AUR#773 Oct 12 Kyiv School Of Economics (KSE); Demystifying Russian Gas Deal; WTO; Grain Traders Accuse Govn’t; "Spell Your Name" Holocaust Documentary

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                      To create a new generation of Ukrainian economists
Mr. E. Morgan Williams, Publisher and Editor  
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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
                       To create a new generation of Ukrainian economists                                 
By E. Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #773, Article One
Washington, D.C., Thursday, October 12, 2006

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, October 11, 2006

ANALYSIS & COMMENTARY: By Roman Kupchinsky
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Tuesday, October 10, 2006

By Adam Cohen, Dow Jones Newswires
Brussels, Belgium, Friday, October 6, 2006

                                   OF RUSSIA’S GAS POLICY
           The labyrinthine gas agreement between Russia and Ukraine
        As to the gas business between the two countries, it is most likely
       doomed to many more years of opaqueness and back-room deals.
        Woe be it to anyone attempting to change this entrenched system.

ANALYSIS & COMMENTARY: by Roman Kupchinsky
The National Interest, The Nixon Center
Washington, D.C., Tuesday, October 10, 2006

Associated Press (AP), Kiev, Ukraine, Wed, October 11, 2006 


Associated Press, Kiev, Ukraine, Thursday, October 5, 2006
    Ukraine, China, Russia, Turkey & Chile have lively counterfeiting markets
Juliane von Reppert-Bismarck, Dow Jones Newswires
Brussels, Belgium, Friday, October 6, 2006

9.                                          WTO SELLOUT
EDITORIAL: Kyiv Post, Thursday, September 28 2006


                              OF BLOCKING WHEAT EXPORTS
By Natasha Lisova, Associated Press Writer
Kiev, Ukraine, Thursday, October 12, 2006

      Ukrainian PM Yanukovych’s government sets up new licensing system
Reuters, Kiev, Ukraine, Wednesday, October 11, 2006


Business Digest, Sofia, Bulgaria, Wed, October 4, 2006

          Neighbors with no membership prospects – such as Ukraine, southern
            Caucasus nations and countries around the Southern Mediterranean
                                       – would get EUR15 billion.
Associated Press (AP), Luxembourg, Tuesday, October 10, 2006


          Andrey Illarionov spoke the truth to those in power in the Kremlin
Kommersant, Moscow, Russia, Wednesday, October 11, 2006

        In Ukraine, foreign banks are paying high prices for Ukrainian banks
COMMENTARY: By Anders Aslund
Moscow Times, Moscow, Russia, Wed, Oct 11, 2006


                                  HOLOCAUST IN UKRAINE 
Victor Pinchuk Foundation and the
USC Shoah Foundation Institute for Visual History and Education
Los Angeles and Kiev, Ukraine, Wednesday, October, 11, 2006

  Solemn ecumenical observance of 73rd anniversary of Ukraine’s Genocide
                                  Saturday, November 18th, 2006
Ukrainian Congress Committee of America (UCCA)
New York, New York, Wednesday, October 11, 2006

                     Investigative Journalist Anna Politkovskaya Murdered
Sen. Sam Brownback, Chairman
Rep. Christopher H. Smith, Co-Chairman
U.S. Helsinki Commission, Ford House Office Building
Washington, D.C. Tuesday, October 10, 2006


                        Monday, October 16, 11:00 a.m. to 12:15 p.m.
National Endowment for Democracy (NED)
Radio Free Europe/Radio Liberty (RFE/RL)
Washington, D.C., Wednesday, October 11, 2006

20.                       MOSCOW BACK IN THE SHADOWS
       It is past time for the world to recognize Vladimir Putin for what he
                  is: a man who is taking Russia back into the shadows.
: By Nina Khrushcheva
Taipei Times, Wednesday, October 11, 2006

          Politkovskaya mourned by rebels, residents in North Caucasus
: By Andrei Smirnov
Eurasia Daily Monitor, Volume 3, Issue 186
The Jamestown Foundation, Tuesday, October 10, 2006
Special Issue of Communist & Post-Communist Studies journal
Volume 39, Issue 3, University of California, September 2006
Action Ukraine Report (AUR) #773, Article 22
Washington, D.C., Thursday, October 12, 2006
Action Ukraine Report (AUR) #773, Article 23
Washington, D.C., Thursday, October 12, 2006
OP-ED: Walter Parchomenko, Kyiv Post, Kyiv, Ukraine, Thu, Oct 12 2006
COMMENTARY: by Dr. Ariel Cohen
The Heritage Foundation, WebMemo #1235
Washington, D.C., Tuesday, October 10, 2006
26.                             GROUNDHOG DAY POLITICS
OP-ED: By Taras Kuzio, Kyiv Post, Kyiv, Ukraine, Thu, Oct 12 2006
                   To create a new generation of Ukrainian economists
By E. Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #773, Article One
Washington, D.C., Thursday, October 12, 2006

KYIV – The Victor Pinchuk Foundation and the Economic Education and
Research Consortium (EERC) in Ukraine are launching a exciting new joint
project – the creation of the Kyiv School of Economics (KSE).

KSE is being established by the transformation and enlargement of the
Masters Program of EERC which has been in existence for 10 years at the
National University “Kyiv-Mohila Academy”. During the next decade the
Victor Pinchuk Foundation will donate more than 10 million dollars towards
the development of KSE.

The main purpose of the new economics school will be to educate students
for Masters Degrees and in the future PhD’s in the field of economic
sciences in accordance with international standards, and to carry out large

scale studies of various modern economic systems.

Ukrainian industrialist Victor Pinchuk will be the honorary chairman of the
KSE board, Dr. Anders Aslund of the Institute of International Economics,
Washington, and Regina Yan of the Eurasia Foundation, will be co-chairmen
of the board. Tom Coupé, manager of EERC masters program, will be
director of KSE.

According to the intentions of the founders, the strategic objective of the
development of KSE is to create a new generation of Ukrainian economists,
both educators and practitioners.

Within the next few years the school plans to hire leading people in the
market to educate and train specialists of this profile in Central and
Eastern Europe and to become competitive in the world market of

economic education.

The strategy of KSE development will also include the creation of an
international debating club for the discussion of the important issues of
the day and to discuss the strategies of Ukrainian and world economics
with the participation of well known researchers, educators, politicians
and business leaders around the world.

The first program for the international debating club will be public
lectures and discussions by Dr. Francis Fukuyama and Dr. Robert Engle.

“Our objective is very ambitious,” said Thomas Eymond-Laritaz, President
of the Victor Pinchuk Foundation, “we plan to establish the best school of
economics in Central and Eastern Europe, a Ukrainian Harvard in a sense.”

“With the help of this modern international economics school we will meet
the challenges of the development of Ukraine – to create, train and educate
a new generation of economists and managers who will change and
modernize the country,” foundation president Mr. Eymond-Laritaz

“The EERC Master’s Program differs in a quality manner from all other
programs in Ukraine,” Dr. Anders Aslund reported, “Here, economic
science is not taught à la Marx, but according to the modern international

“This fact allows the graduates of the program to be very successful
economists and managers. The KSE project does not just develop the
master’s program, it transforms it into a real school of economics
according to the international model, and brings it to a higher quality
level,” according to the well-known international economist Aslund.

“The 10-year program of financing gives us the possibility to hire long-term
regular lecturers, holders of PhD’s in economics, both in Ukraine and in
the West,” said KSE director Tom Coupe. “Furthermore, the contribution
of the Viktor Pinchuk Foundation ensures KSE the long-term level of
stability necessary for the development of our important research activity”.

The permanent members of the staff will consist of Ukrainian instructors,
who obtained PhD degrees in economics at universities in the United States.
They will work for KSE on a permanent basis.

In addition, professors from universities in such countries as the USA,
Italy, Israel, from international scientific research institutes and from
business companies will be invited to teach special courses.

Today, the number of candidates admited to the program is 50. Over the
long term it is planned to extend the enrollment level to 200 people. Plans
are underway to develop magisterial programs for several professions,
and to create a system of long-term payment for the education.  -30-

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

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, October 11, 2006

KYIV – The transit rate for Russian natural gas across Ukrainian territory
in 2007 will remain unchanged at $1.60 per 1,000 cubic meters per 100
kilometers and unaffected by the rise in the price of Central Asian gas for
Ukraine, Fuel and Energy Minister Yuriy Boiko said.

“We have signed an agreement under which the transit rate was set for five
years at $1.6. If we wish to be a reliable partner, we must stick to the
agreement that our country has signed,” he told a Wednesday news conference
in Kyiv.

He said that in 2007 Ukraine would be importing only Central Asian gas
transported through Russia. The tariff for the 586-kilometer transit will be
the same at $1.6.

The gas dispute between Russia and Ukraine in January 2006 ended in raising
the price of imported gas for Ukraine to $95 for 1,000 cubic meters and the
transit rate to $1.6 for 1,000 cubic meters per 100 kilometers.

In 2007 the price of imported gas for Ukraine is expected to rise to $130.
The completion of the gas talks is scheduled for the end of October.

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

ANALYSIS & COMMENTARY: By Roman Kupchinsky
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Tuesday, October 10, 2006

WASHINGTON – Ukrainian Fuel and Energy Minister Yuriy Boyko raised

more than a few eyebrows when he told journalists in Kyiv on October 6
that Ukraine will not import Russian gas for domestic consumption next year.

His statement that “there will not be any Russian gas in Ukraine’s balance”
was clear enough. How he calculated that meeting Ukraine’s gas needs was
possible without a Russian contribution was not.
                                         NUMBERS GAME 

Boyko’s had announced two days earlier that Ukraine has signed contracts to
purchase 42 billion cubic meters of Turkmen gas, 7 billion cubic meters of
Uzbek gas, and 8.5 billion cubic meters of Kazakh gas in 2007.

That would add up to 57.5 bcm, sufficient in Boyko’s opinion to fulfill
Ukraine’s prodigious appetite for natural gas. A curious conclusion
considering that the forecast for 2006 is 76-77 bcm and Ukraine imported 73
bcm under a gas-purchasing agreement with Russia in which it received a
“mixed basket” of gas from Russia, Turkmenistan, Uzbekistan, and Kazakhstan.

That agreement, under which Ukraine paid $95 per 1,000 cubic meters of gas,
was apparently scrapped in late September during secretive discussions with
Russia on gas supplies.

Despite Boyko’s statement regarding the replacement contract, it is a
stretch to say that Ukraine will be free from the Russian gas yoke. After
all, while it will be purchasing gas under the new contract via RosUkrEnergo
and not from Gazprom directly, the Russian gas giant remains the owner of 50
percent of the shares in RosUkrEnergo.

According to the new agreement, which is to go into effect in January 2007,
Gazprom will not sell Russian gas to Ukraine, but will resell the 50 bcm of
gas it buys from Turkmenistan for $100 per 1,000 cubic meters to Ukraine.

This after Ukraine’s failed negotiations with Turkmenistan led to Russia
making a play for Turkmen gas at the $100 rate. Seeing that in 2006 Ukraine
is paying Russia $95 per 1,000 cm of gas, the fact that Gazprom’s Aleksei
Miller announced on September 27 that that rate will stand until the end of
the year could mean a loss of nearly $400 million for Gazprom.
                              GOOD-NEIGHBORLY DEAL 
The exact price Ukraine will pay for its imported gas in 2007 has not yet
been announced, but Prime Minister Viktor Yanukovych has in recent weeks
repeatedly touted a price at or around $130 per 1,000 cubic meters.

On September 28, Yanukovych told his cabinet that the country “will pay less
for gas than its neighbors in 2007-09.” He followed up on that prediction by
telling the cabinet on October 4 that “We know that the price of gas for
2007 for our neighbors — Moldova, the Baltic countries, Georgia, and
Azerbaijan — is already about $200 [per 1,000 cm].

In October we will see what price Ukraine will have to pay. We expect, and
we have reasons for this, that the price will be about $130.”

Meanwhile, the 2007 draft budget prepared by the Yanukovych government
factored in the new price for gas to be $135/1,000 cm and allocated ample
funding to account for increased gas expenses, while also lowering the gas
price for the public.

The new arrangement apparently caught the Ukrainian government off guard.

As late as September 22, Boyko had told the media that beginning in January
2007 thru the end of 2009, Ukraine would buy an annual total of 62 billion
cubic meters of gas from Turkmenistan, Uzbekistan, Kazakhstan, and
“partially from Russia.”

Again, Boyko said the 62 bcm involved would be “fully sufficient to meet
Ukraine’s gas needs.”

Five days later, Gazprom CEO Miller and Boyko announced that Ukraine would
only be buying 55 bcm of gas per year beginning in 2007 thru 2009 — again
saying that despite the 18 bcm difference compared to 2006, the gas would
“fully meet Ukraine’s needs.”
                         HOW MUCH DOES UKRAINE NEED? 
It is difficult to account for the vast discrepancy in the volume of gas
purchased by Ukraine in 2006 and the new amount for 2007.

The oft-cited decrease of around 18 bcm would be enough gas to meet the
demands of a medium-size country. Has Ukraine’s consumption of gas declined
so drastically in one year?

Ukraine currently ranks sixth in the world in terms of gas usage — burning
more gas than Poland, the Czech Republic, Hungary, and Slovakia combined.

It produces approximately 20 billion cubic meters of its own gas and in 2005
sold 5 bcm abroad. Thus, it is feasible that imports of 55 or 57.5 bcm might
be sufficient to meet Ukraine’s needs in 2007, although that would also mark
the end of profitable sales of gas abroad.

In the weeks preceding the Ukrainian-Russian negotiations, numerous Russian
officials — among them Anatoliy Chubais, the head of Unified Energy
Systems, the country’s electricity generating monopoly, Andrey Kiriyenko,
the head of the country’s nuclear energy agency, and German Gref, the
economic development and trade minister — all warned that Russian gas
production will not be able to keep up with domestic demand by 2007.

Meaning that the fall in Ukrainian gas imports is likely not by
preference — but can rather be directly traced to Russia’s own rapidly
rising domestic demand.                                  -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


By Adam Cohen, Dow Jones Newswires
Brussels, Belgium, Friday, October 6, 2006

BRUSSELS – Top European Union energy officials and utilities executives
Friday said they have met with their Russian and Ukrainian counterparts to
discuss natural gas supplies for the coming winter.

The meeting was prompted by a crisis last winter, when several E.U.
countries faced supply shortages. In January, Russian natural gas giant
Gazprom OAO (GSPBEX.RD) shut off its main pipeline through Ukraine.

Gazprom claimed too much gas was siphoned off illegally.

Since then, E.U. leaders have been preoccupied with energy security and have
attempted to negotiate, so far unsuccessfully, a new energy partnership with

A key problem is the breakdown of a united front in the 25-state bloc’s
dealings with Russia. Germany has signed its own pact with Moscow to build a
Baltic Sea gas pipeline that will bypass Poland, Estonia, Latvia, and

Polish Defense Minister Radek Sikorski has compared the planned pipeline
with the deals between Germany and the Soviet Union “conducted over our
head” before World War II.

The European Commission, in a statement, called for more transparency in the
E.U.’s dealings with Russian and Ukrainian gas suppliers.

The commission noted that the U.K., which suffered supply shortages and
price hikes last winter, will benefit this winter from new natural gas
pipelines from the Netherlands and Norway.

Last month, the commission’s energy overseer Andris Piebalgs met Norwegian
Minister of Petroleum and Energy Odd Roger Enoksen to discuss how the
country’s energy resources can help wean the bloc from uncertain Russian

While the commission said there is “no immediate need for concern” about
supplies for this winter, it added that “further vigilance is indispensable.”
Adam Cohen, Dow Jones Newswires;

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.
                                  OF RUSSIA’S GAS POLICY
               The labyrinthine gas agreement between Russia and Ukraine

          As to the gas business between the two countries, it is most likely
         doomed to many more years of opaqueness and back-room deals.
          Woe be it to anyone attempting to change this entrenched system.

ANALYSIS & COMMENTARY: by Roman Kupchinsky
The National Interest, The Nixon Center
Washington, D.C., Tuesday, October 10, 2006

The ongoing Russian-Georgian face-off conjures nostalgia for Cold-War lore
and makes for good headlines.

The brinkmanship-with Georgia apprehending alleged spies, Russia responding
with an economic blockage, Georgia standing down but the provocations still
escalating-naturally capture the world’s attention.

The underlying and broader interest in that spectacle remains, though, what
the showdown signals about Russia’s current inclination to project its power
toward its Western near abroad.

To what extent, and how, will Moscow jockey to secure its own interests in
neighboring states? How will that jockeying affect Western interests?

The West, particularly Western Europe, watches the Russian-Georgian spook
spat with so much interest because it is trying to discern what it might
signal regarding Russia’s current temperament towards the region,
particularly in regards to its energy policy.

Here, of course, Ukraine, through which most Russian gas towards Western
Europe flows, remains paramount-and what a labyrinthine gas arrangement it

With Moscow clearly unafraid of flexing its muscle in Eurasia, many are
wondering: could the West’s bad boy of Ukrainian politics, Prime Minister
Viktor Yanukovych, ultimately be the one to deliver stability to the
long-standing Ukrainian-Russian gas price and supply conflict?

Such a feat would certainly benefit not only Ukraine, but also the West.

Surely Moscow would favor handing Yanukovych a quid for his pro-Moscow
quo. But simple economics will probably restrain the Kremlin’s ability to
thus oblige its favored leader.
                                DEMYSTIFYING THE DEAL
Russia never did apply its announced price increase from the current $95 for
1,000 cubic meters of gas to $120-130, announced on May 22 by Aleksander
Ryazanov, Gazprom’s deputy CEO.

Some interpreted that reprieve as an indication that Russia was tailoring
its gas pricing policy towards Ukraine in 2006 for geopolitical reasons.

Yanukovych, after all, was experiencing a political comeback and Russia did
not want to be seen as pressuring Ukraine once again by raising prices.

Geopolitics or not, though, in the long run price increases appear
inevitable. On September 5, Alexei Miller, Gazprom CEO, agreed to buy 50
billion cubic meters (bcm) of gas from Turkmenistan at $100 per 1,000 cubic
meters of gas, up from $65 per bcm.

Gazprom resells the bulk of this Turkmen gas to Ukraine as part of a basket
of supplies from other Central Asian countries and Russia. Russia uses the
remaining 9 bcm for Russian domestic consumption.

With the recent price increase for Turkmen gas, it is inevitable that
Ukraine will pay at least $135/1,000 cubic meters in 2007. Furthermore,
under the new contract scheduled to begin in 2007, yearly deliveries from
Turkmenistan to Gazprom would be some 10- 30 bcm less then an earlier
Russian-Turkmen gas contract signed in 2003 called for.

Russian gas strategy has been to buy Central Asian gas (which is cheaper
than Russian gas) for domestic use, thus allowing Gazprom to sell its own
gas to Europe and make a substantial profit without disrupting domestic

Since Turkmenistan will be delivering less gas to Russia in 2007, Russia may
have less gas available to sell to Ukraine and, by extension, the European
                                 WHAT RUSSIA REQUIRES
In August, German Gref, the Russian minister for economic development,
warned that in 2007 Russia might experience a shortage of gas for domestic
consumption. Such a prospect would cause Europe a serious supply problem.

Most experts concur that Gazprom is strapped for the cash required to bring
the needed new gas fields online to just meet rapidly rising domestic

And Russian gas industry studies project that from 2007-2010, Russia needs
to invest some $37 billion to develop new fields and build the
infrastructure needed to sell gas to China and South Korea and to gasify
Siberia and Russian Far East.

It seems highly unlikely that Russian energy managers would agree to sell
Ukraine cheap gas in order to reap uncertain political benefits in the
                           THE BARGAIN FOR UKRAINE
Even at the price of $135/1,000 cubic meters, Ukraine is buying gas far
below world prices. The price Turkmenistan is charging Russia, $100/1,000
cubic meters, translates into a price of about $2.75 per million British
thermal units.

On New York futures markets, the price of natural gas stands at about $6 per
million BTUs.

Turkmenistan has been forced to sell its gas to Russia cheaply because it is
dependent on the main gas trunk pipeline going through Russia and controlled
by Gazprom, to transport its gas to market.

The Turkmen do not have an alternate gas transportation system to handle
such a large capacity. The only other customer for Turkmen gas today is
Iran, which buys in limited quantities and pays more than Russia.
                              UKRAINE’S GREAT GAS HEIST
Before the new deal with Turkmenistan was signed, Yanukovych visited Moscow,
where he set an upbeat tone by promising Gazprom that Ukraine would not
siphon any Russian gas from its pipeline that delivers most of the Russian
gas bound for Europe.

Yanukovych’s promise not to steal gas from Russia is not a new one. Viktor
Yushchenko, during his tenure as prime minister during Leonid Kuchma’s
presidency, made the same promise.

At that time, high ranking officials of Naftohaz Ukrayina, the Ukrainian gas
monopoly, were diverting large quantities of gas from the main pipeline and
selling this gas to companies in Poland, Romania and Hungary at below-market
prices, pocketing the profits.

This practice did not end and Rem Vyakherev, then the head of Gazprom,
complained of continued theft.

In January 2005, during the short period when Russia cut off supplies to
Ukraine in order to pressure the country into accepting minimal prices
increases, Ukrainians were accused of stealing gas in order to keep their
homes warm and industry working.

Russia’s primary goal in its dealings with Ukraine is to have a measure of
control over the pipeline, which supplies over 80 percent of Russian gas
destined to Europe.

An underwater northern pipeline to Germany, now under construction, will not
replace the Ukrainian trunk pipeline-it will only diminish its importance to
some degree.
                                FEEDING THE OLIGARCHS
And then there is RosUkrEnergo (RUE). The company serves as a intermediary
in bringing Russian gas to Ukraine; is registered in Switzerland; was
created by Gazprom (with Putin’s blessings) and a private Ukrainian
businessman; and was approved by then-Ukrainian President Leonid Kuchma in

RUE does not own any gas or control any pipelines. It is designated as the
“operator” of Turkmen gas to Ukraine. But just what “operator” means has
never been defined by either Gazprom or Ukraine.

RUE made close to $1 billion in 2004 and close to $2 billion in 2005.

Despite an investigation into the circumstances surrounding the creation of
RosUkrEnergo and questions on why Ukraine agreed to allow a private entity
to represent Ukrainian state interests (and earn close to $500 million per
year while doing so), no answers have been provided.

Both Yushchenko and Yanukovych have sought to pacify Moscow and
Ukrainian oligarchs by turning a blind eye to the continued use of

In a typical post-Soviet maneuver, the investigation into the company ended,
allegedly at Yushchenko’s orders.

For over 15 years both countries have approached the gas business as if it
were a giant milking cow for their political elites.

As a result of such opaque deals, the Ukrainian-Russian gas relationship
appears doomed to periodic bursts of confrontation and delivery disruptions
for years to come.

Meanwhile, the Ukrainian side continues to delay costly energy conservation
measures or finding a source of alternative gas supplies and seems
indifferent to the fact that it is one of the most energy intensive
countries in the world.

Graft in the gas business depends to a large degree on volume-the more gas
sold, the greater the take.

Gazprom’s critics have accused it of using a large part of the middlemen’s
revenue to pay for political campaigns and as a secret slush fund for high
level, pro-Kremlin Russian officials.

And critics also allege that high level officials in Ukraine, some aligned
with Yushchenko and others in the Yanukovych camp, also receive informal
disbursements of cash by Gazprom or Ukrainian gas monopoly Naftohaz, in
return for protecting such companies as RosUkrEnergo from criminal
                            THE GEOPOLITICS OF GAS
The use of gas as a geopolitical lever to force Ukraine into having a more
pronounced pro-Russian orientation is an idea that has dubious merit even
with Yanukovych as prime minister.

Ukrainians, despite their squabbles over such issues as the status of
Russian as a second state language, by and large do not want to be ruled
from Moscow.

And Ukrainian leaders largely do not wish to be seen as a “governor” of
Malorossiya (little Russia) as Ukraine was dubbed during czarist times.

Likewise, even Ukrainian businessmen in the “Donetsk clan”, seen as aligned
with Moscow, do not wish to be bought out by their wealthier Russian
oligarch-cousins, nor do they want to suffer Mikhail Khodorkovsky’s fate.

Any attempt to pressure them with threats to shut off the gas valve could
trigger a backlash, with potential scenarios ranging from a shutting down of
the gas pipeline to Europe in order to deprive Russia of income or kicking
out the Russian Black Sea fleet from Sevastopol in the Crimea. Most Russian
officials understand this.

Despite the recent spook spat with Georgia and some of the hyperbolic
predictions it has inspired regarding Russia’s role in its sphere of the
world, Moscow will respect Ukrainian independence as long as the Ukrainians
do not overstep the informal boundaries, such as NATO membership-or, for
that matter, apprehending Russia nationals it claims are spies.

As to the gas business between the two countries, it is most likely doomed
to many more years of opaqueness and back-room deals. Woe be it to
anyone attempting to change this entrenched system.         -30-
NOTE Roman Kupchinsky is a regional analyst for Radio Free
Europe/Radio Liberty specializing in energy policies.

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

Associated Press, Kiev, Ukraine, Wed, October 11, 2006 

KIEV – Ukraine is at risk of missing another deadline to enter the World
Trade Organization and must act with urgency if it doesn’t want to lose
another year in its efforts to join the powerful global trade body, the
president’s office warned Wednesday.

Pro-Western President Viktor Yushchenko had promised to take this former
Soviet republic into the WTO by the end of 2005, but ran into strong
opposition in parliament among Socialists and Communists. Both parties

are now partners in the governing coalition.

“Without a doubt, we are worried because there is a deadline,” said
Oleksandr Chaly, the president’s top foreign policy adviser.

The deadline comes on Dec. 21 when Ukraine’s membership bid would be
considered. Before then, the government must make considerable legislative
changes, including passing more than 20 laws.

“The question of entering WTO is in the hands of the government and
parliament,” Chaly said. “The president has made his political position
absolutely clear, and will use whatever leverage he can to ensure the quick
adoption of the laws.”

Prime Minister Viktor Yanukovych, a more pro-Russian politician who heads
the Cabinet after he and his allies won March parliamentary elections, has
said he supports quick WTO membership, but has noted that Ukraine must
ensure it protects its national interests.

Some analysts have suggested that Ukraine’s new government is delaying
membership as a concession to Russia, which has seen its own hopes of
joining WTO mired in disputes with Washington. Ukraine is currently in
difficult talks with Russia to try to win a discounted price for natural gas
imports.                                           -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Associated Press, Kiev, Ukraine, Thursday, October 5, 2006

KIEV – Ukraine’s president criticized lawmakers Thursday, saying
they were doing little to speed up the nation’s joining the World
Trade Organization.

Viktor Yushchenko had pledged to take this ex-Soviet republic into
the Geneva- based WTO by the end of the year, but the government
failed repeatedly to win support among lawmakers for legislative
changes in the banking, metals and other sectors.

“Ukraine was expected to join WTO in 2006. I don’t understand the
debates in parliament to postpone this issue until the next year,”
Yushchenko said. He urged lawmakers to immediately consider 21

laws needed to join WTO.

The slower Ukraine is in joining WTO, the longer it will remain
outside the European Union, he said.

Yushchenko was swept to power in the 2004 presidential election on
promises of reform and closer ties with Europe after the Orange
Revolution mass protests against election fraud.

The slow pace of reforms and infighting among his government hurt his
party badly in March elections, which were won by his former rival.
Viktor Yanukovych, who is backed by some of Ukraine’s leading
industrialists, formed a majority coalition and is now premier.

The head of a U.N.-linked advisory panel warned last month that
Ukraine had missed an opportunity to launch necessary reforms, and it
must press ahead to join the WTO, liberalize its land market and
tackle corruption.                               -30-

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    Ukraine, China, Russia, Turkey & Chile have lively counterfeiting markets

Juliane von Reppert-Bismarck, Dow Jones Newswires
Brussels, Belgium, Friday, October 6, 2006

BRUSSELS — The European Union may resort to legal action at the World

Trade Organization to force its trade partners to crack down on counterfeiting
industries, a European Commission spokesman said.

The warning came as the commission published a study naming Ukraine,

China, Russia, Turkey and Chile as countries with lively counterfeiting

Determination to root out trade in copies of European-branded goods — an
industry that threatens the profit margins of Europe’s biggest companies —
may “at some stage result in engaging at the WTO,” EU trade spokesman Peter
Power said Thursday. Individual EU countries may also seek action at the

WTO, he added.

The office of European Trade Commissioner Peter Mandelson issued a

 warning to Russia, Ukraine, Chile and Turkey. “These countries…need to
considerably step up their efforts and tackle serious deficiencies,” it said
in a statement.

Countries that will see their management of counterfeiting come under
European scrutiny include Thailand, Malaysia, Indonesia, the Philippines,
Vietnam and South Korea. Europe also will tighten the screws on Brazil,
Argentina and Paraguay to crack down on piracy.

Europe will use trade talks as a bargaining ground to secure promises of
action from these countries. China accounts for two-thirds of fake branded
goods entering the EU, ranging from copies of branded handbags and medicine
to electric appliances and entire motorcycles.

The country is Europe’s “main priority” in its antifake campaign, according
to the statement, which praised China’s official commitments to fighting the

The study uses information supplied by European business to suggest which
strategies are most likely to succeed when European companies take on
counterfeiters eating at their profits.                     -30-
Juliane von Reppert-Bismarck at
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

9.                                       WTO SELLOUT

EDITORIAL: Kyiv Post, Thursday, September 28, 2006

Endorsements by two more countries and the adoption of around a dozen

pieces of legislation is all that is needed for Ukraine to become a member of the
World Trade Organization. The problem, however, is the new-found lack of
urgency in the cabinet of Prime Minister Viktor Yanukovych.

Meeting top EU officials in Brussels Sept. 21, Yanukovych was urged to
conclude talks to join the WTO by the end of 2006 to bring Ukraine closer to
EU policies. In reply, he said he would not bend to EU pressure but protect
Ukraine’s national interests. Clearly a balance has to be found between
protecting domestic producers from competition, but also the public from
overpriced and inefficiently produced goods.

The next day, Yanukovych was in Moscow for gas talks. According to the
premier, Ukraine must take into account that “unsynchronized” accession –
that is, Ukraine joining earlier than Russia – could worsen trade relations
between the two countries.

Kyiv stands closer to WTO accession than Moscow. The EU wants Ukraine to
become a member of the WTO and to create a free-trade zone with it in order
for talks on EU membership to go forward. Why should Ukraine delay in order
to join simultaneously with Russia? Ukraine has to do its own thing.

Neither is there a guarantee there will be a sweetener, like Russia selling
cheap gas. Belarus is a case in point. A close ally of Russia, Minsk has
been told to pay much more for gas from 2007. Also, the timeframe for
Russia’s admission is unclear. The possibility of Ukraine joining the WTO

first may be embarrassing for Russia. But Yanukovych is supposed to be
representing the interests of his own country.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                          OF BLOCKING WHEAT EXPORTS

By Natasha Lisova, Associated Press Writer
Kiev, Ukraine, Thursday, October 12, 2006

KIEV, Ukraine –Ukrainian grain traders accused the government on
Wednesday of blocking wheat exports by hastily introducing export
licenses and putting limits on how much grain can leave this fertile
ex-Soviet republic.

Ukraine, once known as the breadbasket of the Soviet Union, is the
world’s sixth largest grain exporter.

The government’s restrictions, traders warned, could cripple this
country’s agricultural sector and drive prices up on the world
market, already suffering from low reserves.

“The government’s decision effectively blocked Ukrainian export of
bread wheat and fodder wheat,” said Volodymyr Klimenko, president
of the Ukrainian Grain Association.

The government introduced the compulsory licenses at the end of last
month. Traders have applied, but so far no licenses have been issued,
Klimenko said. On Wednesday, Ukraine also put limits on the quantity
of wheat that could be exported, Ukrainian new agencies reported.

Authorities have defended the restrictions, saying they must ensure
the country has enough wheat to supply Ukrainians with bread. Rising
bread prices, caused by shortages, in the past have sparked strong
public protests in Ukraine.

The Agriculture Ministry forecast wheat yield this year at 14.4
million tones, compared to 18.7 million tones in 2005. Bad harvests
have been reported worldwide, increasing demand for wheat.

The Agricultural Ministry said it gave the necessary authorization
for traders who sought export licenses, but noted it was up to the
Economics Ministry to issue the licensees. The Economics Ministry
refused to comment.

Klimenko said the government’s move would hurt national producers
and traders.

“Our farmers and grain traders will lose, while their colleagues from
Germany, France and Russia make money,” he said, noting that buyers
would just look elsewhere.

Eleven ships are currently standing idle in Ukraine’s Black Sea
ports, with another 15 ships on their way, unable to pick up the
wheat for export, Klimenko said.                   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

      Ukrainian PM Yanukovych’s government sets up new licensing system

Reuters, Kiev, Ukraine, Wednesday, October 11, 2006

KIEV — Ukraine has halted all grain exports as authorities withhold
licenses, causing a backlog in ports and railways that is also holding up
deliveries of Russian grain to Black Sea ports, industry sources said on

The Ukrainian Grain Association, which groups more than 60 local and
international companies, said exports had been halted since Monday, with
ships idle in ports and rail cars loaded with grain stranded in long queues.

“As of 10 a.m. on Monday, Oct. 9, none of the licenses for wheat export from
Ukraine had been granted,” the association said in a statement on its web
site. “Steamers are still lying idle in Ukrainian ports. There are big lines
of wagons with grain,” it said.

Ukraine’s Agriculture Ministry has proposed export licenses and quotas after
cutting its crop forecast by 7 percent, citing drought, high fuel prices and
unfavorable wintering conditions.

Russian wheat, not subject to licensing restrictions, would be transferred
to Ukraine so that traders operating in both countries could honor prompt
export contracts, but railway bottlenecks were holding up shipments,
industry sources said.

Ukrainian Prime Minister Viktor Yanukovych last week signed a government
order making wheat and wheat-rye exports subject to a new licensing system.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
 If you are receiving more than one copy of the AUR please contact us.
Business Digest, Sofia, Bulgaria, Wed, October 4, 2006

APK-inform Ukrainian fat and oil producer Creative Industrial Group and
Russian private company Protein Production will start the construction of a
$25 mln (19.6 mln euro) soy processing factory in the central Kirovohrad
region on October 5, 2006, local media reported.

The new facility, with a processing capacity of 100,000 tonnes a year, is to
be completed by October 2007, Creative said in a press release. The
investment is expected to be recouped in three years, as the factory revenue
is projected at $70 mln (55 mln euro).

The joint-venture, 51 pct owned by Creative, will specialise in the
production of soy oil, isolate, concentrate and meal. It will be the first
in the entire Commonwealth of Independent States (CIS) to produce soy
isolate, which Creative will use in its margarine and vegetable oil
production, Creative’s CEO, Yuriy Davydov, explained. Some 70 pct of the
plant’s total output will be exported, mainly to Russia.

The new facility will use as feedstock non-genetically modified Ukrainian
soybean, Davydov added. Creative, based in Kirovohrad, produces deodorized
margarine oil, modified fats, hard and soft margarine, mayonnaise, as well
as mixed animal feed.

According to the rating of local agricultural website APK-inform ( ), Creative ranks among the top three Ukrainian margarine
producers, controlling 13 pct of the domestic market with an output of
40,000 tonnes of margarine for the 2005/06 marketing year.

(Editor’s note: According to the Ukrainian Oil Association or UkrOliya,
there are 31 margarine producers in the country. Ukraine’s margarine output
totalled 284,000 tonnes in the 2005/06 marketing year, ending August 2006,
down by 10 pct from the same period of 2004/05, the Ukrainian News Digest
reported.) (Alternative name: Kirovograd)
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
             Send in a letter-to-the-editor today. Let us hear from you.
          Neighbors with no membership prospects – such as Ukraine, southern
            Caucasus nations and countries around the Southern Mediterranean
                                       – would get EUR15 billion.

Associated Press, Luxembourg, Tuesday, October 10, 2006

LUXEMBOURG – European Union nations Tuesday debated an increase of as

much as 50% in the European Investment Bank’s lending to non-E.U. countries –
an idea opposed by some who say the agency that extends soft loans for projects
in poor nations should stay closer to home.

The EIB’s current seven-year lending cycle – that has a ceiling of EUR20.7
billion for lending to countries outside the E.U. – expires at the end of
the year.

The European Commission has proposed a new ceiling of EUR33 billion, and a
new geographical breakdown to better dovetail E.U. loans with E.U. foreign
policy goals. This includes a reserve of EUR1.5 billion to be used in cases
of natural disasters and postwar reconstruction.

Joaquin Almunia, the E.U. monetary affairs commissioner, has said the EIB’s
lending outside the E.U. has “enhanced the impact and visibility” of the
bloc, justifying a push to boost the bank’s visibility around the world.

He proposes EUR9 billion in loans for neighbors that are in line to join the
E.U., such as Croatia, Macedonia and Turkey.

Neighbors with no membership prospects – such as Ukraine, southern Caucasus
nations and countries around the Southern Mediterranean – would get EUR15
billion, followed by Latin America (EUR4 billion), Asian nations (EUR2
billion) and South Africa (EUR1.5 billion).

This breakdown effectively means more EIB cash would go to Central Asia and
the Caucasus.

The plan has drawn a cool reaction, notably from the Netherlands, Spain,
Denmark and Hungary, whose governments believe the EIB should focus on
immediate E.U. neighbors and leave lending to more distant countries to the
World Bank.

Finland, which now holds the E.U. presidency, is suggesting either a ceiling
of EUR27.3 billion or EUR30.2 billion budget from 2007 to 2013 with E.U.
governments to decide where the money should go.

E.U. officials defend the higher lending ceiling by saying EIB loans to
outside countries tend to support European businesses.

Almunia has cited examples such as the expansion of a German car
manufacturer in Argentina, Brazil and Mexico through some EUR200 million in
EIB loans, and the construction of liquefied natural gas plants in Egypt by
French, U.K. and Italian companies using EUR500 million in EIB loans.

The aim of EIB lending is to support long-term development projects in poor
E.U. regions and beyond with low-interest loans. It raises substantial funds
on the markets which it directs on favorable terms toward financing capital

The Luxembourg-based EIB operates like a development bank. In 2005 – the
last year for which full figures are available – almost 90% of EIB financing
went to E.U. projects. The EIB never funds more than 50% of the total
project cost, but its lending is a catalyst meant to trigger private
lending.                                            -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

        Andrey Illarionov spoke the truth to those in power in the Kremlin

Kommersant, Moscow, Russia, Wednesday, October 11, 2006

A former economic advisor to Russian President Vladimir Putin and one of
the Kremlin’s staunchest critics, Andrey Illarionov, has left Russia for a
post as a senior research fellow at the Cato Institute’s Center for Freedom
and Prosperity in Washington.

Mr. Illarionov is careful to stress that his departure does not mean
emigration, but he calls his main work at the institute a continuation of
the study of authoritarian regimes.

Yesterday it was announced that the project on global economic freedom run
by the Cato Institute – the most authoritative liberal think tank in the
world – has been turned into the Center for Global Freedom and Prosperity.

The Washington, D.C.-based Institute has named as a senior research fellow
Andrey Illarionov, a former economic advisor to the Russian president, who
is currently in the United States. The financial details of the contract
were not immediately available.

Mr. Illarionov says that he is not considering emigrating, but he confirmed
that, according to his contract, he will live for nine months out of the
year in Washington, where the center has its offices. This was confirmed for
Kommersant by Jamie Dettmer, the center’s media director.

“We are very happy that Andrey Illarionov, a real advocate of freedom, has
joined our new center on global freedom and prosperity,” said Cato Institute
president Ed Crane. “For many years Andrey spoke the truth to those in power
in the Kremlin. He is one of the most courageous people that we know.”

Jamie Dettmer said, “we invited Andrey because he has a reputation and a
background in economics; he understands what democratic freedoms are and
also simultaneously knows the character of the Russian government.” Mr.
Illarionov retired from his post in Mr. Putin’s cabinet in February 2006 for
political reasons.

Mr. Illarionov will work in Washington in the company of other government
servants and people close to power from many different countries.

The Indian economist Suaminatan Aiyar, who formerly worked in the Indian
government, accepted a position at the center yesterday, joining a group of
advisors that includes Gurcharan Dass, the former CEO of the Indian division
of Procter & Gamble; Jose Pinera, the former labor and social welfare
minister of Chile; and Fred Hu, the chief economist for Goldman Sachs in

The center’s future plans include conducting research on questions of reform
in Africa, the crisis of liberalism in Russia and Central Europe, and
corruption and the success of economic reforms in Latin America and India.
Andrey Illarionov, however, does not intend to leave behind his activities
as a commentator on politics and economics.

“One of the conclusions that must be drawn from the Russian experience of
the last 15 years – possibly the most important conclusion – is that freedom
is indivisible. If freedoms are curtailed in one sphere, then we pay for
that in other spheres.

If restrictions on freedom are not done away with as the very first
priority, then they will only kill and destroy more and more people, and
they will continue to destroy as long as they are not removed,” he told
Kommersant, commenting on the ongoing anti-Georgian campaign in Russia
and the murder of the Russian journalist Anna Politkovskaya.

Mr. Illarionov has said that in his position at the Cato Institute he will
not stop his investigations into the situation in Russia.

Only one acquaintance of Mr. Illarianov’s who is close to the Russian
authorities, Russian Union of Industrialists and Entrepreneurs (RSPP) head
Alexander Shokhin, agreed to comment on his new position.

“The Georgians and Andrey Illarionov are obviously not needed by the Russian
labor market. It was already clear when the president took him into his
cabinet that he would not be a bureaucrat who was part of the system. Many
people believed that the president kept him on to provide a different point
of view from that of the bureaucrats.

In that capacity, Andrey Illarionov excelled, successfully achieving a level
of freedom – both economic and intellectual – unprecedented in the
bureaucracy. It’s not surprising that he is planning to continue to work on
these topics in Washington,” said Mr. Shokhin.

Institute for Transitional-Period Economics head Yegor Haidar, the
presidential administration’s economic department head Arkady Dvorkovich,
and Russian Economics and Trade Minister German Gref refused to comment.

Vladimir Mau, the rector of the Administrative Academy, told Kommersant
only that “Andrey Illarianov invested a great deal of work and time in that
direction. All of this is to be expected.”

In his new position, Mr. Illarionov is likely to continue to espouse the
opinions that he has been expounding since his retirement from the post of
presidential advisor early this year.

In an interview with the Austrian newspaper Die Presse on October 5, he
again harshly criticized Russia’s use of its energy resources as “political
weapons” against neighbors like Georgia, Moldova, and Ukraine.

The former presidential advisor has also not shied away from confrontation
with EAS Russia chairman Anatoly Chubais.

In particular, he has stated that the first time “energy weapons” were used
was not against Belarus but against the authorities in Primorya, where the
interruption of energy supplies to the region provoked a crisis that
culminated in the departure from office of regional governor Evgeny

He is also not inclined to overestimate the influence of the West on Russia:
as he explains, “the Yukos affair showed that Western leaders do not worry
about democracy in Russia.”

It looks as though there can be no better place to search for kindred souls
of Andrey Illarionov than in the Cato Institute. In the Institute’s annual
report on economic freedom, published at the beginning of September,
Russia ranked 102 out of 130.

A year ago, when Mr. Illarionov was still working as an advisor to Vladimir
Putin, Russia’s position was even worse: Russia shared the 114th spot with

Apparently, however, a twelve-point improvement was not enough to convince
Mr. Illarionov to look for work in Moscow instead of in Washington. In the
Cato Institute’s rankings the United States occupies third place, behind
only New Zealand and Switzerland.                      -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
        In Ukraine, foreign banks are paying high prices for Ukrainian banks

COMMENTARY: By Anders Aslund
Moscow Times, Moscow, Russia, Wed, Oct 11, 2006

On Sept. 13, Andrei Kozlov, whom I had known since the early 1990s, was
killed in what looked like a contract hit. He excelled as one of Russia’s
brightest, most honest and most fearless civil servants.

At the age of 30, he became deputy chairman of the Central Bank on sheer
merit. Professionally and morally, he was a giant.
Throughout his many years at the Central Bank, he was the most principled
fighter for a decent banking system.

When Viktor Gerashchenko, once called history’s worst central banker,
returned to the Central Bank after the financial crash of 1998, Andrei
quietly left. When Gerashchenko departed, he happily returned, because
work made sense again.

The murder of a major official is always shocking, but more so when the
victim is one of the few officials whom nobody accuses of corruption.

There are two main hypotheses as to the motive. One is that Kozlov, as the
top bank regulator, had a list of banks that would lose their licenses.

Anyone whose bank was on the a list might have killed him, assuming that
only Kozlov was brave enough to close a contentious bank. The other is that
anyone from one of the 91 banks he had already closed down decided to take

Let’s examine the banking system more broadly. Although it is experiencing a
boom in consumer lending and borrowing, the banking system remains
remarkably small.

Russia’s monetization — that is money and credits as a ratio to GDP — is
persistently far lower than that of Ukraine. Structurally,the banking system
is one of the most backward parts of the economy and acts as a bottleneck
for the country’s economic development.

The chief reason for this backwardness is the dominance of state banks. The
two biggest, Sberbank and Vneshtorgbank, own almost half of the total
banking assets. No private bank possesses more than 2 percent of total
assets, and their share is not increasing.

This state dominance is a result of Gerashchenko’s discrimination against
private banks after the 1998 financial crash. In most other CIS countries,
bank crashes wiped out the worst, that is, the state banks.

In Ukraine, by contrast, there are only two state banks, which hold about 5
percent of total banking assets. The biggest private banks have about 10
percent each. Banking is the biggest boom industry in Ukraine, and 18 of the
country’s 30 richest men are bankers.

With a strong banking sector, all of the country’s regions and small
enterprises have a much better chance to develop than in Russia. Hardly any
of Russia’s richest men are primarily bankers.

In Ukraine, foreign banks are paying high prices for Ukrainian banks and
foreign bank ownership accounts for about 30 percent of banking capital.
Ukraine has accomplished this only as a result of the dominance of private

In Russia, however, foreign ownership in the sector is almost stagnant at 13
percent of total capital. It is positive that the government has approved a
bill to abolish so-called “blessed” shares, which can only be purchased by
foreigners with state approval.

That is a major reason why few commercial banks are traded on Russia’s stock
exchanges. Finance Minister Alexei Kudrin’s advocacy of raising the cap on
foreign capital in the banking sector to 50 percent is also welcome. But the
problems with the sector are structural.

Foreign investors are most interested in niche banks, regional banks or
consumer banks, while few want to deal with the key enterprise sector.

It is, naturally, much more difficult to get bank loans for enterprises in
Russia than in Ukraine, even though Russia is so much richer. Again, the
fundamental problem with Russia’s banking sector is the dominance of state

You might suspect that the prevalence of state banks would lead to
stability, but in the summer of 2004 there was a major run on banks. It was
instigated by paid-for newspaper articles.

We know this because one of the victims, Alfa Bank, Russia’s biggest private
bank, went to court for libel and won. The main victim was Guta Bank, which
was swiftly picked up after bankruptcy by Vneshtorgbank, further extending
state-bank dominance.

Nor does the dominance of state banks help transparency. Admittedly,
Sberbank is quite transparent, but nobody would say that about
Vneshtorgbank. With close links to the Kremlin and the security services, it
is involved in all of the siloviki’s business activities.

It was Vneshtorgbank that bought 5 percent of Airbus parent company EADS
for a so far unidentified agency. State banks also financed Rosneft’s
purchase of Yuganskneftegaz.

With their market position and political connections you would expect state
banks to be highly profitable. Sberbank is quite impressive, with a 2005
return on equity of 34 percent, but Vneshtorgbank logged a miserable 8
percent in the boom year of 2004 and 15.6 percent in 2005. We don’t even
know whether these public accounts are dependable.

If Vneshtorgbank is performing so poorly, it ought to contract. Instead, it
is the most aggressive promoter of renationalization in the bank sector.

Beside Guta Bank it has also gobbled up Promstroibank and St. Petersburg
Promstroibank (two different entities) as well as Ukraine’s Mriya bank, as
part of its CIS-oriented strategy. There are rumors of other purchases.

Vneshtorgbank is characteristic of the government’s strategy since the
confiscation of Yukos. The less profitable and the less transparent a state
company is, the more aggressively it indulges in renationalization.

Kozlov’s murder ought to make the government rethink the murky banking
system it has bred. Two days after Kozlov’s death, President Vladimir Putin
held a meeting on fighting economic crime in Sochi.

His words were rather revealing: “Unfortunately, we continue to see banks
being used for criminal purposes and for procuring billions of rubles in
cash every month. … In order to make the fight against economic crime
more effective, I think we need to act as quickly as possible.”

His suggestion was to create a ministerial-level group that would include
representatives of the Prosecutor General’s Office, the Tax Service, the
Financial Intelligence Service, the Federal Security Service and the
Interior Ministry.

Few Russians would see any of these bodies as honestly fighting crime, so
why transfer the responsibility for fighting money laundering to them from
the Central Bank?

Four days after Kozlov’s murder, a new bank regulator, Gennady Melikyan,
was appointed. Melikyan was labor minister from 1992 to 1997 and made a
name for himself as someone who didn’t want to upset anybody.

This might be a plus in his social life, but it is hardly a desirable
quality in a bank regulator. With this appointment, Putin actually
underscored the emasculation of Central Bank regulation of the sector.

The banking system is riddled with problems. In a sense, it is both over-
and under-regulated. Far too many rules exist, but bank inspection is
focused more on bureaucratic detail than essence.

Bank inspection should be handled by an independent bank inspectorate
or the Central Bank, not by the Prosecutor General’s Office.

The real cure for Russia’s banking problems lies in the privatization of the
sector, but the opposite is happening.

Murky as it is, Vneshtorgbank is supposed to be paraded for investors in an
IPO to provide the siloviki with more private international funding, which
will give it the resources to gobble up more private banks.
NOTE: Anders Aslund is a senior fellow at the Institute for International
Economics in Washington.

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

                                HOLOCAUST IN UKRAINE  
Victor Pinchuk Foundation and the
USC Shoah Foundation Institute for Visual History and Education
Los Angeles and Kiev, Ukraine, Wednesday, October, 11, 2006

LOS ANGELES and KIEV, Ukraine – Steven Spielberg and Victor Pinchuk
will host the premiere of “Spell Your Name,” a film by director Sergey
Bukovsky on the Holocaust in Ukraine, on October 18th in Kiev.

The premiere will mark Mr. Spielberg’s first trip to one of the countries of
the former Soviet Union, and to the country of his family’s origin.

In addition to the Holocaust survivors featured in the documentary,
political, cultural, and leaders of the Jewish community will attend the
event, which will be held at the International Center of Culture and Arts
(the former Zhovtnevyi Palace) in central Kiev.
            Jewish survivors who escaped brutal execution
The film, produced by the USC Shoah Foundation Institute for Visual History
and Education with support from Mr. Pinchuk, takes viewers on a journey of
discovery, as Mr. Bukovsky and three Ukrainian journalism students absorb
the testimony of Jewish survivors who escaped brutal execution and those who
rescued friends and neighbors during the Holocaust.

The men and women featured in the film share the details of their
experiences in Ukrainian and Russian.

“To prepare for the film, we viewed nearly 500 testimonies at the USC Shoah
Foundation Institute in Los Angeles. As I watched, I could imagine making a
film from every single one,” said the film’s director, Mr. Bukovsky.

Mr. Spielberg, who established the Shoah Foundation in 1994, is co-
executive producer of Spell Your Name, with Mr. Pinchuk. Mr. Pinchuk first
discussed his idea for a film on the Holocaust in Ukraine with Mr. Spielberg
in 2004.

“The stories and experiences of survivors in Ukraine need to be seen and
heard by the people of the world, who may not know what happened in
Ukraine during the Holocaust,” Mr. Spielberg said.

“Sergey’s work is compelling art, and it beautifully conveys the emotions
experienced by the students who took this journey of discovery.”

“My appreciation and gratitude also go to my friend Victor Pinchuk, whose
generous support and commitment to making a film on this subject made it
possible for the USC Shoah Foundation Institute to make ‘Spell Your
Name’,” he added.
                            LEARN LESSONS OF HISTORY
“It is essential that we learn the lessons of history, and the testimonies
gathered by the USC Shoah Foundation Institute that you will see in this
film are the most compelling teachers for Ukraine and all the world,” Mr.
Pinchuk said.

“It was a pleasure for me to work with the master of modern cinema, Steven
Spielberg. Together we were able to help the Institute and Sergey Bukovsky
shed light on one of the darkest pages of Ukraine’s history.”

“Raising issues of tolerance is timely everywhere, and especially so as we
commemorate the sixty-fifth anniversary of the massacre at Babi Yar,” said
historian Douglas Greenberg, Executive Director of the Institute.

“‘Spell Your Name’ teaches us all about some of the darkest moments in
human history; we hope and expect that it will not only provide education
about the past, but start a dialogue about the future as well.”
                                      TEACHER’S GUIDE
Completion of a teacher’s guide to accompany the film will occur in early
2007 as part of a broader educational program being developed by the
Institute in conjunction with the Pinchuk Foundation.

                                   LIST OF KEY CREDITS
Director                                            Sergey Bukovsky
Executive Producers                         Steven Spielberg & Victor
Produced by                                    USC Shoah Foundation
Executive Director                            Douglas Greenberg
Executive in charge of Production     Kim Simon
Producer                                          Mark Edwards
Directors of Photography                 Roman Elensky
                                                       Volodymyr Kukorenchuk
Film Editor                                       Anton Goida
Original Music                                  Vadim Khrapatchev
Sound Designer                                Igor Barba
Associate Producer                          Victoria Bondar
Ukrainian Production Services          Film Plus, Ltd.

USC Shoah Foundation Institute for Visual History and Education
With a collection of nearly 52,000 video testimonies in 32 languages and
from 56 countries, the USC Shoah Foundation Institute’s archive is the
largest visual history archive in the world.

The Institute interviewed Jewish survivors, homosexual survivors, Jehovah’s
Witness survivors, liberators and liberation witnesses, political prisoners,
rescuers and aid providers, Roma and Sinti (Gypsy) survivors, survivors of
Eugenics policies, and war crimes trials participants.

The mission of the USC Shoah Foundation Institute is to overcome prejudice,
intolerance, and bigotry-and the suffering they cause-through the
educational use of the Institute’s visual history testimonies.

The Institute relies upon partnerships in the United States and around the
world to provide public access to the archive and advance scholarship in
many fields of inquiry. The Institute and its partners also utilize the
archive to develop educational products and programs for use in many
countries and languages.
                       About the Victor Pinchuk Foundation
Victor Pinchuk is the founder of Interpipe Corporation, one of the largest
Ukrainian industrial groups. The Victor Pinchuk Foundation develops and
supports projects that contribute to the development and modernization of

Six fields of activity and the current projects of the Foundation have been
selected because of their strategic importance for the future of the
country: Health (Neonatal Centers), Education (Stipends Programs, School of
Economics, cooperation with the Aspen Institute), Culture (Contemporary Arts
Centre), Rule of Law (with the Soros Foundation), International Development
(promotion of Ukraine in the EU) and support for local communities in
Ukraine. Further program development is underway.
CONTACTS: Talia Cohen, USC Shoah Foundation Institute
University of Southern California, (213) 740-6036
Nikita Poturaev, Victor Pinchuk Foundation, (38) 067 220 9991

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
  Solemn ecumenical observance of 73rd anniversary of Ukraine’s Genocide
                                  Saturday, November 18th, 2006

Ukrainian Congress Committee of America (UCCA)
New York, New York, Wednesday, October 11, 2006

NEW YORK, NY – On Saturday, November 18th the annual commemorative
observance of Ukraine’s Genocide will take place at St. Patrick’s Cathedral
in New York City.

Sponsored by the Ukrainian Congress Committee of America (UCCA), the now
traditional observance, which begins at 2:00 PM, will include an ecumenical
memorial service (panakhyda) co-celebrated by the hierarchy of the Ukrainian
Catholic and Orthodox Churches, with the participation of The Dumka Choir
of New York City.

Following the religious portion of the commemoration, government officials
will be afforded an opportunity to offer their remarks.

Invited guest speakers include the Honorable Kofi Annan, Secretary-General
of the United Nations; U.S. Senators Hillary Rodham Clinton and Charles
Schumer; New York City Mayor Michael Bloomberg; and, Ukraine’s
Ambassador to the United States, Oleh Shamshur.

The UCCA has also appealed to President George W. Bush to offer a
statement in honor of the 73rd anniversary of Ukraine’s Genocide that will
be read at the commemoration.

The entire Ukrainian American community of the greater New York
metropolitan area is invited and urged to participate in this solemn
ecumenical observance of the 73rd anniversary of Ukraine’s Genocide
[1932-1933].                                     -30-
CONTACT: Tamara Gallo, UCCA, National Office, 203 Second
Ave., New York, N.Y. 10003,  Phone: (212) 228-6840/6841
Fax: (212) 254-4721;
FOOTNOTE:  Ukraine’s genocide of 1932-1933 is called ‘Holodomor’
in Ukraine, i.e. induced starvation, death for millions, genocide.
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                     Investigative Journalist Anna Politkovskaya Murdered

Sen. Sam Brownback, Chairman
Rep. Christopher H. Smith, Co-Chairman
U.S. Helsinki Commission, Ford House Office Building
Washington, D.C. Tuesday, October 10, 2006

WASHINGTON – Helsinki Commission Chairman Senator Sam Brownback

(R-KS) and Co-Chairman Rep. Christopher H. Smith (R-NJ) expressed
sorrow and outrage after learning of the killing of investigative journalist Anna
Politkovskaya. Ms. Politkovskaya was found dead after being shot outside of
her apartment.

“The murder of Ms. Politkovskaya, clearly a contract killing, is a
devastating blow to journalism and civil society in Russia – an incalculable
loss,” said Senator Brownback.

“This murder of one of the most prominent journalists in Russia is a
chilling reminder of the fragile façade of political and social stability in
Russia.  I call on the Russian authorities to conduct an immediate,
thorough, and transparent investigation of this murder that will find not
only those who carried out the attack, but also those who ordered it,” added
Senator Brownback.

“Ms. Politkovskaya faced death threats in the past yet she bravely continued
her calling,” said Rep. Smith.

“Her testimony on Chechnya at a 2003 Helsinki Commission hearing reflected
both her professional excellence and her deep commitment to humanitarian
values.  Her outstanding contribution to journalism and the cause of human
rights will be deeply missed.”

“Truth in journalism is a commodity with an immense price tag in today’s
Russia,” said Commission Ranking Member Rep. Benjamin Cardin (D-MD). 

“The assassination of Anna Politkovskaya places in jeopardy the life of every
journalist in Russia who attempts to tell the truth about events in that

In 2003, Ms. Politkovskaya was awarded the Organization for Security and
Cooperation in Europe’s Parliamentary Assembly Prize for Journalism and
Democracy for her reporting from Chechnya, where she exposed the brutal
methods used by some elements of the Russian military forces against

Chechen civilians.

Anna Politkovskaya’s Helsinki Commission testimony can be read at under the Chechnya: Current Situation and Prospects

for the Future hearing on September 16, 2003.
The Commission on Security and Cooperation in Europe, also known as
the U.S. Helsinki Commission, is an independent agency of the U.S.
Government charged with monitoring compliance with the Helsinki Final
Act and other commitments of the 56 participating States in the Organization
for Security and Cooperation in Europe (OSCE).
Media Contact: Shelly Han or Mark Kearney,
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                        Monday, October 16, 11:00 a.m. to 12:15 p.m.

National Endowment for Democracy (NED)
Radio Free Europe/Radio Liberty (RFE/RL)
Washington, D.C., Wednesday, October 11, 2006

WASHINGTON – The National Endowment for Democracy (NED) and
Radio Free Europe/Radio Liberty (RFE/RL) invite you to a memorial
gathering in honor of:

                                  ANNA POLITKOVSKAYA
                                   Monday, October 16, 2006
                                        11:00 am – 12:15 pm
                                  1025 F Street, NW  Suite 800
                                      Washington, DC  20004

Please join with us in honoring the memory of Anna Politkovskaya, the
courageous reporter for the Moscow newspaper Novaya Gazeta who

was brutally murdered at her apartment building on Saturday, October 7.

The mother of two, Politkovskaya was a fearless journalist committed to
reporting the truth about the conflict in Chechnya, which she called, “a
small corner of hell.”

Anna’s colleagues at Novaya Gazeta have called on the Russian public to
honor her on October 16.

This day, the ninth since her murder, holds special significance in Russia;
according to Russian peasant tradition, the soul then leaves the body and is
guided by angels to its next destination.

We hope you will join with friends and colleagues of Anna on this day to
share memories and bear witness to her courage, humanity and dedication to
truth. Refreshments will follow tributes.

———————————————————————————————–, Radio Free Europe / Radio Liberty
1201 Connecticut Ave NW, Washington, DC  20036
tel: 202-457-6900,, fax: 202-457-6992
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20.                  MOSCOW BACK IN THE SHADOWS
       It is past time for the world to recognize Vladimir Putin for what he
                  is: a man who is taking Russia back into the shadows.

ANALYSIS & COMMENTARY: By Nina Khrushcheva
Taipei Times, Wednesday, October 11, 2006

It is time to end the fiction that Vladimir Putin’s “dictatorship of law”
has made post-communist Russia any less lawless.

The murder of Anna Politkovskaya, one of Russia’s bravest and best
journalists, a woman who dared to expose the brutal murders committed by
Russian troops in Chechnya, is final proof that President Putin has
delivered nothing more than a run-of-the-mill dictatorship with the usual
contempt for law.

This recognition is a timely one for the world to make, particularly Europe.
Germany’s Foreign Ministry is preparing a policy on Russian/German relations
that will enshrine indifference to Putin’s lawlessness as being in the
national interest of the most powerful member of the European Union.

But indifference becomes appeasement when it encourages Putin to pursue

his lawless ways in the international arena, as in his current campaign to
strangle Georgia’s economy.

The killing of Politkovskaya has produced an eerie sense of deja vu: Just as
in the KBG’s heyday, people simply disappear in Putin’s Russia.
Politkovskaya’s is the third politically tinged killing in three weeks.

Enver Ziganshin, the chief engineer of BP Russia, was shot to death in
Irkutsk on September 30. Andrei Kozlov, the deputy governor of Russia’s
central bank, who was leading a campaign against financial fraud, was
assassinated on September 14.

The fact that Russia’s Prosecutor, General Yuri Chaika, took over the
investigation into Politkovskaya’s killing, as he did with the murder of
Kozlov, doesn’t inspire hope, as such senior level involvement would in any
real democracy.

In fact, the involvement of the highest level of Russia’s government is
almost a guarantee that the killers will never be found.

Politkovskaya’s murder is a particularly grim augury when you consider that
she was a powerful critic of Russia’s president.

In her articles for one of the few remaining independent papers in Moscow,
Novaya Gazeta, and in her books “Putin’s Russia: Life in a Failing
Democracy” and “A Dirty War: A Russian Reporter in Chechnya,”

Politkovskaya wrote of the vanishing freedoms that are the signature
characteristic of Putin’s presidency.

As shown by the exile of the former media tycoons Boris Berezovsky and
Vladimir Gusinky, and the imprisonment of oil magnate Mikhail Khodorkovsky,
three fates await Putin’s enemies: exile, imprisonment or the grave.

I am not accusing Putin’s government of the contract killing of
Politkovskaya. After all, as a campaigning investigative journalist, she
made many people angry besides Putin, not least of which is the current
Chechen Prime Minister, Ramzan Kadyrov, whom she accused of a policy of
kidnapping for ransom.

But even if Vladimir Putin’s associates had nothing to do with Politkovskaya
being gunned down in an elevator of her apartment building in the center of
Moscow, his contempt for law created the climate in which the murder was
carried out.

Like the murder of Archbishop Thomas Becket in his Canterbury Cathedral

many centuries ago, the crime was committed in the clear belief that it would
please the king.

Given what Politkovskaya represented – the responsibility of a democratic
press to question the Kremlin and its policies – the government should have
made certain that nothing bad happened to her.

Putin’s Russia has already lost 12 leading journalists to murder in the past
six years. None of those crimes has been solved, which would not be the case
if Putin’s “dictatorship of law” was anything more than a PR strategy.

The six-year period since Vladimir Putin arrived in the Kremlin has been a
time of deeply conflicting signals.

On one hand, the world sees a young, educated leader pledging to modernize
Russia, particularly in terms of bringing its law enforcement and judicial
practices into line with international norms.

On the other, the president watches in silence while his ex-colleagues in
Russia’s FSB security service (the former KGB) provide no security to those
murdered and launch a series of notorious espionage cases against
journalists, scientists, and environmental activists.

These “neo-spies” include journalist Gregory Pasko, arms control expert Igor
Sutyagin, diplomat Valentin Moiseyev, physicist Valentin Danilov and others.

The supposedly civilizing influence of being a Western partner – chairing a
G8 summit in Saint Petersburg for example – seems to have been lost on
Putin’s Kremlin cabal.

Once again exposure to Western values has delivered another Potemkin
village; Russia presents a facade of laws and democratic institutions, but
behind that cardboard surface the same arbitrary brutes rule.

The danger for the world is that Putin’s lawlessness is being exported.
Across Russia’s near abroad, a form of criminalized diplomacy is taking

Look at Putin’s attempt to rig Ukraine’s previous presidential election, and
the on again off again criminal charges brought against the opposition
leader Yuliya Tymoshenko.

Look at the rogue breakaway regions in Moldova and Georgia that exist only
because of the Kremlin’s backing. Look at how the Kremlin seeks to blackmail
its neighbors by threatening their energy supplies.

Every policeman knows that when you ignore criminal behavior, criminals grow
bolder. It is past time for the world to recognize Vladimir Putin for what
he is: a man who is taking Russia back into the shadows.

So the world must now ponder the Latin maxim qui tacet consentere videtur –
silence means consent – and ask if it is wise to consent quietly to Putin’s
construction of a lawless energy superpower.
Nina Khrushcheva teaches international affairs at New School University

and is the author of a forthcoming book on Vladimir Nabokov.
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          Politkovskaya mourned by rebels, residents in North Caucasus

Eurasia Daily Monitor, Volume 3, Issue 186
The Jamestown Foundation, Tuesday, October 10, 2006

The October 7 murder of Anna Politkovskaya, the Russian journalist who wrote
about human rights violations in the North Caucasus, has enraged the people
of the region.

“I regard the death of Anna Politkovskaya as an act of political terror,”
Chechen student Osam Masaev told Kavkazky Uzel. “Many people in power did
not like her reports on Chechnya. She was a Human Being and a Journalist — 
with capital letters,” he added.

Taisa Isaeva, director of the Chechen Human Rights Information Center,
echoed many reactions, commenting, “Anna Politkovskaya was one of those few
Russian journalists who were really respected and liked in Chechnya.

She was respected for her bravery to write the truth about what was going on
here. That is why her assassination was taken very hard here. Many Chechens
regarded her as one of them, because she had known too well the situation in
the republic.”

Residents of Kabardino-Balkaria expressed similar feelings. “Politkovskaya’s
reporting was the only alternative to the official propaganda that tried to
conceal the real situation in the North Caucasus,” said Valery Khatazhukov,
a local human rights activist (Kavkazky Uzel, October 8).

Politkovskaya was very popular in the North Caucasus and the West. Her
articles and clippings can be found in almost every home in Chechnya or
Ingushetia. Her fame spread to Kabardino-Balkaria after the bloody October
13, 2005, rebel raid on the regional capital, Nalchik.

When the authorities refused to return the bodies of the rebels or
bystanders suspected of being rebels, Politkovskaya wrote several articles
about the relatives’ desperate attempts to make the authorities change their
minds and release the corpses for proper burial.

But as she became increasingly admired in the North Caucasus, Politkovskaya
became increasingly unpopular in Russian society. While Caucasians regarded
her as a defender of their rights, many Russians, including the Russian
establishment, regarded her as “a traitor” linked with the “Chechen

Many Caucasians fear that, following her death, no one else in Russia will
dare speak out against the massive human rights violations in the North
Caucasus, especially in Chechnya.

The Chechen rebels also expressed their sorrow at Politkovskaya’s murder.
Akhmed Zakaev, the rebel envoy in Europe, issued a statement saying: “On
behalf of the Chechen president Doku Umarov and the Chechen [rebel]
government I feel it necessary to condemn the murder of Anna Politkovskaya,
which is aimed at terrorizing all independent journalists in Russia.

The memory of the great Russian woman who sympathized with the tragedy of
the Chechen people will be forever in our hearts and one day will be
commemorated in the Chechen Republic” (Chechenpress, October 8).

The pro-Russian Chechen authorities’ reaction to the murder was rather
confused. In an interview given to Gazeta newspaper, Alu Alkhanov, the
pro-Russian Chechen president, recognized the fact that Politkovskaya had
been an honest journalist who “had been writing about corruption among
officials not only in the Chechen Republic, but also in the whole North

However, Alkhanov then made a rather odd observation: “Sometimes Anna

wrote something that looked like just the fruit of her imagination, not facts, but
this is not a reason to kill a human being, especially a journalist.”

Then he said more directly, “I doubt that anybody among us [the pro-Russian
leaders of Chechnya] can be connected with her death. It is nonsense that
Ramzan Kadyrov could be involved in her death.”

Then Alkhanov unexpectedly admitted that Politkovskaya had been writing not
only about corruption, as he had just mentioned, but also about human rights
violations and torture. “Everything that she had been writing about was
true,” Alkhanov added, sounding as if he forgot what he had just said about
Politkovskaya’s “imagination.”

At the end of the interview Alkhanov rejected again any speculation about
possible involvement of the pro-Russian authorities of Chechnya in her
death, saying, “It would have been much easier to kill her in the North
Caucasus than in Moscow.”

Ramzan Kadyrov, the prime minister of the pro-Russian Chechen government,
commented on Politkovskaya’s assassination only briefly. His press service
issued a statement saying that Kadyrov hoped for an objective investigation
and that there were no grounds to connect this murder with Chechnya (Gazeta,
October 8).

Kadyrov’s terse comment and Alkhanov’s very contradictory interview have
only strengthened suspicions that Kadyrov might have ordered Politkovskaya’s
murder. Recently Politkovskaya had been sharply critical of Kadyrov, calling
him “a state bandit” and “Putin’s most tragic mistake.”

In an interview given to Radio Liberty just three days before her death,
Politkovskaya said that she had acquired documents and photos that linked
Kadyrov’s personnel with the kidnapping and murder of innocent Chechens.

Dmitry Muradov, the editor-in-chief of Novaya gazeta, the newspaper where
Politkovskaya worked, reminded readers that last May Khairudin Visengireev,
then secretary of the Chechen Security Council, had warned him,
“Politkovskaya is asking for trouble” and advised Muradov not to send the
journalist to Chechnya (Kavkazky Uzel, October 9).

There are many theories today about who could be behind Politkovskaya’s
death, but residents of the North Caucasus, who have considerable experience
with “state terror,” would not be surprised if one day they discover that
Kadyrov or even Russian President Vladimir Putin could have been behind the
murder of the person whom they regarded as their last hope for justice.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Special Issue of Communist & Post-Communist Studies journal
Volume 39, Issue 3, University of California, September 2006
Action Ukraine Report (AUR) #773, Article 22
Washington, D.C., Thursday, October 12, 2006

Communist and Post-Communist Studies is an international journal covering
all communist and post-communist states and communist movements,
including both their domestic policies and their international relations.

It is focused on the analysis of historical as well as current developments
in the communist and post-communist world, including ideology, economy
and society.

It also aims to provide comparative foci on a given subject (e.g. education
in China) by inviting comments of a comparative character from scholars
specializing in the same subject matter but in different countries (e.g.
education in Poland or Romania).

In addition to the traditional disciplines of history, political science,
economics and international relations, the editors encourage the submission
of articles in less developed fields of social sciences and humanities, such
as cultural anthropology, education, geography, religion and sociology.

   Guest Editor, Taras Kuzio (German Marshall Fund of the USA)

1. Editorial Board

2. International diffusion and postcommunist electoral revolutions
By Valerie J. Bunce and Sharon L. Wolchik, Pages 283-304

3. Democracy or autocracy on the march? The colored revolutions as
normal dynamics of patronal presidentialism,
By Henry E. Hale, Pages 305-329

4. Explaining the success and failure of post-communist revolutions
By Paul D’Anieri, Pages 331-350

5. Color revolutions: The Belarus case,
By David R. Marples, Pages 351-364

6. Civil society, youth and societal mobilization in democratic revolutions
By Taras Kuzio, Pages 365-386

7. The dynamics of autocratic coercion after the Cold War
By Lucan A. Way and Steven Levitsky, Pages 387-410

8. Power and persuasion: Nonviolent strategies to influence state security
forces in Serbia (2000) and Ukraine (2004)
By Anika Locke Binnendijk and Ivan Marovic,  Pages 411-429

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

Action Ukraine Report (AUR) #773, Article 23
Washington, D.C., Thursday, October 12, 2006

Washington, D.C. – Three new academic articles on Ukraine by Taras Kuzio:

[1[ ‘Civil Society, Youth and Societal Mobilization in Democratic

Revolutions’, By Taras Kuzio
Communist and Post-Communist Studies, vol.389, no.3
(September 2006), pp.365-386.

[2] ‘Ukraine is not Russia : Ukrainian and Russian Youth
Compared’, By Taras Kuzio
SAIS Review, vol.XXVI, no.2 (Summer-Fall 2006), pp. 67-83.

[3] ‘National Identity and History Writing in Ukraine’, By Taras Kuzio
Nationalities Papers, vol.34, no.3 (September 2006), pp.407-427

The three articles are available to download from

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

OP-ED: Walter Parchomenko, Kyiv Post, Kyiv, Ukraine, Thu, Oct 12 2006

It is often said that opportunities are transient by nature; here today,
gone tomorrow. Today, Viktor Yanukovych and his Party of Regions-led
government and majority in parliament have a rare opportunity to measurably
advance U.S.-Ukraine relations. The door to good partner relations is wide

Contrary to conventional wisdom, the relationship today is probably better
than any time in the last 15 years, with a very positive foundation upon
which to forge future relations.

This is a key finding of the Third Working Session of the U.S.-Ukraine
Policy Dialogue Exchange Program (PDEP) held in Washington on 25-28

PDEP is a unique U.S. State Department funded project coordinated by the
U.S.-Ukraine Foundation, an American NGO established in 1991 which has
offices in Washington and Ukraine.

It is unique because each session brings together about 50 distinguished
participants, an equal number of Ukrainians and Americans, in an effort to
deepen dialogue and develop new and creative approaches to assist the
Ukrainian government in the country’s transition towards democracy.

The first PDEP session was held in June 2005 in Washington followed by one
in Kyiv last November. To ensure that the dialogue remains focused and
action oriented, participants are divided into four Task Forces:  Economics
and Business, Media and Information, Politics and Governance, and Foreign
Policy and National Security.

Task Force participants include members of the Ukrainian parliament and
other government officials; representatives of NGOs, the media and the
business community; policy experts and former ambassadors.

Given the very intensive nature of PDEP  and their now 15 month
collaboration, several findings of the most recent Policy Dialogue merit
close attention.

According to the Economics and Business Task Force, there has been no real
progress in economic reform since President Yushchenko came to office in
January 2005. The economic scene is marked by total corruption and a very
unfriendly business environment for small and medium-sized businesses, which
develop in spite of and not due to any assistance from the government.

The government’s implementation machinery is totally ineffective and needs
to be replaced. According to the Economic Task Force it stifles even the
best economic reform plans. Tellingly, we still have not seen a single case
where a Ukrainian government official has gone to jail for corrupt

The Politics and Governance Task Force spotlighted problems of corruption,
unethical standards and unprofessionalism in government and the Orange
government’s failure, in particular, to implement an existing civil service
reform program that meets European standards.

Today, there is no transparency in the selection process of Ukraine’s civil
service and in governmental processes and politics in general. Moreover, the
illegitimate influence of business interests on politics is now a robust
tradition, and the government’s lack of political accountability to the
public is brazen and unabated.

The Information and Media Task Force made a simple but critical
recommendation to the cabinet:  “Stay away from freedom of speech!”  Press
freedom has come to Ukraine but it has not yet been consolidated. There are
still many dangers ahead, according to the Information and Media Task Force.

For example, access to information is still very limited, libel laws can be
fashioned to the great detriment of journalists and state institutions like
the State Committee for Radio and Television Broadcasting could fall under
the control of a single party.

The Task Force also highlighted the need for Ukrainian educational programs
which can promote ethical standards and greater competency among
journalists, and the need for a program to develop the country’s Internet

Finally, the Foreign Policy and National Security Task Force stressed that
Ukraine’s political elite urgently need to reach a consensus  on key foreign
policy. It said the government’s NATO information campaign remains weak
and poorly funded, and that the president must be the key advocate in such a

The stance of the Regions on NATO was clearly stated: Ukraine will
strengthen its relationship with NATO  but there will be no push for
membership; Ukraine’s stance shouldn’t irritate Russia.

Interestingly, Ukrainian and American members of the Foreign Policy and
National Security Task Force recommended that, over the next year the
cabinet should conduct two or three televised debates on Ukraine’s
cooperation with NATO and on potential membership.

The participants should include Ukrainian experts, politicians and a large
audience representative of the country’s regions. The aim should be to
stimulate public thought and discussion, free of rigid and outdated
stereotypes, and not to advance particular policy proposals.

Active government support of  such TV debates could provide important
evidence of  Yanukovych’s commitment to a public news campaign and to
his party’s stated desire to deepen European policy.

Despite the many daunting challenges facing Ukraine today in domestic and
foreign policy, there is a decidedly positive trend line in
Ukrainian-American relations.

Washington is looking forward to working with Ukraine’s new cabinet and has
officially recognized Yanukovych as a legitimate and democratically elected
leader, and his Regions-led parliamentary coalition as a democratically
formed body.

According to the Foreign Policy Task Force, ties have gone from focusing on
problems to looking for joint projects which add a qualitatively new
dimension to ties, which shouldn’t be underestimated.

The door to good U.S.-Ukrainian partner relations remains wide open despite
fatigue on the part of Ukraine and low expectations about the new
future reform course in many corners of Washington. It remains open in no
small measure due to the efforts of the PDEP.

But doors can close quickly. A creeping Putin-style rollback of democracy in
Ukraine that threatens NGOs, journalists, and the Internet would greatly
undermine U.S.-Ukrainian relations.

Today, Yanukovych and his cabinet have a golden opportunity to advance good
partner relations with the U.S. To keep the door wide open, he will have to
do what  President Yushchenko and his administration failed to do:  to live
up to their slogan of “less talk, more action.”

There has been scant progress in economic and political reform since
Yushchenko came to office. This is primarily because of the lack of
political will and consensus among the elite on reforms. Several PDEP Task
Forces said this is down to the lack of institutional capacity to implement
reform measures.

It is a hopeful sign, however, that each Task Force in the recent Washington
Policy Dialogue had a newly elected Regions’ member of parliament as a
participant. Their presence ensures that PDEP policy recommendations will be
carried back to Regions leaders.

The challenge for Yanukovych and his party is to use this capability to
promote free market reform, democracy and human rights, and to break
through the bureaucratic logjams that continue to plague Ukraine.    -30-
Walter Parchomenko, Ph.D., is a Senior Fellow with the Atlantic Council
of the United States currently based in Ukraine and a member of PDEP’s
Foreign Policy and National Security Task Force. The views expressed
are purely his own.                            
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: by Dr. Ariel Cohen
The Heritage Foundation, WebMemo #1235
Washington, D.C., Tuesday, October 10, 2006

Amid great power fretting over North Korea’s nuclear test and continuing
Iranian truculence against the West, Russia escalated its confrontation with
the neighboring Georgia.

Moscow is now using Georgia’s arrest of four alleged Russian intelligence
officers two weeks ago as a pretext to escalate its conflicts with Tbilisi.

This is a dangerous development for the West, and specifically the United
States, which could see its influence in the Caucasus region crumble if
Russia is successful in forcing Georgia into its sphere of influence.

U.S. policy must walk a fine line of encouraging settlement of the current
dispute without becoming a liability through over-involvement.

Georgia may have overplayed its hand in arresting the Russian military
intelligence officers, whom it accused of sabotage, and not just expelling
them quietly-the normal modus operandi in such cases.

In response to the arrests, Moscow recalled its ambassador from Tbilisi,
evacuated diplomats and their families, and halted issuing visas to Georgian

The Russian military forces stationed in Georgia are on high alert. Russia
cut air and railroad links to Georgia, and blocked money transfers from
Georgians working in Russia, an important source of income for many
Georgian families.

Bearing the brunt of this invigorated conflict is one-million-strong
Georgian Diaspora in Russia. Ethnic Georgians, including children, were
loaded onto cargo planes and expelled from Russia.

Russia cites their illegal immigration status. Prominent Georgian
intellectuals who are Russian citizens are being harassed by the tax police.

Georgian businesses in Moscow are being singled out by law enforcement
authorities. The handling of this crisis is further damaging Russia’s
international standing as a dependable member of the G-8.
                                    GEORGIAN OVERKILL?
Since Mikheil Saakashvili rose to power in the Rose Revolution of 2003,
Russia has warily witnessed anti-Russian statements by Georgian leaders, a
relentless push to evacuate Russian military bases (to which Russia had
agreed previously), an attempt to join NATO, and opposition to Russian
membership in the World Trade Organization.

In response, the Putin administration has embargoed Georgia’s key exports
into Russia: Borjomi mineral water and wine.

Russia has made little secret of its desire to spark a war in the Caucasus
to force regime change in Tbilisi. (See Ariel Cohen, “Preventing a
Russian-Georgian Military Confrontation,” Heritage Foundation Webmemo No.
1024, March 31, 2006, at

wm1024.cfm.) It may get its wish. In September, South Ossetian separatists,
who receive Russian military support, fired on a Georgian helicopter
carrying the Georgian Minister of Defense. This provocation, if successful,
could have led to renewed hostilities in the small secessionist territory
that is a part of Georgia.
                                    GEOPOLITICAL ROOTS
Russia’s regional and global strategic aims explain why Moscow is escalating
its conflict with Georgia. First, Russia has attempted before to block NATO
enlargement into former Soviet territory. In 1999, Russia fulminated against
the Baltic States’ NATO membership.

But at that time, Russia was extricating itself from the 1998 economic
crisis while a power struggle was afoot in Moscow to succeed President Boris
Yeltsin. In part because energy prices were much lower in 1999, Western
European countries supported the Baltic States’ NATO bid despite Russian

Today, with the West increasingly dependent on Russia’s Gazprom, they are
taking Russia’s foreign policy positions much more seriously.

Second, the Kremlin is now buoyed by $250 billion in petro-dollar reserves.
These funds can buy a lot of hardware for the Trans-Caucasus Military
District and pro-Russian separatists in Abkhazia and South Ossetia.

Third, Russia is uneasy over the Baku-Tbilisi-Ceyhan main export pipeline
(MEP), which takes Azeri oil to Mediterranean markets and crosses Georgia
but bypasses Russia. Soon the Absheron-Erzurum gas pipeline will come
online, bringing Azeri gas to Turkey and Europe, again bypassing Russia.

Gazprom fears that this gas pipeline may eventually allow Turkmeni and
Kazakhstani gas to circumvent its pipeline network on its way to Europe.
                           A BALANCE OF POWER SHIFT
If Georgia comes under the Russian sway, neighboring Azerbaijan and
Armenia will feel the full weight of the Russian presence.

Foreign policy experts in Moscow believe that the Russian government is
angry that Azerbaijan has not allocated enough oil patches to Russian
companies and has facilitated its oil exports via Turkey instead of Russia.
With increased power in the region, Russia will act on these concerns.

Armenian opposition openly seeks a more pro-Western and less pro-Russian
policy, pointing out that close ties with Moscow did not improve Armenia’s
abysmal living standards and did not bring international recognition of the
independence of Nagorno-Karabakh, a breakaway province of Azerbaijan,
populated mostly by Armenians.

A pro-Russian Georgia in the Collective Security Treaty Organization of the
Commonwealth of Independent States would permit Russia and Iran to
dominate Azerbaijan and Armenia, severely limiting U.S. policy options

Furthermore, such a development would put to rest American ambitions in
Central Asia and could cut off strategically important Kazakhstan from
western energy markets.
                            THE KOSOVO RIPPLE EFFECT
Russia has warned repeatedly that it will retaliate severely if Kosovo is
granted independence against the will of Serbia, a historic ally, and
Russian President Vladimir Putin has called for the imposition of the Kosovo
criteria on separatist enclaves in the former Soviet Union, including
Transnistria (a part of Moldova), Abkhazia, South Ossetia, and

Under this policy, Russia would enforce referenda in these territories and
recognize their independence, opening the door to their eventual
incorporation in the Russian Federation.

This approach would create a dangerous precedent for the Crimea, where the
majority of the Russian-speaking population is pro-Russian; Russian-speaking
Eastern Ukraine; and the predominantly Slavic Northern Kazakhstan.

Violations and alternations of the current borders of the former Soviet
Union could generate severe tensions in Europe and open a Pandora’s box
of territorial claims and ethnically based border challenges there and
elsewhere, such as in Iraq and Kurdistan.
The United States today is preoccupied with Iraq, Afghanistan, Iran, and
North Korea. Russia is a key player in all of these, and its increased
cooperation in these disputes would be welcome.

The future of U.S.-Russian relations and global security requires that
Moscow behave responsibly and constructively. Quickly defusing the
Georgian crisis through diplomacy would be a good place to start.

Washington should encourage the European powers, the European Union,
and Turkey to become more engaged in defusing the Georgian-Russian

Finally, the U.S. should advise Georgia not to escalate its rhetoric on
Russia unnecessarily or needlessly antagonize its large neighbor. After all,
a peaceful and prosperous Caucasus is in Russian, Georgian, and American
interests.                                         -30-
NOTE: Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and
Eurasian Studies and International Energy Security at the Douglas and
Sarah Allison Center for Foreign Policy Studies, a division of the
Kathryn and Shelby Cullom Davis Institute for International Studies,
at The Heritage Foundation.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
26.                            GROUNDHOG DAY POLITICS

By Taras Kuzio, Kyiv Post, Kyiv, Ukraine, Thu, Oct 12 2006

Observing Our Ukraine’s disastrous lack of tactics since the March 2006
elections, I have reached the conclusion that Ukraine resembles the mythical
town in the 1993 American film “Groundhog Day.”

In “Groundhog Day,” the comedian actor Bill Murray plays Phil Collins, an
arrogant, self-centered and cynical television cameraman sent to the
Pennsylvania town of Punxsutawney to cover the groundhog ceremony held
annually in February.

Groundhogs are checked to see if they are still in winter hibernation. If
so, the prediction is that winter is still not over.

During the course of covering Groundhog Day for his television station,
Collins stumbles into a time warp and each day is the same. A winter
blizzard strands him in Punxsutawney.

Ukraine is like Groundhog Day. Each day I check the Internet to see a new
development since this year’s elections. Specifically, if Our Ukraine (and
its honorary chairman, President Viktor Yushchenko) have reached a decision.

Instead, we have the same arguments, indecision, mudslinging and infighting.
Each day we read ‘Our Ukraine is maybe joining x coalition’ or ‘Our Ukraine
is maybe going into opposition.’

Even the pro-Yushchenko newspaper Ukrayina Moloda (Oct. 6) wrote, “Its
happened. Our Ukraine has finally stopped moving between two shores and . It
has yet to arrive at either . But at least is drifting in the right
direction.” Maybe.

Because the ability of this political force to really reach any kind of
concrete decision, which nobody believes, can bring to an end its permanent
negotiating strategy. That is why, maybe, it is too early to dot the i’s. It’s
better to say: Has it really happened?

Our Ukraine is more than anything central to Ukraine’s Groundhog Day. They
took credit for holding free elections but refused to accept the results,
which were that they had come in third and lost to the Party of Regions and
the Yulia Tymoshenko bloc.

In this they were similar to the Party of Regions, which has always refused
to accept that they lost the 2004 elections.

Since the 2006 elections we have had three months of Our Ukraine
simultaneously and duplicitously negotiating with its Orange partners
(through Roman Besmertniy) and with the Party of Regions (through Yuriy
Yekhanurov). Both coalitions failed.

Then Our Ukraine negotiated for two months with the Anti-Crisis coalition.
This also failed.

Now, Our Ukraine is joining the opposition, with whom it is planning to
negotiate. But, what is there to negotiate about? Our Ukraine has 81
deputies and the Tymoshenko bloc 129 and, therefore, Our Ukraine is the
minority party in the opposition.

Just as Our Ukraine would have been the minority party in either an Orange
or Anti-Crisis coalition.

Our Ukraine must be kicking itself for not opting for the Grand coalition,
as it was the only coalition of the three (Orange, Grand, Anti-Crisis) where
it could mitigate the younger brother. The Party of Regions, desperate to
get into government, had conceded the Prime Minister’s position to Our
                             RUKH AND OUR UKRAINE
Our Ukraine as Groundhog Day is reflected in its continuing uncertainty as
to whether it is actually in opposition. This is nothing new – Our Ukraine
could not decide this question in 2002-2003 and swayed back and forth
between Arise Ukraine! and joining pro-Kuchma centrists in a parliamentary

Our Ukraine had no problem in joining a coalition with the Agrarians, Party
of Regions, People’s Democratic Party (NDP) or Labor Ukraine. The only
obstacle was Our Ukraine’s refusal to join a coalition with the Social
Democratic Party United  (SDPUo).

Years later, Our Ukraine demanded that the Anti-Crisis coalition eject the
Communists. You see what I mean? Groundhog Day. No change in policies or
tactics, and no learning from past mistakes.

Our Ukraine’s straddling position between the opposition and government is
due to the fact that Our Ukraine was always constituted as a loyal
opposition (or as a ‘constructive opposition’), rather than as a true
opposition party. In this, Our Ukraine were similar to the Communists, who
also were a loyal opposition.

Only the Socialist Party and the Tymoshenko bloc adopted an opposition
stance, the former throughout most of the 1990s and the latter from the 2000
Kuchmagate crisis. This summer, the Socialist Party (SPU) has joined the
loyal opposition Communists with the Party of Regions.

The real opposition has been reduced to the Tymoshenko bloc, and Our Ukraine
again represents opposition-lite. National democratic parties not inside
parliament, such as Yuriy Kostenko’s People’s Party, have – like in the
Kuchmagate crisis – refused to join the real opposition.

The Reforms and Order Party has gone into opposition. During the Kuchmagate
crisis it both refused to join the opposition Ukraine without Kuchma NGO or
National Salvation Front, as they were dominated by the SPU and Tymoshenko
bloc, and instead created the alternative For Truth NGO.

For Truth eventually evolved in 2003-2004 into the ‘yellow’ wing of the Pora
(It’s Time) youth NGO. ‘Yellow’ Pora worked alongside key Reforms and Order
and former For Truth activists, such as Taras Stetskiv and Volodymyr
Filenko, in organizing the Orange Revolution.

During the 2000-2001 Kuchmagate and summer 2006 crises, national democrats
in Our Ukraine and affiliated parties grappled with the same dilemma. How to
be in opposition to one branch of the authorities while supporting the

Six years ago, Yushchenko was prime minister while Leonid Kuchma was
president and today, Yushchenko is president, but Kuchma’s chosen successor
(Yanukovych) is prime minister.

The attempt to transform the Anti-Crisis into the National Unity coalition
by adding Our Ukraine marks a Groundhog Day return to the early 1990s after
Ukraine became an independent state.

Then President Leonid Kravchuk sought to align himself with national
democrats to obtain legitimacy as a post-communist and to receive support
for state building in the face of internal and external threats.

After Ukraine became an independent state the strategic priority for
national democrats was state building; that is, they were first and foremost
derzhavnyky (state builders) rather than democratic reformers.

National democrats were then divided over their attitudes towards
cooperating with Kravchuk and now over the Party of Regions.

One wing of Rukh led by Vyacheslav Chornovil went into ‘constructive (i.e.
loyal) opposition to Kravchuk, while another wing, the Congress of National
Democratic Forces led by Dmytro Pavlychko, Ivan Drach and Mykhailo Horyn,
fully aligned itself with the president.

Our Ukraine split during the summer 2006 crisis in the same manner, with one
wing opposed to cooperating with Yanukovych, describing itself as a
‘constructive (loyal) opposition’ and another willing to be members of the
Yanukovych government.

In the parliamentary vote on Yanukovych’s Prime Ministerial candidacy, 30
out of 80 Our Ukraine MPs voted for him, clearly showing the divide running
through the bloc.

As in Groundhog Day, in the early 1990s and today, national democrats,
President Yushchenko and a wing of Our Ukraine, seek to cooperate with the
Party of Regions believing that national democrats and centrists need to
work together to unite Ukraine. National democrats are popular in
western-central Ukraine, and centrists in eastern-southern Ukraine.
Our Ukraine was established in 2001 after Yushchenko was removed as prime
minister by a parliamentary vote of no-confidence.

A major figure in Our Ukraine was always Petro Poroshenko, who was first
elected to parliament in 1998 in the SDPUo. A year later he acquired the
Party of Ukrainian Solidarity (PUS) founded in 1997 in Donetsk, which became
the basis for the Solidarity parliamentary faction. Poroshenko sought Kuchma’s
support, who agreed to back Solidarity as a way to balance the SDPUo’s
growing power.

The PUS, like Our Ukraine, was construed as a loyal opposition that never in
reality opposed Kuchma. In 2001 the PUS agreed to unite with current Kyiv
Mayor Leonid Chernovetsky’s Beautiful Ukraine party, the Party of
Pensioners, Regional Revival of Ukraine and the Labor Party.

This became the basis for today’s Party of Regions, the political roof of
the Donetsk clan, showing the early ties that existed between business
members of Our Ukraine and Donetsk. Both were united in their dislike for
the SDPUo.

After failing to become head of the united party, Poroshenko registered a
new Solidarity Party. Poroshenko’s new Solidarity party became a founding
member of Our Ukraine. Poroshenko’s Solidarity represented the first
business alliance with national democratic parties, such as Rukh, who also
entered Our Ukraine in the 2002 elections.

Kuchma did not see Our Ukraine as a threat because its leaders, Poroshenko,
Yushchenko, and former parliamentary speaker Ivan Pliushch, defined it as
different to the real opposition Tymoshenko bloc (registered as the Forum
for National Salvation in the 2002 elections) and the SPU. Our Ukraine hoped
its stance as loyal opposition would elicit support from Kuchma for
Yushchenko to become his chosen successor.

Our Ukraine sought out a niche lying between the pro-Kuchma For a United
Ukraine bloc (ZYU) and SDPUo, and the anti-Kuchma SPU and Tymoshenko bloc.
Loyal opposition Our Ukraine would, therefore, counterbalance the radical

The degree to which Our Ukraine’s leaders were willing to compromise in
their relationship to Kuchma could be seen in its offer by Poroshenko to
elect the head of the presidential administration Volodymyr Lytvyn as head
of Solidarity.

This would have permitted Lytvyn to have a commanding position inside Our
Ukraine and enable him to defend Kuchma’s interests inside the bloc. Kuchma
refused the offer, instead placing Lytvyn as head of ZYU.

The division in the national democratic camp between the real opposition
(Tymoshenko bloc, SPU) and the loyal opposition Our Ukraine was, therefore,
only temporarily set aside during the Orange Revolution.

Since the Revolution the division has dominated the Yushchenko
administration, leading to the dismissal of the Tymoshenko government in
September 2005 and following the 2006 elections it showed Our Ukraine as
unwilling to accept the return of Tymoshenko to government and unable to
decide whether it is in government or in opposition.

Our Ukraine’s October ratings are down to 6 percent, down from 14 percent

in this year’s elections and 24 percent in 2002. Our Ukraine has become a
failed party of power as quickly as did the NDP following the 1998

The reasons are built into the Groundhog Day repeat of internal
contradictions in the national democratic camp that go back to the founding
of the Ukrainian state in 1991.                       -30-
Dr. Taras Kuzio is a Senior Transatlantic Fellow at the German Marshal Fund
of the United States. Taras Kuzio is also an Adjunct Professor at the
Institute for European, Russian and Eurasian Studies, George Washington
University. The views expressed in this article are those of the author and
should not be attributed to the German Marshal Fund of the United States.

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