AUR#778 Oct 23 Macroeconomic Situation Report By SigmaBleyzer; Mars Pet Food Plant; WTO; NATO; Our Ukraine Congress; Gold Medals; Sue The Communists

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               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, October 23, 2006

             One of the world’s largest producers of chocolate and pet food
Interfax-Ukraine, Kyiv, Ukraine, Friday, October 20, 2006

The Ukrainian Times, Kyiv, Ukraine, Monday, Oct 23, 2006

         Woskob International Research in Agriculture program at Penn State
PA Farm News, Quarryville, PA, October 11, 2006


Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

Associated Press (AP), Kiev, Ukraine, Friday, October 20, 2006

Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

ForUm, Kyiv, Ukraine, Tuesday, October 3, 2005

                               PLANTS IN ROMANIA AND UKRAINE

Metal Bulletin com, London, UK, Wednesday, September 27, 2006
Zerkalo Nedeli On The Web, Mirror-Weekly, No 38 (617) 
Kyiv, Ukraine, Saturday, 7 – 13 October 2006 

REMARKS: by Senior U.S. Administration Official
Ukraine’s Quest for Mature Statehood Conference
Ukraine and NATO Membership, Roundtable VII
Washington DC, Wednesday, October 18, 2006

Action Ukraine Report (AUR) #778, Article 11
Washington, D.C., Monday, October 23, 2006

Press office of President Victor Yushchenko, Kyiv, Ukraine, Thu, 19 Oct 2006

                           “I have been and will always be with this party.”
Press Office of President Viktor Yushchenko, Kyiv, Ukraine, Sat, Oct 21, 2006

     Party leadership clearly unprepared from the scathing criticism of its leader.
One Plus One TV, Kiev, in Ukrainian 1630 gmt 21 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, October 21, 2006

15.                       “ALL OF OUR UKRAINE’S FAILURES” 
  Analysts are calling Our Ukraine the world’s most incompetent political force.
: By Ivan Lozowy
The Ukrainian Insider, Vol. 6, No. 3, Kyiv, Ukraine, Friday, Oct 20, 2006 

TV 5 Kanal, Kiev, in Ukrainian 0900 gmt 20 Oct 06
BBC Monitoring Service, United Kingdom, Friday, Oct 20, 2006


 First world/Olympic medal for Krasnianska, first Ukraine world title since 1995
Reuters, Aarhus, Denmark, Sunday October 22, 2006

                          Alexey Koltakov wins the $15,000 top prize
Mike Greenberg, Staf, Express-News
San Antonio, Texas, Saturday, October 21, 2006

By Stephen Boykewich, Agency France Presse (AFP)/

European Jewish Press (EJP), Kyiv, Ukraine, Thursday, Oct 19, 2006

By Andrew Nynka, New York, New York, Friday, October 20, 2006

BOOK REVIEW: By Maria Tumarkin
The Age, Melbourne, Australia, Friday, October 20, 2006
ANALYSIS & COMMENTARY: by Valentyn Pustovoit
Ukrayinska Pravda, Kyiv, Ukraine, Wed, October 18, 2006
23.                   TWO NEW BOOKS: POWER TO THE PEOPLE
How a failed revolution in Eastern Europe ended up saving untold numbers of lives.
Reviewed by Andrew Nagorski, Book World, The Washington Post
Washington, D.C., Sunday, October 22, 2006; Page BW10
24.                               AFTERMATH OF A MURDER
          Strange but predictable reactions to the killing of a Russian journalist
The Washington Post
Washington, D.C., Saturday, October 21, 2006; Page A18

MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, October 23, 2006

[1] Supported by dynamically growing industry, trade and transportation,
real GDP grew by 5.7% yoy over January-August.

[2] Robust GDP growth contributed to above-target budget revenues
collection. Coupled with under-execution of budget expenditures, the
consolidated fiscal budget reported a 0.84% of period GDP surplus over

[3] In mid-September, the government presented the draft budget law for
2007, envisaging a fiscal deficit at 2.6% of GDP.

[4] Consumer price index (CPI) growth remained unchanged at 7.4% yoy in
August, favored by the continuing slowdown in food prices.

[5] Thanks to improving export performance, the current account deficit
narrowed to $39 million in the second quarter (2Q) of 2006.

[6] A surplus in financial and capital accounts, achieved on account of
robust FDI inflows and growing private sector borrowing from abroad, allowed
the NBU to start replenishing its international reserves in 2Q 2006.

[7] A recent World Bank/International Finance Corporation report indicated
an improving business environment in Ukraine in 2006.

                                      ECONOMIC GROWTH
During August, Ukraine continued to enjoy a high rate of economic growth.
Over the month, GDP grew by 7.1% yoy, bringing cumulative growth to 5.7%
yoy. The growth was supported by robust external and domestic demand,
which translated into strong recovery of industry, wholesale and retail
trade, construction and transportation.

Over January-August, the construction sector demonstrated a 7.1% yoy
increase in value added (in contrast to a 7.7% decline over the respective
period last year), boosted by strong demand for new residential housing and
industrial buildings as well as a number of repair and infrastructure works.

Robust growth of household income (by a real 19.5% yoy over January-July),
booming consumer credit and a sharp rebound in industrial production over
the last four months contributed to a 13.2% yoy increase in wholesale and
retail trade between January and August and a 8.7% yoy increase in

A favorable external environment and robust domestic demand encouraged
the rapid expansion of industrial production. Over May-August, monthly
industrial output grew by 10% yoy on average. As a result, eight month
cumulative growth in industry reached 5.4% yoy in contrast to the meager
0.4% yoy growth over January-April.

The main contributors to industrial output growth were metallurgy, machine
building, food processing, utilities and mining. Benefiting from high world
steel prices and recovered construction, metallurgy posted a 19.7% yoy
increase in August, bringing cumulative growth to 8.4% yoy.

The need to renovate existing production capacities and introduce energy
saving technologies prompted a 12.3% yoy increase in machine building over
January-August. Output in food processing grew by 7.7% yoy over the period,
stimulated by high domestic demand.

Production of chemicals and electricity, gas and water increased by 2.5% yoy
and 7.4% yoy between January and August, taking advantage of strong external
demand. Expensive imported fossil fuels triggered a 6.2% yoy output increase
in mining over the period under review.

On the downside, output in coke and oil-refining continued to decline,
though at a slower pace (-12.9% yoy over January-August compared to more
than a 15% yoy decrease over 1H 2006).

Dynamically growing industry and trade more than compensated for the
slowdown in agriculture. The cumulative decline in agricultural value added
worsened from 1.4% yoy in January-July to 2.3% yoy in January-August due to
the moderate harvest this year compared to 2005. Although the contribution
of agriculture is expected to remain negative in 2006, it will be rather

At the same time, the current evolution of Ukraine’s main macroeconomic
indicators makes the revised government forecast of real GDP growth at 6%
yoy for 2006 quite realistic. High reliance on exports makes Ukraine’s
economy quite vulnerable to changes in the external environment.

Although the prospects for Ukraine’s economy in 2007 look rather good (high
domestic demand, buoyant investment activity), further increases in the
price for imported gas in 2007 and the likely decline of world steel prices
will not allow GDP growth to accelerate beyond the 2006 level. We expect
GDP to grow by about 5.5% yoy in 2007.

                                        FISCAL POLICY
Unlike the previous month, collections of revenues to the general fund of
the central budget were 1.8% above the target in August. The
over-fulfillment was achieved thanks to the over-execution of VAT proceeds
and non-tax revenues. In particular, VAT collections were 33.3% above target
in August.

At the same time, this figure is exaggerated as VAT refunds were
under-fulfilled by almost 24%. As a result, VAT refund arrears increased to
UAH 5.6 billion (more than $1.1 billion) as of September 1st, up from UAH
4.4 billion at the beginning of the year.

On the back of higher rent on domestic extraction of crude oil and natural
gas, and larger dividend payments of state-owned enterprises, non-tax
revenues became the second largest contributor (after VAT proceeds) to
consolidated budget revenues.

On the downside, corporate tax collections continued to be under-executed by
13.2% over January-August due to lower profitability of industrial
enterprises (though improving over the recent months) and increased tax
evasion. Under-execution of foreign trade tax collections by 24.4% over the
period was primarily due to unrealized gas re-export plans and deceleration
of imports.

At the same time, expenditures of the general fund of the central budget
were over-executed by 8.9% in August. However, due to considerable
under-fulfillment in the previous periods, cumulative budget expenditures
were almost 4% below target.

Due to over-execution of revenues and under-execution of expenditures, the
central budget deficit declined from UAH 4.4 billion over January-July to
about UAH 1.7 billion over January-August.

Thanks to surpluses in local budgets, the consolidated budget reported a
surplus of UAH 2.5 billion or 0.8% of period GDP during the first eight
months of 2006.

Current fiscal sector performance suggests considerable fiscal loosening at
the end of the year as the 2006 Budget Law envisages a budget deficit at
2.6% of GDP.

According to the law, more than 85% of the targeted fiscal deficit is
planned to be financed through privatization revenues (UAH 2.1 billion from
new privatization deals, with the rest covered by funds received from the
privatization of Kryvorizhstal in the fall of 2005). However, as of
September 1st, privatization proceeds amounted to less than UAH 280 million,
representing only 13.2% of the targeted amount.

To secure enough resources to finance the expected year-end fiscal deficit,
the government resumed issuance of domestic T-bills and Eurobonds in
September, which had been terminated in July and October of last year

In August, however, with the absence of new issuance of debt instruments,
Ukraine’s public debt continued to decline. In particular, public debt has
declined by almost 6% since the beginning of the year to $14.6 billion.

In mid-August, the government presented the draft 2007 Budget Law, which a
few weeks later was taken by the parliament as a basis for consideration.
Next year, state budget revenues and expenditures are estimated at UAH 136.2
billion ($27 billion) and UAH 151.3 billion ($30 billion).

Despite a moderate increase in revenues and expenditures, the successful
execution of budget parameters may be a challenging task. In particular, the
deficit is forecasted to represent less than 2.6% of 2007 GDP, which is
planned to be financed by privatization proceeds (estimated in the amount of
UAH 10 billion, or approximately $2 billion) and new borrowings on the
domestic and external markets at about UAH 9.8 billion.

Unlike the previous years, the government has made public in advance the
list of enterprises suggested to be privatized next year. Though the list
contains about 480 enterprises, it may be insufficient to raise the targeted

At the same time, this amount may be realistic if the proposed innovation to
sell land that belongs to the enterprise together with the enterprise is
approved by the parliament.

In addition, the government developed the draft budget on the back of a
rather optimistic macroeconomic forecast. In particular, despite the fact
that the imported gas price was predicted to increase from the current $95
per 1000 m3 to $135 per 1000 m3, GDP was forecasted to grow at a real
6.5% yoy.

Moreover, the government assumes that the external environment will be
favorable enough to allow a small surplus in foreign trade of goods and
services. Both assumptions we consider to be overly optimistic.

Furthermore, the government plans to reduce the rate of obligatory profit
transfers to the budget from state-owned enterprises from the current 50% to
15% and the duty on foreign exchange sales from the current 1.3% to 1%.

Though the personal income tax (PIT) rate will be raised to 15% (as the
transition period during which the PIT rate was set at 13% expires at the
end of this year), these reductions coupled with the government plans to
restore special economic zones may make the targeted amount of consolidated
budget revenues difficult to attain.

On a positive note, the draft budget law envisages a moderate increase in
social payments (mainly to compensate for inflation), considerably higher
expenditures on economic development and investments, and greater fiscal
decentralization (the share of local budget expenditures in consolidated
budget expenditures is proposed to increase from 36.2% in 2005 to 43.4% in
                                     MONETARY POLICY
Higher prices for imported energy resources continued to affect consumer
prices. As in previous months, the most inflationary components in August
remained services and fuels. In particular, service tariffs grew by 30.2%
yoy in August. Further acceleration from 28.5% yoy in the previous month

was driven by the increasing costs of housing services, water supply and

High international prices on crude oil as well as an increase in Russia’s
crude oil export duty as of August 1st by 8.3% to $216.4 per ton triggered a
12.2% month-over-month (mom) increase in prices for domestic fuels. This
translated into 24.6% growth in annual terms.

The consumer price index (CPI) stood at 7.4% yoy in August, unchanged from
the previous month. Further growth of service tariffs and non-food prices
was compensated for by decelerating food prices.

The decline in food prices on a monthly basis, observed since March this
year, also continued in August. As a result, annual growth of food prices
slowed from 11.4% yoy in February to a meager 2.4% yoy in August.

At the same time, while the previous months’ deflation was primarily driven
by declining prices for meat, milk and dairy products, the deflation was
registered on account of sugar, potato, vegetables and fruits in August.

Led by a good harvest, the reduction of prices on these products more than
compensated for the price growth on bread, cereals, macaroni and flour as
the grain harvest was not as good as in the previous year.

Despite the scheduled (25% on electricity as of September 1st) and expected
further increases in service tariffs (on heating, water supply, etc.),
current price dynamics give reason to expect year-end inflation at about 9%
in 2006. At the same time, the Ukrainian parliament adopted a moratorium on
increases in gas, electricity, utility and public transportation tariffs in
mid-September. [1]

According to the moratorium, current tariffs for households should be those
applicable as of January 1st 2006. Most likely, however, the moratorium will
be abolished, though in exchange for a partial reduction in previously
raised tariffs.

Although the government has already proposed such measures, we believe
the reduction in tariffs will be marginal (as in the other case, this will
negatively affect the utility sector performance and put additional pressure
on the budget), and thus did not change our year-end inflation forecast.

Lower-than-expected consumer price inflation over the period was also
achieved thanks to moderate growth of monetary aggregates. Monetary base
performance in August was affected by two opposing forces.

On the one hand, acceleration of exports over recent months, active private
sector borrowing from abroad, robust FDI, and a relatively stable cash forex
market resulted in $500 million of net purchases of foreign currency by the
NBU on the interbank market.

On the other hand, starting August 1st, the NBU reduced reserve requirements
for commercial banks [2] to supply them with necessary liquidity needed for
further expansion of credit operations. In sum, the monetary base reported a
0.4% mom decline, contributing to sharp deceleration of monetary base growth
in annual terms to 19.5% yoy, down from almost 24% yoy a month before.

Reduction of reserve requirements as well as buoyant growth of deposits
caused the money multiplier to increase to a record high 2.77 level in
August. However, on the back of considerable slowdown of monetary base,
the growth rate of money supply (M3) has moderately declined to 37.5% yoy
(down from 39.2% yoy in July).

A significant reduction of reserve requirements for hryvnia-denominated
deposits increased their attractiveness for commercial banks. In turn,
commercial banks slightly increased the interest rate on hryvnia deposits to
7.3% pa, while the rate on foreign currency deposits continued to decline to
5.3% pa.

The opposite developments were observed for the lending rate; while the
interest rate on hryvnia-denominated loans continued to decline to 14.6% pa,
the interest rate on foreign-currency denominated loans slightly increased
to 11.2% pa.

At the same time, due to political turmoil at the beginning of August
(related to the formation of the new government) and active borrowing by
commercial banks from abroad, forex-denominated deposits and loans
continued to grow considerably faster than hryvnia-denominated ones
(5.5% mom and 6.8% mom in contrast to 0.3% mom and 3.1% mom,

The reduction of reserve requirements helped commercial banks to further
increase their lending operations. In annual terms, credits grew by 65.7% in
August. Although the growth is primarily driven by corporate lending, whose
contribution exceeds 55%, consumer credits are quickly catching up.

Since the beginning of the year, consumer lending grew by 73.3%, which
translates into 141.3% yoy growth. Though the volume of consumer credits
is still rather small, buoyant consumer lending growth (which is usually
treated as a positive phenomenon since it drives consumption and thus
economic growth) raises a number of concerns.

First, it contributed to the growth of imports, which may increase the
country’s external imbalances. Second, it puts the whole set of issues such
as improvement of credit quality through development of sophisticated credit
scoring models, creation and effective functioning of credit bureaus, etc.
on the agenda.

In July, export performance continued to improve. On the back of favorable
external conditions for Ukrainian metallurgy, chemicals, machines and
equipment and transport vehicles, merchandise exports reported 21.1% yoy
growth, which translated into a 4.8% yoy increase to date.

At the same time, imports demonstrated a moderate 17% yoy increase in July
and 21.3% yoy over January-July. Despite recent improvements, the monthly
merchandise trade deficit remained negative at $340 million in July, while
the cumulative trade deficit widened to $3.3 billion.

By export breakdown, exports of metals continued to accelerate in July,
bringing the cumulative growth to 4.6% yoy. Strong external demand
contributed to further expansion of Ukraine’s export of chemicals and
machinery (13.5% yoy and 9.2% yoy, respectively). Recovered investment
activity and robust growth of household income stimulates the import of
metals, machinery, transport vehicles, and food products.

Over January-July, imports of these commodities grew by 28.7% yoy, 18.2%
yoy, 70% yoy, and 23.3% yoy, respectively. At the same time, imports growth
slowdown may be explained by a high base effect and lower volumes of mineral
products imports, the weightiest component in total merchandise imports. In
particular, imports of mineral products decelerated to 11% yoy, down from
12.3% yoy over January-June.

Further deterioration of the merchandise trade deficit, though at a
considerably slower pace, was partially compensated for by larger surpluses
in foreign trade of services and net transfers.

In particular, the surplus of foreign trade of services increased to $401
million in 2Q 2006 (compared with $176 million in the previous quarter),
while net transfers amounted to $782 million (up from $616 million in 1Q

As a result, the current account deficit shrunk to a meager $39 million in
2Q 2006, bringing the cumulative deficit to less than $800 million, or 2.1%
of period GDP.

Unlike in the previous quarter, the financial account reported a surplus of
about $160 million, achieved on account of robust FDI inflows and growing
private sector borrowing from abroad.

In particular, net FDI inflow posted $1.4 billion, mainly directed to the
financial sector of Ukraine (during the period, a number of merger &
acquisition deals in the banking sector were completed).

A similar amount was attracted by the private sector (primarily banks) in
the form of long-term non-guaranteed and short-term loans.

These amounts more than compensated for the outflow of short-term capital
related to buy-out of government securities from non-residents and large
demand on cash foreign currency in the first months of the quarter.

As a result, in the 2Q 2006 the NBU started to replenish its reserves after
a decline by $2.3 billion in the previous quarter. At the end of June, the
NBU’s net international reserves constituted $17.6 billion, which was
equivalent to 3.9 months of future imports of goods and services.

                             THE INVESTMENT CLIMATE
According to the latest World Bank/International Financial Corporation
report, Doing Business 2007: How to Reform, the business environment in
Ukraine has improved in 2006.

Ukraine was placed 128th out of 175 countries in 2006, compared with the
132nd rank in the previous year, which reflected considerable progress in
simplifying business registration procedures (introduction of one-stop shop
registration offices, simplification of procedures for obtaining licenses
and permits, etc.).

At the same time, WB/IFC experts advocated a speed up of economic
reforms, particularly in the areas of taxation, foreign trade regulations,
and investor protection.                            -30-
[1] The Verkhovna Rada of Ukraine adopted a law that imposes a moratorium

on increases of gas, electricity, other utility and public transportation
tariffs yet at the end of January 2006, but the law was vetoed by the
president. On September 22nd, the parliament overcame the veto. According
to the law, the moratorium will be active until the minimum wage is equal to
the subsistence level (currently the ratio is about 75%).
[2] Starting August 1st, reserve requirements for term and demand deposits
in national currency were reduced to 2% pa and 3% pa, respectively, while
those in foreign currency to 3% pa and 5% pa respectively.
NOTE: To read the entire SigmaBleyzer/The Bleyzer Foundation Ukraine
Macroeconomic Situation report for September, 2006 and previous monthly
reports in a PDF format, including several color charts and graphics click
on the following link: or click on
NOTE:  SigmaBleyzer/The Bleyzer Foundation also publishes monthly
Macroeconomic Situation Reports for Bulgaria and Romania. They are
 published at
The Bleyzer Foundation, Kyiv, Ukraine.
or Morgan Williams, Director, Government Affairs, Washington Office,
SigmaBleyzer, Washington, D.C.,,
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
           One of the world’s largest producers of chocolate and pet food

Interfax-Ukraine, Kyiv, Ukraine, Friday, October 20, 2006

KYIV – Mars, one of the world’s largest producers of chocolate and pet food,
is planning to build a pet food plant in the Kyiv region, Volodymyr Koval,
head of the foreign investment department in the Kyiv regional
administration, told Interfax.

The company is planning to invest about $15 million in the project, he said.
A land plot has already been allocated for the construction of the plant in
the region’s Boryspil district. Construction is to begin in 2007.

The Mars representative office in Russia did not comment on the plans to
build a plant in Ukraine.                              -30-

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

The Ukrainian Times, Kyiv, Ukraine, Monday, Oct 23, 2006

KYIV – The World Bank thinks it is necessary to invest $100 billion in
development of Ukraine for the period ending in 2015.

According to the analysis made by bank’s experts, power engineering,
transportation and agriculture require some $30 billion, $5 billion and $9
billion respectively.

At the same time, the World Bank believes Ukraine should increase the
national debt with great caution lest private investments are ousted from
the country and macroeconomic tension created.

To accelerate the economic development of Ukraine, the World Bank

recommends reducing ineffective expenses of subsidies and the transfers,
which are made beside the purpose, as well as reforming a tax system and
the system of social protection.

According to forecasts by the World Bank, growth of GDP will amount to

4.5% in Ukraine next year.                          -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
      Woskob International Research in Agriculture program at Penn State

PA Farm News, Quarryville, PA, October 11, 2006

UNIVERSITY PARK — During a September visit to Ukraine to receive an
honorary degree, the dean of Penn State’s College of Agricultural Sciences,
Robert Steele, announced a new joint program to encourage scholarship and
professional development among faculty at Ukrainian agricultural

Beginning in 2007, the Woskob International Research in Agriculture, or
WIRA, program — made possible by an endowment from real estate developers
Helen and Alex Woskob of State College — will bring as many as four
Ukrainian scholars to Penn State each year during the fall semester to study
educational methods, take and co-teach courses, establish links with Penn
State researchers and promote study-abroad opportunities for undergraduate

“It’s very fitting that the Ukrainian word ‘wira’ means ‘trust,'” Steele
says. “We hope that the partnerships made possible by the Woskobs’
generosity will enhance agricultural research, education and productivity in
Ukraine and encourage global understanding, collaboration and friendship
among faculty members and students at participating universities.”

The announcement came during ceremonies at Lviv State Agricultural
University near Lviv, Ukraine, where Steele received an honorary doctorate.
The College of Agricultural Sciences has a long-standing relationship with
Lviv in co-sponsoring student and faculty exchange programs.

“The similarities between Penn State and LSAU are striking,” Steele says.
“Penn State celebrated its sesquicentennial in 2005, and Lviv is marking its
150th anniversary this year.

Both institutions are dedicated to generating scientific knowledge that can
be put to practical use and to training new generations of researchers and
educators.” Also coincidentally, “Lviv” translates to “lion” in English,
Steele notes, pointing out Penn State’s “Nittany Lion” mascot.

The honorary doctorate was Steele’s second from a Ukrainian university in a
little more than a year. He was similarly recognized by National Agrarian
University in Kiev in September 2005.

The WIRA scholars program will be open to full-time faculty members at all
Ukrainian agricultural universities.

Natives of Ukraine, the Woskobs are founders and co-owners of State
College-based A.W. and Sons Enterprises. Since 1963, they have developed
numerous real estate projects in Centre County, including housing for
thousands of Penn State students.

The Woskobs have a long history of support for higher education. In 1992,
they established the Ukrainian Agricultural Exchange Program, enabling
collaboration between the College of Agricultural Sciences and the Ukrainian
Agricultural Academy.

They have been involved in the university’s Ukrainian Studies program and
have served on the advisory board of the Centre for Ukrainian Agriculture.

More information on the Woskob International Research in Agriculture
program is available by calling the College of Agricultural Sciences’ Office
of International Programs at (814) 863-0249 or by visiting the Web at          -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.
Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

KYIV – The United States Agency for International Development (USAID) has
recommended that the State Commission for Regulating Markets of Financial
Services create an agricultural insurance department within the commission.

USAID stated this in the recommendations for the project called Ukraine
Agricultural Policy, Legal, and Regulatory Reform (AgPLR), a text of which
Ukrainian News obtained.

In particular, it proposes creating the department for the purpose of
monitoring and analyzing insurance practices in the agricultural sector.

According to the authors of the recommendations, it is sufficient for the
department to be manned by 2-3 people at the beginning. However, according
to the recommendations, the number of specialists in the department should
be determined in the future by administrative requirements for performance
of its functions.

Moreover, USAID recommends that the commission draft new requirements

for licensing companies intending to provide agricultural insurance services.

“It is proposed only licensed companies that meet additional qualification
requirements should be allowed to operate under a subsidized agricultural
insurance program. These requirements should be drafted by a regulator and
the administrator of the program,” the recommendations state.

Moreover, the recommendations state that companies should create a regional
network for servicing the subsidized agricultural insurance program and
provide sufficient numbers of specialists in the regions as well as loss
estimators and agents.

As Ukrainian News earlier reported, USAID introduced the AgPLR program,
within the framework of which it drafted proposals “On Improving the
Functions of the Ukrainian State Commission for Regulating Markets of
Financial Services in Order to Develop Agricultural Insurance in Ukraine.”

In general, the project is aimed at facilitating reform of the agriculture
in Ukraine and improving the legal basis for it.                 -30-

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

Associated Press (AP), Kiev, Ukraine, Friday, October 20, 2006

KIEV – Ukraine’s Prime Minister Viktor Yanukovych said Friday that the
ex-Soviet nation hoped to join the World Trade Organization next February.
Yanukovych promised that Ukraine would quickly approve the legislation
necessary to meet the WTO accession criteria.

The Ukrainian parliament Thursday considered bills needed to join WTO, but
lawmakers passed only a handful of more than 20 bills which Ukraine needs to
approve in order to qualify for membership in the global trade body.

“The government intends to perform measures needed for Ukraine to enter
WTO…by February 2007,” Yanukovych said during a meeting with members

of the European Parliament. He reiterated that his country will “defend
Ukraine’s European choice consistently and decisively.”

Ukraine’s Western-leaning President Viktor Yushchenko had pledged to take
the former Soviet republic into the WTO by the end of last year, but he ran
into opposition from Socialists and Communists, who now are in the ruling
parliamentary coalition.

Ukraine has now missed two self-imposed deadlines, and observers say the
nation is unlikely to pass all the bills needed for entry by year’s end.

Earlier this week, Yanukovych, a proponent of stronger ties with Russia,
urged lawmakers to pass the bills. The move came just weeks after Yanukovych
upset ties with Yushchenko by declaring Ukraine’s bid to join NATO

Also Friday, Yushchenko’s deputy chief of staff on issues of foreign policy,
Oleksandr Chaly, said that Ukraine is “80% in WTO”.           -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Ukrainian News Agency, Kyiv, Ukraine, Sunday, October 22, 2006

KYIV – Ukrainian Foreign Affairs Minister Borys Tarasiuk has criticized the
Cabinet of Ministers and the parliament for delaying Ukraine’s accession to
the World Trade Organization (WTO). Tarasiuk issued the criticism at a press
conference in Lviv.

“Regarding the WTO, the latest news does not inspire optimism. Both the
government and the parliament are disrupting the timetable for accession to
the WTO. This is very alarming,” Tarasiuk said.

He expressed the opinion that the government is working sufficiently
energetically to secure Ukraine’s accession to the WTO.
According to him, it will be a lot worse if it turns out that all this is
being done deliberately to satisfy the requirements of another country.

As Ukrainian News earlier reported, Parliament Speaker Oleksandr Moroz
believes that the drafting of the laws that are necessary for Ukraine’s
accession to the WTO and their submission to the parliament for approval

are the prerogatives of the Cabinet of Ministers.

President Viktor Yuschenko is proposing that the parliament approve a
package of 16 draft laws necessary for Ukraine’s accession to the WTO.

Prime Minister Viktor Yanukovych has forecast that the Cabinet of Ministers
will send draft laws necessary for Ukraine’s accession to the WTO to the
parliament by mid-November.                             -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
     NOTE: Send in a letter-to-the-editor today. Let us hear from you.

ForUm, Kyiv, Ukraine, Tuesday, October 3, 2005

Narbutas & Co, the Lithuanian office furniture producer, intends to focus on
development of the regional representative offices within Ukraine using the
direct sales program.

The first representative offices have launched working in Odesa, Kharkiv,
Dnipropetrovs’k, Donetsk and Lviv in the half year of 2006, the press
service of the company reported.

Judging by result of the past eight months, the sales have been increased by
45% comparing with the same period of 2005. The company decided not to
launch new representative offices but to attract its attention on the
development of the current ones.

Narbutas & Co was created in 1991. It is one of the leading companies among
Lithuanian office furniture producers. It has representative offices in
Lithuania, Ukraine, Russia, the Great Britain and Germany. The first such
office was settled in Kyiv in 1997.                       -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                               PLANTS IN ROMANIA AND UKRAINE
Metal Bulletin com, London, UK, Wednesday, September 27, 2006
LONDON – Rautaruukki [Finland] plans to build two processing plants in
Romania and Ukraine, at a cost of Euro50 million, in order to take advantage
of the strong growth in construction markets in Eastern Europe and CIS,
according to an announcement on Wednesday.
The investment will allow Ruukki Construction, one of the group`s
subsidiaries, to significantly increase its deliveries of construction
components, such as insulation panels, for commercial and industrial
construction in Ukraine, Romania and Bulgaria, it said.
Ruukki Construction already has 21 similar processing plants in central and
eastern Europe.
“The acquisition of Ventall has … given [Ruukki] a strong footing in the
rapidly growing Russian market [and] we believe that Ruukki`s future success
will increasingly be based on the business opportunities created for us by
the growth in construction in Eastern Europe,” said the company`s president
and ceo Sakari Tamminen.
Rautaruukki acquired Russian steel fabricator Ventall for Euro100 million in
March, and also bought AZST-Kolor CJSC, a Ukrainian colour-coating line,
for $6.1 million in April.                              -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

ANALYSIS & COMMENTARY: By Yulia Zahoruiko 

Zerkalo Nedeli On The Web, Mirror-Weekly, No 38 (617) 
International Social Political Weekly
Kyiv, Ukraine, Saturday, 7 – 13 October 2006 
The 2006-2007 Global Competitiveness Report published by the World
Economic Forum (WEF) on Sept. 26, 2006 was not good news for Ukraine.
Since the previous report was published last year its position in the global
rating of national economies’ competitiveness has deteriorated by ten points.

Originally, the previous report ranked Ukraine 84th amongst 117 countries.
the. This year, the WEF reviewed its rating methodology increasing the
number of assessed parameters from 35 to 90.

When converted to the new Global Competitiveness Index, last year’s position
would be upgraded to 68th. Among the new parameters are: infrastructure
development, sophistication of business, labor market efficiency,
accessibility and quality of public health and education.

The WEF Global Competitiveness Index is a synthetic indicator that relies on
one third statistic data and two thirds on expert opinions. To elicit the
latter, 11,000 top managers from companies operating in 125 countries were
polled earlier this year.

The Centre for Competitiveness Studies at the Lausanne-based International
Institute for Management Development (IMD) produces another rating, based

on an inverse ratio: two thirds on official statistics and one third on their
own expert opinions.

The number of rated parameters is much larger (314) but the number of rated
countries is almost twice as low as in the WEF rating (60). As a result, the
IMD rating is more objective and accurate, yet it is also more conservative.

The WEF’s mild methodology, on the other hand, allows for an analysis and
evaluation of a broader range of nations, including those with unavailable
or unreliable statistics. As for Ukraine, the WEF rating is the only
existing measurement of its competitiveness.

So, according to the WEF Report for 2006, Switzerland is the most
competitive country, followed by three Scandinavian states – Finland, Sweden
and Denmark. The rating’s top ten also include (in descending order)
Singapore, the U.S.A. (which lost its longstanding first place on the list),
Japan, Germany, the Netherlands and the U.K.

Two of the above nations have made impressive jumps: Sweden rose from 7th

to 3rd and Japan – from 10th to 7th, whereas Switzerland and the U.S.A. have
caused real sensations. The last three on the list of 125 rated countries
were Chad, Burundi and Angola.
                                        GAINS AND LOSSES 
For Switzerland, it is the first time that it has outperformed all other
countries in the world, according to the WEF annual report. “Its success
comes from a combination of the county’s first-class capacity for innovation
and an advanced business culture,” – says Augusto Lopez-Claros, Chief
Economist and Director of the WEF Global Competitiveness Network.

He praised the country’s research-and-development infrastructure and close
cooperation between leading research centers and businesses. Swiss companies
lavishly fund research-and-development and intellectual property rights are
duly protected to stimulate technological innovations.

Business activity relies on steady high-quality public administration and a
regulatory environment characterized by the rule of law, effective
judiciary, transparency and accountability by social institutions. According
to Lopez-Claros, the success of Swiss businesses stems from two key

factors: a flexible labor market and an excellent infrastructure.

Switzerland took the top place in nine rating categories, which ranged from
market efficiency to the level of innovation. In two categories it did not
make it into the top six: public health and primary education (29th
position) and macroeconomic policy (18th position).

The U.S.A.’s slip from the first to the sixth was totally unexpected. It
dealt the world’s largest economy a severe blow. WEF analysts maintain that
U.S. competitiveness suffered because of terrorism, tax reductions and
ineffective public health expenditures.

To make matters worse, the retail market has been feverish of late with
price knock-downs, and the Federal Reserve (U.S. Central Bank) is expected
to lower interest rates in order to prevent a recession.

Nevertheless, the U.S.A. remains the world’s technological development
engine; the country can boast the most enabling environment for business and
efficient markets. The WEF Report also points out a host of weaknesses
detrimental to the country’s reputation for doing business globally.

U.S. competitiveness faces a challenge due to macroeconomic misbalances,
which should be alarming for the Americans.

[1] First, public finance will hardly improve in the near future, given
plans to reduce taxes even further and to increase outlays for defense and
anti-terror operations.
[2] Second, the trade deficit is at a threateningly high level. Third, the
low level of household savings and high level of retail debt should also
raise concerns.

According to the WEF, toughening the visa regime after Sept. 11, 2001 might
damage the U.S.’ capacity to absorb a qualified and professional workforce.
There are a few of other factors which account for the U.S.’ declining
competitiveness, including, for instance, low labor productivity in public
As we said earlier, this year the World Economic Forum revised its
methodology of defining global competitiveness by adding new factors
affecting national economies’ competitiveness to 90 factors.

The Global Competitiveness Report assesses countries against two major

The first one is the Global Competitiveness Index (GCI) that replaced the
Index of Competitive Economic Growth. The GCI is applied to measure a
nations’ economic health and mid-term growth prospects.

The second one is the Business Competitiveness Index that quantifies
companies’ and industries’ productivity and efficiency. The ??? is
calculated by Harvard Business School Professor Michael Porter.

In order to derive the GCI, the authors group all countries selected for
rating by their development level. Group one lists countries at the initial
development stage, with two main sources of competitiveness: raw materials
or cheap unskilled labor. In these countries, businesses compete in their
price policies, and low salaries indicate low labor productivity.

In order to compete internationally, they should ensure a stable
macroeconomic environment, fair and effective public and private
institutions and a healthy and well-trained workforce.

Group two unites nations at the effective development stage, which implies
complex production processes, improved quality of goods and services, and

an actual increase in added value. At this stage, the countries’
competitiveness is a function of the quality of higher education and
professional development, flexibility and mobility of the labor market, and
labor legislation supportive of businesses.

Other requirements include a stable banking system, capital and land
markets, and the country’s technological availability, i.e. the ability and
preparedness of companies and countries to introduce new technologies

on a large scale.

At the third and most advanced stage according to the WEF experts, the
innovation development stage, salaries and living standards are high.

Nations cannot reach it unless a country’s individual businesses, industries
and economy are able to compete on global markets thanks to their unique,
revolutionary products and services that are of a high high quality and
sophistication. Put differently, it is at a stage of economic development
where competition is focused on innovation.

In view, where does Ukraine fit into this classification? You are right: we
belong to group one, together with 46 other countries, including the poorest
in Africa, Asia and Latin America.

The least fortunate former USSR republics – Armenia, Georgia, Kyrgyzstan,
Moldova and Tajikistan are there too, as well as Zimbabwe, Bangladesh and

Surprisingly, China also ended up in group one, because of its huge
population. As a matter of fact, one of the key development indicators is
GDP per capita. In China and other countries in this group, this figure does
not exceed USD 2,000. At the same time, China ranked 54th in the overall
competitiveness rating (down 6 places since last year due to the nation’s
uneven development.

On one hand, it showed rapid economic growth and low inflation, which,
coupled with other factors, made China the 6th best performing country as
far as macroeconomic indicators are concerned.

On the other hand, its underdeveloped business infrastructure, large amount
of accounts receivable and poor institutional environment hamper China’s
competitive progress and pose risks to the young Asian tiger.

Most of Ukraine’s neighbours and partners, such as Croatia, Kazakhstan,
Latvia, Lithuania, Poland, Russia, Serbia, Slovakia and Turkey – are
classified in group two, where GDP per capita is USD 3,000-9,000.

It does not mean that those countries have fewer problems or challenges than
Ukraine does. Yet they look much better in the global competitiveness
rating: Croatia and Turkey, for example, have leaped up 12 places to the
51st and 59th positions, respectively.

As for Russia, it slid down 9 spots to the 62. According to the WEF
analysts, its major problems are lack of the property right safeguards and
absence of an independent judiciary.

It is sad Ukraine is lagging behind its neighbours, particularly those whose
development is practically unattainable for us in the foreseeable future:
the Check Republic, Estonia and Hungary are in transition toward the world’s
most competitive economies.

This group of so-called “innovation competitiveness” includes the largest
and most developed economies, which Scandinavian countries have led for a
number of years now. What are their competitive advantages?

First, almost all of them have budget surplus and fairly small public debt.
Their governments’ wise fiscal policy facilitates investments into
infrastructure, social services, education and public health.

Finland (ranking 2nd), Denmark (4th) and Iceland (14th) have the best public
administration systems in the world and together with Sweden (3rd) and
Norway (12th) make up the top ten nations in terms of primary education and
public health quality.
                                       NOW TO UKRAINE 
The new WEF index is based on nine key factors that are first computed
separately and then aggregated to produce a country’s competitiveness index.

The first set of basic factors for Ukraine are as follows: public and social
institutions – 104th position out of 125; infrastructure – 69th;
macroeconomics – 74th; public health and school education – 94th.

The second set of factors characterizes improvements in economic efficiency.
Ukraine’s position here looks equally depressing: higher education and
professional training – 48th position, market efficiency – 80th;
technological development – 90th.

The last set of factors pertains to innovation capacity: sophistication of
business processes – 76th position; innovations- 73rd. Not very inspiring,
is it?

Thus, the quality of Ukraine’s public and social institutions is believed to
be its major drawback. Here, Ukraine ranks behind Moldova (ranked 101st),
Armenia (84th), Tajikistan (77th), Azerbaijan (72nd), Uganda (100th), Sri
Lanka (82nd), Ethiopia (83rd), Nigeria (94th) and Cambodia (95th).

This indicator “stripped” Ukraine of 10 rating points and drew it down to
the 78th position. In other words, the quality of public governance and
administration is a key factor undermining Ukraine’s competitiveness.
                                  WHAT’S THE POINT? 
What is the purpose and use of generating competitiveness ratings? According
to Claus Swab, founder and director of the World Economic Forum, “the
report’s conclusions and rates offer governments and business leaders an

opportunity to learn about effective methods for developing successful
economic policies and implementing institutional reforms. “

How should, say, political leaders respond to the report? First of all, they
could treat them as an independent assessment of current economic policies.

Some indicators could be integrated into the national framework for
evaluating governments’ and ministries’ performance, as has been the case in
a score of developed and developing countries, e.g. Finland (ranking 2nd),
Singapore (5th), Kazakhstan (56th) and others. The result is not long in

They should also study approaches and best practices of the global
competitiveness winners. Then it is possible to see how a nation can become
competitive if, as Augusto Lopez-Claros put it, it combines “highly
developed public institutions, competent macroeconomic management with
state-of-the-art education and an economy based on technologies and
innovations. “

What implications does it all have for Ukraine? Yuriy Poluneyev, the
President of the Competitiveness Council of Ukraine, believes there are

[1] First, it is absolutely clear that the disastrous quality of our public
and political institutions, absence of an effective judicial system,
disrespect of the rule of law and a demoralizing regulatory environment
impede our development, rendering it impossible to create conditions for
equal and fair competition.

[2] Second, we still have significant gaps in long-term macroeconomic
strategy and policy. The country still lives beyond its means, and
substantial budget deficits are still made up from foreign and domestic
borrowings. Loans are channelled into consumption, rather than invested in
production and innovation.

Investments in labor productivity (which is one of the key competitiveness
factors, science and research, education and infrastructure are meagre, if
not non-existent.

[3] Third, the country does have an adequate potential for creating a
competitive economy: companies have been fairly good technological
availability and we can boast high quality secondary and higher education.
However, these advantages are not used to leverage innovation.

[4] Fourth, we badly need investments in human capital: in research,
education and public health. These can no longer be regarded as intangible
and, therefore, insignificant sectors, second in priority to the oil-and-gas
industry, mining and the like.

These are spheres of material production focused on the human being. An
individual’s health, as well as that of entire nation, is a factor
determining the quality of Ukraine’s main asset.

It would be incorrect to say that Ukraine is losing its competitiveness: it
has never had it. Only the top ten (or top twenty at the best) economies in
the rating can be viewed as truly competitive. Yet Ukraine had a unique
chance to build a competitive economy, competitive society and competitive

Alas! We cannot remember a singe occasion on which Ukrainian top officials
and political leaders would use such reports and international ratings data
as an independent and unprejudiced assessment tool, as a benchmark for
developing a long-term strategy or for adjusting immediate national aims and

We do not think they will change their attitude this time and pay attention
to Ukraine’s pitiable status in the global competitiveness ratings.  -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                                      THE U.S. PERSPECTIVE

REMARKS: by Senior U.S. Administration Official
Ukraine’s Quest for Mature Statehood Conference
Ukraine and NATO Membership, Roundtable VII
Washington DC, Wednesday, October 18, 2006
Action Ukraine Report (AUR) #778, Article 11
Washington, D.C., Monday, October 23, 2006

Good afternoon.  I want to thank the Center for U.S.-Ukrainian Relations and
other conference organizers for the opportunity to be here.  I welcome all
of you to Washington, especially those of you here from Ukraine, for this
important discussion about your country’s future.

I am passionate about Ukraine and its future, and find it an honor to be
part of team that is able to help the people of Ukraine achieve a brighter
future.  Although, perhaps like many of you, I must also acknowledge that I
have often found myself frustrated working on Ukraine.

But I remain optimistic about Ukraine’s future because I have confidence in
the power of the vision of a Europe whole, free and at peace.  We have seen
the tremendous allure and success of this vision as it has become a reality
in much of Central Europe and increasingly the Balkans.

I believe Ukraine will also find a home in a Euro-Atlantic community bound
together by shared values and interests.  This means that I am also
optimistic about Ukraine’s ultimate prospects for NATO membership.

NATO’s performance-based enlargement process has been a historic success

in strengthening the Alliance and advancing freedom and democracy.

The enlargement processes of both NATO and the European Union, while
distinct, motivate countries to pursue difficult democratic, market and
defense reforms.

The door to NATO membership remains open and the United States continues

to support the enlargement of the Alliance.  But the decision to pursue
membership is Ukraine’s alone, and Ukraine must set the pace.  Enlargement
has always been a demand-driven process.

I firmly believe that Ukraine’s future lies in Europe, as a prosperous,
democratic country working with all of its neighbors to expand freedom and
security in Europe and beyond.  And the United States is committed to
helping Ukraine achieve that future.

In this context, it is clear that NATO membership remains a strategic
objective of Ukraine even if it is not the agenda at this fall’s Riga
Summit.  While the timeline for seeking membership may be extended, we
commend the Government of Ukraine for committing to address the issue

of low public support for NATO membership.

Strong public support is crucial to success in joining the Alliance.  And
public support depends on a realistic understanding of the advantages and
responsibilities of NATO membership.

We therefore expect Ukraine to follow through on its intentions to pursue a
credible public information campaign to address the biases and
misunderstandings of the Alliance among many in Ukraine, something I suspect
is a legacy of Cold War rhetoric.

We also welcome signals that Ukraine will continue to deepen its cooperation
with NATO, including participation in operations.  Those currently include
national contributions funded by Ukraine to NATO efforts in Kosovo and

In the coming months, Ukraine plans to contribute a frigate to NATO’s
Operation Active Endeavor in the Mediterranean and provide specialists to
NATO’s operation in Afghanistan.  And Ukraine still has nearly 50 trainers
and staff officers working in Iraq.

So Ukraine is already working hard to expand freedom and security in Europe
and beyond with its NATO partners, and we very much appreciate that.

We also continue to build cooperation with Ukraine through the NATO-Ukraine
Commission, the Joint Working Group on Defense Reform, Partnership for

Peace Trust Fund projects helping to destroying excess munitions, and a
NATO-supported resettlement and retraining Center to assist with the
transition of the Ukrainian Armed Forces.

Now, we expect to work with the Government of Ukraine to deepen this
practical engagement with the Alliance.

I think everyone here would agree that the Ukrainian public currently lacks
sufficient information to make an informed decision about NATO, and I am
confident that this conference will contribute to that educational process.

The first step in this process is to ensure that average Ukrainians
understand what NATO is and, perhaps more importantly, what it isn’t.

For the United States, NATO is the premier political-military strategic
Alliance and, we believe, the most successful and most promising Alliance in
history.  NATO is at the core of an increasingly global democratic security

NATO is the United States’ primary forum for strategic dialogue with Europe.
When Europe and America act together on security and defense, we act through

Our leaders increasingly turn to NATO when they want to get something done,
and we intend to ensure that NATO can accomplish its missions.

For these reasons, at NATO’s Summit in Riga this November, the United States
would like to see NATO deepen its capabilities for current and future
operations, and enhance its global reach to meet today’s demands.
                         NATO’S CORE ACCOMPLISHMENTS
Ukrainian audiences need to understand NATO’s three fundamental
accomplishments over the past fifty-eight years.

[1] NATO’s first and most obvious accomplishment was helping end the Cold
War, and allowing for the creation of a Europe whole, free and at peace.
NATO united the transatlantic community, allowing it to stand against an
existential threat.

In a period of time when Europe was divided, NATO was the means by which

we gathered the democratic allies from World War II to form a permanent
alliance to stand together for freedom, democracy, and other values we
share.  Our goal was to strengthen and protect our societies so that we
could withstand the challenges that we faced.

It took a long time.  And although it wasn’t NATO that pushed over the
Berlin Wall or that drove the Communist Party of the Soviet Union out of
power, it was NATO that guaranteed basic security, making the political and
economic development of Europe possible, and creating the transatlantic
democratic community we see today.

In this context, it is important to emphasize that NATO has always been a
defensive alliance.  It did not harbor offensive plans against the Soviet
Union, and in the post-Cold War era it certainly does not have hostile
intentions toward Russia or other countries that were once a part of the
Soviet Union.

In fact, NATO’s attention is now focused on 21st century threats, most of
which originate south and east of Europe and Russia.

[2] NATO’s second core accomplishment was stabilizing and securing

freedom in Central and Eastern Europe after the fall of communism.

NATO started as an alliance of 12 countries in 1949, and grew gradually.  In
nearly 50 years, NATO added only four countries.

Then in just five years, we added ten more members – three at the Madrid
Summit in 1997, and seven more at the Prague Summit in 2002 – helping secure
a future of freedom, democracy, market economy, human rights, and the rule
of law for over 100 million people.

It is easy to forget today, but back in 1989 and 1991, people spoke of a
“security vacuum” in Central and Eastern Europe, and debated how it could

be filled.

With bipartisan American leadership, NATO acted boldly, and the security
vacuum never came to be.  The democratic future of much of the East was

The European Union played an enormous and irreplaceable role in this
development as well.  But NATO led.  And the development we have seen

would not have been possible without NATO.

And it was not just membership, but the realistic prospect of membership
that made the difference.  In their pursuit of NATO and EU membership, these
countries implemented reforms that improved the lives and opportunities of
their citizens in ways far beyond basic security and defense.

These reforms strengthened individual rights and freedoms, institutionalized
democratic systems, fostered market economies, resolved border disputes,

and protected minorities.

[3] NATO’s third core accomplishment was transforming itself – from a static
alliance engaged in planning the territorial defense of its members, to an
effective instrument for putting the vast political and military resources
of its members to work in ending conflict and promoting security and
stability well beyond transatlantic geography.

That process of transformation never ends, as NATO continues to adapt to

the rapidly changing threats of the 21st century.

This ongoing transformation has major implications for countries such as
Ukraine.  NATO’s transformation demands defense reforms, specialization,
technology sharing, and interoperability among Allies.

These processes all boost individual Allies’ efforts to transform their
standing armies of yesterday into the flexible, expeditionary,
technologically advanced forces of tomorrow.

Ukraine shares the transatlantic community’s view of 21st century threats
and has real military and technical capabilities to bring to the Alliance.
Its participation in NATO’s transformation process would benefit both
Ukraine and NATO.

NATO helped end the Cold War without firing a shot.  After the Cold War,
NATO has realized that it must be willing to fire shots against terrorists
and extremists – whether in the Balkans or Afghanistan – as security and
development in conflict zones go hand in hand.

                              NATO WILL ENLARGE AGAIN
NATO has enlarged successfully a number of times, and that process has not
run its course. There are countries in Europe, such as Ukraine, which may
seek to join NATO and which are strengthening their democracies, their
economies, and their militaries through reform by working together with

But it is also in NATO’s interest to add new members who meet its
performance-based standards because they strengthen the alliance, and our
collective security in Europe.

Make no mistake: NATO membership is not a mere political decision.  While
there is undeniably a political component, membership requires that an
aspirant meet the standards.

It benefits neither NATO nor aspirant nations to admit them before they are
prepared to shoulder the significant responsibilities of membership.

As you know, enlargement will not happen this year, but we do believe that
it is time to start talking among the Allies, taking stock of the countries
that are interested in membership, and planning for decisions in 2008 when
NATO will have another Summit.

As President Bush made clear most recently yesterday in his meeting at the
White House with Prime Minister Sanadar of Croatia, the United States backs
the enlargement of NATO again.

And, just as in the past, the realistic prospect of NATO membership is
inspiring countries to make difficult reforms that benefit their own
citizens.  And, just as in the past, we anticipate NATO will again lead,
especially as the EU sorts out its own views on the extent of its future

There is another set of benefits that Ukraine can continue to enjoy prior to
actual membership, or even without membership.  There is perhaps as much to
be gained from the process of seeking NATO membership as there is to gain
from membership itself.

NATO is, first and foremost, a community of shared values.  The foundation
of those values is the belief that liberal democratic principles and free
market practices, when wedded together under rule of law, provide the only
truly effective system for ensuring long-term prosperity and security.

These ideas of democracy and free markets are not simply “Western,” but
instead are “universal.”  Ukraine need not choose, therefore, between East
and West, but rather must decide which institutions best serve its sovereign
interests.  NATO is but one such organization, albeit an important one.

But joining the club is not easy.  It requires political will and the
resources to implement difficult reforms.  Old habits of corruption and
power consolidation must be replaced by respect for laws and checks and
balances.  Long-supported subsidies and other market distortions must be
eliminated or they will undermine economic growth.

Courts and laws must be strengthened to defend property and enforce
contracts — otherwise investment will flee.  And above all, individual
liberties must be protected and the citizens’ power over the state

In many ways, what happens inside Ukraine is perhaps more important than
what happens in Ukraine’s relations with NATO.

That is to say, protecting the independence and rule of law in institutions
such as the State Tax Administration and the Central Election Commission, as
well as moving forward with judicial reform, is as, if not more, important
than the progress made in the NATO-Ukraine Joint Working Group on Defense

The agenda with NATO therefore is all-encompassing – what happens in terms
of democratic institutions, rule of law, corruption, economic transparency,
as well as Ukraine’s policy toward its neighbors are just as important as
defense-related issues.

In the past, some Ukrainian interlocutors failed to understand the
connection between domestic developments inside Ukraine and Ukraine’s
relations with NATO or the United States.

Pursuing NATO membership is one of many tools that can help Ukraine tackle
these challenging reforms systematically.  In our eyes, such reforms are
valuable and desirable in and of themselves, regardless of whether Ukraine
chooses to join NATO.

If Ukraine is successful in implementing reforms, it will be preparing
itself for NATO membership, EU membership, or whatever its strategic goals
may be.  But only the people of Ukraine can make those choices.  They must
choose and they must lead.

It is our job to educate, not argue about the costs and benefits of NATO
membership, and not recruit additional members.

In conclusion, the United States continues to support Ukraine’s NATO
aspirations because we fully support its desire to take its rightful place
in the transatlantic community as a prosperous, democratic, and secure
member of a Europe whole, free and at peace.

Ukraine’s choice goes to the heart of President Bush’s Freedom Agenda, in
which we are all made safer and better off by promoting a world dominated

by liberty, democracy, and economic interdependence.

I believe Ukraine’s future in that world is not a question of “if,” but
rather “when.”  We look forward to working with you to help make that

future a reality.                                    -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
CONTACT: Walter Zaryckyj, Program Coordinator, Ukraine’s Quest
for Mature Nation Statehood Roundtables, Center for US-Ukrainian
Relations, New York, NY, waz1@nyu.edu
 If you are receiving more than one copy of the AUR please contact us.

Press office of President Victor Yushchenko
Kyiv, Ukraine, Thursday, 19 October 2006

KYIV – Victor Yushchenko has met with members of the board of the
international nongovernmental network Yalta European Strategy (YES).

They presented a strategy of Ukraine’s integration into the European Union,
Agenda 2020. The document says Ukraine may become an EU member in
2020 if it applies for EU membership in 2011.

Its authors believe this time will be particularly favorable for Ukraine
because Poland, its reliable partner, will be presiding in the European
Union then.

The strategy details practical steps taken by the ten new EU members when
trying to meet the requirements for membership and also conclusions of the
authors’ discussions with Europe’s prominent politicians and experts.

Mr. Yushchenko characterized the project as a good contribution to Ukraine’s
European ambitions.

During the meeting, he phoned Alexander Kwasniewski, who is a member of the
YES board. Poland’s ex-president expressed his full support for the project.

The Head of State said Ukraine’s strategic goal “is to join the EU, not just
to be recognized as a European country or a neighbor for cooperation.”

“We must know what to do with the membership opportunity now to further
formulate our national strategy in this direction,” he said, reiterating
that there would be no changes in Ukraine’s foreign policy “There is no
political force that can revise this course.”

Mr. Yushchenko said Ukraine “needs partners on its path to Europe,” thanking
those present for “defending and assuring Ukraine’s interests in the EU.”

Chairman of the Board Stephen Byers, who is also a British MP, said their
network was eager to become such a partner, “for its members have much
experience they can share.”

He invited the President to attend the fourth annual meeting of YES, which
will take place in Yalta in 2007. Mr. Yushchenko accepted the invitation.

They also discussed preparations for a Ukraine-EU summit, which is scheduled
for October 27 and will be held in Helsinki, Finland. The President said it
was Ukraine’s priority at this stage to implement the Ukraine-EU action
plan, adding that the summit would mainly focus on the initiation of talks
to sign an enhanced agreement.

Deputy Secretariat Chief of Staff Oleksandr Chalyy and the members of the
YES board, Marek Siwiec, Member of the European Parliament, Alexander
Rahr, Program Director/Körber Center, Jean-Pierre Saltiel, President
(1998-2004)/ Rothschild Counsel International, and Victor Pinchuk, YES
founder, attended the meeting.                         -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
             Send in a letter-to-the-editor today. Let us hear from you.
                        “I have been and will always be with this party.”

Press Office of President Viktor Yushchenko
Kyiv, Ukraine, Saturday, October 21, 2006

KYIV – Victor Yushchenko has spoken at the Third Congress of the
People’s Union Our Ukraine Party, whose honorary leader he is. In his
speech, the President said: “I have been and will always be with this party.”

He urged its members to institute profound reforms, believing they must
first formulate a clear ideology which “could help Our Ukraine become a
social factor.” He also demanded that they revise their statute and change
the leadership of the party by renewing mechanisms of electing party

Mr. Yushchenko recommended that delegates of the congress set up working
groups to formulate proposals on how to tackle theses challenges and then
discuss them at the second round of the congress.

The President said the party was committed to the ideas and values he
appreciated, such as patriotism, democracy and European integration. He
said Our Ukraine had been consolidating many liberal forces, consistently
protecting national interests and implementing state policy since its
creation. He thanked its members for supporting his program.

The Head of State said he wanted to unite the so-called orange forces “on
the healthy political basis” despite the fact these forces do not see a
number of key issues alike.

“The orange forces have lost their positions because of the faulty policy,
often blinded by ambitions and faith that there is no responsibility, mainly
personal responsibility,” he said.

The President criticized the party. “Our strength lies in our ability to
frankly and publicly speak about successes of the party and also problems
in its work,” he said.

Mr. Yushchenko added that, as a political organism, Our Ukraine was going
through “a serious inner crisis,” having failed to formulate simple and
comprehensible ideas after the 2004 presidential elections.

“The only idea you have been reiterating like a spell is ‘We are the
presidential party.’ I know this, I appreciate this but it is not enough,”
he said.  The President said the party was improperly built, existing
virtually in some regions.

“I do not want the party to become a joint-stock company, whose major
shareholders can monopolistically decide what the party needs, caring mainly
about their private interests,” he said.

He said members of the party presidium were particularly responsible for its
failures. “I am convinced the delegates of the congress must estimate those
who ruled the party,” he said.

Speaking about its future, the President expressed hopes it would become the
center of Ukraine’s center-right parties. “Why aren’t these parties our
partners? Who should consolidate the democratic movement in Ukraine? I
am convinced it is Our Ukraine,” he said.

Mr. Yushchenko later told reporters Our Ukraine should unite with such
parties as Reforms and Order, PORA, People’s Party, People’s Movement
and other center-right organizations.  “I wish these forces resumed their
dialogue,” he said.                                  -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
     Party leadership clearly unprepared from the scathing criticism of its leader.

One Plus One TV, Kiev, in Ukrainian 1630 gmt 21 Oct 06
BBC Monitoring Service, United Kingdom, Saturday, October 21, 2006

KYIV – [Presenter] Political scientist Volodymyr Fesenko has described
[President Viktor] Yushchenko’s speech at the Congress [of propresidential
Our Ukraine People’s Union party] as a sensation.

He said that the party leadership was clearly unprepared from the scathing
criticism of its leader. Fesenko’s colleagues see the situation as follows.

[Kost Bondarenko] We see that the president is dissatisfied with what Our
Ukraine has been doing. The president is absolutely dissatisfied with the
project. He would like to see an absolutely different project, a new
project, probably with new leaders.

As people like [first deputy head of the presidential secretariat Arseniy]
Yatsenyuk, [deputy head of the presidential secretariat Viktor] Bondar and a
whole number of others joined the party the day before yesterday, this shows
that the president may wish to instruct the presidential secretariat to lead
the party de facto.

[Vadym Karasyov] The party and [parliamentary] faction are the president’s
top resource in the current political situation.

Instead of the confrontation between [senior Our Ukraine MPs Petro]
Poroshenko and [Mykola] Katerynchuk, the president is taking tougher control
of the party, is sending Yatsenyuk, Bondar and then probably someone else to
change the ratio of internal party forces, change the party’s face, give it
a more respectable liberal and intellectual slant, and create a new
leadership group, a new leadership pool in the Our Ukraine party.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
15.               “ALL OF OUR UKRAINE’S FAILURES” 
       Some analysts are calling Our Ukraine the world’s most incompetent
                                  political force, with good reason.

The Ukrainian Insider, Vol. 6, No. 3, Kyiv, Ukraine, Friday, Oct 20, 2006 

Some analysts are calling Our Ukraine the world’s most incompetent political
force, with good reason.

Following the March 26, 2006 elections, under the mis-guidance of its formal
leader, Roman Bessmertny, Our Ukraine needlessly dragged out coalition talks
with Tymoshenko for three months. The bone of contention was Tymoshenko
herself, who had clearly won the right to become Prime Minister again (See
The Ukraine Insider, Vol. 6, No. 2 from March 22, 2006).

In the elections, Tymoshenko’s block received 22.3% as compared to Our
Ukraine’s measly 14% thanks to a disastrous campaign effort.

But Our Ukraine’s party bosses, led by Bessmertny, strove to avoid
Tymoshenko at all costs, because she would doubtless completely sideline
them, as she did when serving as Prime Minister for seven months in 2005.

When it finally seemed that the Orange Coalition was revived in late June,
Oleksandr Moroz stepped in to bust up the coalition, accompanied by more
than a few sighs of relief from Our Ukraine itself.

Moroz had always been a ticking time bomb in the Orange coalition. A
dedicated Leninist, Moroz had served as parliamentary speaker from 1994 to
1998, during which time he had stood firmly against economic — particularly
land — reforms and resisted the adoption of a new Constitution to the last
minute. Moroz is also a big fan of Russia.

Thus Moroz’ agreement with Viktor Yanukovych’s Party of Regions, though a
surprise, was natural given their closer ideological affinity. In return,
Moroz received the parliamentary speaker’s position, again. This was crucial
for him, since his party, the Socialists, had done slightly worse in these
elections as compared to 2002.

With his attempts to eat up the communists from within fading and given his
undying presidential ambitions, Moroz adopted what doubtless seemed to him
the only course of action. The cost has been significant, however, and the
Socialists’ standing and popularity have taken a big hit.

If Moroz’ actions seem natural, those of President Viktor Yushchenko seem
inexplicable. On August 3, 2006 Yushchenko agreed to nominate his former
foe, Viktor Yanukovych, to the post of Prime Minister.

The Party of Regions, as befits a Mafia-like “clan” (See The Ukraine
Insider, Vol. 3, No. 1 from February 7, 2006), moved quickly to consolidate
power. Within one day, all of Our Ukraine’s top government officials were
relieved of their duties.

But the collapse of the Orange Coalition opened the door to what many in Our
Ukraine, not least Bessmertny himself, had been waiting for (See The Ukraine
Insider, Vol. 6, No. 2 from March 22, 2006).

They began negotiations, conducted surreptitiously till then by some of Our
Ukraine’s leading lights such as Petro Poroshenko, Yuriy Yekhanurov and
Anatoliy Kinakh, in earnest with the Party of Regions.

Indeed, on the very day Yushchenko decided to nominate Yanukovych,
Poroshenko was already meeting with Andriy Kliuyev, one of the Party of
Regions’ gray cardinals. Ironically, it was Kliuyev and his brother who
headed up the “dirty tricks” headquarters for Yanukovych’s presidential bid
in 2004.

With Bessmertny’s declaration on October 4 that Our Ukraine was moving into
opposition, however, their second try at a coalition came to an abrupt and
ignominious end. Since the Party of Regions had already received practically
all of what they wanted, the powerful post of Prime Minister, they had no
reason to cede any important government posts to Our Ukraine.

Having stood firm on Yanukovych’s candidacy and after winning out, they

were not about to give much to Bessmertny and his cronies.

Initially, Bessmertny announced publicly that Our Ukraine was going into
opposition in order to try and bluff the Party of Regions into being more

This bluff was revealed when, within the space of one day, Bessmertny was
talking about no going back to negotiations with Yanukovych’s crowd while
Yushchenko stated publicly that a “wide” coalition with the Party of Regions
was still quite possible and negotiations likely to continue.

Four ministers in the government of Our Ukraine were also taken unawares

and at first refused to countenance resigning their posts.

Now uncomfortably ensconced in an opposition limbo, Our Ukraine has, once
again contrary to reality, called for the opposition to unite around them,
calling for an opposition “confederation” called “European Ukraine.” One
Tymoshenko MP jokingly responded that they would create a “pan-Galactic”
opposition in response.

But Our Ukraine, like most of Ukraine’s 130-odd parties, is not a political
party in any real sense. It is an association of adherents of Viktor

It is Yushchenko who is the real and in fact only moving force in Our
Ukraine. Thus after Bessmertny talked to Yushchenko and got his okay for

Our Ukraine’s ministers to quit government, they fell into line this past week.

Bessmertny himself does not have a high level of authority within Our
Ukraine, he is not even well-liked. But he is one of a small handful of
people whom Yushchenko trusts completely.

Bessmertny’s pitiful manipulations have not gone unnoticed. Rumors of a

new political party founded on the basis of Our Ukraine, but without the
deadweight of its current leadership, have been circulating for months.

As a true grass roots effort, however, such initiatives are dead on arrival
since it is Yushchenko himself who can decide whether such a new political
force is needed.

Thus Our Ukraine’s party conference, which takes place in Kyiv this
Saturday, is unlikely to bring any significant change. Some of Bessmertny’s
internal opponents, who are not many, such as Mykola Katerynchuk, a
politician to watch, may suffer.

In today’s Ukraine and with the current President, however, Bessmertny is
practically assured of retaining his position.                 -30-

THE UKRAINE INSIDER – is distributed via the Internet free of charge to
all interested parties as a source of in-depth information on political events
in Ukraine, including behind-the-scenes coverage of significant current
issues, the positions of policy-makers, tactics and strategy information on
Ukraine’s ongoing struggle toward a free and democratic society.
Ivan Lozowy, e-mail:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

TV 5 Kanal, Kiev, in Ukrainian 0900 gmt 20 Oct 06
BBC Monitoring Service, United Kingdom, Friday, Oct 20, 2006

KYIV – A former member of the pro-presidential Our Ukraine bloc, Viktor
Pynzenyk, whose Reforms and Order party has crossed the floor to join the
rival Yuliya Tymoshenko Bloc (BYuT) has urged the Ukrainian opposition to

Both Our Ukraine and BYuT are now in opposition to the ruling parliamentary
coalition led by Prime Minister Viktor Yanukovych, but relations between the
two are frosty.

Tymoshenko has scorned attempts by Our Ukraine to set up a separate
opposition alliance and urged a united front against the ruling coalition.
The following is the text of report by Ukrainian television TV 5 Kanal on 20

[Presenter] The Reforms and Order party [PRP] has joined the ranks of the
opposition Yuliya Tymoshenko Bloc. The leaders of the PRP and the BYuT
signed an agreement to this effect in parliament.

PRP leader Viktor Pynzenyk explained the position of this party by saying
that in the present situation when, his party believes, the ruling parties
are neglecting the values of the Orange Revolution, the PRP can see itself
nowhere but in the opposition.

[Pynzenyk, speaking at a news conference] The Reforms and Order party has
made a decision to participate in the Bloc of Yuliya Tymoshenko. Today we
shall sign an agreement to this effect.

We call on Our Ukraine and other political forces that share our values to
consolidate their efforts within the united opposition.

[Correspondent] Meanwhile, BYuT leader Yuliya Tymoshenko has urged Our
Ukraine to join the united opposition. She is sceptical about Our Ukraine’s
plan to set up its own opposition confederation called European Ukraine. The
new allies of the BYuT also believe that all “Orange” forces should unite in
one camp.

[Tymoshenko] I think that the time for lofty party names is over. It’s time
for real work. But, if someone is busy inventing impressive names, they
should be made even more impressive.

For example, I would advise [Our Ukraine leader Roman] Bezsmertnyy to call
his alliance Our United Opposition [Ukr.: Ob’yednanna Opposytsiya Nashykh].

So, the abbreviation would sound like OON [Ukrainian for the UN]. Of course,
it would be of no use at all in practical terms, but Roman Petrovych
Bezsmertnyy would be able to call himself the UN secretary-general.

[Volodymyr Filenko, captioned as PRP activist] We are sick and tired of
being responsible for the absurdities made by others.
Apart from all absurdities already made a new one is being done at the
moment. I mean the second opposition alliance [led by Our Ukraine].

These boys, our former partners and friends, should return to school and
re-read “A Word of Igor’s Retinue” [heroic saga of the 12th century]. While
princes of Kiev [Rus] were squabbling, the Polovtsy [a nomadic tribe] and
other aggressors were advancing on them from the East.        -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
 First world/Olympic medal for Krasnianska, first Ukraine world title since 1995

Reuters, Aarhus, Denmark, Sunday October 22, 2006

AARHUS, Denmark – Iryna Krasnianska surprised the favourites with her deft
flips on the balance beam to give Ukraine their first gold in 11 years at
the world gymnastics championships on Saturday.

She had to wait 10 minutes for her score of 15.575 points as the crowd grew
impatient and started booing the judges. It was enough to beat Romanian
Sandra Izbasa by 0.075 points and Canadian Elyse Hopfner-Hibbs by 0.100

Top qualifier Zhang Nan from China competed despite suffering an ankle
injury in training that required a trip to hospital on Friday.

She put on a brave but at times wobbly performance and tied for fourth with
Russia’s Anna Pavlova. All-round champion Vanessa Ferrari of Italy fell
during her routine and finished sixth.

It was the first world or Olympic medal in Krasnianska’s career and the
first world title for Ukraine since 1995.

“When I started up I didn’t look at my competitors or their scores at all,”
Krasnianska said. “I didn’t want to get any more nervous. I concentrated on
myself and I did what I could up there. When some of the other competitors
made some mistakes it was possible for me to get the gold.”

Her routine had the highest difficulty score in the final, 6.50, and her
daring paid off.

Romanian Izbasa scored 0.025 more than Krasnianska on execution, but her
routine’s difficulty level of only 6.40 made the difference between gold and

Krasnianska, an 18-year-old standing only 1.42 metres tall, ensured that the
cash-strapped Ukrainian gymnastics federation goes home with one world

Event organisers said on Friday they had to buy antibiotics for an Ukrainian
athlete who had developed an infection because the federation did not have
money for medicine.

The other surprise in the beam final was Zhang’s presence. After her injury
on Friday, her team doctor had said “it will be a miracle if she can

A similar miracle eluded American Nastia Liukin, who could not defend the
title she won last year in Melbourne after hurting her ankle earlier this
month.                                               -30-
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                         Alexey Koltakov wins the $15,000 top prize

Mike Greenberg, Staf, Express-News
San Antonio, Texas, Saturday, October 21, 2006

SAN ANTONIO – Alexey Koltakov of Ukraine and Australia won the
$15,000 top prize to become the gold medalist in the Ninth San Antonio
International Piano Competition.

Robert Rios, vice president of the competition, announced the winners late
Friday after the final round in Trinity University’s Ruth Taylor Recital

The judges chose not to award a silver medal and the accompanying $10,000
prize. There was a tie for the bronze medal – Grace Fong and Michael
Mizrahi, both of the United States – with each receiving $5,000. Fourth
prize, worth $2,500, and fifth prize, worth $2,000, were also not awarded.

The three medalists are to play short programs on a winners’ recital at 7:30
tonight at Travis Park United Methodist Church, downtown at 230 E. Travis
St. Prior to the recital, at 7 p.m., composer Ronn Yedidia will discuss the
“Rhapsody” he wrote on commission for performance by all five finalists.
The winners’ recital and Yedidia’s talk are free.

In addition to the overall rankings, the judges on Friday awarded special
prizes, worth $1,000 each, to Koltakov for the best performance of Yedidia’s
“Rhapsody” and the best performance of a romantic work; and to Fong for
the best performance of a classical work.

The panel of judges included concert pianist Daniel Pollack, as chairman,
and concert pianists Robin McCabe and William Wolfram.     -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
By Stephen Boykewich, Agency France Presse (AFP)/
European Jewish Press (EJP), Kyiv, Ukraine, Thursday, Oct 19, 2006

Hollywood icon Steven Spielberg may have grown up eating Ukrainian beet
soup, but it was only Wednesday that the 59-year-old film legend finally set
foot in the land of his ancestors.

“I got off the plane today and said, “I’m home!'” the director told
journalists after a press screening of his latest project, the Holocaust
documentary “Spell Your Name.”

The film, directed by Ukrainian filmmaker Sergei Bukovsky and executive
produced by Spielberg and Ukrainian billionaire Viktor Pinchuk, continues a
theme that has occupied Spielberg for over a decade.

A year after his award-winning 1993 film “Schindler’s List” brought the
horrors of Nazi persecution of Jews to a new generation, Spielberg’s Shoah
Foundation began to interview Holocaust survivors, mostly from Ukraine.

Having grown up with four Ukrainian grandparents, Spielberg has a strong
personal connection to the country.

“I have no good excuse for why this is my first visit,” he said. But growing
up with his grandparents in the house, “I felt like I had a piece of Ukraine
in my own home, especially at dinnertime.”

The Shoah Foundation’s video archive of over 52,000 interviews with
Holocaust survivors is the world’s largest such collection — and became the
basis for the new film by Bukovsky, whose previous documentaries have won
awards in Europe.

“Spell Your Name” weaves together the stories of Holocaust survivors,
rescuers, and a trio of young film assistants whose lives are changed by the
stories they hear during their work.

“I believe that hearing the stories of Holocaust survivors from all over the
world is going to change the world, and already has,” Spielberg said.

Pinchuk, a steel magnate who is Ukraine’s second-richest man, pitched the
idea when the two met in the United States during the filming of Spielberg’s
2005 alien invasion remake “War of the Worlds.” “He came to me and said
there’s a story I think is necessary to tell and this is the time to tell
it,” the U.S. director said.

Pinchuk told journalists he felt compelled to help tell the story of the
tragedy of Ukraine’s Jews, nearly 1.5 million of whom were slaughtered
during World War II.

Pinchuk said his own family had escaped Kiev shortly before Babi Yar, a
mass murder in 1941 in which Nazis killed tens of thousands of Jews.

“My family managed to escape Babi Yar, but many people they knew, their
friends, their neighbors — many of them wound up there,” Pinchuk said.

Spielberg said the film, which should be commercially released worldwide
next year, is part of the work needed “in order to create an undeniability
about the Holocaust.”

“I started Shoah simply because I wanted these survivors to have some place
to tell their stories, he said.

“When these survivors are no longer with us, their stories will be with my
children, and they’ll be teaching my children about the consequences of not
reaching out and attempting to better get to know each other.”    -30-

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

By Andrew Nynka, New York, New York, Friday, October 20, 2006

NEW YORK – Less than a month before hundreds of people are expected

to gather in New York City for a fundraising event to benefit the Ukrainian
Catholic University, organizers of the November 5 lunch said the annual
affair is vital in helping the university pay its yearly operating cost.

“These dinners are critically important,” said John Kurey, president of the
Ukrainian Catholic Education Foundation, the Chicago-based organization
created in 1997 to help support the university, which is located in the
heart of Lviv, Ukraine.

The money raised by the foundation pays for a large portion of the
university’s operating cost.  In 2005 that cost was about $1.5 million, Mr.
Kurey said. In an effort to help pay the operating cost, the foundation
began holding fundraising dinners three years ago.

Events similar to this year’s planned lunch in New York, which will be held
at the Ukrainian National Home, were held previously in Chicago, Detroit,
Philadelphia and Cleveland.  In addition to the event in New York, similar
lunches will be held this year in Chicago and Warren, Mich.

Last year in New York City the event raised $180,000, and $250,000 two years
ago, said Mykola Haliv, the head of the event committee in New York City,
making it a key region of support for the university.

The event in New York “by far” surpasses what is raised in other communities
throughout the United States, Mr. Kurey said.  Donors from the New York
region have in the past contributed some $600,000 to the foundation, Mr.
Kurey said.

However, Mr. Kurey noted that the university’s most ardent financial support
often comes from the older generations of Ukrainian Americans, creating a
dilemma for the foundation.

“The generation that supports UCU the most is passing away rapidly,” Mr.
Kurey said.  “This generation is limited and time is fading.”

New York Friends of the Ukrainian Catholic University, the committee headed
by Mr. Haliv and created to organize the New York fundraising lunch, has
gotten help this year from a member of the younger generation.

Iryna Zaluzhna, a member of the New York committee, got involved shortly
after she arrived in New York in July.  Mrs. Zaluzhna, 24, herself a
graduate of the Ukrainian Catholic University, came to the United States
from Ukraine to pursue a masters degree in international development and
religion from Boston University.

“I’m already in New York and I thought that, if I’m here, I want to help the
university,” Mrs. Zaluzhna said of the fundraising lunch.

A featured guest at this year’s event will be Father Borys Gudziak, Ph.D.
and rector of the university.  During the lunch, Father Gudziak will have an
opportunity to meet and speak with guests and provide them with an update

on the university, which recently opened a new 50,000-square-foot academic

The new building – home to the school’s department of theology and
philosophy – is the latest addition to the university’s expanding Center of
Theological Education and Formation campus.

The building, which was officially opened on September 17, will add to the
university’s operating costs, making the New York fundraising lunch a
critical event for the university. “They have really been a source of life
for the university,” Mr. Kurey said of the fundraising events.

Prior to the lunch, Father Gudziak will celebrate a Divine Liturgy at noon
in St. George’s Cathedral, at 30 East 7th St.

The lunch will take place at 2 p.m. in the hall of the Ukrainian National
Home, located on the second floor at 140 Second Ave.

Tickets for the event are $50 per person, and may be obtained from the
following address: New York Friends of the Ukrainian Catholic University,
c/o Self Reliance Association, 98 Second Ave., New York, NY, 10003.

Donations also will be accepted.  Please make any checks payable to “UCEF.”
For more information, call (212) 777-1336 or (773) 235-8462.       -30-
Further information about the UCU in English and Ukrainian is available on
the university’s website at Contact: Andrew Nynka,
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21.                                         I WANT TO LIVE:
            The discovery of a candid diary in Soviet-era archives has revealed
               a remarkable witness to life in Stalin’s fiefdom. Her analysis of
               explosive events such as the famine in Ukraine was profoundly
                            astute and completely free of brainwashing.

BOOK REVIEWS: By Maria Tumarkin
The Age, Melbourne, Australia, Friday, October 20, 2006

RE: I WANT TO LIVE: The Diary of a Young Girl in Stalin’s Russia
By Nina Lugovskaya, Publisher, Doubleday, $39.95

OF COURSE, EVERY TOM, Dick and Harry will compare her to Anne
Frank. What else do you do with a teenage girl like this – eloquent,
uncompromising and open-eyed – keeping a diary through the times of
Great Terror?

What other words are there to describe her? So here she is in every
conceivable review and article – Nina Lugovskaya, daughter of the Soviet
counter-revolutionary, innocent victim of Stalin’s repressions, “Russia’s
Anne Frank”.

This may be a good strategy for endearing (read: selling) Nina to Western
readers, but it also mutes everything that is singular, unlike anyone else,
about Lugovskaya and her diaries.

And there is plenty there that is unlike anything else. In 1932, when Nina
started writing her diary, she was a 13-year-old Moscow schoolgirl with a
father who was rarely out of jail or exile and a mother ground into the dust
by daily strife.

Nina’s slightly older twin sisters, preoccupied with their friends and
artistic pursuits, seemed blissfully oblivious to all those things that made
their younger sister sick with rage and despair – Communists, conformity,
thoughtless obedience, school, human condition and the meaninglessness
of it all.

Nina’s school friends were two years younger than her – this and the fact
that she was cross-eyed made Lugovskaya, in her own pitiless estimate, a
monstrous, ugly freak.

Nina was 18 when her diary was confiscated by the NKVD (the proud
forerunner of the KGB). She was accused of plotting to assassinate Stalin –
the proof, after all, was all there in her inflammatory, raging diary

The NKVD combed through them with the utmost care, underlining countless
incriminating passages, particularly Lugovskaya’s vitriols against the “band
of villains” that was the Communist Party and her clearly expressed hatred
for “a dictator, a villain and bastard” that was the Father of Nations,
Joseph Stalin.

None of her criminal thoughts was left without due attention. The attentive
readers from the NKVD marked all entries that testified to her distaste and
despair for Russian people, who, in her eyes, knew only how to “baah-baah”
when led to slaughter.

Her depressive and suicidal passages were singled out as well – they were
considered acts of treason against the state – alongside entries describing
Nina’s persistent fantasies of killing “the vile Georgian who is crippling

All underlined passages are faithfully reproduced in a darker font in this
edition of Lugovskaya’s diary and, as such, they let us go gently into the
mind of an NKVD operative on heat and of the whole machinery of secret
police behind him – after all, in terms of incriminating evidence, the diary
was pure gold.

It was not, of course, a primarily political document – the diary was filled
with boys, wild mood swings, morbid introspection as well as blow-by-blow
accounts of daily events and conversations.

Yet when Nina shifted her attention away from herself and onto the world
that surrounded her, she was unstoppable. Her steadfast resistance to
idol-worshipping was remarkable for a teenage girl growing up in a country
in the grips of one of the 20th century’s most potent and tragic personality

In March 1933, her father was refused a residency permit and had to leave
Moscow, and his family, within 10 days. “I clenched my fists tight in my
fury. He must be killed (illegible) as soon as possible! I must avenge
myself and my father.”

And, yes, the object of her rage is Stalin. To write this in the ’30s – even
to think that, or think of thinking that – was like signing your own death

Lugovskaya hated Stalin and felt no awe for Lenin either. The statue of
Lenin in the town of Mozhaisk, where her father then lived for a while,
looked to her like a deliberate caricature. On the pedestal stood “a little
dwarf of a man with inordinately short legs and a big, bald head”.

“This is the rule of the Inquisition, not socialism,” she wrote of the
Soviet regime. Was she crazy?

NINA was, remarkably and fiercely, her own person. Her analysis of explosive
events such as the famine in Ukraine or the assassination of Sergei Kirov,
which precipitated the Great Purge, was profoundly astute and completely
free of brainwashing.

And so was her take on her Soviet school as a microcosm of the Communist
state, with informers, threats, its own fabricated counter-revolutionaries,
interrogations, complicity and a principal as a localised dictator.

Millions of men and women around her, to say nothing of her school friends,
were brainwashed, frightened, silenced, or made complicit. Yet Nina
Lugovskaya was like a fortress that could not be taken.

Interestingly, her handwriting, reproduced a few times in the book, does not
look at all like a schoolgirl’s diligent hand (calligraphy was a big deal in
Soviet schools). It is spiky, messy but also assured and direct.

It is the handwriting of someone who would not be trained, whose hand could
not be straightened out. And this is the thing about Nina – she was made out
of material naturally and fatally resistant to bending.

Worn out by the brutality and hopelessness of interrogations, Nina
Lugovskaya accepted the NKVD charges of, among other things, conspiring

to assassinate Stalin. It was 1937, so her family’s fate was predetermined –
the Gulag.

She and her sisters survived years at Kolyma and Nina ended up marrying a
fellow inmate, becoming a painter and living long enough to see the Soviet
Union collapse. Her diary was discovered accidentally in the NKVD archives
in the case-file of her father, Sergey Rubin.

She was a wild-eyed child trapped in a world not fit for a stray dog, but
somehow transcending her wretched life, a lonely speck of light in the
darkest of nights.

Nina Lugovskaya was uncompromising, irrepressible, grim, terminally
self-obsessed. She was more adept at flirting with a lethal dose of opium
than with the boys she needed desperately to fall for her and had a tongue
as sharp as a razor and a temperament to drive her family insane.

She was a beautiful writer but also an unreformed snob and a banal
anti-Semite. Angry as hell and moody as hell. Not Russia’s Anne Frank,

but Russia’s Nina Lugovskaya.                           -30-
Maria Tumarkin is the author of Traumascapes, published by Melbourne
University Press.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

by Valentyn Pustovoit
Ukrayinska Pravda, Kyiv, Ukraine, Wed, October 18, 2006

The fact that the Communists do not fear historical responsibility
originates from their clean record. The Communist Party has been never sued.
The conduct of the Communist leader Petro Symonenko is a glaring example
of such resistance to historical responsibility.

Before mass disorders on Maidan on Friday 13th Symonenko informed the
public of the demonstration dedicated to the 64th anniversary of UPA
(Ukrainian Insurgent Army) foundation.

He also said the Communists would never let fascist allies to profane the
‘sacred Khreshchatyk’. If necessary, they would resort to physical violence
against UPA supporters.

And they did, which resulted in local street fights that could turn into
mass disorders. 56 people were detained.

The next day Symonenko was in the air together with Ukrainian People’s Party
leader Yuriy Kostenko. Offered to present his viewpoints concerning ways of
possible reconciliation he burst out with a revelatory criticism of UPA.

According to Symonenko, UPA soldiers killed civilians, teachers and doctors
who came to the Western Ukraine to teach and cure. However, the recently
published top secret KGB materials prove that Symonenko’s statements are
glaring falsehood.

It is impossible to wage any guerrilla warfare without support of the local
population. Ukrainians who lived in the Western Ukraine in 1939-1941 saw
what kind of socialism the Soviets were building. It was the socialism
protected with barbwire.

It was the socialist system shooting its rivals in the back of the head.
That’s why locals supported their guerrillas. Even Soviet Security Services
aided by the military units could not crush UPA rebellion.

They resorted to inhuman tactics. To deprive UPA of their social support
Security Services formed special subunits which killed, raped and robbed the
locals under UPA colors. Besides, on Beria’s proposal villages that hosted
at least one alleged UPA member were resettled to Siberia.

It is not the only bloody episode in the history of Ukraine. Cynicism,
treachery and infernal cruelty are characteristic features of the Soviet

In January 1918 Bolsheviks failed to repeat the scenario of the October coup
in Kyiv. Military unit ran by Yevhen Konovalets who was destined to become
one of the icons of Ukrainian nationalism played the decisive role in the

Failed to get support of the locals, Bolsheviks repeatedly sent their troops
to conquer Western Ukraine and join it to the Soviet Russia. Addressing NKVD
agitators Lev Trotsky formulated Soviet tactics with the frank cynicism:

“It is well known it was not Denikin who made us leave Ukraine. It was the
strong peasantry that opposed the Soviets. A Ukrainian peasant hates the
Soviet system.

Their free Cossack spirit has woken up. It was limitless credulity and lack
of unity that brought to nought all their achievements.
That’s why they lost their independence controlled by Lithuania, Poland or
Russia being a very important part of these countries. Each propagandist
needs to remember these character features of Ukrainian people.

Keep in mind that we have to get Ukraine back. There is no Russia without
Ukraine. Russia can not exist without Ukrainian coal, iron, bread, salt and
the Black Sea. Russia will die, followed by the Soviet power. We need to.”

He advises then to lie that Russia acknowledges Ukraine’s independence
under the Soviet government.

Leiba Bronshtein (political nickname Lev Trotsky) knew Ukrainian people well
enough. He was not exaggerating saying that the Cossack spirit made them
(Ukrainians) perform wonders.

Minimum twice UPA made the decisive contribution to the Civil War outcome.
In September 1919 Ukrainian Revolutionary Insurgent Army headed by Nestor
Makhno crushed volunteer army which disrupted Denikin’s attack on Moscow
that was absolutely defenseless at that time.

In October 1920 Makhno’s army forced a crossing over Syvash river which
allowed the Red Army to capture the town of Perekop. In ten days Frunze
mailed to Lenin: “Our cavalry captured Kerch. The Southern battle-front is
crushed,” forgetting to mention it was Makhno’s cavalry.

After that, by Trotskiy’s order, Makhno’s entire army was executed in the
Crimea as a reward for such feat of arms.

Much has been said and written about Holodomor of 1932-1933 organized by
the Communists. However, it is not an argument for Symonenko who seems
to sincerely believe that death of millions of Ukrainians was a
sophisticated form of sabotage against the kolkhoz system.

Supposedly, Ukrainian peasants were reluctant to join kolkhozes and as a
result they starved against the will of the Soviet power.

It goes without saying about mass repressions. Trucks stuffed with dead
bodies of the people shot in the basements of Zhovtnevyi Palace (then NKVD
residence) were crossing the ‘sacred Khreshchatyk’ by nights.

According to the data presented by Shvernyk Commission, during 1935-1941
NKVD detained 19 840 000 people, killing 7 million.
Let’s compare: according to historian Konovalov, as of July 22, 1941 about
22 thousand people accused of opposition to Hitler’s regime were detained in
the concentration camps all over Germany.

Having come to the Western Ukraine in 1939, Soviet Communists resorted to
the tactics of mass terror. In 1941 during the retreat NKVD officers, having
no time for political prisoners, were just shooting them. But the retreat
was so hasty that they had no time even for the shooting, exploding prisoner
cells with grenades. It was that way in Ternopil.

Those whose relatives and friends died during the first Soviet invasion
constituted the core of UPA and SS-Halychyna Division.

By the way, for information of comrades Symonenko and Vitrenko –
Nuremberg Tribunal did not refer Waffen SS units (those who fought
against Stalin’s regime on the Soviet-German battle-fronts) to criminal
military organizations.

Communists were always acting by a model: they promised and lied. They
killed those who did not believe them. Later on they presented their own
version of the story. Symonenko continues this tradition.

However, Communists could not foresee that top secret documents would be
ever de-classified. It would be great if the Communist leader remembers
about that making his public performances.

Still, the author is not that idealistic hoping for the sudden Epiphany of
the Communist boss.

However, the threat uttered by Symonenko on the air turned into the appeal
to illegal actions. The appeal has been heard. Mass disorders did take

Thus, there are enough legal grounds to sue Symonenko. But is it real,
taking into account his parliamentary privileges?

In this connection, the author and other ordinary tax-payers have a proposal
to the Interior Minister Yuriy Lutsenko. Should the government bring an
action against the Communist Party with the demand to pay out the money
spent by the Interior Ministry for security measures and arrangements?

Let Symonenko keep this money back from his MP wages.

Otherwise Comrade Symonenko, hoping for impunity and his parliamentary
privileges, will appeal to demolish Ukrainian Parliament. We do remember
similar precedents in the world history.                       -30-
(Translated from Ukrainian to English by Eugene Ivantsov)

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
How a failed revolution in Eastern Europe ended up saving untold numbers of lives.

Reviewed by Andrew Nagorski, Book World, The Washington Post
Washington, D.C., Sunday, October 22, 2006; Page BW10

The Story of the 1956 Hungarian Revolution

By Victor Sebestyen, Pantheon. 340 pp. $26

A Personal Memoir and History of the Hungarian Revolution of 1956
By Michael Korda, HarperCollins. 221 pp. $24.95

Incensed by leaks about how their current rulers had lied about the economy,
Hungarian protesters took to the streets of Budapest last month, demanding
the resignation of Prime Minister Ferenc Gyurcsany. They attacked the state
TV station, overturned cars and fought with police, leaving about 200 people
injured. News reports pointed out that this was the worst outbreak of
violence in the country since the 1956 Hungarian Revolution, whose 50th
anniversary will be observed on Oct. 23.

True enough — but the two events can hardly be compared. The violence this
time was brief, and Hungary’s democratic system kept the crisis from
spinning out of control. In 1956, there was a real revolt — and very real
Soviet retaliation, resulting in about 2,500 deaths and 10,000 wounded
during the fighting, as well as an estimated 330 executions and thousands of
arrests after Soviet tanks crushed the rebellion. The unmistakable message:
The Kremlin wasn’t going to allow its satellite to break free.

Two new books provide a timely reminder of the short-lived revolt and its
long-term consequences. Twelve Days, by the Hungarian-born British
journalist Victor Sebestyen, is the more detailed chronicle, capturing the
rapid trajectory of an uprising that he is convinced was doomed. Michael
Korda’s Journey to a Revolution is at its best in recounting the author’s
improbable trip to Budapest right in the midst of the fighting.

Along with three other Oxford students, Korda — nephew of the famed
Hungarian émigré film producer Alexander Korda — filled up a Volkswagen
convertible with medical supplies and drove to the revolution. These
accounts neatly complement each other.

The starting point for this desperate revolt was the brutal rule of Mátyás
Rákosi, Stalin’s Hungarian imitator. In a country with a population of less
than 10 million, Sebestyen notes, 1.3 million people were persecuted during
the height of his reign of terror, from 1950-53; half of those people were
jailed, and more than 2,350 were summarily executed.

If Rákosi had ruled a bigger country, Sebestyen concludes, “he would now be
recognized as one of the greatest monsters of the twentieth century.” And as
one of the most cynical. Although Rákosi and many of his top aides were
Jewish, he immediately joined in Stalin’s anti-Semitic campaign just before
the Soviet dictator’s death in 1953.

The other key player was Imre Nagy, also a dedicated Communist Party member
who had spent many years in Moscow and then served in a variety of top
posts. Party boss Rákosi treated him as a dangerous rival because of his
occasional willingness to push for more conciliatory policies.

In 1955, Nagy was ousted as prime minister and expelled from the party. In
the wake of Nikita Khrushchev’s famous de-Stalinization speech in February
1956, Hungarians began to demand an end to Rákosi’s dictatorship. The
Kremlin opted to replace him with an ideological twin, Erno Gero. When
student protesters took to the streets on Oct. 23, they demanded the return
of Nagy.

Nagy was a reluctant revolutionary who still believed in a gentler brand of
communism while his supporters were dreaming of full freedom and Cold War
neutrality. When the Kremlin leaders reappointed him prime minister, they
did so hoping to quell the protests.

Instead, as the violence escalated and Hungary’s rebels drove the Soviet
occupiers out of Budapest, he was pushed into a more openly defiant stance.
At the end, this veteran communist won the hearts of most of the rebels,
even as he found himself deceived by his former Soviet masters, who launched
a massive assault on Budapest to retake control. During the fighting, one
freedom fighter told Korda that he had thought of Nagy as “just another
communist stooge,” but then he began to respect him. “He has balls,” he

Nagy paid for his courage with his life. The Soviet Union sent in 500,000
troops to put down the hastily improvised rebellion, a show of force
designed to intimidate any would-be imitators elsewhere in Eastern Europe.

Despite the Eisenhower administration’s talk of “rollback” of the Iron
Curtain, Washington — along with London and other Western capitals — did
nothing to support the Hungarians. Korda believes that if the Suez crisis
hadn’t distracted it, the United States might have taken a different stance.

Sebestyen disagrees, and he’s almost certainly right. While criticizing
Radio Free Europe for its “bellicose” broadcasts, he asserts that there was
“nothing dishonorable” about Ike’s policy since there was little he could
do. Perhaps not — but, given its previous rhetoric, Washington should have
felt a burning sense of shame.

Both authors conclude that Moscow was the real loser in the long run. “Not
since Pyrhhus himself has there been so Pyrrhic a victory,” writes Korda.

The graphic images and dispatches of Western correspondents from Budapest
fully exposed the true nature of Soviet power. “Soviet savagery in Hungary
fractured the Left throughout the world, particularly in Europe,” Sebestyen

In subsequent showdowns in the region, the Kremlin was more cautious in
applying brute force — even when its tanks rolled again, this time to
suppress the Prague Spring of 1968. The two books fail to mention another
highly significant result: After Budapest, opposition movements like Charter
77 in Czechoslovakia and Solidarity in Poland realized that their most
effective weapon was nonviolent resistance.

Ultimately, the bloodshed in Hungary helped prevent another bloodbath as the
Soviet empire collapsed. Which is why Hungarians can be truly proud as they
commemorate the 50th anniversary of their seemingly hopeless revolt.   -30-
Andrew Nagorski is a senior editor at Newsweek International. He is
completing a book about the battle for Moscow, scheduled for publication in
September 2007.                                -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
24.                               AFTERMATH OF A MURDER
            Strange but predictable reactions to the killing of a Russian journalist

LEAD EDITORIAL: The Washington Post
Washington, D.C., Saturday, October 21, 2006; Page A18

IT HAS NOW been 14 days since Russian journalist Anna Politkovskaya was
murdered in Moscow. No one has been arrested for the crime, which is hardly
surprising: None of the dozen other killings of journalists since Vladimir
Putin became Russia’s president has been solved.

This one eliminated one of the fiercest and bravest critics of his
government, a reporter who had tenaciously documented the depravity of Mr.
Putin’s war against Chechnya. We don’t have any evidence implicating the
Kremlin, but it’s revealing to examine how Mr. Putin and his regime have
behaved over the past few days.

The president’s first reaction was a strange silence. While politicians,
media outlets and statesmen in Russia and around the world condemned Ms.
Politkovskaya’s murder, no word came from Mr. Putin for three days.

When finally compelled to speak, at a joint news conference in Germany with
Chancellor Angela Merkel, Mr. Putin offered a rote condemnation of the

He then disparaged Ms. Politkovskaya, saying that “the level of her
influence on political life in Russia was utterly insignificant.”

He made the ugly suggestion that foreign-based enemies of his government
were somehow behind the killing — a claim echoed in the state-controlled

“We have information, and it is reliable, that many people hiding from
Russian justice have long been nurturing the idea of sacrificing somebody
in order to create a wave of anti-Russia feeling in the world,” he said.

Really? If so, Mr. Putin’s enemies also must have found a way to
manipulate his own security forces.

It was interior ministry operatives, after all, who violently broke up a
peaceful vigil in Ms. Politkovskaya’s memory in the Caucasian city of Nazran
on Monday. Flowers and pictures of the slain journalist were ripped from the
hands of the participants and stomped on.

Ekaterina Sokiryanskaya, a well-known activist of the human rights group
Memorial, was punched in the face and head; she suffered a broken nose
and a concussion. Three days earlier, a court ordered the closure of the
Russian-Chechen Friendship Society, one of the few nongovernmental
organizations still attempting to document abuses in that devastated

On Thursday the government suspended the operations of Amnesty
International, Human Rights Watch and more than 90 other NGOs, saying
they had not met the requirements of a controversial new registration law.

One other part of this story has played out with depressing predictability:
the absence of any serious follow-up by Western leaders. [There has not

been any leadership or follow-up by leaders in Ukraine.  AUR EDITOR]

At the same news conference at which Mr. Putin uttered his ugly
insinuations, Ms. Merkel vowed that her government would press to complete
a new partnership agreement between the European Union and Russia when
Germany has the rotating E.U. presidency next year.

Yesterday Mr. Putin was invited to dine with European leaders at a summit in
Finland. If Ms. Politkovskaya’s murder remains unsolved, will it be an
obstacle to “partnership” between Russia and Europe? Sadly, Mr. Putin has
been given no reason to think so.                             -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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