AUR#775 Oct 16 Macroeconomic Situation Report By SigmaBleyzer; Wheat Export Controls, Farmers Lose; NATO – If Not Today, Then Tommorrow; UPA Veterans

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

                        Ukrainian History, Culture, Arts, Business, Religion,
            Sports, Government and Politics, in Ukraine and Around the World
                                                                
ACTION UKRAINE REPORT – AUR – NUMBER 775
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., MONDAY, OCTOBER 16, 2006
 
                   Help Build the Worldwide Action Ukraine Network
     Send the AUR to your colleagues and friends, urge them to sign up.
               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.         UKRAINE – MACROECONOMIC SITUATION – AUGUST 2006
MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, October 16, 2006
         ‘Producers lose billions of hryvnias…stop investments into the sector,’
       Ukrainian Agricultural Confederation president Leonid Kozachenko said.
Ukrainian News Agency, Kyiv, Ukraine, Friday, October 13, 2006

3.         AGRICULTURE POLICY MINISTER SAYS GRAIN EXPORT

Ukrainian News Agency, Kyiv, Ukraine, Thursday, October 12, 2006

4.         WORLD WHEAT STOCKS AT LOWEST LEVEL FOR MORE

                                     THAN TWENTY-FIVE YEARS
By Kevin Morrison in London, Financial Times
London, United Kingdom, Friday, October 13 2006

5DROUGHT MAKES WHEAT PRICES ROCKET ON WORLD MARKET
           In Europe, tension rose after Ukraine announced it was slowing its
                wheat exports in a bid to protect its domestic market from a
                            sharp rise in prices by introducing quotas.
Agence France-Presse (AFP), Monday, October 16, 2006

6YUSHCHENKO WANTS PACKAGE OF WTO BILLS PASSES BEFORE

Ukrainian News Agency, Kyiv, Ukraine, Friday, October 13, 2006

7.          UKRAINE’S PRESIDENT CALLS FOR ‘SIGNAL’ FROM EU

By Roman Olearchyk in Kiev, Financial Times
London, United Kingdom, Friday, October 13 2006 

8. UKRAINIAN DEAL STRENGTHENS SECURITY OF EUROPEAN GAS 
     A new gas imports deal has been announced by the Ukrainian government.
By Anton Krawchenko, Energy Business Review Online
London, United Kingdom, Thursday, 12th October 2006

9.      JOINING NATO, SECURING GAS ARE KEY MEASURES TO

UKRAINE’S INDEPENDENCE SAYS DEFENSE MINISTER HRYTSENKO 
Associated Press (AP), Kiev, Ukraine, Friday, October 13, 2006

10.                  NATO – IF NOT TODAY, THEN TOMORROW
INTERVIEW WITH: David Rigsby, U.S. defense and military expert
INTERVIEW BY:  Irene Jarosewich, Editor-in-chief, Svoboda
Published by the Svoboda newspaper in Ukrainian
Ukrainian National Association (UNA)
Parsippany, New Jersey, Friday, October 13, 2006
Re-published in English with permission from Svoboda
Action Ukraine Report (AUR) #775, Article 10
Washington, D.C., Monday, October 16, 2006

11.      UKRAINE AND NATO MEMBERSHIP – ROUNDTABLE VII
          UKRAINE’S QUEST FOR MATURE NATION STATEHOOD –
                    Agenda: For October 17/18, 2006, Washington, DC

William Miller, Co-Chair; Bob Schaffer, Co-Chair
Walter Zaryckyj, Program Coordinator
Action Ukraine Report (AUR) #775, Article 11
Washington, D.C. Monday, October 16, 2006

12.       UKRAINE: COMPETENT SECURITY ON THE PRINCIPLE
                                OF INTELLECTUAL POLITICS
ANALYSIS & COMMENTARY: By Serhiy Datsyuk
Ukrayinska Pravda, Kyiv, Ukraine, Saturday, October 14, 2006

13.                                 MOMENT OF TRUTH
    The anti-corruption package of draft laws is scheduled for consideration
     at the Verkhovna Rada session on 17 October. There each deputy can
     demonstrate either their adherence to their pre-election slogans, or their
      loyalty to the corrupt rules of play established in Ukraine. We will see.
ANALYSIS & COMMENTARY:
By Yevhen Zakharov
Co-Chair of the Kharkiv Human Rights Protection Group,
Head of the Board of the Ukrainian Helsinki Human Rights Union and
member of the Board of the International Association “Memorial”
Ukrayinska Pravda, Kyiv, Ukraine, Friday, October 13, 2006

14MEMORIAL GATHERING IN WASHINGTON, DC TO HONOR
  JOURNALIST ANNA POLITKOVSKAYA, MURDERED IN MOSCOW
                        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

15.                YUSHCHENKO, YANUKOVYCH AND UKRAINE
       Radio Free Europe/Radio Liberty invites you to a briefing with Adrian

   Karatnycky & Roman Kupchinsky, Thursday, Oct 19, Washington, D.C.
Martins Zvaners, Associate Director of Communications
Radio Free Europe/Radio Liberty (RFE/RL)
Washington, D.C., Friday, October 13, 2006

16. UKRAINIAN PRESIDENT BACKS NATIONALIST WAR VETERANS
TV 5 Kanal, Kiev, in Ukrainian 1200 gmt 14 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, Oct 14, 2006

17.      ANTI-SOVIET, ANTI-NAZI FIGHTERS RALLY IN UKRAINE 

By Natasha Lisova, Associated Press Writer
Kiev, Ukraine, Saturday, October 14, 2006

18DID STEPAN BANDERA SIGN MOLOTOV-RIBBENTROP PACT?
  UPA veterans have the right to feel the honor and respect of the country they
  have been fighting for. UPA was fighting for the independent Ukraine we are
           now living in. That’s why UPA veterans do not need equal rights
                    with the soviet soldiers. They need a different status.
ANALYSIS & COMMENTARY
: By Oleksandr Paily, Historian
Ukrainskaya Pravda, Kyiv, Ukraine, Tuesday, October 10, 2006

19.        NATIONALISTS, LEFTISTS CLASH IN KHARKIV OVER 

           ANNIVERSARY OF UKRAINIAN INSURGENT ARMY (UIA)
TV 5 Kanal, Kiev, in Ukrainian 1800 gmt 14 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, Oct 14, 2006

20.          THE PRICE OF RUSSIA’S ‘DICTATORSHIP OF LAW’
  Politkovskaya’s murder is latest example of lawlessness in Russian society.
COMMENTARY:
By Ethan S. Burger
Christian Science Monitor, Boston, MA, Thu, October 12, 2006

 
21.                   PROTECTING OTHER ANNAS IN RUSSIA
COMMENTARY: THE MONITOR’S VIEW
Christian Science Monitor, Boston, MA, Friday, October 13, 2006
 
22.    UKRAINIAN PASTRY CHEF CREATES A BUZZ IN WESTERN
                            UKRAINE WITH UNUSUAL CAKES 
              Making his brides dress out of flour, eggs, sugar and caramel.
Matt Hagengruber, AP Worldstream
Uzhhorod, Ukraine, Thursday, Oct 12, 2006
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1
. UKRAINE – MACROECONOMIC SITUATION – AUGUST 2006

MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, October 16, 2006

     UKRAINE – MACROECONOMIC SITUATION – AUGUST 2006
                                             SUMMARY
[1] In July, the Ukrainian economy continued to enjoy broad-based growth.
Real GDP grew by 7.7% yoy in July, bringing cumulative growth to 5.5%
yoy.

[2] Over January-July, the consolidated fiscal deficit was maintained at a
reasonable 0.5% of period GDP.

[3] With a sluggish privatization process this year, the government plans to
resume both domestic and external borrowings in the fall. So far, total
public debt has declined by 5.1% year-to-date.

[4] Consumer price index (CPI) growth moderately accelerated to 7.4%
yoy in July. The impact of the second wave of service tariff increases
was to a large extent compensated for by continuing food deflation.

[5] Rebounding investment demand and more expensive imported energy
resources stimulated the growth of imports. However, in June the growth
rate of Ukraine’s merchandise exports outpaced that of imports on the
back of favorable conditions for exports of metallurgical products,
machinery, equipment, and transport vehicles.

[6] Over January-June, FDI inflow amounted to $1.7 billion, which is
almost 3.5 times more than in the respective period last year.

[7]At the end of August, Standard & Poor’s international rating agency
confirmed Ukraine’s credit ratings.

                                  ECONOMIC GROWTH
The Ukrainian economy continued to show remarkable growth in July,
underpinned by strong external and domestic demand. According to
preliminary data from the State Statistics Committee (SSC), Ukrainian
GDP advanced by 7.7% yoy in July, bringing cumulative growth to 5.5%
yoy over January-July. The major sectors contributing to this growth were
industry, domestic trade, transport and construction.

On account of the buoyant growth of residential construction, several
Greenfield projects in mining and energy sectors, and a number of repair
and infrastructure works, the construction sector demonstrated a 7.1% yoy
increase in value added between January and July. At the same time, the
growth was achieved on a low base effect as value added declined by
about 8% yoy over the respective period last year.

High domestic demand and acceleration of exports contributed to an 11%
yoy increase in wholesale and retail trade. Value added in transport grew by
9.1% yoy over January-July, which is closely linked to recovered industrial
production (volumes of cargo transportation grew by 3.7% yoy) and robust
growth of household income (passenger traffic was 2.7% yoy higher).

Slight deceleration in GDP growth from 9.3% yoy in June to 7.7% yoy in
July is attributable to the decline in agriculture. Over January-July,
agriculture reported a 1.4% decline in value added. Despite good prospects
for this year’s harvest, it is expected to be lower than last year’s.

In addition, overproduction on some commodity markets (such as milk,
meat, etc.) resulted in a notable reduction in their purchase prices, and
hence a decline in production output. Most likely, agriculture will
demonstrate a small reduction of value added for the whole year, which
will be more than compensated for by further expansion in the service
and industrial sectors.

Supported by vigorous growth in metallurgy, machine-building, mining
and electricity, gas and water, industrial production surged by 11.4%
yoy in July, bringing January-July growth to 4.8% yoy (up from 3.6%
over 1H 2006 and 0.2% over 1Q 2006). In particular, metallurgy reported
an 18.9% yoy increase in output in July, which is, however, slightly lower
than in the previous month (21.9% yoy).

The deceleration may be attributed to the resumption of a downward
trend for steel prices on Asian markets, an important destination of
Ukraine’s metallurgical exports. However, as steel prices on other markets
(such as Europe, North America, etc.) continued to grow, the prospects
for output growth in metallurgy are rather favorable.

Closely linked with metallurgy and construction, and helped by strong
external demand, machine-building reported a 13.1% yoy increase in output
for January- July. On the back of favorable external conditions, output in
the chemical industry and electricity, gas and water grew by 1.6% yoy and
 6.8%, respectively.

In contrast, a 5.8% yoy increase in the extractive industry’s output was
primarily driven by domestic demand. On the downside, declines in output
continued to be observed in coke and oil-refining (down by 13.9% yoy)
and textiles and apparels (down by 2.8% yoy).

Considering current real sector performance, the government upgraded
its forecast of real GDP growth for 2006 to 6% yoy while industrial output
is expected to increase by real a 5-5.5%. Taking into account that the price
for imported gas will remain unchanged through the end of the year, this
forecast looks realistic.

At the same time, the government’s 2007 GDP forecast of 6.5% yoy may
be overly optimistic considering the rise in imported gas prices to $130 per
1,000 m3 (up from the current $95 per 1,000 m3).

In 2006, unexpectedly high real GDP growth (the government as well as
domestic and foreign experts originally forecasted GDP to grow at 2.5-2.8%
yoy in 2006) is partially explained by enterprises’ internal capacities to
absorb the gas price shock (through a reduction in their profitability) and
resumption of world steel price growth (contrary to the expected gradual
reduction throughout the year).

Next year, external conditions for Ukraine’s steel and chemical exports may
not be as favorable as in 2006. Thus, GDP growth at about 5% yoy for 2007
looks more realistic.

                                      FISCAL POLICY
Despite improving real sector performance, July’s collection of revenues to
the general fund of the central budget was under-fulfilled by 4.3%, for the
first time since the beginning of the year. However, due to
above-target collections in previous months, cumulatively
revenues were 1.2% above target over January-July.

Under-execution of tax revenues by 6.2% in July was primarily related to
poor enterprise profit tax (EPT) receipts, which were 27.3% below target.
Poor EPT collections this year is attributed to the decline in industrial
sector profitability, a change in EPT tax accounting methodology and tax
evasion-for 1H 2006, EPT tax arrears amounted to almost UAH 2 billion
($400 million).

However, over-fulfillment of VAT proceeds by 12.7% over January-July (up
by a real 25.9% over the period), robust growth of personal income tax
collections (up by a real 26.4% over January-July), and under-execution of
budget expenditures (expenditures from the general fund of the central
budget were 4.5% below target) allowed the government to maintain the
consolidated fiscal deficit at a controllable 0.5% of period GDP.

So far, the fiscal deficit has been primarily financed by the remainder of
the funds received from last year’s privatization of Kryvorizhstal.
Considering the sluggish privatization process this year (proceeds from
privatization amounted to UAH 185 million ($36.6 million), or 8.6% of the
full-year targeted amount) and the traditional loosening of fiscal policy at
the end of the year, the government plans to start issuing new domestic
T-bills in September this year. According to the 2006 State Budget Law,
new borrowings on the domestic market are envisaged in the amount of
UAH 4.55 billion ($0.9 billion).

In addition, the government may issue Eurobonds in the amount of about
$500 million, which is likely to take place in October-November. So far,
in the absence of new borrowing (both domestic and external), Ukraine’s
public debt has continued to decline. Since the beginning of the year, total
public debt (public and publicly guaranteed debt) has declined by 5.1% to
$14.7 billion, or about 14% of forecasted full-year GDP.

                                 MONETARY POLICY
In July, the government carried out the second wave of service tariffs
increases. In particular, starting July 1st, gas prices for households and
budget organizations were raised by about 85%, which were still below
the price for imported gas ($95 per 1,000 m3). In addition, starting
July 12th, the cost of railway passenger carriage was increased by 50%.
Surging by 28.5% yoy, services were the most inflationary component of
consumer price index (CPI) growth.

Another inflationary component was gasoline prices, which expanded by
24.1% yoy over the month, responding to considerably higher international
crude oil prices and a number of increases in Russia’s crude oil export duty
(the latest was in June, when the duty was increased by 7.2%). However,
due to its small share in the consumer basket (0.8%), it had a rather
limited effect on CPI dynamics.

However, June’s surge in service tariffs was to a great extent compensated
for by continuing food price deflation. Foods, which account for about 64%
in the consumer basket, reported a 1.8% month-over-month (mom) decline
in prices. Food price deflation has been observed for five months in a row
and is primarily attributed to overproduction of several products and a high
base effect.

In annual terms, food inflation decelerated to 3% yoy, the lowest level
since mid-2003. As a result, CPI growth accelerated just moderately to 7.4%
yoy in July. Considering better-than expected consumer inflation performance
during the first eight months, year-end inflation may be below 9% in 2006.

Consumer price developments this year were favored by moderate growth
of monetary aggregates. In turn, developments of monetary aggregates were
closely related to exchange rate policy. Since mid-2005, the exchange
rate of hryvnia to US dollar has been stable.

Under political instability and unclear macroeconomic prospects (related
to the price increase for imported energy resources), keeping the exchange
rate unchanged was seen by NBU authorities as an important measure to
retain confidence in the future economic stability of the country.

In addition, although the nominal exchange rate remained unchanged, the
hryvnia depreciated against other currencies, causing the real effective
exchange rate to depreciate by 5.1% over January-July, according to
Ministry of Economy calculations.

To maintain a stable exchange rate in July, the NBU continued to intervene
in the forex market. Thanks to stabilization of the cash foreign exchange
market, acceleration of exports, robust FDI, and active commercial bank
borrowing from abroad, the net balance of NBU interventions was positive
for the third consecutive month. This helped the NBU to further replenish
its international reserves to $18.1 billion at the end of July.

As a result of the NBU’s net purchases, the growth of the monetary base
slightly accelerated from 22.4% yoy in June to 23.8% yoy in July; however,
it has decelerated considerably since the beginning of the year (40.1% yoy
growth in January). Money supply (M3) grew by 39.3% yoy in July, up
from 37% yoy a month before, thanks to acceleration of the monetary base
and deposit growth.

The growth of deposits accelerated to 47% yoy in July, up from 42.2%
yoy in June. At the same time, the growth of commercial banks credit
operations considerably outpaced that of deposits. In July, credit
portfolios of commercial banks expanded by 66.3% yoy, up from
65.3% in June. Further expansion of credit operations on the back of a
rather tight liquidity stance became possible thanks to active commercial
banks’ borrowing from abroad.

To support banking sector liquidity, the NBU announced the second
reduction in reserve requirements for this year. Starting August 1st,
reserve requirements for term and demand deposits in national currency
were reduced to 2% pa and 3% pa, respectively, while those in foreign
currency to 3% pa and 5% pa respectively.

The differentiation of reserve requirements by currency may be related
to the NBU measures to reduce growing foreign exchange risk in the
banking system and dollarization of the economy.

               INTERNATIONAL TRADE AND CAPITAL
In June, for the first time since early 2005, the growth rate of Ukraine’s
merchandise exports outpaced that of imports. In particular, the growth
of exports accelerated to 17.4% yoy (up from 11.5% increase in June
and a 4.4% yoy decline over 1Q06), while the growth of imports
decelerated to 12.7% yoy (down from 30.1% yoy a month before and
30.2% yoy over the first quarter). As a result, cumulative growth rates
constituted 2.1% yoy and 22.1% yoy respectively.

Acceleration of exports growth over May-June is primarily attributed to
growing world metal prices and robust external demand for Ukraine’s
chemicals, machines, equipment, and transport vehicles.

In particular, exports of metallurgical products grew by 22.3% in June,
up from 6.2% a month before. However, it was not enough to
compensate for the considerable decline in the four previous months.
As a result, the export of metals still reported a 0.4% yoy decline to date.

The notable deceleration of imports may be explained by considerable
deceleration of mineral products imports, the weightiest component in
total merchandise imports; they increased by only 12.3% yoy over 1H
2006, although the prices for imported gas and crude oil were
considerably higher than last year.

A possible explanation for this could be a decline in imported volumes of
these commodities. The deceleration of imports may also be attributed to
the vanished low base effect (May 2005’s reductions in a number of import
duties started to show up in June’s import statistics).

More expansive imported mineral resources (particularly, gas and crude oil),
Ukraine’s production and export of gasoline declined sharply, while exports
of natural gas almost ceased. However, these declines were more than
compensated for by a 12.5% yoy increase in the export of chemicals and a
16% yoy increase in exports of machines, equipment and transport
vehicles over 1H 06.

The commodity structure of Ukraine’s imports continued to improve.
The share of mineral products in total merchandise imports declined
to 32.3% for January-June, down from 41% at the beginning of the
year.

At the same time, the share of machines, equipment and transport
vehicles expanded to 27.5%, up from 23.4% at the beginning of the
year. The almost 40% yoy increase in imports of these goods over
1H 2006 reflects strong investment and consumer demand in the
country.

Thanks to improved export performance, Ukraine’s merchandise
trade balance started to improve. In particular, the foreign trade deficit
constituted $2.9 billion at the end of June, up by about $300 million in
June (about half the growth of the previous month).

At the same time, according to SSC data, the surplus of Ukraine’s
foreign trade of services made up $1.9 billion for 1H 2006, suggesting
that the current account deficit did not exceed $1 billion over the period.

Despite political uncertainties, FDI inflow amounted to $1.7 billion for
1H 2006, which is almost 3.5 times more than for the respective period
last year. The largest amounts of FDI were directed to the financial sector,
which is related to a number of commercial banks acquisitions, followed
by real estate, metallurgy, and trade.

Robust inflow of FDI over 1h 2006 and active commercial bank borrowing

from abroad gives reason to expect a considerable financial account surplus,
which will not only securely cover the expected CA deficit at 2.1% in 2006
but also allow the NBU to replenish its international reserves to end-of-2005
levels.
   OTHER DEVELOPMENTS AND REFORMS AFFECTING
                          THE INVESTMENT CLIMATE
At the end of August, Standard & Poor’s confirmed its ‘BB-‘ long-term
foreign, ‘BB’ long-term local, and ‘B’ short-term sovereign credit ratings
for Ukraine with a stable outlook. S&P acknowledged the better than
expected macroeconomic performance of Ukraine to date (higher
economic growth, lower inflation, and a controllable fiscal deficit) and
the improved political situation.

On the other hand, lack of progress with structural reforms and economic
modernization were the primary reason for keeping Ukraine’s ratings
unchanged.                                        -30-
————————————————————————————————
NOTE: To read the entire SigmaBleyzer/The Bleyzer Foundation Ukraine
Macroeconomic Situation report for August 2006 and previous monthly
reports in a PDF format, including several color charts and graphics click
on the following link: http://www.sigmableyzer.com/en/page/532.
————————————————————————————————

NOTE:  SigmaBleyzer/The Bleyzer Foundation also publishes monthly
Macroeconomic Situation Reports for Bulgaria and Romania. They are
 published at http://www.sigmableyzer.com/en/page/532.
————————————————————————————————-
FOR FURTHER INFORMATION CONTACT: Olga Pogarska, Economist,
The Bleyzer Foundation, Kyiv, Ukraine. OPogarskia@SigmaBleyzer.com.ua
or Morgan Williams, Director, Government Affairs, Washington Office,
SigmaBleyzer, Washington, D.C., MWilliams@SigmaBleyzer.com.
http://www.SigmaBleyzer.com, http://www.BleyzerFoundation.com.
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2.  UKRAINE: GRAIN MARKET EXPERTS REPORT ON DECREASE
           OF GRAIN PRICES DUE TO LIMITATION OF EXPORTS
      ‘Producers lose billions of hryvnias…stop investments into the sector,’
    Ukrainian Agricultural Confederation president Leonid Kozachenko said.
 
Ukrainian News Agency, Kyiv, Ukraine, Friday, October 13, 2006

KYIV – Grain market experts report on decrease of grain prices on the
domestic market due to introduction limits for its exports by the Cabinet of
Ministers.

They disclosed this during a joint meeting of representatives of the
Ukrainian Agricultural Confederation, Ukrainian League of Industrialists and
Entrepreneurs, Ukrainian Grain Association and the Cabinet of Ministers,
commenting Cabinet of Ministers resolutions on introduction of quotas for
grain and grain exports limitations.

‘When licensing and quoting were introduced without a forecast of
consequences for the domestic market of Ukraine, decrease of prices
started,’ Ukrainian League of Industrialists and Entrepreneurs chairman
Anatolii Kinakh said.

His words were also confirmed by Ukrainian Grain Association president
Volodymyr Klymenko. He said that grain has already started to fall in its
price on the domestic market.

Klymenko said that during the covering of grain exports, such cultures like
rape can fall in its price by UAH 250 per ton; corn, by UAH 250-300 per ton
and barley, by UAH 140 per ton.

‘Producers lose billions of hryvnias…stop investments into the sector,’
Ukrainian Agricultural Confederation president Leonid Kozachenko said.

Klymenko said that losses of grain traders from limitation of exports have
not yet been estimated, but said that standby of one ship in the port costs
USD 1 per ton of cargo a day.

He also said that traders will also suffer losses from untimely supply of
cargoes to the customer-country and pay fines. ‘A number of our companies
intend to appeal at administrative court,’ the Ukrainian Grain Association
president said.

Kinakh also said that according to the results of the meeting, the
participants will demand the government to introduce more flexible
mechanisms of grain export regulation.

Klymenko said that the forecast of possible grain exports will be 3-3.5
million tons of wheat, 5 million tons of barley and about 1.5 million tons
of corn.

As Ukrainian News earlier reported, on October 11, the Cabinet of Ministers
introduced quotas for grain exports of 1.1 million tons.

Earlier, the Agricultural Policy Ministry had worked out a draft resolution
on introduction of quotas for exports of wheat, barley, rye, and corn to
provide food safety of the country. It proposed to introduce quotas for
wheat and mixture of wheat and rye of 400,000 tons; barley, 600,000 tons;
and corn, 100,000 tons.

On October 3, Cabinet of Ministers resolution on introduction of licensing
of bread wheat and mixture of wheat and rye exports took effect.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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3.    AGRICULTURE POLICY MINISTER SAYS GRAIN EXPORT
    LIMITS WILL PREVENT BREAD GRAIN DEFICIT IN UKRAINE 
Ukrainian News Agency, Kyiv, Ukraine, Thursday, October 12, 2006

KYIV – Agricultural Policy Minister Yurii Melnyk says that introduction by
the Cabinet of Ministers of grain export restrictions is a move required for
the prevention of bread grain deficit inside the country.

This was announced in a report of the Agricultural Policy Ministry press
service referring to Melnyk’s statement made during his meeting with US
Ambassador to Ukraine William Tailor, which took place on October 11.

In his words, introduction of grain export restrictions was in the first
place caused by the need to prevent bread grain deficit in Ukraine.

During the meeting he noted that these decisions had been passed “in the
atmosphere of transparency”, with the attraction to consultations of all
participants in the grain market.

On top he emphasized that this move corresponds to international practice,
including the norms and standards of the World Trade Organization.
Meanwhile, Melnyk indicated that such measures must be of a temporary
character.

As Ukrainian News reported, during its meeting on October 11 the Cabinet of
Ministers introduced quotas for grain exports until the end of 2006, having
refused from its licensing. The quota was set at the level of 1.1 million
tons.

On September 28, the Cabinet of Ministers introduced licensing of wheat and
meslin (mixture of wheat and rye) until the end of 2006. The Ukrainian Grain
Association reported on suspension of wheat exports due to problems linked
with the licensing of its exports.

From the beginning of the 2006/2007 marketing year (July 2006 – June 2007)
to September 28, 2006 Ukraine exported 3.4 million tons of the 2006 yield
grain.

The Agricultural Policy Ministry predicts a gross grain crops (in acceptance
weight) in the volume of 35.3 million tons this year.
Earlier the Agricultural Policy Ministry predicted the 2006-grain crop at
last year’s level of nearly 38 million tons.

In 2005 the grain harvest was 38 million tons (including 20.3 million tons
of bread grain), against 41.8 million tons in 2004.              -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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4.   WORLD WHEAT STOCKS AT LOWEST LEVEL FOR MORE
                             THAN TWENTY-FIVE YEARS 

By Kevin Morrison in London, Financial Times

London, United Kingdom, Friday, October 13 2006

The world’s wheat stockpiles are at their lowest level in more than a
quarter of a century, according to the US agriculture department, which
yesterday slashed its forecasts for global wheat and corn production.

The lower forecasts, which presage higher food prices, were mostly
attributable to a severe drought in Australia, where the forecast for this
year’s wheat crop was cut by 8.5m tons to 11m. That is less than half of

the 24m produced last year, of which about 17m went to exports.

AWB, the country’s main wheat exporter, said it would suspend exports

from the country’s east coast and review its export requirements.

Ukraine has set licences and quotas on its wheat exports, in effect bringing
shipments to a standstill. This has halted Ukrainian wheat shipments of
50,000 tonnes to India. The US agriculture department also lowered wheat
output for China, Brazil and the European Union.

Wheat futures on the Chicago Board of Trade reached a 10-year high of $5.51
a bushel before the release of the US report, which represented a rise of 18
per cent since last Friday. The December CBOT wheat contract eased 4 cents
to $5.27 in early afternoon Chicago trade, a 56 per cent rise on the year to
date.

The agriculture department said global wheat production would fall by 11m
tons to 585.1m, causing stockpiles to drop 7.1m tons more from its previous
forecast to 119.3m. This represents a fall of a fifth from a year ago,
putting stocks at their lowest level since 1981.

“The concern now is what happens next year. If we have poor conditions for
growing wheat again, supplies could get very tight and we might see demand
rationing,” said Dan Cekander, grains analyst at Fimat.

James Barnett, grains analyst for Man Global Research, part of the Man
Group, said there was more concern in the global corn market after the USDA
cut crop estimates in the US by 209m bushels to 10.9bn after it said that
800,000 fewer acres were growing corn than had been expected. The US is the
world’s largest corn grower.

“We are looking at a structural change in the corn market, because demand is
going to increase next year from the ethanol industry and we might not be
planting corn in enough acres to satisfy that demand,” said Mr Barnett.

Corn futures on the CBOT rose 20 cents to $3.04 a bushel, its highest level
since June 2004 and up more than 35 per cent in the past month. Analysts
estimate ethanol to consume between 20 and 25 per cent of the US corn crop
next year, which is estimated at about 11.1bn bushels, and to account for
about 35 per cent of the following year’s crop.                 -30-

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5. DROUGHT MAKES WHEAT PRICES ROCKET ON WORLD MARKET
          In Europe, tension rose after Ukraine announced it was slowing its
               wheat exports in a bid to protect its domestic market from a
                            sharp rise in prices by introducing quotas.

Agence France-Presse (AFP), Monday, October 16, 2006

Indian farmer Harjeet Singh harvests his crop of wheat in a field at the
village of Khasa on the outskirts of Amritsar in April 2006. Widespread
droughts leading to lower than expected wheat harvests worldwide have led to
soaring wheat prices on global markets.

The less there is of something the more it costs. This age-old supply and
demand adage rarely applies to farm produce, but widespread droughts leading
to lower than expected wheat harvests worldwide have led to soaring wheat
prices on global markets.

In the United States, the futures price on December wheat reached its
highest levels in a decade, while in Paris, the price of flour wheat is
close to the autumn 2003 records. In London, wheat for animal feed is at its
highest prices since May 2004.

Poor rainfalls are blamed for affecting wheat harvests worldwide except in
China. The London-based International Grains Council said world wheat
production would amount to 588 million tonnes in the 2006-07 cycle, a
shortfall of 30 million tonnes (4.8 percent) against the previous cycle and
would not be enough to meet expected demand of 607 million tonnes.

This means that wheat reserves will have to be used, taking them to their
lowest levels in 25 years.

According to the IGC report, published at the end of September, the figures
do not take into account alarming news from Australia where wheat production
appears set to suffer a 50 percent shortfall because of low rainfall.

Australia will harvest between 12 to 15 million tonnes instead of the 25
million harvested last year. Australia usually exports about 70 percent of
its production, principally to Asian countries where it competes with US
wheat. This sidelining of one of its main competitors has helped strengthen
US wheat prices.

In Europe, tension rose after Ukraine announced it was slowing its wheat
exports in a bid to protect its domestic market from a sharp rise in prices
by introducing quotas.

Ukraine’s traditional clients have thus had to turn to other sources nearby,
notably in Europe.

Ukrainian wheat has not only suffered from the water shortage but also from
its poor reputation as being low quality due to severe winter frosts, hot
summers and to top it all this year, an invasion of grasshoppers.

India, which demands high quality from its wheat suppliers, refused a cargo
of Ukrainian wheat, turning instead towards European wheat which, like its
US counterpart, is benefitting from the difficulties of its competitors.

Despite a drop in production of more than 9.0 million tonnes, the United
States hopes to export 24.5 million tones of wheat against 27.5 million last
year but the European Union hopes to better its export figure of 10 million
tonnes last year by exporting 12 million this year.

Europeans also seem well on the way to meeting their objectives because in
three months of trading they have already sold a million tonnes more than
they had at this time last year.

Major importers such as Egypt, Iraq, Algeria or Brazil have put their
purchase orders forward to try and beat the price rises.

Faced with this demand, producers are playing coy and raising the stakes.
“They are the ones who are dictating the prices, particularly because there
is nothing in view which might indicate that prices will come down,” said a
French trader.

The price of other grains, notably maize, has risen in the wake of wheat.
Because of the development of biofuels, in particular in the United States,
the demand for maize is likely to grow expotentially in the next few years.

“It will then be the turn of maize to pull the price of wheat up,” commented
a trader.                                                -30- 
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6. YUSHCHENKO WANTS PACKAGE OF WTO BILLS PASSES BEFORE
   UKRAINE-EUROPEAN UNION SUMMIT ON OCTOBER 27 IN FINLAND
 
Ukrainian News Agency, Kyiv, Ukraine, Friday, October 13, 2006

KYIV – President Viktor Yuschenko is awaiting that Verkhovna Rada will adopt
a package of bills required for Ukraine’s membership in the World Trade
Organization before the Ukraine – European Union summit slated for October
27 in Helsinki (Finland). The president’s press secretary, Iryna Vannykova,
announced this at a news briefing.

“The President believes it necessary to adopt a package of WTO laws before
the Ukraine – European Union summit in Helsinki,” she said.

As Ukrainian News reported, the European Union is ready to launch official
talks on a free trade zone with Ukraine after it becomes a member of the
World Trade Organization.

Ukraine hopes that a political decision on launching talks on the creation
of a free trade zone with the EU will be made when the issue of Ukraine’s
WTO membership is settled.

The Cabinet of Ministers intends to review the bills necessary for Ukraine’s
joining the World Trade Organization worked out by the former government

and sent to be endorsed by the Verkhovna Rada.

Earlier Ukraine intended to enter the WTO in 2006. The intension is foreseen
by the Declaration of National Unity, which was signed by the parliamentary
political forces on August 3 this year.                  -30-
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7.   UKRAINE’S PRESIDENT CALLS FOR ‘SIGNAL’ FROM EU 

By Roman Olearchyk in Kiev, Financial Times
London, United Kingdom, Friday, October 13 2006 

Ukraine’s pro-western president, Viktor Yushchenko, yesterday called on the
European Union to provide a “signal” that his country was seen as a
candidate for membership in the long term, despite growing calls in Brussels
for a halt to eastward expansion.

“If we look at the processes under way in the EU today, we could say that it
is not the best time to talk about Ukraine’s EU membership aspirations,” Mr
Yushchenko told the FT.

“We understand the difficulties which are under way in Europe. We are just
asking to be heard. We need only one thing . . . to know and to feel through
written agreements that there are prospects for Ukraine in Europe, so that
we can see the horizon.”

Referring to the EU as Ukraine’s main trading partner, he acknowledged that
his country faced a long road of reforms and preparations before realising
its EU membership aspirations.

Mr Yushchenko’s plea to the EU comes at a time of political uncertainty in
Kiev and doubts as to whether the country’s new coalition government will
follow the swift western integration agenda adopted following the Orange
revolution of 2004.

He stressed that his foreign policy and domestic reform plans would not be
derailed, insisting he had enough powers as president, including veto
rights, to steer Ukraine westward and ensure liberal reforms were
implemented at home.

Viktor Yanukovich, Mr Yushchenko’s rival in the 2004 elections, made a
comeback this summer, reclaiming his old job as prime minister. The two

men reached a cohabitation agreement that was intended to preserve Mr
Yushchenko’s foreign and domestic policy agendas.

However, Mr Yanukovich has revived Kiev’s ties with Moscow, Ukraine’s
principal supplier of energy fuels. He has taken a more cautious approach on
plans for integration with the EU and Nato, insisting he would pursue
policies of “Euro-pragmatism” rather than “Euro-romanticism”.

He has vowed to pursue closer ties, including trade pacts, with both the EU
and Russia, a position many fear could complicate western integration.

Mr Yushchenko said his country needed to improve often “complicated”
relations with Russia, but stressed that Ukraine’s future lay in Europe.
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8. UKRAINIAN DEAL STRENGTHENS SECURITY OF EUROPEAN GAS 
     A new gas imports deal has been announced by the Ukrainian government.

By Anton Krawchenko, Energy Business Review Online
London, United Kingdom, Thursday, 12th October 2006

The Ukrainian government recently announced that all its gas imports in 2007
will come from Central Asia. This new deal to diversify Ukrainian gas
imports is good news for West European security of supply, and will finally
lay to rest the Russia-Ukraine price dispute, which earlier this year caused
major disruptions to several European countries.

‘Content Almost 80% of Europe’s Russian gas is transported across Ukraine.
In January 2006, during the pricing dispute between Ukraine and Russia,
Russia reduced gas supplies to its former satellite, resulting in an
immediate, though temporary, 30% drop in gas pressure in seven European
countries.

A temporary truce was put in place between Russia and Ukraine, due to expire
at the end of September 2006. Security of gas supply to Europe hung in the
balance as a replacement agreement was negotiated.

At times the outlook for Europe looked very bad. During the summer, Yulia
Tymoshenko, who promised to stymie any compromise deal, was a prime
minister-in-waiting.

However, Ms Tymoshenko was passed over. More importantly, Turkmenistan

then indicated that it would raise its gas prices to Gazprom in September, just
as their supply agreement expired.

The breakdown in subsequent negotiations was exploited by Ukraine as it
moved in to secure its own deal. Ukraine was ultimately able to reach gas
import deals with Uzbekistan, Kazakhstan and Turkmenistan for the
importation of 57.5bcm in 2007.

Russia was not, ultimately, opposed to the deals. Rather than fighting with
Ukraine to take prices up to international levels, Gazprom can now move to
greener pastures without a fight, freeing up more internationally-priced gas
for export to western Europe.

For Central Asian suppliers, the deal is as good as it gets. These countries
are isolated from international markets and rely completely on foreign
infrastructure to take their products to market. For the foreseeable future,
full international prices will be beyond their reach.

One essential element of the status quo that has been maintained is the role
of RosUkrEnergo, the intermediary part-owned by Gazprom. Gazprom will buy
Turkmen gas at $100 per 1,000cm, immediately selling it to RosUkrEnergo,
which owns the gas as it transits through Gazprom pipes.

At the Ukrainian border, RosUkrEnergo will sell the gas to Ukrainian
authorities for $95 per 1,000cm, receiving compensation for its loss.

It is a Byzantine system, and a curious set of comprises, but it seems
everyone from Europe to Central Asia wins.

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9.      JOINING NATO, SECURING GAS ARE KEY MEASURES TO
UKRAINE’S INDEPENDENCE SAYS DEFENSE MINISTER HRYTSENKO 

Associated Press (AP), Kiev, Ukraine, Friday, October 13, 2006

KIEV – Ukraine’s defense minister said Friday that this ex-Soviet
republic needed to join NATO and secure reliable gas supplies, calling both
measures key to Ukraine’s independence.

“If we resolve both those questions, Ukraine will be a stable, independent
state,” Defense Minister Anatoliy Hrytsenko said at a Kiev conference
devoted to NATO.

NATO membership remains one of the most divisive issues in Ukraine, which

is torn between the wishes to shed Russian influence and improve frayed ties
with the Kremlin.

Pro-Western President Viktor Yushchenko insists membership in the Western
military alliance is a priority, but the more pro-Russian Premier Viktor
Yanukovych has said that Ukraine will not push for quick entry.

Russia has bristled at the prospect of neighboring former Soviet republics
joining its former Cold War foe.

“NATO is not only a military-political bloc, but a community of democratic
states, which creates a high standard of living for their citizens, for
their society,” said Hrytsenko, who is a presidential appointee and
considered one of the most hawkish pro-NATO ministers.

Initially, Ukrainian officials had hoped to advance to the next stage in its
NATO membership bid this fall, but Yanukovych put the brakes on that during
a visit with NATO officials in Brussels last month, noting that the alliance
remains deeply unpopular among most Ukrainians.

Hrytsenko noted, however, that Yanukovych had also stated “that the final
aim of Ukraine’s cooperation with NATO is entrance into the organization.”
“Unfortunately, the prime minister’s statement hasn’t been made widely
known,” Hrytsenko said.

Hrytsenko also told the conference that Ukraine must “resolve the question
of transparent, diversified, stable supply of energy resources to Ukraine,
particularly gas.” “We don’t have that now,” he said.

Ukraine receives most of its natural gas supplies via Russia, and last year
a bitter pricing dispute between Kiev and Moscow led Russia to temporarily
cut supplies.

The move was widely perceived as Kremlin punishment for Ukraine’s
pro-Western ambitions; the supplies were turned back on after Ukraine agreed
to a nearly twofold price increase. Ukraine is currently in delicate
negotiations with Moscow over prices for next year.      -30-
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10.              NATO – IF NOT TODAY, THEN TOMORROW

INTERVIEW WITH: David Rigsby, U.S. defense and military expert
INTERVIEW BY:  Irene Jarosewich, Editor-in-chief, Svoboda
Published by the Svoboda newspaper in Ukrainian
Ukrainian National Association (UNA)
Parsippany, New Jersey, Friday, October 13, 2006
Re-published in English with permission from Svoboda
Action Ukraine Report (AUR) #775, Article 10
Washington, D.C., Monday, October 16, 2006

Ukraine’s prime minister Viktor Yanukovych created a stir in mid-September
with his abrupt declaration in Brussels that Ukraine is not yet ready to
enter NATO despite the determined efforts for the past two years of the
Yushchenko administration to more swiftly integrate Ukraine into
Euro-Atlantic and worldwide political, economic and military structures.

Articles subsequently appeared in Western and Ukrainian media reflecting all
angles of the debate – including V. Yanukovych’s opinion piece in the
Washington Post of October 5 in which the reader is led to believe that, of
course, Ukraine is headed for Europe (just not clear how and when), to the
Wall Street Journal’s (Europe) lament of October 6 that the West in losing
Ukraine to Putin’s Russia at an unprecedented pace.

Competing public opinion polls in Ukraine claim that anywhere from 10 to 60
percent of those polled oppose or strongly oppose Ukraine’s entry into NATO
ant that between a quarter to a third of those polled have little or no idea
what NATO is or what it does.

David Rigsby, managing director of Umbra LLC, based in Northern Virginia,
has extensive international defense and military experience and has traveled
to Ukraine frequently during the past 15 years. He returned recently from a
10-day trip to Ukraine and agreed to speak with Svoboda’s editor-in-chief
Irene Jarosewich about Ukraine’s military and the issue of Ukraine’s
ascension into NATO.

IJ: Ukraine was being considered for inclusion into a NATO Mutual Action
Plan (MAP) later this year – a decision now apparently in flux with the
prime minister’s declaration that a referendum in Ukraine must be held
first. Regardless of how the political situation plays out in the near
future, what was the NATO MAP for Ukraine?

DR: The Membership Action Plan – MAP gives a country the milestones to
NATO membership.  The country must meet a certain set of military standards
established by NATO.  However, it is important to understand that a country
does not actually have to be working on the MAP to be on the road to meeting
NATO standardization requirements.

Ukraine has been cooperating with NATO since 1997, when it became a PfP
country – a Partnership for Peace nation.  And if you look at Ukraine’s
Ministry of Defense website (http://www.mil.gov.ua), there are  80 key goals
for Ukraine’s defense policy listed that are NATO-compatible.

Inertia towards NATO is still on Ukraine’s side. They’re doing it anyway and
may not need the MAP deadlines just yet.  In fact, Ukraine may find the
non-MAP approach more flexible, why deliberately accept deadlines that you
can’t necessarily meet?

IJ: Will there continue to be support in the military hierarchy for
Ukraine’s ascension into NATO?

DR: My impressions is that the military will remain internationally
oriented. Basically, Ukraine’s military modernization program is leading
them along this path. Any military is big – and like a tanker on a ocean has
a lot of inertia. Saying we have a MAP or not is not immediately relevant –
the ship can’t stop on a dime and change direction anyway.

And Ukraine is well on the way to adopting NATO standards. Just one
example: they are in the process of establishing a professional NCO corps
(non-commissioned officers corps) – these are the ranks from corporal to
sergeant major.

This is a big step away from Soviet standards, which was fundamentally
based on a system of lower skilled conscript privates and skilled officers.
Ukraine will be shifting away from an unskilled, conscript military to
smaller, more directed and much more highly skilled volunteer force.

The country may not be moving in lockstep with the MAP, but Ukraine is
adopting fundamental principles, procedures, and equipment that makes it
more NATO-like.

To be in NATO a country must sign onto standardization agreements so that
NATO members can work together – languages, procedures, equipment,
telecommunication – once these standards are in your system they are
difficult to undo. Ukraine has already invested more than 10 years into the
modernization of the military in ways that are compatible with NATO
standards.

IJ: For more than a decade Ukraine has participated in a variety of joint
military endeavors with troops from Western nations – Ukrainian troops
entered the ranks of UN peacekeeping missions in several countries; until
last year Ukrainian troops participated in the US-led coalition force in
Iraq; Ukraine’s military has hosted several Sea Breeze training operations
off the coast of Crimea.

How would you characterize the effect that this fairly wide variety of
consistent experiences with the militaries of Western nations had had on
Ukraine’s military?

DR: Right up front I’d like to say, despite Ukraine’s many problems, I am a
supporter of the country and its people.  Despite, what appears at time to
be, uncertainty among the political leadership, I believe that Ukraine will
come out OK. And I believe that the military will be one of the reasons that
Ukraine will be OK in the future.

Ukraine’s military has had a great deal of outside contacts, its officers
have traveled, its’ troops have sat in holes in-the-ground with the troops
of other nations.

Ukraine’s defense forces have participated in 11 peace keeping operations
(PKOs) since it became independent.  Some of these operations were under
the UN, others were NATO and some are coalition operations with partners
such as the United States.

No other branch of Ukraine’s government has as pervasive contacts (across
the range of the ranks) with the world at large, except maybe the foreign
ministry. And over time these contacts will percolate to other aspects of
society.

As a result, today’s Ukrainian junior military officers have a better sense
of the world outside Ukraine than your average Ukrainian. And someday
some of these junior officers will go on to become political leaders
bringing with them that understanding and experience.

Ukraine’s military has been involved in some very complex joint exercises in
addition to the PKOs, and it has assumed serious international
responsibilities.

For example, for years Ukraine has been participating, along with other PfP
nations, in NATO’s annual Combined Endeavor training, a sophisticated
technical communications exercise to test how well the multinational
communications infrastructure actually works.  In Combined Endeavor 2006,
41 nations participated in joint communications exercises.

The next Combined Endeavor exercise is scheduled for May 2007. Ukraine
will furnish what is known as the “forward operating base”.  While the
representatives of the participating players and nations go to a central
base in Germany, Ukrainian communications specialists and equipment will go
to Armenia to set up the forward operating base from which the test signals
will be sent.  Communication must be excellent.

There is a great deal of time and money invested in this exercise and this
is an enormous responsibility. Ukraine has to get it right. However, Ukraine
would not have been given this assignment unless exercise planners believed
Ukraine was ready to do this. In fact, Ukraine is being told “you are part
of the pool of nations that we deem to be capable of doing this.”

IJ: However, despite all these positive aspects that you have mentioned, in
Ukraine, for decades, NATO was viewed negatively – as a U.S.-led
anti-Soviet, now anti-Russian, military alliance. And by most accounts, this
negative view is still the primary opinion held by a large percentage of the
general public in Ukraine.

NATO is viewed as antagonistic to Ukraine’s neighbor and ally Russia,
expensive and aggressive.  Most Ukrainians would prefer to remain unaligned.
Why should your average citizen in Ukraine vote to have its government join
NATO?

DR: To the first point: it’s true. NATO was anti-Soviet. But it is not
anti-Russian. In fact Russia, though it doesn’t broadly announce it,
participates as a PfP nation in many of the same testing and training
exercises as does Ukraine.

NATO first and foremost has become an alliance of common interests. I too
was among those in the early 1990s who thought that maybe NATO would
wither away. But NATO has transformed itself.

Every country that is a member is, for example, interested in international
stability and national security. We do not want any more Yugoslavia’s. We
do not want worldwide terrorism.

NATO doesn’t have “friends” per se, rather NATO members have common
“interests”, such as the national security of member states, interest in
global issues such as the abatement of worldwide terrorism, and maintaining

stable trade.

The world has changed. It is no longer divided in the way it was. And
Ukraine will not become a US lackey by joining NATO. In NATO they will
be a full partner. We must remember that the US in NATO can find itself a
subordinate to other NATO leaders as is the case in Afghanistan now.

NATO represents an array of interests. It is a collaborative and
consultative body. There are examples after examples where NATO does not
back US intentions. Iraq is a good example. A question often asked in
Ukraine when the topic of NATO comes up is; “Who is the enemy?” This is
really the wrong question to be asking. We need to get beyond the shadow of
World War II.

The questions today are: who’s going to guard your pipelines?, who will help
the people in national emergencies?, who will manage refugees from other
unstable nations?, how can we protect our nation by conducting PKOs far
away from our own borders?, and who will defend us if needed? NATO is
about these and other capabilities.

In today’s world, your military is not just for classical military
operations. Militaries serve in large emergencies. Every country needs an
infrastructure to keep the country together and to save people.

Today’s military is not just for war, but to resolve a continuum of
problems. The military is an infrastructure of capabilities, combined with
discipline and training. You don’t need enemies to need a military but you
do need capabilities to solve problems that are beyond the abilities of any
other part of the national government. And NATO provides capabilities.

There are also the economic benefits to Ukraine of NATO. Developing,
upgrading, producing military and mixed use military-civilian equipment is a
major economic decision and beneficial for Ukraine. Adopting NATO
standards will develop internal industries; which will improve Ukraine’s
competitiveness in world markets.

Complying with NATO standards is economically better than complying to
Ukraine-only standards – or to Russian standards, since the world has
standards that are non-Russian.

Further, the men and women who serve in a voluntary military force can be
provided with in-depth training that will benefit both them and Ukraine when
they leave or retire from military service.  For example, Ukraine’s economy
will benefit from military trained communications specialists, construction
workers, mechanics and medical workers to name only a very few.

IJ: For the layman, it is difficult to judge expert opinion about the state
of Ukraine’s military.  On one hand, one hears of the “dreadful state” of
Ukraine’s military – no money, antiquated equipment, high corruption, low
morale. Then another expert explains that Ukraine is on target in reducing
its bloated post-Soviet military bureaucracy, riding itself of dangerous and
useless weapons and equipment, praise for troops that participate in
dangerous missions. In your opinion, what is the state of Ukraine’s military
in terms of morale, training, experience, leadership?

DR: It’s true, among the conscripts; morale is never very high because they
did not select the military. That’s why a volunteer military where everyone
has joined because they want to is the way to go.

However, I do believe the Ukrainian officer corps morale is high. Funding is
always a problem, but then the military is just one of many pressing demands
on Ukraine’s national treasury.

With the establishment of the professional NCO corps, which is in-keeping
with classic military structure worldwide, I believe that the military will
be seen as a good career path.

The officer corps now gets and will get good training and experience
particularly in project and personnel management. Then when they leave the
military they can enter a second career in civilian life that’s respectable.

NCOs will come out of the military with a high level of training in fields
such as construction, communications, mechanics, medical treatment and
many other specialties. I think now, among the “man in the street” Ukraine’s
military is regarded with respect.

Personally I believe that if Ukraine’s military continues down this path
that it has chosen, then the military will be instrumental in making Ukraine
a good world citizen. Currently there seems to be a fundamental disconnect
between the politicians and the citizens of Ukraine.

However, a good military will always instill in its ranks a sense of
responsibility to the people and the nation while giving both a place in the
world.  By teaching that, the defense forces of Ukraine will be an
instrument of change for Ukraine.  I must admit that I am not an unbiased
observer.

I am positive about the direction of Ukraine’s military. I like Ukraine, I
like Ukrainians, I like its military.  That being said, I do have a
skeptical eye for the plans and programs envisioned by Ukraine’s military
planners.  I suppose I am a skeptical optimist.

IJ: U.S. government policy is to support international efforts that are
compatible with the goals of U.S. foreign and defense policies.  This
includes money and training for the defense infrastructures of ally nations.

 
Despite the hue and cry that the U.S. is “buying” the loyalty of Ukraine,
the numbers show otherwise.  Of all the money available in the FMF (Foreign
Military Finance) program, for example, one of the largest U.S. programs for
supporting foreign defense infrastructures, Ukraine receives a paltry sum of
money.  Is there a reason for this?

DR: The hue and cry that Ukraine’s military is receiving huge sums of money
from the U.S. or other foreign sources is more political posturing than
grounded in reality.  It’s true that Ukrainians have been purchasing
equipment that allows them to work with NATO through our FMF (Foreign
Military Finance) program.  But that program is small in relation to needs
and really should be expanded.

Under it, Ukraine gets to set it’s own priorities and select the equipment
and services that Ukraine needs. Americans are not “buying” loyalty with
this and other programs, they are working to develop a partner with equal
capabilities. And, in many cases Ukrainian companies will furnish the
maintenance and training.  They may even become the regional representative
for the US companies.   But it remains Ukraine that must plan.

The U.S. does not just hand out money.  The U.S. Office of Defense
Cooperation, which oversees the FMF programs is genuinely interested in
helping the Ukrainian military.  They work closely with the Ukrainian
military to determine which uses of the available funds will have the
greatest impact on Ukraine’s military capability.

My sense also is that the Department of Communications in Ukraine’s defense
ministry has a good understanding of how Ukraine can become a dependable
player in the arena of international telecommunications. This is one area
where the U.S. has helped with financing and plans to continue to
contribute.

Based on my experience, I believe an Ukraine and the US need to develop an
informal forum or perhaps several for a where the plans and requirements of
the Ukrainian military can be discussed directly with the companies capable
of providing them.

There is no need to limit the participants to US companies only.  Ukrainian
companies also need to understand what their defense forces may need from
them.

The questions of financing via direct support or defense offsets (a
particularly good concept for Ukraine) can be discussed. Programs such as
FMF can augment Ukraine’s military budget and probably should be expanded.
Ukraine can improve its chances of obtaining increased international support
by showing how they will be meeting international military standards with
the funding.

I understand that designing and developing proposals that will bring in ten
times the amount of money that you can now get is not easy.  But as I said
before, about Ukraine, I am a skeptical optimist.                -30-
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NOTE: The Action Ukraine Report (AUR) thanks Irene Jarosewich,
Editor-in-chief, Svoboda, for granting AUR permission to be the first to
publish this interview in English.  The Ukrainian-language version of this
interview is available online at www.svoboda-news.com as of October 16.
No portion of this interview, in either language, may be reprinted without
the prior permission of Svoboda.   AUR Editor Morgan Williams
———————————————————————————————–
CONTACT: Irene Jarosewich, Editor-in-chief, Svoboda
2200 Route 10 West, Parsippanny, NJ 07054, svoboda@att.net

Subscriptions to the Svoboda weekly Ukrainian language newspaper 
are available.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
11. UKRAINE AND NATO MEMBERSHIP-ROUNDTABLE VII
           UKRAINE’S QUEST FOR MATURE NATION STATEHOOD –
                         Agenda: October 17/18, 2006, Washington, DC
 

William Miller, Co-Chair; Bob Schaffer, Co-Chair
Walter Zaryckyj, Program Coordinator
Action Ukraine Report (AUR) #775, Article 11
Washington, D.C. Monday, October 16, 2006

                                    — AGENDA —
DAY I –  Tuesday, October 17, 2006 ———-
VENUE: RONALD REAGAN INTERNATIONAL TRADE CENTER
9:00 AM – 9:30 AM – Opening Remarks:  John Wobensmith
(VP for Development /AFPC)
Sen. Mike DeWine (R-OH) [INVITED]

9:30 AM – 10:00 AM – Roundtable Focus Session I
Theme: Ukraine’s NATO Accession Process – The Ukrainian Perspective
Chair: Oleh Shamshur (UA Ambassador to the US)
Featured Speaker: Volodymyr Khandohiy
Ukraine Dep. Minister of Foreign Affairs

10:00 AM -12:30 PM – [I] Has Ukraine Met the “External Political
Requirements” for NATO Membership? [Two Panels]

(1) The “Shared Values” Requirement
Moderator: Kyle Parker (CSCE)
Panelists: Yuri Scherbak (UA NAS)
Bruce Jackson (Proj. on Transitional Democracies)
Lead Discussants: Carlos Pascual (Brookings Institution)
Volodymyr Dubovyk (WWIC/ONUCIS)
Topics: Adherence to the Democratic Process
General Market Orientation; Dedication to Social Opportunity
Euro-Atlantic Security Outlook

(2)  The “Good Neighbor” Standard
Moderator: Orest Deychakiwsky (CSCE)
Panelists:  Darren Hultman (UA Desk/DOS)
Oleksandr Sushko (CPCFPU/UA FMA)
Lead Discussants: Steven Pifer (CSIS)
Alexander Motyl (Rutgers U/CGG)
Topics: Respect for Borders; Open Skies Policy; Non Protectionist
Economic Approach; Readiness to Promote Cultural Exchange

12:30 PM-2:30 PM – Working Lunch —–
Theme: Ukraine’s NATO Membership –
UA Political/Societal Spectrum Speaks Out
Chair: William Miller (Kennan Institute)
Discussants: Viewpoint from the Executive Branch: Ivan Vasiunyk
(Dep. State Sec.)
Viewpoint from the Verkhovna Rada: Hryhoriy Nemyria (BUTy)
Viewpoint from the Verkhovna Rada: Leonid Kozhara (Regions)
Viewpoint from the Third Sector: Pavlo Zhovnirenko (UA CSS)
Viewpoint from the Fourth Estate: Oleh Medvedev (Obozrevatel.com)
Vox Populi Stand-in: Ilko Kucheriv (Democratic Initiatives)

2:30 PM-3:00 PM – Roundtable Focus Session II ———-
Theme: Ukraine’s NATO Accession Process – The Visegrad Perspective
Chair: John Micgiel (Columbia University)
Featured Speaker: Rastislav Kacer (Ambassador of the Slovak Rep. to
the United States)

3:00 PM-5:30 PM – [II] Has Ukraine Met the “Internal Political
Requirements” for NATO Membership? [Two Panels]

(1) The “Rule of Law” Requirement
Moderator:  Jan Bugajski (CSIS)
Panelists:  Bohdan Futey (US Court of Federal Claims)
Oleksandr Derhachov (IPES/UA NAS)
Lead Discussants: Nadia Diuk (NED)
Idil Ismirli (George Mason U.)
Chris Holzen (IRI)
Topics:  Free and Fair Elections; Accountable Governance; Vibrant
Civil Society & Independent Press; Equitable National Minorities Policy

(2) The “Democratic Civilian Control over the Military” Standard
Moderator: Bob Schaffer (Aspect Resources)
Panelists:   F.S. Larrabee (RAND)
Hryhoriy Perepelytsya (UA NISS)
Lead Discussants: Michael Haltzel (Johns Hopkins U/SAIS)
Valentyn Nalyvaychenko (Dep. Head/SBU)
Topics: DCC over Defense Sector; DCC over Intelligence Sector;
DCC over Border Security Sector; DCC over Law Enforcement Sector

5:30 PM-6:00 PM – Roundtable Focus Session III
Theme: Ukraine’s NATO Accession Process – The Baltic Perspective
Chair: Keith Smith (CSIS)
Keynote Speaker: Juri Luik (Estonian Ambassador to the United States)

7:00 PM-9:00 PM – Conference Reception [Hosted by the UA Embassy
to the United States]
————————————————————————————————
DAY II – OCTOBER 18, 2006 ———-
VENUE: RONALD REAGAN INTERNATIONAL TRADE CENTER

9:00 AM- 9:30 AM – Roundtable Focus Session IV —–
Theme: Ukraine’s NATO Accession Process-A British Voice on the Matter
Chair: John Van Oudenaren (Library of Congress)
Keynote Speaker:  James Sherr (Fellow/CSRC/UK Defence Academy)

9:30 AM-12:00 PM – [III] Has Ukraine Met the “Economic Requirements”
for NATO Membership? Two Panels]
(1) The “Developed Market Economy” Requirement
Moderator: Ariel Cohen (Heritage Foundation)
Panelists:  Brian Cox (EEA/Dept of the Treasury)
Serhiy Korsunsky (Econ. Dept/UA MFA)
Lead Discussants: Anders Aslund (Inst. for Int’l Econ.)
J. Benedict Wolf (US DOS/ED)
Edilberto Segura (SigmaBleyzer)
Topics: Stable Growth of Annual GDP; Low Inflation & Limited Budget
Deficit; Steady Rise in Real Income; Adequate Social Safety Net

(2) The “Reasonable Economic Security” Standard
Moderator: William Courtney (CSC)
Panelists: Vasyl Rohovyj (Dep. Secretary/UA NS&DC)
Damon Wilson (NCEES/NSC)
Lead Discussants: John Hewko (Millennium Challenge)
Ronald Slimp (TD International)
Topics:  Secure Land Borders & Sea Lanes; Adequate Defense Industrial
Capabilities; Transparent Economic Activity; Energy Diversity

12:00 PM-12:30 PM – Roundtable Focus Session V
Theme: Ukraine’s NATO Accession Process – The US Perspective
Chair: Robert McConnell (US-Ukraine Foundation)
Featured Speaker: Kurt Volker (Principal Deputy Assistant Secretary of
State/EUR)

12:30 PM-2:30 PM – Working Lunch ———-
Theme: Ukraine’s NATO Membership and the “Russian Question”}
Chair: Morgan Williams (SigmaBleyzer; Ukraine-US Business Council)
Discussants: Viewpoint from Warsaw: Jan Pieklo (PAUCI)
Viewpoint from Washington [USG]: Jorgan Andrews (DD-UMB/US DOS)
Viewpoint from Washington [Academia]: Celeste Wallander (Georgetown)
Viewpoint from New York [Academia]: Mark von Hagen (Columbia)
Viewpoint from London: James Sherr (CSRC/UK Defence Academy)
Viewpoint from Kyiv: Yevhen Zerebeckyj (NIIS/UA NS&DC)

2:30 PM-5:00 PM – [IV] Ukraine’s Road to NATO: Past, Present, Future
Security Arrangements [Two Panels] —–

(1) Assessing Ukraine’s Preparation for NATO Membership (1997-2006)
Moderator: Ilan Berman (AFPC)
Panelists:  Scott Schless (Principal Director EA/OSD/ISP, DOD)
Andrij Ordynovych (Head/MANI/DEAI/GS/UA MOD)
Michael Duray (Director/UA NATO I&DC)
Lead Discussant: Jennifer Moroney (RAND)
Topics: Creation of Professional Defense Force; Education of NATO
Ready Officer Corps; Provision  for Rapid Reaction Units;
Upgrade of Weaponry and C3I

(2) Pondering Ukraine’s Future Course with Regard to NATO Membership
Moderator: Adrian Karatnycky (Orange Circle)
Panelists:   Petro Kanana (Senior Asst./UA MOD)
Eva Shinagel (US DOS/DD-NATO Affairs)
Jorgan Andrews (DD-UMB/US DOS)
Lead Discussant: Jan Neutze (Atlantic Council)
Topics:  Present State of Affairs: UA NATO Future #1: “Fast Track”;
UA NATO Future #2: “Slow Track” UA NATO Future #3: “On Hold”

5:00 PM-5:30 PM – Roundtable Focus Session VI
Theme: Ukraine’s NATO Accession Process – The NATO Perspective
Chair: Samuel F. Wells Jr. (Kennan Institute)
Featured Speaker: Natasha Cayer (NATO Secretariat)

5:30 PM-6:00 PM – Concluding Remarks: Viktor Nikitiuk (DCM/
Embassy of Ukraine)
Rep. Curt Weldon (R-PA) [INVITED]

7:00 PM-9:00 PM – Patrons’ Reception [Hosted by the UA Quest RT
Series Steering Committee]

————————————————————————————————–
                       REGISTRATION INFORMATION
RTVII registration and sponsorship information can be found online at the
Center for US-Ukrainian Relations, http://www.cusur.org/rt7/index.html.

For additional information, please contact Mark Romaniw, UA Quest RTVII
Media Coordinator, by phone: (202) 412 6883, fax: (212) 473 2180, or e-mail:
mark.romaniw@cusur.org.                         -30-
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================

 If you are receiving more than one copy of the AUR please contact us.
========================================================
12.  UKRAINE: COMPETENT SECURITY ON THE PRINCIPLE
                              OF INTELLECTUAL POLITICS

ANALYSIS & COMMENTARY:
By Serhiy Datsyuk
Ukrayinska Pravda, Kyiv, Ukraine, Saturday, October 14, 2006

Politicians and experts tend to be giving an outright refusal to discuss
national security. Instead, they are constantly exaggerating the hackneyed
subject about whether or not to enter NATO.

But as the matter of fact, Ukrainian community is willing to learn about the
national security and the way it exists, regardless of NATO entry.

Common political decisions are still very likely to remain popular for some
time. However, they will no more be effective. Ukraine has encountered big
challenges which call for complex decisions.

Yet, it is impossible to discover these complex decisions inside the old
rational or subtle politics, guided by certain interests.

In order to arrive at complex decisions, there should be a new kind of
politics: the intellectual politics. Its basic requirement consists in the
following: act so that the maxim of your political will remains a general
principle, which combines both your own and your political opponent’s
interests.

The principal itself should exist in the form of consensus, not compromise,
for compromise is the balance between the interests of two opposing parties
on account of their mutual concessions.

Consensus is when nobody makes any concessions, but nevertheless changes
the vision and the way the interests are implemented on the basis of the
general principle found.
                THE PROBLEMS OF NATIONAL SECURITY
It is rather weak a position to suppose that Ukraine would supplicate
others’ protection and therefore be unalarmed about its own safety.

It is also naïve to count on the fact that Ukraine, maintaining neutrality,
would never be attacked by anyone. And it is a perfect nonsense to believe
that if the country is not attacked today, it will never be attacked in the
future.

How can Ukraine be protected? There should be some particular security
levels: either “umbrellas” or “shields”. “Nuclear umbrella”, “satellite
umbrella” (supervision and active protection against ballistic missiles or
satellite-borne weapon), “radar umbrellas” (supervision and active
protection against enemy aircrafts and missiles), “sea shield” and
“ground-based shield”.

So, the matter of defense is the matter of whether there are
high-performance “umbrellas” or “shields” for every possible attack and at
any possible point of time. Who is to know, which of these ‘umbrellas’ or
‘shields’ is better? Can this matter be really settled at referendums?

Every matter of national security should correspond with a certain level of
competence, at which this task will be carried out: global, interstate,
intrastate public and intrastate governmental levels.

Security of any state always concerns its neighbours, although these
neighbouring countries may only have a limited right of veto for certain
substantial security elements, e.g. nuclear or satellite weapons.

Ukrainian security should first of all consist in the ability of the country
to protect itself by its own forces and not to be utterly dependent on
foreign protection. Why?

Because foreign protection acts within the framework of its own security
tasks, and all the other countries are thereby protected on the ‘leftover’
principle. On the other hand, it is impossible to predict the situation, for
we may suffer from the protecting country more than from the actual enemies.

Security should always be up-to-date, for every country tends to keep the
power of its weapons secret, so that these weapons were effective.

Thus, the basis of any security system should suggest that the security
level of the country was as high as possible due to a number of innovations,
which would provide protection both from the present and theoretically
possible weapons.

Government should be competent enough to be able to choose the right way
of making decisions as to the national security.

It means, that in order to decide on a certain alternative, people’s
deputies should not only know the name of this alternative, but also be
thoroughly conversant with the expert evaluation of all the possible
alternatives.

It is inefficient to make such a choice as, for example, to enter NATO or
not. It should always be decided between the expert evaluations of all the
possible alternatives.

The decision and the way it has been arrived at are to be publicly
explained. The community is supposed to be competent in security affairs
when voting.

In other words, the method of choosing the national security conception is
likely to go beyond the parliament. But! In the same way this method should
be a competent choice of Ukrainian community.

“Umbrellas” and “shields” serve the national security, not the political
expediency. Security is an expert matter, not political. Or, in the other
words, war has to do with politicians, whereas security deals with experts.

When security becomes the affair of politicians or general electorate, one
should not expect anything but military conflicts, terrorist attacks or real
war.

TOUR DE FORCE (feat of strength, or an act, displaying strength)
Thus, the principles of security, defined as “tour de force” may be
formulated in the following way:

     1) Security should consist in protection by one’s own forces rather
than by foreign ones.
     2) Security should be a matter of competence, and not of political
expediency.
     3) Any single security affair of a certain country should correspond
with a certain competence level and the scale on which this affair is to be
settled: global, interstate, intrastate public or intrastate governmental.
     4) The formulation of security conception should not only be
up-to-date, but also innovational, so that the country’s security is always in

excess. In other words, security should always be innovationally sufficient.
     5) Security of a particular country makes up a part of international
security. Therefore, the decision as to the security system of a particular
country should at the same time be an international consensus reached by
the most powerful and most secure countries, or blocs of these countries.
     6) Security of a particular country concerns the neigbouring countries
directly. Therefore, the neighbouring countries should also take part in
consensus decision-making, although they are only to have a limited right of
veto.
     7) Security of a particular country may be a subject of parliamentary
or public voting, when there are clear-cut alternatives of a wide choice
formulated on the mentioned-above levels (domestically, in collaboration
with neighbouring countries, or in the international arena). That is to say,
choice is to be made with due account for every possible variant.
     8) When arriving at a certain security alternative, people’s deputies
or citizens should have enough competence and be knowledgeable about
certain security means.

As a matter of fact, had there been a real political leader in Ukraine, he
would probably put it like this: we indeed have several possible doctrines
of national military defense.

[1] Firstly, entry into NATO.
[2] Secondly, creation of common security system with Russia.
[3] Thirdly, creation of non-NATO security system with European countries,
taking the part of an initiator of such an approach. And finally, creation
of our own security system.

The referendum on one of these doctrines, e.g. entry into NATO, is the
referendum on political expediency, and not on the security system. Ukraine
is not yet able to afford the creation of its own security system.

In order to create a security system either with NATO or Russia, Ukrainian
people should be at unity with each other, which is now impossible. And
creation of European security system is very time-consuming.

Therefore, the referendum held on the security system, may cover all the
four above-mentioned issues. But long before the issues are addressed,
Ukrainian experts have to make certain calculations for each of the
variants, which should then be given to the public.

Security system should be based upon the expert estimate and public
consensus, the financial estimate being a matter of secondary importance.
For this should first of all be an interpretation of pros and cons of every
national security doctrine.

So let us abstain from referendums before the expert estimates have been
formed and made public. This is how the real leader would appeal to the
public, in the author’s opinion.

Instead, there are no real political leaders both in the government and
opposition. In this sense, the “tour de force” principle has the following
meaning: “show the feat of strength, make an action which would demonstrate
the strength of your country”.

And now, if any of the politicians starts a conversation about NATO entry or
Russian protection from the point of view of political expediency, one had
better scream to him with all might and main: “Tour de force!”, “Tour de
force!,” especially if this politician does not make aware of any of the
words. (Translated by Anna Platonenko)                  -30-
————————————————————————————————
LINK: http://www.pravda.com.ua/en/news/2006/10/15/6576.htm
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
             Send in a letter-to-the-editor today. Let us hear from you.
========================================================
13.                                MOMENT OF TRUTH
 
   The anti-corruption package of draft laws is scheduled for consideration
     at the Verkhovna Rada session on 17 October. There each deputy can
     demonstrate either their adherence to their pre-election slogans, or their
      loyalty to the corrupt rules of play established in Ukraine. We will see.

ANALYSIS & COMMENTARY: By Yevhen Zakharov
Co-Chair of the Kharkiv Human Rights Protection Group,
Head of the Board of the Ukrainian Helsinki Human Rights Union and
member of the Board of the International Association “Memorial”
Ukrainskaya Pravda, Kyiv, Ukraine, Friday, October 13, 2006

On 17 October parliament is to consider a package of anti-corruption draft
laws submitted as top-priority by the President.

In September President Yushchenko approved a Strategy Plan for fighting
corruption in Ukraine and submitted the appropriate package with six draft
laws to parliament.

Three of these concern ratification of international agreements – the
Council of Europe Criminal Law Convention on Corruption, the Additional
Protocol to this Convention, as well as the UN Convention against
Corruption.

The others deal with establishing general principles for countering and
preventing corruption, introduce amendments to criminal and administrative
legislation, as well as regulating liability of legal entities for
corruption offences.

These documents propose significant amendments to legislation directed at
creating conditions which will if not prevent, then reduce to a minimum,
corrupt activities.

At the very outset representatives of all parliamentary factions declared
their support for the President’s initiatives. The Verkhovna Rada actively
set to considering the draft laws and the profile parliamentary committees
supported ratifying the international anti-corruption conventions.

Then at the beginning of October deputies began discussing the draft laws in
substance. On Tuesday 3 October there was a meeting of the Committee on
fighting organized crime and corruption. According to the deputies present,
the discussion was fairly lively and constructive.

Most spoke out in favour of the draft laws. The few emotional outbursts
“against” were rather indicative of the lack of knowledge of those who made
them than of actual problems in the draft laws.

Yet by the very next day against a background of political confrontation,
the enthusiasm on issues involving fighting corruption among the deputies
had unexpectedly vanished. (For reference: most of the members, as well as
the Chair of the Committee on fighting organized crime and corruption are
from the Party of the Regions).

It was decided to reject the draft laws and to cancel the decision to
support the ratification of international anti-corruption conventions.

The Committee was unable to give one legal or social argument in support of
this decision. Nor did the deputies come up with arguments regarding
conceptual miscalculations in the draft laws, and they confined themselves
to referring to the opinion of the Verkhovna Rada central scientific expert
department.

The number of comments on the three draft laws in this opinion came to 127.
Presumably such a number made a serious impression on the members of the
Committee. They even failed to find out what they were about.

Had they taken the trouble, they would have discovered that only about a
dozen pertained to the actual legal content of the draft. The opinions
moreover recommended that the draft laws be passed at the first reading “as
a basis”.

So what was in this opinion? The central scientific expert department
considers “that a fair number of the provisions of these draft laws have
serious substantive flaws and arouse serious objections”.

Furthermore “the adoption of the draft laws could create a threat to justice
and the principle of the rule of law, infringe the rights, freedoms and
legitimate interests of particular individuals and legal entities”.

Yet in that case how can they recommend passing the said draft laws, even
at the first reading? The comments given in the opinion are of a purely
technical nature, or are in general debatable or wrong. The conceptual
provisions (the approach) of the draft anti-corruption laws are virtually
not disputed by the authors of the opinion.

At the same time a number of the comments suggest that the opinion’s authors
lack an understanding of the modern anti-corruption ideology proposed in the
draft laws and that they have no wish to move away from an outdated and
repressive approach to ways of fighting corruption.

For example, the concept of “corruption” offered by the central scientific
expert department contains serious fundamental errors.

The definition proposed for corruption is “the granting of advantages to a
relevant person in order to persuade him/her to use his/her offices and the
opportunities connected therewith unlawfully”.

Yet what about such an extended situation where officials use hints to
indicate that they want or would not object to unlawfully receiving benefits
for carrying out, or not carrying out, actions using their offices and the
opportunities connected therewith?

Or when they out and out demand such benefits? Under these circumstances
providing unlawful advantages, according to the Criminal Code, constitutes
giving a bribe. So why omit these practices from the definition of
corruption?

The following is another example. A lot of paper in the opinion is wasted on
the efforts of the authors, providing references to international documents,
to prove that the object of corruption cannot be non-material benefits. This
position in actual fact is in keeping with Soviet criminal law from the
middle of the last century.

Whereas on the contrary, the Explanatory Report on the Council of Europe
Criminal Law Convention on Corruption states that non-material advantages
are a form of corruption.

An interesting detail: in its opinion, the Verkhovna Rada central scientific
expert department suggests that a special state body be created on fighting
corruption (Yet another Ministry, doubling up on the functions of the
Ministry of Internal Affairs, the SBU (Security Service) and Tax Police?)

It is also startling that the experts of the department, providing an
opinion on draft anti-corruption laws, are sometimes guided by ideas about
the scale and forms (manifestations) of corruption in Ukraine which stray
far from reality.

For example, they ask how one can be engaged in scientific or creative work
or medical practice via intermediaries or dummies.

So do Ukrainian politicians themselves write their academic work, give
lectures? Is this a revelation for the department’s specialists?

The anti-corruption package of draft laws is scheduled for consideration at
the Verkhovna Rada session on 17 October. There each deputy can
demonstrate either their adherence to their pre-election slogans, or their
loyalty to the corrupt rules of play established in Ukraine. We will see.

Meanwhile the Committee on fighting organized crime and corruption, chaired
by “Regional” Mykola Dzhyha has recommended to the Verkhovna Rada that a
number of the draft laws on fighting corruption, submitted by the President,
be sent back for revision.

The members of the Committee decided that the said draft law, like other
draft laws submitted by the President in the anti-corruption “package”, have
“great public significance and reflect the concern of the state over the
seriousness of problems and threats to the stability and security of society
posed by corruption”.

“At the same time a significant number of the provisions in the draft laws
submitted for the consideration of the Verkhovna Rada of Ukraine, including
in this specific draft, have serious substantive flaws and arouse serious
objections”, the opinion states.

The Verkhovna Rada site reports on the Committee’s statement that “the
adoption of the draft laws could create a threat to justice and the
principle of the rule of law, infringe the rights, freedoms and legitimate
interests of particular individuals and legal entities”      -30-
————————————————————————————————-
Yevhen Zakharov, Co-Chair of the Kharkiv Human Rights Protection Group,
Head of the Board of the Ukrainian Helsinki Human Rights Union and member
of the Board of the International Association “Memorial”
————————————————————————————————-
Original article in Ukrainian translated by Halya Coynash
LINK: http://www.pravda.com.ua/en/news/2006/10/13/6571.htm
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
14.  MEMORIAL GATHERING IN WASHINGTON, DC TO HONOR
  JOURNALIST ANNA POLITKOVSKAYA, MURDERED IN MOSCOW
                        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. RSVP to jane@ned.org.
———————————————————————————————–
ZvanersM@rferl.org, Radio Free Europe / Radio Liberty
1201 Connecticut Ave NW, Washington, DC  20036
tel: 202-457-6900, http://www.rferl.org, fax: 202-457-6992
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
15.       YUSHCHENKO, YANUKOVYCH AND UKRAINE
     Radio Free Europe/Radio Liberty invites you to a briefing with Adrian

   Karatnycky & Roman Kupchinsky, Thursday, Oct 19, Washington, D.C.

            

Martins Zvaners, Associate Director of Communications
Radio Free Europe/Radio Liberty (RFE/RL)
Washington, D.C., Friday, October 13, 2006
 
WASHINGTON – Radio Free Europe/Radio Liberty invites you to a
briefing by: Adrian Karatnycky, President, The Orange Circle and
Roman Kupchinsky, Regional Analyst, RFE/RL, Inc.
 
                 Thursday, October 19, 2006; 9:00AM-10:30AM
                         in Conference Room A (4th Floor) at
       Radio Free Europe/Radio Liberty, 1201 Connecticut Ave NW
 [entrance on Rhode Island Ave NW, next to St. Matthew’s Cathedral]
 
Ukraine has been in political turmoil since the March 2006 parliamentary
elections, which marked a return to prominence of Viktor Yanukovych
and his “Party of Regions.”

Since March, struggles between Yanukovych, Ukrainian President Viktor
Yushchenko and his one-time Orange Revolution ally Yuliya Tymoshenko

led to months of coalition building that resulted, on August 3, in Yushchenko
nominating his political nemesis, Yanukovych as Prime Minister.

Did Yushchenko’s decision achieve the unity and political stability the
President hoped for? And where does this leave Ukraine in its efforts to
both secure membership in Western institutions and reliable energy supplies
from its former Soviet neighbors?

Adrian Karatnycky is President of the non-partisan international initiative
“The Orange Circle.” Karatnycky also directs a long term Freedom House
comparative global study on the factors and forces that influence democratic
transitions and is coordinator of an international conference on energy
diversification that will convene in Warsaw in early 2007, under the
patronage of the Presidents of Ukraine and Poland. From 1993 until 2003

was President of Freedom House.

Roman Kupchinsky was the president of Prolog Research and Publishing
Corporation in New York prior to joining RFE/RL, where he was director of
the Ukrainian Service for ten years before taking on his current role as
regional analyst for RFE/RL Online and editor of “RFE/RL Organized Crime

and Terrorism Watch” in 2001.

Please RSVP by Wednesday, October 18 by email to dc-response@rferl.org,

by telephone to Melody Jones at (202) 457-6949, or by fax to (202) 457-6992.

Radio Free Europe / Radio Liberty, 1201 Connecticut Ave NW, Washington,

DC  20036, tel: 202-457-6900, http://www.rferl.org, fax: 202-457-6992
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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16. UKRAINIAN PRESIDENT BACKS NATIONALIST WAR VETERANS

TV 5 Kanal, Kiev, in Ukrainian 1200 gmt 14 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, Oct 14, 2006

KIEV – [Presenter] Ukrainian President Viktor Yushchenko is visiting his
home Sumy Region today. Along with his family he will attend the opening of
a museum of Ukrainian medieval hetman Petro Kalnyshevskyy. Our

correspondent has the details.

[Correspondent] Viktor Yushchenko congratulated all on the Pokrova religious
holiday and the 64th anniversary of the Ukrainian Insurgent Army [UIA]. He
spoke about the history of the UIA to make his point.

Discussions and sometimes conflicts related to this issue just prove that
people do no know their own history. A year ago the president ordered the
cabinet to set up a special commission to study the history of the UIA. It
finished its work four months ago.

Now legal moves should be taken to define the status of OUN-UIA
[Organization of Ukrainian Nationalists which set up the UIA] veterans.
Yushchenko said that as the president he cannot do this. He can only prompt
the authorities to take appropriate legal moves.

[Yushchenko] As the president I do not define status. But I can urge the
authorities, including the Ukrainian parliament, to consider this issue and
make an appropriate decision. I signed a decree to this effect this morning.
———————————————————————————————–

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17. ANTI-SOVIET, ANTI-NAZI FIGHTERS RALLY IN UKRAINE 
By Natasha Lisova, Associated Press Writer
Kiev, Ukraine, Saturday, October 14, 2006

KIEV, Ukraine — Ukrainian nationalist fighters who battled both Soviet

and Nazi forces during World War II rallied in their country’s capital on
Saturday, demanding the same financial and moral recognition as Red
Army veterans.

Western-leaning Ukrainian President Viktor Yushchenko on Saturday
praised the guerrillas for fighting for Ukraine’s independence, but
the issue of how to recognize the nationalists in Ukrainian history —
as freedom fighters or traitors — has polarized Ukraine.

The divisions were apparent at Saturday’s rally, as some of the 2,000
nationalists briefly scuffled with socialists holding a counter-rally.
Police detained about 20 people.

During Soviet times, schoolchildren were taught that members of the
insurgent army were enemies of the people who committed atrocities
alongside Nazi troops. Since the 1991 Soviet collapse, the former
guerrillas have sought financial and moral recognition similar to what
Red Army veterans have long enjoyed.

The “best sons of Ukraine gave up their lives for our Motherland.
Unfortunately we have not been recognized yet. It is a shame,” said
Orest Vaskul, an ex-partisan.

The western part of the nation is pro-U.S. and strongly supports the
nationalist veterans. In the Russian-speaking east, support for the
Soviet fighters and longings for closer ties to Russia are prevalent.

“They are our enemies, they shot our soldiers in the back,” said
Volodymyr Protstenko, a 69-year-old teacher who noted that he tells
his students “about crimes of partisans.”

Red Army veterans in the Ukraine receive additional payments and
social benefits added to an average monthly pension of $80; the
partisans want similar benefits in addition to political recognition
of their sacrifices.

Yushchenko signed a decree calling for more studies of the partisans’
history and for drafting a law that would give them official
recognition to combat their stigma as enemies of Ukraine.

Since Yushchenko — whose father was a Red Army soldier who spent

four years in a Nazi camp — came to power last year, his government has
been striving to win recognition for some 100,000 partisans. His
efforts, however, have met resistance from Communists and Red Army
veterans.

On Saturday, about 1,000 supporters of the communist and socialist
progressive parties held competing rallies in Kiev to denounce the
former guerrilla fighters as enemies of the Ukraine, waving red flags
as Soviet war songs played over loudspeakers.

Hostility toward the partisans runs deep in Ukraine.

During the early years of World War II, the anti-Soviet partisans
aligned themselves with the Nazis, seeing Germany’s invasion as a way
to get rid of the Soviet regime.

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

About 10,000 partisans are believed to still be alive, while there are
about 3.8 million Red Army World War II veterans living in the country.

An estimated 7 million Ukrainians died in the fighting against the
Nazis, and 2.4 million people were sent to Nazi concentration camps.
———————————————————————————————–
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18.   DID STEPAN BANDERA SIGN MOLOTOV-RIBBENTROP PACT?
   UPA veterans have the right to feel the honor and respect of the country they
   have been fighting for. UPA was fighting for the independent Ukraine we are
            now living in. That’s why UPA veterans do not need equal rights
                    with the soviet soldiers. They need a different status.

ANALYSIS & COMMENTARY: By Oleksandr Paily, Historian
Ukrainskaya Pravda, Kyiv, Ukraine, Tuesday, October 10, 2006

Ukrainian society seems to be ready for a new, non-stereotype judgment of
Ukrainian Insurgent Army (UPA). At least recent public discussions suggest
such a conclusion.

One of such stereotypes is that UPA soldiers demand recognition and equal
rights with the Soviet Army soldiers.

However, the Soviet Army fought for Ukraine only when opposing the
fascism regime which threatened to destroy the entire nations.

All the rest of the time the Soviet Army defended Stalin’s regime, promoted
strengthening of totalitarianism in Ukraine and other European countries.
It helped to kill nations, Ukrainian nation among them.

Moreover, soldiers of the Soviet Army were totally oblivious of their
negative mission. That’s why they were often surprised by the attitude of
people in Czech Republic, Hungary and of course in Western Ukraine.

On the contrary, UPA was fighting for the independent Ukraine we are

now living in.

Accusations of collaboration with the Germans are actually ridiculous
because they were brought by the Communists since it was USSR that
signed a peace agreement with Germany.

It was official Moscow that signed secret Molotov-Ribbentrop Pact which
implied division of Europe between the two countries. It was by agreement of
Stalin with Hitler and fascist Germany that the Soviet Government and Secret
Services (NKDV) appeared in the Western Ukraine.

It was USSR and Germany that, executing this Pact, attacked Poland and
rendered Germany technical assistance till July 1941. It was USSR that had a
common parade with the fascists in Brest.

Who can explain why one of Kyiv streets has got the name of UPA activist
Olena Teliha?

She was murdered in Babyn Yar together with thousands of OUN-UPA
activists. Lots of UPA members died in German concentration camps. Stepan
Bandera’s brother was among them.

Fascists did not want an independent Ukraine. They needed territory in the
East. Obviously UPA had its own goals apart from the fascists. An
independent Ukraine was the final goal of Ukrainian patriots.

Those accusations of killing civilians brought against UPA soldiers are
inconsistent.

For some reasons, population of the Western Ukraine does not remember
anything about these crimes. Instead, they do remember crimes committed by
those UPA has always opposed and fought.

No propaganda can explain this inconsistence.

Besides, heroism implies a conscious choice. Well, maybe just volunteers of
the Soviet Army may be compared with UPA soldiers who did not know the
term of ‘mobilization’.

However, such comparison is not quite relevant. It is easier to fight being
aware that you are supported by one of the most powerful and largest
countries in the world than to fight being armed by the lofty ideas and
awareness of the fact that you will not live up to see you dream come true.

Had Ukrainian Soviet veterans known what is well-known now they would
have naturally joined UPA.

That’s why UPA veterans do not need equal rights with the soviet soldiers.
They need a different status.

Maybe they need to have an equal status with the soviet soldiers in the
sense of social benefits. UPA veterans are not the only ones who need this
special status. The succeeding generations also need to know what is evil
and good.

UPA showed the striking moral and personal courage of the Ukrainian people.
UPA, all by itself, opposed the most powerful country in the world.

Do not forget it was the time when no one dared to offer even the slightest
resistance, neither USSR republics nor West-European countries.

People hate only those whom they fear. It is the stigma ‘Banderivets’,
applied to nearly every Ukrainian, that shows the Soviets did not fear and
hate anything and anybody that much as they feared the power of Ukrainian
rebellion.

They were right since it was the revived Ukraine that destroyed the empire.

That’s why appeals for a detailed consideration of UPA issue are
hypocritical. 15 years of independence is enough for such an analysis.
Soviet veterans have been always honored.

So, UPA veterans have the right to feel the honor and respect of the country
they have been fighting for, at least in the twilight of their lives.

Naturally Natalia Vitrenko and Co. will not like such decision. However,
that is no obstacle at all.

Vitrenko and Co. dislikes the existence of an independent Ukraine. That
does not mean we have to destroy Ukrainian independence.

We have to confess there are some people in the country (fortunately not
many) who sincerely believe that the only mistake made by the soviet
government regarding Ukrainian people is that it did not kill another 10-20
million of Ukrainians so that this country would forever pass into
nothingness.

Disloyalty of some Ukrainian citizens to Ukraine is sometimes astonishing.

During the last presidential pre-election campaign one fellow from Donetsk
confessed his granny would scold him if she knew he could speak Ukrainian.
“If she knew I actually speak it she would kill me,” he added.

Lots of people who once came to Ukraine will never love it. For the rest of
Ukrainians it became the Motherland where an ordinary Belarusan, Buryat or
even ex-prisoner can become the prime minister.

Maybe their grandchildren will understand that those who fought for the
freedom of this Motherland deserve respect.                 -30-
————————————————————————————————–
NOTE: translated by Eugene Ivantsov
LINK: http://www.pravda.com.ua/en/news/2006/10/13/6566.htm
————————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
19.       NATIONALISTS, LEFTISTS CLASH IN KHARKIV OVER 

         ANNIVERSARY OF UKRAINIAN INSURGENT ARMY (UIA)

TV 5 Kanal, Kiev, in Ukrainian 1800 gmt 14 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, Oct 14, 2006

KIEV – The events in Kharkiv to mark the anniversary of the nationalist
Ukrainian Insurgent Army (UIA), which fought the Soviet Army during World
War II, were marred by clashes between the UIA’s rightist supporters and
their leftist and pro-Russian opponents on 14 October, Ukrainian television
has reported.

The venue of the commemorative ceremonies was surrounded by Soviet Army
veterans, Communists and Party of Regions members, who used sirens to drown
out the speakers at the rally.

The television showed cordons of policemen struggling to keep the opponents
at bay and to break up those already fighting. No-one was detained or
admitted to hospital, though, the television added.

The following is the text of a report by Ukrainian television TV 5 Kanal on
14 October:

[Presenter] Clashes occurred in Kharkiv during ceremonies at the UIA
memorial. Participants in a rally staged by rightist parties were surrounded
on all sides by supporters of the Party of Regions, Communists and members
of radical leftist organizations. Mykola Piddubnyy witnessed the events.

[Correspondent] Clashes began on approaches to the Youth Park where a
memorial stone had been installed to honour the UIA. Veterans of the Soviet
Army, Communists and young people of an unknown political affiliation tried
to obstruct the movement of the column of rightist forces.

Representatives of national patriotic organizations, for their part, accused
their opponents of attempting to vandalize the monument. A few moments later
the tension escalated into a fight. [Video of protesters pushing police,
sounds of angry people shouting and chanting.]

The rally was held to the wailing of sirens. According to Communists and
veterans, any means will do to spoil the festive atmosphere for IUA
supporters.

[Viktor Horbunov, captioned as Soviet Army veteran, wearing a
lieutenant-colonel’s uniform, in Russian] They are traitors of the people.
Now they want to resurface again. They fought the invalids who are still
alive. This is blasphemy with regard to them – the things they are up to
now.

[Anatoliy Semenchenko, captioned as representative of a local cell of the
People’s Movement of Ukraine] You can see that this is a well-planned

action because they have prepared horns and everything.

By the way, this is the first time I see such close attention to this date,
the day of Cossackdom and the OUN-IUA on 14 October, on the part of
anti-Ukrainian forces.

[Correspondent] Small conflicts kept flaring up every minute until the last
participant in the patriotic rally left the park. Policemen simply had no
time to break up the opponents. However, according to official information,
no-one has been detained or admitted to hospital.

[Video shows the monument, police cordons; UIA supporters laying flowers;
their opponents holding slogans and shouting; people pushing and fighting.]
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20.    THE PRICE OF RUSSIA’S ‘DICTATORSHIP OF LAW’
    Politkovskaya’s murder is latest example of lawlessness in Russian society.

COMMENTARY: By Ethan S. Burger
Christian Science Monitor, Boston, MA, Thu, October 12, 2006

WASHINGTON – The contract-style killing of Novaya Gazeta correspondent
Anna Politkovskaya this past weekend has caused shock and outrage in the
human rights and journalistic communities in Russia and abroad.

While thousands attended her funeral Tuesday, the Russian government was
apparently represented only by a deputy minister of culture.

The significance of her death can only be understood within the context of
recent developments in Russia that must not be ignored by foreign political
and business leaders.

Ms. Politkovskaya’s assassination cannot simply be regarded as retribution
for her reporting about atrocities committed by the Russian armed forces in
Chechnya or her critical assessment of Russian President Vladimir Putin’s
policies.

Rather, her murder – the 13th contract-style murder of a Russian journalist
since Mr. Putin came to power in 2000, according to the Committee to
Protect Journalists – is the latest example of the lawlessness in Russian
society.

This state of affairs is a by-product of a conscious effort by prominent
individuals representing powerful interest groups to intimidate the
opponents of the political and economic order, as well as to drive foreign
competition in the natural resource and financial sectors out of Russia.

Last month, Russian Central Bank Deputy Director Andrei Kozlov was
murdered in Moscow. Mr. Kozlov was widely regarded as a supporter of
further economic reform and opening up the country’s banking sector to
increased competition, including from foreign banks.

Earlier this month, Enver Ziganshin, the chief engineer for the Anglo-
Russian oil producer TNK-BP, was gunned down in Siberia – perhaps
as a warning to BP.

Mr. Ziganshin’s killing took place shortly after Russia’s government
jeopardized Shell’s multibillion-dollar oil-development investment in the
Sakhalin II fields by revoking a critical license.

The Russian authorities allegedly took this step on the grounds that Shell
had caused significant harm to the environment. This action has been met by

a great deal of skepticism given the generally weak enforcement of Russian
environmental regulations.

After becoming president six years ago, Putin promised to end the disorder
of the Yeltsin era and establish a “dictatorship of law.” This phrase was
ambiguous then. Not so today.

Given Putin’s time as a KGB agent and his education as a lawyer, it’s clear
that he envisioned a “Bismarckian” model that would combine a rule-based
society with an expanded safety net.

The presumption was that Russians, raised in the communist Soviet Union,
would be willing to give up civil rights in exchange for economic growth and
stability in their daily lives. But Putin has largely failed to deliver as
expected.

The Russian government has pursued a course of taking direct or indirect
control of much of the country’s natural-resource sector under the guise of
law. Consider the government’s heavy-handed tactics toward Mikhail
Khodorovsky’s Yukos oil company in recent years.

Today, those who know how Russian state policy is determined and who
controls it are limited to a small group in the Kremlin. Analysts note that
some 6,000 former KGB officials hold key positions in the Russian
government at a time when power is increasingly centralized in Moscow.

It is not clear that Putin has the power to set policy unilaterally. He
faces pressure to accommodate the interests of the siloviki – the powerful
senior figures in the Federal Security Service, the military, and the
Ministry of the Interior.

Two likely explanations for recent events is that either Putin has
sanctioned deliberate policies, or his lame-duck status – his term is
scheduled to end in 2008 – means that he no longer has the power to ensure
domestic order, or set the direction for Russia’s foreign policy. The latter
may explain Russia’s increasingly disturbing policies toward Belarus, Iran,
Georgia, Moldova, and Ukraine.

Russia’s direction is making many governments nervous. Private-sector
attitudes are likely to change, too. Companies should think twice about
making large investments in unstable countries without a well-established
rule of law.

For Russia to attract both domestic and foreign investors, its legal and
corporate governance must become more transparent and accountable.

This will not occur without an independent press that reliably reports about
conditions that affect commerce – or if the Russian government continues
to intervene on behalf of its political favorites. It cannot live on energy
exports alone, especially given its falling population.

If current conditions persist, only those who have good political
connections with the Russian ruling elite will be willing to be active in
the country’s economy. In some respects, this may resemble centralized
control over economic activity and political life as it was in the
not-so-distant past.                                 -30-
———————————————————————————————
NOTE: Ethan S. Burger is a scholar-in-residence at American University’s
School of International Service and an adjunct professor at Georgetown
University Law Center in Washington.
———————————————————————————————
LINK: http://www.csmonitor.com/2006/1012/p09s01-coop.html
———————————————————————————————–
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21.                 PROTECTING OTHER ANNAS IN RUSSIA

COMMENTARY: THE MONITOR’S VIEW
Christian Science Monitor, Boston, MA, Friday, October 13, 2006

Of the thousand-plus Russians who waited in a steady Moscow drizzle to
honor slain journalist Anna Politkovskaya this week, many did not personally
know her. They came, as one said, because she was one of the “few people
who speak for us.”

Independent journalists, human rights activists, and others devoted to
freedom and rights in Russia are dwindling.

They’ve been muzzled by the Putin government’s near total control of media,
partial rollback of democratic government, laws restricting nongovernmental
organizations, threats, and arrests.

It’s unclear who ordered the killing of Russia’s leading investigative
journalist, but some cite an intolerant atmosphere of nationalism.

Despite such repression, brave people are still speaking out. Their dissent,
so vital for a functioning democracy, is the highest honor a Russian could
pay to the memory of Ms. Politkovskaya, who devoted her life to
investigating atrocities committed in the Russian province of Chechnya.

The world needs to help shield these truth-tellers, among them:

[1] Oksana Chelysheva. She follows in Politkovskaya’s footsteps as a
journalist and human rights activist focused on war-torn Chechnya. She
publishes in Russia and travels abroad to speak – despite death threats.

Her boss, Stanislav Dmitriyevsky, was convicted in February of inciting
ethnic hatred and handed a two-year suspended sentence. Prosecutors are
seeking to shut their human rights organization.

[2] Garry Kasparov. The former chess champion travels in Russia with
bodyguards. He organized a conference of Russian opposition groups, called
“Other Russia,” in advance of the G-8 summit in July. Dozens of participants
were arrested or detained on the way to the conference.

[3] Yulia Latynina. This Moscow journalist specializes in economics. And
issues too hot to handle get an airing in her popular novels about business
crimes. But she’s still dagger-sharp on her radio show and in her columns.

She described the recent assassination of a top Russian banking official as
a “story about the complete disintegration of law enforcement bodies…. In
a country where the Kremlin can do anything, anyone who has a pistol with a
silencer can do anything.”

[4] Vladimir Ryzhkov. The US might like to see this politician as Russia’s
next president. An independent in the parliament, he’s criticized its
rubber-stamp practices, fought against newspaper closings, and decried
elections in authoritarian ally Belarus as a “farce.” Now the government is
stonewalling as he tries to officially register his Republican Party of
Russia.

[5] Georgy Satarov. This political scientist heads the Indem Foundation, a
nongovernmental organization that tracks Russian corruption. His 2005 survey
shows 55 percent of Russian citizens are touched by corruption and bribes,
up from 50 percent in 2001. He was recently refused entry to college
speaking engagements in Russia.

These individuals and others, including those who lead unofficial minority
religions, have been able to speak out partly because President Putin wants
to maintain a sheen of democracy.

But this courageous set of activists has been shaken by the death of their
high-profile colleague. May they have the courage and protection to keep
rattling the Kremlin.                                     -30-
———————————————————————————————–
NOTE: http://www.csmonitor.com/2006/1013/p08s02-comv.html
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22.   UKRAINIAN PASTRY CHEF CREATES A BUZZ IN WESTERN
                           UKRAINE WITH UNUSUAL CAKES 

           Making his brides dress out of flour, eggs, sugar and caramel.

Matt Hagengruber, AP Worldstream
Uzhhorod, Ukraine, Thursday, Oct 12, 2006

UZHHOROD – Valentyn Shtefano’s pastries were known for attracting stares,
giggles and lip-smacking murmurs of “yum” in this western Ukrainian city.

But even his bride-to-be was surprised when Shtefano told her he was making
her wedding dress – out of flour, eggs, sugar and caramel.

The edible dress – made of 1,500 cream puffs and weighing in at 20 pounds (9
kilograms) – took the 28-year-old baker two months to make, and by the end
of the wedding reception, bride Viktoriya didn’t want to take it off, much
less devour it.

Shtefano is fast becoming a rising star in the mostly empty Ukrainian field
of baking, earning him a devout following in this centuries-old city
bisected by the clear Uzh River and dotted with church steeples.

His workday creations have generated a buzz in a place where cake is often
layers of heavy cream, wafers and nuts or poppy seeds. For many here, cake
was just something to eat, not something that can also be looked at and
admired.

“At first glance, it’s really a surprise; I didn’t even believe it was a
cake,” said Olha Nemyataya of Uzhhorod, who sampled some of Shtefano’s

new deserts at a pizzeria on a recent Friday night. “Nowhere in Uzhhorod have
I seen things like this.”

Uzhhorod’s city center has experienced an explosion of new businesses and
cafes. Step away from downtown, however, and worn-out roads and gray
Soviet-era apartment blocks still dominate the landscape of this city near
the border with European Union member Slovakia.

Shtefano, his fingernails permanently stained with food coloring, is eager
to introduce new sweets to this city of 125,000 people.

He took a three-month baking course in Paris and entered an international
baking competition last year with his sister, who lives in the French
capital. The siblings made a 2-foot-long (0.61-meter), 1920s-era Cadillac
from cream puffs and caramel. They won third place.

Shtefano’s cakes have evolved with his experience. His first baking job six
years ago was at a pizzeria where he made US$40 (A31.50) per month.

He quit after the owner refused to give him a raise. Now he splits his time
between two restaurants and works his own schedule, delighting this town
with his culinary treats.

“Every cake has its own unique taste,” said Svitlana Dorinets, who works the
cake counter at the pizzeria where Shtefano’s cakes are displayed. “A few
years ago, we never saw anything like this. It’s new on the top and tasty
inside.”

Shtefano’s cakes are more art than dessert. Sure, some might be for a mature
audience, like a pair of breasts on display at the pizzeria.

But Shtefano also created an elaborate cake for Easter that drew hundreds to
a local cathedral. It was a black and gold globe hatching from an Easter
egg, with pieces of eggshell on top of the globe and falling off to the
side. It was too pretty to eat.

The wedding dress cake presented the biggest challenge. At first, he tried
sewing the empty cream puffs together, but the dress collapsed.

Then, he bought a wedding dress frame and carefully attached the puffs. He
made a separate top and bottom for the dress, and Viktoriya spent a couple
hours each night before the wedding modeling the dress as Shtefano added
more.

Finally, he painted a few rows of cream puffs white to add some color to the
dress. Viktoriya’s crown, bouquet and necklace all were made from
caramelized sugar. Shtefano said the dress was a one-time thing and he’d
never make another. He couldn’t put a price on it.

“At first, it was even a little embarrassing,” Viktoriya Shtefano said of
the dress she wore to the couple’s reception at Uzhhorod’s 1,200-year-old
castle, attracting a rush of local media attention in August. “Cameras,
interviews, but after a couple of hours, I didn’t even want to take it off.”

The wedding dress is now being stored in Shtefano’s cramped apartment,

which he shares with his parents and new bride, until he can find a mannequin
on which to display it in the pizzeria’s window.

Shtefano hopes to someday open a business with his sister in Ukraine,
believing there’s more room for skillful bakers in Ukraine than in Paris.

“Here you can buy jobs,” he said. “You want to be president, governor,
(parliament) deputy, OK. “But my job you can’t buy – you have to do it.”

————————————————————————————————-
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                           TRUTH IS A REVOLUTIONARY ACT
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