AUR#785 Nov 3 Ukraine Country Outlook; North Dakota Trade Mission; Hidden Cost Of Gas; PM To USA; Alarming Legislation Proposed

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

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

                                                                                  
ACTION UKRAINE REPORT – AUR – NUMBER 785
Mr. E. Morgan Williams, Publisher and Editor  
WASHINGTON, D.C., FRIDAY, NOVEMBER 3, 2006
                
               –——-  INDEX OF ARTICLES  ——–
              Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.                                UKRAINE: COUNTRY OUTLOOK
Ukraine: Country View, The Economist Intelligence Unit Limited
New York, New York, Wednesday, November 1, 2006
 
2.      UKRAINE, RUSSIA, KAZAKHSTAN HAVE GREAT POTENTIAL
             FOR NORTH DAKOTA FARM MACHINERY COMPANIES
         The three countries are North Dakota’s fourth-largest trading partner
Associated Press (AP), Bismarck, North Dakota, Thu, Nov 2 2006

3.          NORTH DAKOTA AGRICULTURAL MACHINERY TRADE

                MISSION TO UKRAINE, RUSSIA AND KAZAKHSTAN
Office of the Governor, State of North Dakota
Bismarck, North Dakota, Thursday, Nov 2 2006

4.   UKRAINIAN PARLIAMENT SUDDENLY GIVES FIRST READING
                   APPROVAL TO SEVEN WTO RELATED BILLS
NTN, Kiev, in Ukrainian 1500 gmt 2 Nov 06
BBC Monitoring Service, Kyiv, Ukraine, Thu, November 2, 2006

5    UKRAINE SHOULD NOT SYNCHRONIZE WTO ACCESSION

                   WITH RUSSIA, SAYS POPULAR RUKH PARTY
Interfax-Ukraine, Kyiv, Ukraine, Thursday, November 2, 2006

6BULGARIA WARNS OF ELECTRICITY EXPORTS CUTS IN 2007
     Has problems as Ukraine has stopped all coal exports and is blocking
          Russian coal from being shipped through Ukraine to Bulgaria.
Associated Press (AP), Sofia, Bulgaria, Thursday, November 2, 2006

7GAZPROM TO MORE THAN DOUBLE GAS PRICE TO GEORGIA
          To charge $230 per 1,000 cubic meters compared to $110 now
Associated Press (AP), Moscow, Russia, Thursday, November 2, 2006

8.    RUSSIAN AMBASSADOR CHERNOMYRDIN DESCRIBES GAS

    STIFF DEMANDS ON UKRAINE IN EXCHANGE FOR CHEAP GAS
ANALYSIS: OSC [US Open Source Center], USA, Fri, Oct 27, 2006
 
10.      RUSSIAN EXPERT: “WE AGREED ON GAS BECAUSE WE
                        RECEIVED SOMETHING IN EXCHANGE”
INTERVIEW: With Mikhail Delyagin, Director
Russian Institute of Globalization Studies
Conducted by: Olha Vasylevska
Glavred, Kiev, in Russian 1131 gmt 25 Oct 06
BBC Monitoring Service, United Kingdom, Friday, Oct 27, 2006

11                             THE HIDDEN COST OF GAS
INFORM: Newsletter for the international community providing news,
views and analysis from the Yulia Tymoshenko Bloc (BYUT), Issue 17
Kyiv, Ukraine, Monday, 30 October, 2006

 
     COMPANIES SHOULD RESUME, SUPPORTS PRIVATE PROPERTY
Interfax-Ukraine, Kyiv, Ukraine, Thursday, November 2, 2006
     
13.      UKRAINE: STATE CUSTOMS OFFICE SUSPENDS WHEAT
                AND BARLEY EXPORTS WITHIN ISSUED QUOTAS
Interfax-Ukraine, Kyiv, Ukraine, Thursday, November 2, 2006

14.     UKRAINIAN-AMERICAN LEADER JUDGE BOHDAN FUTEY

                           RECEIVES JAMES MADISON AWARD
By Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #785, Article 14
Washington, D.C., Friday, November 3, 2006

15US & CANADIAN BUSINESS FIGURES DISCUSS ATTRACTION
        OF FOREIGN INVESTMENTS INTO UKRAINIAN ECONOMY
Ukrinform, Kiev, Ukraine, Wednesday, November 1, 2006

16 UKRAINIAN PRIME MINISTER DISCUSSES PREPARATIONS

      FOR HIS VISIT TO UNITED STATES WITH US AMBASSADOR
Interfax-Ukraine, Kyiv, Ukraine, Thursday, Nov 2, 2006

17.  PRESIDENT’S FORMER PRESS SECRETARY HERASHCHENKO
         BECOMES PRESIDENT OF UNIAN NEWS AGENCY IN KIEV
UNIAN news agency, Kiev, in Ukrainian 0850 gmt 2 Nov 06
BBC Monitoring Service, United Kingdom, Thu, Nov 02, 2006

18.   UKRAINIAN INTERIOR MINISTER YURIY LUTSENKO DENIES
                PARLIAMENT, GOVERNMENT CAN SUSPEND HIM
One Plus One TV, Kiev, in Ukrainian 1730 gmt 2 Nov 06
BBC Monitoring Service, United Kingdom, Thu, Nov 02, 2006

19. UKRAINIAN PRIME MINISTER YANUKOVYCH DOUBTS FOREIGN
                     MINISTER TARASYUK CAN GO ON WORKING
UNIAN news agency, Kiev, in Ukrainian 1540 gmt 2 Nov 06
BBC Monitoring Service, United Kingdom, Thu, Nov 02, 2006

20PRES YUSHCHENKO SETS UP CONSTITUTIONAL COMMISSION
Ukrainian News Agency, Kyiv, Ukraine, Nov, November 2, 2006

 
                 He also suggests punishing production, distribution and
                         possession of materials denying the famine.
Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 2, 2006
 
22       THIS IS THE MOMENT FOR EUROPE TO DISMANTLE
                                 TABOOS, NOT ERECT THEM
                  Far from criminalising denial of the Armenian genocide,
                       we should decriminalise denial of the Holocaust
COMMENTARY: Timothy Garton Ash, The Guardian
London, United Kingdom, Thursday, October 19, 2006
 
Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 2, 2006
 
 
 
26.     DIPLOMATIC SNIPING ON GENOCIDE AND LIGHTHOUSES
Deutsche Presse-Agentur (DPA), Germany, Thursday, Nov 2, 2006
 
27UNIVERSITY OF LAS VEGAS (UNLV) COMPOSER VIRKO BALEY
         TO FINALLY FINISH HIS OPERA ABOUT UKRAINE FAMINE
           Receives fellowship from Harvard’s Ukrainian Research Institute
By Kristen Peterson, Las Vegas Sun
Las Vegas, Nevada, Thursday, November 02, 2006
 
 
29  MEMORIAL SOCIETY SAYS THERE ARE 900,000 VICTIMS OF
                  POLITICAL REPRISALS STILL LIVING IN RUSSIA
Interfax, Moscow, Russia, Sunday, October 29, 2006
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1
              UKRAINE: COUNTRY OUTLOOK

Ukraine: Country View, The Economist Intelligence Unit Limited
New York, New York, Wednesday, November 1, 2006

COUNTRY VIEW: FROM THE ECONOMIST INTELLIGENCE UNIT

[1] OVERVIEW: Viktor Yanukovych’s ascent to the post of prime

minister has returned to government many of the officials who opposed
Viktor Yushchenko’s presidential election victory in late 2004.

These elites are grouped within the Party of Regions (PoR), which now
controls both parliament and the cabinet.

Combined with recent constitutional changes that weaken the presidency, this
ensures that Mr Yushchenko will struggle to shape the political agenda in
coming years. With the PoR’s policies frequently diverging from those of the
president, inter-institutional friction is likely.

The Economist Intelligence Unit expects annual real GDP growth to dip to
around 6% in 2007-08.

Annual average inflation is forecast to accelerate to more than 10% in 2007
before slowing the following year. The currency will weaken only moderately
in nominal terms against the US dollar. The current-account deficit is
expected to widen in both years of the forecast period.

[2] DOMESTIC POLITICS: The centrist PoR has come to dominate

Ukrainian politics in recent months and is expected to remain the most
significant force on the political scene in 2007-08.

The March 2006 parliamentary election handed the PoR by far the largest
share of seats in the legislature, and the party has since then managed to
set up a majority coalition with the parliamentary left.

Since August the PoR has also dominated the cabinet, which is headed by the
party leader, Mr Yanukovych. Although the PoR’s internal strains have become
more apparent in recent weeks, its discipline and financial resources are
still well above those of any other political grouping.

These qualities–combined with the enhanced powers enjoyed by the parliament
and the cabinet since the start of 2006–should permit the PoR to retain its
current powerful position in 2007-08.

There is little prospect that any other parliamentary faction could
form–and lead–an alternative majority coalition.

[3] INTERNATIONAL RELATIONS: The “declaration of national

unity” in theory commits the PoR to the president’s pro-Western foreign
policy priorities, and it is expected that the new government will continue
to implement the EU-Ukraine Action Plan.

This runs until 2008 and will then be reconsidered by the EU, alongside the
partnership and co-operation agreement (PCA) that expires at that point.

The government will most probably pursue membership of the World Trade
Organisation (WTO), albeit with considerably less urgency than the previous
two cabinets.

In other areas, however, the PoR is already calling for a more “balanced”
foreign policy. In practice, this will mean closer ties to Russia and a less
unconditional approach to Western integration.

[4] POLICY TRENDS: The new governing coalition is not expected to

break completely with the generally pro-reform policies espoused by the
previous government, even though it is dominated by the former opposition
and includes both of the left-wing parliamentary factions.

The economic interests that dominate the governing PoR are keen to expand
links with the West and to pursue pro-business policies.

This will ensure at least gradual and uneven progress on structural reforms,
deregulation and liberalisation, which are prerequisites for Ukraine’s
joining the WTO and deepening links with the EU.

However, the new government brings back into power many of the oligarchic
economic interests that prevented meaningful reform and allowed the shadow
economy to flourish under the previous president, Leonid Kuchma.

This suggests little scope for progress on sensitive reforms such as energy
sector restructuring, and greater risk that privatisations will return to
the insider deals witnessed in the past.

The political force that is most serious about bringing the shadow economy
into the open–the Yuliya Tymoshenko Bloc (YTB)–is now in opposition.

[5] INTERNATIONAL ASSUMPTIONS: World GDP growth is

estimated at an extremely robust 5.3% in 2006, measured using purchasing
power parity (PPP) weights, and is then forecast to ease moderately in
2007-08. The trend in Ukraine’s main markets is generally favourable.

The EU economy is growing at an accelerated pace, the expansion in Asia will
remain robust, and real GDP growth in Russia, which is still the single most
important export destination for Ukraine, will remain well above 5%
annually.

The prospects for Ukraine’s terms of trade are nevertheless poor. Gas import
prices are likely to rise sharply again in 2007 (having almost doubled in
2006). Oil import prices will remain high, pushed up by supply problems and
geopolitical concerns about Iran’s nuclear programme.

Moreover, the recent increase in steel export prices is likely to reverse in
2007-08, as a result of growing output and weakening demand. Average annual
steel prices over the next two years are forecast to be well below the peak
reached in 2004.

[6] ECONOMIC GROWTH: The most recent data have indicated that the

economy grew by 5.4% year on year in the first half of 2006–rather than by
the 5% previously reported–and that the expansion accelerated to reach
6.2% year on year in January-September.

Full-year growth of 6.5% in 2006 now appears likely, which is well above the
2.6% recorded in 2005 as a whole. Our forecast for annual growth of at least
6% in 2007-08 reflects a number of considerations.

An end to election-related uncertainties is now likely to begin encouraging
investment, and an ongoing rise in earnings will help to ensure that
household consumption growth remains strong–even though real personal
incomes are unlikely to continue to rise at the buoyant pace recorded in
2005, and incomes will be affected by rising utility prices.

However, with incomes growing at a decelerated rate, steel export prices set
to decline and gas prices rising further, real GDP growth is still forecast
to slow slightly in 2007.

[7] INFLATION: Year-on-year consumer price inflation accelerated

beyond 9% in September owing to the sharply higher electricity and
agricultural prices recorded that month.

Consumer prices are expected to rise slightly more quickly over the
remainder of the year and in 2007 as well, before then moderating in 2008 in
the absence of both gas import price rises and further administered tariff
increases.

The accelerating inflation expected over the next year will reflect not just
rising gas prices and higher utility tariffs, but also the looser fiscal
stance.

Moreover, currency inflows resulting from increased investment are expected
to rise. This will offset part of the reduction in trade-related currency
inflows, thereby limiting the deceleration in money supply growth.

[8] EXCHANGE RATES: The National Bank of Ukraine (NBU, the central

bank) has kept the hryvnya steady against the US dollar since April 2005.
It has indicated that it intends to prevent the currency diverging much from
its current rate.

We expect the hryvnya to weaken moderately against the US dollar over
2007-08 in the face of a growing trade deficit (the government’s 2007 budget
proposal assumes a slight depreciation).

All of this will translate into a modest real effective appreciation during
that period. Owing to the rapid increase anticipated in the trade deficit,
the risk of greater than expected currency weakening against the US dollar
has grown.

Another risk to our forecast comes from the possibility that the NBU could
begin a de facto pegging of the hryvnya to a basket of currencies, rather
than just to the US dollar as at present.

[9] EXTERNAL SECTOR: The deficit recorded on Ukraine’s trade in

goods since the second quarter of 2005 is expected to expand over the
forecast period, owing to a further rise in the price paid for Russian gas
imports in 2007 and a drop in steel export prices in both 2007 and 2008.

Strong growth in import volumes, linked to a continued rise in incomes

and a pick-up in investment, will contribute to this trend.

Ukraine will nevertheless still be able to offset much of its trade in goods
imbalance through its invisibles surplus, which will limit the annual
current-account deficit to an average of less than 6% of GDP in 2007-08.

Ukraine will record a larger surplus on its services trade than in the past,
owing to an increase in the price charged to Russia for large-scale transit
of energy exports westwards.

The transfers surplus is also expected to remain substantial, owing to
rising remittances from Ukrainians working abroad. The combined surplus

on services and transfers is forecast to equal around 6% of GDP in 2007-08.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2.  UKRAINE, RUSSIA, KAZAKHSTAN HAVE GREAT POTENTIAL
        FOR NORTH DAKOTA FARM MACHINERY COMPANIES
     The three countries are North Dakota’s fourth-largest trading partner

Associated Press (AP), Bismarck, North Dakota, Thu, Nov 2 2006

BISMARCK – Lieutenant Governor Jack Dalrymple says three former Soviet

Union states have a lot of potential for North Dakota agriculture companies.

Dalrymple is leading 10-person North Dakota trade delegation to
Kazakhstan, Russia and Ukraine this week. Dalrymple and representatives

from seven North Dakota companies will be returning Saturday.

Dalrymple says potential sales for North Dakota companies that deal with

farm-related equipment is huge. He says in Russia alone there is a shortage
of 180-thousand farm machines.

Susan Geib (GUYB) is the executive director of the North Dakota Trade

Office. She says the three former Soviet Union states are North Dakota’s
fourth-largest trading partner.

Geib says North Dakota companies had 56 million dollars in sales there

last year. She says through the first six months of this year, there have
been 43 million dollars in sales.

Howard Dahl is the president of Amity Technologies in Fargo. The
company makes sugar beet harvesting equipment and other machinery.

Dahl says his company has done about 110 million dollars in sales to
Kazakhstan, Russia and Ukraine since 1991.

He says he expects sales of about 21 million dollars there so far this
year and even more next year. He says about 100 jobs at his factory
depend on the market to the three former Soviet Union states.      -30-

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FOOTNOTE:  The farming conditions around Fargo, North Dakota are
about as close to those found in Ukraine one can find in the United States. 
There are many specialty farm machinery companies in North Dakota who
have designed and now manufacture machinery specifically for the soil,
weather and crops found there.  In the 1990’s I worked very closely
with Howard Dahl, who comes from a three-generation, very innovative,
farm machinery manufacturing family, regarding his work to sell farm
machinery in Ukraine and Russia.    AUR Editor Morgan Williams.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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3.   NORTH DAKOTA AGRICULTURAL MACHINERY TRADE
          MISSION TO UKRAINE, RUSSIA AND KAZAKHSTAN

Office of the Governor, State of North Dakota
Bismarck, North Dakota, Thursday, Nov 2 2006

BISMARCK, N.D. – Lt. Gov. Jack Dalrymple, officials of the North Dakota
Trade Office and members of a trade delegation currently visiting
Kazakhstan, Russia and Ukraine today announced new sales resulting from

the mission.

SolarBee, a Dickinson, N.D. company, reported Thursday that it has entered
an Agreement to sell its solar-powered water circulators – a deal valued at
$220,000.

The initial sale is expected to be part of a much more lucrative, long-term
partnership between SolarBee and two Russian companies that have landed
five projects to improve the quality of water supplies in Kazakhstan and
Russia, said Chris Harris, SolarBee vice president of international
marketing.

The sales agreement follows a major sale completed last week by
Wahpeton-based WCCO Belting Inc., in Kazakhstan.

All of the trade mission’s participating companies have reported
establishing significant contacts with pre-qualified equipment buyers and

distributors – contacts they fully expect to result in new export sales.

“Our primary goal was to establish business ties with companies that were
identified in advance as being qualified, market leaders who could help
expand our international sales in these three countries,” Dalrymple said.

“Our companies have succeeded, and initial sales that have been generated
as a result of this mission are an added bonus.”

“Everyone I met with could eventually carry our equipment,” said Mike
Gates, president of Gates Manufacturing, Inc., of Lansford, N.D.

Gates, a manufacturer of heavy harrow tillage equipment, said his next step
will be to forward more information regarding his equipment prices and
freight charges to four equipment distributors in Russia and others in
Kazakhstan and Ukraine.

Harris said SolarBee’s first sale of water-improvement equipment in Russia
went to Moscow-based Kontur-Aqua. SolarBee also has agreed to supply a
larger Russian company called EWP Eurasian Water Partnership, he said.

“Both Kazakhstan and Russia are dealing with significant algae growth in
their water supplies and SolarBee is well positioned to help solve their
problems,” Harris said.

Tom Shorma, President of Wahpeton-based WCCO Belting, Inc., announced
Oct. 31, that his company secured a major order to supply swather belts for
a Kazakhstan equipment manufacturing company.

On Tuesday, Shorma began talks with the president and the general director
of one of Russia’s largest farm equipment manufacturing companies.

The company, with $1 billion in sales last year, is having problems with its
current belting systems and is considering WCCO Belting to supply its
belting needs, he said.

Other initial results from the mission’s second week, business meetings in
Moscow and Kiev, Ukraine, include:

Mark Hatloy, sales representative for Sund Manufacturing Company Inc.,
Newburg, N.D., said he has entered talks with four Russian Agricultural
equipment distributors to sell Sund’s harvesting and grain-handling
equipment.

Representatives of Fargo-based Brandt Holdings, Inc. are meeting with
distributors interested in marketing Brandt’s used, late-model John Deere
equipment throughout Ukraine, Russia and Kazakhstan.

Most members of the trade delegation will return to North Dakota Saturday,
after nearly two-weeks of meetings with potential business partners and
equipment buyers in Astana, Kazakhstan, Moscow and Kiev.

The delegation also participated in the international AgroProdExpo
agricultural trade show in Astana, Kazakhstan during the first week of their
trip. The economies of Kazakhstan, Russia and Ukraine continue steady
growth.

The countries’ governments and private sectors are heavily investing in the
development of their agricultural industries which are in great demand for
new and used, late-model equipment and machinery, the U.S. Department
of Commerce reports.

Lt. Gov. Jack Dalrymple is leading the trade mission, with representatives
from seven North Dakota companies. Six of the participating companies are
manufacturers and distributors of agricultural equipment.

Companies participating in the trade mission are: Sund Manufacturing, Inc.,
Lansford; SolarBee, Dickinson; WCCO Belting Inc., Wahpeton; Titan
Machinery, Fargo; Brandt Holdings Inc., Fargo; Duratech Industries,
Jamestown; and Gates Manufacturing, Lansford.                 -30-
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LINK: http://governor.state.nd.us/media/news-releases/2006/11/061102.html
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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4. UKRAINIAN PARLIAMENT SUDDENLY GIVES FIRST READING
                 APPROVAL TO SEVEN WTO RELATED BILLS

NTN, Kiev, in Ukrainian 1500 gmt 2 Nov 06
BBC Monitoring Service, Kyiv, Ukraine, Thu, November 2, 2006

KYIV – Ukrainian MPs demonstrated unprecedented unity when passing a
number of WTO-related bills in the first reading today, the Ukrainian NTN
TV has said.

While the opposition says that the progovernment coalition did this in
order to manipulate President Viktor Yushchenko into signing the state
budget law later, coalition MPs say that the laws were passed so swiftly
because they were amended significantly.

They deny any intention of horse-trading with the president, hoping that the
second reading of the bills will be as successful as the first one. The
following is the text of a report by Ukrainian television NTN on 2 November:

[Presenter] Ukraine made a step towards the WTO today. MPs voted almost
unanimously for the draft laws required for Ukraine’s accession to the World
Trade Organization. They passed five laws in the first reading and adopted
two more laws in full.

Oddly, both the opposition and the [progovernment] anti-crisis coalition
voted in favour of the bills, although until recently, the Communists and
the Party of Regions were against joining the WTO. Yuliana Saukh knows

why MPs changed their mind.

[Correspondent] Ukrainian MPs demonstrated unprecedented unity by
yielding 390 to 400 votes in support of the WTO-related bills. Both the
anti-crisis coalition and the opposition voted in favour of the laws,
although the latter are saying that this was just the first reading.

Such unity seems to be even more surprising if you recall that not long ago,
being in opposition, the Regions and the Communists obstructed the
adoption of the same laws, resorting to fisticuffs and the use of sirens.

The Party of Regions MPs explained the change on their stance by
significant changes in the bills.

The Communists remained true to themselves. They did not take
part in the vote. They quietly expressed their protest, clearing the way for
the their fellow coalition members. Besides, it was clear that there will be
enough votes without the Reds’ support.

[Vasyl Tsuhko, leader of the Socialist faction, in Russian] As for the
Socialists, the faction of the Socialist Party will vote in favour of all
WTO-related bills in the first reading. Why? Because this is a kind of
technique. After the first reading, MPs get the right to express their
opinions and to submit their proposals.

[Correspondent] This is just the first reading, the opposition says. MPs
from the Yuliya Tymoshenko Bloc [YTB] and the [propresidential] Our
Ukraine faction are not keen to welcome the coalition’s support,
expecting some kind of trick from them.

[Andriy Shkil, member of the YTB faction] The majority of the bills will be
passed in the first reading. But when it comes to the second, third and the
final one, they [the coalition] will agree to pass them only after the
president signs the state budget into law. The president will face such a
condition.

[Correspondent] Coalition members are insisting that they have nothing like
this on their mind. They believe that the bills will be passed in the second
reading in the same swift way.

[Taras Chornovil, member of the Party of Regions faction] The WTO-related
bills will be considered much sooner then the final, third, reading of the
budget. This is why will have no tools to somehow impede it. We cannot
procrastinate.

[Correspondent] If MPs continue to demonstrate this kind of unity towards
all the WTO-related bills, then Ukraine has a chance to become a member of
the World Trade Organization at the beginning of next year.    -30-

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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5.   UKRAINE SHOULD NOT SYNCHRONIZE WTO ACCESSION
                WITH RUSSIA, SAYS POPULAR RUKH PARTY

Interfax-Ukraine, Kyiv, Ukraine, Thursday, November 2, 2006

KYIV – The deputy head of the Popular Rukh of Ukraine party Volodymyr

Lanovy believes that synchronizing Ukraine’s joining the World Trade
Organization (WTO) with Russian would not be in Ukraine’s national interests.

“Today’s statements on the synchronization of Ukraine’s accession [to the
WTO], let’s say, with Russia, are in fact a proposal that Ukraine wait [to
join the WTO], not enter the WTO, but build its foreign economic policy,
proceeding from the norms that are in effect in Russia,” he said at a press
conference at Interfax-Ukraine.

Lanovy stressed that Ukraine has different economic conditions. “We cannot
coordinate our activity with Russia, because Russia has its own economic
interests,” he said. He also said delaying Ukraine’s accession to the WTO
damages national interests.

He said that according to estimates made in 2005, Ukraine annually loses 20%
of jobs in metallurgy, 17% in the chemical industry, as well as 5-6% of
incomes per capita that the country could receive should it join the WTO.

However, he said, the Economy Ministry’s estimates show that after Ukraine
enters the WTO, the number of jobs in agriculture will fall by 2%. He said
this will be connected not with “a decline in production,” but with reforms
and modernization to be conducted in the sector.               -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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6. BULGARIA WARNS OF ELECTRICITY EXPORTS CUTS IN 2007
      Has problems as Ukraine has stopped all coal exports and is blocking
           Russian coal from being shipped through Ukraine to Bulgaria.

Associated Press (AP), Sofia, Bulgaria, Thursday, November 2, 2006

SOFIA, Bulgaria — Bulgaria’s plans to slash its electricity exports next
year due to the European Union-required closure of two nuclear units, which
could threaten energy stability in the Balkans, officials said Thursday.

“The electricity that Bulgaria will be able to produce will be directed
mainly to the domestic market…and in certain periods there will be nothing
left for export,” said Lyubomir Velkov, the chief executive officer of the
state-run electricity provider NEK.

Bulgaria is the biggest electricity exporter in the Balkans, providing its
neighbors and other Balkan countries with more than 7 million megawatt-

hours of electricity a year. 
                  WILL MOTHBALL TWO AGING REACTORS
Bulgaria, however, will mothball two aging reactors in its Kozlodui nuclear
plant on Dec. 31, as part of its entry agreements with the E.U., which it is
to join on Jan. 1.

Economy and Energy Minister Rumen Ovcharov confirmed the warning, and

blamed the issue on the European Union’s insistence to see the two units
closed by the end of the year.

“European Commission experts repeatedly have said that the decommissioning
of units 3 and 4 of our nuclear plant would not lead to any shortages and
that alternatives exist,” Ovcharov wrote in a letter to the European Energy
Commissioner, Andris Piebalgs.

“Now we expect the European Commission to consider all open options and
suggest an acceptable solution.

“Bulgaria plays a leading role in the region’s energy market…and now panic
has begun to rise,” Ovcharov told reporters. “But despite the difficulties,
Bulgaria will keep its commitments towards the European Union.”

According to Ovcharov, electricity exports already have been cut because of
“problems with coal deliveries from Ukraine and Russia.”

Velkov said they were due to “a Ukrainian decision to stop coal exports and
to block Russian coal exports through its territory,” but didn’t elaborate.

In an effort to compensate for the nuclear units closure, the government has
launched an ambitious EUR4 billion project to construct a new nuclear plant
at the Danube port of Belene.

Russia’s Atomstroyexport recently won a tender for the construction of the
two 1,000 megawatt units, saying the first would be operational in 6.5
years.

Earlier this year, U.S.-based energy giant AES Corp. (AES) began
construction of a EUR1 billion coal-fired power plant in central Bulgaria
that should be completed by the end of 2009.

Both projects are hailed as an opportunity for Bulgaria to secure its
growing electricity needs and maintain its position as an energy hub in the
region.                                              -30-

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7. GAZPROM TO MORE THAN DOUBLE GAS PRICE TO GEORGIA
          To charge $230 per 1,000 cubic meters compared to $110 now

Associated Press (AP), Moscow, Russia, Thursday, November 2, 2006

MOSCOW — Russia’s state-controlled natural gas monopoly OAO Gazprom
(GSPBEX.RS) said Thursday it would more than double the gas price for
neighboring Georgia, a move the Georgian foreign minister said was the price
of his nation’s pro-Western course.

The announcement signaled Moscow’s continuing recalcitrant stance in its
disagreement with its small ex-Soviet neighbor, even as Foreign Minister
Gela Bezhuashvili was visiting Moscow in the hope of easing spiraling
tensions.

Bezhuashvili said he wasn’t surprised by the announcement because Russia had
been warning that it would put Georgia on the same payment terms as other
European nations, and that he had received assurances that Moscow wouldn’t
cut off gas or electricity supplies to his country.

But he said Tbilisi would like to see the pricing formula. “They present it
as a commercial deal, but there is a big portion of politics,” Bezhuashvili
told reporters in Moscow, adding that the new price was “the price we pay
for our choice” in setting pro-Western policies.

He called gas prices the only thing left to Russia as a tool to influence
Georgia, “but we won’t be pressured.” Bezhuashvili said his country had
worked to diversify its energy sources away from Russia, which has been
virtually the only supplier.

Georgia is counting on negotiations with Azerbaijan, Turkey and Iran, which
can cover Georgia’s 1.5 billion-1.8 billion cubic meter annual demand, he
said.

Gazprom said in a statement it plans to charge Georgia $230 per 1,000 cubic
meters of gas, compared with $110 that it pays now.

Relations between Moscow and Tbilisi have steadily deteriorated since the
2004 election of Georgian President Mikhail Saakashvili, who has sought to
take the Caucasus nation out of Russian influence, bolster ties with the
West and join NATO in 2008 – a course that has angered Moscow.

Relations took a sharp turn for the worse after Georgia briefly detained
four purported Russian spies in late September. Moscow responded with a
sweeping transport and postal blockade on Georgia and a crackdown on
Georgian migrants living in Russia.

Moscow has shrugged off Western calls for lifting the sanctions against
Georgia, saying it was acting because the Georgian government is plotting to
bring its breakaway provinces of Abkhazia and South Ossetia back into the
fold by force – allegations Georgia denies.

Bezhuashvili said Russia played a “negative role in manipulating the
conflicts,” and complained Moscow was turning a blind eye to illegal
activities in the two separatist regions.

He alleged that Russian banks are operating without licenses, contravening
international regulations to stop money-laundering, and counterfeit dollars
are being printed in South Ossetia.

“The most dangerous activity is (Russia’s) uncontrolled illegal arms deals
with the breakaway regions, that makes it very difficult to control the
situation,” he said.

Gazprom has consistently argued that price increases for former Soviet
neighbors are a long-overdue recalibration toward market pricing. However,
they have been widely seen in the West as part of the Kremlin’s attempts to
put pressure on ex-Soviet neighbors.

Gazprom temporarily switched off the gas it supplies to Ukraine at the start
of the year after Kiev refused to accept an abrupt price rise that was seen
as a calculated blow to its Western-leaning government.

Cuts would also deal a blow to Georgia’s landlocked neighbor, Armenia, which
receives its gas from Russia via Georgia. Armenian businesses already have
been forced to organize costly new export routes to Russia due to the
transport blockade.                                    -30-
————————————————————————————————

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========================================================
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========================================================
8.     RUSSIAN AMBASSADOR CHERNOMYRDIN DESCRIBES GAS
 PRICE OF $130 PER 1,000 CUBIC METERS AS A ‘GIFT’ FOR UKRAINE

Interfax-Ukraine, Kyiv, Ukraine, Thursday, Nov 2, 2006

KYIV – Russian Ambassador to Ukraine Viktor Chernomyrdin has described

the price of $130 per 1,000 cubic meters of gas as a gift from Russia to
Ukraine.

“I think it is a present. Especially when the price is $230-$250 [for other
countries],” he said at a press conference in Kyiv on Thursday.

“I think that $130 per 1,000 cubic meters is a very suitable price. The
leaders of your state [Ukraine] say so also,” the ambassador said.    -30-
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9.   RUSSIAN AND UKRAINIAN MEDIA SEES MOSCOW MAKING

   STIFF DEMANDS ON UKRAINE IN EXCHANGE FOR CHEAP GAS

ANALYSIS: OSC [US Open Source Center], USA, Fri, Oct 27, 2006

Russia-Ukraine: Both Russian and Ukrainian media are asserting that
Russia, in exchange for only a modest hike in natural gas prices for
2007, has laid down stiff demands on Ukraine, including backing away
from joining NATO and allowing the Russian fleet to remain in
Crimea.

Gazprom’s new 2007 price of $130 per 1,000 cubic meters for Ukraine is
far below what it is demanding from some other neighboring countries,
lending weight to suspicions that Russia is getting important political
concessions in return. Russian and Ukrainian officials denied any deals
over gas but discussed NATO and economic cooperation at high-level
meetings parallel to the gas negotiations.

After weeks of Russian-Ukrainian negotiations during which Ukrainian
Premier Viktor Yanukovych repeatedly said he hoped for a natural gas
price of $130 for 2007, that price was finally confirmed on 24 October
by Russian and Ukrainian gas company negotiators in Moscow (ITAR-
TASS, 24 October). Although $130 represents a substantial increase from
the present $95, it had been characterized by Yanukovych as a good deal
(Korrespondent.net, 28 September) and less than other countries will pay
(Uatoday.net, 5 October).

(1) Media have been avidly discussing the price and, citing insiders in the
Russian Government, Gazprom, and the Ukrainian Government, some
media have carried articles contending Moscow demanded big political
and economic concessions from Ukraine for relatively cheap gas. Moscow
daily Kommersant, citing Ukrainian Government sources, (2) specified
five Russian conditions in exchange for raising the price to only $130
(20 October).

— Ukraine must hold a quick referendum on joining NATO, which will
“bury the idea” since polls show 60% of Ukrainians against membership.

— Ukraine must allow Russia’s Black Sea Fleet to remain in Crimea at
least until 2017.

— Ukraine must continue to buy gas through Gazprom subsidiary
RosUkrEnergo for the next five years, (3) must get Turkmen gas
exclusively through Russia, and must not try to change the price it
presently charges Gazprom for using Ukraine’s pipeline to transport
gas to Europe. (4) Kommersant said Russian President Vladimir Putin
had presented these conditions to Yanukovych at a September meeting
and, according to a source “close to Gazprom,” this deal would be
confirmed when Russian Premier Mikhail Fradkov visited Kiev on 24
October.

Ukraine’s edition of Kommersant carried the same information but added
sharper comment. Citing a recent Yanukovych statement that if Ukraine
gets the price of $130, it may be only for one year and in 2008 may rise
to $200 or $210, Kommersant-Ukraina on 20 October concluded that
“thus, conceding on key questions of relations with Russia and losing the
main levers of influence on future negotiations, Ukraine gets only a delay”
in steep price rises. (5)

The Kommersant report was reprinted by the independent Moscow
websites Lenta.ru and Grani.ru on 20 October both using the title
“Ukraine Has To Turn Away From NATO for the Sake of Cheap
Gas.” It was reprinted by several Ukrainian websites: Uatoday.net
under the title “Yanukovych Traded NATO for Cheap Russian Gas?;”
Obkom under the title “Kremlin Threw Off Its Mask: For 130 Bucks It
Wants To Buy the Whole Ukraine;” and Ukrayinska Pravda under the
title “Russia Forces Ukraine To Reject NATO and Leave Fleet for $130?”
(20 October).

Another Moscow paper accused Yanukovych of planning to make big
concessions to keep a relatively low price for the rest of 2006 and for
2007:

— The independent Moscow business daily Vedomosti on 16 October,
under the title “Ukraine Will Sell Russia What Is Most Valuable,” said it
had learned that Ukraine is ready to pay Russia for keeping favorable gas
prices to the end of 2006 by “assisting” Russian state companies in
buying shares in Ukrainian aviation and energy companies. It said
Yanukovych in meetings with Putin and Fradkov in August and September
got Gazprom to keep the present price of $95 to the end of 2006 and to
aim at a “minimum” rise in 2007, to $130.

Vedomosti said present law forbids the sale of Ukrainian energy and
aviation companies, but it reported the Ukrainian Government now is
working out a list of assets to include in the 2007 privatization program
and these companies head the list. Evidence of Concessions

Yanukovych allies such as First Deputy Premier Mykola Azarov and
Deputy Premier Andriy Klyuyev denied making any concessions
(Interfax-Ukraine, 23, 24 October), and Russian Premier Fradkov was
careful to stress that gas negotiations and Russian-Ukrainian discussion
of political issues like NATO are unrelated. After the talks, Fradkov at a
24 October joint press conference with Yanukovych said they had not
discussed gas since this was being negotiated by the gas companies,
Russia’s Gazprom and Ukraine’s Naftohaz (Strana.ru, Korrespondent.net,
24 October).

Despite Fradkov’s assertion that his visit was not connected with the gas
talks, some saw his statements in Kiev about NATO, Ukraine’s Antonov
aviation company, and energy as confirming the stories that Russia was
demanding political and economic concessions. Ukrainian website
Glavred said the “strategic questions” mentioned by Fradkov “strangely”
coincided with the list of alleged concessions reported in the press:
“Whoever doubted the existence of such demands could hear them
directly from Fradkov’s mouth,” even though he did not link them explicitly
to gas prices (25 October).

— Fradkov said the Ukrainian public is against joining NATO, Ukraine
should consider Russian opinions in moving to join NATO and the EU,
and that Russia and Ukraine should “synchronize” their moves to join
the WTO (Interfax, 24 October).

— Fradkov stressed that Russian state agencies and businesses had
great interest in Ukraine’s Antonov-124 (Interfax-Ukraine, ITAR-TASS,
 24 October) and signed documents with Ukrainian leaders to renew
joint development of it (Kommersant-Ukraina, 25 October).

— Fradkov signed agreements on Russian-Ukrainian cooperation in
electricity and oil (Interfax, 24 October).

Some media argued that the very price was evidence of concessions since
it was much lower than that asked of other countries by Gazprom.

Independent Moscow website Politcom.ru noted that Ukraine got a lower
price than Moldova, which is paying $160, or the Baltic states, which pay
from $160 to $200. It concluded, “apparently to get such a ‘privileged’
status Ukraine had to concede something, but precisely what is still a
mystery” since the reported conditions are still only rumors (25 October).

Gazprom has set a price of $200 even for its close ally Belarus (Lenta.ru,
29 September), and Yanukovych said Poland will pay $282 and Romania
$300 (Uatoday.net, 5 October).

(1) See the OSC Analysis “Gazprom Moves To Raise Natural Gas
Prices for Neighboring Countries” (17 October 2006).

(2) Asked why the leaks came from Ukraine rather than Moscow,
Kommersant Publishing House director Andrey Vasilyev explained that
“Russian politicians already know that they cannot talk with anyone
about anything. But in Ukraine politicians still talk with journalists”
(Korrespondent.net, 23 October).

(3) Independent Ukrainian website Glavred, questioning why Russia put
so much importance on keeping RosUkrEnergo as middleman, concluded
it was needed “as a corrupt source of enormous money” (26 October).

(4) Not mentioned as a demand was Russian purchasing of shares in
Ukrainian pipelines or distribution companies, which has been very
controversial in Ukraine. Yanukovych has pledged not to surrender
ownership of any of Ukraine’s gas transport system (Interfax-Ukraine,
26 October).

(5) Kommersant later conceded that Russia had made some other
concessions to Ukraine in addition to the gas price. Kommersant.com
on 24 October said Ukraine not only got an “acceptable” gas price but
also an end to Russia’s ban on importing Ukrainian meat and dairy
products and renewed Russian cooperation in electricity and the aviation
industry.                                           -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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10.  RUSSIAN EXPERT: “WE AGREED ON GAS BECAUSE WE
                     RECEIVED SOMETHING IN EXCHANGE”

INTERVIEW: With Mikhail Delyagin, Director
Russian Institute of Globalization Studies
Conducted by: Olha Vasylevska
Glavred, Kiev, in Russian 1131 gmt 25 Oct 06
BBC Monitoring Service, United Kingdom, Friday, Oct 27, 2006

Ukraine is likely to have made political concessions to Russia in exchange
for 130-dollar gas price for 2007, the director of the Russian Institute of
Globalization Studies, Mikhail Delyagin, has said in an interview.

Some Russian companies might be interested in Ukraine’s NATO accession, he
said. However, he ruled out Russian Prime Minister Mikhail Fradkov’s idea of
synchronizing both countries WTO accession.

The following is the text of the interview with Mikhail Delyagin conducted
by Olha Vasylevska entitled “Economic expert Mikhail Delyagin: ‘We agreed on
gas because we received something in exchange” posted on the Ukrainian
website Glavred on 25 October; subheadings have been inserted editorially:

Long-awaited [Russian] Prime Minister [Mikhail] Fradkov’s visit to Ukraine
has brought nothing sensational. [Ukrainian Prime Minister] Viktor
Yanukovych just declared previously announced gas price, and his Russian
counterpart spoke about synchronization of WTO accession.

But if the gas turned out to be not a very popular problem for discussion
between both countries’ prime ministers on the banks of the Dnieper, it is
still a top theme among Ukrainian and Russian experts. Glavred proposed to
discuss it with the director of the Russian Institute of Globalization
Studies, Mikhail Delyagin:
                                 GAS PRICE CALCULATION
[Vasylevska] Mr Delyagin, a gossip about your recent visit to Ukraine where
you had a meeting with Viktor Yanukovych is actively circulating now. Is it
true?

[Delyagin] Indeed, I visited Ukraine, but a meeting with the Prime Minister
was not envisaged.

[Vasylevska] How would you explain the fact that Ukraine is receiving gas
from RosUkrEnergo [gas middleman], but meanwhile, Ukrainian Fuel and

Energy Minister Yuriy Boyko visits [Russian gas monopolist] Gazprom to
agree the price?

[Delyagin] I think it should be accepted as an unassuming hint that the one
is actually standing behind RosUkrEnergo.

[Vasylevska] Who, in your opinion, has determined the gas price for Ukraine
for the coming year as 130 dollars per 1,000 cu.m., and what were the
criteria?

[Delyagin] I think it was determined with the scientific choice method. It
means there was a certain upper level determined by Ukrainian experts in
chemical industry and metallurgy. It could have been 125 dollars, the same
way as 145.

We shall not find it out. Taking into account the quality of planning at
their enterprises, I have doubts that this assessment was lawful.

The Russian Federation had clear understanding of the fact that the price
should be higher than [current] 95 dollars per 1,000 cu.m. in order to be
able to sell Turkmen gas al least without losses and with minimal profit.

To put it politely, the rest depended on the course of the negotiations. The
price of 130 dollars will be retained for a year, and then we shall see.
                           LIKELY POLITICAL CONCESSIONS
[Vasylevska] There are numerous speculations nowadays that Russia will

sell gas for the price of 130 dollars to Ukraine in exchange for certain
political and economic concessions. To what extent are these assumptions
adequate in your opinion?

[Delyagin] I think these assumptions are close to reality. Obviously, we
have reached these agreements not because we are kind, gentle and fluffy,
but because we have received something in exchange. It is clear.

I have great doubts that Yanukovych will hand over the gas transportation
system. Ukrainian prime minister can promise anything, the same way as
[Belarusian President Alyaksandr] Lukashenka who has been promising for six
years and will promise as long.

In reality, Yanukovych can conduct a referendum related to NATO because it
corresponds to Ukrainian public position, along with his own stand (he has
to systemically bargain with the West). This discontent is one matter, while
documents of a referendum which can be sold much higher are a different
matter.

Of course, there will also be certain concessions with regard to status of
Sevastopol, the same way as with regard to gas transit price. I think it
will be a kind of a package agreement, and we shall learn its details after
the end of Mikhail Fradkov’s visit to Kiev. But we shall learn another part
much later.

[Vasylevska] Different people visited Russia to negotiate on gas supplies in
different periods. Someone was more successful, and someone less. Who is
currently the chief negotiator from the Ukrainian side?

[Delyagin] I don’t know, but I think Yanukovych is the chief one. He may
have a concrete representative, but I am not aware of his name.

[Vasylevska] Can we speak about Russia’s sincere interest in having European
Union countries, in particular, Germany, involved in a gas transportation
consortium?

[Delyagin] Being a final consumer, Germany defends transit interests in
Ukraine. But during the notorious “gas war” [in late 2005 – early 2006]
Germany gave it up, having said: “Fellows, these are your problems.” It will
be very good if Germany changes its position.
                                           WTO ACCESSION
[Vasylevska] Why is Moscow so interested exactly in a five-year agreement
between Ukraine and RosUkrEnergo?

[Delyagin] This is the maximal term subject to tentative forecasting. We are
interested in maximally long cooperation, but no-one knows what will happen
in five years.

[Vasylevska] During the recent period, we hear top-ranking Russian officials
speaking about Russia’s willingness to “coordinate its actions with Ukraine”
with regard to WTO accession. To what extent are these aspirations
realistic, in view of the fact that a number of bills on WTO accession were
adopted in Ukraine as early as last year?

[Delyagin] I have doubts that actions in this respect can be coordinated.
Ukraine is striving to the West. It is mainly not because the West is good,
but because the example demonstrated by Russia is far from being good,
especially its economic policy.

It is unpleasant for me to recognize this, but nevertheless… [ellipsis as
published] Russia has encountered very serious problems with the Americans
who will not make concessions.

I presume that Ukraine will join the WTO some time later, while Russia (I
hope so because WTO accession is a very dangerous issue) will not join it
for the time being.

Meanwhile, and it is natural, they speak that “we shall obligatory try to do
our utmost for accession” trying to preserve their image. In reality, it is
a great progress.
                             UKRAINE’S NATO ACCESSION
[Vasylevska] You assert in one of your articles published in Nezavisimaya
Gazeta [Russian newspaper] that a number of Russian companies working in
cooperation with Ukraine are interested in Ukraine’s NATO accession. Why?

[Delyagin] Ukraine’s NATO accession means elimination and liquidation of
military-industrial complex to the extent to which it is orientated at
Russia. A large number of plants will just be obliterated. Consequently,
Russia will have to create some of these plants from scratch.

It will mean large state funding and grand business. Some Russian companies
want these plants to be developed in Russia because it will be only their
business. There will be hectic constructions.
            GAS EXTRACTION, TRANSPORTATION IN RUSSIA
[Vasylevska] Information is being actively circulated that Russia is facing
immense gas shortages on the domestic market. In particular, according to
the Russian Institute of Energy Policy, extraction saw a 120bn-cu.m. decline
during the recent six years. What is it related to?

[Delyagin] There is no gas extraction decline in Russia at all. I don’t know
who is the one saying this nonsense. Actual figures can be seen on the
website of the Russian Statistics Committee. Indeed, there was a certain
percentage of exports decline in 2003, but no-one has noticed this.

Of course, there are risks that we can face gas shortages in the future if
the Yamal and Stockman deposits are not developed.

Due to the fact that the Stockman deposit will be developed for exports
under the present-day political system, the Yamal deposit is unlikely to be
developed, and then we can face a shortage problem.

On the other hand, we are currently compensating for the exported gas with
the one from Turkmenistan, and if Kazakhstan builds its gas pipeline the way
that gas will be cut off from us, we shall somehow have to eliminate this
Kazakh gas pipeline. But this is the problem of the year 2011.

Another point is that there were gas problems in the Republic of Komi and in
some other regions last summer, indeed. But this process is just at its
initial stage.

I think we shall still live a year quite normally without gas shortages. The
figures you have mentioned are something fantastic.           -30-

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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11.                           THE HIDDEN COST OF GAS

INFORM: Newsletter for the international community providing news,
views and analysis from the Yulia Tymoshenko Bloc (BYUT), Issue 17
Kyiv, Ukraine, Monday, 30 October, 2006

KYIV – It appears to many in the western world that Prime Minister Viktor
Yanukovych brokered a “wonder deal” with Russia by securing imported

natural gas in 2007 for $130 per thousand cubic metres

But a closer look at the deal unveils a hidden cost that strikes at the very
heart of Ukraine’s future foreign policy and national security.

According to press reports broken by the Russian daily Kommersant, the deal,
made with Russian Prime Minister Mikhail Fradkov on his visit to Kyiv, was
linked to a package of economic and political demands. Unnamed sources in
the government and Gazprom revealed that the price was conditional upon:

     [1] Ukraine holding a national referendum on joining NATO
     [2] An agreement for the Russian fleet to stay in Sevastopol until 2017
     [3] A guarantee to cooperate with Rosukrenergo for five years for the 
          supply of gas
     [4] An agreement that gas from Turkmenistan is received exclusively 
          through Russia
     [5] No change in the transit price for Russian gas.
               SO WHAT DOES THIS MEAN FOR UKRAINE?
A NATO referendum, held sooner rather than later, without the benefit of a
prolonged public educational information campaign, would certainly be in
Russia’s best interests.

The Kremlin still harbours deep concerns over the prospect of Ukraine and
Georgia joining the alliance.  Some 60% of Ukrainians are opposed to joining
NATO, so a quick referendum would almost certainly kill the issue.

Writing in the Kyiv post, Georgeta Pourchot, a Senior Associate at the
Centre for Strategic and International Studies, contended that “a referendum
on NATO membership has or should have nothing to do with the topic of gas.
Imposing this condition on Ukraine, a mere month before the start of the
long cold winter, smacks of political pressure and blackmail.”

The second bone of contention is the 20-year agreement, signed in 1997,
which grants rights to the Russian fleet to use the Black Sea port of
Sevastopol at a rental price considered to be well below market rates.

When earlier this year Ukraine raised the issue of increasing the rental,
the Russians cried foul, calling upon Kyiv to honour the original contract.

The fact that Russia had disregarded its legally binding gas contract with
Ukraine and unilaterally raised prices seemed not for one minute to suggest
double-standards at play.

Then there is the continuing demand for RosUkrEnergo as the interlocutor for
the import of gas. Moscow positioned the dubious company as a saviour which
had found a way to cushion Ukraine from even sharper price increases,
however most observers questioned the company’s opacity, believing it to
mask a scheme to make unnamed beneficiaries rich.

Despite the allegations, RosUkrEnergo is now entrenched and set to manage
the transfer of 55 billion cubic metres of gas to Ukraine – a deal it claims
is not hugely profitable given the low price conceded to Ukraine.

Irrespective of whom you believe, the fact remains that the Kuchma-era
architects behind the establishment of RosUkrEnergo have moved into
positions of power under Mr Yanukovych.

Yuriy Boyko, who was head of Naftogaz and instrumental in the founding of
RosUkrEnergo, is now ensconced as the government’s energy minister.

Critics of the gas deal, like Yulia Tymoshenko the BYUT and opposition
leader, believe there should be no role for intermediaries in executing
national energy policy.  But once again, Ukraine is not presented a choice.

The same could be said of the condition that Naftogaz must only purchase
Turkmen gas through Russia; a move no doubt calculated to reinforce the
Kremlin’s hold over its Central Asian siblings.

The final condition is a demand that  the transit price for gas through
Ukraine’s pipeline network remain at the current level of $1.60 per 100
cubic meters per 100 km.  This flies in the face of market rates which range
up to $3.20.

This demand appears less about political bullying and more about economic
coercion as it conveniently removes Ukraine’s only bargaining chip from the
equation.

 “While the official reason for Russia’s drastic and sudden increase in the
gas price for Ukraine last winter was a “compliance with current world
realities and prices in the gas market,” Russia does not recognise the right
of its neighbours to invoke the same principle in setting their transit
prices for Russian gas,” opined Ms Pourchot.

Rightly or wrongly, the new gas deal also has been widely connected with
Ukraine’s plans to join the World Trade Organisation (WTO).

At a press conference with Mr Yanukovich, Russian Prime Minister Fradkov
said that Ukraine should respect Russia’s position on issues like
cooperation with NATO, the European Union and the World Trade

Organisation. “I would say quite openly that we need to synchronize the
negotiation process of our countries on WTO,” Mr Fradkov said.

Mr Fradkov also expressed concern over President Viktor Yushchenko’s
pro-Western ambitions, a theme echoed by Ukraine’s First Deputy Prime
Minister Mykola Azarov, who put the blame on the gas price rises on the
Orange team. “If the government of Yanukovych had worked in 2005, there
wouldn’t have been the price of $95,” declared Mr Azarov.

He said that in 2005, Ukraine had every chance to continue paying a price of
around $45 for five years more and rounded on the post-Orange Revolution
governments whose “thoughtless, short-sighted policy ruined old agreements
with the Russians.”

Finally putting all thought of political concessions aside, is the deal good
business for Ukraine? Not so, according to Tim Ash, Managing Director of
Emerging Markets for Eastern Europe, Middle East and Africa at Bear

Stearns in London.

“From the Ukrainian perspective, this is a little disappointing, as the hope
would have been that this price would be fixed for three years.  As it is,
Russia has agreed only to fix the price for 2007. The assumption is that
Russia will be seeing what is delivered by the Yanukovych administration
with respect to its broader political and economic agenda,” wrote Mr Ash.

Hryhoriy Nemyria, Mrs Tymoshenko’s top foreign affairs advisor was also
critical, “The Yanukovych-government is painting the deal as a success but
in reality it is doing nothing more than perfuming the pig.

The new price will only exacerbate further the mushrooming debts of Naftogaz
to RosUkrEnergo, which may cause our government to make even more
concessions.  We all know the Russians are desperate to get their hands on
Ukraine’s gas-pipeline network.  That is the real prize at stake.”
                              SO WHERE IS THE DEAL NOW?
Interestingly, the deal does not require parliamentary or presidential
approval, and Mr Yanukovych has been at pains to stress that it is not a
deal between two governments but between two state enterprises.

To-date Mr Yushchenko has denied the alleged overt political dimension to
the deal.  Speaking in Helsinki, he said, “At the level of the president, no
political questions were discussed. I think and I am sure that the
government [did not discuss such questions] either.”

Mr Yushchenko’s deputy chief-of-staff, Oleksandr Chalyi said it was unclear
if the president would sign off on the deal, ” It’s still not clear how the
price formula of $130 per thousand cubic meters has been reached,” he told
reporters, “it’s not clear today if the inter-governmental agreements will
be signed.”

Many in the west see the deal as beneficial in that it at least avoids
another stand-off gas war that could interrupt their supplies.

Also, it provides gas far cheaper than the much touted $230 per thousand
cubic metres market rate, or at prices endured by out of favour nations such
as Georgia and Moldova.

Yet as Mrs Tymoshenko has pointed out, the sharp increase contradicts the
pledges made by Mr Yanukovych not to substantially increase gas prices.

“It is not clear what compromises Ukraine should take and which Russia
should,” commented Valery Chaly of the Razumkov Center, a Kiev-based
economic and political think-tank. “Coming from previous experience, I can
guess that the balance of compromises will not be in Ukraine’s favour.”

It is likely that the ramifications of the deal will be felt for some time
both inside and outside Ukraine.  It again illustrates the application of
energy as a political tool, and, in the light of such leverage, the need for
good leadership to determine the best deal and ultimately the course of the
nation.
                               IN SEARCH OF EUROPE
Last week President Yushchenko attended the annual EU-Ukraine summit held

in Helsinki (as Finland holds the rotational EU presidency).  Agreements were
signed on cross-border cooperation easing visa requirements and the
readmission of illegal immigrants.

Significantly, an agreement was signed on Friday to commence negotiations at
the beginning of 2007 on a joint free-trade area.

However, Finland’s Prime Minister Matti Vanhanen and President of
the Commission José Manuel Barroso, reminded Ukraine that a free-trade area
was conditional upon Ukraine securing membership of the World Trade
Organisation (WTO).

Hugh Patrick Mingarelli, director of the European Commission’s directorate
on Eastern Europe, said that Ukraine needs to adopt a further 21 laws in
order to qualify for WTO membership. The Cabinet of Ministers is expected to
submit the so-called WTO bills to parliament in early October.

President Yushchenko has urged parliament to endorse a package regarding the
WTO by mid-November for the country’s accession to the organisation in
December 2006.

Last Tuesday, Russia’s Prime Minister Mikhail Fradkov said that Ukraine
should respect Russia’s position on the issues of cooperation with NATO, the
EU, and the WTO. “I would say quite openly that we need to synchronize the
negotiation process of our countries on WTO,” Mr Fradkov said.

Conversely, President Yushchenko’s office was adamant that Ukraine should
join WTO as soon as possible, ruling out any steps to synchronize
membership. Deputy Chief-of-Staff Oleksandr Chalyi said, “we cannot talk
about synchronization of our accession into the WTO with the Russian
Federation.”

The concern from Moscow is that if Ukraine enters the WTO first, it may seek
to influence the terms of Russia’s entry.

Also, there is a fear that if Ukraine does get such leverage, it may seek to
diminish the importance of Russia’s trump card – energy – as a means to
influence Ukraine’s political and economic affairs.
                    FULL EU MEMBERSHIP OFF THE TABLE
The prospect of full EU membership was not up for discussion in Helsinki and
remains a sore point with many politicians in Brussels, who are against
further expansion, at least until new states are bedded down and outstanding
issues resolved.

There has been disquiet over the admission of Romania and Bulgaria which
will join the European Union as planned at the start of 2007 – swelling the
current 450 million EU population to 480 million, and entry talks are
ongoing with Croatia and Turkey.

President Yushchenko has made it clear that he wants membership talks to
begin in 2008 but EU officials weighed down by “enlargement fatigue”

pointed out that Ukraine has still a long way to go to satisfy conditions for
accession.

Notwithstanding the issues surrounding Ukraine’s aspirations, there appeared
genuine recognition of progress made in all areas relating to the EU-Ukraine
Action Plan and the need to proceed with its implementation.

The big question is whether the Yanukovych-government will continue to
support Ukraine’s western orientation.

“While it has made many of the right noises, it has thrown spanners into the
works to slow down progress,” said Yulia Tymoshenko who questioned Mr
Yanukovych’s enthusiasm for integration.

“To-date the parliamentary government has shown almost willful disregard to
the president’s foreign policies and has not hesitated to throw its weight
around, making a mockery of foreign policy and causing venerable
institutions to ask what is going on in Ukraine – who is steering the ship?
The split in Our Ukraine is testament to this conflict,” Tymoshenko stated.

A recent BBC report suggested that EU officials are “concerned that reforms
are being slowed by political divisions.”                         -30-
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For further information please contact: taras@byti.org.ua
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12. UKRAINIAN VP SAYS PRIVATIZATION OF ELECTRICITY SUPPLY

     COMPANIES SHOULD RESUME, SUPPORTS PRIVATE PROPERTY

Interfax-Ukraine, Kyiv, Ukraine, Thursday, November 2, 2006

KYIV – The Ukrainian government should resume the privatization of
electricity supply and generating companies, according to Vice-Premier
Andriy Kliuyev.

“I support private property. Objects should be privatized. [But] they should
be privatized correctly, and not wholesale,” he said at a press conference
in Kyiv on Wednesday.

Kliuyev said that the privatization of electricity supply companies that
exploit heat power plants would allow them to attract significant investment
to renovate the heat power sector.

“As for electricity generating companies, especially in the heat power
sector, significant funds should be invested in their reconstruction. I
believe that there is sense in considering their privatization,” he said.

He said that the government should also complete the process of the
privatization of electricity supply companies, which started several years
ago.

The vice-premier said that he did not support proposals by the State
Property Fund of Ukraine to sell small stakes in electricity supply
companies.

“I don’t support the sale of one, two or five percent [of stocks]. If [they
are] to be sold, they should be sold in full,” Kliuyev said.

He said that some electricity supply companies, in particular, the national
energy company Ukrenergo, which monitors the country’s energy system,

should remain in state ownership.                         -30-
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13.    UKRAINE: STATE CUSTOMS OFFICE SUSPENDS WHEAT
              AND BARLEY EXPORTS WITHIN ISSUED QUOTAS

Interfax-Ukraine, Kyiv, Ukraine, Thursday, November 2, 2006

KYIV – Ukraine’s State Customs Office has temporarily banned the export of
wheat and barley within the quotas previously distributed by the Economy
Ministry.

This decision was made in connection with the October 31 ruling passed by
Kyiv’s economic court, reads the letter of the State Customs Office’s chief,
sent to the heads of the regional customs offices.

As was reported, on October 31, Kyiv’s economic court suspended the
cabinet’s October 11, resolution on the introduction of grain export quotas
until the end of the year.

Managing Partner of Kyiv-based Astapov Lawyers law firm Andriy Astapov

told Interfax-Ukraine that the court had taken its decision to satisfy an appeal
from Astapov Lawyers.

“To prevent infringements on foreign economic laws, I require that the
customs registration of cargo shipped under one-off licenses issued by the
Economy Ministry for the export of wheat and barley to be suspended
temporarily, until the claim is settled,” reads the letter.

Astapov sad that the next meeting of the court on this case had not been

set yet.                                               -30-
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14.   UKRAINIAN-AMERICAN LEADER JUDGE BOHDAN FUTEY
                      RECEIVES JAMES MADISON AWARD

Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #785, Article 14
Washington, D.C., Friday, November 3, 2006

WASHINGTON – The United States Court of Federal Claims has
awarded Ukrainian-American leader Judge Bohdan A. Futey its
prestigious James Madison Award.  The award was announced during
the 19th Judicial Conference held in Washington, D.C. on October 25,
2006

Chief Judge Damich presented the award to Judge Futey. The Chief
Judge’s statement in presenting the award at the awards luncheon was:

“We now have the pleasure of turning to the awards presentation part
of this luncheon.  Each year at the court’s Judicial Conference, we use
the occasion to recognize and honor individuals who have made notable
contributions to the advancement of the court’s mission.

The James Madison Award is given periodically to a member of the
court’s family who has contributed notably to the advancement of justice
and the rule of law, whether within or outside of the context of the court’s
own jurisdiction.

In addition to his service on the court, our recipient this year has been
actively involved for many years with democratization and rule of law
programs organized by the Judicial Conference of the United States, the
Department of State, and the American Bar Association in Ukraine and
Russia.

He is an advisor to the International Foundation for Electoral Systems
and has served as an official observer during parliamentary and presidential
elections in Ukraine.

In recognition of his work to advance the rule of law throughout Eastern
Europe and, in particular, in his home country of  Ukraine, I am pleased to
present the James Madison Award to an esteemed colleague and friend,
Senior Judge Bohdan A. Futey.”                     -30-
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15. US & CANADIAN BUSINESS FIGURES DISCUSS ATTRACTION
       OF FOREIGN INVESTMENTS INTO UKRAINIAN ECONOMY

Ukrinform, Kiev, Ukraine, Wednesday, November 1, 2006

WASHINGTON – A round table at the John Hopkins University involved
discussion of attracting foreign investments for development of the
Ukrainian economy and peculiarities of business running in Ukraine. The
event drew representatives of US and Canadian business circles.

The participants stressed a necessity to expand economic cooperation with
Ukraine at the regional level. Chairperson of the Ukrainian Federation of
American Zenia Chernyk stressed that both countries’ efforts should be
directed toward attracting the Ukrainian business to operating in the USA.
She named cooperation in the energy, agriculture, tourism and pharmacy
sectors as the most prospect.

Representative of the investment fund “SigmaBleyzer” Morgan Williams
noted a significant economic potential of Ukraine and its stable
development. Under proper approach and persistent work a new economic
miracle is likely to be observed in Ukraine, he stressed.

President of the Ukraine-US Business Council Susanne Lotarski opined
that Ukraine is among the most dynamic countries of Europe and irrespective
of some disadvantages it’s economy undergoes a rapid development, which
attracts foreign investors and assures them in beneficial economic
cooperation with Ukraine.                            -30-
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LINK: http://www.kmu.gov.ua/control/publish/article?art_id=53136529 

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FOOTNOTE:  The Roundtable on Trade and Investment In Ukraine, 
Current Prospects and Challenges, Viewpoints from US & Canada was
organized by Andrew Bihun, Director of the Business Development
Forum of The Washington Group, Wash, D.C.  We congratulate Andy
for his work and appreciate the opportunity to participate. AUR EDITOR
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16.   UKRAINIAN PRIME MINISTER DISCUSSES PREPARATIONS
      FOR HIS  VISIT TO UNITED STATES WITH US AMBASSADOR

Interfax-Ukraine, Kyiv, Ukraine, Thursday, Nov 2, 2006

KYIV – Ukrainian Prime Minister Viktor Yanukovych discussed in Kyiv

on Thursday preparations for his visit to the United States with U.S.
Ambassador to Ukraine William Taylor, according to the press service
of the Ukrainian cabinet.

The press service did not disclose the date of the visit. Yanukovych and
Taylor also discussed prospects for cooperation between Ukraine and the
United States.                                              -30-

———————————————————————————————–
FOOTNOTE: Information around Washington indicates that because
of the U.S. elections and Thanksgiving week the visit by Ukrainian Prime
Minister Yanukovych to the United States will most likely take place early
in December.    AUR EDITOR
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17. PRESIDENT’S FORMER PRESS SECRETARY HERASHCHENKO
         BECOMES PRESIDENT OF UNIAN NEWS AGENCY IN KIEV

UNIAN news agency, Kiev, in Ukrainian 0850 gmt 2 Nov 06
BBC Monitoring Service, United Kingdom, Thu, Nov 02, 2006

KIEV – Iryna Herashchenko [former press secretary to President

Yushchenko] has been appointed president of the UNIAN news agency.

The agency’s director-general, Oleh Nalyvayko, introduced her to the staff
today. He said UNIAN’s stakeholders created this new post in the

management structure.

Commenting on the appointment, Herashchenko said her main goal is “to
strengthen, extend and increase the number of subscribers, to launch a
series of new media products and projects and to bring UNIAN to top
positions in the Ukrainian media space”.

She said she “will use her professional experience to strengthen the
agency’s position in the highly competitive media market so that UNIAN’s
subscribers could feel the new top quality”.

“I am glad to return to journalists’ workshop,” she said, recalling that her
work is always ruled by the principles of “freedom of speech, impartiality,
high journalist standards and professionalism”. She said there will be no
staff reshuffles. “We will work as one team,” she said.

A professional journalist, Iryna Herashchenko was a leading presenter and
the deputy chief of the political department on the Inter
TV channel until 2001.

From 2002 to 2004, she was the press secretary of the opposition leader,
Viktor Yushchenko. From 2005 to September 2006, she was the press

secretary of Ukrainian President Viktor Yushchenko.          -30-
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18.  UKRAINIAN INTERIOR MINISTER YURIY LUTSENKO DENIES
               PARLIAMENT, GOVERNMENT CAN SUSPEND HIM

One Plus One TV, Kiev, in Ukrainian 1730 gmt 2 Nov 06
BBC Monitoring Service, United Kingdom, Thu, Nov 02, 2006

KIEV – Interior Minister Yuriy Lutsenko has said that the parliament
resolution recommending the government suspend him from his duties

pending the outcome of an investigation of allegations of corruption among
senior police officers has no legal force.

Speaking during a studio interview on One Plus One TV on 2 November,
Lutsenko said, “In line with the current constitution, neither the Supreme
Council (parliament) nor the Cabinet of Ministers have the power to suspend
a minister.

They can dismiss me, but not suspend me. If my opponents want to stick

to current legislation, they should raise the question of dismissal and adopt
it.”

Lutsenko said that he did not believe the government of Viktor Yanukovych
was behind the move. “We work together fairly peacefully,” he said.

“The prime minister does not interfere in the particular tasks of the
Interior Ministry. I report calmly to the president and prime minister about
the problems and achievements of the Ukrainian police.”

Lutsenko said that there is a “very interesting” alliance of “ostensibly
opposing” factions who want to remove him. “From the political point of
view, this was the revenge of those who have problems with the law and

whose conscience does not allow them to sleep soundly at night,” he said.

“It is interesting that the people who initiated today’s events are in
ostensibly opposing factions – the Party of Regions and the Yuliya
Tymoshenko Bloc.”

One Plus One TV earlier reported that 23 members of the Yuliya Tymoshenko
Bloc faction had voted with the Party of Regions and Communists in favour

of the resolution on 2 November.

Lutsenko said that the corruption allegations, which appeared in a newspaper
article, had already been checked by the Prosecutor-General’s Office. “The
majority of alleged facts presented in the newspaper were thrown out,” he
said.

Lutsenko said that, while he is confident that there will be no problems if
the investigation is objective, “parliament may take a political decision,
because Lutsenko is getting in their way – that’s their right, they’re the
winners and they can dictate conditions.”                    -30-
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19. UKRAINIAN PRIME MINISTER YANUKOVYCH DOUBTS FOREIGN
                    MINISTER TARASYUK CAN GO ON WORKING

UNIAN news agency, Kiev, in Ukrainian 1540 gmt 2 Nov 06
BBC Monitoring Service, United Kingdom, Thu, Nov 02, 2006

KIEV – Prime Minister Viktor Yanukovych is convinced that Foreign Minister
Borys Tarasyuk cannot work in the government due to his opposition status.
He said this to journalists in Kiev today.

“A minister cannot work if he expresses his view that he is in opposition to
this government but is working in it,” Yanukovych said.
“That goes for people who have human principles,” Yanukovych said.

On 1 November, Yanukovych said that he has political differences with
Tarasyuk, but his government does not have the right to decide on the
expediency of his presence in the post of foreign minister (the head of the
Foreign Ministry is appointed on the president’s quota).    -30-
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20. PRES YUSHCHENKO SETS UP CONSTITUTIONAL COMMISSION

Ukrainian News Agency, Kyiv, Ukraine, Nov, November 2, 2006

KYIV – President Viktor Yuschenko has created a constitutional commission.
This follows from presidential decree No.926/2006 dated November 2, a copy
of which was made available to Ukrainian News.

The commission under the president will draw up propositions regarding
amendments to the Constitution and draft bills aimed at their
implementation.

In his decree, Yuschenko suggests Chairman of the Verkhovna Rada Oleksandr
Moroz, leaders of the factions and Premier Viktor Yanukovych to send their
propositions concerning candidatures to this commission.

As Ukrainian News earlier reported, in his annual address to the Verkhovna
Rada, Yuschenko came forth with the idea of setting up a constitutional
commission that would draft amendments to the Constitution.     -30-
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21. UKRAINE: YUSHCHENKO SUGGESTS PARLIAMENT PASS LAW
  ESTABLISHING FINES FOR PUBLIC DENIAL OF 1932-1933 FAMINE
     He also suggests punishing production, distribution and possession of
                        materials denying the famine with the same fine.
 

Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 2, 2006

KYIV – Ukrainian President Viktor Yushchenko is suggesting the
Verkhovna Rada to pass the law establishing administrative amenability
for public denial of the famine of 1932-1933 and punish such actions
with fines of 10-15 nontaxable minimum incomes of citizens.

This follows from the bill on the famine of 1932-1933, a copy of which
was made available to Ukrainian News.

In such a way, Yuschenko proposes supplementing the Code on
Administrative Violations with an article on public denial of the famine
of 1932-1933 in Ukraine.

He also suggests punishing production, distribution and possession of
materials denying the famine with the same fine.

He also proposes that such actions performed via mass media should be
punished with the fine of 20-30 non-taxable minimum incomes of citizens.

As Ukrainian News earlier reported, Yuschenko submitted a draft law that
suggested the Verkhovna Rada to acknowledge the famine of 1932-1933
as genocide against the Ukrainian people.

Parliaments of ten countries acknowledged the famine of 1932-1933 as
genocide against the Ukrainians.                         -30-

————————————————————————————————
      ALARMING PIECE OF LEGISLATION PROPOSED
                  The President has gone too far with this one
 
FOOTNOTE: For a person who has spent considerable time and
raised a fair amount of private funds over the past ten years to tell the
world about the genocide in Ukraine in 1932-1933, the Holodomor,
[induced starvation, death for millions, genocide] the news announcement
above about a proposed piece of legislation is a very shocking, alarming,
unbelievable, and a terrible turn of events in Ukraine.
 
Ukraine declared its independence from the Soviet Union fifteen years
ago and is supposed to be a country that now believes strongly in and
protects freedom of the press and freedom of speech.  This legislation
destroys freedom of speech and freedom of the press and one would 
hope, would be absolutely unconstitutional in Ukraine.
 
The above piece of legislation has no place whatsoever in a free and
independent society. There should be a public outcry in Ukraine and
around the world to have this piece of legislation withdrawn immediately. 
AUR EDITOR Morgan Williams
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22.    THIS IS THE MOMENT FOR EUROPE TO DISMANTLE
                               TABOOS, NOT ERECT THEM
                Far from criminalising denial of the Armenian genocide,
                     we should decriminalise denial of the Holocaust

COMMENTARY: Timothy Garton Ash, The Guardian
London, United Kingdom, Thursday, October 19, 2006

What a magnificent blow for truth, justice and humanity the French national
assembly has struck. Last week it voted for a bill that would make it a
crime to deny that the Turks committed genocide against the Armenians
during the first world war. Bravo! Chapeau bas! Vive la France!

But let this be only a beginning in a brave new chapter of European history.

Let the British parliament now make it a crime to deny that it was Russians
who murdered Polish officers at Katyn in 1940. Let the Turkish parliament
make it a crime to deny that France used torture against insurgents in
Algeria.

Let the German parliament pass a bill making it a crime to deny the
existence of the Soviet gulag. Let the Irish parliament criminalise denial
of the horrors of the Spanish Inquisition.

Let the Spanish parliament mandate a minimum of 10 years’ imprisonment for
anyone who claims that the Serbs did not attempt genocide against Albanians
in Kosovo.

And the European parliament should immediately pass into European law a

bill making it obligatory to describe as genocide the American colonists’
treatment of Native Americans.

The only pity is that we, in the European Union, can’t impose the death
sentence for these heinous thought crimes. But perhaps, with time, we may
change that too.

Oh brave new Europe! It is entirely beyond me how anyone in their right
mind – apart, of course, from a French-Armenian lobbyist – can regard this
draft bill, which in any case will almost certainly be voted down in the
upper house of the French parliament, as a progressive and enlightened step.

What right has the parliament of France to prescribe by law the correct
historical terminology to characterise what another nation did to a third
nation 90 years ago?

 If the French parliament passed a law making it a crime to deny the
complicity of Vichy France in the deportation to the death camps of French
Jews, I would still argue that this was a mistake, but I could respect the
self-critical moral impulse behind it.

This bill, by contrast, has no more moral or historical justification than
any of the other suggestions I have just made. Yes, there are some half a
million French citizens of Armenian origin – including Charles Aznavour,

who was once Varinag Aznavourian – and they have been pressing for it.

There are at least that number of British citizens of Polish origin, so
there would be precisely the same justification for a British bill on Katyn.
Step forward Mr Denis MacShane, a British MP of Polish origin, to propose
it – in a spirit of satire, of course. Or how about British MPs of Pakistani
and Indian origin proposing rival bills on the history of Kashmir?

In a leading article last Friday, the Guardian averred that “supporters of
the law are doubtless motivated by a sincere desire to redress a 90-year-old
injustice”. I wish that I could be so confident.

Currying favour with French-Armenian voters and putting another obstacle in
the way of Turkey joining the European Union might be suggested as other
motives; but speculation about motives is a mug’s game.

It will be obvious to every intelligent reader that my argument has nothing
to do with questioning the suffering of the Armenians who were massacred,
expelled or felt impelled to flee in fear of their lives during and after
the first world war.

Their fate at the hands of the Turks was terrible and has been too little
recalled in the mainstream of European memory. Reputable historians and
writers have made a strong case that those events deserve the label of
genocide, as it has been defined since 1945.

In fact, Orhan Pamuk – this year’s winner of the Nobel prize for
literature – and other Turkish writers have been prosecuted under the
notorious article 301 of the Turkish penal code for daring to suggest
exactly that. That is significantly worse than the intended effects of the
French bill. But two wrongs don’t make a right.

No one can legislate historical truth. In so far as historical truth can be
established at all, it must be found by unfettered historical research, with
historians arguing over the evidence and the facts, testing and disputing
each other’s claims without fear of prosecution or persecution.

In the tense ideological politics of our time, this proposed bill is a step
in exactly the wrong direction.

How can we credibly criticise Turkey, Egypt or other states for curbing

free speech, through the legislated protection of historical, national or
religious shibboleths, if we are doing ever more of it ourselves?

This weekend in Venice I once again heard a distinguished Muslim scholar
rail against our double standards. We ask them to accept insults to Muslim
taboos, he said, but would the Jews accept that someone should be free to
deny the Holocaust?

Far from creating new legally enforced taboos about history, national
identity and religion, we should be dismantling those that still remain on
our statute books.

Those European countries that have them should repeal not only their
blasphemy laws but also their laws on Holocaust denial. Otherwise the charge
of double standards is impossible to refute. What’s sauce for the goose must
be sauce for the gander.

I recently heard the French philosopher Bernard-Henri Lévy going through
some impressive intellectual contortions to explain why he opposed any laws
restricting criticism of religion but supported those on Holocaust denial.

It was one thing, he argued, to question a religious belief, quite another
to deny a historical fact. But this won’t wash.

Historical facts are established precisely by their being disputed and
tested against the evidence. Without that process of contention – up to and
including the revisionist extreme of outright denial – we would never
discover which facts are truly hard.

Such consistency requires painful decisions. For example, I have nothing but
abhorrence for some of David Irving’s recorded views about Nazi Germany’s
attempted extermination of the Jews – but I am quite certain that he should
not be sitting in an Austrian prison as a result of them.

You may riposte that the falsehood of some of his claims was actually
established by a trial in a British court. Yes, but that was not the British
state prosecuting him for Holocaust denial.

It was Irving himself going to court to sue another historian who suggested
he was a Holocaust denier. He was trying to curb free and fair historical
debate; the British court defended it.

Today, if we want to defend free speech in our own countries and to
encourage it in places where it is currently denied, we should be calling
for David Irving to be released from his Austrian prison.

The Austrian law on Holocaust denial is far more historically understandable
and morally respectable than the proposed French one – at least the
Austrians are facing up to their own difficult past, rather than pointing
the finger at somebody else’s – but in the larger European interest we
should encourage the Austrians to repeal it.

Only when we are prepared to allow our own most sacred cows to be poked in
the eye can we credibly demand that Islamists, Turks and others do the same.

This is a time not for erecting taboos but for dismantling them. We must
practice what we preach.                       -30-
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LINK: http://www.guardian.co.uk/comment/story/0,,1925401,00.html
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23.   UKRAINE’S FOREIGN AFFAIRS MINISTRY SURPRISED BY

           RUSSIAN FOREIGN MINISTRY’S STATEMENT ABOUT
      PROGRAM TO RECOGNIZE 1932-1933 FAMINE AS GENOCIDE

Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 2, 2006

KYIV – The Ukrainian Foreign Affairs Ministry is surprised by the Russian
Foreign Affairs Ministry’s statement that Ukraine is launching a campaign
around the issue of the 1932-1933 famine in Ukraine.

The Ukrainian Foreign Affairs Ministry’s press service announced this in a
commentary, a text of which Ukrainian News obtained.

‘The Ukrainian Foreign Affairs Ministry received with surprise the claim
about the so-called launching of a campaign around the issue of the 1932-33
famine in Ukraine. Even greater surprise was caused by the insinuation that
this issue is aimed against modern Russia,’ the commentary states.

The Ukrainian Foreign Affairs Ministry also says that it fails to understand
why the Russian Foreign Affairs Ministry writes the words famine and
genocide in quotes.

The Ukrainian side says that the famine in Ukraine has been a topic of broad
debate and discussion in Ukraine for many years and that these debates and
discussions are aimed at honoring the memories of the victims of the famine
and providing political and legal assessments of this tragedy involving the
Ukrainian people.

According to the Ukrainian Foreign Affairs Ministry, Ukraine has raised the
issue of the famine in Ukraine at the international level several times and
intends to continue doing so as a way of building on earlier initiatives.

Ukraine is convinced that securing recognition of the historical truth will
facilitate avoidance of a repeat of the genocide and mass violations of
human rights in the future.

‘We are counting on cooperation from the Russian side during discussion

of the issue of the famine on the international arena,’ the commentary states.

As Ukrainian News earlier reported, Foreign Affairs Minister Borys Tarasiuk
is hoping that member-countries of the United Nations Organization will
recognize the 1932-1933 famine in Ukraine as an act of genocide against the
Ukrainian people during the a session of the General Assembly of the
organization in autumn 2007.

During his address to the 61st Session of the general Assembly of the United
Nations Organization in New York on September 25, Tarasiuk called on
member-nations of the organization to recognize the 1932-1933 famine in
Ukraine as an act of genocide against the Ukrainian people.

Tarasiuk believes that the overwhelming majority of the member-states of the
United Nations Organization will support Ukraine’s proposal on the issue
while a few delegations will oppose. According to various estimates, between
3 million and 7 million people died in the 1932-1933 famine in Ukraine.
————————————————————————————————-

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24. PRESIDENT YUSHCHENKO PROPOSES PARLIAMENT RECOGNIZE
  1932-1933 HOLODOMOR AS GENOCIDE OF THE UKRAINIAN PEOPLE

Ukrainian News Agency, Kyiv, Ukraine, Thu, November 2, 2006

KYIV – Ukrainian President Viktor Yuschenko proposes the Verkhovna
Rada [parliament] recognize the Holodomor of 1932-1933 as a Genocide
against the Ukrainian people.

This proposal is included in a draft bill ‘On The Holodomor of 1932-1933
in Ukraine,’ the text of which Ukrainian News has obtained.

“The Holodomor of 1932-1933 in Ukraine is a Genocide of the Ukrainian
people”, the first article of the bill states. By this, to deny publicly the
Holodomor of 1932-1933 means desecration of the memory for the five
million victims and humiliation of the Ukrainian nation’s dignity.

With this bill Yuschenko proposes to oblige power bodies and local
self-governments to participate in the renewing and keeping the national
memory of Ukrainians, promote the nation’s consolidation and also to
disseminate information about the Holodomor and study this event.

The authorities also have to take part in immortalizing the memory of the
tragedy victims, particularly, by raising monuments and memorial signs to
them. They also must provide access to archives and other materials
related to the Holodomor.

Yuschenko proposes to appoint the Ukrainian Institute of the National
Memory, which is funded by the state budget as a designated authority of
the governmental policy in this sphere. By this the Cabinet of Ministers has
to create environment for it to work.

The President also proposes that the state would ensure conditions for
conducting investigations and activities on immortalizing memory of the
Holodomor victims basing on the governmental program.

This program is approved by the Cabinet of ministers and is submitted by
the Institute Of The National Memory. Money for this program have to be
provided from the budget.

Yuschenko introduced this draft bill in order to revere the Holodomor
victims’ memory and in honor of those who survived this tragedy.

Yuschenko also thinks that it is a moral duty and a necessary act of
restoring historic justice.

As Ukrainian News already reported, the Holodomor of 1932-1933 has

been recognized as an act of genocide against the Ukrainians by the
parliaments of 10 countries.                           -30-
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25.   PRES YUSHCHENKO SUBMITS BILL ON 1932-1933 FAMINE IN
UKRAINE TO VERKHOVNA RADA TO RECOGNIZE IT AS GENOCIDE

Ukrinform, Kyiv, Ukraine, Thursday, November 2, 2006

KYIV – President Viktor Yushchenko submitted the bill “On the 1932-1933
Holodomor (famine) in Ukraine” to the Verkhovna Rada [parliament], having
urged the MPs to pass it immediately.

The Acting Chairman of the Ukrainian Institute of National Memory,
Academician Ihor Yukhnovsky, will represent the bill in the Parliament.

The bill is aimed at restituting historical justice through giving a
political – legal assessment of the 1932 – 1933 famine in Ukraine, as
genocide against the Ukrainian people, commemorating the victims of the
famine and promoting intolerance to any manifestations of violence in
Ukraine.

As scientific researches proved, as a result of criminal actions on the part
of the authority in 1932 to 1933 millions of people died of artificially
arranged famine in Ukraine. The Stalin regime levied excessively high duties
of yielding bread upon peasants.

Special armed units of the Soviet punitive forces forcedly confiscated all
food resources from the peasants and blockaded whole territories not even
allowing anybody to leave their homes. The famine fact was fully concealed.

The 1932-1933 Holodomor in Ukraine, as genocide against the Ukrainian
people, falls under the definition of genocide in the UN Convention on the
Prevention and Punishment of the Crime of Genocide, dated of December

1948.

The 1932-1933 famine has been already recognized as genocide against the
Ukrainian people by some foreign parliaments.               -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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26. DIPLOMATIC SNIPING ON GENOCIDE AND LIGHTHOUSES

Deutsche Presse-Agentur (DPA), Germany, Thursday, Nov 2, 2006

KIEV – Diplomatic sniping between Ukraine and Russia continued on

Thursday with Kiev accusing the Kremlin of trying to white-wash genocide,
and Moscow refusing to remove troops from dozens of lighthouses in
Ukraine’s Crimea peninsula.

A statement by Ukraine’s Ministry of Foreign Affairs expressed ‘an inability
to understand’ Russia’s refusal to declare the Soviet Union’s 1932-33
famine – which centred in Ukraine – a case of genocide.

An estimated eight to ten million ethnic Ukrainians died in the man-made
disaster resulting from Soviet government efforts to force private farmers
onto collective farms by confiscating all food.

Most Ukrainians believe Soviet leaders ordered the famine with the intention
of destroying Ukrainian ethnicity.

The Kremlin and most Russians disagree, arguing the famines did not just hit
Ukrainians but a smaller number of ethnic Russian private farmers as well.

Russia’s Ministry of Foreign Affairs last month declared Ukraine’s efforts
to have the famine, known in Ukraine as the ‘Holodomor’, an
internationally-recognised genocide misguided, and criticised Ukraine for
blaming its problems on Moscow and attempting to undermine the reputation

of Russia.

Viktor Chernomyrdin, Russian ambassador to Ukraine, on Thursday added

more fuel to tensions between Kiev and Moscow by announcing the Kremlin
had no intention of pulling its troops out of facilities in the Crimean peninsula,
despite Ukrainian court orders.

A series of Ukrainian judges over the last twelve months have ordered Russia
troops to evacuate lighthouses along the Black Sea coast, arguing the
territory belongs to Ukraine.

Russia maintains naval bases in Crimea under the terms of a treaty with
Ukraine, but the status of the lighthouse chain is unclear.
During the summer Ukrainian court bailiffs took over one lighthouse by
force. Russia then placed armed marines in the other lighthouses.

The lighthouse issue is symptomatic of generally poor relations between
Russia and Ukraine, which have deteriorated since Ukraine’s 2004 pro-

Europe Orange Revolution.                          -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
27. UNIVERSITY OF LAS VEGAS (UNLV) COMPOSER VIRKO BALEY
         TO FINALLY FINISH HIS OPERA ABOUT UKRAINE FAMINE
            Receives fellowship from Harvard’s Ukrainian Research Institute

By Kristen Peterson, Las Vegas Sun
Las Vegas, Nevada, Thursday, November 02, 2006

Waiting 20 years to complete an opera that is dear to your heart demands
a little, well, patience. In a perfect world, Harvard University would call
and offer a five-month fellowship to finish the work. But what are the odds?

If you’re a well-known composer of Ukrainian heritage and the fellowship is
from Harvard’s Ukrainian Research Institute, they’re likely stacked in your
favor.

Ask Virko Baley, UNLV’s composer in residence, who got the call in April.
Would he be interested in completing “Hunger,” his opera based on the 1932
Ukraine famine? Of course he would. [Holodomor – induced famine, death
for millions, genocide, in Soviet Ukraine, 1932-1933.  AUR Editor]

It takes weeks of solid daily work to dig into an opera – even a 90-minute,
one-act opera. The Petro Jacyk Distinguished Research Fellowship gives
him that and more.

“As long as I keep my wine intake to a minimum, I’m sure I’ll be fine,”
Baley says with an understated smile.

It’s hard not to like the 68-year-old composer and conductor. He’s
generously conversational, witty and inspired. He’ll gladly walk you through
his music and research libraries and share his encyclopedic knowledge on
new music, old music and poetry.

Between teaching, conducting and completing commissioned works, Baley
has been thinking about “Hunger” since Bohdan Boychuck’s libretto was
completed in the 1980s.

Since arriving at UNLV in 1970 as a piano professor, Baley has written two
symphonies, chamber music, duets, various instrumental combinations and
concertos, most of which are performed nationally and internationally –
whether it’s for the New Juilliard Ensemble, a string quartet in Iowa or a
New York trombonist.

His two film scores are “Swan Lake: The Zone,” a poetic Ukrainian film
reflecting Soviet oppression, and “A Prayer for Hetman Mazepa.”

The National Symphony Orchestra commissioned him to write a chamber
music piece following its residency in Nevada last year.

Contracts have yet to be signed, but if the work reflects his varied
repertoire, it will be a tad avant garde, edgy and rhythmically complicated.

“There’s a little bit of a joke when Virko’s going to write you a piece,”
says Stephen Caplan, principal oboist with the Las Vegas Philharmonic and
UNLV oboe professor. “It’s going to be really difficult and you’re going to
get it at the last minute.”

He described Baley’s unique style: “It’s a complicated sound, and that turns
some people off. There are layers there. It’s something you’re not going to
get listening to for the first time. But with Virko, it’s worth it. You go
from being mystified to a real emotional core. And find that it’s not so
cerebral after all.”

Although definitively American, Baley’s Ukrainian roots run as deep
musically as they do professionally.

How much does his heritage influence his work? “You are what you eat,”
he says. “It comes out sometimes overtly. Other times, it’s more of a
fingerprint. There’s no attempt on my part to try to deny it, mitigate it,
subvert it.”

Born in 1938 in Radekhiv, Ukraine, which was part of the Soviet Union,
Baley’s childhood was a nomadic one, directly influenced by the war
around him.

The family came to the United States in 1949 and settled in Los Angeles.
Baley, a pianist, graduated from the Los Angeles Conservatory of Music,
and in 1970 moved to Las Vegas to teach piano at UNLV.

Composition is his love: “Somehow one must amuse oneself.”

When writing solo works, Baley says he likes to write for particular players
in mind: “I know them. I can write for their strengths. But frankly, just to
be mean, I’ll write for their weaknesses.”

Despite the joking, Baley’s music is not all brash and in your face. His
“Orpheus Singing” for oboe and string quartet is melodic.

His harshness, atonality, angularity and aggressiveness is “mellowing” with
age, Baley says, and the music he’s writing now is more giving. “There are
works of mine now that are extremely lyrical and melodic.” And despite its
dark themes, his first symphony has an exuberant sound.

Then there is “Treny,” a series of four works for cello and soprano based
on the work of a Polish poet whose young daughter had died.

Baley wrote it amid his own loss: His mother had recently died, as had his
oldest friend in Las Vegas and the wife of a good friend. The work, which
Baley describes as a metaphor for suffering, is unmistakably somber.

Many of the composer’s contemporary pieces reference Ukrainian folk
music.

Tymish Holowinsky, executive director of the Ukrainian Research Institute,
says the institute is pleased Baley accepted the fellowship, referring to
Baley as a “highly respected composer” and “distinguished musician and
musicologist.”

While at Harvard, Baley will also present an outline of 20th century
Ukrainian music.

At UNLV Baley is working to expand the eight-year-old composition
department, which will host a composers conference this spring and bring
in Pulitzer Prize-winning composer Steven Stucky from Cornell University,
Grawemeyer Award winner George Tsontakis from Bard College and Paul
Chihara from UCLA as faculty.

Meanwhile, he’s looking forward to finishing his opera. “The way you start
is sharpening pencils; you waste a lot of time, you doodle. You welcome
interruption; you’re not supposed to answer the phone, but when it rings
you rush to it.”

Fortunately for Baley fans, he sometimes just lets it ring.          -30-
————————————————————————————————
Kristen Peterson can be reached at 259-2317 or at kristen@lasvegassun.com.
————————————————————————————————
http://www.lasvegassun.com/sunbin/stories/do/2006/nov/02/566653882.html
PHOTOGRAPH of Virko Baley:
http://www.lasvegassun.com/sunbin/stories/do_cut/2006/nov/02/c00008980.html

——————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
28. VP MINISTER DMYTRO TABACHNYK SUGGESTS TO HOLD
     SCIENTIFIC CONFERENCE ON 1932-1933 FAMINE IN UKRAINE 
 

Ukrinform, Kyiv, Ukraine, Thursday, October 26, 2006

KYIV – Humanitarian Vice Prime Minister Dmytro Tabachnyk suggests to
hold an international scientific conference on 1932 to 1933 famine in
Ukraine with participation of Ukrainian, Russian, Kazakh, Italian scientists.

This was disclosed by him at the first sitting of the organizing committee
on preparations for marking Memory Day of Famine and Political

Repression’s Victims, held with participation of First Deputy Chief of the
Presidential Secretariat Ivan Vasiunyk, the Humanitarian Vice Prime
Minister’s press service told.

Dmytro Tabachnyk stressed that the famine remains a dreadful memory in
history of Ukraine and Ukraine will mark the 74th anniversary of its
initiation on November 25.

Dmytro Tabachnyk also stated an idea of expediency of selecting documents
and materials by historians on the famine for publications. The Cabinet of
ministers will aid search for unique information through ability to view
documents from archives of Russia and Kazakhstan.

The participants in the sitting of the organizing committee heard reports of
First Deputy Chief of the Presidential Secretariat Ivan Vasiunyk, Culture
and Tourism Minister Ihor Likhovyi and other representatives of the
authorities on preparations for the event.

The sitting resulted in Dmytro Tabachnyk’s decision to commission bodies

of the central and local executive authorities to elaborate offers on the
events’ plan within the next three days and submit them for the Culture and
Tourism Ministry’s consideration.                                -30-
—————————————————————————————————
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
29. MEMORIAL SOCIETY SAYS THERE ARE 900,000 VICTIMS OF
               POLITICAL REPRISALS STILL LIVING IN RUSSIA

Interfax, Moscow, Russia, Sunday, October 29, 2006

MOSCOW – There are some 900,000 victims of political reprisals in
Russia, according to the Memorial international charitable human rights
society.

“Among them are those who suffered political repression and also
members of their families, and most of them are elderly people whose
ranks are thinning,” the Memorial’s Executive Director Yelena Zhemkova
told Interfax on Sunday.

Victims of political repression will be commemorated in Russia on
Monday, October 30. This date was formerly observed as the Day of
Soviet Political Prisoners.

Zhemkova complained that authorities have not been attentive enough to
victims of political reprisals.

“The recent shift from social benefits to cash payments had an impact on
the Law on the Rehabilitation of Victims of Political Repression, passed
15 years ago, causing the victims’ living standards to fall.

Matters related to social benefits for victims of political reprisals were
relegated to regional authorities. Of course, those residing in Moscow
and St.Petersburg are better off than in poorer regions. Therefore,
ex-prisoners of the same concentration camp, who live in different regions,
are entitled to different cash benefits,” Zhemkova said.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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