AUR#766 Oct 2 World Bank Public Finance Review; Energy Investments; Privatisation Process Dead End; NATO Opposition Is Legacy Of Past; Road Map For Pres

========================================================
 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 766
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., MONDAY, OCTOBER 2, 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.  WORLD BANK FORECASTS RISE IN UKRAINE’S DIRECT PUBLIC
                                 DEBT TO 21.9 – 25.5% IN 2011-2015
                   Bank says Ukraine’s public sector is large and inefficient
Interfax-Ukraine, Kyiv, Ukraine, Wednesday, September 27, 2006

2.            UKRAINE: CREATING FISCAL SPACE FOR GROWTH
                             A Public Finance Review By World Bank
REPORT: Mark Davis and Pablo Saavedra, Lead Authors
World Bank, Washington, D.C., Kyiv, Ukraine, September 2006

3.   IMF EXPERTS SAY UKRAINE’S 2007 BUDGET SHOULD HAVE
   DEFICIT OF 2% OF GDP; SHOULD STOP INCREASING OUTLAYS
Interfax-Ukraine, Kyiv, Ukraine, Friday, September 30, 2006

4EBRD CORRELATES UKRAINE’S INVESTMENT ATTRACTIVENESS
               LEVEL HOW AUTHORITIES TREAT MITTAL STEEL
Interfax-Ukraine, Kyiv, Ukraine, Thursday, September 28, 2006

5EBRD: UKRAINIAN GDP TO GROW 5%-7% DURING NEXT 3 YEARS
     Surprised parliament has frozen utility tariffs, we don’t understand this at all.
Interfax-Ukraine, Kyiv, Ukraine, Friday, September 29, 2006

6. EX-FINANCE MINISTER PYNZENYK SLAMS YANUKOVYCH CABINET
   FOR PLANNING TO COVER BUDGET DEFICITS 2008-2010 WITH DEBT
Liudmyla Martynova, Ukrainian News Agency
Kyiv, Ukraine, Tuesday, September 26, 2006

7.  UNDP’S BLUE RIBBON COMMISSION RECOMMENDS UKRAINE
   RESTRAIN GROWTH OF BUDGET AND THE INFLATION EFFECT
Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 1, 2006

 
8.   PROSPECTS FOR WESTERN INVESTORS IN UKRAINE IN THE
             ENERGY SECTOR APPEAR TO BE GETTING WORSE
           View from the US: Black Sea politicking bodes ill for investors
By John Dizard, Financial Times
London, United Kingdom, Monday, October 2 2006

9   NADRA UKRAINY DECLARES 5 WINNERS IN TENDER FOR 
      EXPLORATION OF 5 OIL AND GAS DEPOSITS IN 5 REGIONS 
Yevhen Holovatiuk, Ukrainian News Agency
Kyiv, Ukraine, Thursday, September 26, 2006

10.   UKRAINE DROPS TEN PLACES IN THE WORLD ECONOMIC
           FORUM’S 2006 COMPETITIVENESS INDEX RANKINGS
                          Drops from 68th place down to 78th place
World Economic Forum (WEF) Geneva, Switzerland, September, 2006

11. US SOFTWARE DEVELOPER INDUSLOGIC & U.S.-UKRAINIAN
    BONUS TECHNOLOGY CO MERGE TO CREATE GLOBALLOGIC
50% stake to Draper Fisher Jurvetson, New Enterprise Associates and Sequoia
Interfax-Ukraine, Kyiv, Ukraine, Wednesday, September 27, 2006

12. UKRAINE: DAIMLERCHRYSLER CONSIDERING COOPERATION

         WITH AVTOKRAZ TO PRODUCE COMPONENTS FOR CARS
Interfax-Ukraine, Kyiv, Ukraine, Friday, September 29, 2006

13. FOREIGN INVESTORS WOULD WELCOME CANCELLATION OF

                  GERMAN ECONOMICS DELEGATE IN UKRAINE
Interfax-Ukraine, Kyiv, Ukraine, Friday, September 29, 2006

14.    UKRAINE, LITHUANIA AND POLAND PLAN TO CREATE A

 FUND FOR LVIV’S DEVELOPMENT ACCORDING TO PRESIDENTS
Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 1, 2006

15. PRES: “I EXPRESS UKRAINE’S INFINITE GRATITUDE TO LVIV”
Press Office of the President of Ukraine Viktor Yushchenko
Kyiv, Ukraine, Saturday, September 30, 2006

16 UKRAINIAN AUTOMOBILE MANUFACTURER BOGDAN SAID

     TO BE NEGOTIATING TO ASSEMBLE CHEVROLETS IN RUSSIA
Edmunds.com, Santa Monica, California, Saturday, Sep 23, 3006

17.                                 PRIVATISATION PLANS:
        MEETING TARGET NUMBERS OR IMPROVING QUALITY?
  Government plans to change procedure of privatisation to boost earnings
ANALYSIS: Roman Bryl, Ukraine Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Mon, Sept 25, 2006

18ROUNDTABLE CONFERENCE IN WASHINGTON TO ADDRESS
                UKRAINE’S PROSPECTS FOR NATO MEMBERSHIP
Center for U.S.-Ukrainian Relations (CUSUR)
New York, New York, Monday, October 2, 2006

 
19. YUSHCHENKO: OPPOSITION TO NATO IS LEGACY OF THE PAST
INTERVIEW: With Viktor Yushchenko, President of Ukraine
Interview By Adrian Karatnycky, President, Orange Circle
In Kyiv, Ukraine, on Friday, September 20, 2006
Global Viewpoint, Los Angeles, CA, Friday, September 27, 2006

20.                “OFFICIAL ROAD MAP FOR THE PRESIDENT”
                            Ukrainian president should lead opposition
ANALYSIS & COMMENTARY: By Mykhaylo Basarab
Ukrayinska Pravda website, Kiev, in Ukrainian 25 Sep 06
BBC Monitoring Service, United Kingdom, Monday, Oct 02, 2006

 
21.                       “THE SUPREME COURT’S NEW HEAD”
                      Ukraine’s opposition gets loyal Supreme Court head
REPORT:
By Oleksandr Prymachenko
Zerkalo Nedeli, Kiev, in Russian 30 Sep 06
BBC Monitoring Service, September 30, 2006
 
22.                          “SECOND CHERNOBYL DISASTER?
   Ukraine’s Chernobyl chief at odds with EBRD over tender for new shelter
ANALYSIS & COMMENTARY:
By Volodymyr Kovalenko
Zerkalo Nedeli, Kiev, Ukraine, in Russian 30 Sep 06, p 2
BBC Monitoring Service, United Kingdom, Saturday, Sep 30, 2006
 
23.                   IVAN FRANKO: CREATOR OF THE NATION
By Oleksandr Reient, Corresponding Member
National Academy of Sciences of Ukraine
The Day Weekly Digest in English #27
Kyiv, Ukraine, Tuesday, September 12, 2006
 
24BEAUTY SALON BUSINESS BOOMS IN POST-SOVIET UKRAINE
Deutsche Press-Agence (DPA), Kiev, Ukraine, Monday, Sep 18, 2006
 
25CONCERT: UKRAINIAN NATIONAL SINGER NINE MATVIYENKO
                      Washington, D.C., Thursday, October 5, 6:30 p.m.
Action Ukraine Report (AUR), Washington, D.C., Mon, Oct 2, 2006
========================================================
1
WORLD BANK FORECASTS RISE IN UKRAINE’S DIRECT PUBLIC
                              DEBT TO 21.9 – 25.5% IN 2011-2015
                 Bank says Ukraine’s public sector is large and inefficient

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, September 27, 2006

KYIV – The World Bank forecasts an increase in Ukraine’s direct public debt
in 2011-2015 to an average of 21.9% of GDP under its ‘base case’ scenario,
and to 25.5% under its ‘conservative case’ scenario, whereas in 2007-2010
the forecasts are 17.2% and 20.5% respectively, up from 14.5% and 15% in
2006.

The figures are given in a new economic report on Ukraine’s public finances
entitled “Creating Fiscal Space for Growth: A Public Finance Review” issued
by the World Bank on September 27.

The World Bank also predicts that Ukraine’s GDP growth will slow down in
2011-2015 to an average of 4.6-2.5%, depending on the scenario, from 5-3% in
2007-2010 (previously the World Bank projected Ukraine’s GDP growth in 2007
at 6-7%). In 2006, the World Bank expects the GDP growth in Ukraine at 5-6%.

World Bank experts say that the prospect of increased prices for energy give
the grounds to forecast a decline in the pace of GDP growth. Monetary and
fiscal conditions will not guarantee adequate reserves for absorbing shocks
from energy price hikes without the risk of further inflation, they say.

Moreover, the World Bank says that the deficit of Ukraine’s current balance
of payments in 2011 – 2015 is forecasted at 3.9-1.9% of GDP, in 2007-2010 –
4.3-3.5%, whereas in 2006 it will be less than 2%.

The World Bank also says that an increase in private investments in Ukraine
in 2011-2015 may slow down to 5.2-2.8% from 6.9-4% in 2007-2010 and

8.4-2.7% in 2006.

“The report concludes that Ukraine’s public sector is large and
inefficient,” reads a World Bank press release distributed on September 27.”
Ukraine’s public spending in 2005 was 44% of GDP, but only 2.2% of GDP

was spent on physical capital investment by the public sector.”

While encouraging greater public investment, the World Bank warns that the
money risks being wasted unless the capital budgeting process is improved.

“Completion rates for both national and donor-funded projects are very low,
planning and monitoring inadequate and fiduciary management is weak,” say
the World Bank experts.

“Without improved capacity for multi-year planning and budgeting of capital
investments, the risk of wasteful public investments responding to political
expediency rather than solid cost-benefit analysis is considerable.”    -30-
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.     UKRAINE: CREATING FISCAL SPACE FOR GROWTH
                         A Public Finance Review By World Bank

REPORT: Mark Davis and Pablo Saavedra, Lead Authors
World Bank, Washington, D.C., Kyiv, Ukraine, September 2006

There is scope in Ukraine for a better, more efficient, and smaller
government. To achieve this, Ukraine must change the consumption
orientation of its budget, which is hampering future growth, and move
towards more productive and efficient spending, and overall toward a
pro-growth fiscal policy.

The broad goals on the expenditure side of the budget should be to have
higher productive spending on infrastructure and more efficient social
spending, while reducing the overall size of public spending.

The fiscal space for this can be found by phasing out the most inefficient
subsidies and poorly-targeted social assistance programs in the budget.

In addition, significant fiscal savings can be obtained from parametric
changes in the pensions system, as recommended in detail in this report.

On the revenue side, the broad medium-term objective should be to lower
the average tax burden through lower rates on indirect taxes, particularly
on
payroll taxes. However, this policy should be preceded by specific reforms
geared to broaden the base and to improve compliance.

1. Why is Fiscal Space Needed in Ukraine? —–
Ukraine’s policymakers face important choices and trade-offs that will
affect the country’s development outcomes significantly.

This Chapter examines recent macro-fiscal development and sources of
tensions, funding needs, and pressures arising from the Government’s reform
agenda. The Chapter also explores what the term “fiscal space” means and how
fiscal space can be created and allocated in Ukraine’s budget.

2. Broadening the Tax Base and Improving Compliance, without Increasing
the Tax Burden —–
This chapter stresses the importance of the value-added tax (VAT) to the tax
system and the need to improve its administration significantly, while at
the same time fixing some VAT policy issues.

High marginal rates of payroll taxes must be lowered, but coupled with
reforms geared to broadening the tax base and improving compliance.

This chapter also recommends to keep the Simplified Tax System, but to
thoroughly reform it in order to stop the perverse incentives, inequalities,
and inefficiencies generated by this system for the regular tax system.

3. Finding Expenditure Savings by Improving Allocations —–
In Ukraine’s public spending, there is the scope and need for better
allocation efficiency, for better use of allocated funds, and for a
reduction in the overall size of public spending.

Significant expenditure savings can be achieved by rationalizing and phasing
out inefficient and poorly-targeted programs. Part of the savings obtained
can be used to finance the government’s reform agenda and increase the low
level of capital investments.

4. Getting Pension Reform Back on Track —–
While the government’s strategy measures are positive for the system’s
balance, they are not sufficient to introduce the second pillar and reduce
contribution rates, and to bring long-term fiscal sustainability to the
system. Consequently, additional savings are urgently needed.

The rising dependency ratio poses a serious risk to the long-term
sustainability of the system. The measures recommended here are geared to
mitigate those risks, to protect the poorer pensioners, and are in line with
international practices.

5. Capital Budgeting in Ukraine —–
Public investment is an important potential contributor to economic growth
and to achieving Ukraine’s development objectives.

Public capital spending in the country has increasingly supported subsidies
to enterprises, rather than fixed capital investment.

Moreover, capital spending is not efficiently targeted towards expressed
priorities. Significant efficiency gains could be achieved by enhancing the
processes of planning, formulating, allocating, and supervising capital
expenditures.

6. Creating and Allocating Fiscal Space within a Consistent Macroeconomic
Framework —–

When fiscal programs are not realistic regarding their resource constraints,
tensions begin to arise that can lead to fiscal crises and/or periods of
stagnation.

This chapter showcases an exercise based on the sources and uses of fiscal
space outlined in this report. It shows that different fiscal strategies are
associated with different investment outcomes.

The scenarios presented here highlight the inter-temporal dynamics between
investments and macro-fiscal variables and illustrate the ways in which
different policy packages are likely to affect economic outcomes.   -30-
————————————————————————————————–
http://siteresources.worldbank.org/INTUKRAINE/Resources/328335-1158937917927/PFR_ExecSummary.pdf
——————————————————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.     IMF EXPERTS SAY UKRAINE’S 2007 BUDGET SHOULD HAVE
    DEFICIT OF 2% OF GDP; SHOULD STOP INCREASING OUTLAYS

Interfax-Ukraine, Kyiv, Ukraine, Friday, September 30, 2006

KYIV – Experts of the International Monetary Fund (IMF) believe that a
national budget deficit of 2% of GDP is appropriate, while the
government-prepared draft budget for next year projects the deficit at
2.55%.

IMF Senior Resident Representative in Ukraine Jeffery R. Franks gave the
fund’s opinion at a meeting with First Vice-Premier and Finance Minister
Mykola Azarov, the Ukrainian Finance Ministry reported in a press release on
Friday.

According to Franks, IMF experts consider more acceptable a budget deficit
fixed at 2% of GDP or lower, but one could also agree to a deficit of 2.5%.
He said a challenge for the Ukrainian coalition government would be
refraining from greatly increasing budget outlays.

On the whole, Franks says, the draft budget has both positive sides and
those that raise concerns among IMF experts. The IMF has already prepared
certain recommendations on the document, he said.

Among the positive sides of the draft budget is its investor-oriented
feature, since the Ukrainian budgets for 2005-2006 were characterized by the
groundless prioritizing of spending on the social sphere.

Franks says that the national budget for next year will be oriented towards
raising social standards through supporting the investment component, which
will ensure Ukraine’s economic growth in the medium- and long-term outlook.

Moreover, the IMF supports an initiative to introduce a standard social tax,
as well as the attempt to cancel charges on forex operations, which will in
future have a positive impact on the monetary situation in the country.

In turn, Azarov said that the government is trying to make the 2007 national
budget realistic and well-balanced. In particular, he said, the creation of
a stabilizing fund will help in minimizing the negative aftermath of the
increase in gas prices.                                     -30-

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4. EBRD CORRELATES UKRAINE’S INVESTMENT ATTRACTIVENESS
                LEVEL HOW AUTHORITIES TREAT MITTAL STEEL
 
Interfax-Ukraine, Kyiv, Ukraine, Thursday, September 28, 2006

KYIV – The European Bank for Reconstruction and Development (EBRD)
correlates the level of Ukraine’s investment attractiveness with the
authorities’ attitude to Mittal Steel as a large investor.

EBRD Country Director Kamen Zahariev gave the bank’s position at a

meeting of the top management of OJSC Mittal Steel Kryviy Rih (formerly
Kryvorizhstal steel mill) in Dnipropetrovsk region with diplomats and
representatives of international organizations in Ukraine, Mittal Steel
Kryviy Rih reported in a press release on Thursday.

Zahariev said that the Ukrainian authorities’ attitude to such a large
investor as Mittal Steel would in many respects determine relations of
foreign investors to Ukraine.

Zahariev said that in 2006 the EBRD provided Mittal Steel Kryviy Rih with

a large loan – the largest over the Bank’s work in Ukraine – $200 million.

“We’re working with the Mittal Steel company for many years in various
countries in Europe and Asia and treat this company as a reliable and
effective partner,” the press service quotes Zahariev as saying.

According to the press release, after the investor acquired the steel mill,
investments in modernization of fixed capital have topped $85 million, the
output of marketable rolled stock and sales have grown by 14% and 23%
respectively since the beginning of 2006.                    -30-
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
    Send in names and e-mail addresses for the AUR distribution list.
========================================================
5. EBRD: UKRAINIAN GDP TO GROW 5%-7% DURING NEXT 3 YEARS
     Surprised parliament has frozen utility tariffs, we don’t understand this at all.

Interfax-Ukraine, Kyiv, Ukraine, Friday, Sep 29, 2006

KYIV – Growth in Ukrainian GDP in the coming three years is expected to
amount to 5%-7%, European Bank for Reconstruction and Development

Ukraine Director Kamen Zahariev said.

“At the moment we are extremely surprised that parliament has frozen utility
tariffs – we don’t understand this at all. However, other macroeconomic
indicators, I think, will indicate a further trend towards stabilization and
slow, but good growth in GDP. We expect it to amount to 5%-7%. This will

be in the next three years,” he said in an interview with the Ukrainian
newspaper Delo.

He said that growth in public incomes in recent years means that growth in
Ukrainian GDP is not only based on heavy industry and exporters.

“At the moment GDP largely depends on wholesale trade, frequently even
retail trade inside the country, and the development of the services
sector,” he said.  He added that he expects renewed cooperation between the
EBRD and Ukraine in the oil and gas sector, which was halted several years
ago.

“The amounts will depend on projects. In preliminary negotiations that we
held with previous management Naftogaz Ukrainy, we discussed 300 million
euros for the next two years. Plus another 300 million [euros] – from the
European Investment Bank,” he said.                         -30-
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6. EX-FINANCE MINISTER PYNZENYK SLAMS YANUKOVYCH CABINET
   FOR PLANNING TO COVER BUDGET DEFICITS 2008-2010 WITH DEBT

Liudmyla Martynova, Ukrainian News Agency
Kyiv, Ukraine, Tuesday, September 26, 2006

KYIV – Former Finance Minister Viktor Pynzenyk is criticizing the Cabinet of
Ministers of Viktor Yanukovych for its intention to increase the state debt
to finance the national budget deficit in 2008-2010. This follows from a
statement by the Reforms and Order Party, which is headed by Pynzenyk.

“Instead of conducting the policy aimed at reducing the state debt, which
has been conducted over the last year and a half, the new government plans
to tighten the debt noose around Ukraine’s neck,” the press service cited
Pynzenyk as saying.

In such a way, Pynzenyk commented on cabinet resolution No.1359 dated
September 25 on forecasted consolidated budget indicators on basic types

of revenues, expenses and financing in 2008-2010.

Pynzenyk noted that as of August 1, 2006, the state debt of Ukraine totaled
UAH 74.2 billion, which is UAH 11.2 billion down on the beginning of 2005.

The former minister says that the new cabinet plans to double the state debt
by 2010 to UAH 188 billion – this very debt level (20% of GDP) is fixed in
the government’s forecasts of economic development. According to Pynzenyk,
growth of annual budget outlays on servicing this debt will top UAH 15
billion.

At the same time, Pynzenyk noted that the 2007 budget draft worked out by
the cabinet foresees UAH 10.3 billion for funding expenses of the Education
Ministry, round UAH 4 billion for outlays of the Health Ministry and UAH 0.8
billion for the Culture Ministry.

As Ukrainian News earlier reported, in resolution No.1359 of September 25,
the cabinet forecasts growth of consolidated budget revenues (state and
local budgets) to UAH 265.9 billion (28.29% of GDP) in 2010 while outlays
will grow to UAH 289.1 billion (30.76% of GDP).

The government intends to retain the budget deficit at the level of not more
than 3% of GDP and to cover it with state loans and privatization funds.

At the same time, the cabinet foresees a gradual increase of budget
financing stake via debt operations to 44% of the total volume of financing
in 2008, 56% in 2009 and 67% in 2010.

The government intends to retain the volume of state debt at economically
safe level not more than 20% of GDP (the indicator was 18.4% of GDP in
2005).

The cabinet forecasts GDP growth in 2008 at 7.6% to UAH 708 billion, at 7%
to UAH 820 billion in 2009 and at 6.5% to UAH 939.9 billion in 2010. -30-

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7. UNDP’S BLUE RIBBON COMMISSION RECOMMENDS UKRAINE
   RESTRAIN GROWTH OF BUDGET AND THE INFLATION EFFECT

Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 1, 2006

KYIV – The Blue Ribbon Commission, an independent body created and

supported by the United Nations Development Program (UNDP), is
recommending the Ukrainian government to restrain growth of budget
outlays and their inflation effect.

This follows from a report by the Blue Ribbon Commission, a copy of

which was made available to Ukrainian News.

Particularly, the government should avoid further essential increases in
social spending and ensure that the 2007 national budget deficit does not
top this year’s deficit.

The commission is suggesting that the cabinet revise the structure of

budget outlays and give priority to necessary government investments.

‘In order to restrict the inflation pressure, revenues from privatization
should be favorable to investments, not consumption,’ the commission’s
report reads.

As Ukrainian News reported, earlier the Blue Ribbon Commission drafted

eight priority economic recommendations for Ukraine. The Blue Ribbon
Commission is an independent body of eminent national and international
experts.                                             -30-
————————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
     NOTE: Send in a letter-to-the-editor today. Let us hear from you.
========================================================
8. PROSPECTS FOR WESTERN INVESTORS IN UKRAINE IN THE
           ENERGY  SECTOR APPEAR TO BE GETTING WORSE
           View from the US: Black Sea politicking bodes ill for investors

By John Dizard, Financial Times
London, United Kingdom, Monday, October 2 2006

The prospects for western investors in Ukraine, particularly the energy
sector, appear to be getting worse under the coalition government led by
Victor Yanukovych that took office in early August.

The development of the Black Sea offshore oil and gas prospects, one of the
more promising deep offshore areas in the world, now seems threatened by a
“resource nationalism” that could just be a cover for transfers to new
oligarchs.

Governments should push for the best deals possible for nationally owned
resources. Norwegian and Dutch negotiators are known for their pitilessness
(and honesty) in dealing with oil companies; not a bad model for Ukraine to
have followed.

However, Yuri Boyko, Ukraine’s minister for fuel and energy, has been
insisting that Ukrainian state-connected companies should take the lead in
developing the Black Sea. If we were talking about companies with the
technology and integrity of, say, Norway’s Statoil, that would be realistic.

But given the technological backwardness and shadowy control and ownership
structures of the Ukrainian concerns, the new government leaders seem to
have something else in mind.

As one oilman operating in Ukraine’s onshore patch, (who has no offshore
capability himself) says: “There are only five companies in the world who
could develop a deep offshore prospect such as the Black Sea. For the energy
minister to say he wants Ukrainian companies to develop this is absurd.

They can’t even maintain their production for onshore wells. If they wanted
to hand over control of the country’s hydrocarbons to Gazprom, this would be
the way to do it.”

Under a controversial tendering process concluded by the Ukrainian
government in April, a consortium of Vanco International Ltd, run by Gene
Van Dyke of Houston, and Nathaniel Rothschild’s JNR Eastern Investment

Ltd, received the right to negotiate a production sharing agreement (PSA)
covering 12,900 sq km of the Black Sea.

Neither Vanco nor JNR EIL have the internal operating capability to conduct
seismic exploration and drilling; assuming the PSA negotiations are
concluded, those functions would be subcontracted.

“That should have been divided into smaller blocks,” says our Ukrainian
oilman, “and the process should have been made entirely transparent, which
it was not.”

Mr Van Dyke says: “I met with Boyko [after he took office] and his concern
was ‘why don’t we do this ourselves’. Well, they have drilled on their shelf
down to 40m. Our block is from 400m deep to 2,200m deep.” It is only in the
last five years or so that even the largest and most technically capable
companies have implemented the technology for such deep drilling.

Edward Chow, an energy consultant who worked with Chevron on Caspian and
Chinese projects, and who has done extensive analyses of Russian and
Ukrainian energy policy, says that while big western energy companies could
develop the Black Sea, their participation has certain disadvantages from
the point of view of some Ukrainian politicians.

“If major western companies get involved in Ukraine, they will have to open
up the black box of their policies, and all sorts of cockroaches will come
out. Who gets access to local customers? Who gets what prices for your
production? Who gets access to pipelines and how do they get it? Who gets

to export?”

Yulia Tymoshenko, the former prime minister of Ukraine, and now leader of
the opposition, could benefit from internal opposition to the energy
dealings.

According to Mr Chow: “There is no one other than Tymoshenko to lead on the
transparency issue. She is speaking on behalf of good government, of asking
why Ukraine needs middlemen and shadowy deals.”

“Her attitude,” says the Ukrainian oil operator, “is that Ukraine should
have half of any production from a deal with western companies. That is
perfectly acceptable, and what the industry is accustomed to working with in
the rest of the world. At least she wanted to bring in western investment to
the energy industry, and believe me, they can’t do it themselves.

“Look at the operating capability of the Ukrainian companies Boyko is
talking about. It takes them about five times as long to drill onshore wells
as it does in the west. To drill a 3,000m well takes them 300 days. Their
equipment is terrible. There is no effective service industry here yet.
Tymoshenko seems to understand that, while this government doesn’t seem

to care about the facts.”

Mr Van Dyke, who is still optimistic he’ll be able to work out a PSA with
Ukraine by his December 1 deadline, admits that it will be difficult and
expensive to fulfil the contract.

“When I drilled two wells off west Africa, the day rate was $195,000. Now
it’s over $500,000 a day, and you can’t get them. There aren’t any
drillships operating in the Black Sea now. Drilling in deep water is now
horribly tough.”

Steve Pifer, a senior adviser on Russia and Ukraine with the Center for
Strategic and International Studies in Washington, says: “I don’t think the
government is really interested in negotiating a deal with Vanco. I think
sabotaging the deal may be the objective.

The issue for energy minister Boyko is not what gets done but who does it.
If it’s going to be done by people he doesn’t control, he doesn’t want to do
it at all.”

There is good news here for one group: Gazprom investors. At this rate, the
Russian gas company will be able to hold on to a nation of customers for
decades longer.                                       -30-

———————————————————————————————–
Contact John Dizard: johndizard@hotmail.com
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
9.    NADRA UKRAINY DECLARES 5 WINNERS IN TENDER FOR
     EXPLORATION OF 5 OIL AND GAS DEPOSITS IN 5 REGIONS 

Yevhen Holovatiuk, Ukrainian News Agency
Kyiv, Ukraine, Thursday, September 26, 2006

KYIV – Nadra Ukrainy, a national joint-stock company, has declared five
companies as winners in the tender for drawing in investors that would
conduct geological surveys and develop five deposits in five regions.
Ukrainian News has learned this from the company’s press service.

Enerhia Ltd., which appeared to be the only claimant, was named the winner
to explore the Semyhynivske oil field (approximate investment is UAH

162.670 million).

Metal Trade 2000 Ltd. was declared the winner for the Berestovske (Sumy
region) oil and gas field. The company offered the best conditions for
funding its work and guarantees on its own financial liabilities.

Particularly, the company declared its readiness to invest UAH 48 million
into development of the Berestovske field in 2006-2008.
It also provided the banking guarantees of UAH 73 million.

Metal Trade 2000 Ltd. was also selected for exploration of the Bokhanovske
oil and gas field (Chernihiv and Poltava regions). It is ready to invest UAH
85.2 million into the project in 2006-2008. The banking guarantee totals UAH
73 million.

OJSC ZakhidEnerhoBud, the only contender, received permission to develop

he Strashevytske oil filed (Lviv region).

OJSC AhroNaftohazTekhServis was announced the winner to develop the
Mezhrichenske oil area in Ivano-Frankivsk region (also the only contender).

As Ukrainian News earlier reported, a total of eight companies submitted
bids in the tender for attracting investors that would explore five oil and
gas deposits in five regions.

In August, Nadra Ukrainy declared a tender for exploration of Berestovska
(Sumy region) and Bokhanovska (Chernihiv Poltava region) oil and gas areas
belonging to ChernihivNaftohazHeolohia.

Besides, it declared a tender for exploration of Semyhynivske oil deposit
and Strashevytska oil area in Lviv region, and also for Mezhrichenska oil
area in Ivano-Frankivsk region belonging to ZakhidUkrHeolohia.

Also, it called a tender for exploration of Crimean Pervomaiska oil and gas
area belonging to KrymHeolohia.

Nadra Ukrainy provides exploration of natural resources and investment
projects in the sector in Ukraine. The company includes 14 exploration and
specialized enterprises. Nadra Ukrainy ended 2005 with a loss of UAH 10.8
million.                                            -30-

———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
10.  UKRAINE DROPS TEN PLACES IN THE WORLD ECONOMIC
           FORUM’S 2006 COMPETITIVENESS INDEX RANKINGS
                       Drops from 68th place down to 78th place

World Economic Forum (WEF) Geneva, Switzerland, September, 2006

GENEVA – Ukraine has seen deterioration in its competitiveness over the past
year, dropping from 68th down to 78th place in the World Economic Forum’s
Global Competitiveness Index (GCI) rankings for 2006-2007.

The economy has grown at a healthy pace during the last couple of years but
for this growth to be sustained it will be necessary to tighten policies to
improve the outlook for the public finances, slow down inflation and create
room in the budget for higher outlays for upgrading the country’s
infrastructure.

More importantly, a number of reforms need to be implemented to improve
the country’s institutional environment and the investment climate. Ukraine
suffers from dysfunctional property rights, perceptions of abuse and
arbitrariness at all levels of government, including in the courts.

While levels of corruption appear to have come down from early 2004, they
are still high by international standards.

The country does better in terms of indicators that capture aspects of its
human capital potential (for instance, high university enrolment rates), but
this is not enough to prevent an overall low competitiveness rank.

“The Ukrainian government has expressed a desire to be eventually considered
as a possible candidate for EU accession. This makes good economic and
political sense. It is to be hoped that, as in Poland, Hungary and the rest
of Central and Eastern Europe, this could act as a disciplining mechanism
for better policies and the modernization of the country’s institutions.

Without doubt, Ukraine belongs in Europe. Now it must start walking in that
direction, to meet the challenges of eventual EU membership,” said Augusto
Lopez-Claros, Chief Economist and Head of the World Economic Forum’s
Global Competitiveness Network.

Switzerland, Finland and Sweden are the world’s most competitive economies
according to the report. Denmark, Singapore, the United States, Japan,
Germany, the Netherlands and the United Kingdom complete the top ten list,
but the United States shows the most pronounced drop, falling from first to
sixth.

The rankings are drawn from a combination of publicly available hard data
and the results of the Executive Opinion Survey, a comprehensive annual
survey conducted by the World Economic Forum, together with its network
of Partner Institutes (leading research institutes and business
organizations) in the countries covered by the Report.

This year, over 11,000 business leaders were polled in a record 125
economies worldwide. The survey questionnaire is designed to capture a broad
range of factors affecting an economy’s business climate that are critical
determinants of sustained economic growth.

The Forum annually delivers a comprehensive overview of the main strengths
and weaknesses in a large number of countries, making it possible to
identify key areas for policy formulation and reform.

This year marks an important progression in The Global Competitiveness
Report’s methodology, with the adoption of a new, more comprehensive, tool
to assess countries’ competitiveness: the Global Competitiveness Index
(GCI).

Developed for the World Economic Forum by Professor Xavier Sala-i-Martin
of Columbia University, the new index – representing two years of
collaboration with him and feedback from a broad set of users – extends and

deepens the concepts and ideas underpinning the earlier index used by the
Forum.

“The introduction of the Global Competitiveness Index is a logical extension
of the World Economic Forum’s competitiveness work. Changes in the global
economy and the increasing complexity which characterize the business
environment have made it necessary to develop an instrument that captures a
larger set of factors affecting the evolution of economic growth.

We are confident that this index, elegant in design and with a strong
conceptual underpinning, will become an important tool for dialogue with
policy-makers and the business community on the key drivers of
 productivity,” said Augusto Lopez-Claros.

“With the growing complexity of the global economy, The Global
Competitiveness Report is a contribution to enhancing our understanding of
the key factors which determine economic growth and will help explain why
some countries are much more successful than others in raising income levels
and opportunities for their respective populations.

By providing detailed assessments of the economic conditions of nations
worldwide, the Report offers policy-makers and business leaders an important
tool in the formulation of improved economic policies and institutional
reforms,” noted Klaus Schwab, Founder and Executive Chairman of the World
Economic Forum.

Harvard Business School Professor Michael E. Porter presents the results of
the Business Competitiveness Index (BCI), an especially useful complement to
the GCI, with its emphasis on a range of company-specific factors conducive
to improved efficiency and productivity, such as the sophistication of the
operating practices and strategies of companies and the quality of the
microeconomic business environment in which a nation’s companies compete.

Results of the BCI rankings are fully reported in the Executive Summary and
available online at www.weforum.org/gcr.

The World Economic Forum continues to expand geographic coverage of The
Global Competitiveness Report and with the current installment featuring a
total of 125 economies, this Report is the most comprehensive of its type.
This year, coverage has been expanded to Angola, Barbados, Burkina Faso,
Burundi, Lesotho, Mauritania, Nepal, Suriname and Zambia.

This year’s Report features a number of country-specific boxes on Argentina,
Brazil, France, Hungary, Israel, Japan, South Africa, Turkey and the United
States, providing an in-depth analysis of the issues affecting national
competitiveness.

Moreover, the Report contains a number of external studies on pertinent
issues related to global competitiveness and, more generally, themes which
emanate from the World Economic Forum’s concern with growth and
development.

In addition to these, the Report also includes an interview, in which the
Forum’s Chief Economist Augusto Lopez-Claros talks to Harvard Professors
Richard Cooper and Kenneth Rogoff about the ramifications of global
imbalances.

The Report contains a detailed country/economy profile for each of the 125
economies featured in the study, providing a comprehensive summary of the
overall position in the Index rankings as well as a guide to what are
considered to be the most prominent competitive advantages and competitive
disadvantages of each. Also included is an extensive section of data tables
with global rankings covering over 100 indicators.
======================================================
The World Economic Forum is an independent international organization
committed to improving the state of the world by engaging leaders in
partnerships to shape global, regional and industry agendas.

Incorporated as a foundation in 1971, and based in Geneva, Switzerland,

the World Economic Forum is impartial and not-for-profit; it is tied to no
political, partisan or national interests. (http://www.weforum.org)
—————————————————————————————————
http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm
——————————————————————————————————————-
Contact: Mark Adams, Head of Communications
Tel.: +41 (0) 22 869 1210, Fax: +41 (0)22 869 1394
E-mail: mark.adams@weforum.org, http://www.weforum.org
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
11. US SOFTWARE DEVELOPER INDUSLOGIC & U.S.-UKRAINIAN
    BONUS TECHNOLOGY CO MERGE TO CREATE GLOBALLOGIC
50% stake to Draper Fisher Jurvetson, New Enterprise Associates and Sequoia

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, September 27, 2006

KYIV – The U.S. company Induslogic, an international software developing
company, has announced its merger with U.S.-Ukrainian Bonus Technology

and the creation of a new company named GlobalLogic.

As head of GlobalLogic Peter Harrison said during a press conference in Kyiv
on Monday, the new company will continue developing new software and will
occupy leading positions on the world’s outsourcing market.

As Harrison said at the press conference, both companies are private. He
said it is very difficult to place an exact value on the Ukrainian company
but it in the tens of millions of dollars. He said that the companies merged
on equal terms.

He also reported that a 50% stake in the new company will be given to
international venture companies Draper Fisher Jurvetson (DFJ), New
Enterprise Associates (NEA) and Sequoia, while the rest of the shares will
be distributed between the top-manages of both companies.

According to Harrison, Induslogic’s profit in 2005 was $20 million. The
newly created GlobalLogic plans to receive $50 million in 2006, and the
target revenues for 2007 are $100 million.

The new company plans to extend its presence in China and India. According
to GlobalLogic’s finance director in Europe, Dmytro Lysytsky, the company is
going to hold IPO not earlier than in one year, but no later than in three
years.

Harrison also said GlobalLogic, which currently employs over 1,300 people,
plans to create 1,000 more vacancies [jobs?] in Ukraine’s high tech sector.

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
 If you are receiving more than one copy of the AUR please contact us.
========================================================
12. UKRAINE: DAIMLERCHRYSLER CONSIDERING COOPERATION
         WITH AVTOKRAZ TO PRODUCE COMPONENTS FOR CARS

Interfax-Ukraine, Kyiv, Ukraine, Friday, September 29, 2006

KYIV – DaimlerChrysler is considering cooperation with holding company
Kremenchuk-based AvtoKrAZ in Poltava region, the Ukrainian company’s

press service told Interfax-Ukraine.

DaimlerChrysler delegates have visited AvtoKrAZ to familiarize themselves
with the production, technical and technological possibilities of AvtoKrAZ’s
companies and discuss the possibility of production of units and components
for the companies incorporated into DaimlerChrysler, the source said.

“We’re looking for car manufacturers that could produce components according
to our technical requirements for DaimlerChrysler,” the press service quotes
one of the delegates as saying.

“KrAZ is a company with traditions. What we’ve seen today is professionally
organized production. The commodities made at KrAZ are of high quality.

With what we’ve seen today, I have no reason for us not to cooperate.” -30-
—————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
             Send in a letter-to-the-editor today. Let us hear from you.
========================================================
13. FOREIGN INVESTORS WOULD WELCOME CANCELLATION OF

             VAT ON INVESTMENT IN STATUTORY FUNDS, SAYS
                  GERMAN ECONOMICS DELEGATE IN UKRAINE

Interfax-Ukraine, Kyiv, Ukraine, Friday, September 29, 2006

KYIV – A delegate of the German Bureau of the Economy in Ukraine, Karin

Rau, has said that foreign investors would welcome the cancellation of 20%
VAT on investments in statutory funds of joint-stock companies.

The Ukrainian president’s press service said that the issue was raised
during Rau’s meeting with the head of the presidential secretariat Viktor
Baloha in Kyiv on Wednesday.

“This tax policy makes it unfavorable to invest in Ukraine and restrains
foreign investment in the real economical sector,” Rau said.

Baloha said that the Ukrainian president would insist that the issue is
reviewed during the drawing up of the law on the 2007 national budget and
the simulation of investment development in the country.

“The president emphasizes that German investment should be attracted in
Ukraine, in particular, into the advanced technology sphere,” he said.

Baloha also said that Ukraine is considering Germany as the key foreign
partner in the political and economic spheres.

The sides also discussed the preparations for the international
German-Ukrainian car forum, which is to be held in late October in Kyiv.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
14.   UKRAINE, LITHUANIA AND POLAND PLAN TO CREATE A
 FUND FOR LVIV’S DEVELOPMENT ACCORDING TO PRESIDENTS

Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 1, 2006

KYIV – President of Ukraine Viktor Yuschenko and his Lithuanian and Polish
counterparts Valdas Adamkus and Lech Kaczynski are planning to initiate the
creation of a fund for facilitating the development of Lviv. This follows
from a statement by the presidential press service.

The presidents signed the corresponding joint declaration during their
September 30 meeting in Lviv during the celebrations of Lviv’s 750th
anniversary.

In the document, the sides addressed the peoples and presidents of those
countries that contributed into the formation of Lviv cultural traditions,
as well as international organizations, public, people in culture and
business representatives concerning the development and preservation of
Lviv’s cultural heritage and the city’s architecture.

The meeting participants are confident that the declaration will essentially
contribute into the development of Lviv’s uniqueness in future.

During the meeting, the presidents also discussed relations between Ukraine,
Lithuania and Poland. The three leaders particularly talked over cooperation
in the energy sector, including the Odesa-Brody-Plock project and holding

of a summit on energy issues with the countries interested in the project.

Apart from this, Yuschenko, Adamkus and Kaczynski talked about the
countries’ cooperation in their integration with Europe and NATO. The sides
also focused on the current situation in Georgia. The presidents expressed
their concern about the developments, saying it is necessary to find
diplomatic solutions to the problem.

From the Ukrainian side, Foreign Minister Borys Tarasiuk and Deputy Head

of the Presidential Secretariat Oleksandr Chalyi also took part in the meeting.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
15. PRES: “I EXPRESS UKRAINE’S INFINITE GRATITUDE TO LVIV”

Press Office of the President of Ukraine Viktor Yushchenko
Kyiv, Ukraine, Saturday, September 30, 2006

KYIV – Victor Yushchenko has spoken at an official ceremony to mark the
750-year anniversary of Lviv. In his speech, the President said: “I have
been intimately conversing with Lviv for many years. Circumstances, Lviv

and I change in this dialogue but today I will responsibly express Ukraine’s
infinite gratitude to Lviv.”

Mr. Yushchenko said he treated all Ukrainian cities, towns and regions
equally but admitted that he profoundly valued “the distinct and
consolidating national character that Lviv displays.”

“I firmly believe that Ukraine will be truly great when it overcomes the
slightest symptoms of internal phobias and stops heeding the imposed myths
about the easterners and westerners, speaking with national confidence
instead. In this context, the role of Lviv is special,” he opined.

The Head of State believes our “meaningful European path” is in Lviv and
thus the city is destined to guide the country to Europe.  He said he
appreciated the “creative presence” of Poland and Lithuania in Lviv.

“On behalf of Ukraine, I am bowing my head to honor Lviv residents that
sacrificed their lives for our country’s independence, among them Cossack
riflemen, soldiers of the Ukrainian Galician Army and warriors of the
Ukrainian Rebel Army.”

Addressing church patriarchs, “I would like to honor the Greek Catholic
Church, which pillars our nation,” he said.

Mr. Yushchenko also thanked each resident of Lviv that contributed to the
revival of Ukraine in 1991 and helped it gain freedom in 2004.

“The city of Lviv in Ukraine protects the nation from the threat of becoming
inferior. Let these magnificent guards be always zealous and deserving, and
that is the most important thing I want to wish my dear and beloved city,”
he said.                                              -30-
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
16.  UKRAINIAN AUTOMOBILE MANUFACTURER BOGDAN SAID

    TO BE NEGOTIATING TO ASSEMBLE CHEVROLETS IN RUSSIA

Edmunds.com, Santa Monica, California, Saturday, Sep 23, 3006

MOSCOW – Ukrainian automobile manufacturer Bogdan is said to be
negotiating a deal to assemble Chevrolets – not in Ukraine, but in Russia,
according to the publication Kommersant.

The newspaper estimates the value of the deal at $150 million to $200
million and said it involves construction of a plant with an annual capacity
of 50,000 cars.

General Motors already has assembly deals in Russia with Avtovaz and with
Avtotor, building several Opel-based products as well as a handful of
American designs, including the Hummer H2.

Kommersant reported that Bogdan is in discussions with the Russian Economic
Development and Trade Ministry. It said the Chevy plant could be located in
the Nizhny Novgorod region in central Russia, where it already is
negotiating to build a joint-venture plant with French automaker PSA Peugeot
Citroën.

Sales of Chevrolet vehicles in Russia were up nearly 200 percent in the
first six months of 2006, the paper said.

What this means to you: GM wants to extend its global footprint, including
in the largely untapped markets of the former Soviet Union.
———————————————————————————————–
http://www.edmunds.com/insideline/do/News/articleId=116910?imw=Y
———————————————————————————————–

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
17.                              PRIVATISATION PLANS:
       MEETING TARGET NUMBERS OR IMPROVING QUALITY?
  
  Government plans to change procedure of privatisation to boost earnings

ANALYSIS: Roman Bryl, Ukraine Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Mon, Sept 25, 2006

The privatization process has come to a dead-end as state property fund
(SPF) fails to fulfill its targets for revenues from sale of state property.

In Jan-Aug SPF managed to sell property for only USD 61.6mn, while it was
ordered to sell for at least USD 400mn in full-2006. It is obvious that SPF
will not reach the goal this year.

We have doubts that it will be able to satisfy government’s demands for next
year, i.e. sell state property for USD 2bn. Observing the current situation,
government does not want to lower targets, but instead proposes to change
the mechanism of privatization itself.

State property fund plans to test new scheme of privatisation of state
property together with land, but this appears to be too difficult The first
step government made in that direction was a decision to sell state property
together with land it is situated on.

There are no other examples besides Ukraine, when the state sells property
that actually hangs in mid-air, then finance minister Victor Penzenyk said
once. Selling property together with land could help boost the price of
assets and government could receive more funds from privatization.

Yuri Yekhanurov’s government started to develop a procedure of selling
property together with land but it appeared that additional laws should be
approved, the mechanism of evaluating property and land changed, new ways

of communicating with local authorities found, and etc.

It was expected that selling Kyiv Motorbike Plant would be the first pilot
project of privatization under the new scheme. The plant is a rather juicy
morsel: it is located on a plot of land of more than 35 hectares, mostly in
the center of Kyiv. It was scheduled to sell the plant by the end of this
year, but recently SPF decided to postpone it until next year.

New scheme of privatisation delays privatisation —–

 
Partially the postponement was caused by unexpected problems that
appeared when SPF decided to privatize the plant via the new scheme.

The official version of such a decision is as follows: SPF should first
compile the list of objects owned by the state that could be sold together
with land.

Then, together with state committee on land resources, determine the total
area of land and enterprise’s legal right to use the land. Then SPF and
committee should decide on the expediency to sell the property together with
land. And finally, government should make the final decision on
privatization of the company.

In spite of too long procedure of privatization – the minimum term is 3-4
months – there are other problems that can spoil government’s plans to raise
more money.

[1] First, to sell the asset SPF should organize a tender on choosing a land
utilization organization that would make the identification of the land (to
determine its precise area and borders).

[2] Second, SFP also should hold another tender to select a company that has
a license to make the evaluation of the land. These procedures can be done
simultaneously. It takes about 2 months to complete them.

[3] Third and the most complicated stage – the appraisal of land by local
authorities. At this stage a potential conflict between state and local
authorities can arise.

Local authorities wants keep land of privatised enterprises in their
ownership —–

Local authorities are dissatisfied with the possibility to lose one of its
main sources of revenues – land leasing. When state property is sold
together with land, local authorities receive only 5-10% of its price. But
the present procedure stipulates that while selling state property, land
where it is situated becomes municipal property.

Actually it starts to lease this land to the new owner of the privatized
company. For instance, Kyiv municipality gains USD 360,000 rent annually
from Bolshevik machine-building plant located on 42 hectares.

It is expected that local authorities would reject results of state
evaluation of land giving their view of its price. That potentially can
protract the process of selling an enterprise.

There is another threat: an investor could buy state property just to obtain
the land. Such an investor could not bother about keeping an enterprise
alive.

Government revises list of companies slated for privatization —–

The new procedure of selling state property is not only a tool government
plans to use to boost revenues from privatization.

Government wants to receive a real list of enterprises that can be
privatized in 2007 instead of the existing list that includes all state
property objects the state wants to get rid of.

The majority of enterprises slated for privatization in the current list is
illiquid companies SPF has been trying to sell for many years. Some of them
were declared bankrupt (e.g. TV set producer Slavutych plant and Illichivsk
ore repairing plant).

Other exist only on paper, while real assets were distributed among private
companies. And finally, the most attractive enterprises are presently banned
from privatisation.

Government plans to lift ban on state enterprises forbidden to be
privatised —–

To see the real picture, government is preparing to revise the list of
enterprises for privatization in 2007. It even proposed to abolish the law
on the list of companies banned from privatization that includes 47
enterprises. Most of these state companies are regional publishing houses.

The previous government refused to sell them to secure equal access to
publishing from different independent organizations. At the same time, the
list includes machine-building enterprises that potential investors were
interested in.

The most wanted among them is Mykolaiv shipyard named after 61 Communars.
Several governments tried to sell it to investors from Greece, Poland,
Norway, but still it stays in state property.

Kharkiv-based Energotyazhmash is another highly attractive enterprise. It is
the only domestic producer of turboalteroators and hydroelectric generators
used by nuclear and hydropower plants. The new government also plans to sell
part of the assets of state railroad operator Ukrzaliznytsya, mainly the
railcar-repair plant.

Odessa, Kerch and Illichivsk shipyards are also to be sold off. Also,
government plans to lift the ban on privatization of some military plants,
in particular Kyiv-based automation production plant named after Petrovsky.

State telecom major Ukrtelecom might be sold next year —–

But the most real source of filling the state budget gap with privatization
revenues is state telecommunication company Ukrtelecom. At present it is
excluded from the list of monopolies, which simplifies the sale procedure.

Besides, there is an influential lobbyist of the privatization of
Ukrtelecom – ex-head of the company’s supervisory board Sergyi Liovochkin.

At present he is an adviser of PM Victor Yanukovich. Early this year it was
expected the company could be sold for USD 2-3bn. But experts say the
company’s market share is decreasing, and now it costs 2-3 times less than
in 2001.

The list of companies slated for privatization can also include stakes in
energy companies. SPF proposes to start with small stakes, but government
wants to sell all its assets in most energy companies. There is a big
possibility that privatization will impact coal-mining companies.

This project is a part of the state program on reorganization of the
coal-mining industry that includes, for instance, establishing a state
company that comprises all state mines.

There are no real opponents among government officials who oppose start

of privatisation of largest state companiesIt is obvious that the new
government wants to spur the sale of state property in 2007. And we expect
that it will succeed in reaching the target.

Authorities can simply sell the minority stake in steel major Kryvorizhstal
or Ukrtelecom (if an appropriate scheme is found).

The premises together with land scheme is likely to be used only for
specific medium-sized companies, in our view. However, government is yet

to find a solution for enterprises whose privatization has long been stalling.

Then again, from a political perspective, the only opponent of mass
privatization, head of SPF Valentyna Semenyuk, will soften her attitude.

[1] First, because she fails to fulfill the privatization plan for 2006.
[2] Second, she as a member of the socialist party, which is an ally of the
government that plans to start the second wave of privatization after the
mass privatization in the mid-1990s.                       -30-
———————————————————————————————–
[return to index] Action Ukraine Report (AUR) Monitoring Service]
========================================================
     You are welcome to send us names for the AUR distribution list.
========================================================
18.  ROUNDTABLE CONFERENCE IN WASHINGTON TO ADDRESS
                UKRAINE’S PROSPECTS FOR NATO MEMBERSHIP

Center for U.S.-Ukrainian Relations (CUSUR)
New York, New York, Monday, October 2, 2006

WASHINGTON – The seventh annual roundtable conference in the Ukraine’s

Quest for Mature Nation Statehood series will take place in Washington, D.C.,
on October 17 and 18, 2006.

The topic of this year’s conference is “Ukraine and NATO Membership,” an
issue which garnered international attention following a high-profile visit
by Ukrainian Prime Minister Viktor Yanukovych to NATO headquarters in
Brussels on September 14.

The roundtable conference will bring together government and key
non-government representatives from Ukraine, the United States, and
Ukraine’s neighbors to examine the pivotal issue of Ukraine’s readiness for
accession to the NATO security alliance.

Like previous conferences in the series, this year’s event will serve as a
forum for leading policymakers and analysts to further the international
dialogue on Ukraine’s continuing development as a modern, democratic state
with a Euro-Atlantic vocation.

Conferences in the Ukraine’s Quest for Mature Nation Statehood series have
convened annually since 2000 and have proven an invaluable forum for the
examination of Ukraine’s development as a modern, democratic state.

Previous conferences in this series evaluated Ukraine’s relationship with
the United States and the European Union, its transition to a market
economy, and the development of stable, democratic politics.

The conference is planned and organized by a Steering Committee representing
a wide array of government, non-government, and academic organizations,
including the U.S. Library of Congress, the Congressional Ukrainian Caucus,
the Embassy of Ukraine in the United States, the American Foreign Policy
Council, the Kennan Institute, the US-Ukraine Foundation, the Ukraine-U.S.
Business Council, the Center for US-Ukrainian Relations, Columbia
University’s East Central European Center, the Polish American Ukrainian
Cooperation Initiative, the Organization for the Defense of Four Freedoms
for Ukraine, the Ukrainian National Women’s League of America, the
International Republican Institute, and the National Democratic Institute.

The Steering Committee is chaired by the Honorable Bob Schaffer, former
member of the U.S. House of Representatives, and the Honorable William
Miller, former ambassador of the United States to Ukraine.

 
                   REGISTRATION INFORMATION
RTVII registration and sponsorship information can be found online at the
Center for US-Ukrainian Relations, http://www.cusur.org/rt7/index.html.
                                                   
For additional information, please contact Mark Romaniw, UA Quest RTVII
Media Coordinator, by phone: (202) 412 6883, fax: (212) 473 2180, or e-mail:
mark.romaniw@cusur.org.                         -30-
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
19. YUSHCHENKO: OPPOSITION TO NATO IS LEGACY OF THE PAST

INTERVIEW: With Viktor Yushchenko, President of Ukraine
Interview By Adrian Karatnycky, President, Orange Circle
In Kyiv, Ukraine, on Friday, September 20, 2006
Global Viewpoint, Los Angeles, CA, Friday, September 27, 2006

In Jan. 2005, Viktor Yushchenko was sworn into office as president of
Ukraine. He assumed power after winning a free and fair election that was
held as a result of the Orange Revolution, a mass nonviolent civic protest
that engaged millions of Ukraine’s citizens.

This summer, after free and competitive elections for parliament, Ukraine
saw the establishment of a coalition government headed by President
Yushchenko’s political rival, Viktor Yanukovych, raising new international
concerns about the direction of Ukraine’s political and economic evolution.

In recent weeks, Ukraine’s experiment in “cohabitation” among former
political opponents has seen the emergence of important policy differences
and political jockeying.

With Ukraine’s still-powerful presidency led by a representative of the
reformist values of the Orange Revolution and the government and parliament
led by non-Orange forces, there are uncertainties about the directions
Ukraine will take on such issues as integration into Europe, cooperation
with NATO, and internal democratic and economic reforms.

This interview was conducted for Global Viewpoint in Kyiv on Sept. 20, 2006,
by Adrian Karatnycky, president of the Orange Circle, an international
nongovernmental organization that works to promote “the values that were at
the core of Ukraine’s Orange Revolution.”

QUESTION: Around the world, friends of democratic reforms are alarmed that
Ukraine’s new governing coalition, led by the Party of Regions, may retreat
from the democratic values of the Orange Revolution. How do you answer
those who have such concerns and worries?

YUSHCHENKO: The forces that made the Orange Revolution didn’t lose
electoral support between late 2004 and the parliamentary elections in March
2006.

The replacement of an Orange coalition by another coalition did not reflect
a change in people’s political sympathies, but was based on political
events – the Socialist’s departure from the Orange bloc, in part over
differences on NATO, integration into the European Union, land
privatization, the Common Economic Space (with Russia), and so on.

The new coalition, headed by the Party of Regions, was created on the basis
of positions shaped in the last presidential and parliamentary elections. In
my view, these positions were rather dangerous for the aims of national
unity, national security and a competitive market society.

These positions were most likely shaped during the ebb and flow of an
election campaign and cannot be the basis of national policy. Still, the
coalition that formed naturally represented positions that worry democratic
circles.

And this is why after the new (non-Orange) coalition was formed, there was
a need for a determined effort at consultations among major political forces
to unite around national values.

This was the genesis of the Universal Declaration (of National Unity, a
political pact signed this summer) whose aim was to ensure that whether in
power or in opposition, a political force should be unified around common
national interests . . . that reflect national priorities . . . .

The forces that signed this document declared their responsibility and
adherence to key national policy priorities: the unity and territorial
integrity of Ukraine; they affirmed the aims of integrating into European
and Euro-Atlantic structures; pledged themselves to shape an effective
national security policy; and to resolve differences concerning the status
of Ukrainian as the sole state language in the country.

Time will tell (if this mechanism has worked). Still, I am convinced that if
the parties adhere to the norms in the pact, we will have stability – for
the pact represents the proper national course, irrespective of whether one
is in power or in opposition.

QUESTION: Prime Minister Viktor Yanukovych’s recent statements in
Brussels about the need to freeze progress toward NATO integration
suggests a certain distancing from the basic direction of Ukraine’s
political pact.

Is it your view that this is the beginning of a sharpening of differences in
your relations with the prime minister and his political allies?

YUSHCHENKO: I think the (prime minister’s) position may reflect a
certain political fear to take a decisive position on a question that is a
foundation of our national security.

There have been certain traditions until now, relics of the Soviet era,
promoted by the mass media for decades in terms of a (suspicious)
attitude to Europe and to Euro-Atlantic integration.

So this attitude represents a legacy of the past. But while it is important
we acknowledge the influence of the past, we also need to choose the
future – one that reflects the real interests of national security.

So this may be an answer why the (prime minister) and government have
taken such an indecisive position with regard to relations with the North
Atlantic Treaty Organization.

I also think that this has to do more with the last elections than with
their real position. The prime minister has more than once confirmed his
belief in the fundamentals of our choice, and so I don’t see the
abandonment of this belief.

However, today there is a debate in political circles and within society
that is occurring because we are now at a fundamental point in our efforts
at integration. Still, today, Ukraine’s Law on the Fundamentals of National
Security clearly attests to the aim of full integration into European and
Euro-Atlantic security structures.

And the reason politicians are taking positions on the question of the
timing of this integration is called forth by the fact that Ukraine is
nearing that time of decision on whether to join NATO or not.

QUESTION: Do you believe the prime minister and his circle will carry on a
political campaign aimed at building public opposition to NATO integration,
or will they support an effort to shift public opinion on behalf of NATO
integration through better education on the Atlantic alliance. In others
words, is this a make-or-break moment?

YUSHCHENKO: You know, I will be frank, there are no serious arguments
for changing our foreign policy course, particularly in regard to NATO. If
you analyze the interests of the nation, of how to leave the country in an
auspicious state for the next generation, then there can only be one answer:

This is in the context of a European project, by forming a common security,
economic and humanitarian space . . . . All other options are a part of
history, and, at that, an unhappy history for Ukraine and Ukraine’s
interests . . . . This is why I am convinced that the executive and
legislative branches in Ukraine will with every passing day express
themselves more clearly on this principled question.

QUESTION: The tempos of economic growth in the last year significantly
improved, and this reflected policy changes you introduced last year. Some
people say that the Party of Regions has a relatively progressive position
on economic policy. Others are of the view that it is an unreconstructed
party that reflects pre-Orange authoritarian and statist values. Where is
the truth?

YUSHCHENKO: Two processes are at work. Firstly, Ukraine’s authorities
and their methods of work cannot be the same as they were two, three or four
years ago. Today, you can’t run the country by shadowy means, not only
because it is difficult but because it is now impossible.

This doesn’t remove the need for a war on corruption, or the struggle
against graft, or that this struggle has been won. Obviously not.

But it does mean that the authorities and their use of power have become
more public over the last 15 years, and government actions have become
more transparent. And this leaves an impression on the activity of every
political force, including the Party of Regions.

I believe the Party of Regions understands very well that the methods that
were in place under the rule of (former President Leonid) Kuchma cannot
be used in 2006, whether in economic or in financial policy. I’ll give you a
small example.

In August, in my view the new tax authorities implemented a policy of
compensating value-added taxes in the manner it was done during the worst
period of Kuchma’s rule.

Look at the reaction of the public, of business circles, and look at how
this action was assessed by the policy community. Five years ago, we all
knew about such policies, but everyone remained silent and nothing changed.

Today, (the state) examines these actions to ensure that everything is done
within the letter of the law. And businessmen, entrepreneurs and political
forces have declared their open disapproval.

This is a sign that even if one wanted to use the old methods, it is simply
impossible in the new context. And so its seems to me these factors are
well understood in the Party of Regions.

They realize it is impossible to work according to the same values and
methods that were popular just a few years ago. Civil society, political
forces, and the presidency itself will not allow a return to such
disreputable means.

QUESTION: Let’s talk about the intersection of foreign policy, national
security and the economy: the question of energy and energy resources,
including your efforts to promote energy diversification.

I know that you’ve taken up a number of initiatives in recent months, have
traveled to meet with leaders in the energy-rich Caspian countries,
conducted talks with a number of counties that provide energy, and have
given new impetus to projects like the Odessa-Brody-Gdansk oil pipeline.
Will you be able to synchronize this policy with the new government?

YUSHCHENKO: I think the time has come in Ukraine for a series of legends
to die, including one that posits adequate energy supplies and energy
security can be ensured through duplicitous policies. This issue is becoming
much more acute with every passing day.

We are witnessing the transformation of our traditional patterns and sources
of energy supplies and are resolving problems in protecting the transiting
of energy.

At the same time, there’s more and more talk about new configurations
emerging in regional and continental energy markets that are fundamentally
or partly changing the nature of this market.

It’s time for Ukraine’s authorities to take clear positions that recognize
we hold a number of aces in our hands . . . . We need to carry out an active
policy based on national interest. We must make clear that our energy policy
is not directed at someone or some country.

We have enough of our own problems. We need to take care of our own
national interests. And therefore our national policy should begin from how
best to ensure the realization of our national interests in energy supplies,
while at the same time safeguarding our national security.

And here, accepted international principles begin to operate: How are we to
diversify the market? Not to reject or oppose anyone, but how to diversify
the energy market in a way that enhances stability, supplies and security.

Here we need to focus on the basic organization of our domestic energy
market, including our domestic extraction of gas, petroleum and coal; a new
energy consumption policy in which real prices and open competition would
be at work.

Another consideration is our work with the key energy companies. This
means cooperation in extraction as well as the practice I have introduced of
public tenders for the exploration and extraction of oil and gas on the
Black Sea shelf. We have the example of Shell, where we are implementing
the introduction of what for our market are new and experimental forms of
cooperation.

A further set of issues is the need for us to remain an active
energy-transiting territory.  And so we advocate a Eurasian oil transport
corridor, which can traverse Ukrainian soil traveling from Odessa to Brody
and from there to the European Union.

It is essential that the project be completed all the way to the Polish port
of Gdansk and function fully as planned. Such an energy transport route
would assist Ukraine in meeting its crude oil needs and would fill Ukraine’s
refineries, but it would also be linked to Europe’s energy market through
existing or new pipelines.

This is the most concrete project, one that can be accomplished in a few
years. This is why we are conducting diplomatic negotiations, and
negotiations at the level of energy ministers that are concentrating on
achieving a five-year supply of oil (from the Caspian and Central Asian
region) along this route with the integration of Ukraine’s refineries and
those beyond Ukraine’s borders.

In other words, this concept has already taken on a practical scope. A
working group consisting of the European Union, Poland and Ukraine
lready is focused on this project.

We have created a consortium and proposed that the governments of
Azerbaijan and Kazakhstan join it as partners. A council of the presidents
of Ukraine and Azerbaijan has been created, in part to realize this project.

We are interested in a broad effort to ensure energy security by linking the
Caspian Sea region through the Caucasus and then underneath the Black
Sea through Ukraine into the European Union.

Such a major project must first begin from the policy and diplomatic side.
And this is where the discussion today is focused, on bilateral and
multilateral discussions. I am convinced that this project will take shape,
and this is why Ukraine is giving it so much attention.

QUESTION: What are the views of the Party of Regions on the topic of
energy diversification?

YUSHCHENKO:  I think an absolute majority among Ukraine’s political
forces supports these (energy) projects and approaches. Moreover, there
is a specific plan of action with regard to the development of our relations
with Russia in terms of gas and oil transport, and the realization of
entirely new projects.

Our approach is the following: We are ready to support a program of
development that reflects our common interests in relations with energy
suppliers, and to offer unique opportunities that the Ukrainian side
possesses, including the largest network of gas and oil pipelines that exist
in Europe, as well as Europe’s largest gas storage facilities.

There are new potential projects as well that could create a new means of
ensuring gas and energy security for a certain part of Europe. And here I
would say that if one carries out a transparent and open policy, one can
find a wide array of partners.

QUESTION: A question about an energy matter that troubles the U.S. and
Europe. It is related to the role in energy supplies played by intermediary
companies that are not fully transparent, particularly RosUkrEnergo (RUE).
Is this intermediary essential to the future supplies of energy from Russia
and Central Asia?

YUSHCHENKO: Let me explain a series of nuances in this regard. I
remember the end of December 2005, when there were sharp and turbulent
discussions with Russia about supplying Ukraine with adequate gas supplies.

At that time, a whole series of myths was spread both about the
unreliability of Ukraine in ensuring the transiting of energy to Europe.
Other myths and rumors also circulated around the RUE company.

At home, we were blamed for not achieving a good price for natural gas, that
$95 per 1,000 cubic meters was too high. Let’s see if the passage of time
has brought clarity to the situation.

Let’s return to the question of RosUkrEnergo. Yet again, I assert that
Ukraine has no relationship whatever to this structure. To this date we have
no source of credible information that would point to the fact that some
state structure or private structure in Ukraine is a founder of this
company. This contrasts with Russia.

And yet despite this fact we are fending off an endless stream of complaints
concerning the intermediary role of RosUkrEnergo in the transiting of
natural gas across Russian territory.

I want to make it clear: I believe it is the sovereign right of Russia to
determine who is the licensed transporter of energy over its territory. So
whoever it may be, whether RosUkrEnergo or the Gaztranzyt company or
Gazprom, then I think such questions should be directed to another party,
not to us.

This is the sovereign right of Russia, and it sets this policy. As the same
time, as we discuss this policy issue, I’d like to raise an economic
question. When we discussed the agreed price of $95 per 1,000 cubic meters,
we absolutely sought to approach these questions by faithfully applying
European practice.

QUESTION: Does this set of European standards also apply to the price
RosUkrEnergo charges Ukraine for its intermediary services?

YUSHCHENKO: This same intermediary company, RosUkrEnergo, that
provides services to Ukraine is, by the way, also providing its services to
Germany and Austria. This company works on the Western market.

Thus, we are one of a number of countries that is making use of these
same resources and services, which are offered in a similar manner.

I believe this issue has been excessively politicized, first through
criticism of the allegedly excessive price of $95 price and later through
criticism of the intermediary group. The main aim of this criticism was to
discredit the decisions of our young administration.

But the price we pay is the most optimal, the lowest among countries in
our region. Simply put, no one has a better price.

At the same time, we have preserved ownership of the gas transport network,
we have retained ownership of storage facilities, in other words, the entire
infrastructure for energy transportation. And the agreement we have struck
speaks of holding to the current prices for five years.

This is why I would like all those who sharply criticized us in the past to
support and come to the defense of the current agreement. This would be
an immense contribution to Ukraine’s cause.                   -30-
————————————————————————————————
http://www.digitalnpq.org/articles/global/117/09-27-2006/viktor_yushchenko
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20.             “OFFICIAL ROAD MAP FOR THE PRESIDENT”
                          Ukrainian president should lead opposition

ANALYSIS & COMMENTARY: By Mykhaylo Basarab
Ukrayinska Pravda website, Kiev, in Ukrainian 25 Sep 06
BBC Monitoring Service, United Kingdom, Monday, Oct 02, 2006

Ukrainian President Viktor Yushchenko must initiate the formation of a wide
opposition movement instead of trying to forge an alliance with Prime
Minister Viktor Yanukovych and his Party of Regions, an authoritative
website has said.

Yushchenko needs to grab initiative from Orange Revolution figure Yuliya
Tymoshenko and play on the weak points of her opposition initiatives, the
website said.

The following is the text of the article by analyst Mykhaylo Basarab,
entitled “Official road map for the president”, posted on the Ukrayinska
Pravda website on 25 September; subheadings have been inserted editorially:

Regardless of the outcome of talks on creating a grand coalition, it is
already clear now that this creation will be even less logical than the
current anti-crisis coalition [of the progovernment Party of Regions,
Socialist Party and Communist Party].

It is perfectly understandable that the Donetsk guys [i.e. Party of Regions]
will try to attain complete control of the situation in the country. The
permanent and drawn out conflict, which will come out in the form of
permanent clashes between [President Viktor] Yushchenko and [Party of
Regions leader and Prime Minister Viktor] Yanukovych, will be based on this.

Such an atmosphere will in no way assist in creating stable and long-lasting
existence of the coalition in the so-called broad format. The return of the
status quo, that is, the return of the format of three, is quite likely.

Unless the Party of Regions attains single-handed control of the majority in
parliament. Given the defection of MPs from the [opposition] Yuliya
Tymoshenko Bloc, the Party of Regions will very soon be able “to cobble
together” 226 votes [a simple majority].

Therefore, the move by Viktor Yushchenko and the parties he controls into
opposition ranks is not so unrealistic after all.

Today it seems that Yuliya Tymoshenko has won the initiative from the
president and has been first to settle in opposition territory.

Linear analysis shows that Viktor Yushchenko has nowhere to go apart
from to merge with Tymoshenko.

The logic of such a move by the president is that weary from drawn out
fighting with the Donetsk lot, he has no other choice. However, we must
stress that this option is too simple. It is hardly likely that Viktor
Yushchenko will agree to such a move.

 For it will mean he will automatically fall under the shadow of a more
dynamic player – Yuliya Tymoshenko. She will remain in the role of mother
who forgave her prodigal son and was ready to give him shelter. This will
raise her popularity even further and lower the president’s status.

There is one more factor, which is quite important for Yushchenko. It is
very important for him not to allow important figures to go from the
presidential team to the Yuliya Tymoshenko camp.

 PRESIDENT NEEDS TO GRAB INITIATIVE FROM TYMOSHENKO
This can only be done if these politicians are given the chance to implement
their opposition feelings. It is even more important for the president to
grab the potential first spot in the opposition camp and, what is more
important, to unite and not to divide it.

Viktor Yushchenko – who is currently losing the opposition territory to
Yuliya Tymoshenko – is capable of achieving this only if he proposes a
bigger project to build the institution of the opposition.

And here he will need to play on the weaknesses of the opposition
initiatives put forward by Yuliya Tymoshenko:

1. Her interest in creating an opposition inter-faction group. Yuliya
Tymoshenko regards the creation of such an association almost to the extent
of being the conclusive point in the creation of the opposition in this
country.

In line with such logic, it seems that the opposition will exist only if
there is an inter-faction association in parliament, if there is not, there
is no opposition. However, political processes in parliament are only one of
the grounds of the system in the political relations in the country.

2. Even though Tymoshenko announced she is going to create a broad
opposition movement beyond the confines of the Ukrainian parliament [i.e.
including parties not represented in parliament], this matter has not gone
beyond loud statements.

Instead, one of the most important political partners, the Ukrainian
People’s Party [led by Yuriy Kostenko] has already managed to distance
itself from her initiatives. It seems the efforts are stuck.

In addition, it is unlikely that we will be able to predict the move to the
Tymoshenko camp of more or less important and structured political forces.
For the sake of numbers, a few dozen fringe parties can be gathered.

But in this case will quantity turn into quality? And can things turn out
differently overall? Tymoshenko’s authoritarian nature, her single-handed
rule in the bloc and the [Tymoshenko-led] Fatherland party’s leading role
will do nothing to help unite a wide range of colourful and self-sufficient
political forces and leaders around her.

3. Regardless of the statements made by Tymoshenko on several occasions that
the bloc’s electoral list is made up exclusively of people whose backgrounds
have been checked out, the bloc’s faction is becoming more and more a
supplier of votes provided by the opposition for the anti-crisis coalition.

It is more than likely that Tymoshenko’s business pool will with time show
more and more voluntarism, and eventfully it may leave her party. This can
lead to a significant reduction in Yuliya Tymoshenko’s financial means.

In such conditions Yuliya Tymoshenko is hardly likely to be able to pull off
without outside support large-scale and expensive political projects like,
first and foremost, forming a mass movement in her support, etc.
                                  ADVICE FOR PRESIDENT
Taking into account the above said, Viktor Yushchenko can take advantage of
mistakes by the Yuliya Tymoshenko Bloc leader and not take the path planned
for him by Yuliya Tymoshenko.
Namely:
1. He should initiate the priority creation of the inter-faction association
can be broken down into technical tasks and tasks which are not priority
ones for the broad opposition. Parliament is not Viktor Yushchenko’s
territory if only because the Yuliya Tymoshenko Bloc faction is bigger [than
Yushchenko’s Our Ukraine faction].

Formally, the status of the inter-faction association in parliament can be
described exclusively as representation of the broad opposition movement in
parliament.

2. He should submit proposals as to creating a completely new and bigger
launch pad for a broad opposition front. Politics outside parliament is
where Viktor Yushchenko has every chance of outplaying Yuliya Tymoshenko.

Taking into account the president’s organizational and administrative
capabilities, as well as the traditionally wide circle of political forces
and activists around Yushchenko, he can, even without making a special
effort, rely on quite powerful support from the Ukrainian elite.

Numerically and financially, Viktor Yushchenko will be able to rely on a
significantly bigger in numbers and better in quality representation in the
wide opposition field than Yuliya Tymoshenko.

3. And here the president should not make a big error. A new broad
opposition movement should not be based on the Our Ukraine People’s Union
[whose honorary chairman is Yushchenko].

It should become only a part of this initiative which will draw in, and I
repeat this, a broad circle of the most wide-ranging political forces and
activists. In institutional terms, this should not be a mega party but a
broad people’s movement with a sufficiently flexible body.

At the same time, this association of corporate and individual membership
should be open to the utmost, not hide behind the scenes. Only this form of
association will make it possible to reach the lower reaches.

Without doubt, sceptics will say that Viktor Yushchenko is hardly likely to
compete with Yuliya Tymoshenko at the present time because, according to
opinion polls, her popularity is higher. To answer this, we shall
immediately take a trip in history.

Would Viktor Yushchenko have been able to gain such momentum if he had not
received the support of numerous public and political forces: the Ukrainian
People’s Party, the Reforms and Order Party, the People’s Movement of
Ukraine [Rukh] and many others?

The effectiveness of the new, broad opposition project under the leadership
of the president will, of course, depend on the level of sensible
construction, social openness, financial and organizational influence and
media support.

And after that everything depends on how it is implemented. In this event
Yuliya Tymoshenko will have to join a more powerful opposition wave in the
role of one of its main leaders.                            -30-
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
      Please contact us if you no longer wish to receive the AUR    

========================================================
21.                   “THE SUPREME COURT’S NEW HEAD”
                 Ukraine’s opposition gets loyal Supreme Court head

REPORT: By Oleksandr Prymachenko
Zerkalo Nedeli, Kiev, in Russian 30 Sep 06
BBC Monitoring Service, September 30, 2006

The Ukrainian opposition may view the appointment of the former opposition
MP, Vasyl Onopenko, head of the Supreme Court of Ukraine as its victory,
reputed weekly Zerkalo Nedeli has said.

Although the ruling Party of Regions supported it remains unclear, however,
how Onopenko, who nominated himself, managed to get the post, the paper
says.

The following is an excerpt from the report by Oleksandr Prymachenko
entitled “The Supreme Court’s new head” published in Ukrainian newspaper
Zerkalo Nedeli on 30 September:

Yesterday, Vasyl Onopenko, who had long been affiliated with the
[opposition] Yuliya Tymoshenko Bloc, was unexpectedly elected head of the
Supreme Court of Ukraine. Of 84 judges, who took part in a secret vote, 58
voted in his favour. [Passage omitted: details of the vote]

Upon his return to the Supreme Court after many years of activity one way or
the other connected with the functioning of the legal system (the justice
minister and head of the corresponding parliamentary committee), Onopenko is
capable of effectively performing not only representative, but also
organizational functions vested in the head of the Supreme Court.

Onopenko pledged to fiercely defend the judicial system’s interests, and
most of all, its independence. Well, we will see whether it is possible to
get such a post and remain faithful to one’s own beliefs.

Asked whether anyone supported his aspirations to become head of the Supreme
Court, Onopenko said that he was in talks with the Yuliya Tymoshenko Bloc
and that, since [Prime Minister Viktor Yanukovych’s] Party of Regions seemed
not to have any objections, the authorities must have also backed him.

Only a small selected group of people knows anything about this. Meanwhile,
the majority of the [Party of Regions] members are sad. They have lost not
only the Constitutional Court, but the Supreme Court too.

On the one hand, the head of the Supreme Court of Ukraine affiliated with
the opposition is an advantage for democracy. On the other hand, methods

the candidates [for the post] resorted to in order to get the post, are hardly
tolerable.

In the end, the question whether society will benefit from having a
representative of a political force as head of the Supreme Court becomes a
rhetorical one.                                        -30-
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22.    “SECOND CHERNOBYL DISASTER?
Ukraine’s Chernobyl chief at odds with EBRD over tender for new shelter

ANALYSIS & COMMENTARY: By Volodymyr Kovalenko
Zerkalo Nedeli, Kiev, Ukraine, in Russian 30 Sep 06, p 2
BBC Monitoring Service, United Kingdom, Saturday, Sep 30, 2006

A special commission involving officials from the Ukrainian Cabinet of
Ministers and the EBRD is to investigate why the director-general of the
Chernobyl nuclear power plant, Ihor Hramotkin, has decided to annul results
of the tender to build a new shelter facility over the ruined reactor at
Chernobyl, an analytical weekly has reported.

The administration of the Chernobyl nuclear plant does not want to be held
responsible for possible miscalculations in the project, the paper said.

Currently, the cabinet has taken the side of the EBRD but it may come to
realize that the Ukrainian business elite will not benefit from the project.

The following is the text of the article by Volodymyr Kovalenko entitled
“Second Chernobyl disaster?” published in the Ukrainian newspaper Zerkalo
Nedeli on 30 September; subheadings have been inserted editorially:

By the time of EBRD President Jean Lemierre’s visit to Ukraine planned for 6
October, work is due to be completed by a joint working group of the Cabinet
of Ministers and the bank designed to draw conclusions about the reasons and
motives for the decision by the director of the Chernobyl nuclear power
plant, Ihor Hramotkin, to reject tender proposals for the design of the new
shelter over the destroyed reactor.

Let us remind you that on 14 September the director of the plant, which has
the status of customer of the project, signed an order annulling the tender.

The reasons for the decision in question were not published in a report by
the Emergencies Ministry, but specialists are well aware of them (more about
this later).

However, on 18 September during a sitting of the Ukraine-EBRD working group,
Deputy Prime Minister Andriy Klyuyev and EBRD Vice-President Fabrizio
Saccomanni agreed to rescind the decision; Hramotkin’s order was suspended
by an order from the Emergencies Ministry, and the director himself was
given an attachment to work in the above-mentioned working group.

However events unfold, it is already clear that they will reveal an enormous
layer of contradictions between the interests of Ukraine and the EBRD, that
is becoming increasingly difficult to put a stop to now.

Zerkalo Nedeli has written several times about the pre-history of the
conflict in its material (No 7 of 25 February and No 34 of 9 September this
year). The comparatively weak reaction in society to the report on the
cancellation of the tender for the construction of the new shelter is
surprising.

Its unprecedented nature lies in the fact that thereby it in effect
expresses no confidence in the EBRD, which was conducting the tender; and
also in the fact that the director of the plant, that is the customer, not
the person most vested with powers in the existing chain of implementing the
project, took on personal responsibility for such a decision (even under the
threat of dismissal).

In any other country this would have been scandal number one. However, it
would seem that in our country nobody wants to quarrel with anyone, neither
with the EBRD nor with each other.

The subject was carried by news agencies and websites; a little attention
was paid to it by business publications and that was all. When preparing
this material it did not prove possible to get a single official or even
expert comment: only off the record.
     DIFFICULT RELATIONS WITH FRENCH CONTRACTORS
It is easiest of all to explain the decision by the customer – the plant –
to cancel the tender and turn down tender proposals by the lobbying of
interests of this or that claimant to the title of competition winner. Thus,
the far from easy relations between the plant and the French contractors are
well known.

In particular, with the Framatome ANP company that is carrying out
construction of the spent nuclear fuel depot (SNFD) on the territory of the
plant, jointly with the companies Vinci Construction Grands Projets and
Bouygues Travaux Public S.A. (which are part of the NOVARKA consortium

that was destined to win the tender for construction of the shelter).

Originally it was planned to complete construction back in 2003, but for a
number of reasons it has still not yet happened. The Ukrainian side is
accusing the French of design mistakes, while the contractor alleges that
the customer formulated the design requirements incorrectly. In order to
complete construction, it needs about 90m dollars more over and above the
design estimate.

As a result, construction is frozen. As this paper wrote, after the
preliminary decision of the EBRD to recognize NOVARKA as the winner of the
tender in January this year, the French consortium abandoned some of the
obligations that it had taken on in the project.

At Chernobyl they already knew what this meant for the customer from
experience of construction of the SNFD and were not keen to continue in that
spirit.

“A Russian trace” also made itself felt. In particular, it was assumed that
the Atomstroyeksport company might have an interest in the cancellation of
the tender. It is part of the Russian corporation United Machine-building
Plants – Power Machines.

It has already taken part in tenders for construction work at Ukrainian
nuclear power plants, in particular construction of the second stage of the
SNFD at Chernobyl. It also joined the Stabilization consortium created
jointly with Ukrainian colleagues.

The consortium is carrying out work on strengthening the west and east
buttresses of the Mamont girder of the existing shelter facility.

According to Zerkalo Nedeli’s information, after reports appeared about the
cancellation of the tender, representatives of the company indeed displayed
a certain amount of activity. But no more than that.
                                     REPEAT TENDER LIKELY
In order to let the Russians into the tender, the government will have to
get into a far deeper conflict with the EBRD than even simply in order to
defend the interests of the customer.

Judging by the fact that at present the cabinet does not intend to aggravate
relations with the bank, the tender participants will stay the same.

What is more, the procedure of qualification of the tender participants is
fairly lengthy and has already been conducted in relation to two claimants –
NOVARKA and CH2M-CAL.

Therefore, the most that can be achieved by those who want to change the
status quo is a repeat tender with the existing participants, but without
the breaches of the tender procedure that figured in the January complaint
of an American company and elimination of the distortions in distribution of
powers in the chain “EBRD – Project Management Group [PMG] – Customer” that
the Ukrainian side finds unacceptable.

Let us briefly recall what it is that Ukraine finds unacceptable. Our paper
has also written about non-observance of the principle of balance of powers
and responsibility in implementing the project, when all the powers are with
the PMG (headed by foreign specialists) and all the responsibility is with
the customer.

This imbalance is reflected in the customer’s contract position. In
particular, the latter has no direct levers of influence on the contractor
in the event of disruption to work schedules or unsatisfactory quality.

Questions of increasing the powers of the Ukrainian side have been raised
several times in correspondence between the government and the EBRD and, so
far as can be judged, will also be raised during the negotiations next week.

So far the customer’s proposals have not found support in the bank, which is
insisting on the compliance of the existing distribution of powers with high
European standards. However, it is possible that the situation with the
cancellation of the tender will actually serve as a stimulus for changes.

Implementing the new shelter project carries other risks as well. Thus, in
the opinion of a number of experts, in particular from the atomic plant
construction industry, the very concept of conducting a tender for design
and construction of the facility on a turnkey basis “in one package” was
mistaken.

Previously the State Construction Committee and the Construction Ministry
several times indicated the necessity of first choosing the developer of the
project estimate documentation for Shelter-2, and then, in a separate
tender, choose the contractor for a prepared project with a prepared
estimate.

However, the EBRD insisted on having its own way, and today the customer
cannot even forecast the realistic future cost of the work. And, remembering
the experience of the SNFD, there is some apprehension of ending up in a
situation where the facility is not completed, and more money is needed.

Although, in the larger scheme of things, such a situation should be more
frightening for the donors who are allocating money to the Shelter Fund.

CHERNOBYL DIRECTOR UNHAPPY WITH SECURITY ARRANGEMENTS
The customer several times talked of the need to increase the security
requirements set out in the project. Thus, the report on analysis of the
facility’s security reflects only the risks connected with the volume of the
contractor’s work, although it should also take account of the risks in
exploitation.

The security analysis also failed to take account of some results of the
comprehensive state expert analysis of the project. All of this may lead to
the State Committee for Nuclear Regulation not wanting to issue Shelter-2
with a licence for exploitation.

In theory, the purpose of cancelling the tender should be the holding of
tender documentation in accordance with the above-listed requirements. After
that, a tender could be held with the former complement of participants.

It was only essential to avoid a repeat of the January situation, when
special conditions for each of the participants were written down
differently, as well as other breaches reflected in the report of the
independent expert, (?Gouvier).

If the Ukrainian side and the EBRD fail to reach agreement, the situation
will remain deadlocked for a very long time to come. However, the sides
still have their interests.

The EBRD is a commercial organization that is striving to implement the
project without losses for itself. Incidentally, in the opinion of a number
of experts, the bank’s behaviour is influenced to a certain extent by the
fact that money in the Chernobyl Fund that it has been accumulating for
construction of the facility is not credit, but donor money.

If the EBRD had given credit to the project, then the approach to the choice
of contractor and indeed to the actual elaboration of requirements for the
project would have been more economical.

The situation can also be changed by the donor countries that have given
money to the fund for building the new Shelter. The customer, in the form of
the Chernobyl nuclear power plant, has expressed the intention to acquaint
them with its position regarding the distribution of powers and
responsibility and, as a consequence, the risks.

In mid-October a visit is planned to Ukraine by a delegation of the US
Congress, which is due to carry out an audit of the use of the American
share in the Chernobyl Fund.

The Ukrainian side, which previously to a considerable extent trusted the
experience and reputation of the EBRD and did not raise objections to
responsibility for the project being borne by the bank and the PMG, is
increasingly realizing that it must defend its interests.

The opinion is even being voiced that Ukrainian construction organizations
would have coped with the Shelter-2 project no less effectively, but
noticeably cheaper.

And a billion dollars – the estimated cost of the project today – is not
that impossible a sum for our country to raise today, especially considering
that the funding will be spread over several years.

On the other hand, the train has left, and the EBRD can be excluded from the
process of building the new shelter today only at the cost of a very big
scandal, which would have a negative effect on other projects in which the
bank is participating as well.
                     PRESIDENT AND GOVERNMENT AT OODS
A few words about the political situation. The new spiral in the conflict
has already reached the new government, which, according to our information,
has not yet fully got into the situation and has not made up its mind about
its interests in it.

So far, according to what Deputy Prime Minister Klyuyev has said, the
cabinet has taken the position of mutual understanding with the EBRD, that
is traditional for all incoming Ukrainian governments.

Apart from that, according to some information, the general mood in the
government team is “to do things not the way the president wants”. And if
the latter [Viktor Yushchenko] spoke in favour of adjusting the project
requirements, then the government may support the existing ones approved

by the bank.

The line of support for the EBRD in tandem with the “spirit of
contradiction” makes the government into a temporary ally of the bank and
the tender winner that it chose. However, when they realize the interests of
“Donetsk business circles” in the project, the situation may change.

One would like to hope that in its interaction with the EBRD the government
will consistently defend the interests first and foremost of Ukraine – even
not as a state, but as the land and country.

The main such interest, we remind the government, lies in the following: to
ensure that on the site of the old leaky sarcophagus at Chernobyl a new
shelter will be built as quickly as possible and to as high a quality as
possible, under whose roof work is to be carried out to dismantle the
blockage and to remove and store all the fuel located there.

In other words, it is the result that is important. Not for the current
Ukrainian and European officials, but for future generations of our country.
Who the contractor will be and even who will finance the work are already
secondary questions.                                 -30-
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
23.             IVAN FRANKO: CREATOR OF THE NATION

By Oleksandr Reient, Corresponding Member
National Academy of Sciences of Ukraine
The Day Weekly Digest in English #27
Kyiv, Ukraine, Tuesday, September 12, 2006

In his philosophical and sociopolitical works Ivan Franko raised questions
that were topical not only and not so much for that period as for subsequent
generations of Ukrainians in whose success and happy destiny he
wholeheartedly believed.

Franko’s grandeur as a thinker and sociopolitical activist lay in his
ability to single out from among the countless aspects of Ukrainian public
life those that would be of decisive importance to the Ukrainian nation, and
to propose realistic ways of resolving them.

One of the problems that always troubled Franko was the Ukrainian nation’s
lack of unity – not so much in geopolitical terms as in ideology and
approaches to basic cultural and spiritual principles. This theme is a
dominant leitmotif in his poem “Moses.”

Is this issue not topical today, when politicians, in order to carry out
their tactical tasks, increasingly often seek to divide the Ukrainian nation
into “two Ukraines,” regardless of strategic prospects and the harm that
will be done to future generations, who will have to expend much effort to
surmount these mostly artificial barriers?

Thus, it is important to analyze Franko’s role in establishing relations
between Galicia and Dnipro Ukraine in the last third of the 19 th century
and reveal his views on the problem of Ukrainian national unity, and the
formation and consolidation of the modern Ukrainian nation.

In order to understand Franko’s role in the development of relations between
Galicia and Dnipro Ukraine in the second half of the 19th century, as well
as unifying efforts in his time, it would be useful to analyze the state of
these relations in the mid-1870s.

After Panteleimon Kulish withdrew from political activity, Mykola Drahomanov
became the main intermediary between Galicia and Dnipro Ukraine from 1873.
He quickly impressed the young narodovtsi (national populists); one of them,
Volodymyr Navrotsky, pointed out that “Drahomanov was indeed born to
awaken us to work for the good of the people.”

Yet, from the very outset there was a tendency toward conflict with the
“senior” leadership of the Narodnyk movement, which was rooted in its
unwillingness to publish intact all the radical articles submitted by
Drahomanov and the younger members of the pro-people’s movement.

There were several unsuccessful attempts to reach an understanding, and the
process of establishing the Taras Shevchenko Literary Society exacerbated
their relations.

The eastern Ukrainians, who had mostly financed the undertaking, viewed
this society as an all-Ukrainian institution focusing on scholarly literary
activities, with an emphasis on Ukrainian folkways; they also envisaged
simplified membership procedures for every Ukrainian.

Yet the final version of the statute, prepared by the Lviv-based narodovtsi,
differed essentially from previous agreements. It significantly limited the
enlistment of members, and the board became the authorized head of the
society, which Drahomanov correctly described as an “oligarchy.”

On their part, the narodovtsi objected to the Dnipro Ukrainians’ neglect of
the national cause and their active promotion of socialism, including in
Galicia. Different approaches to recognizing the priorities of national and
social factors exacerbated relations between Drahomanov and the younger
populists, including Meliton Buchynsky, Volodymyr Navrotsky, and
Yevhen Zhelekhivsky.

At the turn of 1874-75, most of them stopped corresponding with each other.
A rift finally occurred during Drahomanov’s visit to Lviv in the fall of
1875, when he was en route to Russia.

Addressing a popular assembly in Lviv, he said that he “does not see a
Ukrainian nationality” and confirmed his authorship of the article in which
he stated that the Ukrainian and Russian peoples had the “same ethnic and
religious roots.”

The narodovtsi could not accept his theory of Russian, Great Russian, and
Ukrainian literatures, and his comparison of Ukrainian literature with
Provencal or Plattdeutsch (Low German).

In the late 1870s relations between Galicia and Dnipro Ukraine were on the
verge of collapse; the Dnipro Ukrainians had rejected the idea of
establishing a center in Lviv. Drahomanov later recalled that the Kyiv-based
leadership had resolved to fine anyone who even broached the question of
consolidation with Galicia.

It was only Franko’s dedicated position on unity and Drahomanov’s role as
an indefatigable “awakener of souls” that prevented the breakdown of all
ties between the Ukrainian territories under Austrian and Russian rule.

 
Starting in the late 1870s, the two men were the key intermediaries in relations
between Galicia and Dnipro Ukraine, determining their character and
structure.

The young Franko attracted the attention of both local Galician and
Kyiv-based activists by his first newspaper articles and stories published
in Druzi (Friends), their clarity and powerful eloquence attesting to the
young writer’s talent.

Unlike the narodovtsi, Franko was an ardent adherent of the socialist idea,
especially in Drahomanov’s interpretation, which also helped Franko
establish close contacts with the Kyiv Hromada.

By the mid-1880s, all contacts between the Kyiv Hromada and Galicia were
restricted to Franko and his circle of fellow thinkers (Mykhailo Pavlyk,
Ivan Belei) who were captivated by the new European ideas and had embarked
on a radical trend of the social movement in Galicia that was expressly
unifying from the outset.

In contrast to the narodovtsi who, beginning in 1880, curtailed their
activity and became markedly less adamant about advancing the idea of unity
in order to become a mass movement and attract the largest possible number
of supporters (among other things, they abandoned phonetics so as to attract
readers to their publications and focused mainly on Galician problems), the
radical youth led by Franko brooked no compromise in their publishing
endeavors.

During that critical period of national unification efforts, their journal
Svit (The World) was the only one that sought to represent universal
Ukrainian interests in Galicia. Evidence of this effort is found Oleksandr
Konysky’s correspondence with his editor I. Belei in 1881. Franko gave
significant assistance to the journal, becoming in effect its main
contributor.

Svit became a platform for the leading writers of Galicia and Dnipro
Ukraine – not just socialists. Franko himself emphasized this fact in 1910,
noting that “for the first time Galicians, Russian Ukrainians, and Ukrainian
emigres encountered each other on the foundation of progressive ideas on its
pages: Drahomanov, Vovk, on one side, and Konysky, Nechui-Levytsky,
Lymansky, and Hrinchenko, on the other. This was the first attempt at a
compromise between the progressive and radical elements of all
Ukraine-Rus’.”

However, this attempt also laid bare the problems of unifying all Ukrainian
forces of unification. The emigres, Drahomanov in particular, became
disillusioned about collaborating with the journal because it published
articles written by people from Dnipro Ukraine, whose views they did not
share.

Franko succeeded in founding a genuine all-Ukrainian journal only in 1898,
when the Literaturno-naukovyi visnyk (Literary-Scientific Herald) first
appeared, with Svit as its foundation and predecessor.

In the mid-1880s, after its fascination with socialism waned, the Kyiv
Hromada expanded its contacts with Ukrainophile figures in Galicia and
members of the Narodna Volia movement, including Oleksandr Barvinsky.

In 1882, Barvinsky had called for severing all contacts with the old Rusyns
and for a clear designation of the populist movement’s positions on unity.

However, most narodovtsi opposed him. From the mid-1880s, he and his fellow
thinkers (known as the “principalists”) were actively supported by leading
activists in Dnipro Ukraine and their contacts intensified.

In fact, two main lines of cooperation between the Ukrainophiles of Galicia
and Dnipro Ukraine took shape in this period:
   1. Franko-Drahomanov (Ukrainophiles, mostly pro-socialist, from

       Dnipro Ukraine);
   2. Barvinsky-Konysky (Kyiv Hromada, mostly of a liberal, national-
       democratic orientation).

In 1884-1885, the activists from Dnipro Ukraine sought to reconcile the
radicals (primarily Franko) with the narodovtsi group in order to strengthen
the Ukrainian movement in Galicia and its unifying character. After lengthy
talks and arguments, a compromise was achieved in the summer of 1885
through the direct efforts of Konysky.

During a meeting of narodovtsi, convened by Yulian Romanchuk, most of the
participants, except for Mykhailo Podolynsky and Anatol Vakhnianyn, spoke
out in favor of reforming Zoria, as did Franko.

In the 1880s, Franko’s world outlook fundamentally changed as a result of
his collaboration with Drahomanov, the narodovtsi, and the Polish left-wing
movement. Already by the 1870s, Franko had defined himself as a naive,
“sympathizing” socialist, but after the trial of 1878 he made a careful
study of the theory of socialism.

He noted later that young Galicians were “impressed [by socialism] through
its knowledge of the future, simplicity of its attitude and way of resolving
the most complex problems, the dogmatic nature of its theses, its seemingly
scholarly phraseology, and also by what the late Drahomanov had identified
as ‘Jewish self-aggrandizement’ among the German social democrats.”

During this period Franko’s correspondence with Drahomanov and his theory
of “community” exerted a major influence on the Galician writer’s world
view.

As Yaroslav Hrytsak aptly puts it, Franko’s world view at the turn of the
1880s could be described as a structure, with bricks borrowed from other
theories.

Franko, however, was never a conformist and did not blindly accept other
peoples’ views and doctrines. Having analyzed the works of Karl Marx,
Ferdinand Lassalle, and other socialist theoreticians, he quickly grasped
the shortcomings of socialist teachings, especially the Marxian version, and
its inappropriateness for Galician realities and the peasant character of
the Ukrainian nation.

Franko’s disillusionment with the socialist movement mounted after his
futile attempts at cooperation with Polish socialists, who clearly displayed
their chauvinistic nature and disregard for Ukrainian national problems in
favor of restoring their “historical Poland.”

The conflict with Polish socialists on national grounds demonstrated the
extraordinary significance of Franko’s idea of Ukrainian unity. His
well-known poetic cycle entitled “Ukraina” appeared in the early 1880s
h(never published in either the 20 and 50-volume collections of Franko’s
works. The most famous of these poems, “Ne pora” (It Is Time, It Is Time,
It Is Time) became one of Ukraine’s national anthems.

In it the poet clearly articulates his stand: “It is time, it is time, it is
time/To refuse to serve Russian and Pole!/ For an end is at hand to the past
and its crime;/Our Ukraine claims your life and your soul.”

The use of the concluding term “Ukraine” is significant, although at the
time all Ukrainian territories in Galicia were usually referred to as “Rus’-
Ukraine,” which also attests to Franko’s departure from the Galician
tradition and switch to Ukrainian unity positions.

Later, in his article “Beyond the Range of the Possible” (1900), Franko
noted: “Everything that goes beyond the framework of the nation is either
hypocrisy on the part of people who are ready to conceal their strivings for
the supremacy of one nation over another behind international ideals, or the
sickly sentimentalism of dreamers, who are ready and willing to conceal
their spiritual alienation from their own nation behind wide-ranging
‘universal’ phrases.”

Summing up his involvement in the socialist movement, especially in regard
to his collaboration with Polish socialists, Franko wrote: “…in
international issues, like socialism, healthy organic shoots can grow in
every land only in unmistakably national soil, and only then will they cease
to be theory and become a blossoming reality.”

Clearly, these ideas formed the basis of the evolution of his ideas in the
1880s and 1890s from championing socialism to national democracy.

(In 1899 he was one of the founders of the Ukrainian National Democratic
Party, and in a series of newspaper articles he emphasized that the creation
of a nation-state is an unconditional prerequisite for resolving the social
question.)

In conclusion, I will allow myself to paraphrase Franko’s statement from his
“Open Letter to Galician Ukrainian Youth”: Today, we must learn to perceive
ourselves as Ukrainians – not as easterners, westerners, or southerners –
but as Ukrainians without ideological and spiritual borders.

I trust that 15 years from now we will not have to seek Franko’s advice on
solving problems relating to Ukrainian national unity.          -30-
———————————————————————————————–
LINK: http://www.day.kiev.ua/168553/
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
24. BEAUTY SALON BUSINESS BOOMS IN POST-SOVIET UKRAINE

Deutsche Press-Agence (DPA), Kiev, Ukraine, Monday, Sep 18, 2006

KIEV – During the dark pre-1991 days of Soviet Ukraine, only two beauty
salons served the needs of more than one million women then in the capital
Kiev – and appointments were fought over tooth and nail.

Today, an estimated 2,000 salons operate legally and illegally in the city,
supported by an army of tens of thousands of self-employed beauty
professionals. Nationwide, beauty salons outnumber restaurants and grocery
stores combined.

“The demand for female beauty in Ukraine, is like the demand for rice in
China,” said Inge Shishchenko, a Kiev-based cosmetics consultant. “The
secret to an attractive appearance is hard work, and no one works harder at
being pretty than our Ukrainian girls.”

It certainly looks that way.

On the tree-shaded promenades in the bigger towns like Kiev’s Khreschtyk
Street or Odessa’s Deribassovsky Boulevard, stunning women traipse by in
quantities exceeding most major European cities, and at times resembling the
starlet parades of Cannes or Hollywood.

The story of how the Ukrainian peasant girl Roksolana through beauty and
guile became the favourite wife of a 16th century Turkish sultan, and so the
effective ruler of the Ottoman Empire, is a standard history lesson in
Ukrainian schools.

Mikhail Zhvanetsky, a popular Ukrainian comic, even jokes: “In summer on

the Deribassovsky, men are walking into lamp posts, it’s like flies on a
windshield! There are too many beautiful women. They are uncontrolled by
law, and your eyes don’t know which way to look! It’s dangerous!”

Feminism has had difficulty gaining a foothold in Ukraine.

Even politician Julia Timoshenko, a 40-something former prime minister
feared by most male politicians for her oratorical skills, admits she is a
just as enthusiastic customer for the beauty industry as her less
accomplished sisters.

“Every girl wants to be beautiful, to have a pleasing appearance,” the
elegant Timoshenko said. “In this I am no different from any other Ukrainian
woman.”

At the top of the market, women like Timoshenko looking to invest in their
appearance can visit a palatial building where classical background music is
played as she chooses between health club and cafe under the same roof.

Besides the fingernail specialist ($10) and the hair stylist ($50-$100), she
can have full-body cleansings ($100-$200), and vitamin and even Botox
injections ($100-$500 a treatment).

At the stylish Kosmetika Luks salon, businesswoman Lesya Zhigalevska turned
down the chocolate mask ($80) in favour of a 90-minute facial treatment
culminating in a collagen-thread massage, in all costing a bit fewer than
$50. “I do as much for the quiet and relaxation, as for the treatment
itself,” Zhigalevska said.

Pretty much all international technology can offer is available to a
Ukrainian woman willing to grit her teeth for the sake of hair-free skin:
chemical washes, leg waxing, electrolysis, intensive-light pulses, and good
old Soviet-era lasers to zap each individual follicle.

Even Ukraine’s famous mineral riches – the country boasts reserves of
everything from antimony to uranium – stand ready to defend the beauty of
the nation.

Ukrainian clay is, according to a Kosmetolog magazine article “superior to
foreign substitutes – and in all ways healthy”. The procedure is simplicity
itself: for whatever mineral the patient’s skin lacks, the beauty
professional chooses the appropriate-coloured clay.

“Reddish clays such as in our eastern provinces are high in iron and copper,
so use this clay for a patient deficient in this mineral,” the article
advised.

At the lower rungs of the market ladder, a beauty salon is one of the few
private businesses a Ukrainian woman can open on her own for not much
start-up capital, and expect a regular income.

“My job is to help,” said Svitlana Drach, owner-operator of the single-room
Nasha Krasunia salon in the village Boyarka. “Of course I give discounts. In
this business my patients only pay what they can.”

Fraud, or more kindly faith-based beauty services, remains a main risk in
Ukraine’s take-no-prisoners beauty industry. Among popular treatments
ranging from the iffy to the downright risky are magnetic massages,
ultrasonic scrubs, and “cyrotherapy”, in which the “technician” freezes the
“patient’s” skin slightly.

“This is why for a Ukrainian woman what is most important is the quality of
the beauty supplies, and the professional skill of the cosmetologist, rather
than the interior of the salon,” Drach explained. “Spending money on beauty
is not enough for our girls – they want results.”

“A Ukrainian woman will always try to be beautiful, it is our tradition, it
is part of our culture,” Shishchenko said. “The will to be beautiful is in
her blood.”                                      -30-

—————————————————————————————-
LINK: http://www.newkerala.com/news4.php?action=fullnews&id=23027
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
25. CONCERT: UKRAINIAN NATIONAL SINGER NINE MATVIYENKO
                      Washington, D.C., Thursday, October 5, 6:30 p.m.

Action Ukraine Report (AUR), Washington, D.C., Mon, Oct 2, 2006

WASHINGTON – The Ukraina Citizens International Association, in
cooperation with The Washington Group Cultural Fund, is sponsoring a
concert by the renowned Ukrainian National singer Nina Matviyenko.

Recognized as the “National Singing Symbol of Ukraine,” it is anticipated
her concert will appeal to both young and mature audiences alike.

In Ukraine, Nina Matviyenko is considered a very patriotic and popular
artist. During the campaigns for the recent elections to Verkhovna Rada,
Ms. Matviyenko sponsored and performed in 54 concerts throughout the
towns and villages of Ukraine, in support of the democratic movement.

Proceeds from the concert in Washington, DC will be allocated for the
building of a Special Children’s Medical Facility of the Center for Children
and Mothers (Okhmatdyt) in Kyiv.

The project is being sponsored by Branch 90 of the Philadelphia Region of
the Ukrainian National Women’s League of America (UNWLA, Inc.) who
invited Mrs. Matvijenko to the US.

This venture is part of the “Project 3000” Healthcare Program, under the
patronage of the First Lady of Ukraine, Kateryna Chumachenko-Yushchenko.

Your participation and support of the concert will sustain this highly
urgent and beneficial cause.

WHEN: Thursday, October 5, 2006, 6:30 p.m.
WHERE: Embassy of Ukraine, 3350 M Street, N.W., Washington, DC
COST: Tickets are $20 each. Seating is limited, please purchase tickets
in advance
FOR MORE INFORMATION: Contact Mykhajlo Datsenko of the
Ukraina Citizens International Association, (202) 491-4030,
e-mail ukraina-citizen@excite.com.

If anyone wants to promote it further, a concert poster is available at:
http://new.photos.yahoo.com/ukraina_citizen/photo/294928803098919710/0.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================

    If you are receiving more than one copy of the AUR please contact us.
    Please contact us if you no longer wish to receive the AUR.    
       You are welcome to send us names for the AUR distribution list.
   If you are missing some issues of the AUR please let us know.
========================================================
         “ACTION UKRAINE REPORT – AUR”
         A Free, Not-For-Profit, Independent, Public Service Newsletter
                With major support from The Bleyzer Foundation
 
      Articles are Distributed For Information, Research, Education
                Academic, Discussion and Personal Purposes Only
                                  Additional readers are welcome.
========================================================
              ACTION UKRAINE PROGRAM – SPONSORS
                              Action Ukraine Report (AUR)
               Holodomor Art and Graphics Collection & Exhibitions
          “Working to Secure & Enhance Ukraine’s Democratic Future”

1.  THE BLEYZER FOUNDATION, Dr. Edilberto Segura,
Chairman; Victor Gekker, Executive Director, Kyiv, Ukraine;
Washington, D.C., http://www.bleyzerfoundation.com.
       Additional supporting sponsors for the Action Ukraine Program 
                                will be listed again later this week.
========================================================
 TO BE ON OR OFF THE FREE AUR DISTRIBUTION LIST
If you would like to read the ACTION UKRAINE REPORT- AUR,
around four times a week, please send your name, country of residence,
and e-mail contact information to morganw@patriot.net. Information about
your occupation and your interest in Ukraine is also appreciated.
 
If you do not wish to read the ACTION UKRAINE REPORT please
contact us immediately by e-mail to morganw@patriot.net.  If you are
receiving more than one copy please let us know so this can be corrected
 
              SPAM BLOCKERS ARE A REAL PROBLEM                 

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

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

Emerging Markets Private Equity Investment Group
P.O. Box 2607, Washington, D.C. 20013, Tel: 202 437 4707
mwilliams@SigmaBleyzer.com; www.SigmaBleyzer.com
========================================================
       Power Corrupts and Absolute Power Corrupts Absolutely. 
========================================================
return to index [Action Ukraine Report (AUR) Monitoring Service]
========================================================
Advertisements

Leave a comment

Filed under Uncategorized

Leave a Reply

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

WordPress.com Logo

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

Twitter picture

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

Facebook photo

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

Google+ photo

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

Connecting to %s