it as an
observer. Like any other “step backwards,” it is alarming of course.

On the other hand, because of the Ukrainian society’s clear position
the summit will be dedicated to the internal problems of NATO
accumulated in the years of its explosive expansion – from
rearrangement of the military infrastructure of East Europe to
financial issues. The United States is annoyed by a situation where
it essentially maintains NATO at its own expense and where at the
same time it is forced to take into account the conceited Europeans
who in their turn are sincerely mad over the Americans’ disinterest
in their rights.

The time is not yet ripe to invite Ukraine into NATO, and
Viktor Yanukovych went so far as to explain this to the West. The
Ukrainian elite aspires for membership of NATO, viewing it as
another “gateway” to the West, another road to the new opportunities
opening up before NATO members.

It seems that some Russian companies would also like to see
Ukraine in NATO. It will destroy the Ukrainian factories cooperating
with Russia and compel the latter to build its own ones. The
opportunities that will open for Russian businesses in this case are
truly enormous. The idea of membership of NATO is but postponed.

Backed by external financial and technological resources, the
campaign of propaganda needs some time first to brainwash the
Ukrainian population and bring the ratio of supporters and enemies
of the idea at least to 1:2. European experience shows that this is
the minimum ratio states need to crush the resistance of enemies of
membership of NATO that outnumber the supporters but lack state
resources to substantiate their stand on the matter.

Pro-NATO propaganda is extremely clumsy for the time being. It
boils down to boring diatribes about “no alternative path,” “the
choice of the civilized world,” the “ignorance” of all opponents,
the “veto power” Ukraine would allegedly wield with regard to its
sponsors, and the inevitable economic prosperity.

The propaganda inevitably refers to Romania, where foreign investment
soared once it became a NATO member. Propagandists never mention
the fact that investment soared in light of Romania’s forthcoming
membership of the European Union.

And yet, even this primitive propaganda is having an effect.
Quality may eventually evolve into quality. Credibility of the
Ukrainian audience should be taken into account as well. But it is
membership of NATO that may become the shocking moment of truth
for Ukraine. In any case, Russia still have time to adjust its position.

Restricting Russia’s stance to clumsy condemnation will
certainly be a mistake. Russia should make an emphasis on the fact
that NATO is a military-political bloc and not “partnership for the
sake of development.” Unless Russia is explained deployment of
NATO’s offensive weapons on its eastern borders, it will keep
regarding expansion of NATO as a hostile move.

The lessons of the anti-Georgian campaign should be learned. Russia’s
response should advance relations between peoples, not sever them.
It should be aimed at the elites (Ukrainian in this case) that force
membership of NATO on their people against the will of the latter.

Russia’s problem is that competition nowadays is not a contest
of tanks or finances, it is a contest of attractive images, models,
and symbols of development. This is where Russia doesn’t have
anything at all. Post-Socialist European countries are not
independent. The choose membership of NATO because Russia as
the only alternative doesn’t have anything attractive to offer them.

If it wants to win the battle for Ukraine, Russia should stop
being a synonym for authoritarian savagery and dumb coercion. Its
leaders should learn to respect other peoples, but this requires
that they should learn to respect their own people first.   -30-
——————————————————————————————–
Translated by A. Ignatkin

——————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3. UKRAINE TO RECEIVE GAS AT $130 PER 1,000 M IN 2007

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Ukrainian Prime Minister Viktor Yanukovych has announced that next
year Ukraine will receive at least 55 billion cubic meters of imported gas
at not more than $130 per 1,000 cubic meters.

“Negotiations are concluding in Russia. The volume of gas being supplied to
Ukraine is being confirmed at not less than 55 billion cubic meters at a
price of not more than $130 per 1,000 cubic meters. As soon as the
executives arrive in Ukraine they will show these contracts,” Yanukovych
said at a joint press conference with Russian Prime Minister Mikhail Fradkov
in Kyiv on Tuesday.

He said that the price agreements are agreements between two companies. “Of
course, we are creating conditions and, as they say, a normal atmosphere for
our companies, so that they can operate normally,” he said.

Fradkov said that the issue of gas supplies to Ukraine was not discussed at
a meeting of the intergovernmental committee, as these talks are being
carried out by companies – primarily Gazprom and Naftogaz Ukrainy.

Yanukovych said that earlier this issue was over politicized and that now
both sides are trying to transfer it to the corporate arena.

He said that the government would guarantee gas import volumes and also
reliable transit “so that European partners do not feel any discomfort.” The
prime minister said that the contracts to supply gas to Ukraine would be
published after they are signed.

This 55 billion cubic meters, along with the 20 bcm produced domestically,
is sufficient to meet requirements in 2007. At the moment the price for gas
being imported into Ukraine is $95. All of the gas supplied to Ukraine is
supplied through RosUkrEnergo and is bought by a joint venture with Naftogaz
Ukrainy – UkrGaz-Energo.

Russia and Ukraine, with help from RosUkrEnergo A.G. (Switzerland),
regulated their gas relations in January 2006. According to agreements, the
price for gas being imported to Ukraine increased to $95 per 1,000 cubic
meter, and the transit price – to $1.6 per 1,000 cubic meters over 100 km.

Ukrainian gas imports are expected to increase to $130 per 1,000 cubic
meters in 2007. Meanwhile, Yulia Tymoshenko, the leader of a large
parliamentary group, has criticized Yanukovych’s remark about the price of
$130 per 1,000 cubic meters of gas Ukraine will pay for Russian gas imports
in 2007.
                  TYMOSHENKO SAYS UKRAINE LOSING
“Ukrainian interests were blatantly betrayed at the start of 2006, when the
agreement with RosUkrEnergo was signed and when the link between transits of
Russian gas through Ukraine and the price for which Ukraine receives gas
from Russia was broken,” Tymoshenko told journalists on Tuesday.

“When it comes to power, the Yulia Tymoshenko Bloc will make public the
names of the officials” because of who “the country is now losing its energy
stability, independence, and its financial substance.”

“It is ridiculous to talk about $130, $210, or $95 now, since officials gave
up the price we were entitled to up to 2010. Either $95, or $130, or $210
remains a crime. I don’t see any difference here,” she said.

Tymoshenko pointed out that, while the agreement on the rent of land and
property for the Russian Black Sea Fleet was signed simultaneously with the
agreement on Russian gas sales to Ukraine, the agreement regarding the
conditions on which the fleet is functioning in Ukraine has not been
revised.

“I regard all these statements on a Russian-German-Ukrainian gas
transportation consortium or any other consortiums based on our gas
transportation system as high treason.

I warn the politicians who have switched to the issue of the gas
transportation system’s ownership after RosUkrEnergo that they won’t get
away with that. They must not dare eye something that has remained our
strategic property,” she said.
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

========================================================
4.   UKRAINE AND RUSSIA SHOULD AGREE ON NATO, EU, AND
        SYNCHRONIZE JOINING WTO, RUSSIAN PREMIER SAYS 
 
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Ukraine and Russia should take into account each other’s opinions 
on joining NATO and the European Union, and should synchronize their
joining the World Trade Organization, Russian Premier Mikhail Fradkov
has said.

Fradkov was speaking at a press conference following a meeting of the
Ukrainian-Russian intergovernmental economic cooperation committee in

Kyiv on Tuesday.

“Strategic cooperation provides for not only the ability to look at the
prospects ahead, but also for relations of trust and mutually shared
priorities in both foreign and domestic policy, as well as at the level of
interstate relations,” he said.

“If it is [the issue of Ukraine’s joining] NATO, it should not be against
Russia’s interests,” he said.

“If it is the WTO, one should take into account the relations between the
WTO and Russia and [there should be] a desire to build up strategic and
economic cooperation in a bilateral format. There should be more
consultations, more exchange [of opinions], I would say directly – to
synchronize the negotiation process of our countries regarding the WTO,”
Fradkov said.

“If it is European integration, here there are a lot of questions, which
must be taken into account by Ukraine and Russia, including those we have
discussed today – transport, industrial cooperation, cooperation in the
high-tech sphere. All of these issues are interrelated,” he said.
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
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========================================================
5.  ‘OUR UKRAINE’ DOES NOT AGREE UKRAINE AND RUSSIA’S
           WTO NEGOTIATIONS SHOULD BE SYNCHRONIZED 
 
Ukrayinska Pravda website, Kiev, in Ukrainian 24 Oct 06
BBC Monitoring Service, United Kingdom, Tuesday, October 24, 2006

KYIV – [Propresidential] Our Ukraine has described as inappropriate Russian

Prime Minister Mikhail Fradkov’s remarks that negotiations should be
synchronized so that Ukraine and Russia join the WTO simultaneously.

“We believe that in this way Ukraine is coming under pressure so that its
foreign policy changes. The essence of the Russian prime minister’s remarks
is not coordination and working out a joint position of the two countries,
but ‘a package of concessions’ by Kiev in politics and the economy,” Our
Ukraine said in a statement.

“Imposing the idea of a synchronized WTO entry [on Ukraine], Russia could
make other demands as well: that it should call a referendum on NATO
immediately, extend the stay of [Russia’s] Black Sea Fleet in Crimea and get
Turkmen gas only via Russia,” the statement says.

“This explains Russia’s position in the ongoing gas talks, whose course can
be affected by any concessions made by the [Ukrainian Prime Minister Viktor]
Yanukovych government,” the statement continues.

Our Ukraine believes that “Russia pursues a policy of restricting Ukraine’s
sovereign right to determine its own foreign policy interests”.

In this connection, Our Ukraine has called on Prime Minister Viktor
Yanukovych “to be a prime minister of Ukraine, not a governor of small
Russia [as Ukraine used to be known when it was part of the Russian empire]”
during talks with Russia.

It was reported earlier that Fradkov suggested that Ukraine’s and Russia’s
accession to the WTO should be synchronized [see TV 5 Kanal, Kiev, in
Russian 1100 gmt 24 Oct 06].                      -30-

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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6.     WTO LAWS SHOULD BE PASSED AS SOON AS POSSIBLE,
     ACCORDING TO UKRAINIAN FIRST VICE PREMIER AZAROV  
 
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006
KYIV – Ukrainian First Vice Premier and Finance Minister Mykola Azarov
has said that Ukraine should pass the package of laws needed for entry to
the World Trade Organization as soon as possible.

“I am convinced that we must consider all these draft bills [concerning the
reform of the tax and customs systems], taking into account the requirements
of the WTO. The government’s firm stand is that Ukraine must join the WTO.

We need to pass a package of laws providing for the process as soon as
possible,” he said, according to a press release from the Finance Ministry
issued on Tuesday.                                 -30-
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7.                IBM SETS UP SUBSIDIARY IN UKRAINE 

         Around 2,000  Ukrainian  companies  are  currently  IBM  clients
Interfax, Moscow, Russia, Tuesday, October 24, 2006

MOSCOW – IBM has set up a subsidiary in Ukraine called IBM Ukraine.

The  presence  of  a  world leader on the IT market in Ukraine will have a

positive  influence on the development of the Ukrainian IT market on the
whole  and  will help expand the sector of supply and services to the
company’s  business partners, Brendon Riley, IBM general director in
Central and Eastern Europe, said at a Tuesday press conference.

The  establishment  of  an  IBM  subsidiary  based on the company’s
representation,  that  has  worked  in Ukraine since 2004, will help
IBM offer the   entire   range   of  its  services  in  Ukraine,  said
 Ihor Pastushenko, general director of IBM Ukraine.

IBM  is planning to implement projects in business consulting, such
as designing  strategies,  personal  management,  installing
integrated informational systems, and developing the network of local
designers and business partners that offer solutions based on IBM
programs.

Around 2,000  Ukrainian  companies  are  currently  IBM  clients,
Pastushenko said.                                   -30-
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========================================================
8.  WORLD BANK CONTINUES TO SUPPORT STRUCTURAL
   REFORMS IN UKRAINE, WITH ASSISTANCE FROM JAPAN

UNIAN, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – A Japanese Policy and Human Resource Development (PHRD) Grant
Agreement to help the Ukrainian government advance its structural reform
agenda was signed today by the First Deputy-Minister of Economy, Mr.
Anatoliy Maksyuta, and the World Bank Director for Ukraine, Belarus and
Moldova, Mr. Paul Bermingham, in the presence of Mr. Mutsuo Mabuchi,
Ambassador of Japan in Ukraine, according to a WB press-release,
forwarded to UNIAN.

Under the coordination of the Ministry of Economy of Ukraine, the US$700,000
grant will assist the government in preparing the second Development Policy
Loan (DPL) from the World Bank by implementing policy commitments and
planning future reform steps in three major areas:

     [1] improvements in the investment climate,
     [2] better public administration and
     [3] public financial management and greater social inclusion.

The World Bank has supported Ukraine’s key policy and institutional reforms
over the past five years, through the series of loans: PAL-1 (2001), PAL-2
(2003) and DPL-1 (2005).

These loans supported the following accomplishments:

     [1] the elimination of pension, wage and most other budget arrears,
     [2] the reduction of tax arrears and tax exemptions,
     [3] improved business accounting standards and practices,
     [4] the launch of land reform and pension reform,
     [5] the establishment of a legal system for mortgage and secured
          interest,
     [6] improvements in the regulation of banks and other financial
          institutions, and
     [7] material progress towards WTO accession.

“Accelerating the implementation of structural reforms will be critical if
Ukraine is to achieve the target of doubling GDP over the coming decade” –
says Paul Bermingham, World Bank Director for Ukraine, Belarus and

Moldova.

“We have already started the dialogue with the new government on the
necessary steps going forward and we are grateful to the Japanese

Government for their assistance.”                   -30-
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9. UKRAINE: BOGDAN CORP, ZAZ TO BUILD AUTO PLANT IN RUSSIA

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Bogdan Corporation and Zaporizhia Automobile Plant (ZAZ) have begun
building a new auto plant in Russia to produce cars, trucks, and buses.
Bogdan press secretary Serhiy Krasulia told reporters joint investment in
the plant would top $300 million.

United Transport Technology on October 18 bought a 50 hectare plot of land
in the Bor district of Nizhny Novgorod in auction. Krasulia said the company
represents Bogdan and ZAZ and is founded by companies affiliated with them.

The plant will initially be able to produce 25,000 Lanos-Chevrolet cars,
6,000 Bogdan-Isuzu buses, and 25,000 trucks and assemblies. It will reach
full capacity in 2009 and will sell mainly on the CIS markets, primarily in
Russia, he said.

Krasulia said Bogdan and ZAZ previously conducted joint projects. The
companies have been producing the VAZ-21099 and VAZ-21093 cars at

ZAZ plants since 2003.

Bogdan first announced plans to produce automobiles in August of last year.
The company produces buses in Ukraine and Belarus.
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10.   UKRAINIAN GOVERNMENT SPARING NO EFFORT TO MAKE
   MARKET ATTRACTIVE TO INVESTORS, SAYS PRES YUSHCHENKO

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – The Ukrainian government will spare no efforts to make the

Ukrainian market attractive to investors, according to Ukrainian President
Viktor Yuschenko.

The cornerstone of this process is the formulation of clear rules, helping
build a productive dialogue between government and business, he said on
Monday in Budapest at a meeting with representatives of Hungarian business
circles, the president’s press service has reported.

He said one of the priorities for the government in this context was to
reduce taxes. Yuschenko also said he was taking steps to persuade

parliament to pass bills enabling Ukraine to become a WTO member.

He said the government was going to sign agreements on readmission and the
liberalization of visa requirements with the European Union this October,
and also start talks to sign a new enhanced agreement in 2007.

He reiterated that Ukraine’s foreign policy would not change. “Ukraine is
looking forward to building the most active dialogue possible with the
European markets,” he said.

Yuschenko discussed ways to introduce energy efficiency technologies and
produce biological fuel. Yuschenko said Ukraine expected Hungary to submit
proposals on joint projects in the area of energy efficiency.

The business leaders said they were ready to invest in the production of
fuel and development of Ukraine’s transportation infrastructure.

The President also said Ukraine would gladly use Hungary’s experience in

the modernization of farms. “Ukraine is open to full-scale economic and
investment cooperation with Hungary,” he stated.          -30- 
————————————————————————————————
FOOTNOTE:  The Ukrainian government the last two years certainly has
not done all they can to make the Ukrainian market attractive to international
investors.  In fact they have accomplished very little in this area and are
doing very little at the present time. The president and others in the
government have made many speeches on this subject but seldom is
there any reality to go with what is promised.   AUR Editor  
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11. “OUR UKRAINE DOES NOT GIVE IN TO THE PRESIDENT”
           Pro-presidential party took another step towards self-annihilation.

ANALYSIS & COMMENTARY: By Oleksandr Chalenko
Segodnya, Kiev, Ukraine, in Russian 23 Oct 06; p 2
BBC Monitoring Service, United Kingdom, Tuesday, Oct 24, 2006

Three factions threaten to fracture the pro-presidential party in Ukraine, a
newspaper has reported. The author said nearly a third of Our Ukraine
People’s Union local chapters will leave the party to follow Mykola
Katerynchuk if he is not elected party leader.

In the meantime, the author said a three-week break in the party’s congress
is to be spent by President Viktor Yushchenko searching for a compromise
with current leaders in the party whom he wants to replace with people more
likely to help him find a common language with the Party of Regions.

The author said an agreement with the Party of Regions could secure him a
second term as president.

The following is the text of the article by Oleksandr Chalenko, entitled
“Our Ukraine does not give in to the president: The dear friends refused to
give up control of the party. Now it demise it unavoidable”, published in
Segodnya on 23 October, subheadings appear as in the original:

Over the weekend, the main pro-presidential party – Our Ukraine, People’s
Union [OUPU] – took another decisive step towards self-annihilation. The
party is ready to be torn into three factions.

[1] The first: those sympathetic to Mykola Katerynchuk, who insist on going
into the opposition and joining Yuliya Tymoshenko.

[2] The second: “the dear friends” [Yushchenko’s allies who were accused of
corruption] headed by Roman Bezsmertnyy and Petro Poroshenko, who are
financing and controlling the OUPU governing bodies.

[3] The third: Viktor Yushchenko himself and his new favourites from the
Presidential Secretariat ([head of the presidential secretariat Viktor]
Baloha, [first deputy head of the presidential secretariat Arseniy]
Yatsenyuk and [deputy head of the presidential secretariat Viktor] Bondar).

And if on Friday [20 October] it appeared that the president and “the dear
friends” managed to find a common tongue in dividing the management of the
party, by Saturday [21 October] during the third OUPU congress, all the
agreements were ruined and the congress itself interrupted.
                                   A ONE-HOUR CONGRESS
The congress opened with a speech by Viktor Yushchenko, the honorary
chairman of the party. The orator came on stage in a suit, but without a tie
though he wore an orange handkerchief in his breast pocket [Orange being
OUPU’s campaign colour].

He branded the former Our Ukraine leadership (he did not name names, but
everyone understood he meant Bezsmertnyy and “the dear friends”, who sent
the party into crisis and turned it into a closed joint-stock company where
“the main shareholders solve their own interests or interests close to their
own”. At the end, the head of state suggested holding the congress in two
stages.

 To set up working groups which will work out foundation documents and sort
out the leadership bodies in the first stage. And in the second stage – the
congress should approve what was worked out. The president’s intentions did
not come to pass.

After him, Bezsmertnyy stepped up to the podium and…[ellipsis as
published] declared a three-week break.

That shocked the delegates, especially those siding with Mykola Katerynchuk,
who wanted to try to elect him leader of the party at this congress. But
Katerynchuk calmed them and agreed to the time out.
                               AWAY WITH THE FRIENDS?
A source in the president’s circle told us that the day before the congress,
the Secretariat reported to Yushchenko that an agreement had been reached
with Poroshenko and company about their resigning on their own from the
leadership of Our Ukraine and on Bezsmertnyy’s departure and freeing a place
for Arseniy Yatsenyuk (currently the deputy chief-of-staff).

And so the president agreed to remain honorary chair of the party. But
unexpectedly, it turned out that Poroshenko was not ready to give up the
party. “And the long time-out was called in order to resolve the problem”,
the source explained.
                               THE END OF THE PARTY?
If it turns out impossible to agree (which is very likely), then it is most
likely Yushchenko will lose interest in OUPU, giving it over to “the dear
friends” who will “devour” Katerynchuk and kick him out of the party (up to
one-third of local organizations and almost half the Our Ukraine faction in
parliament will leave with him).

Of course, without the president’s support, Our Ukraine will quickly become
marginal and it cannot be ruled out that it will give in to the Party of
Regions and set up a grand coalition with it in parliament.
                                    ANOTHER SCENARIO
Events will develop in a far more interesting way if Yushchenko manages to
agree with the “friends” on replacing the leadership of the party (and
Katerynchuk will leave anyway – the president does not accept his calls to
unite with Tymoshenko). There are two conflicting versions on why Viktor
Andriyovych [Yushchenko] would need this.

[1] First: the secretariat is looking at the possibility of an early
parliamentary election. Should Our Ukraine enter them with the old
leadership, unavoidable defeat will be awaiting it, but with new leadership,
the party has a chance to fight for the “Orange” electorate’s vote.

[2] The second version, and one which is more likely, comes down to
Yushchenko not wanting a new election, but rather his thirsting for a
stabilization of the political situation.

To this end, he needs to quickly find agreement with the Blue-and-Whites
[the campaign colours of the Party of Regions], something his old “dear
friends” could not do because of their large appetite for posts and
appointments.

 So it has been decided to put them on the back burner and give the reins of
government in OUPU to people close to the financial-industrial group
Industrial Union of Donbass [IUD], which already controls the presidential
secretariat to a significant extent (Yatsenyuk and [deputy head of the
presidential secretariat Oleksandr] Chalyy) and the Secretary of the
National Security and Defence Council (Vitaliy Hayduk – the co-owner of the
IUD).

The end goal: getting a second term as president for Yushchenko, who could
be elected in parliament rather than in a nationwide election, and so there
is a need to agree with [Prime Minister] Viktor Yanukovych and the Party of
Regions.                                                -30-
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12.             OUR UKRAINE ON VERGE OF MELTDOWN

INFORM, newsletter for the international community providing
views and analysis from the Yulia Tymoshenko Bloc (BYUT), Issue 16
Kyiv, Ukraine, Tuesday, October 24, 2006

The pro-presidential bloc, Our Ukraine, is on the verge of an irrevocable
split as the bloc’s third congress ended in disarray on Saturday.  Its
embattled leadership agreed to reconvene in three weeks time to review plans
from President Viktor Yushchenko who remains its honorary Chairman.

Speaking at the congress, President Yushchenko sharply criticized his
party’s decision to move into opposition and urged it to resume talks with the
governing coalition led by Prime Minister Viktor Yanukovych, his one time
foe.

Only last Thursday Our Ukraine announced that four ministers had resigned
and reiterated that it was officially in opposition.  This appeared to
signal the end of efforts to form a grand coalition with the pro-Russian
Party of Regions and its allies, the Socialist and Communist parties – known
collectively as the Anti-crisis coalition.

But the president seems to have a different agenda. He expressed doubt that
being in opposition was the best option for Our Ukraine and insisted that
the focus should “be on consolidation and mutual understanding with various
political forces, including the Party of Regions.”

He also criticised our Ukraine’s leadership, stating that it had been
weakened by personal ambition and urged a reshuffle. This was seen as a
rebuke of Roman Bezsmertny who announced that he would renounce the
leadership and suggest a new candidate at the party’s council meeting next
Wednesday.

The party appears to be on the verge of splitting. For several weeks,  the
president and his ministers appointed by decree – Foreign Minister Boris

Tarasyuk and Defence Minister Anatoliy Hrytsenko – have distanced
themselves from the rest of the bloc. Both ministers signaled their
opposition by refusing to resign, citing their constitutional duty as the
 reason.

Yet the rationale for clinging onto their positions is confusing,
particularly given the fact the ministers were unable to work effectively
with the Yanukovych-cabinet which ran rough-shod over their portfolios.

Tammy Lynch, Senior Fellow at the Institute for the Study of Conflict,
Ideology and Policy at Boston University, recently opined, “A move to
opposition may allow these former ministers more effectively to criticize
the government and to provide clear alternatives.  Their influence outside
the government may be far greater than it was within it.”

The four ministers who submitted their resignations to parliament last
Thursday are Health Minister Yuriy Polyachenko, Culture Minister Ihor
Likhoviy, Family, Youth and Sport Minister Yuriy Pavlenko and Justice
Minister Roman Zvarych.

It is now unclear if they will leave office or not.

Earlier in the week, Evhen Kushnaryov, a senior official from the Party of
Regions, intimated that parliament might go as far as to offer the president
the opportunity to name candidates for the vacant ministerial posts.

President wants renewed talks with the parliamentary coalition

The president’s willingness to hold further talks aimed at forming a new
coalition is at complete odds with the views of many in Our Ukraine,
including its leader Mr Bezsmertny who had deemed further negotiations as
pointless.

Previously claiming “all bridges are burnt,” Mr Bezsmertny  had pinned the
blame on the failure of the Party of Regions to incorporate the conditions
of the ‘Universal’ (National Unity Pact) into a new coalition agreement; the
most pressing being the adoption of the NATO membership action plan,
EU integration and swift accession to the World Trade Organisation.

Despite the president’s wishes, most observers doubt whether Mr

Yanukovych will suddenly acquiesce to Mr Yushchenko’s demands. The
Communist Party will also keep up the pressure.

Its leader, Petro Symonenko, claimed earlier that he did not see any
constructive proposal from Our Ukraine during the negotiations, and “those
ideas that the president and his ‘orange team’ impose were ineffective.”

The most likely scenario is that Our Ukraine will split in two with some of
the deputies joining a re-constituted governing coalition and others
remaining in opposition.

As if to confirm a potential split in the ranks, the first meeting of
“Yevropeyska Ukrayina,” or “European Ukraine,” was held on October 12.
This grouping purports to be a confederation of parties that will form an
alternative opposition.

Interestingly, BYUT was not one of the nine parties invited to attend the
first meeting which lasted for three hours. According to Roman Bezsmertny,
the new force will base its policy upon the Universal and seek to form a
shadow government.

However, some insiders believe the unwillingness to involve BYUT is because
the new group is forming mechanisms to make deals with the governing
coalition.

Others contend that it is simply a re-invention or re-branding of Our
Ukraine in European clothes – a move designed to entice back voters that
defected to BYUT in the March parliamentary election.

Whatever the intent, BYUT leader Yulia Tymoshenko was in a conciliatory
mood, “The door will remain open as long as it takes.

 We encourage Our Ukraine to join an inter-factional opposition which would
unite in challenging the government and securing the future direction of
Ukraine.  This is not a question of party politics but about the freedom and
economic prosperity of a nation.”

To-date there has no been serious dialogue between Our Ukraine and BYUT
on a united opposition.

“There is room for several oppositions,” said Mrs Tymoshenko, “but a single
strong inter-factional opposition will serve this country best. The people
are tired of being let down by squabbling politicians whether they are in
government or opposition.  They expect better and deserve better and because
of this we will remain open to discussions.”                 -30-
————————————————————————————————-
For further information contact: taras@byti.org.ua.

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13.    IVANO-FRANKIVSK CITY COUNCIL CONSIDERS RUSSIAN
       FOREIGN AFFAIRS MINISTRY REPORTS ON INFRINGEMENT
                  OF RUSSIAN LANGUAGE AS A PROVOCATIVE 

Ukrainian News Agency, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Ivano-Frankivsk city council considers Russian Foreign Affairs
Ministry reports on infringement of Russian language in the city as
provocative.

Ivano-Frankivsk city council has disclosed this in a report to Ukrainian
President Viktor Yuschenko, Russian Foreign Affairs Ministry and
Ukrainian citizens of all nationalities on October 17.

‘We consider Russian Foreign Affairs Ministry reports on infringement of
Russian language in Ivano-Frankivsk…as provocative,’ the report reads.
Russian Foreign Affairs Ministry’s position surprised the deputies.

The deputies say that before the report no official complaints from
representatives of national minorities had been received in the frames of
implementation of the program on development of Ukrainian language in
the city for 2004-2006, which was endorsed on June 9, 2004.

‘The program contains nothing about Russian language. It foresees
functioning and development of the state language,’ the report reads.

According to the deputies, Ivano-Frankivsk was, is and will be the city
freely developing communities of other nationalities.

‘We, Ivano-Frankivsk city council deputies, will do our best to make each
dweller of the city, each visitor feel a free and protected person,’ the
deputies said.

As Ukrainian News earlier reported, Ivano-Frankivsk city mayor Viktor
Anushkevichus invites Russian Foreign Affairs Ministry representatives to
hold monitoring of Russian language functioning in the city.

Ivano-Frankivsk regional state administration chairman Roman Tkach denies
Russian Foreign Affairs Ministry’s accusations concerning oppression of
Russian language in Western Ukraine.

On September 27, Russian Foreign Affairs Ministry criticized language policy
of Ukrainian local authorities and in particular authorities in Ivano-Frankivsk
region.

In particular, according to Russian Foreign Affairs Ministry,
Ivano-Frankivsk authorities have issued resolution banning to speak Russian
at educational establishments, and hold mass events using Russian language.

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14.              “BUT WAS THERE DISCRIMINATION”
     Paper denies Russian reports on language discrimination in west Ukraine

ANALYSIS AND COMMENTARY: By Yaroslav Zahoruy
2000 newspaper, Kiev, Ukraine, in Russian 20 Oct 06 pp F1, F2
BBC Monitoring Service, United Kingdom, Friday, October 20, 2006

Contrary to reports in Russian media and to a statement issued by the
Russian Foreign Ministry, the Russian language does not face discrimination
in western Ukraine, a popular newspaper has reported.

The author said a visit to the western Ukrainian city of Ivano-Frankivsk
uncovered no signs that the local authorities were intent to stamp out the
Russian language.

On the contrary he said, Russian co-exists with Ukrainian and
Russian-speaking residents have no real complaints. He concluded that the
Russian newspaper Izvestiya misrepresented facts in its reports of a
“language inquisition”.

The following is the text of the article by Yaroslav Zahoruy, entitled “But
was there discrimination?”, published in the Ukrainian newspaper 2000 on
20 October; subheadings appear as in the original:

2000 looks into information from Russian media about the presence of a
“language inquisition” in Ivano-Frankivsk.

Citing the Russian Ministry of Foreign Affairs, on 27 September the media
reported on severe pressure on the Russian language in the western regions
of Ukraine, especially in Ivano-Frankivsk.

The Russian Foreign Ministry press release reported: “As always, the
authorities in Ivano-Frankivsk have excelled in this. According to
directions issued by the local Ukrainian authorities, it is now forbidden to
speak in Russian anywhere on the territory of educational institutions, mass
events are not allowed to be held in Russian and it is even forbidden to
post announcements in Russian in public places.

Observation of book-sellers and those distributing periodicals in Russian
has been implemented. The Committee of Public Language Control will look for
adherence to these rules; the Committee has been invested with the practical
functions of a ‘language inquisition’.”

The reaction from Ivano-Frankivsk regional administration head Roman Tkach
was immediate: “I have no official information on authorities in western
Ukraine making decisions which limit the Russian language.” The Our Ukraine
People’s Union party stated that such commentary from a foreign country’s
foreign policy establishment was interference into our country’s internal
affairs.

It would seem the conflict had run its course. But on 10 October, the
Russian publication Izvestiya.ru put up an article by Yanina Sokolovska
under the headline “The dictatorship of language: Ivano-Frankivsk becomes
the most Russophobe city in Ukraine”.

A correspondent from 2000 visited Ivano-Frankivsk to see what the situation
was like on the scene.

“About 90 per cent of publications are in Russian”

I can make the Russians happy – there are plenty of publications in the city
in Russian. If you look at glossy magazines, then it is hard to find one in
Ukrainian. In general, the assortment here does not differ much from that in
Kiev and many other cities in Ukraine.

All the popular Russian-language newspapers are also represented here:
Segodnya, Komsomolskaya Pravda, Izvestiya, Argumenty i Fakty, Moskovskiy
Komsomolets and others. To tell the truth, there is a lack of the popular
2000 newspaper. One kiosk operator said that many kiosks kept the newspaper
for regular readers.

I decided to walk down Chornovil Street and made it a point to ask locals
the way in Russian. They all politely answered in Ukrainian and pointed the
way. One did ask if I was from out of town and tried to answer in Russian.
He did not do a very good job of it, but the beginning of my trip gave me
heart.

Next to the regional administration building I first heard Russian speech. A
middle-aged man and woman were talking animatedly – it was clear they were
old acquaintances. I asked them about limits on their native language.

“No-one forbids us from speaking Russian,” was the answer I heard, “Like
you see, we are now freely conversing.”

They heard about the statement of the Russian Foreign Affairs Ministry for
the first time from me, and were surprised at the alleged pressure on
distributing Russian language press and books, pointing to a newspaper kiosk
nearby where “90 per cent of the publications are in Russian”. To tell the
truth, local newspapers come out exclusively in Ukrainian (this was noted by
my new acquaintances).

There are also plenty of books in Russian. One can easily buy books by
current popular authors like Paulo Coelho, Boris Akunin, Dan Brown and
detective stories by Aleksandra Marinina and Darya Dontsova both in stores
and on the street as well as Russian classics like Leo Tolstoy and Vladimir
Mayakovski. As far as literature in translation, I found Moliere, Kafka and
Maugham in Russian – but not in Ukrainian.

It is interesting that book sellers freely converse in both Ukrainian and
Russian, easily switching from one to the other. They say there is no
“language inquisition”, and that people buy books in both languages.

But there is little children’s literature in Russian. And in order to find
it, you have to look several places. And it is not a fact you will be able
to buy the book you need.

“No-one pressures us, but we would like more Russian schools”

City residents may speak verbally to authorities in Russian, but only in
Ukrainian in written form. “That is what the law says,” they say.

But they are mistaken in this. Unfortunately, civil servants have not
studied the Ukrainian constitution in depth, which in particular says: “The
free development, use and defence of Russian and other languages of
national minorities is guaranteed.”

Here are just a few excerpts from the law of the Ukrainian Socialist Soviet
Republic “On language”, which refer to the Russian language (the norms of
this law are in effect in modern Ukraine): [excerpts from the law in Ukrainian]

“Article 4. The languages of interethnic communication
“Ukrainian, Russian and other languages are the languages of inter-ethnic
communication in the Ukrainian SSR.

“The Ukrainian SSR provides for the free use of the Russian language as a
language of inter-ethnic communication between the peoples of the Soviet
Union.

“Article 5. Citizens’ rights to use any language
“Citizens of the Ukrainian SSR are guaranteed the right to use their
national language or any other language.

“Citizens have the right to address state, party, public bodies,
enterprises, departments and organizations in Ukrainian or in another
language of their work, in the Russian language or in another language
acceptable for both sides.

“The refusal of a civil servant to accept and review citizens’ appeals
citing a lack of knowledge of the language of appeal is punishable pursuant
to the law.

“The decision upon an appeal is written in the Ukrainian language or in
another language used by the body or organization which the citizen has
addressed. Should the citizen desire, such a decision can be given to him in
Russian translation.”

[back to Russian] As we see, the law clearly defines citizens’ rights to
converse with state bodies in Russian not only verbally, but in written form
as well. And even get official replies in that language.

Overall, the people I spoke with are convinced that neither the authorities
or residents are pressuring the rights of Russian speakers. The only thing
they drew attention to was that there is currently only one Russian school
in Ivano-Frankivsk (before there were three) and it is full. Russian
speakers (and they now number about 6.4 per cent according to the 2001
census) have to generally send their children to Ukrainian schools.

Of course, some of them do so for purely practical reasons, why should a
child walk to school several kilometres away (even if it is Russian) if he
can be sent to a Ukrainian school only a few minutes’ walk away?

Children in kindergartens and schools speak in the state language, since the
teacher (or school worker) is providing an example. And a Russian-speaking
child speaks in Ukrainian. But at home within the family circle, he freely
speaks Russian.

The very opposite situation is seen for example in Kiev, when a child from a
Ukrainian-speaking family converses with his peers in Russian. And feels no
discomfort in doing so.

The people I spoke with were indignant over such nonsense as Pushkin being
translated into Ukrainian in textbooks and Russian literature being taught
as a foreign literature. But unfortunately that is the practice in many
Ukrainian cities.

Many in Ivano-Frankivsk do not understand the policy of local television
stations in dubbing Russian-language interviews during the news hour into
Ukrainian and again, local stations broadcast exclusively in Ukrainian.
Russian speakers watch neutral channels and the Russian channels ORT,
RTR and NTV.

Students at the Vasyl Stafanyk University in Prykarpattya did not confirm
information that the university administration does not let them speak
Russian. Youth from Crimea and other regions in Ukraine where Russian is
popular study here and no-one hinders them in speaking Russian.

They speak to teachers in both languages. But it is not a fact that all will
answer in the language of the person addressing them. “It depends on the
teacher,” the students explain.
                          NATIONALISM IS NOT POPULAR
I did not find any nationalist slogans in Ivano-Frankivsk newspapers, in
particular Halychyna and Afisha Prykarpattya. I did not see any writing on
the streets along the lines of “Muscovites, out of Ukraine!”, “Suitcase –
Station – Russia” and so on.

In contrast to many articles in Russian media, nationalism is not popular in
the city, nor in the region as a whole.

For example, the Svoboda party of [nationalist] Oleh Tyahnybok did not get
into the regional council and the National Choice bloc, which was made up of
the Ivano-Frankivsk organizations of Sobor and the Congress of Ukrainian
Nationalists, got less than 5 per cent of votes in the parliamentary
election last spring.

Local residents say there are individual instances of “a lack of love” for
Russian. But they are not widespread and find no support among the
population. “There are idiots everywhere, and Ivano-Frankivsk is no
exception,” pensioner Petro Mykhaylovych told me.

At the same time, he noted that Russia, which is always talking about
pressure against the Russian language in western Ukraine, allows its
politicians, in particular [Deputy Speaker Vladimir] Zhirinovskiy and [MP
Nikolay] Kuryanovich to speak negatively about Ukraine and even call it
Little Russia (that concerns the latter of the two).

Ivano-Frankivsk residents relate that they are used to hearing visitors,
especially from eastern regions, asking questions in Russian about pressure
on the Russian language. They are afraid of being laughed at for speaking
Russian.

And they are surprised when they are politely answered in Ukrainian,
sometimes the speaker switching into Russian, as I learned in a cafe. And in
one store, when I approached the cashier in Ukrainian, she answered in
Russian. I did not feel any antagonism from any of the locals I spoke to in
Russian.
                        RUSSIAN SONGS PLAY IN CAFES
Walking around Ivano-Frankivsk and entering various cafes and stores and
travelling on public transport, I noted that songs are played in Ukrainian,
Russian, English and other languages.

For example, near the marketplace Russian pop is playing everywhere and in
the Tsimes Pizza shop the television was showing videos only in Russian. And
no-one asked anyone to turn off the music “in that damned language”.

To the contrary, Ukrainian-language students near the cafe where [pop group]
Via Gra was playing, happily sang along with the girls in Russian.

There is advertising in Russian. Yes, there is not much, but you can’t say
it is not there. And there are posters in Russian. And the Ukrainian
billboard advertising the visit of [Russian pop star Filipp] Kirkorov called
him Filipp and not [the Ukrainianized] Pylyp, like Izvestiya wrote.

I heard no complaints from local Russian speakers about bans on advertising
in Russian. I was told that no-one bans anything, simply Ukrainian speakers
are the vast majority and so advertising is written mainly in Ukrainian.

Whatever the case, I saw no pressure on the Russian language just as I heard
no complaints about it from locals.

They are worried today about issues of a social and economic nature: low
paying jobs (there is nearly no industry), the terrible condition of the
roads and buildings. Many Ivano-Frankivsk residents travel to Italy and
Poland to work and this is the only way they can afford to feed their
families.
STATEMENT BY THE RUSSIAN FOREIGN MINISTRY A MISTAKE
2000 learned at the Ivano-Frankivsk city council that they were simply
shocked by the articles on pressure on the Russian language.

The mayor’s press secretary Andriy Oleksin said the statements by the
Russian Foreign Ministry and the articles in Izvestiya are related to the
Programme of the development and functioning of the Ukrainian language in
Ivano-Frankivsk for 2004 to 2006, which was passed on 9 June 2004 after a
relevant resolution by the cabinet (similar programmes operate in all cities
in Ukraine).

The chairman of the Russian community in the city, Oleksandr Volkov,
protested against six points of the programme and he did so as a private
person (the city received no protests from the community itself or from
other Russian-speaking residents in Ivano-Frankivsk).

The court noted two points relevant to teaching in Ukrainian in educational
facilities and advertisements in the state language. But the authorities in
Ivano-Frankivsk do not know why Volkov did not complain when the programme
began but only did so now as it is coming to a close and a new one is being
prepared.

Oleksin especially noted that no decisions about a ban on playing Russian
music or speaking in Russian in daily life had been made and that they could
not be made as any court would say they were illegal. And the Committee of
Public Language Control is something the Russian press simply made up.

Andriy Volodymyrovych said he was present on Friday at a meeting between the
city mayor Viktor Anushkevych and Volkov and Russian Federation Consul
Yevgeniy Guzeyev. Volkov said he was “[in Ukrainian] simply in shock over
the statements from the Russian Foreign Office and individual media on the
‘language inquisition'” and was “not satisfied by this open filth and
considers such path of cooperation between the Russian community and city
authorities to be anti-productive”.

Commenting on the Russian Foreign Ministry’s statement and the latest
articles in Izvestiya.ru, Guzeyev said he thought the tone of the Foreign
Ministry was rude and a bit incorrect and the information of the Russian
publication “rude, untrue and unfounded”. A relevant press release was
posted on Ivano-Frankivsk’s official website.

There is a tourist boom in Ivano-Frankivsk and Andriy Oleksin says such
unfounded statements significantly harm the city’s reputation. The
authorities do not know who is gaining from that.                -30-

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15. CHILDREN’S HOSPITAL OF THE FUTURE FOUNDATION PLANS
   TO BUILD NEW HOSPITAL IN KYIV ARE PRESENTED IN DONETSK

Press office of President Victor Yushchenko
Kyiv, Ukraine, Saturday, 21 October 2006

KYIV – Last week, Kateryna Yushchenko held a press conference in Donetsk
to present a project to build a children’s hospital of the future in Kyiv.

Her advisor Andriy Myroshnichenko and Transbank Honorary President
Volodymyr Kosterin, who is also a member of the supervisory board of the
Children’s Hospital of the Future Foundation, attended the event.

Mrs. Yushchenko said: “Not only will the creation of such a hospital enable
our doctors to treat serious diseases but also help Ukraine’s medicine
develop and use modern technologies to save Ukrainian children’s lives. We
are proud to see more and more sponsors join in, which we see as a sign of
civil society.

Every day we accept new partners, such as business representatives and
public leaders, who appreciate our vision of common responsibility to
resolve the most pressing social problems.”

Mr. Myroshnichenko detailed steps aimed at creating and building the
hospital. He also told reporters how they were going to raise funds.

Ukraine’s leading television channels, ICTV, 1+1, Inter, NTN, Tonis, STB,
NTCU, M1 and Channel 24, which are participating in the campaign, will
launch a television marathon on November 1.

He also said the project was supported by Ukraine’s mobile network
operators, UMC, Kyivstar, Golden Telecom, Life:) and Beeline, whose
subscribers can donate money via SMS messages or telephone calls.

Mr. Kosterin said his bank saw the Ukraine 3000 Foundation as its reliable
partner. He expressed hopes Donetsk’s business elite would join the project.

Following the press conference, the First Lady inspected the Donetsk Oblast
Children Hospital, where it took place. She also met with Donetsk business
leaders.                                      -30-
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LINK: http://www.president.gov.ua/en/news/data/5_11277.html

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16.    UKRAINE’S PRESIDENT VIKTOR YUSHCHENKO & WIFE
KATERYNA HONOR LEADERS OF 1956 HUNGARIAN REVOLUTION
 
Press office of President Victor Yushchenko
Kyiv, Ukraine, Monday, October 23, 2006

KYIV – Victor Yushchenko and his wife have laid flowers on the monument to
the leaders of the 1956 Hungarian revolution in Budapest’s public cemetery.

When the uprising was suppressed, its three leaders, among them the
reforming Prime Minister Imre Nagy, were arrested and executed. In 1961
their remains were secretly reburied in the outskirts of the cemetery.

The Hungarian Revolution of 1956 was a nationwide revolt against the
Neo-Stalinist government of Hungary and its policies, lasting from October
23 until November 10.

The uprising started in Budapest with a spontaneous demonstration by a crowd
of about 23,000, the reading of a pro-democracy manifesto and the singing of
banned national songs.

A giant statue of Stalin was pulled down. Soviet tanks were forced to
withdraw, but returned with devastating force a week later. Imre Nagy made a
final impassioned plea to the outside world by radio. He and hundreds of
others were killed, among thousands of Hungarians who died.

On June 16, 1989, Nagy was ceremonially reburied again and a monument
honoring the heroes of the revolution erected. This event marked the
beginning of a new democratic era for Hungary and helped initiate social and
political changes in the country.  

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LINK: http://www.president.gov.ua/en/news/data/1_11274.html
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17.    VICTOR YUSHCHENKO AND HIS WIFE KATERYNA MEET
                  WITH HUNGARY’S UKRAINIAN COMMUNITY 

Press Office Of President Yushchenko
Kyiv, Ukraine, Sunday, October 22, 2006

KYIV – Victor Yushchenko and his wife have met with representatives

of Hungary’s Ukrainian community.

In his speech, the President revealed his vision of the current situation in
Ukraine, reiterating that the country’s political forces must unite to
fulfill the nation’s key priorities. He said the National Unity Pact “was
designed to unite political forces irrespective of geography.”

Mr. Yushchenko outlined Ukraine’s recent economic and social
achievements. He particularly said the Ukrainian economy had stabilized
in the past several months, with the GDP rate being 6%.

“This is one of the best results in Europe,” he said, adding that the direct
foreign investment rate had doubled in the past year.

Speaking about Ukrainians living abroad, the Head of State said the
Ukrainian government was now formulating a project called
“The Ukrainian parlor” and aimed at creating Ukrainian information and
culture centers in European capitals and other cities of the world with
numerous Ukrainian communities. He believes it will enable Ukrainians
abroad to sense “the channel of communication with Ukraine.”

“We know what worries the diaspora in Hungary,” he said, promising to
discuss their most pressing problems with his Hungarian colleague, Laszlo
Solyom, tomorrow.

Yaroslava Khortyani, Head of the Ukrainian Culture Association in Hungary,
thanked the Ukrainian government for supporting and promoting their
activities.

The President and the first lady inspected the Markiyan Shashkevych library
and viewed exhibitions featuring Ukrainian artists and craftsmen. They gave
the Ukrainian community a collection of books by Ukrainian classics,
videotapes, CDs and musical instruments.                  -30-
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LINK: http://www.president.gov.ua/en/news/data/1_11243.html
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18.  THE 50TH ANNIVERSARY OF THE HUNGARIAN REVOLUTION
          STATEMENT: UKRAINIAN CANADIAN CONGRESS (UCC)

STATEMENT: Ukrainian Canadian Congress (UCC)
Winnipeg, Manitoba, Canada, Tuesday, October 24, 2006

On October 23, 2006 freedom-loving people across the world mark the 50th
Anniversary of the Hungarian Revolution.

This spontaneous nationwide revolt against the Neo-Stalinist government of
Hungary and its Soviet-imposed policies lasted from October 23 until
November 10, 1956 when it was brutally crushed by the armed forces of the
Soviet Union assisted by domestic collaborators.

Thousands of Hungarians died defending their nation.  Many others became
refugees.

The Revolution was an act of national self-defence in face of an
anti-democratic dictatorial regime which did not serve the interests of the
Hungarian people but only those of the imperialist regime in Moscow.

Ukrainian Canadians bow their heads in memory of those that gave their lives
for the ideal that nations have the right to live as they chose in their own
countries.  We celebrate the spirit of love of country and of fellow
citizens which motivated the Freedom Fighters of ’56.

This same spirit was subsequently shown in other countries of Eastern Europe
and the former Soviet Union.  Most recently, in Ukraine, during the Orange
Revolution this spirit served as an example to the hundreds of thousands of
Ukrainians who braved the threat of state violence and foreign intervention
to stand up for their rights.

Canada became home to many of the refugees of the Revolution.  Ukrainian
Canadians are proud to count their Hungarian neighbours as friends.

Together our two communities became champions of freedom and
democracy in countries ruled by totalitarian regimes.  We stand together
now in continuing to contribute to Canada and its multicultural society.

On behalf of the Ukrainian Canadian Congress, I extend my best wishes to
the Hungarian Canadian community. Let no one forget the spirit and example
of the Hungarian Revolution of 1956!

Orysia Sushko
President, Ukrainian Canadian Congress
————————————————————————————————
Contact: Ostap Skrypnyk ostap.skrypnyk@ucc.ca
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19. FIFTY YEARS ON FROM THE HUNGARIAN REVOLUTION
          They were three weeks that shook the world, when a revolt begun by
             students forced out both a government and hated Soviet forces,
                             only to end in bloodshed and repression.

By Peter Popham, The Independent, London, UK, Mon, 23 Oct 2006

Fifty years ago today, something extraordinary happened in Hungary. A
nation, one of the proudest and most distinctive in Europe, that had endured
two catastrophic world wars, the loss of much of its territory and
subjugation to the brutal might of the Soviet Union, spontaneously decided
that it wasn’t going to take it any more.

It wasn’t the first time Soviet power had been challenged. In June of that
year, workers in Poznan, Poland had risen against the government.

Repression was swift and ferocious, with dozens of rebels killed and wounded
by security police. A poor example to follow, you might think, but in
October Poland’s communist government granted many of the rebels’ demands
and after tense negotiations the Soviets agreed to reduce their troop levels
in Poland.

Posthumously, the slaughtered rebels had won. Following the death of Stalin
in 1953, the long, bleak Stalinist winter appeared to be waning. Winds of
change were beginning to blow through the eastern bloc.

But that is to view the events of 23 October 1956 with the deceptively calm
gaze of hindsight. At the time they were astonishing and unexpected: the
Soviet Empire had not received a challenge on this scale since the end of
the war.

The Hungarian Uprising, or Revolt, or Revolution, flared up out of
practically nothing, the disgruntlement of a few thousand students.

It swept up in its onward surge millions of ordinary people, overthrew the
government and forced the withdrawal of the Soviet forces – then was crushed
and pulverised by Soviet military might with the deaths of tens of thousands
of ordinary people, all within the space of three tumultuous weeks.

It was the most dramatic eruption that the Soviet empire was to experience
before its final eventual disintegration – of which it was the first omen.
“The whole thing was so spontaneous, we didn’t really think things through,”
says Gergely Pongratz, a leader of the uprising. “We just took a gun and
acted.”

The revolution was a textbook demonstration of Alexis de Tocqueville’s tenet
that “the most dangerous moment for a bad government is that in which it
sets about reform.”

Following Khrushchev’s denunciation of Stalin in February 1956, Stalin’s
hardline representative in Hungary, Matyas Rakosi, responsible for thousands
of atrocities against political opponents, was elbowed from power and the
rehabilitation of more liberal communists began.

Communism itself was not being challenged, only the imposition by the
Soviet Union of its own brutal and foreign way of doing things.

The official communist student union, for example, was rejected on 16
October by students in the city of Szeged, who re-established their own
democratic student organisation that had been banned under Rakosi. Their
example flashed across the country, imitated everywhere. Suddenly freedom
seemed possible.

The Russians had liberated Hungary at the end of the Second World War,
and Stalin’s agreement with Churchill guaranteed that the Soviets would have
only a 50 per cent share in the rule of the country.

That proportion was steadily raised by Rakosi’s so-called “salami” tactics,
taking more power one slice at a time, and within a few years Stalin’s
placemen were fully and ruthlessly in charge everywhere.

Compulsory nationalisation and collectivisation followed, with the familiar
results of collapsing productivity and economic stagnation. But the ubiquity
of the much feared state security police, the AVH, and Rakosi’s readiness to
imprison, torture and execute his enemies, ensured that dissent remained
mute.

Now that was suddenly changing. Students and writers, no longer prevented
from banding together freely, set up discussion groups to thrash out the
nation’s dire problems. Thousands joined in.

To show solidarity with Polish rebels, students decided to honour a hero of
Hungary’s War of Independence, General Bem, who was of Polish origin. On
23 October 1956, 20,000 demonstrators duly thronged around the general’s
statue in Budapest.

Some sang the banned national anthem, with its rousing chorus, “We vow, we
vow, we will no longer remain slaves…” Someone cut the hammer and sickle
out of the Hungarian flag, leaving a hole in the middle, and suddenly
everyone was doing it.

We have seen these intoxicating events in our own age, Prague’s Velvet
Revolution, the overthrow of Ceausescu, the huge demonstrations that brought
down Milosevic in Serbia. This was the grand-daddy of them all.

The demonstrators had started gathering in the afternoon, and by 6pm they
numbered 200,000, including tens of thousands of workers. The majority of
them had moved to the Parliament Building.

Even now there was no sign of trouble. “There are big student
demonstrations,” a Budapest editor told an English colleague. Any trouble?
“A few nationalist slogans, but everything is good-humoured.”

Charlie Coutts, Budapest correspondent of Britain’s communist Daily Worker,
told his office on the phone, “The quiet and orderly behaviour of the
marchers is impressive.”

At this point the regime decided to come down hard. At 8pm Erno Gero,
general secretary of the Communist Party, went on the radio and made a
speech rubbishing the demonstrators’ demands.

They were reactionaries, counter-revolutionaries, he said, “hostile
elements” bent on disturbing “the present political order in Hungary.” The
timing was exquisite: Gero had lavished oil on the flames.

The demonstrators showed no sign of going home – and Gero’s attempt to
regain the authoritarian upper hand merely made them furious. A large crowd
gathered outside the headquarters of Radio Budapest, which was heavily
guarded by the AVH. A delegation of some 300 students got inside, bent on
broadcasting their demands, but they were detained.

The temperature of the event began to soar. Rumours began swirling through
the crowd that the delegation inside the radio station had been shot. AVH
men in the building threw tear-gas canisters from upper floors and began
firing at the demonstrators. An ambulance bringing more weapons and
ammunition to the AVH was intercepted by the crowd.

Hungarian Army soldiers arrived to disperse the demonstrators but, harangued
by them, they tore the red stars from their caps and sided with the crowd.
The revolution with no leaders and no plan was giddily underway.

That night the embattled Hungarian government appealed to the Soviet Union
to send troops and tanks “to suppress a demonstration that was reaching an
ever greater and unprecedented scale.”

The next day, Soviet tanks rumbled into place outside parliament building
and at major bridges and crossroads. But there was no stopping the
revolution. Many of the Soviet soldiers, like the Hungarian ones,
fraternised with the revolutionaries and sympathised with their aims.

Charlie Coutts reported seeing a peaceful demonstration encountering a
Soviet tank. “The tank stopped,” Coutts told Peter Fryer, the British
journalist who wrote a book, Hungarian Tragedy, about the uprising, “a
soldier put his head out, and the people in front of the crowd began to
explain they were unarmed and were engaged in a peaceful demonstration. The
soldier told them to jump on the tank; a number of them did so, and the tank
set off in the demonstration.”

When the crowd escorting the tank got to Parliament Square they found three
more tanks and two armoured cars, all on the demonstrators’ side, all
fraternising cheerfully. Then shots rang out from parliament, fired by AVH
secret police, leaving 30 demonstrators dead.

The tipping point of the conflict had suddenly arrived: the government
collapsed, its leaders fled to Moscow, the revolutionary forces were
chaotically in control. By 28 October, after six days of chaos, a ceasefire
was agreed, and the Soviet forces returned to barracks. A huge hole had been
blown in the iron curtain.

Two things are remarkable about the ensuing week of freedom: the West made
no attempt to exploit the chaos in Hungary, despite Khrushchev’s premonition
that it would try to “add Hungary to Egypt.”

The Suez crisis was monopolising the West’s attention, and the Cold War had
reached a sort of stasis. And, although the Stalinists had ranted about
“reactionaries” from day one, the revolutionaries in the countryside were in
no doubt that what they were doing was reforming communism.

“The Government will retain from the Socialist achievement everything which
can be…used in a free, democratic and Socialist country,” said a member of
the new government on 3 November. “No one must dream of going back to the
world of counts, bankers and capitalists,” said another leader. But Moscow
was not interested in democratic socialism.

With the declared neutrality of Austria, which Hungary wished to emulate,
the Soviets saw the Warsaw Pact unravelling before their eyes. Hardliners in
the Kremlin insisted that the process be stopped. And there was only one way
to do it.

On 1 November, 12 new Soviet divisions began grinding into Hungary, many
of them brought from remote corners of the Union and with no knowledge of
European languages. By 3 November they had Budapest encircled.

By dawn the next morning shots were heard all over the city, and prime
minister, Imre Nagy, made a final, futile broadcast appeal to the world.
“Operation Whirlwind” was underway, combining air strikes, artillery
barrages and tank and infantry attacks. It was a grossly unequal fight.

Peter Fryer wrote, in a dispatch censored by the Daily Worker: “For four
days and nights Budapest was under continuous bombardment. I saw a once
lovely city battered, bludgeoned, smashed and bled into submission…It was
heart-breaking.”                                       -30-
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LINK: http://news.independent.co.uk/europe/article1919300.ece
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20.     WHEN HUNGARY TOOK ON THE SOVIET BEAR
       The Hungarian revolution and fight for freedom – 13 days between
                              October 23 and November 4, 1956.

By Sandor Szakaly, The Australian
New South Wales, Australia, Wed, October 25, 2006

THE Hungarian revolution and fight for freedom – 13 days between October
23 and November 4, 1956 – is a central event in Hungarian history and a
turning point of the last century. On this 50th anniversary it is well to
recall what really happened and the causes of the revolt.

After their electoral fraud in the 1947 elections, the Hungarian Communist
Party and the Social Democrat Party dominated the government of Hungary.
The country was sovietised and by 1949 a tyrannical regime resembling
Joseph Stalin’s was created.

Living standards and the gross domestic product fell and by the early 1950s
Hungary was in economic, social and political chaos.

In the beginning of 1956 – mostly due to tensions and debates in Poland –
people became politicised. DISz, the Hungarian Communist Party’s youth
organisation, led and organised the debate. Most people wanted the return of
ousted prime minister Imre Nagy, who briefly led reforms following Stalin’s
death in 1953.

The party itself wanted change; it swapped one notorious Moscow-trained
communist, Matyas Rakosi, for another, Erno Gero, but also brought the
out-of-favour Janos Kadar in from the cold.

The last important impulse was the revolutionary fervour and the party
changes in Poland, which the Soviet Union accepted.

As so often in history, the students took the first important steps.

On October 22, 1956, the students published their 14 points, which included:
reformation of the government under Nagy; withdrawal of the Soviets; new
secret ballot elections; freedom of the press; realistic industrial
production norms; worker autonomy at plants; relief for peasants from
compulsory deliveries to the state; and removal of the hammer and sickle
from the flag.

The Hungarian political leaders’ paralysis and indecision emboldened the
students’ demands. A march of solidarity for the Polish people planned for
the next day became a huge demonstration in Budapest’s streets.

More than 100,000 people demonstrated for Nagy, who mistook one aspect
of their mood: they did not want to be called comrades. Clashes followed at
Hungarian Radio and by then the uprising was armed.

The Hungarian Workers Party’s central committee then decided it needed
Soviet help. But Gero believed the government could not formulate such a
request because of the events, so the request was sent by prime minister
Andras Hegedus after Soviet forces had been sent in.

Most researchers have thought the Soviets could have entered Hungary under
the Warsaw Treaty of May 14, 1955. The question, however, is more
complicated. The peace treaty of 1947 allowed Soviet forces in Hungary to
uphold transport routes to the Soviet zone in Austria.

However, the Soviets had moved out of Austria by October 1955, in keeping
with an agreement to leave by December 31 that year. The Warsaw Treaty
allowed the joint stationing of forces in Hungary according to future
arrangements between the countries and joint protection needs.

But before or at the time of the Hungarian uprising, no such arrangements
had been made, and the necessary agreement under the treaty came into effect
on September 15, 1957, 10 months after the uprising was put down.

As neither the peace nor the Warsaw treaties allowed the Soviets to come in
or stay, we can now say the Soviet intervention violated international law.

The uprising became a revolution on October 28, 1956, when the Nagy
government acknowledged the national movement, that it served the interests
of the whole nation and that the movement was a source of power or
authority.

The government made new promises – withdrawal of Soviet forces from
Budapest, dissolution of the State Defence Authority secret police, the
raising of pensions and the minimum wage – which were completely in harmony
with the public’s demands.

After this, Nagy’s goal became a neutral and independent Hungary. The
parties dissolved earlier were re-formed and new ones were founded.
Non-communist politicians were brought into the Nagy government formed

on October 27.

From October 30, well-known politicians such as Bela Kovacs, Zoltan Tildy
and Ferenc Erdei became members of the cabinet.

The discussions about the withdrawal of the Soviet forces that were to be
started, the secession from the Warsaw Treaty, the announcement of the
country’s neutrality were all signs of revolutionary changes and were more
than was originally demanded.

The Hungarian Socialist Worker Party (Magyar Szocialista Munkaspart) was
not the only political force any more but one of many parties agreed with
the political requests on the need for change. The leader of the party was
Kadar, who at that time seemed to be the comrade of Nagy.

US foreign policy then changed the flow of Hungarian events. The US was
understood not to want to interfere, and to not prefer a country next to the
Soviet Union that might not be that friendly with it. This allowed the
Soviet Union to deal with the situation at will.

Thus after negotiations with Tito, Khrushchev and the presidium of the
Communist Party of the Soviet Union decided to lead an armed attack. Two
members of the Nagy government – Kadar and Ferenc Munnich – left for
Moscow on November 2 and agreed to establish a counter-government in
opposition to the legal Hungarian government and to ask the Soviets for
help.

On November 4, the Soviet forces stationed in Hungary and, transported there
from Romania and the Soviet Union, overran the country. The Hungarian
revolutionaries fought against the might of the Soviet forces, but their
power was very limited and fighting ebbed away between November 10 and15,
1956.

A Revolutionary Worker Farmer government had taken power on November 4.
By the spring of 1957 the Communist Party government, backed by the Soviet
armed forces, completely controlled the country.

The results? Hungary remained in the communist bloc. About 200,000 people
fled to the West. Damage to national property ran into many billions of
forints. The fighting within Hungary was estimated to have claimed 3000 to
4000 lives.

A further 400 people were executed between 1957 and 1963 for playing an
active role in the counter-revolution, as the Kadar regime called the
events.

Most of the executed were workers, students and employees aged 20 to 35.
There were only a few older people or people belonging to the elite of the
era before 1945 among them.

The goal of the Hungarian revolution and fight for freedom of 1956 was not
to re-establish the pre-1945 past but to create a democratic, new Hungary.
Thanks to 1956 this became possible, but only in 1990.        -30-
—————————————————————————————————
Sandor Szakaly is a professor in 20th-century Hungarian history at
Semmelweis University, Budapest, and a former director of the Military
History Institute and Museum of Hungary. This is an edited version of his
October 19 commemorative lecture in the Hungarian Revolution series at the
Centre for Contemporary European Studies at the University of Melbourne.
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http://www.theaustralian.news.com.au/story/0,20867,20638405-12332,00.html
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AUR#780 Oct 25 Ukraine: Prospects & Risks; WTO & Russia; IBM; Building Cars In Russia; ‘Our Ukraine’ Self-Annihiliation; Hungarian Revolution 50 Years Ago

=========================================================
 ACTION UKRAINE REPORT – AUR           
                  An International Newsletter, The Latest, Up-To-Date
                       In-Depth Ukrainian News, Analysis and Commentary

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

 
              THE HUNGARIAN REVOLUTION
                50 Years Ago When Hungary Took On The Soviet Bear 
             The Hungarian revolution and fight for freedom – 13 days between
                                   October 23 and November 4, 1956.
                                                                        
ACTION UKRAINE REPORT – AUR – NUMBER 780
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., WEDNESDAY, OCTOBER 25, 2006
                
               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.                                UKRAINE: PROSPECTS & RISKS
          A serious political conflict has erupted in Ukraine over foreign policy.
ANALYSIS & COMMENTARY:
By James Sherr
CSRC, UK Defence Academy, United Kingdom
Published by Action Ukraine Report (AUR) #780, Article 1
Washington, D.C., Wednesday, October 25, 2006

2.                                 A GATEWAY TO THE WEST
     Ukraine’s dash into NATO postponed for the time being. Post-socialist
    countries join NATO because Russia unable to offer attractive alternative.
COMMENTARY:
By Mikhail Delyagin, Nezavisimaya Gazeta

Moscow, Russia, Monday, October 23, 2006

3.       UKRAINE TO RECEIVE GAS AT $130 PER 1,000 M IN 2007
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

4.   UKRAINE AND RUSSIA SHOULD AGREE ON NATO, EU, AND

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

5‘OUR UKRAINE’ DOES NOT AGREE UKRAINE AND RUSSIA’S
           WTO NEGOTIATIONS SHOULD BE SYNCHRONIZED 
Ukrayinska Pravda website, Kiev, in Ukrainian 24 Oct 06
BBC Monitoring Service, United Kingdom, Tuesday, October 24, 2006

6.     WTO LAWS SHOULD BE PASSED AS SOON AS POSSIBLE,

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006
 
        REFORMS IN UKRAINE, WITH ASSISTANCE FROM JAPAN
UNIAN, Kyiv, Ukraine, Tuesday, October 24, 2006

9UKRAINE: BOGDAN CORP, ZAZ BUILD AUTO PLANT IN RUSSIA
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

10.  UKRAINIAN GOVERNMENT SPARING NO EFFORT TO MAKE
MARKET ATTRACTIVE TO INVESTORS, SAYS PRES YUSHCHENKO
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

11.     “OUR UKRAINE DOES NOT GIVE IN TO THE PRESIDENT”
          Pro-presidential party took another step towards self-annihilation.
ANALYSIS & COMMENTARY: By Oleksandr Chalenko
Segodnya, Kiev, Ukraine, in Russian 23 Oct 06; p 2
BBC Monitoring Service, United Kingdom, Tuesday, Oct 24, 2006

12.                  OUR UKRAINE ON VERGE OF MELTDOWN
INFORM, Newsletter for the international community providing
views and analysis from the Yulia Tymoshenko Bloc (BYUT), Issue 16
Kyiv, Ukraine, Tuesday, October 24, 2006
 

                 OF RUSSIAN LANGUAGE AS A PROVOCATIVE 
Ukrainian News Agency, Kyiv, Ukraine, Tuesday, October 24, 2006
 
14.                   “BUT WAS THERE DISCRIMINATION”
     Paper denies Russian reports on language discrimination in west Ukraine
ANALYSIS AND COMMENTARY: By Yaroslav Zahoruy
2000 newspaper, Kiev, Ukraine, in Russian 20 Oct 06 pp F1, F2
BBC Monitoring Service, United Kingdom, Friday, October 20, 2006
 
   TO BUILD NEW HOSPITAL IN KYIV ARE PRESENTED IN DONETSK
Press office of President Victor Yushchenko
Kyiv, Ukraine, Saturday, 21 October 2006

16.     UKRAINE’S PRESIDENT VIKTOR YUSHCHENKO & WIFE
KATERYNA HONOR LEADERS OF 1956 HUNGARIAN REVOLUTION
Press office of President Victor Yushchenko
Kyiv, Ukraine, Monday, October 23, 2006

17.     VICTOR YUSHCHENKO AND HIS WIFE KATERYNA MEET

                    WITH HUNGARY’S UKRAINIAN COMMUNITY
Press Office Of President Yushchenko
Kyiv, Ukraine, Sunday, October 22, 2006

18 THE 50TH ANNIVERSARY OF THE HUNGARIAN REVOLUTION
          STATEMENT: UKRAINIAN CANADIAN CONGRESS (UCC)
STATEMENT: Ukrainian Canadian Congress (UCC)
Winnipeg, Manitoba, Canada, Tuesday, October 24, 2006

 
19.      FIFTY YEARS ON FROM THE HUNGARIAN REVOLUTION
         They were three weeks that shook the world, when a revolt begun by
            students forced out both a government and hated Soviet forces,
                             only to end in bloodshed and repression.
By Peter Popham, The Independent, London, UK, Mon, 23 Oct 2006

20.              WHEN HUNGARY TOOK ON THE SOVIET BEAR
          The Hungarian revolution and fight for freedom – 13 days between
                                  October 23 and November 4, 1956.
By Sandor Szakaly, The Australian
New South Wales, Australia, Wed, October 25, 2006

========================================================
1
           UKRAINE: PROSPECTS & RISKS
       A serious political conflict has erupted in Ukraine over foreign policy.

ANALYSIS & COMMENTARY: By James Sherr
CSRC, UK Defence Academy, United Kingdom
Published by Action Ukraine Report (AUR) #780, Article 1
Washington, D.C., Wednesday, October 25, 2006

A serious political conflict has erupted in Ukraine over foreign policy
prerogatives. In principle, there are several grounds to hope that this
conflict, brought about by the new division of power between President
Viktor Yushchenko and Prime Minister Viktor Yanukovych, will not lead
to major changes in Ukraine’s foreign policy course.

In practice, institutional rivalries, external pressures, ignorance and
mistakes may combine to do so. Yanukovych’s foreign policy record and
the content of his 14 September speech in Brussels (calling for a ‘pause’
in NATO integration) are far less negative than often portrayed.

Nevertheless, one should not take for granted that Ukraine will continue
down the path that President Yushchenko set in January 2005.  Once again,
politics is undermining clarity of purpose and coherence of action.

The positive factors are these:

     [1] The ‘Universal’ agreement of 3 August established the framework for
a grand coalition of Yushchenko’s Our Ukraine and the ‘blue’ forces of 2004:
Yanukovych’s Party of Regions, Moroz’s Socialists and the now much
diminished Communist Party.

It also reiterated presidential prerogatives in foreign and security policy
already set out in the December 2004 OSCE brokered constitutional
agreement, as well as Article 106 of the Constitution.

     [2] The President’s Euro-Atlantic team-Foreign Minister Borys Tarasyuk
and Minister of Defence Anatoliy Hrytsenko-was swiftly reconfirmed by the
‘Verkhovna Rada’ (parliament), as were three other Yushchenko appointees
in the national security area, Minister of Interior Yuriy Lutsenko, SBU
(Security Service) Chairman Ihor Drizhchaniy and Minister for Emergency
Situations Viktor Baloha (who on 16 September left this post when he was
appointed State Secretary, head of the President’s Secretariat).

The President retains the power to designate the Secretary of the country’s
influential National Security and Defence Council (NSDC), which, according
to Article 107 of the country’s constitution, ‘coordinates and controls the
activity of bodies of executive power in the sphere of national security and
defence’.  After much speculation, he appointed Vitaliy Hayduk to this post
on 10 October.

     [3] As Prime Minister under President Leonid Kuchma, Yanukovych
pursued a generally positive line towards NATO.  He was an architect of the
NATO-Ukraine Memorandum of Understanding (MOU) on airlift (which
parliament rejected),  and he supported the drive for a Membership Action
Plan (MAP) at a time when Kuchma was losing credibility in the West.

     [4] Although repairing relations with Russia is his top priority,
Yanukovych is known believed to favour a multi-vector policy on a basis
that respects Ukraine’s national interests.  He has indicated on several
occasions that this will prove difficult unless the West remains firmly in
the equation.

He was humiliated by President Putin on at least one occasion during the
2004 electoral contest and is capable of drawing conclusions from Putin’s
warning (to Russia) that ‘only the strong are respected’ in international
affairs.  It is unlikely that he, any more than Kuchma, wishes to be a
‘vassal of Russia’.

     [5] This inclination towards balance is reinforced by very powerful
business interests in eastern Ukraine:  by the group of industrialists in
Rinat Akhmetov’s Systems Capital Management (which constitutes the
‘economic resource’ behind Yanukovych’s Party of Regions), as well as
the somewhat less powerful but very successful rival group, the Industrial
Union of Donbas (IUD), co-chaired by Hayduk up to the time of his
appointment to NSDC.

Both groups know how to work with Russian partners, but also have a number
of  competing interests, as well as a growing portfolio of investments in
Central and Western Europe. These industrialists rely upon a predictable
macro-economic framework with their eastern neighbour, but have learnt to
expect the unexpected. Although they have the capacity to absorb energy
price rises, they can only do so if the increases are predictable and
gradual.

But the negatives are telling:

     [1] THE INTERNAL STRENGTH OF REGIONS. The Party of

Regions, with its working ‘blue’ majority in parliament, believes it is in a
dominant position and is wasting no time in exploiting it.  As of January
2006, Ukraine is no longer a presidential republic.

Although the President retains the formal prerogative in foreign, defence
and security policy, Parliament’s control of the money and its power to
dismiss ministers risks confining this prerogative to paper.[i]   If Our
Ukraine is a loosely knit village,  Regions is an entity run on Leninist
principles with a lack of inhibition about using the power it has.

Yanukovych’s appointment of First Deputy Prime Minister Mykola Azarov
(former First Deputy PM  and head of the Tax Administration  under Kuchma),
and Deputy PM Andriy Klyuev (responsible for supervising the country’s
unreformed energy sector) should leave one in no doubt about this.

Both appointments risk restoring opaque, post-Soviet norms of governance.
Already, apprehensions have been voiced that Azarov might become the power
behind the throne, reviving the reviled precedent set by Viktor Medvedchuk,
head of ex-President Kuchma’s presidential administration (but  with the
added advantage of ministerial appointment).  Like Medvedchuk, Azarov is
striving to become master of the bureaucratic apparat as well as the Cabinet
of Ministers.

As architects of Kuchma’s administrative system, both of these figures
studiously turned state and public institutions into tools of presidential
interests.  In the short time since Azarov’s reappointment, he has already
replaced five regional heads of the once notorious Tax Administration, as
well as its Chairman.

The new Minister of Economy, Volodymyr Makuha,  (a supporter of
integration into the Russian sponsored Single Economic Space) and the
new Prosecutor General, Oleksandr Medvedko, are allies of Azarov.

Whilst Klyuev appears to have the ability and ambition to Offset some of
Azarov’s power at an institutional level, he shares the latter’s ‘kuluarno’
(private lobby) understanding of power, administration and the
relationship between business and government.

To a country whose greatest security problem is the relationship between
politics, business and crime, these figures are unlikely to offer guidance
or help.  Euro-Atlantic norms of accountability and transparency are not on
their agenda or in their bloodstream.

     [2] THE WEAKNESS OF REGIONS VIS A VIS RUSSIA. Russia’s
energy instruments remain in place:  a concessionary gas price (now $95 per
th cu m) subject to frequent review and a bankrupt state energy sector,
excluded  from the sources of income needed to repay its debts (thanks to
the damaging agreement between ‘Gazprom’ and ‘Naftohaz Ukrainiy’ of 4
January 2006).  The 15-16 August summit between Putin and Yanukovych
in Sochi did nothing to change this status quo.

Both sides were dissatisfied with the meeting:  Yanukovych, because the
Russians showed no inclination to change the rules; Putin, because
Yanukovych failed to make the concessions-control of the pipeline network
and full entry into the SES-that would induce him to change them.

But instead of refocusing Ukraine’s efforts on the Western vector, the
summit appears to have redoubled efforts to concede ground to Russia in
other areas.  There are grounds to fear that this might entail accepting a
‘de facto’ Russian veto on further steps towards NATO and the WTO (which,
in turn would put paid to the prospects of a free-trade agreement with the
EU).

The dominance of ‘Moscow retransmitters’ in Yanukovych’s apparat (and the
appointment of Anatoliy Orel, Kuchma’s former foreign policy adviser to the
analogous post under Yanukovych) has possibly propelled Yanukovych in this
direction, though it is possible that more balance will emerge with the
recent appointment of two other figures:  former Foreign Minister Konstantin
Hryshchenko and a young, independently minded refugee from Kuchma’s
Presidential Administration, Anatoliy Fialko.[ii]

 For the moment, the disposition to make concessions to Russia appears
to have worked brought relief.  On 12 October, the government delegation in
Moscow (parliamentary Speaker Moroz, Klyuev and Minister of Fuel and Energy
Yuriy Boyko) announced a ‘breakthrough’:  the delayed introduction of the
new price ($130) until 1 January.

As Moroz triumphantly asserted, ‘the price issue has been resolved, and we
can draw a line under these relations’.  Just how it has been resolved, he
did not say.[iii]

This combination of internal strength and external weakness has produced two
unfortunate developments:

     [1] THE BYPASSING OF THE PRESIDENT, MFA AND NSDC. Neither
Yushchenko nor Tarasyuk (let alone the Ukrainian delegation at NATO HQ)
knew what Yanukovych would say in NATO HQ until he said it.  The five-hour
meeting between Yushchenko and Yanukovych following the latter’s return
 produced an agreed position on NATO integration which survived until
Yanukovych’s first press conference.

     [2] THE UNDERMINING OF TARASYUK AND HRYTSENKO. In
contravention of its commitment to deepen public understanding of NATO,
Yanukovych’s government has disbanded the Interdepartmental Committee
on Euro-Atlantic Integration (which Tarasyuk chaired) and cut funds for the
government’s two NATO information programmes by 40 percent.

The budget for reform of the Armed Forces has been cut by half:  a cut which
makes it brazenly optimistic to suppose that the MOD will be able to match
projected force reductions with the funds required to re-house retired
officers.

It is unlikely that the architects of these cuts fail to understand the
relationship between these components of the State Programme,  the standing
of Minister Hrytsenko in the Armed Forces and the evaluation of Ukraine’s
defence reform by NATO.

It is, after all, this State Programme and Hrytsenko’s capable
implementation of it that has provided NATO with its strongest argument
for extending MAP to Ukraine.

In response, a president who was reluctant to use his powers when he had
them has now begun to fight a vigorous rearguard action:

     [1] AN INSTITUTIONAL COUNTER-OFFENSIVE. The first vehicle
in this fight, the Secretariat of the President, is a purely presidential
structure. After almost two years of frustration, infighting and
ineffectiveness, it looks as if it finally will be capably led and directed.

Although its new head, Viktor Baloha, is reputed to be a key figure in the
much reviled Mukacheve business group, he is also regarded as a strong and
competent administrator.

Noteworthy amongst his appointments is one of his two first deputies,
Arseniy Yatsenyuk, former Economics Minister;  and, amongst three deputies,
the urbane and well seasoned Oleksandr Chaliy, former Deputy Foreign
Minister and latterly Vice President of the Industrial Union of Donbas.
Yatsenyuk is also considered an ‘IUD man’.

These appointments suggest that the President is not only trying to defend
his foreign policy turf but limit damage on the domestic, economic front as
well and enlist a new set of allies to this end. But how will the
Secretariat succeed in the absence of the real levers of power that the
Cabinet of Ministers and Parliament now possess?

The President’s  second institutional vehicle is the National Security and
Defence Council (NSDC).  Although chaired by the President, its members
consist of ministers in Yanukovych’s government as well as other senior
decision makers with national security responsibilities.

The August agreements with the Prime Minister and Parliament have already
diluted the NSDC’s cohesion, bringing into the fold Prosecutor General
Oleksandr Medvedko, parliamentary Speaker Oleksandr Moroz and National
Bank Chairman Volodymyr Stelmakh.

Although it cannot be said that these figures lack national security
responsibilities, their priorities are certainly different from those of the
Minister of Foreign Affairs, Minister of Defence, Minister of Interior,
Chairman of the SBU (Security Service) and Chairman of the SZR (Foreign
Intelligence Service).

Moreover, Medvedko and Moroz are political opponents of the President,
and it was the latter’s  defection from the Orange coalition which brought
Yanukovych back to power.

Nevertheless, it is the Council’s Secretary who has tended to play the key
role in its affairs, not to say a key role in the strategic direction of the
state.  Under the initial stewardship of Volodymyr Horbulin (1996-99) the
NSDC was an effective and respected body, adhering strictly to its
constitutional remit and providing the rudiments of inter-agency
coordination in a country hobbled then (as now) by debilitating
institutional rivalries.

But under Horbulin’s successors, Yevhen Marchuk and Volodymyr
Radchenko, the Council was sidelined by President Kuchma and the head
of the Presidential Administration, Viktor Medvedchuk, who not only
usurped the Council’s traditional powers, but directly supervised ministers
and, despite his lack of an elected position or a constitutional role,
became the second most powerful figure in the country.

From the start, those who expected President Yushchenko to restore
constitutional norms were rudely disappointed. As Secretary
(January-September 2005), Yushchenko’s close associate, Petro Poroshenko,
used the NSDC as a foil against Prime Minister Yulia Tymoshenko and secured
presidential backing to widen its remit well beyond its statutory role.  The
result was a full blown crisis which broke up the Orange coalition only nine
months after the Orange revolution brought it to power.

After this trauma, it is not surprising that Yushchenko returned the NSDC to
safer hands:  former Prime Minister Anatoliy Kinakh (September 2005 to May
2006) and, after Kinakh took up a parliamentary seat, to Horbulin once again
(but as Acting Secretary). It was clear that Horbulin could only be a
stopgap.  On 10 October, Vitaliy Hayduk, Co-Chairman of the Industrial Union
of Donbas, was appointed to this post.

     [2] POLITICAL REALIGNMENT. The appointment of Hayduk, Chaliy and
Yatsenyuk (and the reappointment of Oleksandr Zinchenko as presidential
adviser) has brought the Industrial Union of Donbas into the core of
Yushchenko’s administration.  This gives the President allies on his
opponent’s turf.  In a country where those who own and those who run the
country are often indistinguishable, this is a significant development.

By taking this step,  Yushchenko has expanded his financial resources in
ways which he appears to believe will might improve his prospects for
re-election in 2009.  But well before then, he clearly hopes to limit the
ability of Regions to damage his foreign policy and monopolise the economy.

The by now exhaustively explored alternatives offered him no egress:  deeper
dependence on a diminished Our Ukraine and on ‘dear friends’ already
compromised by the events of 2005; or alliance with Yulia Tymoshenko, whom
both he and the ‘dear friends’ regard as ambitious, and uncontrollable and
too knowledgeable about the shortcomings of his administration. This
erstwhile inner circle also advised him not to appoint Hayduk, but he has
wisely ignored their advice.

For the Industrial Union of Donbas, the new developments are, of course,
propitious. >From the moment that Yanukovych and Azarov returned to power,
the IUD was made to feel the financial levers of Akhmetov and the
administrative resources of the Yanukovych/Azarov/Klyuev government.  Now
they will have administrative resources of their own.

They will also aim to counterbalance the geopolitical tilt of Regions’
economic policy.  Hayduk will almost certainly make energy security a major
priority at NSDC.  Central to this enterprise will be steps to counter the
covert Russification of Ukraine’s energy sector and electricity market-and
its not so covert proponents, Deputy Prime Minister Klyuev and the Minister
of Fuel and Energy, Yuriy Boyko.

The fact that Hayduk firmly opposed the January 2006 gas accords and the
formation of ‘RosUkrEnergo’ – which the President’s men negotiated and the
President defended – is an awkwardness that both men will have to manage.

The President now appears ready to support efforts to free Ukraine from the
vice that these accords created, as long as radical means-the denunciation
of the accords and a fresh gas crisis-are avoided.

Hayduk is not a radical, and he will pursue other, more subtle forms of
attack and defence.  As a major player in the economy-and, not incidentally,
a former Deputy Prime Minister under Yanukovych’s last government-he retains
all the necessary back channels to Regions.

He knows how to compromise as well as resist.  The appearance of another IUD
man, Konstantin Hryshchenko, in the Prime Minister’s team, will also keep
lines of communication open.

On the date that Hayduk was appointed, the breakdown of the ‘Universal’ had
a second political consequence. Our Ukraine announced that it was going into
opposition and called for the resignation of all ministers ‘appointed on
behalf of Our Ukraine’.  But just who belongs to that category?

Our Ukraine’s leader, Roman Bezsmertniy, insists that the entire
pro-presidential bloc in Cabinet belongs to it.  Minister of Defence
Anatoliy Hrytsenko, who belongs to no faction, is adamant that he does not.
So is Borys Tarasyuk, who whilst a member of Our Ukraine, does not owe his
appointment to its leaders, but to the President’s foreign policy
prerogative.

For his part, the President is holding ‘consultations’ on the issue, which
in accordance with his well established convention, appears to mean that ‘we
will make a decision on Friday, and on Tuesday we will make another’. As of
14 October, he also continues negotiations with Yanukovych to resurrect the
coalition.  The indecisiveness of the President survives.

But the die appears to have been cast. The experiment in unity between the
foes of 2004 has collapsed.  But instead of restoring old alliances, the
collapse is producing a new and more complex alignment .  Who in these new
circumstances will the President’s people now be?  What kind of opposition
will be formed and against whom?

On 12 October the leadership of Our Ukraine boldly announced the formation
of a nine-party opposition ‘confederation’ under the name European Ukraine.
Yet this format, if realised, will simply replicate the format of Our
Ukraine in 2001. The centrepiece of parliamentary opposition, Yulia
Tymoshenko’s bloc, has not been invited to join it.

The IUD’s men in parliament who, like Hayduk himself, enjoy good relations
with Tymoshenko, certainly will not join it.

Will the IUD’s men in the Secretariat and NSDC be able to stabilise the
relationship between the President’s team and hers? Will they give teeth and
ballast to the parliamentary opposition?  Will Tymoshenko’s bloc in turn be
able to give the IUD more of a political shape?  Where will Our Ukraine fit
into this matrix?  Is it capable of doing so, or will it retreat into its
village and its nostalgia?

                    A DANGEROUS OR FERTILE TENSION?
Although the ‘Universal’ set out a framework for civilised ‘dvoevlastie’
(bifurcated power), politics has set Ukraine on a course of antagonistic
‘dvoevlastie.’  Need that be a destructive course?  If the struggle were
played out along Orange-Blue lines, that would probably be the case.

Either Yanukovych’s Party of Regions would prevail (because Blue is
stronger), or both antagonists would lose (because Blue would win in
opposition to most of the country and the greater part of Ukraine’s foreign
and defence policy establishment).  The short and mid-term casualties would
be accountability, legitimacy and coherent policy.

Today’s developments point to the emergence of new lines of cleavage:
between  democratically orientated Euro-realists and the bastions of eastern
Ukrainian paternalism and the multi-vector approach.

By reaching out to the foils of Yanukovych and Akhmetov in eastern Ukraine
(and disregarding the counsels of those who only recently were his closest
confidants), President Yushchenko has either shown strategic wisdom or
achieved a strategic breakthrough by accident.

Yet the new alliance is unlikely to give much joy to idealists. The IUD are
not crusaders against corruption or ideologues of financial transparency and
G7 style corporate governance.

But they are self-interested proponents of a European future for Ukraine,
and they have set themselves in opposition to the key projects that would
turn Ukraine towards another future:  the Single Economic Space and the
Russian-Ukrainian energy consortium.

Unlike most of Yanukovych’s entourage, those brought into the NSDC
and President’s Secretariat understand Western institutions and impress
Western decision makers with their knowledge, pragmatism and competence.

The IUD team has also developed a productive relationship with Ukraine’s
most prominent opposition figure, Yulia Tymoshenko, whose public profile is
considerably more radical than their own.  >From the start, she, unlike the
leaders of Our Ukraine, has sought to move onto the opponent’s ground,
eastern Ukraine.

The past fortnight’s developments suggest that the struggle might be
shifting onto that ground.  If so, it is a good and necessary thing. Eastern
Ukraine is a region that many in the West have considered lost and that many
more in Russia have considered ‘nash’ (ours).  Yet it has never been a
monolith.

The East-West  political paradigm has repressed its divisions, ambivalences
and even its Ukrainian identity. Whereas President Kuchma managed for a
time to alter this paradigm, the electoral contest of 2004 revived it in
Orange-Blue form.   In that form, politics in Ukraine is fated to be a
process that weakens Ukraine.

The political course since Yushchenko’s inauguration makes it worth
reiterating that Ukraine’s greatest challenge is not integration with the
West, but the integration of Ukraine.  This will not be possible without the
diminution of the regional divide and the mutation and reconstitution of
today’s political blocs.

The short-term effect of this process of mutation  is bound to be
incoherence and an untidy, altogether Ukrainian accommodation to the mixed
agendas of key players.  But that might be a price worth paying if it breaks
the mould of Ukrainian politics.

That mould-the absence of an opposition able to operate on Regions’ own
turf-has not only handed eastern Ukraine’s electorate to Regions, it has
retarded the evolution of Regions itself. Those who believe in the
possibility of Regions’ evolution should welcome this process.

               CONCLUSIONS AND RECOMMENDATIONS
The events of recent days demonstrate once again that things are never as
good or as bad in Ukraine as they seem.  The emergence inside eastern
Ukraine of a capable bloc of pro-presidential allies is not only redressing
some of the imbalance between Yushchenko and Yanukovych.

It is shifting the ground of Ukrainian politics in ways that demand
examination by the West, not to say encouragement.  The alternatives
which have commanded so much attention are not viable.

A revived Orange coalition, like the original coalition, would have little
internal coherence and possibly an even shorter shelf life than the first.

The grand coalition has already fallen apart, and its instrument of unity,
the ‘Universal’, merely enabled Regions to come to power and exercise it
without too much regard for its provisions.   For the moment, a gross
imbalance persists.

Yanukovych and Regions are seeking to establish ‘de facto’ control over
foreign and security policy, and they believe they possess the tools to do
so.

Despite the President’s counter-offensive, they might be right.  The
struggle between Yushchenko and Yanukovych is no longer the only game
in town, but it remains the biggest game,  and it could prove to be a
destructive one.

That puts the West in a dilemma. How can NATO and the EU accommodate
to the reality of Regions’ ‘de facto’ power without legitimising it? In
today’s circumstances, the establishment of direct lines of communication
with Ukraine’s new government is essential.

In principle, there is no impropriety in establishing them. But there is a
difference between exchanging views with the Prime Minister and Cabinet and
transacting official business with them. Western governments will need to
get this balance right.  We dare not suggest by our behaviour that power and
money trump the laws and the constitution of Ukraine.

For its part, Regions will need to come to terms with three realities

     [1] The first is the West. Yanukovych and a good many others in his
entourage and government are hobbled by a lack of understanding of the West
and the working culture and ethos of its core institutions, NATO and the EU.

They exaggerate the extent of geopolitical competition for Ukraine and
underestimate the importance we attach to its democratisation, the
liberalisation of its economy and the modernisation of its institutions.

They also underestimate our knowledge of how Ukraine works, the depth and
extent of our relationships in the country and our ability to see through
the scams and deceptions of politics and daily life.

Finally, they overlook the magnitude of our other security problems and
underestimate the limits of our attention span and patience.  Unless we can
break through these misunderstandings we may be heading for trouble.

     [2] The new authorities might also underestimate the extent of
democratisation that has occurred in Ukraine itself:  the growing astuteness
and assertiveness of civil society, the knowledge and courage of journalists
and experts and the extent to which people have come to take liberty for
granted during the past two years.

We must not forget that despite the failings of Yushchenko, Yanukovych (who
secured 36 per cent of the vote in October 2004) secured only 32 per cent of
the vote in Ukraine’s freest elections to date, those of March 2006.  The
majority of Ukrainians do ‘not’ support him, and there is a risk that he will
overestimate the limits of their tolerance.

     [3] Finally, Regions might overestimate their ability to improve
relations with Russia. Yanukovych and most of his supporters are not tools
of the Kremlin, but Ukrainians who recognise that the achievement of good
relations with Russia will not be easy.

Nevertheless, they currently believe that ‘Yushchenko is to blame’ and hope
for real improvements that do not damage Ukraine’s independence.  It is
likely that this will prove to be an illusory hope.

Will Regions continue on a course of covert accommodations and incremental
capitulations, or at some point will they draw lines and seek help?  If they
have alienated the West before they reach that point,  then re-engagement on
our part might prove difficult.

On all three fronts, the learning curve is likely to advance slowly.  As
clearly as possible, then, it would be in the West’s interests to
communicate three messages:

    [1] We would like Ukraine to join the Euro-Atlantic community to the
extent that it is willing and able. It is Ukraine’s choice. But it cannot do
so on the basis of values and interests that we do not share.  A retreat
from democratic norms-not only in elections, but in media freedom,

administration and law enforcement-will have immediate and damaging
repercussions in Europe and North America.

    [2] NATO’s priority is not MAP or membership, but the deepening of
cooperation and the strengthening of the networks, mechanisms and
programmes that sustain it.  This depends on the survival of teams as well
as ministers-and the continuation of  their work to bring Ukraine’s defence

and security sector into the 21st century.  Much has been invested and
much achieved in this sphere.   A return to ‘integration by declaration’ will
thoroughly disenchant Ukraine’s Western partners.

    [3] There is an urgent need for Ukraine to demonstrate continuity and
credibility.   Without them, our relationship will unravel.  There is no
competition for Ukraine.  There is a competition for priorities and
resources inside the West.   If our joint work in Ukraine is dismantled,
Ukraine could find itself out of that competition.

For its part, the West needs to understand that a period of incoherence

will not necessarily be bad for Ukraine if it breaks down today’s outdated
divisions and alters the dysfunctional pattern of politics in the country.
Where Euro-Atlantic integration is concerned, it would also be best to
adopt the maxim, ‘better later, but better’.                      -30-
———————————————————————————————–
NOTE: The views expressed in this paper are entirely and solely
those of the author and do not necessarily reflect official thinking and
policy either of Her Majesty’s Government or of the Ministry of Defence.
————————————————————————————————
                                           ENDNOTES
[i] The President’s principal foreign, defence and security prerogatives are
set out in Article 106 Para 1 (he ‘guarantees the state’s independence,
national security.’) and Para 3 (he ‘exercises LEADERSHIP in the state’s
foreign political activity, conducts negotiations and concludes treaties’).
Whilst Article 116, Para 1 of the Constitution states that the Cabinet of
Ministers ‘ensures the state sovereignty and economic independence of
Ukraine [and] the IMPLEMENTATION of domestic and foreign policy of
the state’, even this article (which obliges the Cabinet to implement ‘acts of
the President’) implies that the policy to be implemented is that defined
by the President. [emphasis added by author]

[ii] Hryshchenko, a former ambassador to the United States, was believed to
have strong Euro-Atlantic sympathies until he replaced Foreign Minister
Anatoliy Zlenko in 2004 and then failed to support those fighting a
rearguard action against Viktor Medvedchuk and the entry of Ukraine into the
Single Economic Space.  His deference to Medvedchuk (who had placed the
Ministry under direct subordination to the Presidential Administration)
secured his departure from the MFA after the Orange Revolution.  One
casualty of Hryshchenko’s tenure was Deputy Foreign Minister Oleksandr
Chaliy, who had resigned over the issue of the Single Economic Space.  Yet
he, too, found himself shunned by Yushchenko after the Orange Revolution
and, as a result, he soon began to advocate a more equidistant position for
Ukraine.  Both Hryshchenko and Chaliy took up positions in the Industrial
Union of Donbas.  But whatever his leanings at present, Hryshchenko is an
extremely able and knowledgeable figure, who is bound to add balance and
ballast to Yanukovych’s alternative foreign ministry.

[iii] Interfax Ukraine, 12 October 2006, cited in “BBC Summary of World
Broadcasts: Former Soviet Union” (hereafter SWB).
————————————————————————————————
CONTACT: James Sherr, james.sherr@lincoln.oxford.ac.uk.

————————————————————————————————
FOOTNOTE: James Sherr was one of the leading speakers and panelists
last week in Washington, D.C., at Roundtable VII, “Ukraine and NATO
Membership” of the Ukraine’s Quest for Mature Nation Statehood series
of fall conferences.  The AUR will publish Mr. Sherr’s presentation at
the Roundtable within the next few days.  We thank Mr. Sherr for the
opportunity to publish his latest article, “Ukraine: Prospects & Risks.”
AUR Editor Morgan Williams
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.                         A GATEWAY TO THE WEST
   Ukraine’s dash into NATO postponed for the time being. Post-socialist
  countries join NATO because Russia unable to offer attractive alternative.

COMMENTARY: By Mikhail Delyagin, Nezavisimaya Gazeta
Moscow, Russia, Monday, October 23, 2006

NATO still performs its principal military duties, but its role
changed with the collapse of the USSR. These days, NATO is the key
instrument for the West’s absorption of post-Socialist countries
whose economies and legislation don’t yet meet requirements for
European Union membership.

NATO membership of the period of EU’s rapid expansion is a kind
of mandatory “preliminary phase” prior to membership of the European
Union itself. Crisis of the European Union makes membership of NATO
the only affordable form of integration with the West.

Moreover, this integration doesn’t really concern societies and citizens
whose lives are not really affected by military threats. It concerns first
and foremost the elites that prove their loyalty to the West and
particularly to the United States in this manner.

Ukraine’s membership of NATO is one of the central issues of
Russia’s future. Thanks to Zbigniew Brzezinski, everyone knows now
that Russia cannot exist as a major factor of international politics
without Ukraine.

That’s what makes Ukraine’s “European” or Western
choice a key element of the whole global arrangement in the wake of
the collapse of the Soviet Union. That is why membership of NATO is
so important for Western strategists and their partners in Ukraine
itself who believe that cooperation with Russia is fatal for the
fragile Ukrainian self-identity.

George W. Bush intended to visit Ukraine this summer to invite
Ukraine to join NATO. But Ukraine’s political crisis had left it
without a government, however, and there was no one to receive the
high-ranking guest. Mass protests against the American military in
Ukraine followed.

 In fact, it was the so-called Feodosia conflict that transferred the
issue of membership of NATO from bureaucratic to the political plane
and made the previously passive Ukrainian people active and therefore
 important for official Kiev. (Opinion polls indicate that only 20% of
Ukrainians support the idea of joining NATO.)

The NATO summit in Riga on November 28-29 will be “for
authorized personnel” only. Russia is not invited to it as an
observer. Like any other “step backwards,” it is alarming of course.

On the other hand, because of the Ukrainian society’s clear position
the summit will be dedicated to the internal problems of NATO
accumulated in the years of its explosive expansion – from
rearrangement of the military infrastructure of East Europe to
financial issues. The United States is annoyed by a situation where
it essentially maintains NATO at its own expense and where at the
same time it is forced to take into account the conceited Europeans
who in their turn are sincerely mad over the Americans’ disinterest
in their rights.

The time is not yet ripe to invite Ukraine into NATO, and
Viktor Yanukovych went so far as to explain this to the West. The
Ukrainian elite aspires for membership of NATO, viewing it as
another “gateway” to the West, another road to the new opportunities
opening up before NATO members.

It seems that some Russian companies would also like to see
Ukraine in NATO. It will destroy the Ukrainian factories cooperating
with Russia and compel the latter to build its own ones. The
opportunities that will open for Russian businesses in this case are
truly enormous. The idea of membership of NATO is but postponed.

Backed by external financial and technological resources, the
campaign of propaganda needs some time first to brainwash the
Ukrainian population and bring the ratio of supporters and enemies
of the idea at least to 1:2. European experience shows that this is
the minimum ratio states need to crush the resistance of enemies of
membership of NATO that outnumber the supporters but lack state
resources to substantiate their stand on the matter.

Pro-NATO propaganda is extremely clumsy for the time being. It
boils down to boring diatribes about “no alternative path,” “the
choice of the civilized world,” the “ignorance” of all opponents,
the “veto power” Ukraine would allegedly wield with regard to its
sponsors, and the inevitable economic prosperity.

The propaganda inevitably refers to Romania, where foreign investment
soared once it became a NATO member. Propagandists never mention
the fact that investment soared in light of Romania’s forthcoming
membership of the European Union.

And yet, even this primitive propaganda is having an effect.
Quality may eventually evolve into quality. Credibility of the
Ukrainian audience should be taken into account as well. But it is
membership of NATO that may become the shocking moment of truth
for Ukraine. In any case, Russia still have time to adjust its position.

Restricting Russia’s stance to clumsy condemnation will
certainly be a mistake. Russia should make an emphasis on the fact
that NATO is a military-political bloc and not “partnership for the
sake of development.” Unless Russia is explained deployment of
NATO’s offensive weapons on its eastern borders, it will keep
regarding expansion of NATO as a hostile move.

The lessons of the anti-Georgian campaign should be learned. Russia’s
response should advance relations between peoples, not sever them.
It should be aimed at the elites (Ukrainian in this case) that force
membership of NATO on their people against the will of the latter.

Russia’s problem is that competition nowadays is not a contest
of tanks or finances, it is a contest of attractive images, models,
and symbols of development. This is where Russia doesn’t have
anything at all. Post-Socialist European countries are not
independent. The choose membership of NATO because Russia as
the only alternative doesn’t have anything attractive to offer them.

If it wants to win the battle for Ukraine, Russia should stop
being a synonym for authoritarian savagery and dumb coercion. Its
leaders should learn to respect other peoples, but this requires
that they should learn to respect their own people first.   -30-
——————————————————————————————–
Translated by A. Ignatkin

——————————————————————————————–
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========================================================
3. UKRAINE TO RECEIVE GAS AT $130 PER 1,000 M IN 2007

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Ukrainian Prime Minister Viktor Yanukovych has announced that next
year Ukraine will receive at least 55 billion cubic meters of imported gas
at not more than $130 per 1,000 cubic meters.

“Negotiations are concluding in Russia. The volume of gas being supplied to
Ukraine is being confirmed at not less than 55 billion cubic meters at a
price of not more than $130 per 1,000 cubic meters. As soon as the
executives arrive in Ukraine they will show these contracts,” Yanukovych
said at a joint press conference with Russian Prime Minister Mikhail Fradkov
in Kyiv on Tuesday.

He said that the price agreements are agreements between two companies. “Of
course, we are creating conditions and, as they say, a normal atmosphere for
our companies, so that they can operate normally,” he said.

Fradkov said that the issue of gas supplies to Ukraine was not discussed at
a meeting of the intergovernmental committee, as these talks are being
carried out by companies – primarily Gazprom and Naftogaz Ukrainy.

Yanukovych said that earlier this issue was over politicized and that now
both sides are trying to transfer it to the corporate arena.

He said that the government would guarantee gas import volumes and also
reliable transit “so that European partners do not feel any discomfort.” The
prime minister said that the contracts to supply gas to Ukraine would be
published after they are signed.

This 55 billion cubic meters, along with the 20 bcm produced domestically,
is sufficient to meet requirements in 2007. At the moment the price for gas
being imported into Ukraine is $95. All of the gas supplied to Ukraine is
supplied through RosUkrEnergo and is bought by a joint venture with Naftogaz
Ukrainy – UkrGaz-Energo.

Russia and Ukraine, with help from RosUkrEnergo A.G. (Switzerland),
regulated their gas relations in January 2006. According to agreements, the
price for gas being imported to Ukraine increased to $95 per 1,000 cubic
meter, and the transit price – to $1.6 per 1,000 cubic meters over 100 km.

Ukrainian gas imports are expected to increase to $130 per 1,000 cubic
meters in 2007. Meanwhile, Yulia Tymoshenko, the leader of a large
parliamentary group, has criticized Yanukovych’s remark about the price of
$130 per 1,000 cubic meters of gas Ukraine will pay for Russian gas imports
in 2007.
                  TYMOSHENKO SAYS UKRAINE LOSING
“Ukrainian interests were blatantly betrayed at the start of 2006, when the
agreement with RosUkrEnergo was signed and when the link between transits of
Russian gas through Ukraine and the price for which Ukraine receives gas
from Russia was broken,” Tymoshenko told journalists on Tuesday.

“When it comes to power, the Yulia Tymoshenko Bloc will make public the
names of the officials” because of who “the country is now losing its energy
stability, independence, and its financial substance.”

“It is ridiculous to talk about $130, $210, or $95 now, since officials gave
up the price we were entitled to up to 2010. Either $95, or $130, or $210
remains a crime. I don’t see any difference here,” she said.

Tymoshenko pointed out that, while the agreement on the rent of land and
property for the Russian Black Sea Fleet was signed simultaneously with the
agreement on Russian gas sales to Ukraine, the agreement regarding the
conditions on which the fleet is functioning in Ukraine has not been
revised.

“I regard all these statements on a Russian-German-Ukrainian gas
transportation consortium or any other consortiums based on our gas
transportation system as high treason.

I warn the politicians who have switched to the issue of the gas
transportation system’s ownership after RosUkrEnergo that they won’t get
away with that. They must not dare eye something that has remained our
strategic property,” she said.
————————————————————————————————
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========================================================
4.   UKRAINE AND RUSSIA SHOULD AGREE ON NATO, EU, AND
        SYNCHRONIZE JOINING WTO, RUSSIAN PREMIER SAYS 
 
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Ukraine and Russia should take into account each other’s opinions 
on joining NATO and the European Union, and should synchronize their
joining the World Trade Organization, Russian Premier Mikhail Fradkov
has said.

Fradkov was speaking at a press conference following a meeting of the
Ukrainian-Russian intergovernmental economic cooperation committee in

Kyiv on Tuesday.

“Strategic cooperation provides for not only the ability to look at the
prospects ahead, but also for relations of trust and mutually shared
priorities in both foreign and domestic policy, as well as at the level of
interstate relations,” he said.

“If it is [the issue of Ukraine’s joining] NATO, it should not be against
Russia’s interests,” he said.

“If it is the WTO, one should take into account the relations between the
WTO and Russia and [there should be] a desire to build up strategic and
economic cooperation in a bilateral format. There should be more
consultations, more exchange [of opinions], I would say directly – to
synchronize the negotiation process of our countries regarding the WTO,”
Fradkov said.

“If it is European integration, here there are a lot of questions, which
must be taken into account by Ukraine and Russia, including those we have
discussed today – transport, industrial cooperation, cooperation in the
high-tech sphere. All of these issues are interrelated,” he said.
————————————————————————————————

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========================================================
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========================================================
5.  ‘OUR UKRAINE’ DOES NOT AGREE UKRAINE AND RUSSIA’S
           WTO NEGOTIATIONS SHOULD BE SYNCHRONIZED 
 
Ukrayinska Pravda website, Kiev, in Ukrainian 24 Oct 06
BBC Monitoring Service, United Kingdom, Tuesday, October 24, 2006

KYIV – [Propresidential] Our Ukraine has described as inappropriate Russian

Prime Minister Mikhail Fradkov’s remarks that negotiations should be
synchronized so that Ukraine and Russia join the WTO simultaneously.

“We believe that in this way Ukraine is coming under pressure so that its
foreign policy changes. The essence of the Russian prime minister’s remarks
is not coordination and working out a joint position of the two countries,
but ‘a package of concessions’ by Kiev in politics and the economy,” Our
Ukraine said in a statement.

“Imposing the idea of a synchronized WTO entry [on Ukraine], Russia could
make other demands as well: that it should call a referendum on NATO
immediately, extend the stay of [Russia’s] Black Sea Fleet in Crimea and get
Turkmen gas only via Russia,” the statement says.

“This explains Russia’s position in the ongoing gas talks, whose course can
be affected by any concessions made by the [Ukrainian Prime Minister Viktor]
Yanukovych government,” the statement continues.

Our Ukraine believes that “Russia pursues a policy of restricting Ukraine’s
sovereign right to determine its own foreign policy interests”.

In this connection, Our Ukraine has called on Prime Minister Viktor
Yanukovych “to be a prime minister of Ukraine, not a governor of small
Russia [as Ukraine used to be known when it was part of the Russian empire]”
during talks with Russia.

It was reported earlier that Fradkov suggested that Ukraine’s and Russia’s
accession to the WTO should be synchronized [see TV 5 Kanal, Kiev, in
Russian 1100 gmt 24 Oct 06].                      -30-

————————————————————————————————
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========================================================      
6.     WTO LAWS SHOULD BE PASSED AS SOON AS POSSIBLE,
     ACCORDING TO UKRAINIAN FIRST VICE PREMIER AZAROV  
 
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006
KYIV – Ukrainian First Vice Premier and Finance Minister Mykola Azarov
has said that Ukraine should pass the package of laws needed for entry to
the World Trade Organization as soon as possible.

“I am convinced that we must consider all these draft bills [concerning the
reform of the tax and customs systems], taking into account the requirements
of the WTO. The government’s firm stand is that Ukraine must join the WTO.

We need to pass a package of laws providing for the process as soon as
possible,” he said, according to a press release from the Finance Ministry
issued on Tuesday.                                 -30-
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7.                IBM SETS UP SUBSIDIARY IN UKRAINE 

         Around 2,000  Ukrainian  companies  are  currently  IBM  clients
Interfax, Moscow, Russia, Tuesday, October 24, 2006

MOSCOW – IBM has set up a subsidiary in Ukraine called IBM Ukraine.

The  presence  of  a  world leader on the IT market in Ukraine will have a

positive  influence on the development of the Ukrainian IT market on the
whole  and  will help expand the sector of supply and services to the
company’s  business partners, Brendon Riley, IBM general director in
Central and Eastern Europe, said at a Tuesday press conference.

The  establishment  of  an  IBM  subsidiary  based on the company’s
representation,  that  has  worked  in Ukraine since 2004, will help
IBM offer the   entire   range   of  its  services  in  Ukraine,  said
 Ihor Pastushenko, general director of IBM Ukraine.

IBM  is planning to implement projects in business consulting, such
as designing  strategies,  personal  management,  installing
integrated informational systems, and developing the network of local
designers and business partners that offer solutions based on IBM
programs.

Around 2,000  Ukrainian  companies  are  currently  IBM  clients,
Pastushenko said.                                   -30-
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========================================================
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========================================================
8.  WORLD BANK CONTINUES TO SUPPORT STRUCTURAL
   REFORMS IN UKRAINE, WITH ASSISTANCE FROM JAPAN

UNIAN, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – A Japanese Policy and Human Resource Development (PHRD) Grant
Agreement to help the Ukrainian government advance its structural reform
agenda was signed today by the First Deputy-Minister of Economy, Mr.
Anatoliy Maksyuta, and the World Bank Director for Ukraine, Belarus and
Moldova, Mr. Paul Bermingham, in the presence of Mr. Mutsuo Mabuchi,
Ambassador of Japan in Ukraine, according to a WB press-release,
forwarded to UNIAN.

Under the coordination of the Ministry of Economy of Ukraine, the US$700,000
grant will assist the government in preparing the second Development Policy
Loan (DPL) from the World Bank by implementing policy commitments and
planning future reform steps in three major areas:

     [1] improvements in the investment climate,
     [2] better public administration and
     [3] public financial management and greater social inclusion.

The World Bank has supported Ukraine’s key policy and institutional reforms
over the past five years, through the series of loans: PAL-1 (2001), PAL-2
(2003) and DPL-1 (2005).

These loans supported the following accomplishments:

     [1] the elimination of pension, wage and most other budget arrears,
     [2] the reduction of tax arrears and tax exemptions,
     [3] improved business accounting standards and practices,
     [4] the launch of land reform and pension reform,
     [5] the establishment of a legal system for mortgage and secured
          interest,
     [6] improvements in the regulation of banks and other financial
          institutions, and
     [7] material progress towards WTO accession.

“Accelerating the implementation of structural reforms will be critical if
Ukraine is to achieve the target of doubling GDP over the coming decade” –
says Paul Bermingham, World Bank Director for Ukraine, Belarus and

Moldova.

“We have already started the dialogue with the new government on the
necessary steps going forward and we are grateful to the Japanese

Government for their assistance.”                   -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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9. UKRAINE: BOGDAN CORP, ZAZ TO BUILD AUTO PLANT IN RUSSIA

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Bogdan Corporation and Zaporizhia Automobile Plant (ZAZ) have begun
building a new auto plant in Russia to produce cars, trucks, and buses.
Bogdan press secretary Serhiy Krasulia told reporters joint investment in
the plant would top $300 million.

United Transport Technology on October 18 bought a 50 hectare plot of land
in the Bor district of Nizhny Novgorod in auction. Krasulia said the company
represents Bogdan and ZAZ and is founded by companies affiliated with them.

The plant will initially be able to produce 25,000 Lanos-Chevrolet cars,
6,000 Bogdan-Isuzu buses, and 25,000 trucks and assemblies. It will reach
full capacity in 2009 and will sell mainly on the CIS markets, primarily in
Russia, he said.

Krasulia said Bogdan and ZAZ previously conducted joint projects. The
companies have been producing the VAZ-21099 and VAZ-21093 cars at

ZAZ plants since 2003.

Bogdan first announced plans to produce automobiles in August of last year.
The company produces buses in Ukraine and Belarus.
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10.   UKRAINIAN GOVERNMENT SPARING NO EFFORT TO MAKE
   MARKET ATTRACTIVE TO INVESTORS, SAYS PRES YUSHCHENKO

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – The Ukrainian government will spare no efforts to make the

Ukrainian market attractive to investors, according to Ukrainian President
Viktor Yuschenko.

The cornerstone of this process is the formulation of clear rules, helping
build a productive dialogue between government and business, he said on
Monday in Budapest at a meeting with representatives of Hungarian business
circles, the president’s press service has reported.

He said one of the priorities for the government in this context was to
reduce taxes. Yuschenko also said he was taking steps to persuade

parliament to pass bills enabling Ukraine to become a WTO member.

He said the government was going to sign agreements on readmission and the
liberalization of visa requirements with the European Union this October,
and also start talks to sign a new enhanced agreement in 2007.

He reiterated that Ukraine’s foreign policy would not change. “Ukraine is
looking forward to building the most active dialogue possible with the
European markets,” he said.

Yuschenko discussed ways to introduce energy efficiency technologies and
produce biological fuel. Yuschenko said Ukraine expected Hungary to submit
proposals on joint projects in the area of energy efficiency.

The business leaders said they were ready to invest in the production of
fuel and development of Ukraine’s transportation infrastructure.

The President also said Ukraine would gladly use Hungary’s experience in

the modernization of farms. “Ukraine is open to full-scale economic and
investment cooperation with Hungary,” he stated.          -30- 
————————————————————————————————
FOOTNOTE:  The Ukrainian government the last two years certainly has
not done all they can to make the Ukrainian market attractive to international
investors.  In fact they have accomplished very little in this area and are
doing very little at the present time. The president and others in the
government have made many speeches on this subject but seldom is
there any reality to go with what is promised.   AUR Editor  
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
11. “OUR UKRAINE DOES NOT GIVE IN TO THE PRESIDENT”
           Pro-presidential party took another step towards self-annihilation.

ANALYSIS & COMMENTARY: By Oleksandr Chalenko
Segodnya, Kiev, Ukraine, in Russian 23 Oct 06; p 2
BBC Monitoring Service, United Kingdom, Tuesday, Oct 24, 2006

Three factions threaten to fracture the pro-presidential party in Ukraine, a
newspaper has reported. The author said nearly a third of Our Ukraine
People’s Union local chapters will leave the party to follow Mykola
Katerynchuk if he is not elected party leader.

In the meantime, the author said a three-week break in the party’s congress
is to be spent by President Viktor Yushchenko searching for a compromise
with current leaders in the party whom he wants to replace with people more
likely to help him find a common language with the Party of Regions.

The author said an agreement with the Party of Regions could secure him a
second term as president.

The following is the text of the article by Oleksandr Chalenko, entitled
“Our Ukraine does not give in to the president: The dear friends refused to
give up control of the party. Now it demise it unavoidable”, published in
Segodnya on 23 October, subheadings appear as in the original:

Over the weekend, the main pro-presidential party – Our Ukraine, People’s
Union [OUPU] – took another decisive step towards self-annihilation. The
party is ready to be torn into three factions.

[1] The first: those sympathetic to Mykola Katerynchuk, who insist on going
into the opposition and joining Yuliya Tymoshenko.

[2] The second: “the dear friends” [Yushchenko’s allies who were accused of
corruption] headed by Roman Bezsmertnyy and Petro Poroshenko, who are
financing and controlling the OUPU governing bodies.

[3] The third: Viktor Yushchenko himself and his new favourites from the
Presidential Secretariat ([head of the presidential secretariat Viktor]
Baloha, [first deputy head of the presidential secretariat Arseniy]
Yatsenyuk and [deputy head of the presidential secretariat Viktor] Bondar).

And if on Friday [20 October] it appeared that the president and “the dear
friends” managed to find a common tongue in dividing the management of the
party, by Saturday [21 October] during the third OUPU congress, all the
agreements were ruined and the congress itself interrupted.
                                   A ONE-HOUR CONGRESS
The congress opened with a speech by Viktor Yushchenko, the honorary
chairman of the party. The orator came on stage in a suit, but without a tie
though he wore an orange handkerchief in his breast pocket [Orange being
OUPU’s campaign colour].

He branded the former Our Ukraine leadership (he did not name names, but
everyone understood he meant Bezsmertnyy and “the dear friends”, who sent
the party into crisis and turned it into a closed joint-stock company where
“the main shareholders solve their own interests or interests close to their
own”. At the end, the head of state suggested holding the congress in two
stages.

 To set up working groups which will work out foundation documents and sort
out the leadership bodies in the first stage. And in the second stage – the
congress should approve what was worked out. The president’s intentions did
not come to pass.

After him, Bezsmertnyy stepped up to the podium and…[ellipsis as
published] declared a three-week break.

That shocked the delegates, especially those siding with Mykola Katerynchuk,
who wanted to try to elect him leader of the party at this congress. But
Katerynchuk calmed them and agreed to the time out.
                               AWAY WITH THE FRIENDS?
A source in the president’s circle told us that the day before the congress,
the Secretariat reported to Yushchenko that an agreement had been reached
with Poroshenko and company about their resigning on their own from the
leadership of Our Ukraine and on Bezsmertnyy’s departure and freeing a place
for Arseniy Yatsenyuk (currently the deputy chief-of-staff).

And so the president agreed to remain honorary chair of the party. But
unexpectedly, it turned out that Poroshenko was not ready to give up the
party. “And the long time-out was called in order to resolve the problem”,
the source explained.
                               THE END OF THE PARTY?
If it turns out impossible to agree (which is very likely), then it is most
likely Yushchenko will lose interest in OUPU, giving it over to “the dear
friends” who will “devour” Katerynchuk and kick him out of the party (up to
one-third of local organizations and almost half the Our Ukraine faction in
parliament will leave with him).

Of course, without the president’s support, Our Ukraine will quickly become
marginal and it cannot be ruled out that it will give in to the Party of
Regions and set up a grand coalition with it in parliament.
                                    ANOTHER SCENARIO
Events will develop in a far more interesting way if Yushchenko manages to
agree with the “friends” on replacing the leadership of the party (and
Katerynchuk will leave anyway – the president does not accept his calls to
unite with Tymoshenko). There are two conflicting versions on why Viktor
Andriyovych [Yushchenko] would need this.

[1] First: the secretariat is looking at the possibility of an early
parliamentary election. Should Our Ukraine enter them with the old
leadership, unavoidable defeat will be awaiting it, but with new leadership,
the party has a chance to fight for the “Orange” electorate’s vote.

[2] The second version, and one which is more likely, comes down to
Yushchenko not wanting a new election, but rather his thirsting for a
stabilization of the political situation.

To this end, he needs to quickly find agreement with the Blue-and-Whites
[the campaign colours of the Party of Regions], something his old “dear
friends” could not do because of their large appetite for posts and
appointments.

 So it has been decided to put them on the back burner and give the reins of
government in OUPU to people close to the financial-industrial group
Industrial Union of Donbass [IUD], which already controls the presidential
secretariat to a significant extent (Yatsenyuk and [deputy head of the
presidential secretariat Oleksandr] Chalyy) and the Secretary of the
National Security and Defence Council (Vitaliy Hayduk – the co-owner of the
IUD).

The end goal: getting a second term as president for Yushchenko, who could
be elected in parliament rather than in a nationwide election, and so there
is a need to agree with [Prime Minister] Viktor Yanukovych and the Party of
Regions.                                                -30-
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========================================================
12.             OUR UKRAINE ON VERGE OF MELTDOWN

INFORM, newsletter for the international community providing
views and analysis from the Yulia Tymoshenko Bloc (BYUT), Issue 16
Kyiv, Ukraine, Tuesday, October 24, 2006

The pro-presidential bloc, Our Ukraine, is on the verge of an irrevocable
split as the bloc’s third congress ended in disarray on Saturday.  Its
embattled leadership agreed to reconvene in three weeks time to review plans
from President Viktor Yushchenko who remains its honorary Chairman.

Speaking at the congress, President Yushchenko sharply criticized his
party’s decision to move into opposition and urged it to resume talks with the
governing coalition led by Prime Minister Viktor Yanukovych, his one time
foe.

Only last Thursday Our Ukraine announced that four ministers had resigned
and reiterated that it was officially in opposition.  This appeared to
signal the end of efforts to form a grand coalition with the pro-Russian
Party of Regions and its allies, the Socialist and Communist parties – known
collectively as the Anti-crisis coalition.

But the president seems to have a different agenda. He expressed doubt that
being in opposition was the best option for Our Ukraine and insisted that
the focus should “be on consolidation and mutual understanding with various
political forces, including the Party of Regions.”

He also criticised our Ukraine’s leadership, stating that it had been
weakened by personal ambition and urged a reshuffle. This was seen as a
rebuke of Roman Bezsmertny who announced that he would renounce the
leadership and suggest a new candidate at the party’s council meeting next
Wednesday.

The party appears to be on the verge of splitting. For several weeks,  the
president and his ministers appointed by decree – Foreign Minister Boris

Tarasyuk and Defence Minister Anatoliy Hrytsenko – have distanced
themselves from the rest of the bloc. Both ministers signaled their
opposition by refusing to resign, citing their constitutional duty as the
 reason.

Yet the rationale for clinging onto their positions is confusing,
particularly given the fact the ministers were unable to work effectively
with the Yanukovych-cabinet which ran rough-shod over their portfolios.

Tammy Lynch, Senior Fellow at the Institute for the Study of Conflict,
Ideology and Policy at Boston University, recently opined, “A move to
opposition may allow these former ministers more effectively to criticize
the government and to provide clear alternatives.  Their influence outside
the government may be far greater than it was within it.”

The four ministers who submitted their resignations to parliament last
Thursday are Health Minister Yuriy Polyachenko, Culture Minister Ihor
Likhoviy, Family, Youth and Sport Minister Yuriy Pavlenko and Justice
Minister Roman Zvarych.

It is now unclear if they will leave office or not.

Earlier in the week, Evhen Kushnaryov, a senior official from the Party of
Regions, intimated that parliament might go as far as to offer the president
the opportunity to name candidates for the vacant ministerial posts.

President wants renewed talks with the parliamentary coalition

The president’s willingness to hold further talks aimed at forming a new
coalition is at complete odds with the views of many in Our Ukraine,
including its leader Mr Bezsmertny who had deemed further negotiations as
pointless.

Previously claiming “all bridges are burnt,” Mr Bezsmertny  had pinned the
blame on the failure of the Party of Regions to incorporate the conditions
of the ‘Universal’ (National Unity Pact) into a new coalition agreement; the
most pressing being the adoption of the NATO membership action plan,
EU integration and swift accession to the World Trade Organisation.

Despite the president’s wishes, most observers doubt whether Mr

Yanukovych will suddenly acquiesce to Mr Yushchenko’s demands. The
Communist Party will also keep up the pressure.

Its leader, Petro Symonenko, claimed earlier that he did not see any
constructive proposal from Our Ukraine during the negotiations, and “those
ideas that the president and his ‘orange team’ impose were ineffective.”

The most likely scenario is that Our Ukraine will split in two with some of
the deputies joining a re-constituted governing coalition and others
remaining in opposition.

As if to confirm a potential split in the ranks, the first meeting of
“Yevropeyska Ukrayina,” or “European Ukraine,” was held on October 12.
This grouping purports to be a confederation of parties that will form an
alternative opposition.

Interestingly, BYUT was not one of the nine parties invited to attend the
first meeting which lasted for three hours. According to Roman Bezsmertny,
the new force will base its policy upon the Universal and seek to form a
shadow government.

However, some insiders believe the unwillingness to involve BYUT is because
the new group is forming mechanisms to make deals with the governing
coalition.

Others contend that it is simply a re-invention or re-branding of Our
Ukraine in European clothes – a move designed to entice back voters that
defected to BYUT in the March parliamentary election.

Whatever the intent, BYUT leader Yulia Tymoshenko was in a conciliatory
mood, “The door will remain open as long as it takes.

 We encourage Our Ukraine to join an inter-factional opposition which would
unite in challenging the government and securing the future direction of
Ukraine.  This is not a question of party politics but about the freedom and
economic prosperity of a nation.”

To-date there has no been serious dialogue between Our Ukraine and BYUT
on a united opposition.

“There is room for several oppositions,” said Mrs Tymoshenko, “but a single
strong inter-factional opposition will serve this country best. The people
are tired of being let down by squabbling politicians whether they are in
government or opposition.  They expect better and deserve better and because
of this we will remain open to discussions.”                 -30-
————————————————————————————————-
For further information contact: taras@byti.org.ua.

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========================================================
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========================================================
13.    IVANO-FRANKIVSK CITY COUNCIL CONSIDERS RUSSIAN
       FOREIGN AFFAIRS MINISTRY REPORTS ON INFRINGEMENT
                  OF RUSSIAN LANGUAGE AS A PROVOCATIVE 

Ukrainian News Agency, Kyiv, Ukraine, Tuesday, October 24, 2006

KYIV – Ivano-Frankivsk city council considers Russian Foreign Affairs
Ministry reports on infringement of Russian language in the city as
provocative.

Ivano-Frankivsk city council has disclosed this in a report to Ukrainian
President Viktor Yuschenko, Russian Foreign Affairs Ministry and
Ukrainian citizens of all nationalities on October 17.

‘We consider Russian Foreign Affairs Ministry reports on infringement of
Russian language in Ivano-Frankivsk…as provocative,’ the report reads.
Russian Foreign Affairs Ministry’s position surprised the deputies.

The deputies say that before the report no official complaints from
representatives of national minorities had been received in the frames of
implementation of the program on development of Ukrainian language in
the city for 2004-2006, which was endorsed on June 9, 2004.

‘The program contains nothing about Russian language. It foresees
functioning and development of the state language,’ the report reads.

According to the deputies, Ivano-Frankivsk was, is and will be the city
freely developing communities of other nationalities.

‘We, Ivano-Frankivsk city council deputies, will do our best to make each
dweller of the city, each visitor feel a free and protected person,’ the
deputies said.

As Ukrainian News earlier reported, Ivano-Frankivsk city mayor Viktor
Anushkevichus invites Russian Foreign Affairs Ministry representatives to
hold monitoring of Russian language functioning in the city.

Ivano-Frankivsk regional state administration chairman Roman Tkach denies
Russian Foreign Affairs Ministry’s accusations concerning oppression of
Russian language in Western Ukraine.

On September 27, Russian Foreign Affairs Ministry criticized language policy
of Ukrainian local authorities and in particular authorities in Ivano-Frankivsk
region.

In particular, according to Russian Foreign Affairs Ministry,
Ivano-Frankivsk authorities have issued resolution banning to speak Russian
at educational establishments, and hold mass events using Russian language.

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14.              “BUT WAS THERE DISCRIMINATION”
     Paper denies Russian reports on language discrimination in west Ukraine

ANALYSIS AND COMMENTARY: By Yaroslav Zahoruy
2000 newspaper, Kiev, Ukraine, in Russian 20 Oct 06 pp F1, F2
BBC Monitoring Service, United Kingdom, Friday, October 20, 2006

Contrary to reports in Russian media and to a statement issued by the
Russian Foreign Ministry, the Russian language does not face discrimination
in western Ukraine, a popular newspaper has reported.

The author said a visit to the western Ukrainian city of Ivano-Frankivsk
uncovered no signs that the local authorities were intent to stamp out the
Russian language.

On the contrary he said, Russian co-exists with Ukrainian and
Russian-speaking residents have no real complaints. He concluded that the
Russian newspaper Izvestiya misrepresented facts in its reports of a
“language inquisition”.

The following is the text of the article by Yaroslav Zahoruy, entitled “But
was there discrimination?”, published in the Ukrainian newspaper 2000 on
20 October; subheadings appear as in the original:

2000 looks into information from Russian media about the presence of a
“language inquisition” in Ivano-Frankivsk.

Citing the Russian Ministry of Foreign Affairs, on 27 September the media
reported on severe pressure on the Russian language in the western regions
of Ukraine, especially in Ivano-Frankivsk.

The Russian Foreign Ministry press release reported: “As always, the
authorities in Ivano-Frankivsk have excelled in this. According to
directions issued by the local Ukrainian authorities, it is now forbidden to
speak in Russian anywhere on the territory of educational institutions, mass
events are not allowed to be held in Russian and it is even forbidden to
post announcements in Russian in public places.

Observation of book-sellers and those distributing periodicals in Russian
has been implemented. The Committee of Public Language Control will look for
adherence to these rules; the Committee has been invested with the practical
functions of a ‘language inquisition’.”

The reaction from Ivano-Frankivsk regional administration head Roman Tkach
was immediate: “I have no official information on authorities in western
Ukraine making decisions which limit the Russian language.” The Our Ukraine
People’s Union party stated that such commentary from a foreign country’s
foreign policy establishment was interference into our country’s internal
affairs.

It would seem the conflict had run its course. But on 10 October, the
Russian publication Izvestiya.ru put up an article by Yanina Sokolovska
under the headline “The dictatorship of language: Ivano-Frankivsk becomes
the most Russophobe city in Ukraine”.

A correspondent from 2000 visited Ivano-Frankivsk to see what the situation
was like on the scene.

“About 90 per cent of publications are in Russian”

I can make the Russians happy – there are plenty of publications in the city
in Russian. If you look at glossy magazines, then it is hard to find one in
Ukrainian. In general, the assortment here does not differ much from that in
Kiev and many other cities in Ukraine.

All the popular Russian-language newspapers are also represented here:
Segodnya, Komsomolskaya Pravda, Izvestiya, Argumenty i Fakty, Moskovskiy
Komsomolets and others. To tell the truth, there is a lack of the popular
2000 newspaper. One kiosk operator said that many kiosks kept the newspaper
for regular readers.

I decided to walk down Chornovil Street and made it a point to ask locals
the way in Russian. They all politely answered in Ukrainian and pointed the
way. One did ask if I was from out of town and tried to answer in Russian.
He did not do a very good job of it, but the beginning of my trip gave me
heart.

Next to the regional administration building I first heard Russian speech. A
middle-aged man and woman were talking animatedly – it was clear they were
old acquaintances. I asked them about limits on their native language.

“No-one forbids us from speaking Russian,” was the answer I heard, “Like
you see, we are now freely conversing.”

They heard about the statement of the Russian Foreign Affairs Ministry for
the first time from me, and were surprised at the alleged pressure on
distributing Russian language press and books, pointing to a newspaper kiosk
nearby where “90 per cent of the publications are in Russian”. To tell the
truth, local newspapers come out exclusively in Ukrainian (this was noted by
my new acquaintances).

There are also plenty of books in Russian. One can easily buy books by
current popular authors like Paulo Coelho, Boris Akunin, Dan Brown and
detective stories by Aleksandra Marinina and Darya Dontsova both in stores
and on the street as well as Russian classics like Leo Tolstoy and Vladimir
Mayakovski. As far as literature in translation, I found Moliere, Kafka and
Maugham in Russian – but not in Ukrainian.

It is interesting that book sellers freely converse in both Ukrainian and
Russian, easily switching from one to the other. They say there is no
“language inquisition”, and that people buy books in both languages.

But there is little children’s literature in Russian. And in order to find
it, you have to look several places. And it is not a fact you will be able
to buy the book you need.

“No-one pressures us, but we would like more Russian schools”

City residents may speak verbally to authorities in Russian, but only in
Ukrainian in written form. “That is what the law says,” they say.

But they are mistaken in this. Unfortunately, civil servants have not
studied the Ukrainian constitution in depth, which in particular says: “The
free development, use and defence of Russian and other languages of
national minorities is guaranteed.”

Here are just a few excerpts from the law of the Ukrainian Socialist Soviet
Republic “On language”, which refer to the Russian language (the norms of
this law are in effect in modern Ukraine): [excerpts from the law in Ukrainian]

“Article 4. The languages of interethnic communication
“Ukrainian, Russian and other languages are the languages of inter-ethnic
communication in the Ukrainian SSR.

“The Ukrainian SSR provides for the free use of the Russian language as a
language of inter-ethnic communication between the peoples of the Soviet
Union.

“Article 5. Citizens’ rights to use any language
“Citizens of the Ukrainian SSR are guaranteed the right to use their
national language or any other language.

“Citizens have the right to address state, party, public bodies,
enterprises, departments and organizations in Ukrainian or in another
language of their work, in the Russian language or in another language
acceptable for both sides.

“The refusal of a civil servant to accept and review citizens’ appeals
citing a lack of knowledge of the language of appeal is punishable pursuant
to the law.

“The decision upon an appeal is written in the Ukrainian language or in
another language used by the body or organization which the citizen has
addressed. Should the citizen desire, such a decision can be given to him in
Russian translation.”

[back to Russian] As we see, the law clearly defines citizens’ rights to
converse with state bodies in Russian not only verbally, but in written form
as well. And even get official replies in that language.

Overall, the people I spoke with are convinced that neither the authorities
or residents are pressuring the rights of Russian speakers. The only thing
they drew attention to was that there is currently only one Russian school
in Ivano-Frankivsk (before there were three) and it is full. Russian
speakers (and they now number about 6.4 per cent according to the 2001
census) have to generally send their children to Ukrainian schools.

Of course, some of them do so for purely practical reasons, why should a
child walk to school several kilometres away (even if it is Russian) if he
can be sent to a Ukrainian school only a few minutes’ walk away?

Children in kindergartens and schools speak in the state language, since the
teacher (or school worker) is providing an example. And a Russian-speaking
child speaks in Ukrainian. But at home within the family circle, he freely
speaks Russian.

The very opposite situation is seen for example in Kiev, when a child from a
Ukrainian-speaking family converses with his peers in Russian. And feels no
discomfort in doing so.

The people I spoke with were indignant over such nonsense as Pushkin being
translated into Ukrainian in textbooks and Russian literature being taught
as a foreign literature. But unfortunately that is the practice in many
Ukrainian cities.

Many in Ivano-Frankivsk do not understand the policy of local television
stations in dubbing Russian-language interviews during the news hour into
Ukrainian and again, local stations broadcast exclusively in Ukrainian.
Russian speakers watch neutral channels and the Russian channels ORT,
RTR and NTV.

Students at the Vasyl Stafanyk University in Prykarpattya did not confirm
information that the university administration does not let them speak
Russian. Youth from Crimea and other regions in Ukraine where Russian is
popular study here and no-one hinders them in speaking Russian.

They speak to teachers in both languages. But it is not a fact that all will
answer in the language of the person addressing them. “It depends on the
teacher,” the students explain.
                          NATIONALISM IS NOT POPULAR
I did not find any nationalist slogans in Ivano-Frankivsk newspapers, in
particular Halychyna and Afisha Prykarpattya. I did not see any writing on
the streets along the lines of “Muscovites, out of Ukraine!”, “Suitcase –
Station – Russia” and so on.

In contrast to many articles in Russian media, nationalism is not popular in
the city, nor in the region as a whole.

For example, the Svoboda party of [nationalist] Oleh Tyahnybok did not get
into the regional council and the National Choice bloc, which was made up of
the Ivano-Frankivsk organizations of Sobor and the Congress of Ukrainian
Nationalists, got less than 5 per cent of votes in the parliamentary
election last spring.

Local residents say there are individual instances of “a lack of love” for
Russian. But they are not widespread and find no support among the
population. “There are idiots everywhere, and Ivano-Frankivsk is no
exception,” pensioner Petro Mykhaylovych told me.

At the same time, he noted that Russia, which is always talking about
pressure against the Russian language in western Ukraine, allows its
politicians, in particular [Deputy Speaker Vladimir] Zhirinovskiy and [MP
Nikolay] Kuryanovich to speak negatively about Ukraine and even call it
Little Russia (that concerns the latter of the two).

Ivano-Frankivsk residents relate that they are used to hearing visitors,
especially from eastern regions, asking questions in Russian about pressure
on the Russian language. They are afraid of being laughed at for speaking
Russian.

And they are surprised when they are politely answered in Ukrainian,
sometimes the speaker switching into Russian, as I learned in a cafe. And in
one store, when I approached the cashier in Ukrainian, she answered in
Russian. I did not feel any antagonism from any of the locals I spoke to in
Russian.
                        RUSSIAN SONGS PLAY IN CAFES
Walking around Ivano-Frankivsk and entering various cafes and stores and
travelling on public transport, I noted that songs are played in Ukrainian,
Russian, English and other languages.

For example, near the marketplace Russian pop is playing everywhere and in
the Tsimes Pizza shop the television was showing videos only in Russian. And
no-one asked anyone to turn off the music “in that damned language”.

To the contrary, Ukrainian-language students near the cafe where [pop group]
Via Gra was playing, happily sang along with the girls in Russian.

There is advertising in Russian. Yes, there is not much, but you can’t say
it is not there. And there are posters in Russian. And the Ukrainian
billboard advertising the visit of [Russian pop star Filipp] Kirkorov called
him Filipp and not [the Ukrainianized] Pylyp, like Izvestiya wrote.

I heard no complaints from local Russian speakers about bans on advertising
in Russian. I was told that no-one bans anything, simply Ukrainian speakers
are the vast majority and so advertising is written mainly in Ukrainian.

Whatever the case, I saw no pressure on the Russian language just as I heard
no complaints about it from locals.

They are worried today about issues of a social and economic nature: low
paying jobs (there is nearly no industry), the terrible condition of the
roads and buildings. Many Ivano-Frankivsk residents travel to Italy and
Poland to work and this is the only way they can afford to feed their
families.
STATEMENT BY THE RUSSIAN FOREIGN MINISTRY A MISTAKE
2000 learned at the Ivano-Frankivsk city council that they were simply
shocked by the articles on pressure on the Russian language.

The mayor’s press secretary Andriy Oleksin said the statements by the
Russian Foreign Ministry and the articles in Izvestiya are related to the
Programme of the development and functioning of the Ukrainian language in
Ivano-Frankivsk for 2004 to 2006, which was passed on 9 June 2004 after a
relevant resolution by the cabinet (similar programmes operate in all cities
in Ukraine).

The chairman of the Russian community in the city, Oleksandr Volkov,
protested against six points of the programme and he did so as a private
person (the city received no protests from the community itself or from
other Russian-speaking residents in Ivano-Frankivsk).

The court noted two points relevant to teaching in Ukrainian in educational
facilities and advertisements in the state language. But the authorities in
Ivano-Frankivsk do not know why Volkov did not complain when the programme
began but only did so now as it is coming to a close and a new one is being
prepared.

Oleksin especially noted that no decisions about a ban on playing Russian
music or speaking in Russian in daily life had been made and that they could
not be made as any court would say they were illegal. And the Committee of
Public Language Control is something the Russian press simply made up.

Andriy Volodymyrovych said he was present on Friday at a meeting between the
city mayor Viktor Anushkevych and Volkov and Russian Federation Consul
Yevgeniy Guzeyev. Volkov said he was “[in Ukrainian] simply in shock over
the statements from the Russian Foreign Office and individual media on the
‘language inquisition'” and was “not satisfied by this open filth and
considers such path of cooperation between the Russian community and city
authorities to be anti-productive”.

Commenting on the Russian Foreign Ministry’s statement and the latest
articles in Izvestiya.ru, Guzeyev said he thought the tone of the Foreign
Ministry was rude and a bit incorrect and the information of the Russian
publication “rude, untrue and unfounded”. A relevant press release was
posted on Ivano-Frankivsk’s official website.

There is a tourist boom in Ivano-Frankivsk and Andriy Oleksin says such
unfounded statements significantly harm the city’s reputation. The
authorities do not know who is gaining from that.                -30-

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15. CHILDREN’S HOSPITAL OF THE FUTURE FOUNDATION PLANS
   TO BUILD NEW HOSPITAL IN KYIV ARE PRESENTED IN DONETSK

Press office of President Victor Yushchenko
Kyiv, Ukraine, Saturday, 21 October 2006

KYIV – Last week, Kateryna Yushchenko held a press conference in Donetsk
to present a project to build a children’s hospital of the future in Kyiv.

Her advisor Andriy Myroshnichenko and Transbank Honorary President
Volodymyr Kosterin, who is also a member of the supervisory board of the
Children’s Hospital of the Future Foundation, attended the event.

Mrs. Yushchenko said: “Not only will the creation of such a hospital enable
our doctors to treat serious diseases but also help Ukraine’s medicine
develop and use modern technologies to save Ukrainian children’s lives. We
are proud to see more and more sponsors join in, which we see as a sign of
civil society.

Every day we accept new partners, such as business representatives and
public leaders, who appreciate our vision of common responsibility to
resolve the most pressing social problems.”

Mr. Myroshnichenko detailed steps aimed at creating and building the
hospital. He also told reporters how they were going to raise funds.

Ukraine’s leading television channels, ICTV, 1+1, Inter, NTN, Tonis, STB,
NTCU, M1 and Channel 24, which are participating in the campaign, will
launch a television marathon on November 1.

He also said the project was supported by Ukraine’s mobile network
operators, UMC, Kyivstar, Golden Telecom, Life:) and Beeline, whose
subscribers can donate money via SMS messages or telephone calls.

Mr. Kosterin said his bank saw the Ukraine 3000 Foundation as its reliable
partner. He expressed hopes Donetsk’s business elite would join the project.

Following the press conference, the First Lady inspected the Donetsk Oblast
Children Hospital, where it took place. She also met with Donetsk business
leaders.                                      -30-
———————————————————————————————
LINK: http://www.president.gov.ua/en/news/data/5_11277.html

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16.    UKRAINE’S PRESIDENT VIKTOR YUSHCHENKO & WIFE
KATERYNA HONOR LEADERS OF 1956 HUNGARIAN REVOLUTION
 
Press office of President Victor Yushchenko
Kyiv, Ukraine, Monday, October 23, 2006

KYIV – Victor Yushchenko and his wife have laid flowers on the monument to
the leaders of the 1956 Hungarian revolution in Budapest’s public cemetery.

When the uprising was suppressed, its three leaders, among them the
reforming Prime Minister Imre Nagy, were arrested and executed. In 1961
their remains were secretly reburied in the outskirts of the cemetery.

The Hungarian Revolution of 1956 was a nationwide revolt against the
Neo-Stalinist government of Hungary and its policies, lasting from October
23 until November 10.

The uprising started in Budapest with a spontaneous demonstration by a crowd
of about 23,000, the reading of a pro-democracy manifesto and the singing of
banned national songs.

A giant statue of Stalin was pulled down. Soviet tanks were forced to
withdraw, but returned with devastating force a week later. Imre Nagy made a
final impassioned plea to the outside world by radio. He and hundreds of
others were killed, among thousands of Hungarians who died.

On June 16, 1989, Nagy was ceremonially reburied again and a monument
honoring the heroes of the revolution erected. This event marked the
beginning of a new democratic era for Hungary and helped initiate social and
political changes in the country.  

————————————————————————————————
LINK: http://www.president.gov.ua/en/news/data/1_11274.html
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17.    VICTOR YUSHCHENKO AND HIS WIFE KATERYNA MEET
                  WITH HUNGARY’S UKRAINIAN COMMUNITY 

Press Office Of President Yushchenko
Kyiv, Ukraine, Sunday, October 22, 2006

KYIV – Victor Yushchenko and his wife have met with representatives

of Hungary’s Ukrainian community.

In his speech, the President revealed his vision of the current situation in
Ukraine, reiterating that the country’s political forces must unite to
fulfill the nation’s key priorities. He said the National Unity Pact “was
designed to unite political forces irrespective of geography.”

Mr. Yushchenko outlined Ukraine’s recent economic and social
achievements. He particularly said the Ukrainian economy had stabilized
in the past several months, with the GDP rate being 6%.

“This is one of the best results in Europe,” he said, adding that the direct
foreign investment rate had doubled in the past year.

Speaking about Ukrainians living abroad, the Head of State said the
Ukrainian government was now formulating a project called
“The Ukrainian parlor” and aimed at creating Ukrainian information and
culture centers in European capitals and other cities of the world with
numerous Ukrainian communities. He believes it will enable Ukrainians
abroad to sense “the channel of communication with Ukraine.”

“We know what worries the diaspora in Hungary,” he said, promising to
discuss their most pressing problems with his Hungarian colleague, Laszlo
Solyom, tomorrow.

Yaroslava Khortyani, Head of the Ukrainian Culture Association in Hungary,
thanked the Ukrainian government for supporting and promoting their
activities.

The President and the first lady inspected the Markiyan Shashkevych library
and viewed exhibitions featuring Ukrainian artists and craftsmen. They gave
the Ukrainian community a collection of books by Ukrainian classics,
videotapes, CDs and musical instruments.                  -30-
————————————————————————————————
LINK: http://www.president.gov.ua/en/news/data/1_11243.html
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18.  THE 50TH ANNIVERSARY OF THE HUNGARIAN REVOLUTION
          STATEMENT: UKRAINIAN CANADIAN CONGRESS (UCC)

STATEMENT: Ukrainian Canadian Congress (UCC)
Winnipeg, Manitoba, Canada, Tuesday, October 24, 2006

On October 23, 2006 freedom-loving people across the world mark the 50th
Anniversary of the Hungarian Revolution.

This spontaneous nationwide revolt against the Neo-Stalinist government of
Hungary and its Soviet-imposed policies lasted from October 23 until
November 10, 1956 when it was brutally crushed by the armed forces of the
Soviet Union assisted by domestic collaborators.

Thousands of Hungarians died defending their nation.  Many others became
refugees.

The Revolution was an act of national self-defence in face of an
anti-democratic dictatorial regime which did not serve the interests of the
Hungarian people but only those of the imperialist regime in Moscow.

Ukrainian Canadians bow their heads in memory of those that gave their lives
for the ideal that nations have the right to live as they chose in their own
countries.  We celebrate the spirit of love of country and of fellow
citizens which motivated the Freedom Fighters of ’56.

This same spirit was subsequently shown in other countries of Eastern Europe
and the former Soviet Union.  Most recently, in Ukraine, during the Orange
Revolution this spirit served as an example to the hundreds of thousands of
Ukrainians who braved the threat of state violence and foreign intervention
to stand up for their rights.

Canada became home to many of the refugees of the Revolution.  Ukrainian
Canadians are proud to count their Hungarian neighbours as friends.

Together our two communities became champions of freedom and
democracy in countries ruled by totalitarian regimes.  We stand together
now in continuing to contribute to Canada and its multicultural society.

On behalf of the Ukrainian Canadian Congress, I extend my best wishes to
the Hungarian Canadian community. Let no one forget the spirit and example
of the Hungarian Revolution of 1956!

Orysia Sushko
President, Ukrainian Canadian Congress
————————————————————————————————
Contact: Ostap Skrypnyk ostap.skrypnyk@ucc.ca
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19. FIFTY YEARS ON FROM THE HUNGARIAN REVOLUTION
          They were three weeks that shook the world, when a revolt begun by
             students forced out both a government and hated Soviet forces,
                             only to end in bloodshed and repression.

By Peter Popham, The Independent, London, UK, Mon, 23 Oct 2006

Fifty years ago today, something extraordinary happened in Hungary. A
nation, one of the proudest and most distinctive in Europe, that had endured
two catastrophic world wars, the loss of much of its territory and
subjugation to the brutal might of the Soviet Union, spontaneously decided
that it wasn’t going to take it any more.

It wasn’t the first time Soviet power had been challenged. In June of that
year, workers in Poznan, Poland had risen against the government.

Repression was swift and ferocious, with dozens of rebels killed and wounded
by security police. A poor example to follow, you might think, but in
October Poland’s communist government granted many of the rebels’ demands
and after tense negotiations the Soviets agreed to reduce their troop levels
in Poland.

Posthumously, the slaughtered rebels had won. Following the death of Stalin
in 1953, the long, bleak Stalinist winter appeared to be waning. Winds of
change were beginning to blow through the eastern bloc.

But that is to view the events of 23 October 1956 with the deceptively calm
gaze of hindsight. At the time they were astonishing and unexpected: the
Soviet Empire had not received a challenge on this scale since the end of
the war.

The Hungarian Uprising, or Revolt, or Revolution, flared up out of
practically nothing, the disgruntlement of a few thousand students.

It swept up in its onward surge millions of ordinary people, overthrew the
government and forced the withdrawal of the Soviet forces – then was crushed
and pulverised by Soviet military might with the deaths of tens of thousands
of ordinary people, all within the space of three tumultuous weeks.

It was the most dramatic eruption that the Soviet empire was to experience
before its final eventual disintegration – of which it was the first omen.
“The whole thing was so spontaneous, we didn’t really think things through,”
says Gergely Pongratz, a leader of the uprising. “We just took a gun and
acted.”

The revolution was a textbook demonstration of Alexis de Tocqueville’s tenet
that “the most dangerous moment for a bad government is that in which it
sets about reform.”

Following Khrushchev’s denunciation of Stalin in February 1956, Stalin’s
hardline representative in Hungary, Matyas Rakosi, responsible for thousands
of atrocities against political opponents, was elbowed from power and the
rehabilitation of more liberal communists began.

Communism itself was not being challenged, only the imposition by the
Soviet Union of its own brutal and foreign way of doing things.

The official communist student union, for example, was rejected on 16
October by students in the city of Szeged, who re-established their own
democratic student organisation that had been banned under Rakosi. Their
example flashed across the country, imitated everywhere. Suddenly freedom
seemed possible.

The Russians had liberated Hungary at the end of the Second World War,
and Stalin’s agreement with Churchill guaranteed that the Soviets would have
only a 50 per cent share in the rule of the country.

That proportion was steadily raised by Rakosi’s so-called “salami” tactics,
taking more power one slice at a time, and within a few years Stalin’s
placemen were fully and ruthlessly in charge everywhere.

Compulsory nationalisation and collectivisation followed, with the familiar
results of collapsing productivity and economic stagnation. But the ubiquity
of the much feared state security police, the AVH, and Rakosi’s readiness to
imprison, torture and execute his enemies, ensured that dissent remained
mute.

Now that was suddenly changing. Students and writers, no longer prevented
from banding together freely, set up discussion groups to thrash out the
nation’s dire problems. Thousands joined in.

To show solidarity with Polish rebels, students decided to honour a hero of
Hungary’s War of Independence, General Bem, who was of Polish origin. On
23 October 1956, 20,000 demonstrators duly thronged around the general’s
statue in Budapest.

Some sang the banned national anthem, with its rousing chorus, “We vow, we
vow, we will no longer remain slaves…” Someone cut the hammer and sickle
out of the Hungarian flag, leaving a hole in the middle, and suddenly
everyone was doing it.

We have seen these intoxicating events in our own age, Prague’s Velvet
Revolution, the overthrow of Ceausescu, the huge demonstrations that brought
down Milosevic in Serbia. This was the grand-daddy of them all.

The demonstrators had started gathering in the afternoon, and by 6pm they
numbered 200,000, including tens of thousands of workers. The majority of
them had moved to the Parliament Building.

Even now there was no sign of trouble. “There are big student
demonstrations,” a Budapest editor told an English colleague. Any trouble?
“A few nationalist slogans, but everything is good-humoured.”

Charlie Coutts, Budapest correspondent of Britain’s communist Daily Worker,
told his office on the phone, “The quiet and orderly behaviour of the
marchers is impressive.”

At this point the regime decided to come down hard. At 8pm Erno Gero,
general secretary of the Communist Party, went on the radio and made a
speech rubbishing the demonstrators’ demands.

They were reactionaries, counter-revolutionaries, he said, “hostile
elements” bent on disturbing “the present political order in Hungary.” The
timing was exquisite: Gero had lavished oil on the flames.

The demonstrators showed no sign of going home – and Gero’s attempt to
regain the authoritarian upper hand merely made them furious. A large crowd
gathered outside the headquarters of Radio Budapest, which was heavily
guarded by the AVH. A delegation of some 300 students got inside, bent on
broadcasting their demands, but they were detained.

The temperature of the event began to soar. Rumours began swirling through
the crowd that the delegation inside the radio station had been shot. AVH
men in the building threw tear-gas canisters from upper floors and began
firing at the demonstrators. An ambulance bringing more weapons and
ammunition to the AVH was intercepted by the crowd.

Hungarian Army soldiers arrived to disperse the demonstrators but, harangued
by them, they tore the red stars from their caps and sided with the crowd.
The revolution with no leaders and no plan was giddily underway.

That night the embattled Hungarian government appealed to the Soviet Union
to send troops and tanks “to suppress a demonstration that was reaching an
ever greater and unprecedented scale.”

The next day, Soviet tanks rumbled into place outside parliament building
and at major bridges and crossroads. But there was no stopping the
revolution. Many of the Soviet soldiers, like the Hungarian ones,
fraternised with the revolutionaries and sympathised with their aims.

Charlie Coutts reported seeing a peaceful demonstration encountering a
Soviet tank. “The tank stopped,” Coutts told Peter Fryer, the British
journalist who wrote a book, Hungarian Tragedy, about the uprising, “a
soldier put his head out, and the people in front of the crowd began to
explain they were unarmed and were engaged in a peaceful demonstration. The
soldier told them to jump on the tank; a number of them did so, and the tank
set off in the demonstration.”

When the crowd escorting the tank got to Parliament Square they found three
more tanks and two armoured cars, all on the demonstrators’ side, all
fraternising cheerfully. Then shots rang out from parliament, fired by AVH
secret police, leaving 30 demonstrators dead.

The tipping point of the conflict had suddenly arrived: the government
collapsed, its leaders fled to Moscow, the revolutionary forces were
chaotically in control. By 28 October, after six days of chaos, a ceasefire
was agreed, and the Soviet forces returned to barracks. A huge hole had been
blown in the iron curtain.

Two things are remarkable about the ensuing week of freedom: the West made
no attempt to exploit the chaos in Hungary, despite Khrushchev’s premonition
that it would try to “add Hungary to Egypt.”

The Suez crisis was monopolising the West’s attention, and the Cold War had
reached a sort of stasis. And, although the Stalinists had ranted about
“reactionaries” from day one, the revolutionaries in the countryside were in
no doubt that what they were doing was reforming communism.

“The Government will retain from the Socialist achievement everything which
can be…used in a free, democratic and Socialist country,” said a member of
the new government on 3 November. “No one must dream of going back to the
world of counts, bankers and capitalists,” said another leader. But Moscow
was not interested in democratic socialism.

With the declared neutrality of Austria, which Hungary wished to emulate,
the Soviets saw the Warsaw Pact unravelling before their eyes. Hardliners in
the Kremlin insisted that the process be stopped. And there was only one way
to do it.

On 1 November, 12 new Soviet divisions began grinding into Hungary, many
of them brought from remote corners of the Union and with no knowledge of
European languages. By 3 November they had Budapest encircled.

By dawn the next morning shots were heard all over the city, and prime
minister, Imre Nagy, made a final, futile broadcast appeal to the world.
“Operation Whirlwind” was underway, combining air strikes, artillery
barrages and tank and infantry attacks. It was a grossly unequal fight.

Peter Fryer wrote, in a dispatch censored by the Daily Worker: “For four
days and nights Budapest was under continuous bombardment. I saw a once
lovely city battered, bludgeoned, smashed and bled into submission…It was
heart-breaking.”                                       -30-
———————————————————————————————–
LINK: http://news.independent.co.uk/europe/article1919300.ece
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20.     WHEN HUNGARY TOOK ON THE SOVIET BEAR
       The Hungarian revolution and fight for freedom – 13 days between
                              October 23 and November 4, 1956.

By Sandor Szakaly, The Australian
New South Wales, Australia, Wed, October 25, 2006

THE Hungarian revolution and fight for freedom – 13 days between October
23 and November 4, 1956 – is a central event in Hungarian history and a
turning point of the last century. On this 50th anniversary it is well to
recall what really happened and the causes of the revolt.

After their electoral fraud in the 1947 elections, the Hungarian Communist
Party and the Social Democrat Party dominated the government of Hungary.
The country was sovietised and by 1949 a tyrannical regime resembling
Joseph Stalin’s was created.

Living standards and the gross domestic product fell and by the early 1950s
Hungary was in economic, social and political chaos.

In the beginning of 1956 – mostly due to tensions and debates in Poland –
people became politicised. DISz, the Hungarian Communist Party’s youth
organisation, led and organised the debate. Most people wanted the return of
ousted prime minister Imre Nagy, who briefly led reforms following Stalin’s
death in 1953.

The party itself wanted change; it swapped one notorious Moscow-trained
communist, Matyas Rakosi, for another, Erno Gero, but also brought the
out-of-favour Janos Kadar in from the cold.

The last important impulse was the revolutionary fervour and the party
changes in Poland, which the Soviet Union accepted.

As so often in history, the students took the first important steps.

On October 22, 1956, the students published their 14 points, which included:
reformation of the government under Nagy; withdrawal of the Soviets; new
secret ballot elections; freedom of the press; realistic industrial
production norms; worker autonomy at plants; relief for peasants from
compulsory deliveries to the state; and removal of the hammer and sickle
from the flag.

The Hungarian political leaders’ paralysis and indecision emboldened the
students’ demands. A march of solidarity for the Polish people planned for
the next day became a huge demonstration in Budapest’s streets.

More than 100,000 people demonstrated for Nagy, who mistook one aspect
of their mood: they did not want to be called comrades. Clashes followed at
Hungarian Radio and by then the uprising was armed.

The Hungarian Workers Party’s central committee then decided it needed
Soviet help. But Gero believed the government could not formulate such a
request because of the events, so the request was sent by prime minister
Andras Hegedus after Soviet forces had been sent in.

Most researchers have thought the Soviets could have entered Hungary under
the Warsaw Treaty of May 14, 1955. The question, however, is more
complicated. The peace treaty of 1947 allowed Soviet forces in Hungary to
uphold transport routes to the Soviet zone in Austria.

However, the Soviets had moved out of Austria by October 1955, in keeping
with an agreement to leave by December 31 that year. The Warsaw Treaty
allowed the joint stationing of forces in Hungary according to future
arrangements between the countries and joint protection needs.

But before or at the time of the Hungarian uprising, no such arrangements
had been made, and the necessary agreement under the treaty came into effect
on September 15, 1957, 10 months after the uprising was put down.

As neither the peace nor the Warsaw treaties allowed the Soviets to come in
or stay, we can now say the Soviet intervention violated international law.

The uprising became a revolution on October 28, 1956, when the Nagy
government acknowledged the national movement, that it served the interests
of the whole nation and that the movement was a source of power or
authority.

The government made new promises – withdrawal of Soviet forces from
Budapest, dissolution of the State Defence Authority secret police, the
raising of pensions and the minimum wage – which were completely in harmony
with the public’s demands.

After this, Nagy’s goal became a neutral and independent Hungary. The
parties dissolved earlier were re-formed and new ones were founded.
Non-communist politicians were brought into the Nagy government formed

on October 27.

From October 30, well-known politicians such as Bela Kovacs, Zoltan Tildy
and Ferenc Erdei became members of the cabinet.

The discussions about the withdrawal of the Soviet forces that were to be
started, the secession from the Warsaw Treaty, the announcement of the
country’s neutrality were all signs of revolutionary changes and were more
than was originally demanded.

The Hungarian Socialist Worker Party (Magyar Szocialista Munkaspart) was
not the only political force any more but one of many parties agreed with
the political requests on the need for change. The leader of the party was
Kadar, who at that time seemed to be the comrade of Nagy.

US foreign policy then changed the flow of Hungarian events. The US was
understood not to want to interfere, and to not prefer a country next to the
Soviet Union that might not be that friendly with it. This allowed the
Soviet Union to deal with the situation at will.

Thus after negotiations with Tito, Khrushchev and the presidium of the
Communist Party of the Soviet Union decided to lead an armed attack. Two
members of the Nagy government – Kadar and Ferenc Munnich – left for
Moscow on November 2 and agreed to establish a counter-government in
opposition to the legal Hungarian government and to ask the Soviets for
help.

On November 4, the Soviet forces stationed in Hungary and, transported there
from Romania and the Soviet Union, overran the country. The Hungarian
revolutionaries fought against the might of the Soviet forces, but their
power was very limited and fighting ebbed away between November 10 and15,
1956.

A Revolutionary Worker Farmer government had taken power on November 4.
By the spring of 1957 the Communist Party government, backed by the Soviet
armed forces, completely controlled the country.

The results? Hungary remained in the communist bloc. About 200,000 people
fled to the West. Damage to national property ran into many billions of
forints. The fighting within Hungary was estimated to have claimed 3000 to
4000 lives.

A further 400 people were executed between 1957 and 1963 for playing an
active role in the counter-revolution, as the Kadar regime called the
events.

Most of the executed were workers, students and employees aged 20 to 35.
There were only a few older people or people belonging to the elite of the
era before 1945 among them.

The goal of the Hungarian revolution and fight for freedom of 1956 was not
to re-establish the pre-1945 past but to create a democratic, new Hungary.
Thanks to 1956 this became possible, but only in 1990.        -30-
—————————————————————————————————
Sandor Szakaly is a professor in 20th-century Hungarian history at
Semmelweis University, Budapest, and a former director of the Military
History Institute and Museum of Hungary. This is an edited version of his
October 19 commemorative lecture in the Hungarian Revolution series at the
Centre for Contemporary European Studies at the University of Melbourne.
—————————————————————————————————
http://www.theaustralian.news.com.au/story/0,20867,20638405-12332,00.html
—————————————————————————————————
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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, www.eugeniadallas.com.
15. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
16. SWIFT FOUNDATION, San Luis Obispo, California
17. TRAVEL TO UKRAINE website, http://www.TravelToUkraine.org,
A program of the U.S-Ukraine Foundation, Washington, D.C.
18. BUYUKRAINE.ORG website, http://www.BuyUkraine.org.
A program of the U.S.-Ukraine Foundation, Washington, D.C.
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AUR#779 Oct 24 For Cheap Gas What Is Ukraine Willing To Give To Russia?; IKEA; Tanks; Nuclear Fuel; WTO Football; Vat Reimbursement: Back To Corruption

========================================================
 ACTION UKRAINE REPORT – AUR           
                  An International Newsletter, The Latest, Up-To-Date
                       In-Depth Ukrainian News, Analysis and Commentary

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

                                                                        
ACTION UKRAINE REPORT – AUR – NUMBER 779
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., TUESDAY, OCTOBER 24, 2006
             
               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.            UKRAINE, RUSSIA SET TO INK NEW GAS AGREEMENT 
AFX Europe (Focus), Kiev, Ukraine, Monday, Oct 23, 2006

2LOW PRICE FOR NATURAL GAS DEPENDS ON KIEV AGREEING TO

By Oleg Gavrish, Kiev; Natalia Grib
Kommersant, Moscow, Russia, Friday, October 20, 2006

3.   UKRAINE MAY RENOUNCE PRO-NATO DRIVE IN EXCHANGE

             FOR ACCESS TO CHEAPER RUSSIAN NATURAL GAS
Itar-Tass, Moscow, Russia, Friday, October 20, 2006

4.    UKRAINIAN DEPUTY PM DENIES POLITICAL CONCESSIONS
                              TO RUSSIA IN GAS PRICE TALKS 
Interfax-Ukraine news agency, Kiev, in Russian 1311 gmt 23 Oct 06
BBC Monitoring Service, United Kingdom, Monday, Oct 23, 2006

5“FRANCHUK: NAFTOHAZ UKRAYINY IN STATE OF BANKRUPTCY”
       “I b
elieve that this is the most cunning special operation since the time of
       Ukraine’s independence that Russia has conducted in relation to Ukraine.”

INTERVIEW: With Ihor Franchuk, former head of Chornomornaftohaz
INTERVIEW BY: Alla Yeryomenko, Zerkalo Nedeli,

Kiev, Ukraine, in Russian 21 Oct 06; pp 1, 4
BBC Monitoring Service, United Kingdom, Monday, Oct 23, 2006

6.        SWEDISH IKEA FURNITURE GIANT URGES UKRAINE PM

                    TO CUT RED TAPE FOR $2.0 BLN INVESTMENT
Business Digest, Sofia, Bulgaria, Monday, October 23, 2006

7.   UKRAINE’S STATE-OWNED ARMOURED TANKS PRODUCER TO
           SUPPLY $100 MILLION IN MILITARY EQUIP TO PAKISTAN
Business Digest, Sofia, Bulgaria, Monday, October 23, 2006

8VINNYTSIA FACTORY TO OVERHAUL KA-26 HELICOPTERS TO MEET
EUROPEAN UNION STANDARDS FOR BULGARIA, ROMANIA, HUNGARY
By Marina Tsygankova, The Ukrainian Times
Kyiv, Ukraine, Monday, October 23, 2006

9HEAD OF UKRAINE’S NATIONAL NUCLEAR POWER GENERATING

      CO & U.S. AMBASSADOR TAYLOR DISCUSS NUCLEAR ENERGY                          
              Enerhoatom and Westinghouse Electric Company (United States)
                       Second stage of the nuclear fuel qualification program.
Ukrainian News Agency,  Kyiv, Ukraine, Monday, October 23, 2006

10.   MAJOR MEDICINE PRODUCER IN LVIV INTENDS TO INVEST
 OVER $10 MILLION IN ITS MAIN PRODUCTION FACILITIES BY 2012

Ukrainian News Service, Kyiv, Ukraine, Monday, October 23, 2006

11.               REFORMS TAKE A BACK SEAT AS UKRAINE’S
                             LEADERS STRUGGLE FOR POWER
By Roman Olearchyk and Stefan Wagstyl
Financial Times, London, UK, Tuesday, October 24 2006

12.                                     WTO FOOTBALL
ANALYSIS & COMMENTARY: By Yuriy Skolotiany
Zerkalo Nedeli On The Web, Mirror-Weekly
International Social Political Weekly, No. 40 (619)
Kyiv, Ukraine, Saturday, 21 – 27 October 2006

13.            VAT REIMBURSEMENT: BACK TO CORRUPTION           

ANALYSIS AND COMMENTARY: By Roman Bryl, Ukraine Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Monday, October 23, 2006

14.     “YUSHCHENKO BANKING ON OTHER DONETSK PEOPLE”
    Choice of new Ukrainian security chief signals shift in president’s backing
COMMENTARY:
By Oleksandr Chalenko, Mykhaylo
Hannytskyy and Yaroslav Malyuta
Segodnya daily newspaper, Kiev, in Russian 11 Oct 06; p 2
BBC Monitoring Service, United Kingdom, Thursday, Oct 12, 2006

15.    ARSENII YATSENIUK MOST LIKELY CANDIDATE TO LEAD

Ukrainian News Agency, Kyiv, Ukraine, Monday, October 23, 2006

16.       OUR UKRAINE: TO BE OR NOT TO BE…AN OPPOSITION
ANALYSIS & COMMENTARY: By Tammy Lynch
THE ISCIP ANALYST, An Analytical Review, Volume XIII, Number 3,
Institute for the Study of Conflict, Ideology & Policy at Boston University,
Boston, MA, Thursday, 19 October 2006

17.    OLD SURPRISES; NEW REALITIES IN UKRAINE’S POLITICS
                   History proves that freedom dies when criticism ends.
COMMENTARY
: By Oksana Bashuk Hepburn, Canada

Maidan, Kyiv, Ukraine, October 2006

18.            CANADIAN SLAVONIC PAPERS – LATEST ISSUE
Oleh Ilnytskyj, Canadian Slavonic Papers
An Interdisciplinary Journal Devoted to Central and Eastern Europe
Volume 48, Numbers 1-2, March-June 2006
Department of Modern Languages and Cultural Studies
University of Alberta, Edmonton, Alberta, CANADA

19.                   NEW UKRAINIAN FOLKLORE MATERIALS

Natalie Kononenko, Kule Chair of Ukrainian Ethnography
University of Alberta, Modern Languages and Cultural Studies
Edmonton, Alberta, Canada, October 2006

20 PRESIDENT YUSHCHENKO APPROVES NATIONAL CONCEPT

Ukrainian News Agency, Kyiv, Ukraine, Saturday, October 14, 2006
========================================================
1
 UKRAINE, RUSSIA SET TO INK NEW GAS AGREEMENT 

AFX Europe (Focus), Kiev, Ukraine, Monday, Oct 23, 2006

KIEV – Ukraine and Russia were due to sign a gas price agreement on

Tuesday aimed at calming Europe’s concerns about the reliability of Russian
energy supplies and pressuring Ukraine to moderate its pro-Western policies.

Under the deal, Kiev would face a higher gas bill, although still well under
the top price Russia demanded at the height of an energy crisis ten months
ago.

The Ukrainian government press service said only that Russian Prime Minister
Mikhail Fradkov would sign “three inter-governmental agreements” with his
Ukrainian counterpart Viktor Yanukovich.

However, Yanukovich said last week that he expected to sign a deal on
natural gas imports at the meeting and that the agreed price would amount to
“no more than 130 usd” for 1,000 cubic meters of gas, up from 95 usd paid
currently.

The question of gas prices is a critical one for Russian-Ukrainian
relations, as nearly all of Ukraine’s energy imports come from Russia, and
80 pct of Russian gas supplies to Europe pass through Ukraine.   -30-
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2. LOW PRICE FOR NATURAL GAS DEPENDS ON KIEV AGREEING TO

     A PACKAGE OF MOSCOW’S ECONOMIC & POLITICAL DEMANDS
 
By Oleg Gavrish, Kiev; Natalia Grib
Kommersant, Moscow, Russia, Friday, October 20, 2006

MOSCOW – Kommersant has learned from sources in the government and

in Gazprom that Moscow expects to complete gas negotiations successfully
when the prime ministers of the two countries meet in Kiev on October 24.

The price of the natural gas will be under $130 per 100 cubic meters, if
Kiev agrees to a package of Moscow’s demands, including economic and
political demands.

During Russian Prime Minister Mikhail Fradkov’s visit to Kiev on October 24,
conditions for the delivery of gas to Ukraine in 2007 will be discussed. A
source close to Gazprom says that big hopes are being placed on that
meeting.

A few days ago, Ukrainian Prime Minister Viktor Yanukovich said that draft
federal budget had been written based on a gas price of $130 per 1000 cu. m.
and everything will be put in writing during the meeting of the Russian-

Ukrainian trade and economic commission in Kiev on October 24.
Fradkov will make a one-day visit to Kiev on that date.

Kommersant has learned that Moscow is offering Kiev a package deal. A
high-placed source in the Ukrainian leadership says that Ukraine is
promising several concessions to Russia in exchange for gas.

[1] The first is that a national referendum on NATO membership is to be

held in the near future, which is intended to put an end to all thoughts of
joining that organization.

Holding a referendum on NATO was one of the basic positions of Yanukovich’s
Party of the Regions. Then a clause on a national vote on NATO membership
was included in the so-called Universal signed on August 4 by the president
and the leaders of the anticrisis coalition.

Polls show that about 60 percent of Ukrainians are against NATO membership
and the results of such a referendum today would be completely predictable.
Thus Moscow is blocking Ukraine’s way to NATO, at least for several years,
by demanding a referendum.

[2] The second demand mentioned by the source is that Ukraine leave the
Russian fleet based in Sevastopol alone until 2017, as they had agreed, and
possibly even prolong the agreement.

Moscow and Kiev concluded a 20-year agreement on the Black Sea Fleet in
1997. But a scandal has been simmering around the fleet for more than a year
now.

[3] The third condition on the deal is a Ukrainian guarantee to cooperate
with Rosukrenergo for at least five years, as agreed on, without initiating
a reconsideration of that agreement.

[4] Fourth, Kiev has to promise to receive gas from Turkmenistan exclusively
through Russia.

[5] Finally, Ukrainian must not change the transit price for Russian gas.

Those proposals were discussed at the meeting between Russian President
Vladimir Putin and Yanukovich in September. At that time, Russian

Ambassador to Ukraine Viktor Chernomyrdin told Kommersant that a price
of $130 per 1000 cu. m. was being discussed.

The elements of the deal are at different stages of advancement. Yanukovich
met with First Deputy Prime Minister of Russia and chairman of the board of
directors of Gazprom Dmitry Medvedev in the Crimea on October 15 and
discussed options for gas deliveries between 2007 and 2010.

That was reported by the press service of the Ukrainian cabinet. The results
of the negotiations were not reported, however.

It is also known that Ukrainian Minister of Fuel and Energy Yury Boiko met
with Russian Minister of Industry and Energy Viktor Khristenko in Moscow to
discuss state support for the gas business from both sides.

Gazprom is not commenting on information about the price of gas to Ukraine.
The Swiss company Rosukrenergo, 50 percent of which belongs to

Gazprombank and 50 percent to Dmitry Firtash, stated yesterday that contracts
for 2007 are at the stage of signing.

On the Ukrainian market, they called the economic conditions on the deal
“maintenance” of the current situation. “The agreement of January 4, 2006,
was made for five years, so obviously it is a matter of fulfilling current
obligations,” a Rosukrenergo spokesman in Kiev said. A source at Naftogaz
Ukrainy agreed, saying that “Russia has proposed that Ukraine preserve the
existing procedure for gas supplies.”

Minister Boiko stated at the beginning of this month that the transit price
for Russian natural gas across the territory of Ukraine would be kept at
$1.60 per 100 cu. m. per 100 km. in 2007, which is significantly lower than
world rates ($2.40-3.20) The Ukrainians decided on that in connection with
the replacement of Russian gas by Central Asian gas.

The fee for the transit of Russian gas in Ukraine mirrors the fee for the
transit of Central Asian gas in Russia. “After the conversion to Central
Asian gas, it will be unprofitable for Ukraine to change any transit fees
for Russia. That would lead to a direct loss,” explained president of the
Association of Natural Gas Traders Roman Storozhev. “Therefore, that
Russian demand has been met.”                        -30-
————————————————————————————————

LINK: http://www.kommersant.com/p714949/Referendum_NATO_Ukraine/
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3. UKRAINE MAY RENOUNCE PRO-NATO DRIVE IN EXCHANGE
          FOR ACCESS TO CHEAPER RUSSIAN NATURAL GAS

Itar-Tass, Moscow, Russia, Friday, October 20, 2006

MOSCOW – Ukraine, whose pro-Western President Viktor Yushchenko
has embarked on a course of bringing his country to NATO, seems to be
inclined to give up the goal in exchange for access to less expensive
Russian natural gas.

Russian Prime Minister Mikhail Fradkov and Ukrainian Prime Minister
Viktor Yanukovych will hold talks related to gas in Kiev next week.

Yanukovich said the country’s budget for next year has been drafted and
the price of gas factored into it stands at 130 U.S. dollars per thousand
cubic meters. This contrasts with Russia’s previous statements that it would
like to sell gas to the Ukrainians at a price a hundred U.S. dollars bigger.

Moscow-based Kommersant daily indicated that Russia has offered a
package deal to Ukraine.

[1] First, Ukraine holds a national referendum on NATO membership, in

which most Ukrainians are likely to answer in the negative, since more than
a half of Ukrainian nationals oppose that prospect.

“The referendum will shelve Kiev’s striving for alliance membership for
quite some time,” Kommersant said.

[2] Secondly, Moscow proposes the Ukrainians to leave alone the Russian
Black Sea Fleet based in the Crimea until 2017, the way the agreement on
deployment of naval forces that Moscow and Ukraine signed in 1997
envisions. Scandals around the Black Sea Fleet, which is one of Russian
Navy’s four major territorial branches, have been raging for about a year.

[3] Thirdly, the terms of the hypothetical deal presuppose that Ukraine should
continue cooperating with Rosukrenergo company in the gas sphere over
the next five years according to bilateral agreements on gas and that it
will not demand their revision.

[4] Fourthly, Kiev is expected to promise that it will receive Turkmenistani gas
via Russia only and, last but not least,

 
[5] that it will not alter the fixed rates for transits of Russian gas to European
countries via a ramified system of pipelines stretching across Ukrainian territory.

In response to this, Ukraine will be able to buy gas for 130 U.S. dollars
per thousand cubic meters instead of 230 U.S. dollars.

Sources told Kommersant the proposals were discussed during September
talks in Moscow between President Putin and Prime Minister Yanukovich.

Gazprom executives did not issue any comments on the information, while
spokespeople for the Swiss company Rosukrenergo, which is owned fifty-
fifty by Gazprombank and businessman Dmitry Firtash, said the agreements
for 2007 are still in the phase of signing.

Gazprom and Ukraine’s oil and gas monopoly Naftogaz Ukrainy agreed at
the beginning of the year that gas will be supplied to that country for 230
dollars per thousand cubic meters.

The sides established then that supplies will be handled by Rosukrenergo,
which will sell gas to Ukrainians for 95 dollars per thousand cubic meters,
while the difference in the price will be covered though inclusion in the
fuel balance of gas imported from Turkmenistan, Uzbekistan and Kazakhstan,

The latter fuel accounts for two-thirds of all supplies and is sold at 55
dollars to 65 dollars per thousand cubic meters.

In the meantime, the data of sociological polls in Ukraine show that about
60% respondents there dislike the idea of their country’s joining NATO
— the percentage that makes results of a hypothetical referendum quite
predictable.

A poll taken by the Nikolai Gavrilov Analysis Service from October 1
through October 3 showed that three-fourths of those polled would not
support accession to NATO even if Ukraine were given membership of the
EU as a prize for this.

The idea of solving the NATO problem through a nationwide referendum
was one of the basic program provisions of Yanukovich’s Regions Party.
After that, an article on holding the referendum was included in the
so-called Universal (Charter) of National Unity that President Yushchenko

and leaders of the anti-crisis parliamentary coalition signed August 4.

Yanukovich made a statement in August, in which he urged the authorities to
suspend adoption of the Plan of Action on NATO Membership as the
population had very sparce information on it.

The Supreme Rada, Ukraine’s national parliament, issued a resolution soon
afterwards where it approved of Yanukovich’s position, and cabinet ministers
joined the MPs in endorsing it the next day.

The ministers said this position reflected the domineering moods among
Ukrainians.

Reaction from NATO came through its press service that told Kommersant-
Ukraina newspaper the alliance would keep its doors open for the
country but the process of accession should be based on real achievements.

It is noteworthy that Kiev did not receive an invitation to attend a NATO
summit due in Riga November 28 and November 29. The information was
revealed by Ukrainian Foreign Ministry’s chief press spokesman Andrei
Deshitsa.

The decision was taken in Brussels following Yanukovich’s statement that
the country was unready to join NATO, Deshitsa said.

On the face of it, Boris Makarenko, a deputy director general of the Center
for Political Technologies believes it would be highly unrewarding for
Yanukovich to press forward with the referendum now.

“Ukraine won’t get into NATO until the referendum is held and that’s why
Yahukovich will have limitless opportunities for bargaining with Russia,”
Makarenko indicated.

He believes that the main thing for the Prime Minister — the most powerful
Ukrainian politician now — is to avoid deterioration of relations either
with the West of with Russia.

“He will be sending signals in both directions to see where the yield is
bigger,” Makarenko said.

As for President Yushchenko, his positions are so feeble now that it would
be totally irrational for him to raise the NATO issue, since he might
suffer another loss on it, the expert said.                  -30-
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

========================================================
4.  UKRAINIAN DEPUTY PM DENIES POLITICAL CONCESSIONS
                            TO RUSSIA IN GAS PRICE TALKS 

Interfax-Ukraine news agency, Kiev, in Russian 1311 gmt 23 Oct 06
BBC Monitoring Service, United Kingdom, Monday, Oct 23, 2006

KIEV – Ukrainian Deputy Prime Minister Andriy Klyuyev has categorically
rejected statements that the Ukrainian government is ready to make political
concessions that go beyond the political interests of Ukraine at gas talks
with Russia.

“The current government’s constructive work and effective management in the
gas sector are a key component that makes us hope for the positive outcome
of the talks between Ukrainian Prime Minister Viktor Yanukovych and his
Russian counterpart Mikhail Fradkov,” Klyuyev said in an interview with
Interfax-Ukraine on 23 October.

A number of Ukrainian media reports last week assumed that the Ukrainian
government managed to get a privileged price of gas of 130 dollars [for
2007] in comparison to neighbouring countries because of political
concessions to Russia in European integration, the [Russian] Black Sea

Fleet [deployed in Ukraine’s Crimea] and privatization.

Klyuyev said that the topics the Ukrainian media referred to, are not on the
agenda of bilateral intergovernmental negotiations, whose key objective is
to improve the efficiency of economic cooperation between Russia and
Ukraine.

[Passage omitted: Russian Prime Minister Mikhail Fradkov arrives in

Ukraine on 24 October.]                                     -30-
————————————————————————————————
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5. “FRANCHUK: NAFTOHAZ UKRAYINY IN STATE OF BANKRUPTCY”
              Ukraine’s energy minister accused of mismanaging gas industry
      “I believe that this is the most cunning special operation since the time of
      Ukraine’s independence that Russia has conducted in relation to Ukraine.”

INTERVIEW: With Ihor Franchuk, former head of Chornomornaftohaz
INTERVIEW BY: Alla Yeryomenko, Zerkalo Nedeli,

Kiev, Ukraine, in Russian 21 Oct 06; pp 1, 4
BBC Monitoring Service, United Kingdom, Monday, Oct 23, 2006

The former head of Chornomornaftohaz, Ihor Franchuk, who is contesting his
dismissal in court, heavily criticizes Fuel and Energy Minister Yuriy Boyko
for his activity as Naftohaz Ukrayiny chairman in 2003-05.

In an interview, Franchuk implies that Boyko is Moscow’s agent infiltrated
into Ukraine to bankrupt the state monopoly Naftohaz Ukrayiny and free
market space for Russian Gazprom-affiliated companies.

The following is the text of the interview Franchuk gave to Alla Yeryomenko
entitled “Ihor Franchuk: Naftohaz Ukrayiny in state of bankruptcy” published
in the Ukrainian analytical weekly Zerkalo Nedeli on 21 October; subheadings
have been inserted editorially:

The facts that the start of the heating season in Ukraine was disrupted
[central heating is normally switched on 15 October], that Naftohaz Ukrayiny
[state oil and gas company] has not been an independent, let alone an
influential company on the domestic gas market for a long time, and that
Naftohaz’s affiliate company, Haz Ukrayiny, actually has no gas to be able
to supply the sharply increased demands of enterprises of municipal heating
are a logical outcome of the activity of Naftohaz leadership in recent
years.

And whereas some time ago everything happening in the gas sector was
explained, to put it mildly, by the lack of professionalism of the state
company’s management, now that the oil and gas complex and power engineering
of Ukraine have been virtually handed over to the complete control of the
twice ex-head of Naftohaz, the fuel and energy minister, Yuriy Boyko, we can
probably talk about targeted work, well-planned, by someone (not only in
Ukraine), the result of which evidently should be


[1] the collapse of Naftohaz,
[2] the surrender of Ukraine’s national interests and
[3] direct expansion of non-Ukrainian capital, in particular of [Russian gas
monopoly] Gazprom to the whole Ukrainian market as such rather than
just the oil and gas market.

Zerkalo Nedeli has written several times, expressing its theories of what is
happening, about how Naftohaz Ukrayiny is being deliberately taken to the
slaughter.

Ihor Franchuk also has his own theory. He is party to the deeds of Ukraine’s
oil and gas industry, since from 2001 right up to 29 August 2006 he headed
the State Joint-Stock Company (SJC) Chornomornaftohaz [Black Sea Oil and
Gas], which is part of Naftohaz Ukrayiny.

However, Mr Franchuk does not consider himself dismissed even now, since he
intends to prove that his work contract was extended to 2011 by the chairman
of the supervisory board (!? – Ed.) of Chornomornaftohaz and former head of
Naftohaz Ukrayiny, Oleksiy Ivchenko. Perhaps it is this circumstance that
explains why Franchuk avoids talking about the dark period in the life of
Naftohaz when it was headed by Ivchenko.

But it was not about his dismissal that we talked with Franchuk at the
editorial office of Zerkalo Nedeli, but about the situation in the country’s
oil and gas industry as a whole and in Naftohaz in particular over the
period from 2003 to the present day.

In a word, about how we sank into such a “gas-free” life. We hope that
Franchuk realizes what he said in the interview.

NAFTOHAZ IN GOOD HEART WHEN BOYKO TOOK OVER
[Yeryomenko] Mr Franchuk, in 2003 Naftohaz Ukrayiny was headed by the
present fuel and energy minister, Yuriy Boyko.

In what condition, in your opinion, did he find Naftohaz Ukrayiny and what
was the position of Ukraine then on the post-Soviet and European gas
markets?

[Franchuk] At the time of Yuriy Boyko’s arrival, the system of Naftohaz
Ukrayiny had about 10bn cubic metres of gas in underground storage (its own
gas). In those prices its value was about 600m dollars. Naftohaz had about
300m dollars in Gazprom accounts.

True, there was a current debt to Turkmenistan of 150m dollars. But
nevertheless, the company’s positive balance amounted approximately to

700m dollars with tax obligations to the state fully paid.

Apart from that, Naftohaz Ukrayiny had a balance of gas within the country.
It had the possibility to export its gas, including to countries of Europe
to support its investment projects and to have the financial potential to
supply gas to the population at a comparatively low price.

Through its pricing policy Naftohaz fully covered all exploitation
expenditure in the modernization and exploitation of the gas transport
system.

It worked with Gazprom as an equal in questions of supplies to Europe. At
that time there was no blatant diktat on the part of Gazprom and could not
have been!

Ukraine had intergovernmental agreements up to 2015 and contracts with
Russia and Gazprom, where all the conditions of delivery and transit of the
gas were clearly fixed.

Apart from that, the agreement up to 2007 with Turkmenistan allowed us
annually to buy Turkmen gas at a volume up to 30bn cubic metres.

A draft agreement with Turkmenistan up to 2025 had also been drawn up for
signing on annual supplies at a volume of 50bn-60bn cubic metres of gas.

Such was the situation in Naftohaz Ukrayiny at the time that the chairman of
its board, Kopylov, left and when Boyko arrived there.

Of course, this state of affairs did not suit Gazprom. Already then the
Russian gas monopoly had embarked on implementing its plan of expansion into
Ukraine.

From 2003 Gazprom and the highest officials in Russia undertook masses of
attempts to accuse Ukraine of stealing export gas.

They were saying everywhere that the Ukrainian gas transport system (GTS)
was unreliable and needed urgently to be modernized etc. Nevertheless,
Gazprom did not allow anyone to approach Naftohaz in questions of the work
as an independent national company.

When in 2003 Boyko was delegated to Naftohaz Ukrayiny, it looks as if a
“road map”, as the president [Viktor Yushchenko] now likes to say, was
elaborated.

In my view, Boyko was given a clear task, including four basic points:
[1] to weaken Naftohaz economically;
[2] “to bury” forever direct contracts for gas supplies from Turkmenistan;
[3] to mix up definitively the system of the balance of gas; and to make
[4]Naftohaz fully dependent on external gas suppliers.

                                 BOYKO’S FIRST MOVES
What was the Naftohaz head’s first move? At his initiative, a new commercial
structure – Eural Trans Gas [ETG] – was brought into the scheme of supplying
Turkmen gas to Ukraine instead of the Itera company that had been operating
on the instruction of Gazprom.

But with the former gas supply operator we had an excellent point in all the
agreements saying that all the Central Asian gas that Itera supplied was
sold on Ukrainian territory and at a price of 50 cents lower than what we
were buying from Russia.

Itera did not engage in direct sales of gas on Ukrainian territory as RUE
[Swiss-registered RosUkrEnergo middleman company] now does. It was
exclusively Naftohaz Ukrayiny that did that.

But it did not end with the introduction of the new commercial structure:
ETG was allowed first to engage in the transport of Turkmen gas up to the
Ukrainian-Russian border and then in transporting gas via Ukrainian
territory and its storage in Ukrainian underground stores (prices for ETG
were specially cut from nine to two and a half dollars). The price tariff
for gas transit was also cut for that structure.

And later, instead of Naftohaz, only that operator got the right to export
gas from Ukraine. Thereby a full stop had been put to the possibility of
Naftohaz to work independently both with Turkmenistan and on the European
gas market.

[Yeryomenko] Turkmenbasy [Turkmen President Saparmyrat Nyyazow] was

also put in a difficult position; after the conclusion of the union between Kiev
and Moscow, he essentially was left one to one with Gazprom.

[Franchuk] For Turkmenistan Ukraine was the only possibility of getting
Turkmen gas out to Europe. At present that channel does not exist.

[Yeryomenko] What happened in the financial plan of Naftohaz Ukrayiny?

[Franchuk] Imaginary, mythical projects of extraction and prospecting of gas
and oil “are being developed” in Libya, Egypt, the UAE and Kazakhstan.
Naftohaz is starting to attract enormous credit resources.
                         GRADUAL LOSS OF INDEPENDENCE
[Yeryomenko] When did this process get going?

[Franchuk] Precisely under Boyko. Naftohaz was getting into financial
dependence on creditors. Naturally, not a single financial resource (credit,
loan) was used for its intended purpose.

What is more, during the time that Boyko was in charge of Naftohaz there was
no modernization of the GTS, even though it was constantly declared.

When preparations were under way to set up a gas transport consortium, the
whole of Ukraine’s GTS was studied. And back then it was calculated that it
needed about 700m dollars for the complete modernization of the GTS,
including compressor stations and construction of new pipeline strings.

[Yeryomenko] Annually?

[Franchuk] Altogether. This is not such big money for a company like
Naftohaz Ukrayiny. It could be saved up comparatively quickly through
tariffs on the transportation of transit gas.

Further, losses of gas (technological, commercial) have mounted in a
surprising way for regional gas supply companies: from 1.3bn to 2.6bn-3bn
cubic metres a year.

We must find out where that gas is. Technological losses have grown in
Ukrtranshaz [Ukrainian gas transport company] both production and
commercial.

Mr Boyko consolidated all this by legislation in order to safeguard himself
from criminal investigations as to why and whence those losses occurred.

We did not start pumping more gas; the population did not start consuming
more. But in two years the commercial losses for regional gas supply
companies increased by over 120 per cent!

At the same time a surprising thing is happening, which, in essence, also
remained unnoticed by many people – work started on buying up stakes in
Ukraine’s gas supply companies.

[Yeryomenko] Everyone was chasing the regional electricity supply companies
and few people were interested in the regional gas companies.

[Franchuk] Share packages in regional gas companies started being
consolidated exactly at the time when Boyko headed Naftohaz. And although at
that time the work was not taken to its logical conclusion, it is being done
now.

And its aim is very simple: through the influence of a commercial structure
connected with Russia, UkrGazEnergo, to get control of the system of
marketing gas directly to consumers, to wit the population. In that case its
becomes far simpler to influence people economically, psychologically and
even politically.

Having a gas supplier today in the person of a company linked with Russia
(RUE) and having a marketing company today linked with Russia
(UkrGazEnergo), we are losing our state independence. Today it is a matter
not even of the privatization of the GTS.

It is a matter of the privatization of Ukraine with all its inhabitants and
enterprises. I think that today’s prime minister [Viktor Yanukovych] does
not yet fully realize the danger connected with the appointment of Boyko as
Ukraine’s fuel and energy minister.

[Yeryomenko] You are expressing yourself so precisely about Yanukovych, as
if shielding him… [ellipsis as published] Do you not allow the possibility
that he didn’t want to realize it?

[Franchuk] I believe that today he does not yet realize the depth of the
problems that will be disclosed in six months, in a year at most. And he
will be faced with the facts. I say this seriously, because today the prime
minister is the prime minister, the president is the president, and I
believe that in this situation they are in the same boat.

Just as Boyko blackmailed [ex-President Leonid] Kuchma at one time, so he
later blackmailed Yushchenko. How did it end?

With an agreement under which [ex-Prime Minister Yuriy] Yekhanurov was
removed and in accordance with which, the price of gas for Ukraine rose
abruptly to 95 dollars for 1,000 cu.m. The next one to be blackmailed will
be the prime minister.

The collapse of the country’s oil and gas system today is racing ahead and
one has the impression that “they” are in a great hurry, understanding that
if the regional gas companies are not “yielded”, and share packages in them
are not consolidated, if modernization of the GTS doesn’t start, primarily
of the compressor stations, (for which Naftohaz cannot pay) and if, as a
result, for debts to commercial structures connected with Russian capital it
all moves into the ownership of those structures and will not be run by
them, then “they” will not carry out their main task, for which the special
operation was carried out, codenamed “getting Boyko penetrated into
Ukraine”.
       MOST CUNNING SPECIAL OPERATION BY RUSSIA
I believe that this is the most cunning special operation since the time of
Ukraine’s independence that Russia has conducted in relation to Ukraine.

[Yeryomenko] Do you know what is now happening at the negotiations between
Ukraine and Russia?

[Franchuk] At present they are discussing how to consolidate the result they
got when Ukraine was deprived of its resources… [ellipsis as published]

[Yeryomenko] Do you mean legalizing the January 2006 accords between
Gazprom, Naftohaz and RUE, transferring them to an intergovernmental
protocol?

UKRGAZENERGO CONSOLIDATES RUSSIAN  CONTROL IN UKRAINE
[Franchuk] Absolutely correct. And in essence today information about whose
gas was pumped and at what price into Ukrainian underground storage
facilities shows what we can expect next year.

[Yeryomenko] Can we talk about this in a bit more detail, please, because
Boyko says that 25bn cubic metres of gas have been pumped into the
underground storage facilities. But there has been no word about whose gas
it is and at what price Ukraine will be able to use it when the cold weather
comes.

[Franchuk] Of the 25bn cubic metres only 5bn are Ukrainian gas, and there
has never been such a low indicator in the history of Ukraine. The rest is
gas from commercial structures.

RUE has pumped in about 10bn cubic metres at the so far declared price of
230 dollars per 1,000 cubic metres. But that gas will cost the final
consumer 40 dollars more, taking transport expenses into account.

[Yeryomenko] What about the other 10bn cubic metres?

[Franchuk] This is gas of UkrGazEnergo pumped in at a price of 130 dollars.
On sale it will cost 170 dollars for 1,000 cu.m.

Therefore in January next year I think that the question will be put in all
probability to the government of Ukraine that Naftohaz is bankrupt and that
henceforth RUE should be in full control of Ukraine’s entire gas balance.

[Yeryomenko] Why do you say that gas pumped in at 130 dollars by
UkrGazEnergo is completely a non-Ukrainian resource? After all, 50 per cent
of the stock in that company belongs to Naftohaz.

[Franchuk] Because 50 per cent is precisely a formula specially chosen to
ensure that the management of UkrGazEnergo is absolutely unsinkable.

There is only an appearance that this structure has something to do with
Naftohaz. Yes, the company will declare minimum profit. But it is illusory
to count on there being some dividends and that Naftohaz will receive its
share of the profit.

[Yeryomenko] Do you know the financial indicators of UkrGazEnergo since it
started operating?

[Franchuk] They report their financial indicators and are currently actively
attracting credit resources for pumping gas.

It is exactly the policy that Boyko pursued in Naftohaz: getting the maximum
amount of credit resources from Western institutions (and, in essence, their
Russian owners) so as to be able later from that side too, and not just from
the side of Russia, to blackmail Ukraine if some steps are taken to restrict
the profitability of that company’s work or cut its share of the market, or
remove it from the market altogether.

[Yeryomenko] Boyko set the start of the RUE scheme, but then Naftohaz was
headed by Ivchenko, who also excelled in external loans. Are you
deliberately not commenting on his work and the Ivchenko period of Naftohaz?

[Franchuk] It is still too early to comment on the period when Naftohaz was
headed by Ivchenko, because there is a lot of criticism today, and often it
is not entirely professional.

In my opinion, Ivchenko continued working on the same rails that were
created by the previous leadership of Naftohaz, and even had he been a
super-professional of the oil and gas industry, he still could not have
changed the situation.

[Yeryomenko] I vehemently disagree with you on this. And yet, if Boyko is
now dismissed, can the situation be changed?

[Franchuk] It is not too late today to talk about partnership and normal
relations with Russia, Turkmenistan, Uzbekistan and Kazakhstan.

Prime Minister Yanukovych, who is currently supported by Moscow, is able

at will to tackle certain questions, including economic ones, at the highest
level.

He should act to ensure that Ukraine keeps its system of Naftohaz and
returns to the period of probably 2003 in the framework of intergovernmental
agreements signed at the time.

The mistakes made in that period must be admitted, let’s put it that way,
but it must be understood that Russia should be a partner rather than the
owner of Ukraine as a state in questions of energy.
                                    NAFTOHAZ SIDELINED
[Yeryomenko] Boyko recently said that contracts had already been agreed for
2007 for 42bn cubic metres of Turkmen gas, 8.5bn of Kazakh gas and 7bn of
Uzbek gas for Ukraine.

[Franchuk] In all his statements it’s a matter of commercial structures.
Naftohaz at present does not have a single direct contract with gas
producers, and will not have.

[Yeryomenko] When you told the media that the present head of Naftohaz,
Volodymyr Sheludchenko, should not allow his opinion to be ignored, what did
you have in mind?

[Franchuk] The fact that Naftohaz today is effectively removed from accords
being reached that are disadvantageous for Ukraine or criminal in relation
to it, but which Naftohaz has to carry out.

And so Sheludchenko now (and I consider him to be a good specialist and I’ve
worked with him) needs to gather a group of experts who would analyse the
situation in Naftohaz. If, of course, he wants to.

[Yeryomenko] The scheme whereby Boyko appears to have reached agreement

on gas supplies to Ukraine seems strange.

It means that Gazeksport, which is the owner of the Turkmen volume, sells
that gas on the Russian border to RUE. RUE then brings it here, as far as
the border and sells it to Naftohaz and UkrGazEnergo. Why such complexities,
if it is possible to conclude direct contracts?

[Franchuk] I completely agree that there has been a deliberate pushing aside
(moreover through decree, and this is documented) of Naftohaz from work

with Central Asian countries.

This means that Naftohaz today is deprived of the possibility to transport
gas, deprived of the possibility to talk about any joint projects in those
countries among other things.

It is not too late today to break that scheme. I think that for those
central Asian states Ukraine is very important, as is, by the way, work
precisely with the state company as well. And they also perceive today’s
work exclusively through middlemen very negatively there, I think.

But they are forced to consider that they have to accept the position that
Boyko is voicing today at all meetings as the position of the Ukrainian
government.

I doubt profoundly that all these nuances and all these subtleties today are
known either to Prime Minister Yanukovych or the deputy prime minister for
the fuel and energy complex, [Andriy] Klyuyev.

[Yeryomenko] You say that Yanukovych today could have reached agreement

on changing the Kremlin’s attitude. But a loyal attitude of the Kremlin does
not happen just like that; correspondingly the prime minister will have to
make some economic and political concessions.

Payment will have to be made, for example with the time frame of WTO entry
suitable for Ukraine, European integration, enterprises and so forth.

[Franchuk] We don’t need to pay, but to receive dividends from the fact that
80 per cent of Russian gas is exported via Ukrainian territory. After all,
gas is the most important source of replenishing the budget and
stabilization fund of the Russian Federation.

Therefore, today we don’t have to ask, but to say how it was in 2003 and
what we are demanding in order for us to have equal relations as a partner.

If we’re talking about a gas transport consortium, the conversation needs to
be continued not in the Ukraine-Russia framework, but in the framework of
the countries that produce and consume the gas.

[Yeryomenko] According to our information, the Ukrainian side is proposing a
scheme whereby it will not only be Russia and Ukraine that will join the
consortium, as Moscow wants, but also France, Germany, Turkmenistan and

even Libya. What do you think of a scheme like that?

[Franchuk] The scheme is somewhat weird. The scheme may certainly include
Ukraine, Russia, European countries and countries that are extracting and
transporting gas today – Turkmenistan, Uzbekistan and Kazakhstan. That’s the
formula according to which the structure can work.

[Yeryomenko] Are you calling the scheme “weird” because of Libya?

[Franchuk] It’s one of those mythical projects to which it will again be
necessary to attract financial resources and deepen still further the
serious position of Naftohaz at the level of financial obligations.

[Yeryomenko] How do you feel about Boyko’s idea to remove from the
composition of Naftohaz the company that engaged in resuscitating the gas
transport system and purchases of equipment for it?

It is being said that this company might be headed by Sheludchenko’s deputy,
Ukrayinskyy. In terms of purchases he has eaten up not puppies, but a whole
borzoi.

[Franchuk] I believe that today it is a direct violation to create some
structures that engage in such targeted purchases. In essence, it has even
been banned by legislation and a number of provisions of the Anti-Monopoly
Committee.

Companies such as, for example, Chornomornaftohaz and Ukrnafta should
independently conduct a transparent policy on the purchase of all equipment.

And the fact that an attempt is now being made to consolidate it into a
single system and send money flows there shows that once again purchases
will be absolutely non-transparent and the amounts of contracts will
unjustifiably reach astronomical figures.
Naftohaz virtually bankrupt, needs restructuring

[Yeryomenko] Why is it, do you think, that Sheludchenko, who demanded the
dismissal of his deputy, [Ihor] Voronin, has not taken the matter to its
conclusion, and the latter still combines the duties of deputy head of
Naftohaz and chairman of the board a commercial structure – UkrGazEnergo?

[Franchuk] Mr Voronin heads a commercial structure, UkrGazEnergo, which is
working in the interests of Russia. It is precisely the Russian side that
needs the company’s business.

And I think that Mr Sheludchenko has enough arguments today allowing him to
say that first and foremost the domestic system of Naftohaz Ukrayiny needs
to be protected from the encroachments of other sides and countries. And
this applies to all staff in Naftohaz, and his deputy all the more so.

[Yeryomenko] We know that Sheludchenko in a fit of temper threatened to
resign if Finance Minister [Mykola] Azarov insisted on a significant
increase in the tax burden on Naftohaz. It is a matter of a difference, even
in comparison with this year, of several billion dollars.

Sheludchenko, who inherited Naftohaz in a catastrophic condition, not having
the necessary levers of influence and enough financial resources (after all,
the greater part of industrial gas consumers, who actually bring income to
gas traders, are clients of UkrGazEnergo today) believes that it will
finally finish off Naftohaz.

In other words, Sheludchenko today has to fight on several fronts. But how
to resolve the contradiction with the finance minister, who can also be
understood – he has a threadbare budget?

[Franchuk] I dealt with Naftohaz budget problems for a fairly long time, in
particular Chornomornaftohaz, and I can say that the attitude of the finance
minister (in relation to any economic entity) will always be like this: get
as much tax as possible for the budget. The attitude of any taxpaying
entity, including state companies, is to pay less.

I think that in this situation a balance has to be found and a transparent
scheme for payment by Naftohaz in the form not only of rates, but also of
specific figures that would be based on the company’s production and finance
programme.

But at present we should not be talking of full payment by Naftohaz even in
the framework of this financial year, since Naftohaz’s debts are only
increasing. To date the overall debts of Naftohaz, the basis of which was
laid in 2003-05, amounts to about 18bn hryvnyas.

According to the conclusion of the auditing company Ernst & Young, Naftohaz
Ukrayiny is in essence in a state of bankruptcy. But people prefer not to
speak about this today.

[Yeryomenko] Do you not consider that Naftohaz Ukrayiny – a structure
created it is known by whom, it is known with whom and what for, that has
turned into a Klondyke for a group of the powers that be, penetrated by
corruption through and through – simply should not exist today?

Let today’s affiliate companies and enterprises of Naftohaz act as
independent economic entities – Ukrtranshaz, Ukrvydobutok,
Chornomornaftohaz, Ukrnafta… [ellipsis as published] Why such
concentration?

[Franchuk] Naftohaz Ukrayiny was initially created as a holding company. But
there is a gulf between the idea of its creation and the present situation
in Naftohaz.

In this situation I would talk of the need to restructure it in order to
ensure that every structure in the oil and gas complex can work
independently and is run either by the Cabinet of Ministers or the State
Property Fund or the Fuel and Energy Ministry.

In order for it to show its profitability, it would pay taxes but would be
an independent economic entity.

But at present all the independent enterprises in Naftohaz Ukrayiny that
should have become joint-stock companies have been scrapped, apart from the
last enterprise, Chornomornaftohaz.

An absolute vertical power structure has now been set up for Naftohaz to
manage all the structures that are part of Naftohaz.

      DOMESTIC GAS EXTRACTION BEING DISCOURAGED
[Yeryomenko] It is known that Ukraine’s requirement for gas amounts to about
76bn cubic metres a year (not including so-called technical gas). The
population and the state-funded sphere consume about 20bn a year. That is
exactly how much is extracted in Ukraine each year.

Another 14bn cubic metres of gas are needed for enterprises of heating and
communal service energy. But payment for transit of Russian gas allows us to
buy that volume.

The remainder of the 76bn cubic metres of annual gas consumption in Ukraine
goes basically to privatized industry. So why should the state make any
economic and political concessions to Russia in haggling for cheaper gas for
major non-state capital?

[Franchuk] Supplying gas and haggling over prices for industry are indeed
not a function of the state. The function of the state is to balance the
internal gas market, of which at present is not even a trace.

We have to understand that Ukrainian industry today, buying gas from
UkrGazEnergo and other middlemen, is investing its profit in the gas
extraction of other countries rather than investing funds in the development
of domestic gas extraction.

It is incomprehensible in our situation why the Ukrainian government is not
doing anything, not stimulating investment in its own hydrocarbon extraction
and development of the domestic raw materials base.

I’ll quote the following example. In the last four years Chornomornaftohaz,
going through all the stages of bans and permissions, including the cabinet,
had the opportunity to sell gas to all categories of consumers, including
industrial ones.

Through this an investment component appeared that was invested in
developing the Ukrainian section of the Black Sea shelf.

As a result, in three years the extraction of gas and condensate doubled and
foundations were laid for supplying Crimea in 2007 with 100 per cent of its
own gas extraction.

But it turned out that now such a prospect is not beneficial, because there
is a commercial structure supplying gas to Ukraine’s industry, including
Crimea – UkrGazEnergo.

As a result, a paradoxical situation has come about: the country no longer
needs the gas being extracted on the Black Sea shelf!

Of the 1.4bn cubic metres of gas that will be extracted by the end of the
year, Chornomornaftohaz can sell only 500m cubic metres to the population.

The remaining gas is in underground storage free of charge. And now an
emergency situation has come about to halt gas extraction on the shelf and
“stop” the wells. If that happens, then it will be impossible to reopen the
wells: it’s an irreversible process.

[Yeryomenko] So Chornomornaftohaz today cannot sell gas extracted in

Ukraine on the domestic market?

[Franchuk] Yes. This is an example of how an individual enterprise (part of
Naftohaz Ukrayiny) literally in four months is being artificially brought
into default. The next stage is bankruptcy.

And a state enterprise that can at present ensure gas extraction and an
increment in extraction of 500-600 per cent in the next 10 years, in essence
may be liquidated as a front-ranking enterprise in the domestic oil and gas
industry.

What is more, it is a state enterprise operating on the Black Sea shelf, and
that shelf is 132,000 km, i.e. a quarter of the territory of Ukraine.

A tendency to cut oil and gas extraction in Ukraine is clearly discernible.
And that means only one thing – an increase in dependence not even on
volumes of imports of those hydrocarbons, but on indirect importers.
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6. SWEDISH IKEA FURNITURE GIANT URGES UKRAINE PM
             TO CUT RED TAPE FOR $2.0 BLN INVESTMENT

Business Digest, Sofia, Bulgaria, Monday, October 23, 2006

KYIV – Swedish furniture giant and mall operator IKEA is ready to spend

$1.5 bln (1.198 bln euro) to $2.0 bln (1.597 bln euro) for mall construction
projects in Ukraine, company representatives Sven Holm and Lennart Dahlgren
told Ukrainian Prime Minister Viktor Yanukovich on October 18, 2006, at a
meeting intended to untie some red tape for the ample investment.

Yanukovich welcomed IKEA’s expansion plans and expressed hopes that

the Swedish retailer would serve as an example to other strategic foreign
investors wishing to set foot in Ukraine.

[Editor’s note: For several years IKEA has unsuccessfully attempted to
purchase land for its first store in Ukraine.

On October 10, 2006, the Kyiv regional council offered a plot near the
city’s ring road area, where one ha is estimated at some $5.0 mln (4.0 mln
euro), the Ukrainian News Digest reported.] (Alternative name: Kiev)

www.zadonbass.org; http://www.aiidatapro.com.          -30-
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7. UKRAINE’S STATE-OWNED ARMOURED TANKS PRODUCER TO
         SUPPLY $100 MILLION IN MILITARY EQUIP TO PAKISTAN

Business Digest, Sofia, Bulgaria, Monday, October 23, 2006

KYIV –  Ukraine’s leading state-owned armoured tanks producer Malyshev, in
the eastern Kharkiv region, and the Pakistani Defence Ministry are to sign a
contract for military equipment supplies worth $100 mln (79.3 mln euro) in
December 2006, Malyshev CEO Genadyi Gritsenko announced on October

23, 2006 but declined to give further details.

The Pakistani Government has assured Gritsenko that Malyshev will obtain the
supply order by the end of 2006. The substantial deal will boost Malyshev’s
financial results in the first two months of 2007, Gritsenko added.

Malyshev plant is one of the largest manufacturers of tanks and heavy-duty
diesel machines in the Commonwealth of Independent States (CIS). It also
produces equipment for the mining and oil industries.

[Editor’s note: Malyshev ended 2005 with a loss of 43.51 mln hryvnias ($8.6
mln/6.8 mln euro), as its net revenue slumped 33.7 pct or by 98.1 mln
hryvnias ($19.4 mln/15.4 mln euro) on the year, the Ukrainian News Digest
reported.] (Alternative name: Kharkov) www.ugmk.info,

http://www.aiidatapro.com.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
     NOTE: Send in a letter-to-the-editor today. Let us hear from you.
========================================================
8. VINNYTSIA FACTORY TO OVERHAUL KA-26 HELICOPTERS TO MEET
EUROPEAN UNION STANDARDS FOR BULGARIA, ROMANIA, HUNGARY

By Marina Tsygankova, The Ukrainian Times
Kyiv, Ukraine, Monday, October 23, 2006

KYIV – The protocol of certification of the helicopter Ka-26 has been signed
by the Vinnytsia aircraft factory and the Kamov aircraft design office of
Russia.

According to Oleg Yaroslavsky, director of the factory, the European Union
will stop operation of Ka-26 on the territory of its member countries
starting March 2007.

In this connection Bulgaria, Romania and Hungary are faced with the problem
of using about 100 helicopters Ka-26.

Each aircraft must be overhauled and certified in compliance with the
requirements of the European Aviation Union. Previously, the Kamov design
office, together with the Vinnytsia factory, developed technologies of
renovating Ka-26.                                 -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]

========================================================
9. HEAD OF UKRAINE’S NATIONAL NUCLEAR POWER GENERATING
    CO & U.S. AMBASSADOR TAYLOR DISCUSS NUCLEAR ENERGY                          
           Enerhoatom and Westinghouse Electric Company (United States)
           reached an agreement in June on introduction of the second stage
                            of the nuclear fuel qualification program.

Ukrainian News Agency,  Kyiv, Ukraine, Monday, October 23, 2006

KYIV – The Enerhoatom national nuclear power generating company’s President
Andrii Derkach and United States Ambassador to Ukraine William Taylor have
discussed Ukrainian-American cooperation in the area of nuclear energy. The
press service of Enerhoatom announced this to Ukrainian News.

In particular, during a meeting on October 20 Derkach thanked Taylor for the
United States’ assistance in improving the safety systems at Ukrainian
nuclear power stations, training personnel, and in other areas.

‘We are prepared to deepen mutually beneficial cooperation within the
framework of an understanding that should be based on clear observance of
the Constitution of Ukraine, the Constitution of the United States, and the
interests of the two countries,’ Derkach said.

Taylor said he was personally involved in the drafting of proposals for the
United States government regarding provision of assistance to Ukraine in the
area of nuclear energy and that he participated in the realization of
several projects at the initial stage of the cooperation.

Taylor gave a positive appraisal of the level of economic development of
Ukraine and the level of public participation in the public and political
life and said that deepening coordination between the government of the two
countries would have a positive effect on development of mutually beneficial
partnership in the energy industry, particularly the nuclear energy
industry.

Derkach called on the United States to engage in constant dialogue and said
that he would be guided exclusively by the interests of the country in the
post of president of Enerhoatom while focusing his primary attention on
raising the level of safety at nuclear power stations and establishing
maximum transparency in the financial, production, and social aspects of the
company.

As Ukrainian News earlier reported, Enerhoatom and Westinghouse Electric
Company (United States) reached an agreement in June on introduction of the
second stage of the nuclear fuel qualification program, which is being
realized at the third reactor of the Southern Ukrainian nuclear power
station (Mykolaiv region).

The project for qualification of nuclear fuel makes it possible to bring
American fuel in line with Ukraine’s standards after which it will be
possible to use it at Ukraine’s nuclear power plants.

Enerhoatom operates the four nuclear power plants in Ukraine and accounts
for about 50% of the total quantity of electricity generated in Ukraine.  -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
10.  MAJOR MEDICINE PRODUCER IN LVIV INTENDS TO INVEST
 OVER $10 MILLION IN ITS MAIN PRODUCTION FACILITIES BY 2012

 
Ukrainian News Service, Kyiv, Ukraine, Monday, October 23, 2006

KYIV – Halychfarm, a major medicine producer based in Lviv, intends to
invest USD 10.315 million in development of its main production facilities
by the year 2012.

Ihor Kolodii, director of production operations at the Arterium corporation,
to which Halychfarm belongs, disclosed this to Ukrainian News.

Specifically, Halychfarm intends to invest USD 6.240 million in development
of production of solutions for injections by the year 2010: USD 0.700
million in 2006, USD 2.930 million in 2007, USD 1.910 million in 2008, and
USD 0.700 million in 2009.

Moreover, Halychfarm intends to invest USD 2.860 million in development of
its phyto-chemical production facilities by the year 2011: USD 0.250 million
in 2007, USD 1.730 million in 2008, USD 0.703 million in 2009, and USD

0.150 million in 2010.

It also plans to invest USD 1.215 million in production of ointments and
gels by the year 2012: USD 0.646 million in 2007, USD 0.400 million in 2008,
and USD 0.169 million in 2011.

As Ukrainian News earlier reported, the Arterium corporation, which consists
of the two major drug producers Kyivmedpreparat (Kyiv) and Halychfarm,
intends to invest UAH 57 million in production modernization and quality
control during the year 2006.

According to information from Halychfarm, 24.95% of the shares in the
company belong to Kyivmedpreparat, 19.73% to Newport Inc. (United

States), 19.73% to Statex Corp. (United States), and 19.43% to EastCoast
United Inc (United States).

Halychfarm produces about 80 prescription and non-prescription medicines,
including 15 medicines developed by the company.          -30-
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11.       REFORMS TAKE A BACK SEAT AS UKRAINE’S
                      LEADERS STRUGGLE FOR POWER

By Roman Olearchyk and Stefan Wagstyl
Financial Times, London, UK, Tuesday, October 24 2006

A political compromise thrashed out this summer by Ukrainian President
Viktor Yushchenko and Viktor Yanukovich, his rival in the disputed 2004
presidential elections, has yet to deliver the stable reform-oriented
government it promised.

Mr Yanukovich took office as prime minister with Mr Yushchenko’s support in
return for backing for the president’s agenda of economic liberalisation and
integration with Nato and the European Union.

But Mr Yanukovich’s ties with Ukraine’s business oligarchs, who are loath to
offend Russia for fear of losing cheap energy supplies, have tempered his
enthusiasm for Mr Yushchenko’s aims.

The resulting power struggle has created concerns in the west about Mr
Yushchenko’s ability to develop his foreign policy and dismantle the corrupt
business-to-bureaucrat links that flourished under his authoritarian
predecessor, Leonid Kuchma.

Mr Yushchenko had hoped the deal with Mr Yanukovich, struck after three
months of negotiations following parliamentary elections in March, would end
conflicts dating back to the 2004 Orange Revolution.

The agreement came as a shock for many of the president’s supporters, who
saw it as a betrayal of the Orange Revolution. But Mr Yushchenko hopes he
can close an unhealthy divide between his supporters in western Ukraine and
Mr Yanukovich’s backers in the east.

However, the president’s plans for a broad coalition were dashed last week
when his own Our Ukraine party refused to back the Yanukovich government.

This failure has undermined him. It has also weakened the Yanukovich
government by cutting the coalition’s strength in parliament from more than
300 (enough to override presidential vetoes) to about 240 seats in the
450-member chamber.

Unlike Mr Kuchma, Mr Yushchenko cannot bulldoze his way out of trouble.
Under the settlement that ended the Orange Revolution, the president
surrendered powers to parliament, notably the right to nominate governments.
He is fighting to maintain his influence – but the prime minister is fighting back.

The most public example of the power struggle has been over Nato. When Mr
Yanukovich visited Brussels last month, Mr Yushchenko expected him to ask
for a membership action plan – a co-operation programme that precedes Nato
membership. But Mr Yanukovich did no such thing.

Mr Yushchenko remains committed to Nato. Mr Yanukovich wants the issue
postponed, saying the Ukrainian public today opposes Nato membership so a
referendum would be lost.

On the EU, both men say they want membership and both recognise that it will
be a long process. Mr Yanukovich said in an FT interview that Ukraine should
work towards establishing both a “free trade zone” with the EU and a “free
economic zone” with Russia.

In Mr Yanukovich’s view, membership of the World Trade Organisation – a
prerequisite for deeper EU co-operation – should be pursued in tandem with
Russia.

The two men have different philosophies. In Mr Yushchenko’s view, Ukraine’s

destiny lies with the west, though good relations with Russia must be maintained.
Mr Yanukovich and his business backers are more pragmatic.

They see long-term advantage in westward integration, not least because it
will help boost the value of their industrial assets.

But with the EU in no hurry to accommodate Kiev, they see no reason to rush
to Brussels. Instead, they want to maximise short-term benefits from Moscow
in the form of cheap energy.

This policy is not so much a pro-Russian stance as a conservative defence of
the status quo. Mr Yanukovich accepts energy prices will rise but he is
playing for time.

Meanwhile, the economy is growing fast, at 6 per cent this year. Foreign
investors relish the opportunities but are worried that instead of pushing
ahead with reforms officials are busy re-establishing influence over
business and perhaps discriminating in favour of oligarchs.

One example, is a battle over VAT refunds. After the Orange Revolution, the
government set up rules for prompt VAT repayments for exporters, ending a
longrunning dispute.

Mr Yanukovich suspended the payments – except for the oligarch-dominated
steel industry. The tax authorities argue vertically integrated steel
companies are easy to police, but some foreign investors see the action as
discriminatory.

But bureaucrats and oligarchs alike recognise the Orange Revolution has
changed Ukraine, especially in creating independent media.

Petro Poroshenko, an Our Ukraine leader, says: “I think there’s a big danger
of them wanting things as they were three years ago. But it’s impossible,
because this is a different country now.”                -30-
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12.                               WTO FOOTBALL

ANALYSIS & COMMENTARY: By Yuriy Skolotiany
Zerkalo Nedeli On The Web, Mirror-Weekly
International Social Political Weekly, No. 40 (619)
Kyiv, Ukraine, Saturday, 21 – 27 October 2006

Never, in the whole history of its independence, has Ukraine been so close
to the WTO accession as now. Yet it looks like this year we will not see the
final goal scored in this game for a higher place in the world trade league.

The new players of the national political team started passing the ball to
one another in their field, but the exercise is so cyclical and pointless
that the spectators suspect they have fixed the match with the opponent and
are even receiving instructions from the contending team’s coach.

Like in real football, time is running out very quickly, but the desperate
fans still pray for a miracle: may they show their will again; may they do
it. Alas, the miracle does not occur. No wonder, given the selection of
players in Ukraine’s political premier league.

A long-awaited breakthrough towards WTO accession that the country made
in late 2005-early 2006 (thanks to it getting market economy status, signing
a mutual market access protocol with the USA and the US Congress’ abolition
of the Jackson-Vanick amendment) inspired our hopes for a victory in the
thirteenth WTO season.

However, the play-makers who assumed leading positions in the national
political team, having formed the “anti-crisis coalition”, rushed to
implement the strategy and tactics with regard to WTO incongruous with
their commitments under the National Unity Pact.

Prime Minister Viktor Yanukovych was the first to kick the ball into
Ukraine’s own goal by stating, on the fourth day in office, that his Cabinet

planned to revise all draft laws required for the country’s accession to WTO
so as to make sure they expedite Ukraine’s national interests and ascertain if
there was a need to discuss them in public hearings.

The Prime Minister’s request that the WTO partners postpone the reduction
of import duties for a few years was also indicative of his government’s
true intentions.

Of course, it could be justified by the desire to create better conditions
for Ukrainian manufacturers but, in fact, it entailed additional
negotiations with the WTO member-states who had already signed bilateral
agreements with our country.

Understandably, new negotiations meant yet another delay with the WTO
accession. These new negotiations could take years.

Characteristically, Viktor Yanukovych first mooted these ideas while
introducing the new-old Foreign Minister Borys Tarasiuk to the ministerial
staff.

In principle, one could expect something like that from the Party of Regions
leader, given that back in November 2005 the party announced, through its
press service, it would not vote for the WTO laws “because of the conflict
of interests with Ukrainian manufacturers”.

So Mr Yanukovych’s stand over the matter would have looked consistent
but for his signing the National Unity Pact, which provides (in Item 24) for
“immediate adoption of legislation required for joining the World Trade
Organization and accession to this organization by the end of 2006″.

This document is not legally binding, it is true, but in August, upon
returning from Moscow, the Prime Minister assured the President that he
would work towards including the Pact provisions into the Cabinet’s action
programme.

Later Yanukovych, on numerous occasions, advertised the government’s
intention to ensure Ukraine’s speedy accession to WTO, albeit with a
reservation “on terms acceptable for Ukraine”.

In order to find out if the passage of WTO laws would create acceptable
conditions and terms, the Ministry of Economy held public consultations on
the draft laws pertaining to industrial and agrarian policy on 5-6 October
2006.

According to the official website of the Ministry of Economy, it invited
representatives of concerned central executive power bodies, manufacturers’
associations, civil society, academic and legal communities to take part in
the discussion.

The press release reads: “Based on the discussion outcomes, analytical
materials will be prepared and necessary amendments proposed so that the
Cabinet of Ministers could incorporate them into the draft laws and submit
the latter to Parliament”. Hence, there were no serious objections to or
criticisms of the draft laws.

Deputy Minister of Economy, Valeriy Piatnytsky confirmed this when
commenting on the WTO-relating processes for ZN:
“It is noteworthy that the WTO laws will not change the effective
legislative framework in any dramatic way, nor will they introduce any
sweeping regulatory innovations. Instead, they will just fill in the
existing gaps in legislation.

Our national legislation, for the most part, has been amended to meet the
standards and requirements of international organizations whose membership
Ukraine either gained in the previous years or is seeking at the moment. I
mean, in particular, the agreements currently in effect within the World
Trade Organization.

So these laws should be adopted, irrespective of our plans to join WTO.
Ukraine is already so closely integrated into the world economy that it
needs to harmonize its national legislation and trade regimes with the
international ones; otherwise we will never become active players on the
world market.

If we really want to maintain, and improve, our national economy’s
competitiveness in the world marketplace, we should grasp this opportunity
to complete the accession process: another chance could be a long time
coming.

We should revise and update our approaches to and instruments of protecting
national manufacturers. Permanent support of ineffective enterprises will
lead us to a dead end, so we should take an alternate route.”

Unfortunately, traditional bureaucracy hijacked the process of fine-tuning
the draft laws. On 11 October, Olexander Chaly, Deputy Head of the
Presidential Secretariat, declared that his office would foster a swift
passage of the required legislation in Parliament: “We have very little time
left for the adoption of all the necessary laws, since the decision on
Ukraine’s accession to WTO is due on 21 December”.

Yet the discussion of draft laws in the Supreme Rada Committee for Finance
and Banking, scheduled for 11 October never took place because, according to
the Committee Chair Petro Poroshenko, the Cabinet of Ministers failed to
submit them to Parliament.

Tensions were further heightened when Ian Boag, Head of the European
Commission Office in Kyiv, stated on 16 October that Ukraine’s accession to
WTO would be put off for another year unless the Supreme Rada passed the
WTO legislation by the end of the week.

He also underscored that the EU was going to start negotiating a free trade
agreement with Ukraine in early 2007, but will have to defer the talks
should the country fail to make it into the WTO.

On the same day, the press service of the Cabinet of Ministers, citing
Yanukovych’s speech at a joint session of the coalition coordination board
and the government, reported that the Prime Minister “expects Ukraine to
access to WTO in January-February 2007, provided the Supreme Rada
adopts the necessary legislation”.

According to the press service, Yanukovych insisted on speeding up the
consideration and passage of the WTO-related draft laws by the Rada. Later
that day Viktor Yanukovych said at a press conference that he instructed the
Cabinet to submit the drafts in question to Parliament by mid November.

As of October 16, he maintained, three drafts had been sent to the Rada,
another five were being analyzed by ministries and agencies, and the
remaining ones were being scrutinized by the Cabinet’s legal experts in
preparation for their discussion at one of the government’s forthcoming
meetings. “It will not take longer than two to three weeks,” – promised the
Prime Minister.

Amazingly, it was on 16 October that the conference board of the Supreme
Rada committee hears and faction leaders decided to reschedule for a later
date the parliamentary hearings on Ukraine’s progress in WTO accession.

Speaker Moroz tried to reassure the journalists that it did not mean the
Rada would also put off the deliberations of draft laws at the plenary
sessions during the week.

Thus, the parliamentary hearings on Ukraine’s preparation for the WTO
accession were rescheduled from 18 October to 1 November. Volodymyr
Zaplatynsky, Chair of the Supreme Rada Committee for Economic Policy, put
that down to the need for a “more careful preparation for the discussion, as
the WTO accession is a major policy issue of today”. In addition, he said
the Cabinet has yet to submit the WTO draft laws to Parliament.

President Yushchenko met with Speaker Moroz to voice his concern over the
situation with legislative support to Ukraine’s accession to WTO and warn
that he would resort to his constitutional powers so as to ensure compliance
with all accession procedures.

On 18 October, Hennadiy Udovenko made a statement in the Supreme Rada, on
behalf of the “Our Ukraine” faction, demanding that Parliament consider and
adopt all draft laws conducive to Ukraine’s WTO accession by 27 October.

“Our Ukraine reckons, – the statement reads, – that the top officials in the
government and Supreme Rada spare no means to freeze the discussion and
passage of required laws and disrupt Ukraine’s accession to WTO. It is
obvious that the anti-crisis coalition and officials that it delegated into
executive power bodies neglect Ukrainian people’s legitimate interests and
promote the interests of another state”.

In response, Speaker Moroz called these claims “totally groundless”. “If one
wants to accelerate this work, one can draft the legislation in question and
we will adopt it, – the Supreme Rada Chairman riposted. – In November, i.e.
by December 1 as envisioned by the schedule, we will have passed the laws,
provided they are properly prepared. And I am positive all of them will be
ready by that time. One cannot set tasks to be fulfilled by 26 October
knowing only too well that these tasks are unrealistic. I think it is a
wrong thing for the authors of the statement to do”.

Arseniy Yatseniuk, First Deputy Head of Presidential Secretariat, argued
that the draft laws should be adopted by 27 October and told the press that
President Yushchenko submitted his own package of legislation defining it as
top priority.

“If this package of 16 draft laws submitted by the President and three draft
laws that are already in Parliament are passed in the first reading by the
end of this week and finally adopted next week, we will be able to finalize
Ukraine’s accession process at the session of the unofficial working group
on October 27,” – said Mr Yatseniuk.

He reminded the journalists that the process of Ukraine’s accession to WTO
has been under way for 14 years: “If this is fast, tell me what is slow”.
Today Ukraine is amongst the few countries that still do not belong to the
WTO club, along with Yemen, Iraq, Iran, Afghanistan and Tajikistan.

A little earlier, however, MP Vitaliy Shybko, Chair of the Supreme Rada
Committee for Foreign Affairs, suggested Ukraine should not hurry to join
WTO: “We should not regard this process as a moving train that one wants to
jump into just to go somewhere”.

What is the bottom-line? None of the WTO draft laws were considered last
Thursday, in spite of their urgency and priority. Neither were they put on
Friday’s agenda. Instead, our “progressive” MPs prolonged for another year
tax vacations for agrarians, passing draft law #2299 of 10 October 2006
almost unanimously (with 422 affirmative votes out of 423 present
parliamentarians).

It is exactly what Ukraine will have to give up once it joins WTO.
Concurrently, MPs sent back for revision, without even looking at it, a
draft law cancelling the age requirement for imported motor vehicles, as
envisioned in WTO regulations.

Can the skeptics be right arguing that Yanukovych and Moroz agreed with the
Russian leadership on the synchronization of the two countries’ accession to
WTO during their respective visits to Moscow? And what does it all have to
do with the national strategic interests? Is it a component of the price
that we have to pay for the undervalued gas at USD 130 per 1000 cubic
meters?

Sad as it is, we have to admit, yet another again, that Ukraine can hardly
be expected to demonstrate spectacular advances in either foreign policy or
football.

Most probably, we will have to wait until generations change in both premier
football and political leagues.                           -30-
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LINK: http://www.mirror-weekly.com/ie/show/619/54858/

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13.     VAT REIMBURSEMENT: BACK TO CORRUPTION
                  During last several months VAT  reimbursement poor

ANALYSIS AND COMMENTARY: By Roman Bryl, Ukraine Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Monday, October 23, 2006

KYIV – After the return of Victor Yanukovich as PM and Mykola Azarov as
finance minister certain shortages in VAT reimbursement to big exporting
companies appeared.

Information regarding these shortages was announced on Oct 5, when the
FinMin informed that the plan on VAT reimbursement was 10.2% under

performed in Jan-Sep. And the situation worsened mainly in the last several
months. In particular, the reimbursement plan was only ¾ fulfilled in August
and eptember.

After receiving this information president Victor Yuschenko ordered
secretary of national Security and Defense Council Vitaliy Gayduk to examine
the situation and to pay special attention to corruption and selective
approach towards exporters that receive reimbursement.

Mainly exporters from Donetsk region receive VAT reimbursement in
advance —–

Earlier ex-finance minister Victor Penzenyk disclosed the information that
average level of VAT reimbursement made up 76.1% all over the country. But
at the same time exporters from Donetsk region obtained 222% of
reimbursement of the tax (i.e. they received the funds in advance).

On the other hand, the tax volume for companies from Volyn region amounted
only to 2.4% out of volume planned. Even Kyiv region the exporting power of
which is only 2-fold less compared to Donetsk region obtained 12-fold less
of reimbursement funds compared to Donetsk region.

Thus in Jan-Sep exporters from Donetsk region received USD 502mn of VAT
reimbursement, including USD 160 paid in advance.

General Prosecutor Office finds nothing suspicious in current scheme

of tax returns —–

After analyzing the data General Prosecutor Office decided to inquire about
possible corruption related to VAT reimbursement. However, it concluded that
there was no reason to believe that the tax is paid using the selective
approach.

General Prosecutor Office informed that government should pay USD 2.52bn of
reimbursed funds and it actually paid USD 2.48bn in Jan-Sep. So the gap is
too narrow, the Office concluded.

But at the same time the representatives of 10 largest exporting companies
informed that the combined debt of non-reimbursed funds made up at least USD
150mn. So, the figure is much higher than what was presented by General
Prosecutor Office.

Problems with VAT reimbursement also seen when Yanukovich was

PM in 2003-2004 —–

Nervousness of president Victor Yuschenko regarding problems with VAT
reimbursement can be easily understood. This tax belongs to the main of
state budget earnings and 23% of budget revenues come from this tax.

Notably, during the last year when officials made significant effort to
organize VAT reimbursement, the revenues from this tax increased by
1.5-fold.

The problems with this tax collection also were seen in 2002. In 2003-2004
when Victor Yanukovich headed the government the situation only worsened.
During this period of time the revenues from VAT dropped to 4.29% of GDP
comparing with 5.97% of GDP in 2002.

Partially, this drop was explained by the increase of export volumes.
However, the opponents of PM insist that a lot of false export transaction
increased significantly during this time.  The independent analysis made
World Bank gave another picture of VAT reimbursement problems.

In 1999 internal VAT (VAT paid to domestic producers) made up 84% of
earnings received from this tax, while in 2004 this figure made up 72%.

It appeared that exporters, who mainly cause GDP growth more funds as
reimbursement than they pay to the state budget. It also explains why
Donetsk region receives the lion’s share of reimbursement: in this region a
larger part of the exporting enterprises is located.

In 2005 situation with returnable funds improves —–

The data for the last year showed that the increase in VAT collection gave
message that it could be possible to collect more funds from this tax.
Problems were mainly rooted in the performance of tax authorities.

Current situation with VAT reimbursement has two reasons. The first one is
that the government faces problems in filling the state budget and it
decided to postpone the reimbursements. The second reason is that the level
of corruption in this area rose significantly recently.

Tax authorities tend not to be diligent in following VAT reimbursement
legislation —–

Obviously that the best way to improve the situation with VAT reimbursement
is to change the performance of tax authorities and make them independent
from politics and organized crime. It is not a secret that VAT reimbursement
has already become a very profitable crime business.

There are several reasons for that. At first the whole procedure
unjustifiably complicated and takes a lot of time to complete.

At second thanks to “personalized” management of the process of
reimbursement by tax authorities and by state treasury this process is not
controlled.

Also there is no common opinion on amount of funds that should be returned
to one company or another. Documentary revisions of the legality of VAT
reimbursement are often protracted.

Because of this, the funds that should be returned are put off until next
accounting periods and it becomes difficult for tax authorities to pay off
all the money in full.

This situation can be demonstrated using several enterprises, as an example.
Isteel metallurgical company suffered the USD 37.6mn loss because of
non-returned VAT, but Donetsk tax authority insists that the sum of debt
makes up only USD 13.5mn. TNK-BP petroleum company has about USD

74.4mn of non-returned funds.

Country cannot abolish VAT, but it needs to make deep changes in its
collection —–

When the  president asked secretary of national Security and Defense Council
Vitaliy Gayduk to examine the situation with VAT reimbursement he made only
the first step. Afterwards, the internal investigation of performance of
suspected taxpayers and state officials should be carried out.

However, the main step forward is out of the situation is to simplify
procedure of VAT reimbursement. International experts from World Bank

also considered that internal investigations could yield very few results. Huge
fines for those who break law on VAT could replace it.

Local companies just want the tax authorities to behave within the
legislation they established. The most radical way out is to abolish VAT and
to introduce the tax on sales. But the procedure of the new tax introduction
is too complicated and it could bring unexpected results.

Besides VAT is an obligatory law existing in most countries, which is are
trade partners of Ukraine. Finally, the process of integration of the
country to European institutions also demands to keep VAT.   -30-
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14.    “YUSHCHENKO BANKING ON OTHER DONETSK PEOPLE”
   Choice of new Ukrainian security chief signals shift in president’s backing

COMMENTARY: By Oleksandr Chalenko, Mykhaylo
Hannytskyy and Yaroslav Malyuta
Segodnya daily newspaper, Kiev, in Russian 11 Oct 06; p 2
BBC Monitoring Service, United Kingdom, Thursday, Oct 12, 2006

KIEV – Vitaliy Hayduk, recently appointed by President Viktor Yushchenko as
secretary of the National Security and Defence Council, is a tycoon from
Donetsk, a paper controlled by another Donetsk tycoon, Rinat Akhmetov, has
said.

Hayduk, a former ally of Akhmetov and premier Viktor Yanukovych, is meant

to use his wealth to ensure Yushchenko’s re-election and act as a foil to the
prime minister.

The following is the text of the article by Oleksandr Chalenko, Mykhaylo
Hannytskyy and Yaroslav Malyuta entitled “Yushchenko banking on other
Donetsk people” published in the Ukrainian daily Segodnya on 11 October.
Subheadings are as published:

The newly appointed NSDC [National Security and Defence Council] secretary
[Vitaliy Hayduk] will try to organize a second term for the president.

Yesterday, [President] Viktor Yushchenko finally found a secretary for the
NSDC. And what a secretary!

Vitaliy Hayduk was appointed to the post – a billionaire, co-owner of the
Industrial Union of Donbass [IUD], one-time eminent comrade-in-arms of
[Prime Minister] Viktor Yanukovych and [Donetsk-based tycoon MP] Rinat
Akhmetov and in general a through and through Donetsk person.

However, after the Orange Revolution Hayduk enjoyed the favour of the
president. And during the past month the head of state has in general
surrounded himself with “fledglings from the IUD nest” – the corporation’s
former top manager, Oleksandr Chalyy, became deputy head of the secretariat.

The first deputy head of that agency, Arseniy Yatsenyuk, is also named in
the media as someone close to the corporation, as is the recently appointed
presidential adviser, Oleksandr Zinchenko. And now we have Hayduk.

In this way both the policy of the Yanukovych government and the policy of
the president are now basically determined by representatives of the same
team that ran the Donbass at the end of the 90s.

True, since those times the paths of its leaders have radically diverged.
And there is another big question of how they will work harmoniously from
opposite sides of the barricades.
Why?

So far it can certainly be said that along with the arrival of Hayduk there
will be a definitive setting of the star of [propresidential] Our Ukraine
and [Yushchenko’s close allies] the “dear friends” ([Petro] Poroshenko,
[Oleksandr] Tretyakov, [Davyd] Zhvaniya and so on).

It is also likely that the group of the first deputy head of the
secretariat, Ivan Vasyunyk, will be removed from taking serious decisions;
at the beginning of the year the group seriously fell out with Hayduk over
the question of gas (Hayduk was against RosUkrEnergo [middleman firm
supplying gas to Ukraine] and Vasyunyk was in favour).

Political circles are now discussing the option of creating a new
centre-left propresidential party under the auspices of the NSDC secretary
to replace Our Ukraine. Perhaps headed by Zinchenko or [Interior Minister
Yuriy] Lutsenko.

“Hayduk’s appointment is a sign that the president has given up on Our
Ukraine and decided to bank on a new party that will probably be funded by
the IUD,” political scientist Vitaliy Kulyk believes.

This party and the renewed team of the president in general have to
personify the new image of Yushchenko for the people – without the
nationalist “Bandera people” [Stepan Bandera was a nationalist leader who
fought against Soviet power in West Ukraine] from Our Ukraine, without the
“dear friends”, without officials compromised by the gas deals of early
2006, lastly without the Euro-Atlanticists that irritate Russia, like
[Foreign Minister] Borys Tarasyuk (who may be retired and replaced by
Chalyy).

Here you have “the father of all Ukraine” rather than just its western part.
It is also understandable why this image is needed – 2009 is not that far
off, when Yushchenko will have to stand for re-election for a second term.
Both Hayduk and the IUD may well become the main managers of the project.
                                   THE CONCILIATOR 
The only thing that is unclear is how the project is to be implemented –
through confrontation with their Donetsk compatriots from the government or
through an amicable understanding (including through cancelling nationwide
elections of the president and the re-election of Yushchenko for a second
term in parliament).

So far it seems that events will unfold according to the latter scenario.
The “regionals” [Yanukovych’s Party of Regions] took the appointment of
Hayduk very calmly and even joyfully.

“It’s good news for us. He is someone inclined to reach agreement. He and
his team are pragmatists and good specialists,” says Taras Chornovil, one of
the leaders of the Party of Regions.

Andriy Shkil, a representative of the opposition Yuliya Tymoshenko Bloc, has
exactly the same opinion. He is sure that Hayduk as a person is inclined to
compromise and will become a means of definitive conciliation between
president and prime minister.

On the other hand, the very same Yatsenyuk, albeit apparently an “IUD man”,
is now acting as the main pioneer in the campaign to fight the government
for the president’s powers.

And indeed, it is unlikely that Hayduk would have been appointed as NSDC
secretary at all if he had not promised Yushchenko to protect him against
Yanukovych’s pretensions.

Most likely, the confrontation between the president (strengthened by IUD
resources) and prime minister will continue right up until the moment when
it becomes definitively clear whether Viktor Andriyovych is capable of being
re-elected for a second term at nationwide elections or not. And that is
still about a year and a half away.                -30-
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15.    ARSENII YATSENIUK MOST LIKELY CANDIDATE TO LEAD

  OUR UKRAINE’S PEOPLE’S UNION PARTY (OUPU) SAY EXPERTS
 
Ukrainian News Agency, Kyiv, Ukraine, Monday, October 23, 2006
KYIV – Political experts believe that Presidential Secretariat First Deputy
Chief Arsenii Yatseniuk is the main candidate for the post of council
chairman of the Our Ukraine People’s Union party (OUPU).

“To date, Yatseniuk is candidate number one,” said Volodymyr Fesenko,
chairman of the Center for Applied Political Studies.

Likewise, Oles Donii, who heads the Center for Political Values Research,
thinks that President Viktor Yuschenko, an honorary chairman of the OUPU,
regards Yatseniuk as the party leader.

“According to the latest reports, the president insists on Arsenii Yatseniuk
leading Our Ukraine,” Donii said.  Vadym Karasiov, head of the Institute of
Global Strategies, said that Yatseniuk’s candidacy, like some other new
people in the party, is good because of his positive image.

“They must be new promising, optimistic managerial persons associated with
optimism rather than defeats, scandals and anti-ratings,” he said.

At the same time, Yatseniuk has some minuses like the lack of experience in
managing and developing the party, insufficient support inside the OUPU
itself and a deficit of time because of his post at the President’s
Secretariat.

“He could become an artificial leader whom a significant part of the party
might not accept. I don’t even mention the heads, the founders of Our
Ukraine. A significant part of the party might not accept him, despite the
fact that his is a favorite of Yuschenko. Yatseniuk has got one more
problem. He has absolutely no experience in party work,” Fesenko opined.

At the same time, Yatseniuk may become a good candidate for the top position
on the election list of the party and this is the strong side of the idea of
appointing him as party leader, Donii added. “As a PR product, he is winning
lot,” he said.

The second likely candidate is parliamentary deputy Viacheslav Kyrylenko,
the third one is Mykola Katerynchuk, Fesenko said.

The latter, however, is believed by experts to have insufficient support
inside the party and among the president’s entourage.
Moreover, Katerynchuk prefers Yulia Tymoshenko as the leader for the
opposition camp, while Our Ukraine does not like it, Fesenko added.

“Our Ukraine is not only a pro-Yuschenko party, it is an anti-Tymoshenko
party. This is the specifics that people often forget about. It is true,
Katerynchuk has become the symbol of Our Ukraine renewal, criticism of the
heads, but he has insufficient support either on the part of Yuschenko’s
circle or inside the party,” the analyst said.

Despite this, the political exerts forecast that Katerynchuk will retain his
high position in the party, so as current OUPU leader Roman Bezsmertnyi
owing to his experience, knowledge and ability to maintain balance between
different influential groups inside the party.

Karasiov expects these three politicians to take top posts in the party: the
post of political council head, the post of presidium head and the post of
executive committee head. “It will help achieve balance at the management
level,” he said.

The experts agreed on the point that Presidential Secretariat Chief Viktor
Baloha may become one of the party heads thanks to his perfect
organizational skills.

They do not think Internal Affairs Minister Yurii Lutsenko will appear at
the head of the OUPU as the president’s protege.

It could only be possible if he resigned from the ministerial post and if
Yuschenko requested him directly, Fesenko commented.
Analyzing the candidacy of Lutsenko, Fesenko said that he will not be
accepted in the party; besides, Lutsenko has an ambition to create his own
political project.

The experts believe that despite changes inside the party, MPs Petro
Poroshenko, Oleksandr Tretiakov, Mykola Martynenko, David Zhvania and
Zaporizhia Region Governor Yevhen Chervonenko – all of them were involved in
the September 2005 scandal following corruption accusations – will remain in
the party.

“They don’t want to go and nobody can make them going,” Karasiov stated,
pointing to the influence of these politicians on regional chapters of the
party and party factions, and their contribution to the OUPU budget.

“The fact that the president has decided to build it [the political project]
on renewal of Our Ukraine means that they can be pushed aside for a certain
period of time, but not expelled,” Donii said.

Fesenko noted that these politicians are the people who finance the OUPU

and are important to the party from this point of view. In his opinion, the
party needs to find alternative sources of financing if it wants to reform.

“As an option, involvement of DIU in financing is possible, but it shouldn’t
be ruled out that Pinchuk’s or Pryvat’s money could be there based on the
principle of diversification of the sources of financing. This is one of the
most important guidelines for rebuilding the OU activity – to make it
independent from Poroshenko, Tretiakov and Martynenko,” Fesenko said.

As Ukrainian News earlier reported, the OUPU has postponed the election of
party heads and consideration of statute changes from October 21 to three
weeks later.

Yatseniuk joined the OUPU on October 19. Katerynchuk heads the executive
committee of the party; Bezsmertnyi heads its council and presidium.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
16.  OUR UKRAINE: TO BE OR NOT TO BE…AN OPPOSITION

ANALYSIS & COMMENTARY: By Tammy Lynch
THE ISCIP ANALYST, An Analytical Review, Volume XIII, Number 3,
Institute for the Study of Conflict, Ideology & Policy at Boston University,
Boston, MA, Thursday, 19 October 2006

On Tuesday, the pro-presidential political bloc Our Ukraine (OU) registered
as an opposition party in Ukraine’s parliament. (1)  President Viktor
Yushchenko’s bloc officially pulled out of previous agreements with Prime
Minister Viktor Yanukovich’s ruling Party of Regions and suggested that its
ministers would be withdrawn from the cabinet.

If this occurs, it would leave President Yushchenko with little real
representation in the cabinet, where all domestic (and some foreign) policy
is controlled.  It could also add to the strength of the current
parliamentary opposition, led by former Prime Minister Yulia Tymoshenko.

The “opposition” is still an evolving concept in Ukraine, but already plays
a crucial role in a country still grappling with questions of government
accountability and rule of law.

Given Our Ukraine’s history of vacillation between political partners and
political positions, however, the eventual outcome of this latest twist is
difficult to predict. At a minimum, Our Ukraine’s switch to opposition means
that the bloc, at least temporarily, has halted lengthy, laborious
negotiations with Party of Regions representatives over a legal coalition
agreement.    Beyond this, however, much remains to be seen.

Our Ukraine and the majority of its membership historically have rejected
opposition-oriented alliances, preferring instead to be as near to “the
power” as possible.

Indeed, the bloc’s halting of negotiations this month seems to have had more
to do with the inability of its leadership to secure satisfactory levels of
power-sharing than disagreements over policy.

Despite recent assertions by Our Ukraine that Yanukovich’s policies have led
to the “demolition of Ukraine’s internal and external course,” (2) the Prime
Minister’s policies have not shifted significantly since President
Yushchenko and Our Ukraine signed a “Declaration of National Unity” with
him on 2 August as a condition of his nomination as prime minister.

This agreement listed Ukraine’s domestic and foreign policy objectives and
was hailed by Yushchenko both as a starting point for coalition negotiations
between OU and Regions, and as a guarantee that Yanukovich would follow the
president’s policy objectives.

In reality, the document was vague, lacked enforcement mechanisms and
provided Yanukovich with significant room to maneuver within (or slightly
outside of) the agreement’s stipulations.  He has done so skillfully, while
simultaneously spurning suggestions from Our Ukraine that the bloc is needed
within the governing coalition.

The ruling coalition unites Regions with the Socialists and the Communists,
providing a majority of about 242 out of 450 without Our Ukraine.   Despite
some tension among the participants, the coalition agreement has held well
since its creation.   This has allowed Yanukovich to challenge the president’s
authority – exploiting constitutional inconsistencies over spheres of
control.

On 17 October, OU leader Roman Bezsmertny suggested that, under the
Yanukovich government, “Ukraine’s process of integration into the WTO is
being wrecked, the program of Ukraine’s accession to the EU has been
basically stopped and there has been a fundamental block on Ukraine’s entry
into NATO.”  (3)

It is true that Yanukovich and his coalition have halted preparations for
NATO entry, slowed preparation for the WTO and paid little attention to EU
reforms.  But, given Yanukovich’s previous anti-NATO rhetoric and his
consistent caution towards the WTO and the EU, this should be of little
surprise.

In fact, the “Declaration of National Unity” provides no timetable for NATO
and EU preparation – Yanukovich refused to sign it if it did.  And, although
the document states that the Yanukovich government and parliamentary
majority will enact reforms “necessary for entering the World Trade
Organization by the end of 2006,” the coalition partner Communist Party
always refused to endorse this particular article of the agreement,
immediately calling it into question.  (4)

Therefore, Our Ukraine could not, or should not, have expected any behavior
other than that which is being exhibited currently by the Yanukovich
government.  Upon signing the “Declaration,” perhaps they had hoped to be
able to influence Yanukovich more heavily, or perhaps they had expected to
be given greater control over government and parliamentary activities.
Neither of these things happened.

Nevertheless, some members of Our Ukraine remain hesitant to make the
transition to the opposition.

Cabinet ministers nominated on the personal quota of President Yushchenko –
who remains the honorary leader of Our Ukraine – have expressed reluctance
to resign.  A spokesman for Foreign Minister Borys Tarasyuk suggested, “A
decision on his resignation is for the president to make.” (5)

Tarasyuk is the leader of one of the largest parties in the Our Ukraine
bloc – a party whose ruling council supported the call for all Our Ukraine
ministers to leave the cabinet and join the opposition.  Interior Minister
Yuriy Lutsenko, Defense Minister Anatoliy Hrytsenko and Justice Minister
Roman Zvarych also have so far rejected the call to resign, while most Our
Ukraine-nominated ministers have remained silent.

President Yushchenko himself initially objected to the idea of his party
going into opposition, despite Yanukovich’s attempts to assert his control
over what have historically been presidential matters.

On 11 October, Yushchenko urged a resumption of negotiations between Our
Ukraine and the Party of Regions.  “I feel most of the participants of the
talks think the negotiations are incomplete and that there is still some
chance to compromise,” he said. (6)

In a clear rebuke – the first of its kind from his party – this idea was
immediately rejected by Our Ukraine.  But at the same time, Bezsmertny
provided confusing answers regarding the type of opposition Our Ukraine will
mount.

His most concrete suggestion has been that his bloc will not work closely
with the bloc of former Prime Minister Yulia Tymoshenko, which declared its
“radical opposition” status on 3 August, immediately after Yanukovich’s
nomination.

Tymoshenko is widely viewed as the country’s primary opposition leader, and
attempted last month to form an inter-party opposition.  Our Ukraine quickly
rejected that idea.

“Our Ukraine does not conduct any negotiations,” Bezsmertny said. “If Yuliya
Volodymyrivna [Tymoshenko] makes relevant proposals, we are ready to renew
a dialogue,” he added.  (7) But they will not approach her, he underscored,
while suggesting that there should be only one opposition bloc.

The remark is reminiscent of Bezsmertny’s comments in 2002 in advance of the
second round of the so-called “Rise Up! Ukraine” protests against
then-President Leonid Kuchma.  Tymoshenko, the Socialists and the Communists
had been leading protests for months, while Our Ukraine’s leadership had
declined to endorse the original protests.

Then, in a change of course at the end of 2002, Bezsmertny suggested that
Our Ukraine “should be the leader of the protests rather than follow
Tymoshenko or anyone else.” (8)  This thought process seems still to be
prevalent in Our Ukraine in 2006.

To underscore their point, this week, Our Ukraine hosted a meeting of
potential opposition partners to create what it calls a “constructive
opposition.”  Nine parties or blocs were invited to the meeting.  The Bloc
of Yulia Tymoshenko – already in opposition – was not.

The omission underscores the animosity between Tymoshenko and certain
members of Our Ukraine; the former prime minister earlier accused several
leaders of the bloc of improperly profiting from their government
connections.  They denied these charges.

The omission also underscores the difficulty Ukrainian politicians will have
in pursuing a unified program.  In recent days, votes in the parliament have
shown serious division between Tymoshenko and Our Ukraine, with both blocs
sometimes voting with the majority, but rarely with each other.

This could have serious, negative consequences for the country’s course to
Europe, which is already endangered, and for President Yushchenko’s agenda.

Yushchenko, Tymoshenko and Our Ukraine’s various leaders have all denounced
the 2007 budget proposal from Yanukovich’s government, suggesting is
backtracks on previous reforms.  The document is said not to use accepted
IMF macro-economic standards for evaluating revenues and expenditures.

 It reportedly cuts funds from social programs championed by Yushchenko,
alters the tax system to provide significant breaks for large businesses
that may be associated with government ministers, and funds regional budgets
based on an arbitrary system that gives regions supporting Yanukovich a much
bigger piece of the pie.

Yushchenko has already stated that he will not sign it if passed as is –
setting up the first real power struggle between the two men.

Yushchenko’s Our Ukraine likely will need the help of Tymoshenko to alter
the budget on behalf of the president.  Bezsmertny’s party holds 79 seats,
while Tymoshenko controls 122.  The apparent attempt to marginalize
Tymoshenko could lead to the failure of Our Ukraine’s legislative proposals.

This is, of course, if Our Ukraine chooses to remain in the opposition.  On
18 October, Our Ukraine’s Minister for Sport, Family and Youth Yuriy
Pavlenko, suggested that his party may return to the bargaining table with
Yanukovich. (9)  At the same time, though, Pavlenko suggested that he is
prepared to resign, while Yushchenko urged Our Ukraine’s ministers to
implement the will of their party. (10)                     -30-
————————————————————————————————–
                                        SOURCE NOTES:
(1) “Our Ukraine officially joins opposition (Part 2),” Interfax, 0854 GMT,
17 Oct 06 via (www.interfax.com)
(2) Agence France Presse, 1309 GMT, 17 Oct 06 via Lexis-Nexis.
(3) Ibid.
(4) See Ukrayinska Pravda
(http://www.pravda.com.ua/en/news/2006/8/1/5966.htm) for the English
language text of the Declaration.
(5) “Ukraine ministers reluctant to form shadow govt. despite party appeal,”
RIA Novosti, 1710 GMT, 17 Oct 06 via (http://en.rian.ru).
(6) “President wants to resume coalition talks,” Press Office of Viktor
Yushchenko, 1620 GMT, 11 Oct 06 via
(www.president.gov.ua/en/news/data/1_10996.html).
(7) “OUR UKRAINE TO GO INTO OPPOSITION ON TUESDAY,”
Ukrayinska Pravda, 0951
CET, 17 Oct 06 via (www.pravda.com.ua/en).
(8) “Ukrainian Opposition Fails to Unite,” Ukrainska Pravda, 12 Dec 2002.
(9) Ukrayinska Pravda, 18 Oct 06 via (www.pravda.com.ua).
(10) “President lets OU ministers resign,” Press Office of Viktor
Yushchenko, 1930 GMT, 18 Oct 06 via
www.president.gov.ua/en/news/data/1_11168.html.
———————————————————————————————-
By Tammy Lynch (tammymlynch@hotmail.com)  Institute for the Study of
Conflict, Ideology & Policy at Boston University, 141 Bay State Road,
Boston, MA 02215.

———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
17.  OLD SURPRISES; NEW REALITIES IN UKRAINE’S POLITICS
                History proves that freedom dies when criticism ends.

COMMENTARY: By Oksana Bashuk Hepburn, Canada
Maidan, Kyiv, Ukraine, October 2006

The announcement by President Yushchenko’s Our Ukraine (OU) party to
go into opposition to the government does not surprise.

The greater surprise happened a few weeks ago when the President called on
Victor Yanukhovych to form a coalition government comprising the Party of
Regions (PR), the Socialists (SPU), the Communists(CPU) and OU. Now
OU is leaving.

In reality, the coalition is untenable. It has no ideological base, no
common policies and no cohesion. Yesterday’s enemies artificially forced a
relationship designed to achieve immediate political imperatives.

The OU wanted to regain some power—get appointed to head ministries
after forfeiting a viable Orange forces coalition; the PR was anxious to
neutralize opposition.

To cover up major political fault lines the parties signed the National
Unity Universal document. To her credit, Yulia Tymoshenko refused to join
the coalition and formed an opposition to the government. Nor did she sign
the document.

Now, it appears, the poyedynokl z dijavolom, the alliance with the devil as
the Ukrainians call unsavory unions, is in jeopardy. Last week Roman
Bezsmertnyj, the party leader announced that OU is joining the opposition
and pulling ministers from the government.

The immediate kicker was the Prime Minister’s negative stand to NATO in
Brussels however, OU accuses him of wider disregard for the Universal.

No surprise here. Once the Universal had served its purpose and once he was
firmly in power, Mr.Yanuchovych was less bound to its principles like the
European integration, quick move towards WTO, promotion of national
Ukrainians symbols, freedom of the press, and, of course, NATO.

Such principles never comprised his party’s political ideology to begin
with. Moreover, it appears, the Universal is not enforceable by law; not
worth the paper it’s written on.

In reality, the Prime Minister can sign it then disregard it as much as he
likes without political consequence. His position is secure as long as he
controls the majority in the Rada, Ukraine’s parliament, or until the people
have had enough of these shenanigans and demand a new election.

It looks like the OU has been outmaneuvered. No surprise here. It has a
history of political ineptness. Consider the following. Its forerunner, and
still an influential component, Rukh championed the independence
movement in 1991.

Over 90% of the populations supported them. Since then, its force has
disintegrated into several parties, including OU. The result? Failure to
capture political control of Ukraine.

Reunited in the 2004 presidential election, the now called Orange forces
again rally tremendous popular support. They surprise and earn respect
from most of Ukraine, the world, with this success.

Not two years later, the political capital squandered by its leaders,
parliamentary power is handed over to Russia’s preferred man Victor
Yanukovych .

The reinvention of OU as the opposition may be its political salvation. It
has lost much support among the people and will no doubt lose more if it
continues to associate with the PR which its electoral base does not.
Ideologically, OU is a much better fit with BYuT than with the PR.

It might distinguish itself once again by joining forces with her to raise
Ukraine to a new level of democratic evolution: a two party system; one in
power and one in opposition.

Democracy, as defined by ancient Greece, and still true today, is a society
in which citizens take turns in being rulers and the ruled. Rulers are those
who win control of parliament in a fair election; the opposition, those who
lose but want to win and rule next.

There were times in history when criticism of the government—the main role
of the opposition—was considered treason, punishable by prison or worse.
This was the reality in the USSR, a one party dictatorship with no
opposition. And death for some 30 million who dared!

Such pathological paranoia may explain the loathing and scorn which still
clings to many politicians, who come from the Communist formation, against
opposition to their “correct” way. Such people are clearly identifiable.
They hurl invectives at those not inclined to support them be it coalitions
or other political views.

Fascist nationalists and emotional national crisis generators, come to mind,
as do the appalling animal name-calling hurled by Mr. Yanukhovych at the
Orange protestors of the falsified presidential elections. These are
yesterday’s people who do not understand the indispensable value of a
opposition and the need for Ukraine to go forward in its political
evolution.

What does the opposition do? It debates and criticizes; asks embarrassing
questions and makes statements to the press about government’s
questionable dealings. When the public good is at stake, it has the right
and duty to oppose the government’s policies and actions.

By doing so, it is convincing the electorate to give it power to govern in
the next election because it, the opposition, can and will do a better job.

In democracies, the evolution from multi-part to a two-three party systems
clarified the role of the opposition. It became the party whose elected
members do not support the government and who offer themselves to the
voters, not just as individual candidates, but as an organized and
alternative government.

This is exactly what Yulia Tymoshenko did when she declared that BYuT
would not join the PR but sit in parliament as the opposition. If Ukraine is
to
continue its transformation into a modern state it is imperative that it
moves in this direction. The OU’s decision to join the opposition is a good
step forward.

What might be some others? What is in Ukraine’s best interest?

Ukraine needs what every democracy needs– a strong, forceful opposition,
ideologically united to fight policy battles on important issues with the
government on behalf of the citizens, and in so doing get itself ready for
the next election. And victory.

To win the next election Ukraine’s opposition, like those throughout the
world, needs a winning strategy. To begin, here are six key steps:

[1] Decide that it is an “Orange opposition” understanding that the greater
the integration and movement towards a single party, the greater its chances
of galvanizing the electorate’s support.

[2] Distance itself from losers, former political lights that have disgraces
themselves.l The people do not forget;

[3] Seek models of how other oppositions do it—the Poles, the Brits, the
Americans. Use what fits. Learn quickly, elections are but a few years away;

[4] Establish a shadow cabinet using the best people for the job sharing
positions among the various factions to strengthen cohesion. Reallocate
portfolios periodically to broaden experience, reward talent and deal with
inadequate performance. Develop winners;

[5]  Provide solid debate on issues facing Ukraine– energy and the Russia
factor; foreign affairs; the despicable social inadequacies. The budget is
an excellent time to query spending and financial accounting. Use the media
as much as possible.

[6] Be fearless in criticizing the government in parliament, the media, in
meetings with the electorate, but be fair. Remember, their turn to criticize
will come when they are in the opposition.

Surprise Ukraine again by leading it to a new political reality.      -30-
————————————————————————————————–
Oksana Bashuk Hepburn, Canada, President U-CAN a consulting firm is

writing a book about her experiences in Ukraine. 
————————————————————————————————–
LINK: http://eng.maidanua.org/node/631
—————————————————————————————————
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========================================================
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18.      CANADIAN SLAVONIC PAPERS – LATEST ISSUE

Oleh Ilnytskyj, Canadian Slavonic Papers
An Interdisciplinary Journal Devoted to Central and Eastern Europe
Volume 48, Numbers 1-2, March-June 2006
Department of Modern Languages and Cultural Studies
University of Alberta, Edmonton, Alberta, CANADA

The latest issue of Canadian Slavonic Papers contains articles on Ukrainian
literature, Anti-Semitism in Ukraine, and a discussion of Rus’ and national
identity as well as other interesting contributions.
                                           ARTICLES
Svitlana Kobets, “Quest for Selfhood and Dystopia in Valerii Shevchuk’s
Eye of the Abyss”
Michael Magner, “La société civile communiste en Pologne et en Hongrie
avant et après 1989″
N.G.O Pereira, “Negative Images of Jews in Recent Russian Literature”
Andrew B. Pernal, “‘Ready to Lay Down His Person and Fortune at Her
Feet’: Prince Boguslaw Radziwill’s Proposal for Marriage with Mary Stuart,
Princess Royal of England and Princess of Orange in 1653-1654″
Per Anders Rudling, “Organized Anti-Semitism in Contemporary Ukraine:
Structure, Influence and Ideology”
T. Allan Smith, “Death and Transfiguration: The Final Hours of Muscovite
Monks”
Gary H. Toops, “A Contrastive Perspective on Several Morphosyntactic
Features of Upper Sorbian”
                                          DISCUSSION
Charles J. Halperin, “Rus’, Russia and National Identity”
Oleh S. Ilnytzkyj, “Reply to Charles J. Halperin (“Rus’, Russia and
National Identity”)”
Charles J. Halperin, “Reply to Oleh S. Ilnytzkyj (“Rus’, Russia and
National Identity”)”
For more information (including abstracts of articles), please visit
http://www.ualberta.ca/~csp/CurrentIssue.html.
——————————————————————————————-
Canadian Slavonic Papers, 200 Arts Building
Department of Modern Languages and Cultural Studies
University of Alberta, Edmonton, Alberta, CANADA, T6G 2E6
Telephone: 780-492-2566; Fax: 780-492-9106; E-mail: csp@ualberta.ca
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
19.            NEW UKRAINIAN FOLKLORE MATERIALS

 
Natalie Kononenko, Kule Chair of Ukrainian Ethnography
University of Alberta, Modern Languages and Cultural Studies
Edmonton, Alberta, Canada, October 2006

Dear Colleagues,

I am writing to announce a different sort of addition to our website
at http://www.arts.ualberta.ca/uvp/  Up to now, we have tried to
document Ukrainian folklore in Ukraine.  Since moving to Edmonton,

we have begun documenting Ukrainian folklore in Canada.

Two items are now up.  One is a 3-D model of a Ukrainian Catholic
church just north of Bruderheim called Church of Jaroslaw.  It is in
danger of being closed and so it is the building we documented first.
Narratives that go along with the church (I conducted interviews
while Peter Holloway filmed) should be up shortly.

The other item is 3-D images of pysanky collections.  Last summer
Mariya Lesiv, one of the graduate students, did the photography.  We
are now beginning to convert the photos to 3-D models and to display
them.  We have a “page” up from four of the collections we did.  In
other words, we have samples and should have more material shortly.

Feedback and suggestions welcome.  We would particularly welcome
comments on Pysanka resolution.  Currently, you have a choice of high
or low.  Does the resolution make a difference to you?  Is it worth
giving high resolution images in spite of the time they take to
download?  Are the low resolution images adequate for you purposes?
———————————————————————————————–
Natalie Kononenko, Kule Chair of Ukrainian Ethnography
University of Alberta, Modern Languages and Cultural Studies
200 Arts Building, Edmonton, Alberta, Canada T6G 2E6
Web: http://www.arts.ualberta.ca/uvp/.                 -30-

———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20. PRESIDENT YUSHCHENKO APPROVES NATIONAL CONCEPT
              FOR COOPERATION WITH UKRAINIANS ABROAD
Ukrainian News Agency, Kyiv, Ukraine, Saturday, October 14, 2006

KYIV – President Viktor Yuschenko has approved the national concept for
cooperation with Ukrainians abroad. This follows from presidential decree
No. 875/2006 dated October 13, a copy of which was made available to
Ukrainian News.

According to the document, the concept is aimed at developing the national
awareness of the Ukrainians who live abroad, satisfying their national and
cultural, educational, language and informational needs. Yuschenko
commissioned the Cabinet of Ministers to ensure implementation of the
concept provisions.

The concept says that the state policy is based on recognition of Ukrainians
abroad as integral part of the world Ukrainian community.

Ukraine undertakes to ensure observance and protection of rights, liberties
and interests of Ukrainians abroad, satisfaction of their cultural,
informational, educational, social and humanitarian needs. Ukraine also
pledges to facilitate opening of culture and information centers in the
countries where Ukrainians live.

Ukraine plans to provide support to citizens in creating unions and
particularly help the Ukrainian World Coordination Council deepen
cooperation with Ukrainians abroad.

Executive power agencies in Ukraine should organize and provide
informational support in work with Ukrainians abroad and their public
organizations, facilitate preservation and development of the Ukrainian
language and culture, implementation of educational programs and projects,
create conditions for Ukrainians abroad to get education in Ukraine, ensure
informational coverage of democratic transformations in Ukraine.

Also, executive power organs intend to cooperate with Ukrainian businessmen
abroad in order to channel investments into Ukraine, to take part in work of
corresponding commissions for cooperation in protecting rights of national
minorities, to facilitate organization and holding of festivals, forums,
meetings, Olympiads, contests and other cultural and educational events in
Ukraine and abroad.

Executive power organs will monitor observance of rights and interests of
Ukrainians abroad, analyze tendencies in their environments and in their
relations with power organs in foreign countries.

As Ukrainian News earlier reported, on July 26, the Cabinet of Ministers
approved the state program for cooperation with Ukrainians abroad for the
period until 2010.                                       -30-

———————————————————————————————–
FOOTNOTE:  It will be interesting to watch and see if this program turns
out to anything most than just a piece of paper. Given the government’s
budget limitations and the party in power it will be surprising if anything
actually happens.        AUR EDITOR
———————————————————————————————–
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          “Working to Secure & Enhance Ukraine’s Democratic Future”

1.  THE BLEYZER FOUNDATION, Dr. Edilberto Segura,
Chairman; Victor Gekker, Executive Director, Kyiv, Ukraine;
    Additional supporting sponsors for the Action Ukraine Program are:
2. UKRAINIAN FEDERATION OF AMERICA (UFA), Zenia Chernyk,
Chairperson; Vera M. Andryczyk, President; Huntingdon Valley,
Pennsylvania
3. KIEV-ATLANTIC GROUP, David and Tamara Sweere, Daniel
Sweere, Kyiv and Myronivka, Ukraine, 380 44 298 7275 in Kyiv,
kau@ukrnet.net
4.  ESTRON CORPORATION, Grain Export Terminal Facility &
Oilseed Crushing Plant, Ilvichevsk, Ukraine
5. Law firm UKRAINIAN LEGAL GROUP, Irina Paliashvili, President;
Kiev and Washington, general@rulg.com, www.rulg.com.
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, yuriy.sivitsky@softline.kiev.ua; Volia Software website:
http://www.volia-software.com/ or Bill Hunter, CEO Volia Software,
Houston, TX  77024; bill.hunter@volia-software.com.
8. ODUM– Association of American Youth of Ukrainian Descent,
Minnesota Chapter, Natalia Yarr, Chairperson
9. UKRAINE-U.S. BUSINESS COUNCIL, Washington, D.C.,
Dr. Susanne Lotarski, President/CEO; E. Morgan Williams,
SigmaBleyzer, Chairman, Executive Committee, Board of Directors;
John Stephens, Cape Point Capital, Secretary/Treasurer
10. UKRAINIAN ORTHODOX CHURCH OF THE USA, Archbishop
Antony, South Bound Brook, New Jersey, http://www.uocofusa.org
11. UKRAINIAN AMERICAN COORDINATING COUNCIL (UACC),
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: http://www.USUkraine.org
13. WJ GROUP of Ag Companies, Kyiv, Ukraine, David Holpert, Chief
Financial Officer, Chicago, IL; http://www.wjgrain.com/en/links/index.html
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, www.eugeniadallas.com.
15. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
16. SWIFT FOUNDATION, San Luis Obispo, California
17. TRAVEL TO UKRAINE website, http://www.TravelToUkraine.org,
A program of the U.S-Ukraine Foundation, Washington, D.C.
18. BUYUKRAINE.ORG website, http://www.BuyUkraine.org.
A program of the U.S.-Ukraine Foundation, Washington, D.C.
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                          PUBLISHER AND EDITOR – AUR
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        Power Corrupts and Absolute Power Corrupts Absolutely. 
——————————————————————————————————
        IN A TIME OF ALMOST UNIVERSAL DECEIT TELLING THE
                           TRUTH IS A REVOLUTIONARY ACT
——————————————————————————————————
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AUR#778 Oct 23 Macroeconomic Situation Report By SigmaBleyzer; Mars Pet Food Plant; WTO; NATO; Our Ukraine Congress; Gold Medals; Sue The Communists

=========================================================
 ACTION UKRAINE REPORT – AUR           
                  An International Newsletter, The Latest, Up-To-Date
                       In-Depth Ukrainian News, Analysis and Commentary

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

                                                                        
ACTION UKRAINE REPORT – AUR – NUMBER 778
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., MONDAY, OCTOBER 23, 2006
 
                   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
1.     UKRAINE – MACROECONOMIC SITUATION – SEPTEMBER 2006
MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, October 23, 2006

2.   UKRAINE: MARS TO BUILD PET FOOD PLANT IN KYIV REGION
             One of the world’s largest producers of chocolate and pet food
Interfax-Ukraine, Kyiv, Ukraine, Friday, October 20, 2006

3.         UKRAINE NEEDS $100 BILLION OF INVESTMENT BY 2015
The Ukrainian Times, Kyiv, Ukraine, Monday, Oct 23, 2006

4UKRAINIAN AGRICULTURAL FACULTY PROGRAM LAUNCHED
         Woskob International Research in Agriculture program at Penn State
PA Farm News, Quarryville, PA, October 11, 2006

5USAID RECOMMENDS FINANCE SERVICE MARKET COMMISSION
     CREATE ITS OWN AGRICULTURAL INSURANCE DEPARTMENT

Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

6UKRAINE’S PM SAYS NATION HOPE TO JOIN WTO NEXT FEBRUARY
Associated Press (AP), Kiev, Ukraine, Friday, October 20, 2006

7UKRAINIAN FM TARASIUK CRITICIZES CABINET OF PARLIAMENT
  FOR DELAYING ACCESSION TO THE WORLD TRADE ORGANIZATION
Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

8.        LITHUANIAN OFFICE FURNITURE PRODUCER NARBUTAS
                  REPORTS INCREASED SALES IN UKRAINE OF 45%
ForUm, Kyiv, Ukraine, Tuesday, October 3, 2005

9FINLAND’S RAUTARUUKKI PLANS TO BUILD TWO PROCESSING
                               PLANTS IN ROMANIA AND UKRAINE

Metal Bulletin com, London, UK, Wednesday, September 27, 2006
Zerkalo Nedeli On The Web, Mirror-Weekly, No 38 (617) 
Kyiv, Ukraine, Saturday, 7 – 13 October 2006 

11. UKRAINE’S NATO ACCESSION PROCESS: THE U.S. PERSPECTIVE
REMARKS: by Senior U.S. Administration Official
Ukraine’s Quest for Mature Statehood Conference
Ukraine and NATO Membership, Roundtable VII
Washington DC, Wednesday, October 18, 2006

Action Ukraine Report (AUR) #778, Article 11
Washington, D.C., Monday, October 23, 2006

12PRESIDENT MEETS WITH BOARD OF YALTA EUROPEAN STRATEGY
        (YES) ABOUT UKRAINE’S INTEGRATION INTO EUROPEAN UNION
Press office of President Victor Yushchenko, Kyiv, Ukraine, Thu, 19 Oct 2006

13.     PRES YUSHCHENKO SPEAKS AT ‘OUR UKRAINE’ CONGRESS
                           “I have been and will always be with this party.”
Press Office of President Viktor Yushchenko, Kyiv, Ukraine, Sat, Oct 21, 2006

14UKRAINIAN PRES TRYING TO RESHAPE HIS POLITICAL PARTY
     Party leadership clearly unprepared from the scathing criticism of its leader.
One Plus One TV, Kiev, in Ukrainian 1630 gmt 21 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, October 21, 2006

15.                       “ALL OF OUR UKRAINE’S FAILURES” 
  Analysts are calling Our Ukraine the world’s most incompetent political force.
ANALYSIS AND COMMENTARY
: By Ivan Lozowy
The Ukrainian Insider, Vol. 6, No. 3, Kyiv, Ukraine, Friday, Oct 20, 2006 

16.                   UKRAINE OPPOSITION URGED TO UNITE
TV 5 Kanal, Kiev, in Ukrainian 0900 gmt 20 Oct 06
BBC Monitoring Service, United Kingdom, Friday, Oct 20, 2006

17GYMNASTICS – UKRAINE’S IRYNA KRASNIANSKA WINS GOLD

           MEDAL WITH HER DEFT FLIPS ON THE BALANCE BEAM
 First world/Olympic medal for Krasnianska, first Ukraine world title since 1995
Reuters, Aarhus, Denmark, Sunday October 22, 2006

18.    UKRAINIAN PIANIST WINS GOLD MEDAL IN SAN ANTONIO
                          Alexey Koltakov wins the $15,000 top prize
Mike Greenberg, Staf, Express-News
San Antonio, Texas, Saturday, October 21, 2006

19.   SPIELBERG UNVIELS HOLOCAUST DOCUMENTARY IN KIEV
             FIRST VISIT, HAD FOUR UKRAINIAN GRANDPARENTS
By Stephen Boykewich, Agency France Presse (AFP)/

European Jewish Press (EJP), Kyiv, Ukraine, Thursday, Oct 19, 2006

20.    NEW YORK CITY FUNDRAISER FOR UKRAINIAN CATHOLIC
     UNIVERSITY IN LVIV TO HELP PAY YEARLY OPERATING COST
By Andrew Nynka, New York, New York, Friday, October 20, 2006

 
                THE DIARY OF A YOUNG GIRL IN STALIN’S RUSSIA    
BOOK REVIEW: By Maria Tumarkin
The Age, Melbourne, Australia, Friday, October 20, 2006
 
22.             IT’S TIME TO SUE THE COMMUNISTS IN UKRAINE
ANALYSIS & COMMENTARY: by Valentyn Pustovoit
Ukrayinska Pravda, Kyiv, Ukraine, Wed, October 18, 2006
 
23.                   TWO NEW BOOKS: POWER TO THE PEOPLE
How a failed revolution in Eastern Europe ended up saving untold numbers of lives.
Reviewed by Andrew Nagorski, Book World, The Washington Post
Washington, D.C., Sunday, October 22, 2006; Page BW10
 
24.                               AFTERMATH OF A MURDER
          Strange but predictable reactions to the killing of a Russian journalist
LEAD EDITORIAL:
The Washington Post
Washington, D.C., Saturday, October 21, 2006; Page A18
=========================================================
1
UKRAINE-MACROECONOMIC SITUATION-SEPTEMBER 2006

MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, October 23, 2006

                                              SUMMARY
[1] Supported by dynamically growing industry, trade and transportation,
real GDP grew by 5.7% yoy over January-August.

[2] Robust GDP growth contributed to above-target budget revenues
collection. Coupled with under-execution of budget expenditures, the
consolidated fiscal budget reported a 0.84% of period GDP surplus over
January-August.

[3] In mid-September, the government presented the draft budget law for
2007, envisaging a fiscal deficit at 2.6% of GDP.

[4] Consumer price index (CPI) growth remained unchanged at 7.4% yoy in
August, favored by the continuing slowdown in food prices.

[5] Thanks to improving export performance, the current account deficit
narrowed to $39 million in the second quarter (2Q) of 2006.

[6] A surplus in financial and capital accounts, achieved on account of
robust FDI inflows and growing private sector borrowing from abroad, allowed
the NBU to start replenishing its international reserves in 2Q 2006.

[7] A recent World Bank/International Finance Corporation report indicated
an improving business environment in Ukraine in 2006.

                                      ECONOMIC GROWTH
During August, Ukraine continued to enjoy a high rate of economic growth.
Over the month, GDP grew by 7.1% yoy, bringing cumulative growth to 5.7%
yoy. The growth was supported by robust external and domestic demand,
which translated into strong recovery of industry, wholesale and retail
trade, construction and transportation.

Over January-August, the construction sector demonstrated a 7.1% yoy
increase in value added (in contrast to a 7.7% decline over the respective
period last year), boosted by strong demand for new residential housing and
industrial buildings as well as a number of repair and infrastructure works.

Robust growth of household income (by a real 19.5% yoy over January-July),
booming consumer credit and a sharp rebound in industrial production over
the last four months contributed to a 13.2% yoy increase in wholesale and
retail trade between January and August and a 8.7% yoy increase in
transport.

A favorable external environment and robust domestic demand encouraged
the rapid expansion of industrial production. Over May-August, monthly
industrial output grew by 10% yoy on average. As a result, eight month
cumulative growth in industry reached 5.4% yoy in contrast to the meager
0.4% yoy growth over January-April.

The main contributors to industrial output growth were metallurgy, machine
building, food processing, utilities and mining. Benefiting from high world
steel prices and recovered construction, metallurgy posted a 19.7% yoy
increase in August, bringing cumulative growth to 8.4% yoy.

The need to renovate existing production capacities and introduce energy
saving technologies prompted a 12.3% yoy increase in machine building over
January-August. Output in food processing grew by 7.7% yoy over the period,
stimulated by high domestic demand.

Production of chemicals and electricity, gas and water increased by 2.5% yoy
and 7.4% yoy between January and August, taking advantage of strong external
demand. Expensive imported fossil fuels triggered a 6.2% yoy output increase
in mining over the period under review.

On the downside, output in coke and oil-refining continued to decline,
though at a slower pace (-12.9% yoy over January-August compared to more
than a 15% yoy decrease over 1H 2006).

Dynamically growing industry and trade more than compensated for the
slowdown in agriculture. The cumulative decline in agricultural value added
worsened from 1.4% yoy in January-July to 2.3% yoy in January-August due to
the moderate harvest this year compared to 2005. Although the contribution
of agriculture is expected to remain negative in 2006, it will be rather
small.

At the same time, the current evolution of Ukraine’s main macroeconomic
indicators makes the revised government forecast of real GDP growth at 6%
yoy for 2006 quite realistic. High reliance on exports makes Ukraine’s
economy quite vulnerable to changes in the external environment.

Although the prospects for Ukraine’s economy in 2007 look rather good (high
domestic demand, buoyant investment activity), further increases in the
price for imported gas in 2007 and the likely decline of world steel prices
will not allow GDP growth to accelerate beyond the 2006 level. We expect
GDP to grow by about 5.5% yoy in 2007.

                                        FISCAL POLICY
Unlike the previous month, collections of revenues to the general fund of
the central budget were 1.8% above the target in August. The
over-fulfillment was achieved thanks to the over-execution of VAT proceeds
and non-tax revenues. In particular, VAT collections were 33.3% above target
in August.

At the same time, this figure is exaggerated as VAT refunds were
under-fulfilled by almost 24%. As a result, VAT refund arrears increased to
UAH 5.6 billion (more than $1.1 billion) as of September 1st, up from UAH
4.4 billion at the beginning of the year.

On the back of higher rent on domestic extraction of crude oil and natural
gas, and larger dividend payments of state-owned enterprises, non-tax
revenues became the second largest contributor (after VAT proceeds) to
consolidated budget revenues.

On the downside, corporate tax collections continued to be under-executed by
13.2% over January-August due to lower profitability of industrial
enterprises (though improving over the recent months) and increased tax
evasion. Under-execution of foreign trade tax collections by 24.4% over the
period was primarily due to unrealized gas re-export plans and deceleration
of imports.

At the same time, expenditures of the general fund of the central budget
were over-executed by 8.9% in August. However, due to considerable
under-fulfillment in the previous periods, cumulative budget expenditures
were almost 4% below target.

Due to over-execution of revenues and under-execution of expenditures, the
central budget deficit declined from UAH 4.4 billion over January-July to
about UAH 1.7 billion over January-August.

Thanks to surpluses in local budgets, the consolidated budget reported a
surplus of UAH 2.5 billion or 0.8% of period GDP during the first eight
months of 2006.

Current fiscal sector performance suggests considerable fiscal loosening at
the end of the year as the 2006 Budget Law envisages a budget deficit at
2.6% of GDP.

According to the law, more than 85% of the targeted fiscal deficit is
planned to be financed through privatization revenues (UAH 2.1 billion from
new privatization deals, with the rest covered by funds received from the
privatization of Kryvorizhstal in the fall of 2005). However, as of
September 1st, privatization proceeds amounted to less than UAH 280 million,
representing only 13.2% of the targeted amount.

To secure enough resources to finance the expected year-end fiscal deficit,
the government resumed issuance of domestic T-bills and Eurobonds in
September, which had been terminated in July and October of last year
respectively.

In August, however, with the absence of new issuance of debt instruments,
Ukraine’s public debt continued to decline. In particular, public debt has
declined by almost 6% since the beginning of the year to $14.6 billion.

In mid-August, the government presented the draft 2007 Budget Law, which a
few weeks later was taken by the parliament as a basis for consideration.
Next year, state budget revenues and expenditures are estimated at UAH 136.2
billion ($27 billion) and UAH 151.3 billion ($30 billion).

Despite a moderate increase in revenues and expenditures, the successful
execution of budget parameters may be a challenging task. In particular, the
deficit is forecasted to represent less than 2.6% of 2007 GDP, which is
planned to be financed by privatization proceeds (estimated in the amount of
UAH 10 billion, or approximately $2 billion) and new borrowings on the
domestic and external markets at about UAH 9.8 billion.

Unlike the previous years, the government has made public in advance the
list of enterprises suggested to be privatized next year. Though the list
contains about 480 enterprises, it may be insufficient to raise the targeted
amount.

At the same time, this amount may be realistic if the proposed innovation to
sell land that belongs to the enterprise together with the enterprise is
approved by the parliament.

In addition, the government developed the draft budget on the back of a
rather optimistic macroeconomic forecast. In particular, despite the fact
that the imported gas price was predicted to increase from the current $95
per 1000 m3 to $135 per 1000 m3, GDP was forecasted to grow at a real
6.5% yoy.

Moreover, the government assumes that the external environment will be
favorable enough to allow a small surplus in foreign trade of goods and
services. Both assumptions we consider to be overly optimistic.

Furthermore, the government plans to reduce the rate of obligatory profit
transfers to the budget from state-owned enterprises from the current 50% to
15% and the duty on foreign exchange sales from the current 1.3% to 1%.

Though the personal income tax (PIT) rate will be raised to 15% (as the
transition period during which the PIT rate was set at 13% expires at the
end of this year), these reductions coupled with the government plans to
restore special economic zones may make the targeted amount of consolidated
budget revenues difficult to attain.

On a positive note, the draft budget law envisages a moderate increase in
social payments (mainly to compensate for inflation), considerably higher
expenditures on economic development and investments, and greater fiscal
decentralization (the share of local budget expenditures in consolidated
budget expenditures is proposed to increase from 36.2% in 2005 to 43.4% in
2007).
                                     MONETARY POLICY
Higher prices for imported energy resources continued to affect consumer
prices. As in previous months, the most inflationary components in August
remained services and fuels. In particular, service tariffs grew by 30.2%
yoy in August. Further acceleration from 28.5% yoy in the previous month

was driven by the increasing costs of housing services, water supply and
communications.

High international prices on crude oil as well as an increase in Russia’s
crude oil export duty as of August 1st by 8.3% to $216.4 per ton triggered a
12.2% month-over-month (mom) increase in prices for domestic fuels. This
translated into 24.6% growth in annual terms.

The consumer price index (CPI) stood at 7.4% yoy in August, unchanged from
the previous month. Further growth of service tariffs and non-food prices
was compensated for by decelerating food prices.

The decline in food prices on a monthly basis, observed since March this
year, also continued in August. As a result, annual growth of food prices
slowed from 11.4% yoy in February to a meager 2.4% yoy in August.

At the same time, while the previous months’ deflation was primarily driven
by declining prices for meat, milk and dairy products, the deflation was
registered on account of sugar, potato, vegetables and fruits in August.

Led by a good harvest, the reduction of prices on these products more than
compensated for the price growth on bread, cereals, macaroni and flour as
the grain harvest was not as good as in the previous year.

Despite the scheduled (25% on electricity as of September 1st) and expected
further increases in service tariffs (on heating, water supply, etc.),
current price dynamics give reason to expect year-end inflation at about 9%
in 2006. At the same time, the Ukrainian parliament adopted a moratorium on
increases in gas, electricity, utility and public transportation tariffs in
mid-September. [1]

According to the moratorium, current tariffs for households should be those
applicable as of January 1st 2006. Most likely, however, the moratorium will
be abolished, though in exchange for a partial reduction in previously
raised tariffs.

Although the government has already proposed such measures, we believe
the reduction in tariffs will be marginal (as in the other case, this will
negatively affect the utility sector performance and put additional pressure
on the budget), and thus did not change our year-end inflation forecast.

Lower-than-expected consumer price inflation over the period was also
achieved thanks to moderate growth of monetary aggregates. Monetary base
performance in August was affected by two opposing forces.

On the one hand, acceleration of exports over recent months, active private
sector borrowing from abroad, robust FDI, and a relatively stable cash forex
market resulted in $500 million of net purchases of foreign currency by the
NBU on the interbank market.

On the other hand, starting August 1st, the NBU reduced reserve requirements
for commercial banks [2] to supply them with necessary liquidity needed for
further expansion of credit operations. In sum, the monetary base reported a
0.4% mom decline, contributing to sharp deceleration of monetary base growth
in annual terms to 19.5% yoy, down from almost 24% yoy a month before.

Reduction of reserve requirements as well as buoyant growth of deposits
caused the money multiplier to increase to a record high 2.77 level in
August. However, on the back of considerable slowdown of monetary base,
the growth rate of money supply (M3) has moderately declined to 37.5% yoy
(down from 39.2% yoy in July).

A significant reduction of reserve requirements for hryvnia-denominated
deposits increased their attractiveness for commercial banks. In turn,
commercial banks slightly increased the interest rate on hryvnia deposits to
7.3% pa, while the rate on foreign currency deposits continued to decline to
5.3% pa.

The opposite developments were observed for the lending rate; while the
interest rate on hryvnia-denominated loans continued to decline to 14.6% pa,
the interest rate on foreign-currency denominated loans slightly increased
to 11.2% pa.

At the same time, due to political turmoil at the beginning of August
(related to the formation of the new government) and active borrowing by
commercial banks from abroad, forex-denominated deposits and loans
continued to grow considerably faster than hryvnia-denominated ones
(5.5% mom and 6.8% mom in contrast to 0.3% mom and 3.1% mom,
respectively).

The reduction of reserve requirements helped commercial banks to further
increase their lending operations. In annual terms, credits grew by 65.7% in
August. Although the growth is primarily driven by corporate lending, whose
contribution exceeds 55%, consumer credits are quickly catching up.

Since the beginning of the year, consumer lending grew by 73.3%, which
translates into 141.3% yoy growth. Though the volume of consumer credits
is still rather small, buoyant consumer lending growth (which is usually
treated as a positive phenomenon since it drives consumption and thus
economic growth) raises a number of concerns.

First, it contributed to the growth of imports, which may increase the
country’s external imbalances. Second, it puts the whole set of issues such
as improvement of credit quality through development of sophisticated credit
scoring models, creation and effective functioning of credit bureaus, etc.
on the agenda.

                  INTERNATIONAL TRADE AND CAPITAL
In July, export performance continued to improve. On the back of favorable
external conditions for Ukrainian metallurgy, chemicals, machines and
equipment and transport vehicles, merchandise exports reported 21.1% yoy
growth, which translated into a 4.8% yoy increase to date.

At the same time, imports demonstrated a moderate 17% yoy increase in July
and 21.3% yoy over January-July. Despite recent improvements, the monthly
merchandise trade deficit remained negative at $340 million in July, while
the cumulative trade deficit widened to $3.3 billion.

By export breakdown, exports of metals continued to accelerate in July,
bringing the cumulative growth to 4.6% yoy. Strong external demand
contributed to further expansion of Ukraine’s export of chemicals and
machinery (13.5% yoy and 9.2% yoy, respectively). Recovered investment
activity and robust growth of household income stimulates the import of
metals, machinery, transport vehicles, and food products.

Over January-July, imports of these commodities grew by 28.7% yoy, 18.2%
yoy, 70% yoy, and 23.3% yoy, respectively. At the same time, imports growth
slowdown may be explained by a high base effect and lower volumes of mineral
products imports, the weightiest component in total merchandise imports. In
particular, imports of mineral products decelerated to 11% yoy, down from
12.3% yoy over January-June.

Further deterioration of the merchandise trade deficit, though at a
considerably slower pace, was partially compensated for by larger surpluses
in foreign trade of services and net transfers.

In particular, the surplus of foreign trade of services increased to $401
million in 2Q 2006 (compared with $176 million in the previous quarter),
while net transfers amounted to $782 million (up from $616 million in 1Q
2006).

As a result, the current account deficit shrunk to a meager $39 million in
2Q 2006, bringing the cumulative deficit to less than $800 million, or 2.1%
of period GDP.

Unlike in the previous quarter, the financial account reported a surplus of
about $160 million, achieved on account of robust FDI inflows and growing
private sector borrowing from abroad.

In particular, net FDI inflow posted $1.4 billion, mainly directed to the
financial sector of Ukraine (during the period, a number of merger &
acquisition deals in the banking sector were completed).

A similar amount was attracted by the private sector (primarily banks) in
the form of long-term non-guaranteed and short-term loans.

These amounts more than compensated for the outflow of short-term capital
related to buy-out of government securities from non-residents and large
demand on cash foreign currency in the first months of the quarter.

As a result, in the 2Q 2006 the NBU started to replenish its reserves after
a decline by $2.3 billion in the previous quarter. At the end of June, the
NBU’s net international reserves constituted $17.6 billion, which was
equivalent to 3.9 months of future imports of goods and services.

   OTHER DEVELOPMENTS AND REFORMS AFFECTING
                             THE INVESTMENT CLIMATE
According to the latest World Bank/International Financial Corporation
report, Doing Business 2007: How to Reform, the business environment in
Ukraine has improved in 2006.

Ukraine was placed 128th out of 175 countries in 2006, compared with the
132nd rank in the previous year, which reflected considerable progress in
simplifying business registration procedures (introduction of one-stop shop
registration offices, simplification of procedures for obtaining licenses
and permits, etc.).

At the same time, WB/IFC experts advocated a speed up of economic
reforms, particularly in the areas of taxation, foreign trade regulations,
and investor protection.                            -30-
————————————————————————————————
[1] The Verkhovna Rada of Ukraine adopted a law that imposes a moratorium

on increases of gas, electricity, other utility and public transportation
tariffs yet at the end of January 2006, but the law was vetoed by the
president. On September 22nd, the parliament overcame the veto. According
to the law, the moratorium will be active until the minimum wage is equal to
the subsistence level (currently the ratio is about 75%).
[2] Starting August 1st, reserve requirements for term and demand deposits
in national currency were reduced to 2% pa and 3% pa, respectively, while
those in foreign currency to 3% pa and 5% pa respectively.
—————————————————————————————————-
NOTE: To read the entire SigmaBleyzer/The Bleyzer Foundation Ukraine
Macroeconomic Situation report for September, 2006 and previous monthly
reports in a PDF format, including several color charts and graphics click
on the following link: http://www.sigmableyzer.com/en/page/532 or click on
http://www.sigmableyzer.com/File/countries/ukraine/Ukr-Monthly-Ec-Report-09-06.pdf
————————————————————————————————————-
NOTE:  SigmaBleyzer/The Bleyzer Foundation also publishes monthly
Macroeconomic Situation Reports for Bulgaria and Romania. They are
 published at http://www.sigmableyzer.com/en/page/532.
—————————————————————————————————–
FOR FURTHER INFORMATION CONTACT: Olga Pogarska, Economist,
The Bleyzer Foundation, Kyiv, Ukraine. OPogarskia@SigmaBleyzer.com.ua
or Morgan Williams, Director, Government Affairs, Washington Office,
SigmaBleyzer, Washington, D.C., MWilliams@SigmaBleyzer.com.
http://www.SigmaBleyzer.com, http://www.BleyzerFoundation.com.
—————————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2.  UKRAINE: MARS TO BUILD PET FOOD PLANT IN KYIV REGION
           One of the world’s largest producers of chocolate and pet food

Interfax-Ukraine, Kyiv, Ukraine, Friday, October 20, 2006

KYIV – Mars, one of the world’s largest producers of chocolate and pet food,
is planning to build a pet food plant in the Kyiv region, Volodymyr Koval,
head of the foreign investment department in the Kyiv regional
administration, told Interfax.

The company is planning to invest about $15 million in the project, he said.
A land plot has already been allocated for the construction of the plant in
the region’s Boryspil district. Construction is to begin in 2007.

The Mars representative office in Russia did not comment on the plans to
build a plant in Ukraine.                              -30-

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3. UKRAINE NEEDS $100 BILLION OF INVESTMENT BY 2015

The Ukrainian Times, Kyiv, Ukraine, Monday, Oct 23, 2006

KYIV – The World Bank thinks it is necessary to invest $100 billion in
development of Ukraine for the period ending in 2015.

According to the analysis made by bank’s experts, power engineering,
transportation and agriculture require some $30 billion, $5 billion and $9
billion respectively.

At the same time, the World Bank believes Ukraine should increase the
national debt with great caution lest private investments are ousted from
the country and macroeconomic tension created.

To accelerate the economic development of Ukraine, the World Bank

recommends reducing ineffective expenses of subsidies and the transfers,
which are made beside the purpose, as well as reforming a tax system and
the system of social protection.

According to forecasts by the World Bank, growth of GDP will amount to

4.5% in Ukraine next year.                          -30-
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4. UKRAINIAN AGRICULTURAL FACULTY PROGRAM LAUNCHED
      Woskob International Research in Agriculture program at Penn State

PA Farm News, Quarryville, PA, October 11, 2006

UNIVERSITY PARK — During a September visit to Ukraine to receive an
honorary degree, the dean of Penn State’s College of Agricultural Sciences,
Robert Steele, announced a new joint program to encourage scholarship and
professional development among faculty at Ukrainian agricultural
universities.

Beginning in 2007, the Woskob International Research in Agriculture, or
WIRA, program — made possible by an endowment from real estate developers
Helen and Alex Woskob of State College — will bring as many as four
Ukrainian scholars to Penn State each year during the fall semester to study
educational methods, take and co-teach courses, establish links with Penn
State researchers and promote study-abroad opportunities for undergraduate
students.

“It’s very fitting that the Ukrainian word ‘wira’ means ‘trust,'” Steele
says. “We hope that the partnerships made possible by the Woskobs’
generosity will enhance agricultural research, education and productivity in
Ukraine and encourage global understanding, collaboration and friendship
among faculty members and students at participating universities.”

The announcement came during ceremonies at Lviv State Agricultural
University near Lviv, Ukraine, where Steele received an honorary doctorate.
The College of Agricultural Sciences has a long-standing relationship with
Lviv in co-sponsoring student and faculty exchange programs.

“The similarities between Penn State and LSAU are striking,” Steele says.
“Penn State celebrated its sesquicentennial in 2005, and Lviv is marking its
150th anniversary this year.

Both institutions are dedicated to generating scientific knowledge that can
be put to practical use and to training new generations of researchers and
educators.” Also coincidentally, “Lviv” translates to “lion” in English,
Steele notes, pointing out Penn State’s “Nittany Lion” mascot.

The honorary doctorate was Steele’s second from a Ukrainian university in a
little more than a year. He was similarly recognized by National Agrarian
University in Kiev in September 2005.

The WIRA scholars program will be open to full-time faculty members at all
Ukrainian agricultural universities.

Natives of Ukraine, the Woskobs are founders and co-owners of State
College-based A.W. and Sons Enterprises. Since 1963, they have developed
numerous real estate projects in Centre County, including housing for
thousands of Penn State students.

The Woskobs have a long history of support for higher education. In 1992,
they established the Ukrainian Agricultural Exchange Program, enabling
collaboration between the College of Agricultural Sciences and the Ukrainian
Agricultural Academy.

They have been involved in the university’s Ukrainian Studies program and
have served on the advisory board of the Centre for Ukrainian Agriculture.

More information on the Woskob International Research in Agriculture
program is available by calling the College of Agricultural Sciences’ Office
of International Programs at (814) 863-0249 or by visiting the Web at
http://www.cas.psu.edu/docs/international/Default.html.          -30-
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LINK: http://www.pafarmnews.com/Articles/061011_PSU_Uke.htm
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========================================================
5. USAID RECOMMENDS FINANCE SERVICE MARKET COMMISSION
     CREATE ITS OWN AGRICULTURAL INSURANCE DEPARTMENT 
 
Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

KYIV – The United States Agency for International Development (USAID) has
recommended that the State Commission for Regulating Markets of Financial
Services create an agricultural insurance department within the commission.

USAID stated this in the recommendations for the project called Ukraine
Agricultural Policy, Legal, and Regulatory Reform (AgPLR), a text of which
Ukrainian News obtained.

In particular, it proposes creating the department for the purpose of
monitoring and analyzing insurance practices in the agricultural sector.

According to the authors of the recommendations, it is sufficient for the
department to be manned by 2-3 people at the beginning. However, according
to the recommendations, the number of specialists in the department should
be determined in the future by administrative requirements for performance
of its functions.

Moreover, USAID recommends that the commission draft new requirements

for licensing companies intending to provide agricultural insurance services.

“It is proposed only licensed companies that meet additional qualification
requirements should be allowed to operate under a subsidized agricultural
insurance program. These requirements should be drafted by a regulator and
the administrator of the program,” the recommendations state.

Moreover, the recommendations state that companies should create a regional
network for servicing the subsidized agricultural insurance program and
provide sufficient numbers of specialists in the regions as well as loss
estimators and agents.

As Ukrainian News earlier reported, USAID introduced the AgPLR program,
within the framework of which it drafted proposals “On Improving the
Functions of the Ukrainian State Commission for Regulating Markets of
Financial Services in Order to Develop Agricultural Insurance in Ukraine.”

In general, the project is aimed at facilitating reform of the agriculture
in Ukraine and improving the legal basis for it.                 -30-
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6. UKRAINE’S PM SAYS NATION HOPE TO JOIN WTO NEXT FEBRUARY

Associated Press (AP), Kiev, Ukraine, Friday, October 20, 2006

KIEV – Ukraine’s Prime Minister Viktor Yanukovych said Friday that the
ex-Soviet nation hoped to join the World Trade Organization next February.
Yanukovych promised that Ukraine would quickly approve the legislation
necessary to meet the WTO accession criteria.

The Ukrainian parliament Thursday considered bills needed to join WTO, but
lawmakers passed only a handful of more than 20 bills which Ukraine needs to
approve in order to qualify for membership in the global trade body.

“The government intends to perform measures needed for Ukraine to enter
WTO…by February 2007,” Yanukovych said during a meeting with members

of the European Parliament. He reiterated that his country will “defend
Ukraine’s European choice consistently and decisively.”

Ukraine’s Western-leaning President Viktor Yushchenko had pledged to take
the former Soviet republic into the WTO by the end of last year, but he ran
into opposition from Socialists and Communists, who now are in the ruling
parliamentary coalition.

Ukraine has now missed two self-imposed deadlines, and observers say the
nation is unlikely to pass all the bills needed for entry by year’s end.

Earlier this week, Yanukovych, a proponent of stronger ties with Russia,
urged lawmakers to pass the bills. The move came just weeks after Yanukovych
upset ties with Yushchenko by declaring Ukraine’s bid to join NATO
premature.

Also Friday, Yushchenko’s deputy chief of staff on issues of foreign policy,
Oleksandr Chaly, said that Ukraine is “80% in WTO”.           -30-
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7. UKRAINIAN FM TARASIUK CRITICIZES CABINET OF PARLIAMENT
  FOR DELAYING ACCESSION TO THE WORLD TRADE ORGANIZATION

Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

KYIV – Ukrainian Foreign Affairs Minister Borys Tarasiuk has criticized the
Cabinet of Ministers and the parliament for delaying Ukraine’s accession to
the World Trade Organization (WTO). Tarasiuk issued the criticism at a press
conference in Lviv.

“Regarding the WTO, the latest news does not inspire optimism. Both the
government and the parliament are disrupting the timetable for accession to
the WTO. This is very alarming,” Tarasiuk said.

He expressed the opinion that the government is working sufficiently
energetically to secure Ukraine’s accession to the WTO.
According to him, it will be a lot worse if it turns out that all this is
being done deliberately to satisfy the requirements of another country.

As Ukrainian News earlier reported, Parliament Speaker Oleksandr Moroz
believes that the drafting of the laws that are necessary for Ukraine’s
accession to the WTO and their submission to the parliament for approval

are the prerogatives of the Cabinet of Ministers.

President Viktor Yuschenko is proposing that the parliament approve a
package of 16 draft laws necessary for Ukraine’s accession to the WTO.

Prime Minister Viktor Yanukovych has forecast that the Cabinet of Ministers
will send draft laws necessary for Ukraine’s accession to the WTO to the
parliament by mid-November.                             -30-
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     NOTE: Send in a letter-to-the-editor today. Let us hear from you.
========================================================
8.    LITHUANIAN OFFICE FURNITURE PRODUCER NARBUTAS
             REPORTS INCREASED SALES IN UKRAINE OF 45%

ForUm, Kyiv, Ukraine, Tuesday, October 3, 2005

Narbutas & Co, the Lithuanian office furniture producer, intends to focus on
development of the regional representative offices within Ukraine using the
direct sales program.

The first representative offices have launched working in Odesa, Kharkiv,
Dnipropetrovs’k, Donetsk and Lviv in the half year of 2006, the press
service of the company reported.

Judging by result of the past eight months, the sales have been increased by
45% comparing with the same period of 2005. The company decided not to
launch new representative offices but to attract its attention on the
development of the current ones.

Narbutas & Co was created in 1991. It is one of the leading companies among
Lithuanian office furniture producers. It has representative offices in
Lithuania, Ukraine, Russia, the Great Britain and Germany. The first such
office was settled in Kyiv in 1997.                       -30-

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LINK: http://en.for-ua.com/news/2006/10/03/134426.html
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9. FINLAND’S RAUTARUUKKI PLANS TO BUILD TWO PROCESSING
                               PLANTS IN ROMANIA AND UKRAINE
 
Metal Bulletin com, London, UK, Wednesday, September 27, 2006
 
LONDON – Rautaruukki [Finland] plans to build two processing plants in
Romania and Ukraine, at a cost of Euro50 million, in order to take advantage
of the strong growth in construction markets in Eastern Europe and CIS,
according to an announcement on Wednesday.
The investment will allow Ruukki Construction, one of the group`s
subsidiaries, to significantly increase its deliveries of construction
components, such as insulation panels, for commercial and industrial
construction in Ukraine, Romania and Bulgaria, it said.
Ruukki Construction already has 21 similar processing plants in central and
eastern Europe.
“The acquisition of Ventall has … given [Ruukki] a strong footing in the
rapidly growing Russian market [and] we believe that Ruukki`s future success
will increasingly be based on the business opportunities created for us by
the growth in construction in Eastern Europe,” said the company`s president
and ceo Sakari Tamminen.
Rautaruukki acquired Russian steel fabricator Ventall for Euro100 million in
March, and also bought AZST-Kolor CJSC, a Ukrainian colour-coating line,
for $6.1 million in April.                              -30-
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10. LOSING WHAT WE HAVE NOT GOT IN 2006, UKRAINE DROPPED
FROM 68TH TO 78TH LINE IN THE WEF COMPETITIVENESS RATING

ANALYSIS & COMMENTARY: By Yulia Zahoruiko 

Zerkalo Nedeli On The Web, Mirror-Weekly, No 38 (617) 
International Social Political Weekly
Kyiv, Ukraine, Saturday, 7 – 13 October 2006 
 
                    ASSESSMENT AND METHODOLOGY 
The 2006-2007 Global Competitiveness Report published by the World
Economic Forum (WEF) on Sept. 26, 2006 was not good news for Ukraine.
Since the previous report was published last year its position in the global
rating of national economies’ competitiveness has deteriorated by ten points.

Originally, the previous report ranked Ukraine 84th amongst 117 countries.
the. This year, the WEF reviewed its rating methodology increasing the
number of assessed parameters from 35 to 90.

When converted to the new Global Competitiveness Index, last year’s position
would be upgraded to 68th. Among the new parameters are: infrastructure
development, sophistication of business, labor market efficiency,
accessibility and quality of public health and education.

The WEF Global Competitiveness Index is a synthetic indicator that relies on
one third statistic data and two thirds on expert opinions. To elicit the
latter, 11,000 top managers from companies operating in 125 countries were
polled earlier this year.

The Centre for Competitiveness Studies at the Lausanne-based International
Institute for Management Development (IMD) produces another rating, based

on an inverse ratio: two thirds on official statistics and one third on their
own expert opinions.

The number of rated parameters is much larger (314) but the number of rated
countries is almost twice as low as in the WEF rating (60). As a result, the
IMD rating is more objective and accurate, yet it is also more conservative.

The WEF’s mild methodology, on the other hand, allows for an analysis and
evaluation of a broader range of nations, including those with unavailable
or unreliable statistics. As for Ukraine, the WEF rating is the only
existing measurement of its competitiveness.

So, according to the WEF Report for 2006, Switzerland is the most
competitive country, followed by three Scandinavian states – Finland, Sweden
and Denmark. The rating’s top ten also include (in descending order)
Singapore, the U.S.A. (which lost its longstanding first place on the list),
Japan, Germany, the Netherlands and the U.K.

Two of the above nations have made impressive jumps: Sweden rose from 7th

to 3rd and Japan – from 10th to 7th, whereas Switzerland and the U.S.A. have
caused real sensations. The last three on the list of 125 rated countries
were Chad, Burundi and Angola.
                                        GAINS AND LOSSES 
For Switzerland, it is the first time that it has outperformed all other
countries in the world, according to the WEF annual report. “Its success
comes from a combination of the county’s first-class capacity for innovation
and an advanced business culture,” – says Augusto Lopez-Claros, Chief
Economist and Director of the WEF Global Competitiveness Network.

He praised the country’s research-and-development infrastructure and close
cooperation between leading research centers and businesses. Swiss companies
lavishly fund research-and-development and intellectual property rights are
duly protected to stimulate technological innovations.

Business activity relies on steady high-quality public administration and a
regulatory environment characterized by the rule of law, effective
judiciary, transparency and accountability by social institutions. According
to Lopez-Claros, the success of Swiss businesses stems from two key

factors: a flexible labor market and an excellent infrastructure.

Switzerland took the top place in nine rating categories, which ranged from
market efficiency to the level of innovation. In two categories it did not
make it into the top six: public health and primary education (29th
position) and macroeconomic policy (18th position).

The U.S.A.’s slip from the first to the sixth was totally unexpected. It
dealt the world’s largest economy a severe blow. WEF analysts maintain that
U.S. competitiveness suffered because of terrorism, tax reductions and
ineffective public health expenditures.

To make matters worse, the retail market has been feverish of late with
price knock-downs, and the Federal Reserve (U.S. Central Bank) is expected
to lower interest rates in order to prevent a recession.

Nevertheless, the U.S.A. remains the world’s technological development
engine; the country can boast the most enabling environment for business and
efficient markets. The WEF Report also points out a host of weaknesses
detrimental to the country’s reputation for doing business globally.

U.S. competitiveness faces a challenge due to macroeconomic misbalances,
which should be alarming for the Americans.

[1] First, public finance will hardly improve in the near future, given
plans to reduce taxes even further and to increase outlays for defense and
anti-terror operations.
[2] Second, the trade deficit is at a threateningly high level. Third, the
low level of household savings and high level of retail debt should also
raise concerns.

According to the WEF, toughening the visa regime after Sept. 11, 2001 might
damage the U.S.’ capacity to absorb a qualified and professional workforce.
There are a few of other factors which account for the U.S.’ declining
competitiveness, including, for instance, low labor productivity in public
health.
DEVELOPMENT STATE AND SOURCES OF COMPETITIVENESS 
As we said earlier, this year the World Economic Forum revised its
methodology of defining global competitiveness by adding new factors
affecting national economies’ competitiveness to 90 factors.

The Global Competitiveness Report assesses countries against two major
indicators.

The first one is the Global Competitiveness Index (GCI) that replaced the
Index of Competitive Economic Growth. The GCI is applied to measure a
nations’ economic health and mid-term growth prospects.

The second one is the Business Competitiveness Index that quantifies
companies’ and industries’ productivity and efficiency. The ??? is
calculated by Harvard Business School Professor Michael Porter.

In order to derive the GCI, the authors group all countries selected for
rating by their development level. Group one lists countries at the initial
development stage, with two main sources of competitiveness: raw materials
or cheap unskilled labor. In these countries, businesses compete in their
price policies, and low salaries indicate low labor productivity.

In order to compete internationally, they should ensure a stable
macroeconomic environment, fair and effective public and private
institutions and a healthy and well-trained workforce.

Group two unites nations at the effective development stage, which implies
complex production processes, improved quality of goods and services, and

an actual increase in added value. At this stage, the countries’
competitiveness is a function of the quality of higher education and
professional development, flexibility and mobility of the labor market, and
labor legislation supportive of businesses.

Other requirements include a stable banking system, capital and land
markets, and the country’s technological availability, i.e. the ability and
preparedness of companies and countries to introduce new technologies

on a large scale.

At the third and most advanced stage according to the WEF experts, the
innovation development stage, salaries and living standards are high.

Nations cannot reach it unless a country’s individual businesses, industries
and economy are able to compete on global markets thanks to their unique,
revolutionary products and services that are of a high high quality and
sophistication. Put differently, it is at a stage of economic development
where competition is focused on innovation.

In view, where does Ukraine fit into this classification? You are right: we
belong to group one, together with 46 other countries, including the poorest
in Africa, Asia and Latin America.

The least fortunate former USSR republics – Armenia, Georgia, Kyrgyzstan,
Moldova and Tajikistan are there too, as well as Zimbabwe, Bangladesh and
Honduras.

Surprisingly, China also ended up in group one, because of its huge
population. As a matter of fact, one of the key development indicators is
GDP per capita. In China and other countries in this group, this figure does
not exceed USD 2,000. At the same time, China ranked 54th in the overall
competitiveness rating (down 6 places since last year due to the nation’s
uneven development.

On one hand, it showed rapid economic growth and low inflation, which,
coupled with other factors, made China the 6th best performing country as
far as macroeconomic indicators are concerned.

On the other hand, its underdeveloped business infrastructure, large amount
of accounts receivable and poor institutional environment hamper China’s
competitive progress and pose risks to the young Asian tiger.

Most of Ukraine’s neighbours and partners, such as Croatia, Kazakhstan,
Latvia, Lithuania, Poland, Russia, Serbia, Slovakia and Turkey – are
classified in group two, where GDP per capita is USD 3,000-9,000.

It does not mean that those countries have fewer problems or challenges than
Ukraine does. Yet they look much better in the global competitiveness
rating: Croatia and Turkey, for example, have leaped up 12 places to the
51st and 59th positions, respectively.

As for Russia, it slid down 9 spots to the 62. According to the WEF
analysts, its major problems are lack of the property right safeguards and
absence of an independent judiciary.

It is sad Ukraine is lagging behind its neighbours, particularly those whose
development is practically unattainable for us in the foreseeable future:
the Check Republic, Estonia and Hungary are in transition toward the world’s
most competitive economies.

This group of so-called “innovation competitiveness” includes the largest
and most developed economies, which Scandinavian countries have led for a
number of years now. What are their competitive advantages?

First, almost all of them have budget surplus and fairly small public debt.
Their governments’ wise fiscal policy facilitates investments into
infrastructure, social services, education and public health.

Finland (ranking 2nd), Denmark (4th) and Iceland (14th) have the best public
administration systems in the world and together with Sweden (3rd) and
Norway (12th) make up the top ten nations in terms of primary education and
public health quality.
                                       NOW TO UKRAINE 
The new WEF index is based on nine key factors that are first computed
separately and then aggregated to produce a country’s competitiveness index.

The first set of basic factors for Ukraine are as follows: public and social
institutions – 104th position out of 125; infrastructure – 69th;
macroeconomics – 74th; public health and school education – 94th.

The second set of factors characterizes improvements in economic efficiency.
Ukraine’s position here looks equally depressing: higher education and
professional training – 48th position, market efficiency – 80th;
technological development – 90th.

The last set of factors pertains to innovation capacity: sophistication of
business processes – 76th position; innovations- 73rd. Not very inspiring,
is it?

Thus, the quality of Ukraine’s public and social institutions is believed to
be its major drawback. Here, Ukraine ranks behind Moldova (ranked 101st),
Armenia (84th), Tajikistan (77th), Azerbaijan (72nd), Uganda (100th), Sri
Lanka (82nd), Ethiopia (83rd), Nigeria (94th) and Cambodia (95th).

This indicator “stripped” Ukraine of 10 rating points and drew it down to
the 78th position. In other words, the quality of public governance and
administration is a key factor undermining Ukraine’s competitiveness.
                                  WHAT’S THE POINT? 
What is the purpose and use of generating competitiveness ratings? According
to Claus Swab, founder and director of the World Economic Forum, “the
report’s conclusions and rates offer governments and business leaders an

opportunity to learn about effective methods for developing successful
economic policies and implementing institutional reforms. “

How should, say, political leaders respond to the report? First of all, they
could treat them as an independent assessment of current economic policies.

Some indicators could be integrated into the national framework for
evaluating governments’ and ministries’ performance, as has been the case in
a score of developed and developing countries, e.g. Finland (ranking 2nd),
Singapore (5th), Kazakhstan (56th) and others. The result is not long in
coming.

They should also study approaches and best practices of the global
competitiveness winners. Then it is possible to see how a nation can become
competitive if, as Augusto Lopez-Claros put it, it combines “highly
developed public institutions, competent macroeconomic management with
state-of-the-art education and an economy based on technologies and
innovations. “

What implications does it all have for Ukraine? Yuriy Poluneyev, the
President of the Competitiveness Council of Ukraine, believes there are
many:

[1] First, it is absolutely clear that the disastrous quality of our public
and political institutions, absence of an effective judicial system,
disrespect of the rule of law and a demoralizing regulatory environment
impede our development, rendering it impossible to create conditions for
equal and fair competition.

[2] Second, we still have significant gaps in long-term macroeconomic
strategy and policy. The country still lives beyond its means, and
substantial budget deficits are still made up from foreign and domestic
borrowings. Loans are channelled into consumption, rather than invested in
production and innovation.

Investments in labor productivity (which is one of the key competitiveness
factors, science and research, education and infrastructure are meagre, if
not non-existent.

[3] Third, the country does have an adequate potential for creating a
competitive economy: companies have been fairly good technological
availability and we can boast high quality secondary and higher education.
However, these advantages are not used to leverage innovation.

[4] Fourth, we badly need investments in human capital: in research,
education and public health. These can no longer be regarded as intangible
and, therefore, insignificant sectors, second in priority to the oil-and-gas
industry, mining and the like.

These are spheres of material production focused on the human being. An
individual’s health, as well as that of entire nation, is a factor
determining the quality of Ukraine’s main asset.

It would be incorrect to say that Ukraine is losing its competitiveness: it
has never had it. Only the top ten (or top twenty at the best) economies in
the rating can be viewed as truly competitive. Yet Ukraine had a unique
chance to build a competitive economy, competitive society and competitive
state.

Alas! We cannot remember a singe occasion on which Ukrainian top officials
and political leaders would use such reports and international ratings data
as an independent and unprejudiced assessment tool, as a benchmark for
developing a long-term strategy or for adjusting immediate national aims and
objectives.

We do not think they will change their attitude this time and pay attention
to Ukraine’s pitiable status in the global competitiveness ratings.  -30-
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11.               UKRAINE’S NATO ACCESSION PROCESS:
                                      THE U.S. PERSPECTIVE

REMARKS: by Senior U.S. Administration Official
Ukraine’s Quest for Mature Statehood Conference
Ukraine and NATO Membership, Roundtable VII
Washington DC, Wednesday, October 18, 2006
Action Ukraine Report (AUR) #778, Article 11
Washington, D.C., Monday, October 23, 2006

Good afternoon.  I want to thank the Center for U.S.-Ukrainian Relations and
other conference organizers for the opportunity to be here.  I welcome all
of you to Washington, especially those of you here from Ukraine, for this
important discussion about your country’s future.

I am passionate about Ukraine and its future, and find it an honor to be
part of team that is able to help the people of Ukraine achieve a brighter
future.  Although, perhaps like many of you, I must also acknowledge that I
have often found myself frustrated working on Ukraine.

But I remain optimistic about Ukraine’s future because I have confidence in
the power of the vision of a Europe whole, free and at peace.  We have seen
the tremendous allure and success of this vision as it has become a reality
in much of Central Europe and increasingly the Balkans.

I believe Ukraine will also find a home in a Euro-Atlantic community bound
together by shared values and interests.  This means that I am also
optimistic about Ukraine’s ultimate prospects for NATO membership.

NATO’s performance-based enlargement process has been a historic success

in strengthening the Alliance and advancing freedom and democracy.

The enlargement processes of both NATO and the European Union, while
distinct, motivate countries to pursue difficult democratic, market and
defense reforms.

The door to NATO membership remains open and the United States continues

to support the enlargement of the Alliance.  But the decision to pursue
membership is Ukraine’s alone, and Ukraine must set the pace.  Enlargement
has always been a demand-driven process.

I firmly believe that Ukraine’s future lies in Europe, as a prosperous,
democratic country working with all of its neighbors to expand freedom and
security in Europe and beyond.  And the United States is committed to
helping Ukraine achieve that future.

In this context, it is clear that NATO membership remains a strategic
objective of Ukraine even if it is not the agenda at this fall’s Riga
Summit.  While the timeline for seeking membership may be extended, we
commend the Government of Ukraine for committing to address the issue

of low public support for NATO membership.

Strong public support is crucial to success in joining the Alliance.  And
public support depends on a realistic understanding of the advantages and
responsibilities of NATO membership.

We therefore expect Ukraine to follow through on its intentions to pursue a
credible public information campaign to address the biases and
misunderstandings of the Alliance among many in Ukraine, something I suspect
is a legacy of Cold War rhetoric.

We also welcome signals that Ukraine will continue to deepen its cooperation
with NATO, including participation in operations.  Those currently include
national contributions funded by Ukraine to NATO efforts in Kosovo and
Darfur.

In the coming months, Ukraine plans to contribute a frigate to NATO’s
Operation Active Endeavor in the Mediterranean and provide specialists to
NATO’s operation in Afghanistan.  And Ukraine still has nearly 50 trainers
and staff officers working in Iraq.

So Ukraine is already working hard to expand freedom and security in Europe
and beyond with its NATO partners, and we very much appreciate that.

We also continue to build cooperation with Ukraine through the NATO-Ukraine
Commission, the Joint Working Group on Defense Reform, Partnership for

Peace Trust Fund projects helping to destroying excess munitions, and a
NATO-supported resettlement and retraining Center to assist with the
transition of the Ukrainian Armed Forces.

Now, we expect to work with the Government of Ukraine to deepen this
practical engagement with the Alliance.

I think everyone here would agree that the Ukrainian public currently lacks
sufficient information to make an informed decision about NATO, and I am
confident that this conference will contribute to that educational process.

The first step in this process is to ensure that average Ukrainians
understand what NATO is and, perhaps more importantly, what it isn’t.

For the United States, NATO is the premier political-military strategic
Alliance and, we believe, the most successful and most promising Alliance in
history.  NATO is at the core of an increasingly global democratic security
community.

NATO is the United States’ primary forum for strategic dialogue with Europe.
When Europe and America act together on security and defense, we act through
NATO.

Our leaders increasingly turn to NATO when they want to get something done,
and we intend to ensure that NATO can accomplish its missions.

For these reasons, at NATO’s Summit in Riga this November, the United States
would like to see NATO deepen its capabilities for current and future
operations, and enhance its global reach to meet today’s demands.
                         NATO’S CORE ACCOMPLISHMENTS
Ukrainian audiences need to understand NATO’s three fundamental
accomplishments over the past fifty-eight years.

[1] NATO’s first and most obvious accomplishment was helping end the Cold
War, and allowing for the creation of a Europe whole, free and at peace.
NATO united the transatlantic community, allowing it to stand against an
existential threat.

In a period of time when Europe was divided, NATO was the means by which

we gathered the democratic allies from World War II to form a permanent
alliance to stand together for freedom, democracy, and other values we
share.  Our goal was to strengthen and protect our societies so that we
could withstand the challenges that we faced.

It took a long time.  And although it wasn’t NATO that pushed over the
Berlin Wall or that drove the Communist Party of the Soviet Union out of
power, it was NATO that guaranteed basic security, making the political and
economic development of Europe possible, and creating the transatlantic
democratic community we see today.

In this context, it is important to emphasize that NATO has always been a
defensive alliance.  It did not harbor offensive plans against the Soviet
Union, and in the post-Cold War era it certainly does not have hostile
intentions toward Russia or other countries that were once a part of the
Soviet Union.

In fact, NATO’s attention is now focused on 21st century threats, most of
which originate south and east of Europe and Russia.

[2] NATO’s second core accomplishment was stabilizing and securing

freedom in Central and Eastern Europe after the fall of communism.

NATO started as an alliance of 12 countries in 1949, and grew gradually.  In
nearly 50 years, NATO added only four countries.

Then in just five years, we added ten more members – three at the Madrid
Summit in 1997, and seven more at the Prague Summit in 2002 – helping secure
a future of freedom, democracy, market economy, human rights, and the rule
of law for over 100 million people.

It is easy to forget today, but back in 1989 and 1991, people spoke of a
“security vacuum” in Central and Eastern Europe, and debated how it could

be filled.

With bipartisan American leadership, NATO acted boldly, and the security
vacuum never came to be.  The democratic future of much of the East was
secured.

The European Union played an enormous and irreplaceable role in this
development as well.  But NATO led.  And the development we have seen

would not have been possible without NATO.

And it was not just membership, but the realistic prospect of membership
that made the difference.  In their pursuit of NATO and EU membership, these
countries implemented reforms that improved the lives and opportunities of
their citizens in ways far beyond basic security and defense.

These reforms strengthened individual rights and freedoms, institutionalized
democratic systems, fostered market economies, resolved border disputes,

and protected minorities.

[3] NATO’s third core accomplishment was transforming itself – from a static
alliance engaged in planning the territorial defense of its members, to an
effective instrument for putting the vast political and military resources
of its members to work in ending conflict and promoting security and
stability well beyond transatlantic geography.

That process of transformation never ends, as NATO continues to adapt to

the rapidly changing threats of the 21st century.

This ongoing transformation has major implications for countries such as
Ukraine.  NATO’s transformation demands defense reforms, specialization,
technology sharing, and interoperability among Allies.

These processes all boost individual Allies’ efforts to transform their
standing armies of yesterday into the flexible, expeditionary,
technologically advanced forces of tomorrow.

Ukraine shares the transatlantic community’s view of 21st century threats
and has real military and technical capabilities to bring to the Alliance.
Its participation in NATO’s transformation process would benefit both
Ukraine and NATO.

NATO helped end the Cold War without firing a shot.  After the Cold War,
NATO has realized that it must be willing to fire shots against terrorists
and extremists – whether in the Balkans or Afghanistan – as security and
development in conflict zones go hand in hand.

                              NATO WILL ENLARGE AGAIN
NATO has enlarged successfully a number of times, and that process has not
run its course. There are countries in Europe, such as Ukraine, which may
seek to join NATO and which are strengthening their democracies, their
economies, and their militaries through reform by working together with
NATO.

But it is also in NATO’s interest to add new members who meet its
performance-based standards because they strengthen the alliance, and our
collective security in Europe.

Make no mistake: NATO membership is not a mere political decision.  While
there is undeniably a political component, membership requires that an
aspirant meet the standards.

It benefits neither NATO nor aspirant nations to admit them before they are
prepared to shoulder the significant responsibilities of membership.

As you know, enlargement will not happen this year, but we do believe that
it is time to start talking among the Allies, taking stock of the countries
that are interested in membership, and planning for decisions in 2008 when
NATO will have another Summit.

As President Bush made clear most recently yesterday in his meeting at the
White House with Prime Minister Sanadar of Croatia, the United States backs
the enlargement of NATO again.

And, just as in the past, the realistic prospect of NATO membership is
inspiring countries to make difficult reforms that benefit their own
citizens.  And, just as in the past, we anticipate NATO will again lead,
especially as the EU sorts out its own views on the extent of its future
enlargement.

        UKRAINE’S PROSPECTIVE MEMBERSHIP IN NATO
There is another set of benefits that Ukraine can continue to enjoy prior to
actual membership, or even without membership.  There is perhaps as much to
be gained from the process of seeking NATO membership as there is to gain
from membership itself.

NATO is, first and foremost, a community of shared values.  The foundation
of those values is the belief that liberal democratic principles and free
market practices, when wedded together under rule of law, provide the only
truly effective system for ensuring long-term prosperity and security.

These ideas of democracy and free markets are not simply “Western,” but
instead are “universal.”  Ukraine need not choose, therefore, between East
and West, but rather must decide which institutions best serve its sovereign
interests.  NATO is but one such organization, albeit an important one.

But joining the club is not easy.  It requires political will and the
resources to implement difficult reforms.  Old habits of corruption and
power consolidation must be replaced by respect for laws and checks and
balances.  Long-supported subsidies and other market distortions must be
eliminated or they will undermine economic growth.

Courts and laws must be strengthened to defend property and enforce
contracts — otherwise investment will flee.  And above all, individual
liberties must be protected and the citizens’ power over the state
strengthened.

In many ways, what happens inside Ukraine is perhaps more important than
what happens in Ukraine’s relations with NATO.

That is to say, protecting the independence and rule of law in institutions
such as the State Tax Administration and the Central Election Commission, as
well as moving forward with judicial reform, is as, if not more, important
than the progress made in the NATO-Ukraine Joint Working Group on Defense
Reform.

The agenda with NATO therefore is all-encompassing – what happens in terms
of democratic institutions, rule of law, corruption, economic transparency,
as well as Ukraine’s policy toward its neighbors are just as important as
defense-related issues.

In the past, some Ukrainian interlocutors failed to understand the
connection between domestic developments inside Ukraine and Ukraine’s
relations with NATO or the United States.

Pursuing NATO membership is one of many tools that can help Ukraine tackle
these challenging reforms systematically.  In our eyes, such reforms are
valuable and desirable in and of themselves, regardless of whether Ukraine
chooses to join NATO.

If Ukraine is successful in implementing reforms, it will be preparing
itself for NATO membership, EU membership, or whatever its strategic goals
may be.  But only the people of Ukraine can make those choices.  They must
choose and they must lead.

It is our job to educate, not argue about the costs and benefits of NATO
membership, and not recruit additional members.

In conclusion, the United States continues to support Ukraine’s NATO
aspirations because we fully support its desire to take its rightful place
in the transatlantic community as a prosperous, democratic, and secure
member of a Europe whole, free and at peace.

Ukraine’s choice goes to the heart of President Bush’s Freedom Agenda, in
which we are all made safer and better off by promoting a world dominated

by liberty, democracy, and economic interdependence.

I believe Ukraine’s future in that world is not a question of “if,” but
rather “when.”  We look forward to working with you to help make that

future a reality.                                    -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
———————————————————————————————–
CONTACT: Walter Zaryckyj, Program Coordinator, Ukraine’s Quest
for Mature Nation Statehood Roundtables, Center for US-Ukrainian
Relations, New York, NY, waz1@nyu.eduhttp://www.cusur.org.
=========================================================
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=========================================================
12. PRESIDENT MEETS WITH BOARD OF YALTA EUROPEAN STRATEGY
       (YES) ABOUT UKRAINE’S INTEGRATION INTO EUROPEAN UNION

Press office of President Victor Yushchenko
Kyiv, Ukraine, Thursday, 19 October 2006

KYIV – Victor Yushchenko has met with members of the board of the
international nongovernmental network Yalta European Strategy (YES).

They presented a strategy of Ukraine’s integration into the European Union,
Agenda 2020. The document says Ukraine may become an EU member in
2020 if it applies for EU membership in 2011.

Its authors believe this time will be particularly favorable for Ukraine
because Poland, its reliable partner, will be presiding in the European
Union then.

The strategy details practical steps taken by the ten new EU members when
trying to meet the requirements for membership and also conclusions of the
authors’ discussions with Europe’s prominent politicians and experts.

Mr. Yushchenko characterized the project as a good contribution to Ukraine’s
European ambitions.

During the meeting, he phoned Alexander Kwasniewski, who is a member of the
YES board. Poland’s ex-president expressed his full support for the project.

The Head of State said Ukraine’s strategic goal “is to join the EU, not just
to be recognized as a European country or a neighbor for cooperation.”

“We must know what to do with the membership opportunity now to further
formulate our national strategy in this direction,” he said, reiterating
that there would be no changes in Ukraine’s foreign policy “There is no
political force that can revise this course.”

Mr. Yushchenko said Ukraine “needs partners on its path to Europe,” thanking
those present for “defending and assuring Ukraine’s interests in the EU.”

Chairman of the Board Stephen Byers, who is also a British MP, said their
network was eager to become such a partner, “for its members have much
experience they can share.”

He invited the President to attend the fourth annual meeting of YES, which
will take place in Yalta in 2007. Mr. Yushchenko accepted the invitation.

They also discussed preparations for a Ukraine-EU summit, which is scheduled
for October 27 and will be held in Helsinki, Finland. The President said it
was Ukraine’s priority at this stage to implement the Ukraine-EU action
plan, adding that the summit would mainly focus on the initiation of talks
to sign an enhanced agreement.

Deputy Secretariat Chief of Staff Oleksandr Chalyy and the members of the
YES board, Marek Siwiec, Member of the European Parliament, Alexander
Rahr, Program Director/Körber Center, Jean-Pierre Saltiel, President
(1998-2004)/ Rothschild Counsel International, and Victor Pinchuk, YES
founder, attended the meeting.                         -30-
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LINK: http://www.president.gov.ua/en/news/data/1_11192.html
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13.   PRES YUSHCHENKO SPEAKS AT ‘OUR UKRAINE’ CONGRESS
                        “I have been and will always be with this party.”

Press Office of President Viktor Yushchenko
Kyiv, Ukraine, Saturday, October 21, 2006

KYIV – Victor Yushchenko has spoken at the Third Congress of the
People’s Union Our Ukraine Party, whose honorary leader he is. In his
speech, the President said: “I have been and will always be with this party.”

He urged its members to institute profound reforms, believing they must
first formulate a clear ideology which “could help Our Ukraine become a
social factor.” He also demanded that they revise their statute and change
the leadership of the party by renewing mechanisms of electing party
members.

Mr. Yushchenko recommended that delegates of the congress set up working
groups to formulate proposals on how to tackle theses challenges and then
discuss them at the second round of the congress.

The President said the party was committed to the ideas and values he
appreciated, such as patriotism, democracy and European integration. He
said Our Ukraine had been consolidating many liberal forces, consistently
protecting national interests and implementing state policy since its
creation. He thanked its members for supporting his program.

The Head of State said he wanted to unite the so-called orange forces “on
the healthy political basis” despite the fact these forces do not see a
number of key issues alike.

“The orange forces have lost their positions because of the faulty policy,
often blinded by ambitions and faith that there is no responsibility, mainly
personal responsibility,” he said.

The President criticized the party. “Our strength lies in our ability to
frankly and publicly speak about successes of the party and also problems
in its work,” he said.

Mr. Yushchenko added that, as a political organism, Our Ukraine was going
through “a serious inner crisis,” having failed to formulate simple and
comprehensible ideas after the 2004 presidential elections.

“The only idea you have been reiterating like a spell is ‘We are the
presidential party.’ I know this, I appreciate this but it is not enough,”
he said.  The President said the party was improperly built, existing
virtually in some regions.

“I do not want the party to become a joint-stock company, whose major
shareholders can monopolistically decide what the party needs, caring mainly
about their private interests,” he said.

He said members of the party presidium were particularly responsible for its
failures. “I am convinced the delegates of the congress must estimate those
who ruled the party,” he said.

Speaking about its future, the President expressed hopes it would become the
center of Ukraine’s center-right parties. “Why aren’t these parties our
partners? Who should consolidate the democratic movement in Ukraine? I
am convinced it is Our Ukraine,” he said.

Mr. Yushchenko later told reporters Our Ukraine should unite with such
parties as Reforms and Order, PORA, People’s Party, People’s Movement
and other center-right organizations.  “I wish these forces resumed their
dialogue,” he said.                                  -30-
————————————————————————————————–
LINK: http://www.president.gov.ua/en/news/data/1_11224.html

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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14. UKRAINIAN PRES TRYING TO RESHAPE HIS POLITICAL PARTY
     Party leadership clearly unprepared from the scathing criticism of its leader.

One Plus One TV, Kiev, in Ukrainian 1630 gmt 21 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, October 21, 2006

KYIV – [Presenter] Political scientist Volodymyr Fesenko has described
[President Viktor] Yushchenko’s speech at the Congress [of propresidential
Our Ukraine People’s Union party] as a sensation.

He said that the party leadership was clearly unprepared from the scathing
criticism of its leader. Fesenko’s colleagues see the situation as follows.

[Kost Bondarenko] We see that the president is dissatisfied with what Our
Ukraine has been doing. The president is absolutely dissatisfied with the
project. He would like to see an absolutely different project, a new
project, probably with new leaders.

As people like [first deputy head of the presidential secretariat Arseniy]
Yatsenyuk, [deputy head of the presidential secretariat Viktor] Bondar and a
whole number of others joined the party the day before yesterday, this shows
that the president may wish to instruct the presidential secretariat to lead
the party de facto.

[Vadym Karasyov] The party and [parliamentary] faction are the president’s
top resource in the current political situation.

Instead of the confrontation between [senior Our Ukraine MPs Petro]
Poroshenko and [Mykola] Katerynchuk, the president is taking tougher control
of the party, is sending Yatsenyuk, Bondar and then probably someone else to
change the ratio of internal party forces, change the party’s face, give it
a more respectable liberal and intellectual slant, and create a new
leadership group, a new leadership pool in the Our Ukraine party.

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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15.               “ALL OF OUR UKRAINE’S FAILURES” 
       Some analysts are calling Our Ukraine the world’s most incompetent
                                  political force, with good reason.

ANALYSIS AND COMMENTARY: By Ivan Lozowy
The Ukrainian Insider, Vol. 6, No. 3, Kyiv, Ukraine, Friday, Oct 20, 2006 
ITEM A.: ALL OF OUR UKRAINE’S FAILURES

Some analysts are calling Our Ukraine the world’s most incompetent political
force, with good reason.

Following the March 26, 2006 elections, under the mis-guidance of its formal
leader, Roman Bessmertny, Our Ukraine needlessly dragged out coalition talks
with Tymoshenko for three months. The bone of contention was Tymoshenko
herself, who had clearly won the right to become Prime Minister again (See
The Ukraine Insider, Vol. 6, No. 2 from March 22, 2006).

In the elections, Tymoshenko’s block received 22.3% as compared to Our
Ukraine’s measly 14% thanks to a disastrous campaign effort.

But Our Ukraine’s party bosses, led by Bessmertny, strove to avoid
Tymoshenko at all costs, because she would doubtless completely sideline
them, as she did when serving as Prime Minister for seven months in 2005.

When it finally seemed that the Orange Coalition was revived in late June,
Oleksandr Moroz stepped in to bust up the coalition, accompanied by more
than a few sighs of relief from Our Ukraine itself.

Moroz had always been a ticking time bomb in the Orange coalition. A
dedicated Leninist, Moroz had served as parliamentary speaker from 1994 to
1998, during which time he had stood firmly against economic — particularly
land — reforms and resisted the adoption of a new Constitution to the last
minute. Moroz is also a big fan of Russia.

Thus Moroz’ agreement with Viktor Yanukovych’s Party of Regions, though a
surprise, was natural given their closer ideological affinity. In return,
Moroz received the parliamentary speaker’s position, again. This was crucial
for him, since his party, the Socialists, had done slightly worse in these
elections as compared to 2002.

With his attempts to eat up the communists from within fading and given his
undying presidential ambitions, Moroz adopted what doubtless seemed to him
the only course of action. The cost has been significant, however, and the
Socialists’ standing and popularity have taken a big hit.

If Moroz’ actions seem natural, those of President Viktor Yushchenko seem
inexplicable. On August 3, 2006 Yushchenko agreed to nominate his former
foe, Viktor Yanukovych, to the post of Prime Minister.

The Party of Regions, as befits a Mafia-like “clan” (See The Ukraine
Insider, Vol. 3, No. 1 from February 7, 2006), moved quickly to consolidate
power. Within one day, all of Our Ukraine’s top government officials were
relieved of their duties.

But the collapse of the Orange Coalition opened the door to what many in Our
Ukraine, not least Bessmertny himself, had been waiting for (See The Ukraine
Insider, Vol. 6, No. 2 from March 22, 2006).

They began negotiations, conducted surreptitiously till then by some of Our
Ukraine’s leading lights such as Petro Poroshenko, Yuriy Yekhanurov and
Anatoliy Kinakh, in earnest with the Party of Regions.

Indeed, on the very day Yushchenko decided to nominate Yanukovych,
Poroshenko was already meeting with Andriy Kliuyev, one of the Party of
Regions’ gray cardinals. Ironically, it was Kliuyev and his brother who
headed up the “dirty tricks” headquarters for Yanukovych’s presidential bid
in 2004.

With Bessmertny’s declaration on October 4 that Our Ukraine was moving into
opposition, however, their second try at a coalition came to an abrupt and
ignominious end. Since the Party of Regions had already received practically
all of what they wanted, the powerful post of Prime Minister, they had no
reason to cede any important government posts to Our Ukraine.

Having stood firm on Yanukovych’s candidacy and after winning out, they

were not about to give much to Bessmertny and his cronies.

Initially, Bessmertny announced publicly that Our Ukraine was going into
opposition in order to try and bluff the Party of Regions into being more
amenable.

This bluff was revealed when, within the space of one day, Bessmertny was
talking about no going back to negotiations with Yanukovych’s crowd while
Yushchenko stated publicly that a “wide” coalition with the Party of Regions
was still quite possible and negotiations likely to continue.

Four ministers in the government of Our Ukraine were also taken unawares

and at first refused to countenance resigning their posts.

Now uncomfortably ensconced in an opposition limbo, Our Ukraine has, once
again contrary to reality, called for the opposition to unite around them,
calling for an opposition “confederation” called “European Ukraine.” One
Tymoshenko MP jokingly responded that they would create a “pan-Galactic”
opposition in response.

But Our Ukraine, like most of Ukraine’s 130-odd parties, is not a political
party in any real sense. It is an association of adherents of Viktor
Yushchenko.

It is Yushchenko who is the real and in fact only moving force in Our
Ukraine. Thus after Bessmertny talked to Yushchenko and got his okay for

Our Ukraine’s ministers to quit government, they fell into line this past week.

Bessmertny himself does not have a high level of authority within Our
Ukraine, he is not even well-liked. But he is one of a small handful of
people whom Yushchenko trusts completely.

Bessmertny’s pitiful manipulations have not gone unnoticed. Rumors of a

new political party founded on the basis of Our Ukraine, but without the
deadweight of its current leadership, have been circulating for months.

As a true grass roots effort, however, such initiatives are dead on arrival
since it is Yushchenko himself who can decide whether such a new political
force is needed.

Thus Our Ukraine’s party conference, which takes place in Kyiv this
Saturday, is unlikely to bring any significant change. Some of Bessmertny’s
internal opponents, who are not many, such as Mykola Katerynchuk, a
politician to watch, may suffer.

In today’s Ukraine and with the current President, however, Bessmertny is
practically assured of retaining his position.                 -30-

————————————————————————————————
THE UKRAINE INSIDER – is distributed via the Internet free of charge to
all interested parties as a source of in-depth information on political events
in Ukraine, including behind-the-scenes coverage of significant current
issues, the positions of policy-makers, tactics and strategy information on
Ukraine’s ongoing struggle toward a free and democratic society.
Ivan Lozowy, e-mail: lozowy@i.com.ua
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
16.               UKRAINE OPPOSITION URGED TO UNITE

TV 5 Kanal, Kiev, in Ukrainian 0900 gmt 20 Oct 06
BBC Monitoring Service, United Kingdom, Friday, Oct 20, 2006

KYIV – A former member of the pro-presidential Our Ukraine bloc, Viktor
Pynzenyk, whose Reforms and Order party has crossed the floor to join the
rival Yuliya Tymoshenko Bloc (BYuT) has urged the Ukrainian opposition to
unite.

Both Our Ukraine and BYuT are now in opposition to the ruling parliamentary
coalition led by Prime Minister Viktor Yanukovych, but relations between the
two are frosty.

Tymoshenko has scorned attempts by Our Ukraine to set up a separate
opposition alliance and urged a united front against the ruling coalition.
The following is the text of report by Ukrainian television TV 5 Kanal on 20
October:

[Presenter] The Reforms and Order party [PRP] has joined the ranks of the
opposition Yuliya Tymoshenko Bloc. The leaders of the PRP and the BYuT
signed an agreement to this effect in parliament.

PRP leader Viktor Pynzenyk explained the position of this party by saying
that in the present situation when, his party believes, the ruling parties
are neglecting the values of the Orange Revolution, the PRP can see itself
nowhere but in the opposition.

[Pynzenyk, speaking at a news conference] The Reforms and Order party has
made a decision to participate in the Bloc of Yuliya Tymoshenko. Today we
shall sign an agreement to this effect.

We call on Our Ukraine and other political forces that share our values to
consolidate their efforts within the united opposition.

[Correspondent] Meanwhile, BYuT leader Yuliya Tymoshenko has urged Our
Ukraine to join the united opposition. She is sceptical about Our Ukraine’s
plan to set up its own opposition confederation called European Ukraine. The
new allies of the BYuT also believe that all “Orange” forces should unite in
one camp.

[Tymoshenko] I think that the time for lofty party names is over. It’s time
for real work. But, if someone is busy inventing impressive names, they
should be made even more impressive.

For example, I would advise [Our Ukraine leader Roman] Bezsmertnyy to call
his alliance Our United Opposition [Ukr.: Ob’yednanna Opposytsiya Nashykh].

So, the abbreviation would sound like OON [Ukrainian for the UN]. Of course,
it would be of no use at all in practical terms, but Roman Petrovych
Bezsmertnyy would be able to call himself the UN secretary-general.

[Volodymyr Filenko, captioned as PRP activist] We are sick and tired of
being responsible for the absurdities made by others.
Apart from all absurdities already made a new one is being done at the
moment. I mean the second opposition alliance [led by Our Ukraine].

These boys, our former partners and friends, should return to school and
re-read “A Word of Igor’s Retinue” [heroic saga of the 12th century]. While
princes of Kiev [Rus] were squabbling, the Polovtsy [a nomadic tribe] and
other aggressors were advancing on them from the East.        -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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17. GYMNASTICS – UKRAINE’S IRYNA KRASNIANSKA WINS GOLD
           MEDAL WITH HER DEFT FLIPS ON THE BALANCE BEAM
 First world/Olympic medal for Krasnianska, first Ukraine world title since 1995

Reuters, Aarhus, Denmark, Sunday October 22, 2006

AARHUS, Denmark – Iryna Krasnianska surprised the favourites with her deft
flips on the balance beam to give Ukraine their first gold in 11 years at
the world gymnastics championships on Saturday.

She had to wait 10 minutes for her score of 15.575 points as the crowd grew
impatient and started booing the judges. It was enough to beat Romanian
Sandra Izbasa by 0.075 points and Canadian Elyse Hopfner-Hibbs by 0.100
points.

Top qualifier Zhang Nan from China competed despite suffering an ankle
injury in training that required a trip to hospital on Friday.

She put on a brave but at times wobbly performance and tied for fourth with
Russia’s Anna Pavlova. All-round champion Vanessa Ferrari of Italy fell
during her routine and finished sixth.

It was the first world or Olympic medal in Krasnianska’s career and the
first world title for Ukraine since 1995.

“When I started up I didn’t look at my competitors or their scores at all,”
Krasnianska said. “I didn’t want to get any more nervous. I concentrated on
myself and I did what I could up there. When some of the other competitors
made some mistakes it was possible for me to get the gold.”

Her routine had the highest difficulty score in the final, 6.50, and her
daring paid off.

Romanian Izbasa scored 0.025 more than Krasnianska on execution, but her
routine’s difficulty level of only 6.40 made the difference between gold and
silver.

Krasnianska, an 18-year-old standing only 1.42 metres tall, ensured that the
cash-strapped Ukrainian gymnastics federation goes home with one world
title.

Event organisers said on Friday they had to buy antibiotics for an Ukrainian
athlete who had developed an infection because the federation did not have
money for medicine.

The other surprise in the beam final was Zhang’s presence. After her injury
on Friday, her team doctor had said “it will be a miracle if she can
compete”.

A similar miracle eluded American Nastia Liukin, who could not defend the
title she won last year in Melbourne after hurting her ankle earlier this
month.                                               -30-
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18.    UKRAINIAN PIANIST WINS GOLD MEDAL IN SAN ANTONIO
                         Alexey Koltakov wins the $15,000 top prize

Mike Greenberg, Staf, Express-News
San Antonio, Texas, Saturday, October 21, 2006

SAN ANTONIO – Alexey Koltakov of Ukraine and Australia won the
$15,000 top prize to become the gold medalist in the Ninth San Antonio
International Piano Competition.

Robert Rios, vice president of the competition, announced the winners late
Friday after the final round in Trinity University’s Ruth Taylor Recital
Hall.

The judges chose not to award a silver medal and the accompanying $10,000
prize. There was a tie for the bronze medal – Grace Fong and Michael
Mizrahi, both of the United States – with each receiving $5,000. Fourth
prize, worth $2,500, and fifth prize, worth $2,000, were also not awarded.

The three medalists are to play short programs on a winners’ recital at 7:30
tonight at Travis Park United Methodist Church, downtown at 230 E. Travis
St. Prior to the recital, at 7 p.m., composer Ronn Yedidia will discuss the
“Rhapsody” he wrote on commission for performance by all five finalists.
The winners’ recital and Yedidia’s talk are free.

In addition to the overall rankings, the judges on Friday awarded special
prizes, worth $1,000 each, to Koltakov for the best performance of Yedidia’s
“Rhapsody” and the best performance of a romantic work; and to Fong for
the best performance of a classical work.

The panel of judges included concert pianist Daniel Pollack, as chairman,
and concert pianists Robin McCabe and William Wolfram.     -30-
(mgreenberg@express-news.net)
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http://www.mysanantonio.com/news/metro/stories/MYSA102106.03B.pianowinners.3563e9f.html

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19.   SPIELBERG UNVEILS HOLOCAUST DOCUMENTARY IN KIEV
            FIRST VISIT, HAD FOUR UKRAINIAN GRANDPARENTS
By Stephen Boykewich, Agency France Presse (AFP)/
European Jewish Press (EJP), Kyiv, Ukraine, Thursday, Oct 19, 2006

Hollywood icon Steven Spielberg may have grown up eating Ukrainian beet
soup, but it was only Wednesday that the 59-year-old film legend finally set
foot in the land of his ancestors.

“I got off the plane today and said, “I’m home!'” the director told
journalists after a press screening of his latest project, the Holocaust
documentary “Spell Your Name.”

The film, directed by Ukrainian filmmaker Sergei Bukovsky and executive
produced by Spielberg and Ukrainian billionaire Viktor Pinchuk, continues a
theme that has occupied Spielberg for over a decade.

A year after his award-winning 1993 film “Schindler’s List” brought the
horrors of Nazi persecution of Jews to a new generation, Spielberg’s Shoah
Foundation began to interview Holocaust survivors, mostly from Ukraine.

Having grown up with four Ukrainian grandparents, Spielberg has a strong
personal connection to the country.

“I have no good excuse for why this is my first visit,” he said. But growing
up with his grandparents in the house, “I felt like I had a piece of Ukraine
in my own home, especially at dinnertime.”

The Shoah Foundation’s video archive of over 52,000 interviews with
Holocaust survivors is the world’s largest such collection — and became the
basis for the new film by Bukovsky, whose previous documentaries have won
awards in Europe.

“Spell Your Name” weaves together the stories of Holocaust survivors,
rescuers, and a trio of young film assistants whose lives are changed by the
stories they hear during their work.

“I believe that hearing the stories of Holocaust survivors from all over the
world is going to change the world, and already has,” Spielberg said.

Pinchuk, a steel magnate who is Ukraine’s second-richest man, pitched the
idea when the two met in the United States during the filming of Spielberg’s
2005 alien invasion remake “War of the Worlds.” “He came to me and said
there’s a story I think is necessary to tell and this is the time to tell
it,” the U.S. director said.

Pinchuk told journalists he felt compelled to help tell the story of the
tragedy of Ukraine’s Jews, nearly 1.5 million of whom were slaughtered
during World War II.

Pinchuk said his own family had escaped Kiev shortly before Babi Yar, a
mass murder in 1941 in which Nazis killed tens of thousands of Jews.

“My family managed to escape Babi Yar, but many people they knew, their
friends, their neighbors — many of them wound up there,” Pinchuk said.

Spielberg said the film, which should be commercially released worldwide
next year, is part of the work needed “in order to create an undeniability
about the Holocaust.”

“I started Shoah simply because I wanted these survivors to have some place
to tell their stories, he said.

“When these survivors are no longer with us, their stories will be with my
children, and they’ll be teaching my children about the consequences of not
reaching out and attempting to better get to know each other.”    -30-
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LINK: http://www.ejpress.org/article/news/11174

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20.  NEW YORK CITY FUNDRAISER FOR UKRAINIAN CATHOLIC
   UNIVERSITY IN LVIV TO HELP PAY YEARLY OPERATING COST

By Andrew Nynka, New York, New York, Friday, October 20, 2006

NEW YORK – Less than a month before hundreds of people are expected

to gather in New York City for a fundraising event to benefit the Ukrainian
Catholic University, organizers of the November 5 lunch said the annual
affair is vital in helping the university pay its yearly operating cost.

“These dinners are critically important,” said John Kurey, president of the
Ukrainian Catholic Education Foundation, the Chicago-based organization
created in 1997 to help support the university, which is located in the
heart of Lviv, Ukraine.

The money raised by the foundation pays for a large portion of the
university’s operating cost.  In 2005 that cost was about $1.5 million, Mr.
Kurey said. In an effort to help pay the operating cost, the foundation
began holding fundraising dinners three years ago.

Events similar to this year’s planned lunch in New York, which will be held
at the Ukrainian National Home, were held previously in Chicago, Detroit,
Philadelphia and Cleveland.  In addition to the event in New York, similar
lunches will be held this year in Chicago and Warren, Mich.

Last year in New York City the event raised $180,000, and $250,000 two years
ago, said Mykola Haliv, the head of the event committee in New York City,
making it a key region of support for the university.

The event in New York “by far” surpasses what is raised in other communities
throughout the United States, Mr. Kurey said.  Donors from the New York
region have in the past contributed some $600,000 to the foundation, Mr.
Kurey said.

However, Mr. Kurey noted that the university’s most ardent financial support
often comes from the older generations of Ukrainian Americans, creating a
dilemma for the foundation.

“The generation that supports UCU the most is passing away rapidly,” Mr.
Kurey said.  “This generation is limited and time is fading.”

New York Friends of the Ukrainian Catholic University, the committee headed
by Mr. Haliv and created to organize the New York fundraising lunch, has
gotten help this year from a member of the younger generation.

Iryna Zaluzhna, a member of the New York committee, got involved shortly
after she arrived in New York in July.  Mrs. Zaluzhna, 24, herself a
graduate of the Ukrainian Catholic University, came to the United States
from Ukraine to pursue a masters degree in international development and
religion from Boston University.

“I’m already in New York and I thought that, if I’m here, I want to help the
university,” Mrs. Zaluzhna said of the fundraising lunch.

A featured guest at this year’s event will be Father Borys Gudziak, Ph.D.
and rector of the university.  During the lunch, Father Gudziak will have an
opportunity to meet and speak with guests and provide them with an update

on the university, which recently opened a new 50,000-square-foot academic
building.

The new building – home to the school’s department of theology and
philosophy – is the latest addition to the university’s expanding Center of
Theological Education and Formation campus.

The building, which was officially opened on September 17, will add to the
university’s operating costs, making the New York fundraising lunch a
critical event for the university. “They have really been a source of life
for the university,” Mr. Kurey said of the fundraising events.

Prior to the lunch, Father Gudziak will celebrate a Divine Liturgy at noon
in St. George’s Cathedral, at 30 East 7th St.

The lunch will take place at 2 p.m. in the hall of the Ukrainian National
Home, located on the second floor at 140 Second Ave.

Tickets for the event are $50 per person, and may be obtained from the
following address: New York Friends of the Ukrainian Catholic University,
c/o Self Reliance Association, 98 Second Ave., New York, NY, 10003.

Donations also will be accepted.  Please make any checks payable to “UCEF.”
For more information, call (212) 777-1336 or (773) 235-8462.       -30-
————————————————————————————————
Further information about the UCU in English and Ukrainian is available on
the university’s website at www.ucu.edu.ua. Contact: Andrew Nynka,

ajnynka@optonline.net.
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21.                                         I WANT TO LIVE:
          THE DIARY OF A YOUNG GIRL IN STALIN’S RUSSIA
            The discovery of a candid diary in Soviet-era archives has revealed
               a remarkable witness to life in Stalin’s fiefdom. Her analysis of
               explosive events such as the famine in Ukraine was profoundly
                            astute and completely free of brainwashing.

BOOK REVIEWS: By Maria Tumarkin
The Age, Melbourne, Australia, Friday, October 20, 2006

RE: I WANT TO LIVE: The Diary of a Young Girl in Stalin’s Russia
By Nina Lugovskaya, Publisher, Doubleday, $39.95

OF COURSE, EVERY TOM, Dick and Harry will compare her to Anne
Frank. What else do you do with a teenage girl like this – eloquent,
uncompromising and open-eyed – keeping a diary through the times of
Great Terror?

What other words are there to describe her? So here she is in every
conceivable review and article – Nina Lugovskaya, daughter of the Soviet
counter-revolutionary, innocent victim of Stalin’s repressions, “Russia’s
Anne Frank”.

This may be a good strategy for endearing (read: selling) Nina to Western
readers, but it also mutes everything that is singular, unlike anyone else,
about Lugovskaya and her diaries.

And there is plenty there that is unlike anything else. In 1932, when Nina
started writing her diary, she was a 13-year-old Moscow schoolgirl with a
father who was rarely out of jail or exile and a mother ground into the dust
by daily strife.

Nina’s slightly older twin sisters, preoccupied with their friends and
artistic pursuits, seemed blissfully oblivious to all those things that made
their younger sister sick with rage and despair – Communists, conformity,
thoughtless obedience, school, human condition and the meaninglessness
of it all.

Nina’s school friends were two years younger than her – this and the fact
that she was cross-eyed made Lugovskaya, in her own pitiless estimate, a
monstrous, ugly freak.

Nina was 18 when her diary was confiscated by the NKVD (the proud
forerunner of the KGB). She was accused of plotting to assassinate Stalin –
the proof, after all, was all there in her inflammatory, raging diary
entries.

The NKVD combed through them with the utmost care, underlining countless
incriminating passages, particularly Lugovskaya’s vitriols against the “band
of villains” that was the Communist Party and her clearly expressed hatred
for “a dictator, a villain and bastard” that was the Father of Nations,
Joseph Stalin.

None of her criminal thoughts was left without due attention. The attentive
readers from the NKVD marked all entries that testified to her distaste and
despair for Russian people, who, in her eyes, knew only how to “baah-baah”
when led to slaughter.

Her depressive and suicidal passages were singled out as well – they were
considered acts of treason against the state – alongside entries describing
Nina’s persistent fantasies of killing “the vile Georgian who is crippling
Russia”.

All underlined passages are faithfully reproduced in a darker font in this
edition of Lugovskaya’s diary and, as such, they let us go gently into the
mind of an NKVD operative on heat and of the whole machinery of secret
police behind him – after all, in terms of incriminating evidence, the diary
was pure gold.

It was not, of course, a primarily political document – the diary was filled
with boys, wild mood swings, morbid introspection as well as blow-by-blow
accounts of daily events and conversations.

Yet when Nina shifted her attention away from herself and onto the world
that surrounded her, she was unstoppable. Her steadfast resistance to
idol-worshipping was remarkable for a teenage girl growing up in a country
in the grips of one of the 20th century’s most potent and tragic personality
cults.

In March 1933, her father was refused a residency permit and had to leave
Moscow, and his family, within 10 days. “I clenched my fists tight in my
fury. He must be killed (illegible) as soon as possible! I must avenge
myself and my father.”

And, yes, the object of her rage is Stalin. To write this in the ’30s – even
to think that, or think of thinking that – was like signing your own death
warrant.

Lugovskaya hated Stalin and felt no awe for Lenin either. The statue of
Lenin in the town of Mozhaisk, where her father then lived for a while,
looked to her like a deliberate caricature. On the pedestal stood “a little
dwarf of a man with inordinately short legs and a big, bald head”.

“This is the rule of the Inquisition, not socialism,” she wrote of the
Soviet regime. Was she crazy?

NINA was, remarkably and fiercely, her own person. Her analysis of explosive
events such as the famine in Ukraine or the assassination of Sergei Kirov,
which precipitated the Great Purge, was profoundly astute and completely
free of brainwashing.

And so was her take on her Soviet school as a microcosm of the Communist
state, with informers, threats, its own fabricated counter-revolutionaries,
interrogations, complicity and a principal as a localised dictator.

Millions of men and women around her, to say nothing of her school friends,
were brainwashed, frightened, silenced, or made complicit. Yet Nina
Lugovskaya was like a fortress that could not be taken.

Interestingly, her handwriting, reproduced a few times in the book, does not
look at all like a schoolgirl’s diligent hand (calligraphy was a big deal in
Soviet schools). It is spiky, messy but also assured and direct.

It is the handwriting of someone who would not be trained, whose hand could
not be straightened out. And this is the thing about Nina – she was made out
of material naturally and fatally resistant to bending.

Worn out by the brutality and hopelessness of interrogations, Nina
Lugovskaya accepted the NKVD charges of, among other things, conspiring

to assassinate Stalin. It was 1937, so her family’s fate was predetermined –
the Gulag.

She and her sisters survived years at Kolyma and Nina ended up marrying a
fellow inmate, becoming a painter and living long enough to see the Soviet
Union collapse. Her diary was discovered accidentally in the NKVD archives
in the case-file of her father, Sergey Rubin.

She was a wild-eyed child trapped in a world not fit for a stray dog, but
somehow transcending her wretched life, a lonely speck of light in the
darkest of nights.

Nina Lugovskaya was uncompromising, irrepressible, grim, terminally
self-obsessed. She was more adept at flirting with a lethal dose of opium
than with the boys she needed desperately to fall for her and had a tongue
as sharp as a razor and a temperament to drive her family insane.

She was a beautiful writer but also an unreformed snob and a banal
anti-Semite. Angry as hell and moody as hell. Not Russia’s Anne Frank,

but Russia’s Nina Lugovskaya.                           -30-
———————————————————————————————
Maria Tumarkin is the author of Traumascapes, published by Melbourne
University Press.
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http://www.theage.com.au/news/book-reviews/i-want-to-live-the-diary-of-a-young-girl-in-stalins-russia/2006/10/20/1160851115342.html
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22.     IT’S TIME TO SUE THE COMMUNISTS IN UKRAINE

ANALYSIS & COMMENTARY:
by Valentyn Pustovoit
Ukrayinska Pravda, Kyiv, Ukraine, Wed, October 18, 2006

The fact that the Communists do not fear historical responsibility
originates from their clean record. The Communist Party has been never sued.
The conduct of the Communist leader Petro Symonenko is a glaring example
of such resistance to historical responsibility.

Before mass disorders on Maidan on Friday 13th Symonenko informed the
public of the demonstration dedicated to the 64th anniversary of UPA
(Ukrainian Insurgent Army) foundation.

He also said the Communists would never let fascist allies to profane the
‘sacred Khreshchatyk’. If necessary, they would resort to physical violence
against UPA supporters.

And they did, which resulted in local street fights that could turn into
mass disorders. 56 people were detained.

The next day Symonenko was in the air together with Ukrainian People’s Party
leader Yuriy Kostenko. Offered to present his viewpoints concerning ways of
possible reconciliation he burst out with a revelatory criticism of UPA.

According to Symonenko, UPA soldiers killed civilians, teachers and doctors
who came to the Western Ukraine to teach and cure. However, the recently
published top secret KGB materials prove that Symonenko’s statements are
glaring falsehood.

It is impossible to wage any guerrilla warfare without support of the local
population. Ukrainians who lived in the Western Ukraine in 1939-1941 saw
what kind of socialism the Soviets were building. It was the socialism
protected with barbwire.

It was the socialist system shooting its rivals in the back of the head.
That’s why locals supported their guerrillas. Even Soviet Security Services
aided by the military units could not crush UPA rebellion.

They resorted to inhuman tactics. To deprive UPA of their social support
Security Services formed special subunits which killed, raped and robbed the
locals under UPA colors. Besides, on Beria’s proposal villages that hosted
at least one alleged UPA member were resettled to Siberia.

It is not the only bloody episode in the history of Ukraine. Cynicism,
treachery and infernal cruelty are characteristic features of the Soviet
regime.

In January 1918 Bolsheviks failed to repeat the scenario of the October coup
in Kyiv. Military unit ran by Yevhen Konovalets who was destined to become
one of the icons of Ukrainian nationalism played the decisive role in the
battle.

Failed to get support of the locals, Bolsheviks repeatedly sent their troops
to conquer Western Ukraine and join it to the Soviet Russia. Addressing NKVD
agitators Lev Trotsky formulated Soviet tactics with the frank cynicism:

“It is well known it was not Denikin who made us leave Ukraine. It was the
strong peasantry that opposed the Soviets. A Ukrainian peasant hates the
Soviet system.

Their free Cossack spirit has woken up. It was limitless credulity and lack
of unity that brought to nought all their achievements.
That’s why they lost their independence controlled by Lithuania, Poland or
Russia being a very important part of these countries. Each propagandist
needs to remember these character features of Ukrainian people.

Keep in mind that we have to get Ukraine back. There is no Russia without
Ukraine. Russia can not exist without Ukrainian coal, iron, bread, salt and
the Black Sea. Russia will die, followed by the Soviet power. We need to.”

He advises then to lie that Russia acknowledges Ukraine’s independence
under the Soviet government.

Leiba Bronshtein (political nickname Lev Trotsky) knew Ukrainian people well
enough. He was not exaggerating saying that the Cossack spirit made them
(Ukrainians) perform wonders.

Minimum twice UPA made the decisive contribution to the Civil War outcome.
In September 1919 Ukrainian Revolutionary Insurgent Army headed by Nestor
Makhno crushed volunteer army which disrupted Denikin’s attack on Moscow
that was absolutely defenseless at that time.

In October 1920 Makhno’s army forced a crossing over Syvash river which
allowed the Red Army to capture the town of Perekop. In ten days Frunze
mailed to Lenin: “Our cavalry captured Kerch. The Southern battle-front is
crushed,” forgetting to mention it was Makhno’s cavalry.

After that, by Trotskiy’s order, Makhno’s entire army was executed in the
Crimea as a reward for such feat of arms.

Much has been said and written about Holodomor of 1932-1933 organized by
the Communists. However, it is not an argument for Symonenko who seems
to sincerely believe that death of millions of Ukrainians was a
sophisticated form of sabotage against the kolkhoz system.

Supposedly, Ukrainian peasants were reluctant to join kolkhozes and as a
result they starved against the will of the Soviet power.

It goes without saying about mass repressions. Trucks stuffed with dead
bodies of the people shot in the basements of Zhovtnevyi Palace (then NKVD
residence) were crossing the ‘sacred Khreshchatyk’ by nights.

According to the data presented by Shvernyk Commission, during 1935-1941
NKVD detained 19 840 000 people, killing 7 million.
Let’s compare: according to historian Konovalov, as of July 22, 1941 about
22 thousand people accused of opposition to Hitler’s regime were detained in
the concentration camps all over Germany.

Having come to the Western Ukraine in 1939, Soviet Communists resorted to
the tactics of mass terror. In 1941 during the retreat NKVD officers, having
no time for political prisoners, were just shooting them. But the retreat
was so hasty that they had no time even for the shooting, exploding prisoner
cells with grenades. It was that way in Ternopil.

Those whose relatives and friends died during the first Soviet invasion
constituted the core of UPA and SS-Halychyna Division.

By the way, for information of comrades Symonenko and Vitrenko –
Nuremberg Tribunal did not refer Waffen SS units (those who fought
against Stalin’s regime on the Soviet-German battle-fronts) to criminal
military organizations.

Communists were always acting by a model: they promised and lied. They
killed those who did not believe them. Later on they presented their own
version of the story. Symonenko continues this tradition.

However, Communists could not foresee that top secret documents would be
ever de-classified. It would be great if the Communist leader remembers
about that making his public performances.

Still, the author is not that idealistic hoping for the sudden Epiphany of
the Communist boss.

However, the threat uttered by Symonenko on the air turned into the appeal
to illegal actions. The appeal has been heard. Mass disorders did take
place.

Thus, there are enough legal grounds to sue Symonenko. But is it real,
taking into account his parliamentary privileges?

In this connection, the author and other ordinary tax-payers have a proposal
to the Interior Minister Yuriy Lutsenko. Should the government bring an
action against the Communist Party with the demand to pay out the money
spent by the Interior Ministry for security measures and arrangements?

Let Symonenko keep this money back from his MP wages.

Otherwise Comrade Symonenko, hoping for impunity and his parliamentary
privileges, will appeal to demolish Ukrainian Parliament. We do remember
similar precedents in the world history.                       -30-
———————————————————————————————–
(Translated from Ukrainian to English by Eugene Ivantsov)
———————————————————————————————–
LINK: http://www.pravda.com.ua/en/news/2006/10/18/6600.htm

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23.            TWO NEW BOOKS: POWER TO THE PEOPLE
How a failed revolution in Eastern Europe ended up saving untold numbers of lives.

Reviewed by Andrew Nagorski, Book World, The Washington Post
Washington, D.C., Sunday, October 22, 2006; Page BW10

RE: TWELVE DAYS
The Story of the 1956 Hungarian Revolution

By Victor Sebestyen, Pantheon. 340 pp. $26

RE: JOURNEY TO A REVOLUTION
A Personal Memoir and History of the Hungarian Revolution of 1956
By Michael Korda, HarperCollins. 221 pp. $24.95

Incensed by leaks about how their current rulers had lied about the economy,
Hungarian protesters took to the streets of Budapest last month, demanding
the resignation of Prime Minister Ferenc Gyurcsany. They attacked the state
TV station, overturned cars and fought with police, leaving about 200 people
injured. News reports pointed out that this was the worst outbreak of
violence in the country since the 1956 Hungarian Revolution, whose 50th
anniversary will be observed on Oct. 23.

True enough — but the two events can hardly be compared. The violence this
time was brief, and Hungary’s democratic system kept the crisis from
spinning out of control. In 1956, there was a real revolt — and very real
Soviet retaliation, resulting in about 2,500 deaths and 10,000 wounded
during the fighting, as well as an estimated 330 executions and thousands of
arrests after Soviet tanks crushed the rebellion. The unmistakable message:
The Kremlin wasn’t going to allow its satellite to break free.

Two new books provide a timely reminder of the short-lived revolt and its
long-term consequences. Twelve Days, by the Hungarian-born British
journalist Victor Sebestyen, is the more detailed chronicle, capturing the
rapid trajectory of an uprising that he is convinced was doomed. Michael
Korda’s Journey to a Revolution is at its best in recounting the author’s
improbable trip to Budapest right in the midst of the fighting.

Along with three other Oxford students, Korda — nephew of the famed
Hungarian émigré film producer Alexander Korda — filled up a Volkswagen
convertible with medical supplies and drove to the revolution. These
accounts neatly complement each other.

The starting point for this desperate revolt was the brutal rule of Mátyás
Rákosi, Stalin’s Hungarian imitator. In a country with a population of less
than 10 million, Sebestyen notes, 1.3 million people were persecuted during
the height of his reign of terror, from 1950-53; half of those people were
jailed, and more than 2,350 were summarily executed.

If Rákosi had ruled a bigger country, Sebestyen concludes, “he would now be
recognized as one of the greatest monsters of the twentieth century.” And as
one of the most cynical. Although Rákosi and many of his top aides were
Jewish, he immediately joined in Stalin’s anti-Semitic campaign just before
the Soviet dictator’s death in 1953.

The other key player was Imre Nagy, also a dedicated Communist Party member
who had spent many years in Moscow and then served in a variety of top
posts. Party boss Rákosi treated him as a dangerous rival because of his
occasional willingness to push for more conciliatory policies.

In 1955, Nagy was ousted as prime minister and expelled from the party. In
the wake of Nikita Khrushchev’s famous de-Stalinization speech in February
1956, Hungarians began to demand an end to Rákosi’s dictatorship. The
Kremlin opted to replace him with an ideological twin, Erno Gero. When
student protesters took to the streets on Oct. 23, they demanded the return
of Nagy.

Nagy was a reluctant revolutionary who still believed in a gentler brand of
communism while his supporters were dreaming of full freedom and Cold War
neutrality. When the Kremlin leaders reappointed him prime minister, they
did so hoping to quell the protests.

Instead, as the violence escalated and Hungary’s rebels drove the Soviet
occupiers out of Budapest, he was pushed into a more openly defiant stance.
At the end, this veteran communist won the hearts of most of the rebels,
even as he found himself deceived by his former Soviet masters, who launched
a massive assault on Budapest to retake control. During the fighting, one
freedom fighter told Korda that he had thought of Nagy as “just another
communist stooge,” but then he began to respect him. “He has balls,” he
concluded.

Nagy paid for his courage with his life. The Soviet Union sent in 500,000
troops to put down the hastily improvised rebellion, a show of force
designed to intimidate any would-be imitators elsewhere in Eastern Europe.

Despite the Eisenhower administration’s talk of “rollback” of the Iron
Curtain, Washington — along with London and other Western capitals — did
nothing to support the Hungarians. Korda believes that if the Suez crisis
hadn’t distracted it, the United States might have taken a different stance.

Sebestyen disagrees, and he’s almost certainly right. While criticizing
Radio Free Europe for its “bellicose” broadcasts, he asserts that there was
“nothing dishonorable” about Ike’s policy since there was little he could
do. Perhaps not — but, given its previous rhetoric, Washington should have
felt a burning sense of shame.

Both authors conclude that Moscow was the real loser in the long run. “Not
since Pyrhhus himself has there been so Pyrrhic a victory,” writes Korda.

The graphic images and dispatches of Western correspondents from Budapest
fully exposed the true nature of Soviet power. “Soviet savagery in Hungary
fractured the Left throughout the world, particularly in Europe,” Sebestyen
adds.

In subsequent showdowns in the region, the Kremlin was more cautious in
applying brute force — even when its tanks rolled again, this time to
suppress the Prague Spring of 1968. The two books fail to mention another
highly significant result: After Budapest, opposition movements like Charter
77 in Czechoslovakia and Solidarity in Poland realized that their most
effective weapon was nonviolent resistance.

Ultimately, the bloodshed in Hungary helped prevent another bloodbath as the
Soviet empire collapsed. Which is why Hungarians can be truly proud as they
commemorate the 50th anniversary of their seemingly hopeless revolt.   -30-
—————————————————————————————————-
Andrew Nagorski is a senior editor at Newsweek International. He is
completing a book about the battle for Moscow, scheduled for publication in
September 2007.                                -30-
—————————————————————————————————–
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/19/AR2006101901210.html
——————————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
24.                               AFTERMATH OF A MURDER
            Strange but predictable reactions to the killing of a Russian journalist

LEAD EDITORIAL: The Washington Post
Washington, D.C., Saturday, October 21, 2006; Page A18

IT HAS NOW been 14 days since Russian journalist Anna Politkovskaya was
murdered in Moscow. No one has been arrested for the crime, which is hardly
surprising: None of the dozen other killings of journalists since Vladimir
Putin became Russia’s president has been solved.

This one eliminated one of the fiercest and bravest critics of his
government, a reporter who had tenaciously documented the depravity of Mr.
Putin’s war against Chechnya. We don’t have any evidence implicating the
Kremlin, but it’s revealing to examine how Mr. Putin and his regime have
behaved over the past few days.

The president’s first reaction was a strange silence. While politicians,
media outlets and statesmen in Russia and around the world condemned Ms.
Politkovskaya’s murder, no word came from Mr. Putin for three days.

When finally compelled to speak, at a joint news conference in Germany with
Chancellor Angela Merkel, Mr. Putin offered a rote condemnation of the
attack.

He then disparaged Ms. Politkovskaya, saying that “the level of her
influence on political life in Russia was utterly insignificant.”

He made the ugly suggestion that foreign-based enemies of his government
were somehow behind the killing — a claim echoed in the state-controlled
press.

“We have information, and it is reliable, that many people hiding from
Russian justice have long been nurturing the idea of sacrificing somebody
in order to create a wave of anti-Russia feeling in the world,” he said.

Really? If so, Mr. Putin’s enemies also must have found a way to
manipulate his own security forces.

It was interior ministry operatives, after all, who violently broke up a
peaceful vigil in Ms. Politkovskaya’s memory in the Caucasian city of Nazran
on Monday. Flowers and pictures of the slain journalist were ripped from the
hands of the participants and stomped on.

Ekaterina Sokiryanskaya, a well-known activist of the human rights group
Memorial, was punched in the face and head; she suffered a broken nose
and a concussion. Three days earlier, a court ordered the closure of the
Russian-Chechen Friendship Society, one of the few nongovernmental
organizations still attempting to document abuses in that devastated
province.

On Thursday the government suspended the operations of Amnesty
International, Human Rights Watch and more than 90 other NGOs, saying
they had not met the requirements of a controversial new registration law.

One other part of this story has played out with depressing predictability:
the absence of any serious follow-up by Western leaders. [There has not

been any leadership or follow-up by leaders in Ukraine.  AUR EDITOR]

At the same news conference at which Mr. Putin uttered his ugly
insinuations, Ms. Merkel vowed that her government would press to complete
a new partnership agreement between the European Union and Russia when
Germany has the rotating E.U. presidency next year.

Yesterday Mr. Putin was invited to dine with European leaders at a summit in
Finland. If Ms. Politkovskaya’s murder remains unsolved, will it be an
obstacle to “partnership” between Russia and Europe? Sadly, Mr. Putin has
been given no reason to think so.                             -30-
————————————————————————————————–
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/20/AR2006102001639.html
——————————————————————————————————————-
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