AUR#772 Oct 11 Wheat Exports Halted, Markets Alarmed; Boeing Visits; Citibank Coming; EBRD 1 Billion Euro; Genocide In Darfur, Ukraine Remains Silent; Anna P.

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

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

                                                                        
ACTION UKRAINE REPORT – AUR – NUMBER 772
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., WEDNESDAY, OCTOBER 11, 2006
 
                   Help Build the Worldwide Action Ukraine Network
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               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.           UKRAINE HALTS WHEAT EXPORTS IN PRICE DISPUTE
By Stefan Wagstyl and Roman Olearchyk in Kiev
Financial Times, London, UK, Wednesday, Oct 11, 2006

2.        UKRAINIAN GRAIN TRADERS ALARMED OVER LACK OF
               EXPORT LICENSES FOR EXPORTING BREAD WHEAT
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 10, 2006

3.        UKRAINE MAY INTRODUCE QUOTAS ON EXPORTS OF

                           WHEAT, BARLEY, CORN AND RYE
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 3, 2006

4MINISTRY OF AGRICULTURAL POLICY PRAISES INTRODUCTION
        OF GRAIN EXPORT LICENSING AS TIMELY AND GROUNDED 

Viktoria Miroshnychenko, Ukrainian News Agency
Kyiv, Ukraine, Monday, October 2, 2006

5.   UKRAINE SETS UP GRAIN EXPORT LICENSES TO END OF 2006
Ukrainian News Agency, Kyiv, Ukraine, Tue, Oct 3, 2006

6.                      HOT YEAR HELPS WHEAT PRICES SOAR
By Kevin Morrison and Lucy Warwick-Ching in London
Financial Times, London, United Kingdom, Wed, October 11 2006

7BOEING MULLING COOPERATION WITH UKRAINIAN AIRCRAFT
    MANUFACTURERS, DELEGATION WAS RECENTLY IN UKRAINE
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 10, 2006

8CITIGROUP PLANS EXPANDING ITS ACTIVITY IN COUNTRIES

                    OF EASTERN EUROPE, INCLUDING UKRAINE
Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 10, 2006

9.               POLISH BANKS PLAN TO CONQUER UKRAINE
Polish News Bulletin, Warsaw, Poland, Tue, Oct 10, 2006

10SMALL BANKS FACE BIG PROBLEMS – QUIT NOW OR LATER?
                     NBU intends to toughen activities of small banks
ANALYSIS AND COMMENTARY: Roman Bryl, Ukraine Analyst
and Andrew Afanasiev, CIS Senior Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Mon, Oct 9, 2006

11.        UKRAINE: BOHDAN CORP SELLS BUSES TO ARMENIA 

Ukrainian News Agency, Kyiv, Ukraine, Tue, October 10, 2006

12.    UKRAINE: VENEZUELA RESCUES ANTONOV AIRCRAFT CO
StrategyPage.com, Friday, October 6, 2006

13.   ITALIAN KING CROSS TO BUILD SHOPPING CENTER IN LVIV
Business Digest, Sofia, Bulgaria, Monday, October 9, 2006

14UKRAINIAN PUBLISHER LAUNCHES NATIONAL NEWS MAGAZINE
Interfax-Ukraine news agency, Kiev, in Russian 1246 gmt 2 Oct 06
BBC Monitoring Service, United Kingdom, Tuesday, Oct 03, 2006

15. GAS PRICE RISES ‘INEVITABLE’ SAYS UKRAINE’S PRIME MINISTER
By Stefan Wagstyl in Kiev, Financial Times
London, United Kingdom, Wed, October 11 2006

16EBRD: INVESTMENT IN UKRAINE WILL REACH 1 BILLION EURO

Ukrainian News Agency, Kyiv, Ukraine, Friday, October 6, 2006

17UKRAINIAN PRESIDENT NAMES EASTERN UKRAINIAN WITH

    POWERFUL INDUSTRY TIES TO OVERSEE SECURITY COUNCIL
AP Worldstream, Kiev, Ukraine, Tue, Oct 10, 2006

18PROFILE: UKRAINE’S NEW SECURITY COUNCIL SECRETARY
                   WEALTHY INDUSTRIALIST VITALY HAYDUK
BBC Monitoring research in English 10 Oct 06
BBC Monitoring Service, United Kingdom, Tue Oct 10, 2006

19UKRAINIAN PM PLEDGES TO IMPLEMENT PACE ACTION PLAN

UNIAN news agency, Kiev, in Ukrainian 1341 gmt 10 Oct 06
BBC Monitoring Service, United Kingdom, Tue, Oct 10, 2006

20.      ANTI-SOVIET WWII PARTISANS IN UKRAINE CALL FOR

                     RECOGNITION BY PRESIDENTIAL DECREE 
Natasha Lisova, AP Worldstream, Kiev, Ukraine, Tue, Oct 10, 2006
 
21.     WHEN RAPE IS THE WEAPON, THE WOUNDS NEVER HEAL
SAVE DARFUR, Full page advertisement, The Washington Post
Washington, D.C., Tuesday, October 10, 2006, p A5
 
22.       GROUNDBREAKING CEREMONY FOR THE VICTIMS OF
            COMMUNISM MEMORIAL HELD IN WASHINGTON, D.C.
Ukrainian National Information Service (UNIS)
Washington, D.C., Monday, October 2, 2006
 
23.         RESPONSE TO GEORGIA SEEN AT LATEST KREMLIN
                     CONTRIBUTION TO RUSSOPHOBIA ABROAD
                Unfortunately, alongside oil and gas, present-day Russia’s
                                 principal export is… Russophobia.
Gazeta.ru website, Moscow, Russia in Russian 6 Oct 06
BBC Monitoring Service, United Kingdom, Tue, Oct 10, 2006
 
24.                                    RUSSIAN INTOLERANCE
LEAD EDITORIAL: Financial Times
London, United Kingdom, Tue, October 10 2006
 
25.              A FIREBRAND FOR FREEDOM IS EXTINGUISHED
   And she never concealed a very personal hatred of President Putin. He was,
    in her view, a second-rate KGB officer who had never changed his nature,
     and was fast rolling back every post-Soviet freedom Russia had enjoyed.
EDITORIAL
: The Independent
London, United Kingdom, Monday, Oct 09, 2006
 
26WORLD WATCHING HOW RUSSIANS INVESTIGATE JOURNALISTS
        DEATH SAYS U.S. SECRETARY OF STATE CONDOLEEZZA RICE
 “We’ve been very concerned about the fate of the press in Russia,” said Rice.
Kasie Hunt, AP Worldstream, Washington, DC., Wednesday, Oct 11, 2006
   Pundit urges Putin to comment on journalist’s murder for reputation’s sake
     When the presidential elections in Ukraine took place you congratulated
        the wrong person without even waiting for the votes to be counted.
LETTER TO THE PRESIDENT
: By Aleksandr Minkin
Moskovskiy Komsomolets, Moscow, in Russian 9 Oct 06
BBC Monitoring Service, United Kingdom, Tue, Oct 10, 2006
 
28.            PERSONAL TRIBUTE TO ANNA POLITKOVSKAYA
PERSONAL COMMENTARY: By Edward Lucas
Eastern Europe correspondent, The Economist
Europe, Monday, October 9, 2006
 
                  RUSSIAN JOURNALIST ANNA POLITKOVSKAYA
Radio Free Europe/Radio Liberty (RFL/RL)
Prague, Czech Republic, Monday, October 9, 2006
 
London, United Kingdom, Tuesday October 10, 2006
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1UKRAINE HALTS WHEAT EXPORTS IN PRICE DISPUTE

By Stefan Wagstyl and Roman Olearchyk in Kiev
Financial Times, London, UK, Wednesday, Oct 11, 2006

Ukraine, the world’s sixth largest grain exporter, has halted wheat exports
for the past week in a dispute with international grain traders over
government intervention in the market.

Eleven ships are standing idle in Ukraine’s Black Sea ports, accumulating
charges at a rate of $30,000 per vessel a day, with some further 15 ships on
their way, according to western grain traders operating in Ukraine.

The authorities suspended wheat exports after grain traders refused to agree
terms for selling wheat at low prices to a government strategic reserve.

The dispute, which comes at a time of growing shortages in the world wheat
market, could damage Ukraine’s reputation in the commodity markets and
among foreign companies operating in the country.

Jorge Zukoski, president of the American Chamber of Commerce in Kiev, said:
“This has caused tremors throughout the agricultural sector. For us it also
exemplifies fears that the new government could slide back into the negative
anti-market attitudes we have seen before in Ukraine.”

Foreign companies are concerned about the direction of government economic
policy because of the uncertainty that has accompanied the creation of the
new government following parliamentary elections in March.

After a long delay, Viktor Yushchenko, president, this summer backed a
coalition led by Viktor Yanukovich, his rival in the disputed 2004
presidential elections.

However, it is unclear how closely Mr Yushchenko, an economic liberal, and
Mr Yanukovich, who has strong ties with Ukrainian big business, will
co-operate in policy formation.

The grain dispute began when the government asked grain trading companies
to sell 300,000 tonnes of wheat to the strategic reserve at a discount of
about $15 to the prevailing price, which was then $168 a tonne.

The companies, which include international traders such as Cargill of the
US, Germany’s Topfer and Bunge, the Dutch company, refused.

A week ago, the authorities suspended the free export of wheat and
introduced compulsory export licences. Traders immediately applied for
licences but none have been issued.

Traders suspect the government has sought to increase wheat reserves to
protect consumers against increases in the bread price at a time when energy
prices are rising rapidly.

In a Financial Times interview yesterday, Mr Yanukovich promised the
argument would be settled. He said: “We will uphold the principles of the
market economy. These problems which now exist [in the grain market] are
linked with domestic procedures which exist in every country.”

Mr Yanukovich insisted Ukraine had a surplus of wheat for its own market
and for sale for export.   -30-
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2. UKRAINIAN GRAIN TRADERS ALARMED OVER LACK OF
        EXPORT LICENSES FOR EXPORTING BREAD WHEAT

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 10, 2006

KYIV – Ukrainian grain traders are alarmed with the lack of clarity over
issuing licenses for exporting bread wheat, the absence of which has led to
the suspension of shipments of bread wheat to foreign markets.

“No licenses for exports have been issued [since being introduced on
September 28]. Wheat is not being shipped for export,” the president of the
Ukrainian Grain Association Volodymyr Klimenko told Interfax-Ukraine on
Monday.

He said that currently grain market players do not know why the licenses are
not being issued, and they have no information on when the situation will
change.

Klimenko also said that at present, the ports are having difficulties with
the reloading of other grain for export, as they are working at full
capacity. He said that because of the downtime of ships, the companies

have to pay fines.

The association said that it has asked Agriculture Minister Yuriy Melnyk and
Economy Minister Volodymyr Makukha to settle the situation concerning the
issue of license on wheat exports. “As of October 9, not one license has
been issued,” the association said.

As reported, the Ukrainian government on September 28 introduced the
licensing of grain exports to raise the reliability of supply on the
domestic market. The licenses were to be issued by the Economy Ministry
after agreement with the Agriculture Ministry.

The Agriculture Ministry forecasted wheat yield this year at around 15
million tonnes against 18.7 million tonnes in 2005.

In the 2005/2006 marketing year (July-June), Ukraine exported almost 13.2
million tonnes of grain, which is 19.3% more year-on-year. Wheat exports
grew by 50%, to 6.48 million tonnes.                 -30-
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3.  UKRAINE MAY INTRODUCE QUOTAS ON EXPORTS OF
                        WHEAT, BARLEY, CORN AND RYE

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 3, 2006

KYIV – Ukraine may introduce export quotas for wheat, barley, corn and rye
until December 31. According to a draft governmental resolution, the quota
on wheat exports will be 400,000 tonnes, barley 600,000 tonnes, corn

100,000 tonnes, and rye 3,000 tonnes.

As the memo to the draft resolution reads, the introduction of quotas will
prevent domestic shortages of certain types of grain. According to the

document, the quotas were calculated on the basis of grain demand and
supply estimates.

According to the Agriculture Ministry, additional exports of grain from
Ukraine until July 1 2007 must not exceed 5 million tonnes, including 1.35
million tonnes of wheat.

At the same time, according to the document, the exchange market as of
October 5 have registered contracts for the export of 5.5 million tonnes of
grain, including 2.9 million tonnes of wheat.                -30-
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4. MINISTRY OF AGRICULTURAL POLICY PRAISES INTRODUCTION
       OF GRAIN EXPORT LICENSING AS TIMELY AND GROUNDED
 
 
Viktoria Miroshnychenko, Ukrainian News Agency
Kyiv, Ukraine, Monday, October 2, 2006

KYIV – The Ministry of Agrarian Policy has described the introduction of
grain export licensing as timely and grounded.

Ukrainian News learned this from a statement by the Ministry of Agrarian
Policy, the wording of which was made available to the agency.

The statement reads that the introduction of the grain export licensing
meets the tendencies of the world market, where the demand for food grain
tops the offer at present and the price is adequate.

The ministry said the decision on grain export licensing had been discussed
with producers, traders, bakers, and other participants of the market. Late
in August, a relevant governmental committee mulled over the issue also.

“Grain exports have grown significantly year-on-year. As for the export
structure it doesn’t meet the structure of grain harvest of this year,” the
press service said.

The press service said the Economy Ministry would issue licenses with the
obligatory agreement with the Ministry of Agrarian Policy. The ministry
stressed that the license would not restrict the volume of grain exports.

As Ukrainian News reported, on September 28, the Cabinet of Ministers
introduced the licensing of the export of wheat and wheat – rye mix before
the end of 2006.

The Ministry of Economy made a proposal in early September to introduce
licensing of grain exports in 2006, which, in the ministry experts’ opinion,
would help stabilize prices on the domestic grain market.

In March the Cabinet of Ministers was looking into the possibility of
introducing the licensing of grain exports until the end of the 2005/2006
marketing year (i.e. until July 1, 2006).

In June, the Agricultural Policy Ministry improved its grain export forecast
for the 2006/2007 marketing year by 30% – 62.5% or 3 million – 5 million
tons to 13 million tons (July 2006 – June 2007).

Market experts say companies exported 13.3 million tons of grain in the
2005/2006 marketing year, 20% up on year 2004/2005.       -30-
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5. UKRAINE SETS UP GRAIN EXPORT LICENSES TO END OF 2006

Ukrainian News Agency, Kyiv, Ukraine, Tue, Oct 3, 2006

KYIV – The Cabinet of Ministers has introduced licenses for export of grain
until the end of 2006. This is stated in the Cabinet of Ministers resolution
No.1364 of September 28, by which some changes were brought into the
resolution No.1304 of December 30, 2005, confirming the list of goods,
exports and imports of which to be licensed in 2006.

The resolution came into force on October 3, since the day of publication in
government newspaper Uriadovyi Kurier.

As Ukrainian News earlier reported, the Economics Ministry proposed in early
September introduction of licenses for export of grain in 2006.

According to the Economics Minister, introduction of export licenses will
facilitate stabilization of prices on the domestic grain market.

According to experts, companies exported 13.3 million tons or grain in the
2005/2006 marketing year (20% more than the quantity exported in the
2004/2005 marketing year).

In March, the Cabinet of Ministers considered the possibility of introducing
export licenses for grain until the end of the 2005/2006 marketing year
(i.e. until July 1, 2006).

In June, the Agricultural Policy Ministry increased its forecast for export
of grain by 3-5 million tons or 30-62.5% to 13 million tons in the 2006/2007
marketing year (July 2006 to June 2007).                 -30-
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6.               HOT YEAR HELPS WHEAT PRICES SOAR

By Kevin Morrison and Lucy Warwick-Ching in London
Financial Times, London, United Kingdom, Wed, October 11 2006

US wheat prices struck a 10-year high yesterday on fears of a further decline
in global production at a time when world stockpiles are near 20-year lows.
The latest rise is expected to lead to higher food prices.

Wheat harvests from Australia to Argentina, Europe and North America have
been affected by drought, heatwaves and, in Ukraine, infestation from the
Eurygaster beetle. Global wheat supplies have fallen about 5 per cent – or
30m tonnes – from last year.

Also Ukraine’s wheat exports were stalled after authorities in Kiev insisted
that grain traders apply for export licences.

Wheat futures in Chicago reached a 10-year high yesterday morning, $5.24 a
bushel, a rise of more than 13 per cent in two days.

Traders said if the highs of 1996 were stripped out, current prices would
represent their highest levels in 30 years, referring to the heatwave of
1976.

Chicago wheat futures rose more than a third in the past month on dramatic
revisions of the outlook for Australia’s wheat crop, now expected to be less
than half last year’s 24m tonnes.

About 70 per cent of Australia’s wheat output is exported, mainly to flour
millers in Asia. Other big wheat importers include Egypt, Nigeria and Iraq.

“This is not just an issue of an odd drought here and there but a structural
issue with the wheat market, with global stockpiles so low and demand
continuing to rise,” said Chris Brodie, a partner at Krom River Partners, a
London-based hedge fund.

Investors have waded into global wheat futures in recent weeks, betting on
further price rises.

The US department of agriculture is expected this week to lower its
assessment of global wheat stockpiles. Its current estimate of 126m tonnes –
about 57 days of global demand – is the lowest level of demand cover in more
than 20 years.

Gary Sharkey, head of wheat at the National Association of British and Irish
Millers, said global markets would remain finely balanced over the next 12
months. “If we have another dry spring or summer in the US, then we could be
facing all sorts of issues,” he said.

Analysts said flour and food prices would rise if current wheat prices held.
Analyst Andrew Saunders at Numis, the investment bank, said: “Food

producers will seek to pass this on to the retailers and in turn consumers
will bear the brunt.”                                -30-
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7. BOEING MULLING COOPERATION WITH UKRAINIAN AIRCRAFT
   MANUFACTURERS, DELEGATION WAS RECENTLY IN UKRAINE

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 10, 2006

KYIV – Boeing is mulling cooperation with Ukrainian aircraft manufacturers
to set up engine production in Ukraine for its airplanes, a source in the
aviation industry told Interfax.

A Boeing delegation was recently in Ukraine to discuss the prospects of
partnership between the U.S. aircraft manufacturer and Ukrainian plants.

Boeing representatives visited the Kharkiv State Aviation Production
Enterprise and the Kyiv State Aviation Plant Aviant, where they studied the
production of An-74, An-140 and An-148 planes and the production program

for An-70 and An-124-150 planes, the source said.

Representatives of the plants and of the state aircraft corporation Anton
discussed certifying parts and engines for planes that meet U.S.
regulations.                                         -30-
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8.  CITIGROUP PLANS EXPANDING ITS ACTIVITY IN COUNTRIES
                   OF EASTERN EUROPE, INCLUDING UKRAINE

Interfax-Ukraine, Kyiv, Ukraine, Tuesday, October 10, 2006

KYIV – World’s major finance corporation Citigroup is looking for
possibilities to expand its activity in the fast-developing countries of
Eastern Europe, including Ukraine.

Citigroup plans to expand its chain in Czech Republic, Hungary, Poland,
Slovakia and Ukraine, Chief Executive Officer for Corporate and Investment
Banking in Central and Eastern Europe, Middle East & Africa Shirish Apte
reported.

Economic growth in these countries is three times faster than in Western
Europe, which results in bigger demand for financial services. Citigroup,
which entered the market of these East European countries 20 years ago, is
now going to increase the volumes of the retail business to the size of its
corporate business.

Citigroup has businesses in 10 countries of Eastern Europe. The American
company started working in Ukraine in 1998.

“Ukrainian market is developing very rapidly,” Apte reported. “We are
looking for possibilities to expand our business her,” he said.

Citibank Ukraine was founded in 1998 as a bank with 100% foreign capital.

Citibank was the 166th largest bank by assets in the first half of 2005,
according to the Interfax-1000: CIS Banks ranking compiled by the Interfax
Center for Economic Analysis. The National Bank of Ukraine said Citibank
ranked 31st by assets among Ukrainian banks.                   -30-

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9.       POLISH BANKS PLAN TO CONQUER UKRAINE

Polish News Bulletin, Warsaw, Poland, Tue, Oct 10, 2006

WARSAW – PKO BP and Pekao SA are planning to develop their activities

beyond Poland’s eastern border in the coming years.

The Ukrainian market is a priority in the foreign development plans of both
banks, the first steps have already been taken, concentrating on individual
banking with its high margins.

PKO BP owns Kredo Bank and intends to achieve the position of market leader
in the western part of the country. In order to meet the target, PKO BP will
create 200 new small branches of Kredo Bank, which now has 72 outlets.

Pekao SA is the stake holder in UniCredit Ukraina, ranked 63rd among
Ukrainian banks. Pekao plans to develop the chain of UniCredit branches and
achieve 150 outlets in 2009. A merger with HVB Ukraina will help complete
the task.

The Ukrainian banking sector is scattered, with 140 banks and the market
leader – Privatbank – having only 11.2 per cent market share. The situation
is comparable to the one on the Polish market in the 1990’s.    -30-
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10. SMALL BANKS FACE BIG PROBLEMS – QUIT NOW OR LATER?
                     NBU intends to toughen activities of small banks

ANALYSIS & COMMENTARY: Roman Bryl, Ukraine Analyst
and Andrew Afanasiev, CIS Senior Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Mon, Oct 9, 2006

The large amount of small and medium banks in the country is often regarded
as a potential threat to the whole financial system. Such banks hardly can
provide high quality of services that are common for big financial
institutions and often fall short of international banking standards.

That is why a point of view prevails to force consolidation of small
financial institution and make them merge. Earlier such a view was shared by
only a group of market participants and experts, but lately the regulator
seemed to agree with this standpoint.

NBU recently published its comments in its order dated Oct 12, 2005
regarding regulatory capital requirements of banks.

The comments can be interpreted as NBU’s ban for banks belonging to the
4th group in terms of total assets (less than USD 100mn) to invest in
charter capital, securities of other companies, and also to open accounts

in foreign banks.

These changes make it harder for small banks to operate. Moreover, the
regulator seemed to break a promise to banks made in May 2006 to introduce
a 5-year grace period for banks in imposing any limits on their activity.

Small banks accumulate several problems regarding their activity:

the first is low return on equity —–
 
NBU’s strict mood can be understood taking into consideration the
problems small banks face today.

[1] The first problem is low return on equity. The indicator makes up 4% on
average compared with 20.28% for big banks.

This gap can be explained by lower share of borrowed funds to own capital
and by low prodigality of their asset transactions. Also, small banks are
poorly funded by long-term liabilities.

So, relying only on current and settlement accounts of enterprises and
short-term deposits of the population, small banks have to keep huge funds
on NBU’s accounts. At present, such banks supply up to 2/3 of savings on
correspondent accounts of the central bank.

Low level of capitalization is the second problem of small banks —–

[2] The second problem of small and medium banks is the low level of
capitalization. On the other hand, it is not only a problem of small and
medium-sized banks.

Despite the steady growth of banks’ capital, now its relation to GDP is
still 3-5-fold lower compared with developed markets. But small banks
confess that they are not able to give long-term credits due to their small
capital.

The regulator tries to increase the capitalization, proposing to set the
minimum level of banks’ capital at EUR 10mn for newly established banks and
at EUR 5mn for existing banks. Also, NBU intends to toughen capital adequacy
requirements. Obviously, bankers are opposing such intentions of NBU.

Small banks limited in attracting cheap funds —–

[3] The third problem of small and medium-sized banks is payments to the
fund of obligatory reserves. Even the lowest rate of such payments makes
credit resources more expensive by 1.5pps. Taking into consideration that
small banks usually work with small businesses, they have limited
opportunities to attract cheap deposits compared with big banks.

This is why small banks prefer to offer deposits at higher interest rates
than big banks. But at the same time, expensive attracted funds do not allow
banks to extend cheap credits that are demanded by small and medium-sized
enterprises.

Small banks have own advantages – mainly close ties with clients —–

But at the same time, small banks have their own advantages. First, they
usually benefit from good reputation and enjoy clients’ confidence
originating from long period of co-existence and close ties with clients.
Most small banks occupied their own niches. But they have many things in
common.

For instance, small banks usually focus on crediting SMEs and also gain from
securities and FX transactions. They avoid entering the retail market due to
its high costs. If a small bank works with individuals, it mostly services
salary projects. Small banks also avoid giving credits to unknown clients.

At the same time, big banks are not very attentive to small and mid-sized
corporate clients and they cooperate with them mainly in the framework of
centralized crediting programs. Thus, such clients do not get that personal
touch from the big banks.

Small banks can avoid pressure from NBU by hiding
their true market position —–

By its drive to increase capital requirements, NBU can actually spoil the
harmonious picture of the relationships between banks and their clients.

If this decision steps in effect, many small banks will be forced to leave
the market. Also, big banks will benefit from such a decision, because they
do not have serious problems with liquid assets.

But small banks are very flexible, for example, in terms of changing credit
agreements with their close clients. They can indicate that a credit given
was short-term, not long-term.

On the other hand, NBU does not have the possibility to examine constantly
the current financial situation at all of the small banks. Such tricks allow
small banks to keep their banking licenses.

Regulator to surely boost capital requirements, but in several years —–

We suppose that NBU returned to the issue of raising capital requirements in
order to give a signal that it will pressure so-called “pocket banks” that
are serving mostly their shareholders, helping them evade tax payments or
lower credit costs.

But NBU risks applying administrative measures in violation of market
principles. It can hardly risk damaging its image this way.

Nevertheless, the regulator hinted that in several years time it can
increase capital requirements. Different sources give different timeframes:
it can happen in the next 2 or 4 years. Until then small banks can exist
peacefully.

But the current situation cannot last very long. The anticipation of death
is worse than the death itself, so they say. Some banks’ owners might decide
to head for the hills with the banks’ money. The most decent ones might try
to sell off their business to larger competitors.

The probability of mergers between small banks is lower in our view.
Although medium-sized banks might turn out quite compatible, if the
shareholders find a way to co-exist.                     -30-
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11.  UKRAINE: BOHDAN CORP SELLS BUSES TO ARMENIA 
 
Ukrainian News Agency, Kyiv, Ukraine, Tue, October 10, 2006
 
KYIV – The Bohdan corporation has sold 77 Bohdan A092 buses with
engines of the Euro-1 to Armenia. The corporation’s press secretary
Serhii Krasulia announced this to Ukrainian News.
According to him, these buses were delivered in December, and Bohdan
plans to deliver an additional 300 Bohdan A092 buses to Yerevan between
late 2006 and early 2007.
 
Krasulia said that sale of buses equipped with engines of Bohdan did not
disclose the value of the contract for delivery of the buses, but Krasulia
did say that the basic export price of a Bohdan A092 bus fitted with an
engine of the Euro-1.Krasulia stressed that Bohdan last delivered buses to
Armenia in April 2005, when it delivered 50.
As Ukrainian News earlier reported, Bohdan increased production by
78.9% or 885 buses to 2,007 buses in 2005, compared with 2004.
Twenty enterprises engaging in production and sale of automobiles, including
the Lutsk automobile factory and the Cherkasy Bus factory (the producer of
the Bohdan buses), founded the Bohdan corporation in February 20
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12.   UKRAINE: VENEZUELA RESCUES ANTONOV AIRCRAFT CO

StrategyPage.com, Friday, October 6, 2006

Venezuela has come to the rescue of the Antonov aircraft company by
offering to buy a dozen of their new An70 transports.

Four months ago, Russia pulled out of the An70 development project, and
survival of the An70 was in doubt. The An70 has been pitched as a low cost
alternative for nations needing C-130 or A400M type medium military
transports.

The An70 is a powerful prop-driven aircraft. While the C-130 can haul 20
tons, and the A400M 37 tons, the AN-70 can carry 47 tons (for up to 1,350
kilometers.) Carrying 20 tons, the An70 can travel 7,400 kilometers.

The aircraft also excels in one area the Russians were always good at; the
ability to operate from unpaved, and short, runways.

The Russian-Ukrainian company developing the AN-70 expected to sell lots
of them to countries like India and China, and others that want the most for
their money in a rugged military transport.

The An70 is a turboprop transport with a top speed of 800 kilometers, a
range of 8,000 kilometers and is intended as a replacement for the
venerable, and popular, An-12.

The An70 has been in development since 1984, and that effort was interrupted
by the collapse of the Soviet Union in 1991.

Despite the cut in funding, the first flight took place in 1994, and a
second in 1997. The project limped along on a much reduced budget. The first
prototype crashed in 2001, and part of the problem was design flaws with
it’s D-27 turboprop engines.

The Soviet Union always had problems with designing and building durable and
reliable aircraft engines. These problems have not been resolved, and some
Russian aircraft companies buy foreign engines for their transports.

Antonov, a Ukrainian company, kept An70 development going through the
Summer, and maintained good relations with the Russian government. Russia
wants to concentrate on further developing its own Il-76 jet transport. But
the Venezuelans needed something like the An70. Just in time.

Venezuela had earlier tried to buy eight C-295 transports and two CN-235MPA
maritime patrol aircraft from Spain. The U.S. blocked that deal, because
those aircraft used American technology that the U.S. would not allow
Venezuela access to.                                 -30-
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13. ITALIAN KING CROSS TO BUILD SHOPPING CENTER IN LVIV

Business Digest, Sofia, Bulgaria, Monday, October 9, 2006

The Ukrainian investment company Comfort Invest and Italian real estate
developer King Cross plan to build a shopping and entertainment complex
under the name of King Cross Leopolis in Lviv, western Ukraine, by the end
of 2008, it was reported on October 9, 2006.

On an area of 104,000 sq m it will house a 10,000 sq m hypermarket, a 8,000
sq m building materials supermarket, a multiplex cinema, a sports and
household appliances stores, as well as a skating rink, a bowling hall and a
car-park with 1,800 spaces.

The building materials supermarket will be operated by German do-it-yourself
(DIY) retailer Praktiker, while the name of the 10,000 sq m hypermarket
tenant is still unknown, but it will be a DIY operator.

Retailers estimate the DIY sector in Ukraine at $2.0 bln (1.587 bln euro)
and competitors such as UK Kingfisher with hypermarkets Castorama,

German OBI, Finnish Kesko and Israeli Fishman plan to enter it.

Chain operators have shown great interest in acquiring sites in Lviv, since
the area lacks big shopping centres and none will be opened in 2007, said
Halyna Maliborska from the Ukrainian unit of real estate service provider
Colliers International. (Alternative name: Lvov) (http://www.podrobnosti.ua)
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14. UKRAINIAN PUBLISHER LAUNCHES NATIONAL NEWS MAGAZINE

Interfax-Ukraine news agency, Kiev, in Russian 1246 gmt 2 Oct 06
BBC Monitoring Service, United Kingdom, Tuesday, Oct 03, 2006

KIEV – The first issue of Focus, a national political weekly, was published
on 30 September, Ukrainian Media Holding announced on Monday [2

October]. Focus is a new project of Ukrainian Media Holding.

Focus will concentrate on the main events of the week in Ukraine and abroad
in order to keep busy people informed about the most important developments,
expert views and forecasts.

The publisher presents it as a classical news magazine – well-illustrated,
emotional, intelligent, trustworthy and interesting.

“Focus will present an example of new independent journalism, creative
ideas, high-quality photographs and design,” Borys Lozhkin, the president of
Ukrainian Media Holding, said.

[Passage omitted: Focus compared to Newsweek, Spiegel and Economist;
editor-in-chief Vakhtang Kipiani promises the public good reading]

Focus will be distributed in 40 Ukrainian cities and have a circulation of
45,000 copies. Its target audience is middle class residents of big cities
from 24 to 45 years of age.

The international company Ukrainian Media Holding is a leader in the
Ukrainian media market, running 77 press, radio and new media projects.

The total print-run of its publications in 2006 stands at 200m copies.

Last summer the company announced a strategic expansion plan for the
magazine market niche. Seven projects should start in 2006.

The Zdorovye [Health] magazine was launched in August, the business magazine
Dengi.ua [Money.ua] on 28 September, and Focus on 30 September. Ukrainian
Media Holding intends to invest 11m dollars in those projects in the next
three years.                                     -30-
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15. GAS PRICE RISES ‘INEVITABLE’ SAYS UKRAINE’S PRIME MINISTER

By Stefan Wagstyl in Kiev, Financial Times
London, United Kingdom, Wed, October 11 2006

KIEV – Viktor Yanukovich, the Ukrainian prime minister, yesterday warned
that the country must prepare to pay world market prices for imported
natural gas in two to three years.

In an FT interview, Mr Yanukovich said further increases were “inevitable”
following the January price rise, when Russia increased prices from $50 to
$95 per thousand cubic metres.

Mr Yanukovich’s appointment this summer encouraged the belief among
Ukrainian consumers that Moscow might avoid stiff price increases while the
Russia-oriented prime minister was in office. But Mr Yanukovich’s comments
will dispel such hopes. Prices are expected to rise next year to $120-$135
per thousand cubic metres.

“We understand that this path is inevitable and that Ukraine will very soon
have prices seen in Europe and the entire world,” he said.

Mr Yanukovich said the country had to become more energy-efficient. “We
have a lot of work head. We need no less than two or three years.”

He confirmed Ukraine’s commitment to economic co-operation with both the

EU and Russia, saying his country needed liberalised trade regimes with both
partners to raise living standards. He insisted there was no contradiction
between seeking close ties with the EU and Russia.              -30-
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16. EBRD: INVESTMENT IN UKRAINE WILL REACH 1 BILLION EURO
Ukrainian News Agency, Kyiv, Ukraine, Friday, October 6, 2006

KYIV – The European Bank for Reconstruction and Development (EBRD)
said the volume of investments into the Ukrainian economy is likely to reach

EUR 1 billion in 2007.

The Finance Ministry press service has disclosed this with the reference to
the meeting between First Vice Premier, Finance Minister Mykola Azarov and
EBRD president Jean Lemierre.

According to the report, Azarov said that Ukraine appreciates cooperation
with the EBRD and counts on bank’s assistance in provision of structural
reforms in economic and social spheres.

In his turn, Lemierre said that the bank is increasing the volume of
investments into Ukraine and also said that Ukraine can count on EBRD
assistance in introduction of sectoral investment projects, in particular in
transport, energy saving technologies and private sectors.

According to Lemierre, EBRD project portfolio for 2007 reaches EUR 700
million and can be considerably increased to EUR 1 billion.

“In case all planned projects are signed, we plan to reach volume of
investments into Ukrainian economy worth EUR 600 million in 2006. In this,
sum foreseen for the next year is quite real target,” Kyiv EBRD department
press service reported.

The parties of the talk agreed to work out certain cooperation plan for 2-3
years, which would set priority directions and system of cooperation
modernization.

Lemierre said that Ukraine could count of EBRD assistance in such medium
term plan.

Azarov said that the Cabinet of Ministers would take part in financing of
investment projects together with EBRD, which is to increase guarantees of
these projects and efficiency of cooperation.

As Ukrainian News earlier reported, EBRD intends to increase financing of
its projects in Ukraine by 50% in 2006-2007.

By the end of 2005, the total volume of EBRD investments in Ukraine was
about EUR 1.9 billion in more than 70 projects.

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17. UKRAINIAN PRESIDENT NAMES EASTERN UKRAINIAN WITH
   POWERFUL INDUSTRY TIES TO OVERSEE SECURITY COUNCIL

AP Worldstream, Kiev, Ukraine, Tue, Oct 10, 2006

KIEV – Ukrainian President Viktor Yushchenko on Tuesday tapped an eastern
Ukrainian businessman with powerful industry connections to head his
Security Council.

The president gave the job to Vitaliy Hayduk, president of the Industrial
Group, a business consortium linked to coal and steel magnate Serhiy Taruta.

Taruta was one of the few eastern tycoons to quietly back the pro-Western
Yushchenko in the 2004 presidential election, an unusual move in the
Russian-speaking Donbass region, home to Yushchenko’s rival, Viktor
Yanukovych.

The Industrial Group, which brings together numerous metals companies, has
argued that European markets hold more promise for Ukrainian business and
that closer trade ties with Russia would only increase competition with
Russia’s wealthy metals sector.

Hayduk served as vice premier under former President Leonid Kuchma, working
alongside Yanukovych, and he also worked in the fuel and energy sector.

He was fired from Kuchma’s government after he criticized proposals to allow
a consortium comprising Ukraine, Russia and Germany run Ukraine’s profitable
gas pipelines, arguing that the proposals were not feasible.

The Council on National Security and Defense has checked the Cabinet’s
powers. It is seen as one of the few ways that Yushchenko can influence the
government led by Yanukovych, who is now prime minister.

Hayduk insisted Tuesday that his job shouldn’t be politicized. “I haven’t
been given any task other than that envisioned by the law,” he told
reporters. Hayduk takes over from Acting Security Council secretary
Volodymyr Horbulin, who was seen as a caretaker figure.         -30-

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18.  PROFILE: UKRAINE’S NEW SECURITY COUNCIL SECRETARY
                   WEALTHY INDUSTRIALIST VITALY HAYDUK

BBC Monitoring research in English 10 Oct 06
BBC Monitoring Service, United Kingdom, Tue Oct 10, 2006

President Viktor Yushchenko has appointed wealthy industrialist Vitaly
Hayduk the new secretary of the National Security and Defence Council, a
body with broad powers in strategic policy-making chaired by the president.

Hayduk’s predecessor, Volodymyr Horbulin, worked in an acting capacity and
was considered an interim figure because he had reached the retirement age.

Although hailing from Donetsk Region, Ukraine’s eastern industrial
powerhouse, Hayduk is not seen as part of the team of Prime Minister

Viktor Yanukovych, a former Donetsk governor. His appointment follows the
arrival of a new team of professionals at the presidential secretariat, seen
as an attempt by Yushchenko to counterbalance a hostile Yanukovych cabinet.

The following is the profile of Hayduk compiled in February 2006 and updated
on 10 October 2006:

Vitaliy Hayduk is a wealthy Ukrainian industrialist and former deputy prime
minister in the administration of president Leonid Kuchma.

Hayduk appears to be the owner of a 49.99-per-cent stake in the Industrial
Union of Donbas (IUD), a diversified holding company that controls around 40
industrial assets in Ukraine and abroad.

He served as Ukrainian deputy prime minister for energy in the Viktor
Yanukovych cabinet from November 2002 to December 2003.

His sacking was widely linked to his opposition to Russian-backed energy
projects in Ukraine, including the creation of the gas transit consortium
and the reversal of the Odessa-Brody pipeline.

After his dismissal, Hayduk reportedly built ties with the then opposition
led by Viktor Yushchenko.

After Yushchenko’s victory in the presidential election in 2004 it was
rumoured that IUD had helped finance his campaign, and in early 2005 Hayduk
was widely viewed as a likely contender for a top cabinet post or the
Donetsk regional governorship.

At the launch of a new casting machine at the Alchevsk steelworks in August,
Yushchenko praised IUD as a positive example of open and transparent
investment policy.

On 30 December 2005, in the middle of the gas crisis with Russia, President
Viktor Yushchenko announced that he would appoint Hayduk deputy prime
minister for fuel and energy.

In a TV interview, Yushchenko described Hayduk as a “very gifted person”,
and said he would be put in charge of the energy sector, the Fuel and Energy
Ministry, the coal industry and energy saving, with a goal to make sure that
Ukraine “has an independent energy balance in four years’ time”.

However, the decree to this effect was never published. IUD co-owner Serhiy
Taruta, who vehemently opposed the new gas deal signed with Russia on 4
January 2006, has said that an “energy lobby” including Fuel and Energy
Minister Ivan Plachkov and Naftohaz Ukrayiny state oil and gas company
chairman Oleksiy Ivchenko persuaded Yushchenko not to sign the decree.

In an interview with the BBC in January 2006, Hayduk criticized the gas deal
with Russia, saying Ukraine should have insisted on keeping the gas price
unchanged based on existing contracts.

He suggested that the Ukrainian negotiators had mishandled the talks and
failed to secure gas transit rights from Uzbekistan and Kazakhstan,
effectively cutting off the Turkmen gas option.

He predicted heavy economic fallout from rising gas prices, and said he had
no explanation for the fact that despite the presidential announcement the
decree on his appointment had never been released.

He added though that following the signing of the gas deal with Russia, he
considered himself free of any obligations regarding his work in the
government.

Following the rise in gas prices, Hayduk said IUD steel plants would invest
heavily in energy-saving technologies and replace gas with coal in its
blast-furnace production cycle.

The web site Ukrayinska Pravda reported rumours that Hayduk has fine
relations with Yushchenko’s former secretary and trusted aide Very
Ulyanchenko, who was said to have lobbied for Hayduk’s appointment.

In September 2005, a Ukrainian paper said Hayduk was the deputy head of a
working group in the Ukrainian government negotiating gas supplies with
Russia’s Gazprom at the time, but he does not appear to have had any role in
subsequent negotiations.

On 9 February 2006, the specialist energy web site pek.com.ua quoted sources
in Hayduk’s Evolution Media holding as saying that Hayduk was harbouring
presidential ambitions.

The source added that Hayduk had been showing keen interest in various
political projects over the previous two months.

It said six people close to Hayduk, including former Energy Minister Serhiy
Yermilov, were running for parliament on the list of the Eco+25 party (which
has little chance of clearing the 3-per-cent threshold but could win some
seats in regional councils in eastern Ukraine), and his allies were on the
lists of several other parties.
                                                    IUD
IUD’s core activities are the production of steel, pipes and coke, and heavy
engineering. In addition, it is active in the power engineering,
construction, telecommunications, leisure and agricultural sectors.

It also trades metal products, coal, coke and natural gas. For 2004, the
company reported revenues of 12bn hryvnyas (2.4bn dollars) and a profit of
2bn hyrvnyas.

Another 49.99-per-cent stake in the IUD is owned by Serhiy Taruta, who is
also the chairman of the board of directors, through his company Azovimpeks.

Hayduk is also the president of the Industrial Group consortium, an asset
management company set up by IUD in 2004. The remaining 0.02 per cent of IUD
is controlled by the Donetsk company Oniks-Don, the ownership of which is
unclear.

Hayduk has tended to be seen as the senior partner in the corporation, and
Taruta was for a long time largely invisible in the post of executive
director.

Formerly highly secretive, IUD gradually became more open after Taruta was
appointed board chairman in 2002. He has since become its public face.

Set up in 1995, IUD appears to have been initially intended to supply gas to
Donbass plants through highly-lucrative barter arrangements. In 1996, IUD
delivered 5.5bn cu.m. of gas to industrial consumers, and arranged a closed
production cycle encompassing coal, coke, steel and pipes.

The pipes were delivered to Russia in exchange for gas. As Taruta put it in
a 2003 interview, “IUD gradually became an enormous clearing centre, which
solved problems in the commercial life of many industrial enterprises in the
region.”

It has been suggested that the formation of IUD was initiated by Donetsk
businessmen Akhat Brahin (who had been assassinated in October 1995) and MP
Yevhen Shcherban to resist encroachment on Donbass industry by gas suppliers
from neighbouring Dnipropetrovsk region. IUD was reportedly protected by
Donetsk governor Volodymyr Shcherban.

In the summer of 1996, IUD and its backers came into direct conflict with
then Prime Minister Pavlo Lazarenko. Volodymyr Shcherban was dismissed as
governor and replaced by a Lazarenko loyalist.

Yevhen Shcherban was assassinated in November 2006. Meanwhile, the
Dnipropetrovsk-based trader United Energy Systems of Ukraine, then headed by
Yuliya Tymoshenko, squeezed IUD out of the Donbass gas market.

However, Kuchma appears to have been frightened by Lazarenko’s growing
power. After dismissing him in summer 1997, Kuchma restored the local elite
to power in Donetsk Region, granting them virtual economic autonomy in
exchange for political loyalty.

Meanwhile, IUD survived and shifted to a coal-coke-metal production cycle,
the foundation of all the corporation’s business. IUD was also gaining
control over many of the region’s plants by buying shares from the State
Property Fund or through debt-for-equity swaps.

By 2000, IUD and its partner firms Dongorbank, ARS and Danco had acquired
control over Azovstal, Khartsyzsk pipe plant, Mariupol coke plant
(Markokhim), and the Alchevsk, Makiyivka and Kostyanivka steelworks, plus
most of the region’s profitable coal mines.

By 2003 the IUD had gradually moved away from barter and by that time all
settlements were in monetary form.

The company was for a long time associated with Donetsk businessman Rinat
Akhmetov, who succeeded Brahin as president of the Shakhtar football club
and appears to have inherited his business empire.

However, Akhmetov has always denied being a shareholder in IUD, though he
has been a partner of the corporation in operating a number of plants.

From 2002, a company set up by Akhmetov, System Capital Management,

began to take control over some of IUD’s most lucrative assets.

These included Azovstal, Khartsyzsk pipe plant (in which Taruta said IUD

had invested 80m dollars), Markokhim, Dongorbank and the coal mines.

IUD was left with Alchevsk steelworks, stakes in a number of engineering
plants, and some foreign assets including Uzbek oil and gas construction
company Uzneftegazstroy.

IUD appears to have used the cash windfall from these deals to acquire
numerous assets in Ukraine and abroad, including the Dniprodzherzhynsk-based
Dzherzhynskyy steelworks, the Dunaferr and Diosgyori Acelmuvek steelworks in
Hungary, and the Huta Czestochowa steelworks in Poland.

In 2004, IUD took part in the first tender for Kryzorizhstal steelworks,
losing out to a consortium formed by Akhmetov and Kuchma’s son-in-law,
Viktor Pinchuk.

IUD also made a bid for Kryvorizhstal in the repeat tender in October 2005
in alliance with Luxembourg-registered Arcelor, but lost to Mittal Steel.

IUD reportedly owns a stake in the moderately pro-opposition NTN television
channel – which is linked to Eduard Prutnyk, a former adviser to Party of
Regions leader Viktor Yanukovych.

It is also reported to control the ProUA web site and the English language
newspaper Kiev Weekly through the Evolution Media holding.

Hayduk is also said to be financing the PRT (Praym Taym) communications
group (Ukraina Kriminalnaya website, Kiev, in Russian 11 Nov 05).

IUD is involved in philanthropic and cultural projects, including
sponsorship of opera productions in Donetsk.
                               RECORD IN GOVERNMENT
Hayduk was appointed to the pro-Kuchma coalition government of Viktor
Yanukovych on 26 November 2002, formally under the quota of the United
Social Democratic Party but representing Donetsk business interests.

He was distinctly unenthusiastic about Russian-sponsored joint energy
projects, and was spectacularly fired by Kuchma on 5 December 2003,
apparently bypassing proper procedure, within a few hours after giving a
news conference.

In it he said there was no economic justification for using the Odessa-Brody
pipeline, originally built for carrying Caspian oil to Europe, to pump
Russian crude to Odessa instead.

He said there were other ways to meet Russia’s increased demand for oil
transit capacity, and argued that the pipeline should serve its original
purpose of reducing Ukraine’s dependence on Russian oil.

He also said there was no need for a joint Russian-Ukrainian consortium to
manage the Ukrainian gas transit system, as Ukraine was perfectly capable to
do that on its own.

Russia reacted swiftly, saying Hayduk’s statements were his “private
opinion”, and Kuchma’s decree sacking him was released on the same day.

Hayduk’s position was praised by opposition figure Yuliya Tymoshenko,
although Hayduk appeared to have played a role in her own dismissal from the
post of deputy prime minister for fuel and energy in the Yushchenko cabinet
in 2000.

Russia eventually succeeded in pushing though its proposal to reverse the
flow of oil in Odessa-Brody, but failed to make any progress on the gas
transit consortium.

Prior to his appointment as deputy prime minister he served as deputy energy
minister and then minister of fuel and energy in January 2000-November 2002.
                                              BIOGRAPHY
Hayduk was born in 19 July 1957 in the village of Khlibodarivka, Volnovakha
District, Donetsk Region. In 1980 he graduated from the Donetsk
Polytechnical Institute with a diploma in machine-building.
In 1997-2000 he was the head of the closed joint stock company Vizavi.
In 1994-1997 he served as the deputy head of the Donetsk Regional council,
and then deputy head of the Donetsk Regional State Administration (deputy
governor) in charge of industry, transport and communications.
In 1988-1994 he was the director of the Zuyevsky power-engineering plant.
In 1981-1988 he worked for the Donetsk regional service centre of the VAZ
car manufacturer, working his way up to deputy director.
Hayduk has a PhD in economics, and is a member of the Academy of Economic
Sciences of Ukraine. He is married, and has a son and a daughter.  -30-
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19. UKRAINIAN PM PLEDGES TO IMPLEMENT PACE ACTION PLAN

UNIAN news agency, Kiev, in Ukrainian 1341 gmt 10 Oct 06
BBC Monitoring Service, United Kingdom, Tue, Oct 10, 2006

KIEV – Ukrainian Prime Minister Viktor Yanukovych has said that the
Ukrainian government is taking steps to comply with the action plan aimed at
the duly implementation of Ukraine’s commitments as a member of the Council
of Europe.

Yanukovych met the Parliamentary Assembly of the Council of Europe [PACE]
monitoring committee rapporteurs for Ukraine, Hanne Severinsen and Renate
Wohlwend, UNIAN news agency has learnt from the press service of the Cabinet
of Ministers.

“The government is interested in active cooperation with the PACE in order
to finally solve the problems outlined for Ukraine,” Yanukovych said.

In particular, the government [1] implements programmes aimed at human
rights observation in Ukraine and implementing rulings of the European Court
of Human Rights, [2] guaranteeing freedom and independence of the mass
media, [3] setting up a public broadcast service, [4] ratifying the European
Convention on Transfrontier Television, [5] complying with the European
Charter for Regional or Minority Languages.

“All these issues will be addressed step by step, they will be financed from
the state budget next year,” Yanukovych said.

Yanukovych also said that it is necessary to give a prompt and objective
answer to the PACE’s report on Ukraine that will be prepared soon.

For her part, Severinsen said that a long pause between the PACE
representatives’ visits to Ukraine was caused by absence of a new government
in Ukraine after the parliamentary election [in March 2006].

“Now the new government is working, and our major objective is to draft a
report that would include an action plan for Ukraine that should be
implemented,” Severinsen said.

[Passage omitted: Yanukovych also discussed with Severinsen and Wohlwend
domestic politics in Ukraine.]                            -30-
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20. ANTI-SOVIET WWII PARTISANS IN UKRAINE CALL FOR

                RECOGNITION BY PRESIDENTIAL DECREE 

Natasha Lisova, AP Worldstream, Kiev, Ukraine, Tue, Oct 10, 2006

KIEV – Ukrainians who fought as anti-Soviet partisans called Tuesday on
President Viktor Yushchenko to recognize them as World War II veterans by
decree, saying that their hopes of winning recognition in parliament had
dimmed under the new governing coalition.

“As Communists are participants in the new coalition, recognition will be
blocked,” said lawmaker Oleksiy Ivchenko, who heads the Congress of
Ukrainian Nationalists. “In any case we will struggle for it.”

About 100,000 Ukrainians fought both the Nazis and the Soviets during the
war in a bid to create an independent homeland. In the Soviet era, Ukrainian
schoolchildren were taught that they were enemies of the people.

But with the breakup of the Soviet Union in 1991 and the creation of an
independent Ukraine, the partisans launched a new fight to change views –
and win financial and moral recognition similar to what Red Army veterans
have long enjoyed.

The issue has divided Ukraine, with the more nationalistic west supporting
recognition, and the Russian-speaking east opposing it. The main opponents,
however, have always been the Communists.

The Communist Party, which has seen its number of supporters decrease, got a
major boost this summer when it joined the governing coalition headed by
Premier Viktor Yanukovych, whose support base is in the more pro-Russian
eastern Ukraine.

In August, Yushchenko tried to get the new coalition members to agree to
recognize the partisans by including such a provision in a Memorandum of
National Unity that he and Yanukovych both signed, but the provision was
dropped.

Lawmaker Taras Chornovil, a Yanukovych ally, said he personally supports
recognizing the partisans but that many political forces in Ukraine are not
yet ready. He said parliament should hold a conference dedicated to the
issue.

Supporters of giving the partisans recognition say that it can be done
through a parliamentary bill or via a presidential decree. If parliament
refuses to act, as many expect, “recognition by presidential decree will be
the only one way out,” said lawmaker Yevhen Hirnyk.

About 10,000 partisans are believed to still be alive, while there are 3.8
million World War II veterans still living.

Hostility toward the partisans runs deep in Ukraine because in the war’s
early years, the anti-Soviet partisans aligned themselves with the Nazis,
seeing the invasion as a way to get rid of the Soviet regime.

But after the Nazis rejected their calls for an independent Ukraine, the
partisans started fighting against both the Nazis and the Soviets. The Red
Army drove out the Nazis in 1944, and the partisans continued their struggle
until 1951.

An estimated 7 million Ukrainians died in the fighting against the Nazis,
and 2.4 million people were sent to Nazi concentration camps. Yushchenko’s
father was a Soviet Red Army soldier who spent four years in a Nazi camp.

Yushchenko has repeatedly urged Red Army veterans and anti-Soviet guerrillas
to forgive each other for the sake of national unity, but his attempts have
sparked protests by Communists and other pro-Russian parties.

“I feel sorry that for 15 years of its independence, Ukraine failed to
recognize partisans which struggled for our independence, for our freedom,”
said 82-year-old former partisan Mikhaylo Zalenchuk.

Former partisans plan to mark the 64th anniversary of the creation of their
army with a march in downtown Kiev on Sunday.            -30-
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21. WHEN RAPE IS THE WEAPON, THE WOUNDS NEVER HEAL

SAVE DARFUR, Full page advertisement, The Washington Post

Washington, D.C., Tuesday, October 10, 2006, p A5

        WHEN RAPE IS THE WEAPON, THE WOUNDS NEVER HEAL

          PRESIDENT BUSH: GENOCIDE IS HAPPENING RIGHT
                          NOW IN DARFUR. YOU CAN END IT.

400,000 people dead. 2.5 million driven from their homes.  Untold
thousands raped, tortured and terrorized.

Ending the horror will take immediate action by a strong United
Nations peacekeeping force.  The Sudanese regime that’s sponsoring
this brutal extermination can no longer be allowed to block UN
intervention. 

STOP THE GENOCIDE. www.SaveDarfur.org

                          SAVE DARFUR

———————————————————————————————–
FOOTNOTE: The President of Ukraine, the Foreign Minister of Ukraine
and Ukrainian organizations around the world continue to remain silent
about the genocide going on in Darfur today.  They want the world to
recognize the Holodomor (induced starvation, death for millions, genocide)
in Ukraine in 1932-1933 and officially declare it a genocide but do not
choose to recognize a genocide going on in the world today.  AUR EDITOR 
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22.      GROUNDBREAKING CEREMONY FOR THE VICTIMS OF
            COMMUNISM MEMORIAL HELD IN WASHINGTON, D.C.

Ukrainian National Information Service (UNIS)
Washington, D.C., Monday, October 2, 2006

WASHINGTON – On September 27, 2006, an historic event took place in
Washington, D.C.  Members and official guests of the Victims of Communism
Memorial Foundation held a groundbreaking ceremony for the monument to

over 100 millions victims of communism.

The monument is located on the highly traveled intersection of
Massachusetts/New Jersey Avenues and G Street, N.W., across from the
Georgetown Law Center and within view of the U.S. Capitol.

The monument’s design is a 10-foot bronze replica of the “Goddess of
Democracy” statue erected by Chinese students in Tiananmen Square in 1989
and based on our own Statue of Liberty. A

among the distinguished guests at the ceremony were Dr. Lee Edwards, Chairman
of the Victims of Communism Memorial Foundation (VOCMF); Undersecretary

of State for Democracy and Global Affairs Paula Dobriansky; Rep. Dana
Rohrabacher (R-CA); Ambassadors of Ukraine, Lithuania, the Czech republic;
Bulgaria, the Republic of China (Taiwan), as well as many representatives
from various countries.

As Chairman of the VOCMF, Dr. Lee Edwards pointed out the historic
significance of this event.  “Today, we are gathered to witness a truly
historic event,” the Chairman stated, “the groundbreaking ceremony for the
first of its kind in the world – a monument to the over 100 million men,
women and children who died under the tyrannical rule of communist regimes
in some 25 captive nations during the 20th century,”

Dr. Edwards thanked the community organizations that helped achieve this
goal, as well as the organizations, governments and private individuals who
sponsored the project.

Rep. Dana Rohrabacher, who was instrumental in getting PL 103-199, which
authorized the construction of this memorial, passed in the House of
Representatives, talked about the difficulties of that endeavor. “I can
hardly believe that we have actually arrived to this day after such a long
ordeal.  [.]  Surprisingly, many in Congress objected to building this
memorial.

‘We should build a memorial to peace rather than victims of communism,’ they
suggested, refusing to acknowledge the evil nature of communism.  But
through persistence and a stroke of luck we have been able to achieve our
goal.  I am very proud to have been a part of this process,” stated the
Congressman.

Undersecretary of State Paula Dobriansky addressed the gathering by saying
how proud she was that her family was deeply involved in this cause. “I am
proud to admit the contribution that my father, Amb. Lev Dobriansky [first
Chairman of the VOCM Foundation and a long-time president of the Ukrainian
Congress Committee of America (UCCA)] made to this cause.”

Undersecretary Dobriansky also reminded that the fight against oppression is
not over and one fifth of the planet is still under the communist rule
against their will.  “So let us honor the victims of communism by not only
breaking ground for this important monument, but also by re-dedicating
ourselves to the struggle of promoting our ideals of democracy.”

The event also included an official groundbreaking ceremony with various
dignitaries taking turns at the ceremonial shovels.

Following the groundbreaking ceremony, a reception was held in the U.S.
Capitol to thank the many supporters of the VOCMF.  Several Members of
Congress were also present to express their support of the VOC memorial.

Reps. John Shimkus (R-IL), Thaddeus McCotter (R-MI), and Mario Diaz-Balart
(R-FL) spoke of the need to not only remember the victims of communism but
to rededicate ourselves to fight against tyranny throughout the world.

Many members of the Central and East European Coalition (CEEC) participated
in the official ceremonies of the Victims of Communism memorial
groundbreaking.

The Ukrainian Congress Committee of America (UCCA) has been an integral part
of the Victims of Communism Memorial Foundation, whereby VOCMF’s first
chairman and long-time UCCA president, Dr. Lev Dobriansky, dedicated many
years advocating the need for a memorial.                  -30-
—————————————————————————————————-
CONTACT: Serhiy Zhykharev, Washington, DC Office:
Ukrainian National Information Service
311 Massachusetts Avenue, NE, Washington, DC 20002
tel:  (202) 547-0018, fax:  (202) 543-5502
E-mail:  unis@ucca.org; web at:  http://www.ucca.org
—————————————————————————————————

FOOTNOTE:  Paula Dobriansky, Undersecretary for Democracy and
Global Affairs, U.S. Department of State, is the highest ranking person in
the Bush Administration with Ukrainian heritage.  It is interesting she

did not mention any of the crimes of communism against the Ukrainian
people in her prepared speech [AUR 767, Oct 3, 2006, Article 22]
 
One of the major crimes of communism anywhere was the Holodomor
(induced starvation, death for millions, genocide) carried out by Stalin in
Ukraine in 1932-1933. One could have expected Undersecretary Dobriansky 
to mention the Holodomor. AUR EDITOR
——————————————————————————————————
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========================================================
23.      RESPONSE TO GEORGIA SEEN AT LATEST KREMLIN
                 CONTRIBUTION TO RUSSOPHOBIA ABROAD
            Unfortunately, alongside oil and gas, present-day Russia’s
                              principal export is… Russophobia.

Gazeta.ru website, Moscow, Russia in Russian 6 Oct 06
BBC Monitoring Service, United Kingdom, Tue, Oct 10, 2006

The saga of the arrest of four Russian officers in Georgia and the Kremlin’s
response (in both senses of the word) shows the depth of the abyss in which
Russian statehood finds itself.

Having ceased to be the nucleus of an empire, the former metropolitan power
has just been unable to feel itself to be an independent state.

There is no appropriate notion of Russia in the heads of the Russian
authorities, and this is the main reason for the succession of wild
political and economic steps that are pushing the country towards
neo-isolationism.

At a meeting with the leaders of Duma factions, the president of a
multi-ethnic country haughtily sanctions the persecution of people on ethnic
grounds, talking about the infringement of the rights of “the indigenous
peoples of Russia’s regions.” The special services organize a Russia-wide
shakedown of Georgians.

Meanwhile attentive visitors to Russian stores have already discovered a
drink by the name of Russkiy borzhkom – with a hard sign at the end, they
say [borzhkom is a Russified substitute version of the famous Borjomi brand
of Georgian mineral water].

Evidently we will soon be opening a “Russian Golden Palace” casino –
somewhere a bit distant, in Siberia, as part of the fight for high morals.

And this entire xenophobic bacchanalia, mark you, is taking place under the
slogan of protecting Russian citizens in the former Soviet Union.

But it is precisely these same Russian citizens, whom the home country has
betrayed wherever and however possible, who are now incapable of leaving
Georgia for home precisely because of the transport blockade of the hated
neighbour that has been declared by the Russian authorities.

Just look at what an astonishing striptease act is being performed by the
law-enforcement agencies.

After all, literally until the end of last week they had for years been
offering splendid protection to that same “Georgia criminal community”
against which, following a signal from the political mountaintop, they have
begun a frenzied struggle. And how vividly are our deputies displaying their
qualities.

These people, who have been elected by the people and express their will,
even if purely formally, are chorusing that the Georgians are “getting fat
in Russia” and that we will now deny them this feeding trough.

Fine, but even if they are getting fat, all they taking the bread out of
anybody’s mouth? Or are we in our multi-ethnic, multi-faith Russia going to
continue using firearms to conduct a debate about which people is stealing
the bread from which other people?

You wish to say that our people are not so averse to such a debate?
Unfortunately I also think that is the case. Only should such a debate and
such actions not be described as fuelling inter-ethnic strife?

And if such a debate is being conducted in word and deed by actual state
bodies – how does this differ from “state terrorism,” as our officials are
currently describing the policy of their Georgian counterparts?

But the most important point is that our glorious authorities are still
astonished after all this that people in Georgia do not love Russia.

Indeed the Kremlin, in case anybody does not remember, imposed a mandarin
blockade on friendly Abkhazia not so long ago when, in defiance of the
Russian authorities’ wishes, it dared to vote in the presidential election
for Sergey Bagapsh rather than for Raul Khajimba.

If Russia is for the Russians, why then is Georgia not for the Georgians?
Why should the Georgian authorities love and respect Russian soldiers if the
anti-Georgia actions by official structures in Russia have assumed the
nature of an overt pogrom?

An acute form of a crisis of self-sufficiency is leading to a situation in
which Russia is doing everything to ensure that nobody loves it.

First it lets Ukraine off a gas debt of more than $1 billion and promises
all possible benefits for Ukrainian guest workers, but when the Ukrainian
people do not choose “our” person for president, we immediately remind them
of the need for gas to be traded at market prices.

As a result of which the area that suffers most is that same
Russian-speaking industrial Ukraine that the Kremlin spin doctors had openly
dreamed of “federalizing” or even separating from the rest of the country.

[2] Russia cripples Georgia in every possible way – from issuing Russian
passports to the residents of the rebel territories to supplying them with
weapons – and is then astonished when the Georgian authorities wish so
frenziedly to get rid of our peacekeepers.

[3] It forces foreign investors out of business projects on Russian
territory that are already in operation or have been agreed, and is then
abusive when our companies are not allowed to take over Western businesses.

Unfortunately, alongside oil and gas, present-day Russia’s principal export
is… Russophobia. Having declared the entire world around us to be hostile,
the Russian authorities are themselves becoming increasingly hostile to the
rest of the world.

You cannot force people to love or even respect you. By reacting
inappropriately, stupidly, and almost schizophrenically to the Georgian
authorities’ high-handed but by no means terminal actions (the Russian
officers have already been released, after all) and describing them as a
provocation and then succumbing to that provocation, the Russian authorities
are not only uniting the Georgian people around the “Saakashvili regime”
that they hate so much.

They are also, and this is much sadder, aligning ordinary Georgians – who
historically, for centuries, have loved Russians – against themselves. And
at the same time setting one section of their own people against another.

Which for Russia, whose uniqueness specifically lies in its unique
conglomeration of peoples, religions, and cultures, is like death. For
Russia, not for Georgia.                                 -30-
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========================================================
24.                                 RUSSIAN INTOLERANCE

LEAD EDITIORIAL: Financial Times
London, United Kingdom, Tue, October 10 2006

There is obviously no direct link between the murder of Russia’s best-known
campaigning journalist at the weekend, Moscow’s clampdown on Georgians

and Gazprom’s decision to go it alone in one of the world’s biggest energy
projects.

But in all three events, there is a strand of increasingly intolerant
nationalism that should send a chill through all of Russia’s neighbours and
partners.

The murder of Anna Politkovskaya, an outspoken critic of President Vladimir
Putin and Ramzan Kadyrov, the Moscow-backed prime minister of Chechnya,

was clearly a contract killing. As yet, there is nothing to pin her murder on
either of these men, or anyone else.

But in a broad sense, Mr Putin bears responsibility for creating, through
the Kremlin’s long-standing assault on the independent media, an atmosphere
in which such killings can happen.

Indeed, it was Ms Politkovskaya who highlighted Chechnya’s “blow-back”
effect on Russia. She wrote not only about Russia’s conduct in Chechnya but
also about the effect of the Chechen wars on Russia itself, dragging down
its conscript army and coarsening its political life.

Mr Putin’s authoritarianism is not new. He has brought all the mainstream
television stations, and some newspapers, back under the control of the
state or state-controlled entities such as Gazprom.

Last week, the new owner of the Kommersant business daily sacked its editor
after an article about government officials’ nepotism. Russia’s prosecutor
general has taken charge of the Politkovskaya investigation.

But that is scarcely reassuring in light of the authorities’ failure to
bring to justice anyone responsible for the dozen contract-style killings of
journalists during Mr Putin’s six years in power.

What is new is the growing streakof nationalism in the authorities’ response
not just in relation to Chechnya, but now towards Georgians.

Russia has followed up its inter-state dispute with Georgia with something
approaching ethnic cleansing at home. Moscow police have been raiding and
closing down Georgian-owned businesses and searching markets and even
schools for undocumented Georgians to expel.

Gazprom plays another part in all this, too, with its decision to drop its
five putative western partners in developing the huge Shtokman field in
favour of developing the Arctic gas deposit by itself. This may be a risky
strategy that is driven by nationalism.

The Shtokman gas will give Russia leverage over western consumers, and

Mr Putin now talks of directing it to western Europe, especially Germany,
instead of the US.

This will be tempting to Angela Merkel, who hosts Mr Putin in Dresden today.
But as she discusses energy security with Mr Putin,Germany’s chancellor
should remember Ms Politkovskaya and spell out western concerns about

where he is taking his country.                           -30-
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25.    A FIREBRAND FOR FREEDOM IS EXTINGUISHED
 And she never concealed a very personal hatred of President Putin. He was,
  in her view, a second-rate KGB officer who had never changed his nature,
    and was fast rolling back every post-Soviet freedom Russia had enjoyed.

EDITORIAL: The Independent
London, United Kingdom, Monday, Oct 09, 2006

Anna Politkovskaya was assassinated for her fearless investigations, for her
outspoken writing and for her personal integrity. Of that there can be no
doubt. She was gunned down in Moscow as she returned home from

shopping. It was a prosaic and cruel end to a life lived with courage.

Ms Politkovskaya is the 12th Russian journalist to lose her life to an
assassin. She was by a long way the most prominent and easily the best

known outside the country.

She was also, in the true sense, a dissident of the new Russia: one of a
small band of journalists and intellectuals brave enough to challenge the
way in which Russia’s current leaders exercise their power.

She denounced their conduct in Chechnya, and the fate of the Chechens became
a personal cause. She was one of very few of her compatriots to transcend
the historical sense of national superiority and represent the Chechen case
to Russia and to the world.

And she never concealed a very personal hatred of President Putin. He was,
in her view, a second-rate KGB officer who had never changed his nature, and
was fast rolling back every post-Soviet freedom Russia had enjoyed.

It is tempting at such a time to forecast the end of what remains of free
speech and democracy in Russia. To many of her less-driven colleagues, Ms
Politkovskaya was a beacon of hope.

So long as she could live, write and publish in her home country, albeit
with difficulty, the hope was still alive that freedom would eventually
prevail.

It is tempting, too, to imagine the hand of Mr Putin metaphorically pulling
the trigger. Like dissidents down the ages, Ms Politkovskaya was a perpetual
irritant to the powerful. Yes, Mr Putin and his Kremlin may have an easier
ride without her.

But there is also a sense in which her murder could not have happened at a
worse time. It serves to reinforce all the most negative stereotypes of Mr
Putin’s Russia at the very time when the Kremlin has started to understand
the need to improve its image abroad.

In recent weeks, Russia has experienced an upsurge in contract killings, and
by no means all the victims are enemies of the Kremlin. The deputy head of
the Central Bank, who campaigned against money-laundering, was murdered

last month.

But whoever stands behind the murder of Ms Politkovskaya, Mr Putin cannot
escape political responsibility for a climate in which the law is so readily
flouted, contract killings are no rarity, and those who take a public
stand – whether against the Kremlin or corruption – fear for their lives.

We can only hope that the shock of Anna Politkovskaya’s death will inspire
others in Russia to continue her cause.                       -30-

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========================================================
26. WORLD WATCHING HOW RUSSIANS INVESTIGATE JOURNALISTS
         DEATH SAYS U.S. SECRETARY OF STATE CONDOLEEZZA RICE
              “We’ve been very concerned about the fate of the press in Russia.” 

Kasie Hunt, AP Worldstream, Washington, DC., Wednesday, Oct 11, 2006

WASHINGTON – “Everybody is watching” how the Russian government

investigates the killing of “heroine” journalist Anna Politkovskaya, U.S.
Secretary of State Condoleezza Rice said.

“It’s a very sad event and one that needs to be fully and totally
investigated by the Russian government that she was killed in this brutal
way,” she said in an interview with ABC News Tuesday.

In Germany, Russian President Vladimir Putin called Politkovskaya’s killing
a “disgustingly cruel” crime that cannot go unpunished, but he also played
down her influence on Russian political life as “very minor.”

Politkovskaya, an award-winning investigative reporter who had criticized
Putin and Russia’s conduct in Chechnya, was gunned down in her apartment
building Saturday. Prosecutors have said she was probably killed because of
her journalistic work, but said there are no immediate leads.

She is the 13th journalist to die in Russia since Putin came to power – and
none of the killers have been found, according to the New York-based
Committee to Protect Journalists.

In the interview, Rice mentioned American journalist Paul Klebnikov, who was
gunned down outside his Moscow office in July 2004. His murder remains
unsolved.

“The Russian government does have a heavy burden to demonstrate that it is
both interested in and determined to find the killers of these journalists,”
Rice said.

Politkovskaya’s death triggered questions about press freedom in the former
Soviet country. “We’ve been very concerned about the fate of the press in
Russia,” said Rice, a trained Russian expert. “We’ve been very concerned
especially about the electronic press, where one gets minimal criticism of
very sensitive issues any longer.”                    -30-
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27.               RUSSIA: “LETTER TO THE PRESIDENT”

  Pundit urges Putin to comment on journalist’s murder for reputation’s sake
    When the presidential elections in Ukraine took place you congratulated
       the wrong person without even waiting for the votes to be counted.

LETTER TO THE PRESIDENT: By Aleksandr Minkin
Moskovskiy Komsomolets, Moscow, in Russian 9 Oct 06
BBC Monitoring Service, United Kingdom, Tue, Oct 10, 2006

Text of report by Aleksandr Minkin entitled “Letter to the president” in the
Russian newspaper Moskovskiy Komsomolets on 9 October

Vladimir Vladimirovich, this is a very difficult task: To put the blame on
you while doing so as delicately as possible. Even sympathizing with you
perhaps but in such a way as not to feel bitter shame before our readers.

If the journalist was killed by your enemies, this means they wanted to
damage your reputation. If she was killed by your supporters, this means
“the president was framed”. One way or another, you are the victim.

There is something is in the air and a chilly draft can be felt coming on. I
stated in a letter to you exactly one month ago, on 8 September: “It
sometimes happens that someone who is subject to this kind of criticism
(harsh and sometimes even offensive) experiences a strong desire to kill the
offender.

Naturally, I don’t want you, Vladimir Vladimirovich, or any of your men, to
fly into a rage and start doing anything of the kind.”

Forgive us, Vladimir Vladimirovich, for we really irritate you by saying and
writing what we should not. Politkovskaya also behaved in such a way that,
most likely, some part of your vertical axis of power (the Caucasus one? the
Petersburg one?) had no other choice but to kill her.

Did they do it in a fit of temporary insanity? The way Colonel Budanov
killed an 18-year-old girl (whom he first stripped naked and raped to the
sound of music).

No, a hallway, a gun…. It had been planned. It was not a fit of temporary
insanity. On the contrary, it was a perfect job done carried out without
undue haste.

When [Moskovskiy Komsomolets reporter Dmitriy] Kholodov was killed [during
investigations into corruption among high-ranking Russian military] (by
professional military killers), President Yeltsin called [Pavel] Grachev the
best defence minister ever. That was two and half months before the
catastrophic defeat in Groznyy.

Now that Politkovskaya has been killed we don’t even know who’ll be called
the best.Whoever he is, though, he’s your man. Therefore, it is your… if
not guilt then at least responsibility.

The contract on her was put out by those in power and they all are your men.
Strangers have not been seen around for a long time now.

It is a political murder (criminal motives are out of the question). This
means that this is the kind of politics we have in Russia where problems are
resolved by gunshots in a hallway.

What are we to do now? Governor elections were abolished after the events in
Beslan as if the school had been seized by incorrectly-elected governors.

Now, perhaps, Novaya Gazeta should be closed down since its employees
provoke professionals to commit murders (Domnikov, Shchekochikhin,
Politkovskaya).

For you, as leader of the country, this has indeed been an unpleasant
incident. What should you do? Keep silent? Or say something?

Almost 24 hours have passed but you have not said anything.

Many people think you always keep silent for a long time, to analyse and
ponder upon things…. Yes, when the Beslan events took place you addressed
the people on 6 instead of 1 September. You were in no hurry to speak about
the Kursk [submarine] or Nord-Ost [the Moscow theatre siege].

However, when the skyscrapers collapsed in New York on 11 September you

were the first to call Bush. When Yuganskneftegaz was sold, you immediately
stated that you knew the buyers.

When the presidential elections in Ukraine took place you congratulated the
wrong person without even waiting for the votes to be counted.

It would now be advisable for you to accuse somebody as soon as possible. It
doesn’t matter whether you guess correctly who did it. The main point is
that the mere fact of your condemnation will show that you oppose the murder
and haven’t forgotten your duty as “guarantor of the constitution”.

The best solution would be to put the blame on international terrorism and
its supporters within the country and abroad. (The late journalist did not
have any business but that theory’s also conceivable. Something along the
lines of “damn oligarchs… to undermine your reputation”)….

Has this unpleasant incident done you any harm? I don’t think so. The murder
could have damaged your reputation in people’s eyes had television covered
it and commented on it the way it once covered Kholodov’s murder. (However,
that kind of television ceased to exist long ago).

Will the murder damage your reputation in the West’s eyes? I don’t think so.
As long as you have the oil and gas valve in your hands, the West will
swallow everything.

Therefore, you shouldn’t be too upset. The unpleasant incident will soon be
forgotten, particularly if the price of petrol goes up or the electricity
industry fails to cope with the increased demand for power in low
temperatures.                                      -30-
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28.   PERSONAL TRIBUTE TO ANNA POLITKOVSKAYA

PERSONAL COMMENTARY: By Edward Lucas
Eastern Europe correspondent, The Economist

Europe, Monday, October 9, 2006

I liked and admired her, though didn’t know her that well. Even if I
hadn’t known her at all, I would weep for her and for her country, and
for us. This is not (yet) an official Economist obit, more of a personal
tribute.

  Anna Politkovskaya, a Russian journalist, was shot dead aged 48

SHE was brave beyond belief, Anna Politkovskaya, reporting a gruesome
war and a creeping dictatorship with a sharp pen and steel nerves. It
may be a chilling coincidence that she was murdered on President
Vladimir Putin’s birthday, but her friends and supporters are in
little doubt that her dogged, gloomy reporting of the sinister turn
Russia has taken under what she called his “bloody” leadership was
what led to her murder in the lift of her Moscow apartment block.

Ms Politkovskaya’s journalism was distinctive. Not for her the waffly,
fawning and self-satisfied essays of the Moscow commentariat. Nor the
well-paid advertorial now so pervasive as to be barely noticeable. She
reported from the wrecked villages and shattered towns of Chechnya,
talking to those on all sides and none, with endless patience and
gritty determination.

She did not sentimentalise the Chechen rebels, nor did she demonise
the Russian conscripts-ill-armed, ill-fed, and ill-led-who have
crushed the Chechens’ half-baked independence. She talked to soldiers’
mothers trying to find their sons’ corpses in military morgues where
mangled bodies lay unnamed and unclaimed-the result of the Russian
army’s unique mixture of callousness and incompetence. And she talked
to Chechens whose friends and relatives had disappeared into the
notorious “filtration camps” to suffer torture, mutilation, rape and
death.

Very few journalists, from any country, did that. The second Chechen
war, which started in 1998 and still fizzles on now, made that
mountainous sliver of territory in the northern Caucasus the most
dangerous place on the planet for a journalist. Most Moscow-based
reporters went seldom, if at all, and then only in daylight and
well-guarded. Ms Politkovskaya was unfazed, making around 50 trips
there, often for days at a time.

Chechens, and many Russians, adored her. Piles of post and incessant
phone calls came, sometimes from people wanting to give her
information, more often from those wanting her help. Could she
intercede with a kidnapper? Trace a loved one? She always tried, she
said, to do what she could.

She loathed those responsible for the war: the warlords who had
misruled Chechnya during its brief spells of semi-independence, the
Islamic extremists who exploited the conflict, the Russian goons and
generals, and their local collaborators. She particularly despised the
Chechen government installed by Russia, for what she termed their
massive looting of reconstruction money, backed up by kidnapping.

The worst effect of the Chechen wars, she reckoned, was the corrosion
of Russia itself. Her reporting from all over Russia made her see her
native country in what many regarded as an unfairly bleak light. Mr
Putin’s regime was utterly brutal and corrupt, she would say in her
soft, matter-of-fact voice. He represented the worst demons of the
Soviet past, revived in modern form. Hundreds had died to bring him to
power, and that was just a foretaste of the fascism and war that was
to come.

The latest twists in Russia’s vindictive fury towards Georgia for
wanting to join Nato make her pessimism seem less extreme. Russians
with Georgian surnames are now experiencing the same retribution from
officialdom that their Chechen counterparts have suffered for the past
ten years.

Ms Politkovskaya suffered death threats aplenty. On more than one
occasion, Russian special forces threatened to rape and kill her,
leaving her body in a ditch. Each time she talked them out of it. In
2001, she fled to Austria after receiving a direct warning to leave
Russia or else. In 2004, on her way to the siege of a school in the
North Ossetian town of Beslan, where she hoped to mediate between the
Chechen hostage-takers and the Russian military, she was poisoned, and
nearly died.

But whoever got into her lift on October 7th was a professional,
intending not to warn her, but to end the problem she presented. She
was shot once in the body, once in the head; the pistol was a Makarov,
the assassin’s favourite. It was left by her side: in that trade,
weapons are used only once.

She was well aware that her murder would be a logical reaction from
the authorities. In many conversations with your obituarist, she
brushed this aside, saying that her sources were in much more danger
than she was. Journalists had a duty to report on the subject that
mattered, she said no matter what-just as singers had to sing and
doctors had to heal.

Ms Politkovskaya’s approachability did not mean that she was easy
company. Her fondness for both sweeping statements and for the
intricate details of the stories she covered sometimes made
conversation heavy-going. She was both disorganised and single-minded;
that could be unnerving too.

But she will go down as a martyr, in the beleaguered causes of free
speech and public spirit. It would be nice to think that Russians will
find her example inspiring. Sadly, they may well conclude that
speaking out on unpopular topics is best avoided.     -30-
================================================
All comments, feedback, criticism etc are very welcome at

esl@economist.com. To subscribe to this weekly mailing, send an
e-mail to edwardlucas-subscribe@yahoogroups.com. The Economist
has asked me to add the following disclaimer. The opinions appearing
on this website and list are the personal opinions of Edward Lucas. 
His employer does not endorse such opinions or this website. -30-
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29.  RADIO FREE EUROPE/RADIO LIBERTY MOURNS DEATH OF
                 RUSSIAN JOURNALIST ANNA POLITKOVSKAYA

Radio Free Europe/Radio Liberty (RFL/RL)
Prague, Czech Republic, Monday, October 9, 2006

PRAGUE – RFE/RL Acting President Jeffrey Trimble released the following
statement in reaction to the death of Russian journalist Anna Politkovskaya
in Moscow October 7, 2006.

“I and my colleagues at RFE/RL are shocked and deeply saddened by the tragic
loss of Anna Politkovskaya. I also express our deepest sympathies to her
family, who have lost her loving care and spirit.

“We condemn the persons who are responsible for this violent and senseless
act against a journalist who worked in the best interests of the people of
the Russian Federation. We call upon the Russian authorities to conduct an
immediate and thorough investigation of this crime, and to do more to ensure
the safety of independent journalists in their country.

“Anna was a frequent contributor to RFE/RL’s Russian-language programs; in
fact, her final interview was with RFE/RL, and took place just two days
before her murder. She was an honest and talented journalist, fearless and
committed to uncovering the truth of a story.

“Her resoluteness earned her more than one death threat. But throughout, she
retained her sense of humanity. Speaking before an audience at RFE/RL in
Washington, DC, a few years ago, she said she felt a responsibility not only
as a journalist, but as a citizen of Russia to help ‘those who could not
speak for themselves.’

“The loss of Anna Politkovskaya is a tragedy for the people of Russia; a
blow to free speech, and a setback for the cause of open and honest
journalism.

“We will miss her.”                                -30-
————————————————————————————
NOTE: Audio and a Russian-language transcript of Politkovskaya’s final
interview with RFE/RL, on October 5, 2006 on the Russian Service’s “Press
Hour” program, can be found at
http://www.svobodanews.ru/Transcript/2006/10/05/20061005120031740.html
———————————————————————————————
RFE/RL’s Russian Service broadcasts are on the air 24 hours of a day, seven
days a week, with programs produced in Prague and the service’s Moscow, St.
Petersburg and Ekaterinburg Bureaus and transmitted to listeners via
shortwave, satellite and AM and FM signals provided by local affiliate
stations in Russia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova and
Ukraine.

Russian Service programming is also available via the Internet, at the
service’s website http://www.svobodanews.ru and at http://www.rferl.org;
English-language news about events in Russia can be found on the RFE/RL
website, at http://www.rferl.org/featuresarchive/country/russia.html
——————————————————————————————–
Radio Free Europe/Radio Liberty is a private, international communications
service to Eastern Europe, the Caucasus, and Central and Southwestern Asia
funded by the U.S. Congress through the Broadcasting Board of Governors.
Radio Free Europe / Radio Liberty, http://www.rferl.org.    -30-

———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
30.     WEST’S MUTED RESPONSE SPEAKS VOLUMES 

Simon Tisdall, The Guardian

London, United Kingdom, Tuesday October 10, 2006

The weekend assassination of Anna Politkovskaya, the celebrated
investigative journalist who frequently criticised Russia’s ruling elite,
was condemned by western media, professional and human rights groups.

But it provoked a relatively muted official reaction from most western
governments.

An exception was Erkki Tuomioja, the left-leaning foreign minister of
Finland, which currently holds the EU presidency. “The fact that this kind
of murder is possible challenges the credibility of the country’s
government,” he said. “Let’s see how willing and able Russian officials are
to solve it … wherever the track leads.”

That is challenging talk. These days most European leaders prefer to appease
rather than accuse Vladimir Putin. Europe’s strategically and morally
debilitating dependency on Russian oil and gas is one reason. A sense among
policymakers that the “new Russia” is ineluctably going its own unsavoury
way is another.

Mr Tuomioja’s public anger contrasted sharply with the German government’s
reaction. It initially declined to make any comment at all, although the
issue was raised during Mr Putin’s visit to Dresden today.

Angela Merkel’s conservative government is busy designing a new Ostpolitik
or “east politics”, modelled on former West German chancellor Willy Brandt’s
opening to the Communist bloc. As a prime German export market and energy
supplier, and a key interlocutor on Iran and North Korea, post-Soviet Russia
is now too important to offend and too big to ignore.

Europe’s conflicting priorities over commerce, security and human rights
have also been exposed in its reaction to Russian bullying of Georgia. The
expulsion of Georgians working in Moscow has been likened by Russian
commentators to ethnic cleansing. The EU has largely looked on in silence.

According to Dmitri Trenin, writing in Nezavisimaya Gazeta earlier this
year, Russia’s leaders – like America’s before them – increasingly believe
theirs is the world’s “indispensable country”.

Georgia and Ukraine had already been targeted for re-absorption into
Russia’s sphere, he said. Belarus, where Moscow is determined to pre-empt
another pro-western “colour revolution”, was next.

Looking at the situation inside Russia, Masha Lipman of the Carnegie
Endowment decried a “widening crackdown on democracy and individual
freedoms” that amounted to a “systemic crisis in the field of human rights
and democratic institutions” and undermined the rule of law.

Opposition parties, independent media, the judiciary, and the electoral
system were all under consistent attack in the name of reform, she said. A
system of imposed or so-called “sovereign democracy” was being instituted
that enabled the ruling political and business elites centred on the Kremlin
to justify its monopoly of power without running serious risk of losing it.

Andrei Illarionov, a former presidential economic adviser, has described the
new Kremlin credo as “an ideology of ‘nash-ism’ (ours-ism) offering
privileges, subsidies, credits, powers and authority to those who are
‘nashy’ (ours)… It is an ideology of aggression to ‘others’. It is a
return to barbarism.” Mikhail Kasyanov, a former prime minister, pointed to
“endemic corruption (that) adds to overall civil insecurity”.

Gary Kasparov, the former chess champion who leads the opposition United
Civil Front, said this week that Ms Politkovskaya’s murder was part of the
overall slide towards intolerant, centralised control. “With the
assassination, the forces of corruption and repression in Russia have now
made it entirely clear that there is nothing they won’t do to stay in
power,” he said.

This is a fight even the battle-shy EU will find it difficult to duck.

———————————————————————————————-
———————————————————————————————-
FOOTNOTE:  The weakest, most muted response from any of the
nations in the region who one would certainly expect to speak out
regarding the cold-blooded murder of a famed journalist has been Ukraine. 
 
As of the end of yesterday the AUR had not found any official statement
from the President of Ukraine, the Prime Minister of Ukraine or the
Foreign Minister of Ukraine.  The Foreign Ministry issued one very
brief statement late yesterday.  WHY?        AUR EDITOR
———————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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——————————————————————————————————
        IN A TIME OF ALMOST UNIVERSAL DECEIT TELLING THE
                           TRUTH IS A REVOLUTIONARY ACT
——————————————————————————————————
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