AUR#787 Nov 10 Prime Minister Yanukovych To Visit U.S., Grain Export Restrictions Slamed by U.S., Germany & The Netherlands

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By Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #787, Article 1
Washington, D.C., Friday, November 10, 2006
Interfax Ukraine News,  Kyiv, Ukraine, Thursday, November 9, 2006

Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 9, 2006

Associated Press (AP), Kiev, Ukraine, Thursday, November 9, 2006


                     UNTIL ENID OF 2006/2007 MARKETING YEAR
Ukrainian News Service, Kyiv, Ukraine, Thursday, November 9, 2006

                        PRICES FOR FUEL AND LUBRICANTS 
Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 9, 2006

Ukrainian News Agency, Kyiv, Ukraine, Wed, November 8, 2006

         Guarantee necessary volume of food supplies and lower food prices
Interfax-Ukraine, Kyiv, Ukraine, Wednesday, November 8, 2006


Ukrinform, Kyiv, Ukraine, Wednesday, November 8, 2006

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, November 8, 2006

Regnum, Moscow, Russia, Tuesday, November 7, 2006

              The prime minister will not want to slow Ukraine’s WTO entry,
                              but gas prices may be a strong incentive.
The Economist Intelligence Unit Limited
New York, New York, Wednesday November 8, 2006


COMMENTARY: By Andriy Honcharuk, Advisor
To Prime Minister Viktor Yanukovych
Den, Kiev, Ukraine, in Russian 9 Nov 06; p 5
BBC Monitoring Service, United Kingdom, Thu, Nov 9, 2006

                                OR STRATEGIC INTEREST?
ANALYSIS: By Kateryna Illyashenko, Ukraine Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Nov 6, 2006


Millennium Challenge Corporation (MCC)
Washington, D.C., Wednesday, November 8, 2006

COMMENTARY: By Thomas Eymond-Laritaz
President of the Victor Pinchuk Foundation
“Delo” daily newspaper in Russian, Kyiv, Ukraine, Fri, Oct 27, 2006
Action Ukraine Report (AUR) #787, Article 16 in English
Washington, D.C., Friday, November 10, 2006

By Tammy Lynch
Institute for the Study of Conflict, Ideology & Policy at Boston University
Boston, Massachusetts, Thursday, November 9, 2006

OP-ED: Walter Parchomenko, Kyiv Post, Kyiv, Ukraine, Thu, Nov 09 2006

                              IT industry core to global e-crime battle
Tom Young,, United Kingdom, Thu, 09 Nov 2006

Amnesty International, New York, NY, Tuesday, 7 November 2006

Frank Shouldice in Odessa, Irish Times, Dublin, Ireland, Tue, Nov 07, 2006
             Church leader believes Russian church conspires against Ukraine
Silski Visti newspaper, Kiev, in Ukrainian 3 Nov 06; pp 1, 2
BBC Monitoring Service, United Kingdom, Tuesday, Nov 07, 2006
By Karen Buckelew, The Daily Record
Baltimore, Maryland, Tuesday, 7 November 2006
         Human rights group founded in Kyiv thirty years ago in Soviet Ukraine
Press office of President Victor Yushchenko
Kyiv, Ukraine, Thursday, November 9, 2006
By Morgan Williams, Publisher and Editor
Action Ukraine Report (AUR) #787, Article 1
Washington, D.C., Friday, November 10, 2006
WASHINGTON – Ukrainian Prime Minister Viktor Yanukovych, according
to several reports in Kyiv and in Washington, will visit the United States in
early December. 
PM Yanukovych is reported to be visiting in Washington, D.C. on
Monday, December 4 and Tuesday, December 5 and then be in New York
City on Wednesday, December 6th.  This will be Yanukovych’s first visit
to the U.S. since becoming Prime Minister for the second time in August
of this year.
The Prime Minister will be making the usual rounds in Washington visiting
with officials in the U.S. government, some legislative leaders on the Hill,
leaders of U.S. businesses active in Ukraine, and a variety of other private
officials with strong connections to Ukraine. 
Reports indicate there is a strong possibility Yanukovych will meet with
Vice President Richard Cheney, Secretary of State Condoleezza Rice,
Secretary of Energy Samuel Bodman and President/CEO of the Overseas
Private Investment Corporation (OPIC) Robert Mosbacher, Jr. 
President George Bush normally does not meet with Prime Minister’s
unless they are a head of state.  In Ukraine President Viktor Yushchenko
is considered the head of state. 
Issues likely to be discussed with the Prime Minister include Ukraine’s
accession to the WTO; the Cabinet of Minister’s severe restrictions on
grain exports; business and governmental corruption; VAT tax refunds;
NATO; Euro-Atlantic integration; energy pricing, transportation and 
conservation; alternative sources of nuclear fuel, relations with Russia;
OPIC’s outstanding insurance claim; regional issues with Moldova,
Georgia, Poland, Belarus and Romania and the recent approval by the
U.S. Congress for the Government of Ukraine to build a monument to
the Holodomor in 1932-1933 (induced starvation, death for millions,
genocide) on federal land in Washington, D.C.         
Kostyantyn Gryshchenko, former Ukrainian Foreign Minister and
Ambassador to the United States, was reported to have been in
Washington this week working on the arrangements for Prime Minister
Viktor Yanukovych’s upcoming visit.                  -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service] ========================================================
Interfax Ukraine News,  Kyiv, Ukraine, Thursday, November 9, 2006

KYIV – The U.S., German and Dutch Ambassadors to Ukraine on Thursday

expressed concern over limitations on the export of Ukrainian grain.

“We, the Ambassadors of the Federal Republic of Germany, the Kingdom of

the Netherlands, and the United States of America wish to convey our concerns
regarding the implementation of grain export restrictions by the government
of Ukraine,” reads a joint statement made public at a press conference at

As German Ambassador to Ukraine Reinhard Schaefers said the concerns
were linked, in particular, with the fact that the procedure for grain export
licensing and quota distribution is not transparent enough.

Moreover, there was no public discussion of the possible consequences of
these measures and a transition period to them.

Schaefers stressed that the limitations on the export of grain have led to a
halt in the export of grain from Ukraine, causing grain traders losses of
millions [of dollars].

“We also fail to understand how food security can explain the government’s
decision to limit exports of feed grains such as barley and corn,” reads the
joint statement.

U.S. Ambassador to Ukraine William B. Taylor said that the government

does not need to interfere in the market to achieve a goal that can be
reached in a different way.

“The restrictions on exports are causing serious damage to Ukraine’s
economy, its investment climate, and its reputation as a reliable trading
partner,” reads the joint statement.

Moreover, Schaefers said that the introduction of export quotas may have

a negative impact on the process of Ukraine’s joining the World Trade
Organization (WTO).

The German Ambassador is confident that it is evident that the impact of

the measures on Ukraine’s efforts to join the WTO will be negative.

At the same time, Taylor said the United States is not going to withdraw its
signature from a protocol signed with Ukraine on mutual access to the
markets of commodities and services, which is a prerequisite for Ukraine’s
WTO membership. At the same time, he said that no one is raising the
question on levying any sanctions vis-à-vis Ukraine if it declines to lift
the grain export limitations.

The ambassadors believe that the cabinet should in the near future cancel
its decision to curb grain exports. “We believe that Ukraine’s government
should review the issue of the approach to handle this situation,” he said.

Dutch Ambassador to Ukraine Ron Keller in turn expressed hope that this
country’s government “will do its best to settle this issue.”

FOOTNOTE: The U.S. business community working in Ukraine is very
pleased the United States government and our Ambassador William
Taylor are speaking out strongly against the severe, unnecessary, grain
export restrictions imposed by the government of Ukraine. Ukraine has
chosen to interfere with and manipulate private agricultural commodity
markets in a very destructive way at great expense to farmers, agri-
businesses, grain traders, shippers, rural towns and villages and the
agricultural industry. AUR EDITOR 
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 9, 2006

KYIV – Germany, the United States and the Netherlands are urging the
Ukrainian Cabinet of Ministers to abrogate the quotation of grain exports.
Ukrainian News learned this from the common declaration of the ambassadors
of Germany, the US and the Netherlands to Ukraine.

According to the declaration, the actions of the Ukrainian government aimed
at restriction of the export of wheat, barley and corn unfoundedly hamper a
normal functioning of the market; limitation of exports causes a serious
damage to the Ukrainian economy, its investment climate and the reputation
of Ukraine as a reliable trade partner.

The ambassadors noted that Ukraine’s grain traders had already suffered
losses exceeding USD 1 million; and farmers did not get access to the world
prices, continuing to suffer losses from the storage of non-sold grain.

Although the Ukrainian government promised that these measures will be
temporary, we believe that the situation in grain market is critical, and
advise immediate lifting of grain export restrictions, the statement says.

The US, Germany and the Netherlands noted that they support Ukraine’s
striving to reach flourishing and economic security by way of drawing
foreign investments, and expressed sorrow that the Ukrainian government
introduced measures that may hamper those efforts.

Restriction of exports goes in conflict with the spirit of Ukraine’s
laudable efforts aimed at accession to the World Trade Organization, the
declaration says.

It stressed that Germany, the US and the Netherlands recommend the

Ukrainian government to revoke all measures restricting exports.

It is a pity that the Ukrainian government decided to interfere with market
processes instead of taking greater efforts for cooperation with companies
in the branch in order to settle potential problems involved in deliveries,
the statement reads.

As Ukrainian News reported, in October the International Monetary Fund
recommended that the Ukrainian Cabinet of Ministers lift grain export

The Ukrainian Agriculture Confederation reported about a worsening of the
situation for grain traders because of the Kyiv business court verdict on
abolition of the October 11 resolution by the Cabinet of Ministers
concerning quotation of grain crop exports.            -30-

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

Associated Press (AP), Kiev, Ukraine, Thursday, November 9, 2006

KIEV – Three Western ambassadors to Ukraine, including the U.S. envoy,
criticized this ex-Soviet republic Thursday for putting limits on grain
exports, saying they could harm its bid to join the World Trade Organization
and discourage foreign investment.

“Our view (is) that it is not necessary to intervene in the market,” U.S.
Ambassador William Taylor said during a news conference with the German

and Dutch ambassadors. Taylor said the “damage is being done to WTO
prospects, to (the) investment climate, not just in the food sector.”

Ukraine, once known as the breadbasket of the Soviet Union, is the world’s
sixth largest grain exporter. In September, Ukraine’s government put limits
on how much wheat could be exported.

A court has frozen the export limits, but authorities continue to defend the
restrictions, saying they must ensure the country has enough wheat to supply
Ukrainians with bread. Rising bread prices in the past have sparked strong
public protests in Ukraine.

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

The ambassadors argued, however, that credible estimates indicated Ukraine’s
wheat harvest this year was in line with normal historical averages and was
nothing to be concerned about. They also said it was unclear how much grain
the State Grain reserve currently has in storage.

Additionally, the diplomats complained that the restrictions were not
enacted in a transparent manner. “In fact, we are talking about the
cessation of grain exports from this country,” German Ambassador Reinhard
Schafers said.

The ambassadors said that grain traders from their countries had invested
nearly US$1 billion (EUR790 million) in the Ukrainian economy and were

now facing losses in excess of hundreds of millions of dollars (euros).

“Investors…will think twice if they see the government intervene in the
market,” Taylor said.  President Viktor Yushchenko has made joining the
WTO a priority, and Prime Minister Viktor Yanukovych said he hoped
Ukraine could join by February.                       -30-
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                    UNTIL ENID OF 2006/2007 MARKETING YEAR

Ukrainian News Service, Kyiv, Ukraine, Thursday, November 9, 2006

KYIV – The Agricultural Policy Ministry and the Economy Ministry intend

to propose that the Cabinet of Ministers establish quotas for export of grain
until the end of the 2006/2007 marketing year. Agricultural Policy Minister
Yurii Melnyk announced this at a press conference.

‘The Agricultural Policy Ministry and the Economy Ministry are preparing a
government decision regarding establishment of the volume of the quotas

for export of grain until the end of the marketing year,’ he said.

Melnyk further said that the exact sizes of the quotas could not yet be
stated, but he added that the government would determine them based on

the fact that, in accordance with the ‘balance of grain,’ the total possible
volume of grain export is 9.5 million tons.
He noted that 5.8 million tons has already been exported.

Moreover, he said that part of the export quota for grain has already been
issued. According to him, export of 9.5 million tons of grain is not a
restriction for traders because this volume is ‘what we can realistically

‘In the near future, we will determine the quota until the end if this
marketing year,’ he said. According to him, the total volumes of export
cannot exceed 3.3 million tons of wheat, about 5 million tons of barley,

and slightly more than 1 million tons of corn.

Melnyk stressed that the government consciously made the decision to
introduce quotas for export of grain based on the fact that this year’s
gross grain harvest in Ukraine is less than last year’s.

At the same time, he said that the government unequivocally favors
development of exports because export revenues are a significant source

of state budget revenues.

However, he said that Ukraine’s export infrastructure is presently capable
of handling 15-18 million tons but added that Ukraine cannot yet export

such a volume of grain.

As Ukrainian News earlier reported, the State Customs Service has banned
export of barley and wheat based on the earlier established quotas in
connection with a ruling by the Kyiv Commercial Court, which ordered
suspension of the Cabinet of Ministers resolution that introduced the grain
export quotas.

The Parliamentary Committee for Agricultural Policy and Land Relations has
recommended that the Cabinet of Ministers consider the appropriateness of
establishing quotas for individual grain crops.

The Cabinet of Ministers introduced quotas for export of grain on October 11
until the end of 2006 and discontinued its licensing.           -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                        PRICES FOR FUEL AND LUBRICANTS 

Ukrainian News Agency, Kyiv, Ukraine, Thursday, November 9, 2006

KYIV – Agricultural Policy Ministry finds expedient to decrease prices and
trade markups for food in connection with reduction of prices for fuel and
lubricants. Agricultural Policy Minister, Yurii Melnyk, disclosed this at a

As to him, in late October – early November, prices for fuel and lubricants
fell by 16-20% as compared to August-September.

“We work on producers of agricultural products and processing enterprises

to adequately reduce prices in the food market, as expenses for fuel and
lubricants came down”, he said.

Melnyk noticed, that they agreed with the Poultry Farmers Association to
lower prices for poultry meat by 10% and also to reduce prices for eggs.

By this Melnyk specified, that these changes must touch upon not only
wholesale-retail prices but also the level of trade markups to prices, as
falling of fuel and lubricants’ prices reduces expenses for logistics and

“We have to pay attention at this work as today a real factor influencing
formation of trade markups exists – falling of prices for fuel and
lubricants”, he underlined.

By this he emphasized, that regulation of trade markups is in local state
administrations’ sphere. As Ukrainian News reported, the Cabinet of
Ministers considered possibility of reducing 2.5% of critical addition to
wholesale prices for food.                          -30- 

FOOTNOTE:  Once again the Cabinet of Ministers is interfering in
private commodity markets.  This interference is not necessary and
certainly not needed or helpful.  When will the Agricultural Policy
Ministry learn to let the private markets work and do their job?  Setting
prices and markups in a private, market driven economy is not the job
of the Agricultural Policy Ministry.  This is not Soviet Ukraine any
longer with a centrally planned economic system.  AUR EDITOR
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Ukrainian News Agency, Kyiv, Ukraine, Wed, November 8, 2006

KYIV – The Economy Ministry considers the pace of purchase of grain

into the state reserve to be slow. Economy Minister Volodymyr Makukha
announced this to journalists after the Wednesday’s Cabinet of Ministers

‘As of today, the process is sufficiently sluggish because all grain is
being held back,’ he said. He explained that the grain is being purchased
into the state reserve through organization of tenders.

Makukha also said that in order to increase the quota for export of grain
from Ukraine, it is necessary to determine the existing ‘balance of grain’
and obtain absolutely authentic information about the quantity of grain that
the state presently possesses.

According to him, it will be possible to speak of increasing the grain
export quota only after this. According to Makukha, the quota for export

of grain is a temporary measure that will remain in place until the issue of
ensuring the country’s internal security is resolved.

As Ukrainian News earlier reported, the State Committee for Material
Reserves intends to invite tenders November 14 for delivery of food-grade
grain harvested this year.

Grain-market operators offered the State Reserve 420,500 tons of food-

grade grain harvested in 2006 via tenders on September 12 and 19.

The committee bought 82,600 tons of food-grade grain via a tender on
September 5 and 51,300 tons via a tender in August.

On August 31, the State Committee for Material Reserve sold 3,500 tons
of grain for more than UAH 1.3 million.

In the first half of this year, the State Reserve sold 194,500 tons of grain
from its old stocks for UAH 97.355 million via eight competitions under its
2006 reserve replenishment program.

The State Reserve intends to buy about 400,000 tons of newly harvested grain
under the 2006 reserve replenishment program and complete the purchase in

The Cabinet of Ministers approves the volumes of purchases by agreement

with the relevant ministries.                            -30-
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         Guarantee necessary volume of food supplies and lower food prices

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, November 8, 2006

KYIV – Ukrainian Premier Viktor Yanukovych has asked Vice Premier

Andriy Kliuyev to prepare reports on steps taken to provide Ukraine with
energy and food security.

While opening a meeting of the government in Kyiv on Wednesday,

Yanukovych ordered Vice Premier Kliuyev and Fuel and Energy Ministry
Yuriy Boiko to prepare a report on the state of the energy security of the

Besides, the premier asked Kliuyev and Agriculture Minister Yuriy Melnyk

to report on the work done to guarantee the necessary volume of food
supplies and to lower food prices.
FOOTNOTE:  The concept of food security is taken right out of the
handbook on how to run a centrally planned economy and is never
successful, just the opposite. In the early 1980’s I visited with the
Minister of Agriculture in Egypt.  The sign on the door to his office
was: Minister of Agriculture and Food Security. This meant his main
job was to keep the price of bread very, very low on the streets of Cairo
and Alexandria regardless of what it cost. The cost was terribly high
because the Ministry of Agriculture implemented a group of terrible
policies that were very counterproductive and reduced Egypt’s food
security instead of helping it at a very high cost to the budget.
The PM wants the Agriculture ministry to artificially lower food prices
at the expense of farmers and rural villages. All Agriculture Minister Yuriy
Melnyk needs to do to guarantee the necessary volume of food supplies
at reasonable prices for the citizens of Ukraine and to produce export
income is to stay out of the way and let private business and private
markets work.  He needs to keep the Cabinet of Ministers from
continuing to implement unsound practices and policies regarding
agriculture and agribusiness in Ukraine as they have for most of the
past fifteen years.    AUR EDITOR
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Ukrinform, Kyiv, Ukraine, Wednesday, November 8, 2006

KYIV – The Ukrainian Government may cancel its decision on limitation of
grain export in case reliable estimates of industrial grain supply will
allow to, First Vice Prime Minister, Finance Minister Mykola Azarov said.

According to him, the Government will be submitted with the relevant

data in the near future.

In case we will be confident the country possesses enough grain supplies,

we will abolish all the restrictions, introduced earlier, Mykola Azarov said.

In turn, Vice Prime Minister Andriy Kliuyev stated his opinion, that
licensing grain export enabled to avoid price hike for bread.

Thus the Agrarian Policy Minister faced a choice, either to impose quoting
and provide Ukraine with sufficient amounts of bread, or cut grain supplies,
which will lead to two-fold price boost for bread.       -30-

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

Interfax-Ukraine, Kyiv, Ukraine, Wednesday, November 8, 2006

KYIV – The Verkhovna Rada, Ukraine’s parliament, will next week consider
13 bills necessary for Ukraine’s joining the WTO, speaker Oleksandr Moroz
said during his meeting with US ambassador William Taylor on Wednesday.

As the speaker’s press secretary Viktoriya Shvedova told journalists, the
sides discussed issues of drafting and considering WTO-related bills.

According to Shvedova, the US ambassador praised the Verkhovna Rada’s
performance on drafting the according bills. Taylor expressed the opinion
that adopting these bills will indicate the direction of the parliamentary
coalition’s foreign policy.

Moroz expressed hope that a positive decision on Ukraine’s joining the
WTO would be taken during the WTO council meeting in February 2007.

According to Moroz, next week the parliament plans to consider 13
WTO-related bills, 10 of them at the first reading and 3 at the second
reading. He said he hoped that by the end of November, all the bills needed
for Ukraine to join the WTO would be adopted.

Taylor in turn said that the U.S. Congress is interested in developing
partnership relations with the Verkhovna Rada.                -30-
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Regnum, Moscow, Russia, Tuesday, November 7, 2006

KIEV – “Unfortunately, there are people in the Ukrainian government who do
not struggle for the country’s joining WTO but impede the process. And,
unfortunately, this today has nothing to do with the domestic manufacturer.

This is really connected to geopolitics,” chair of the subcommittee of the
Supreme Rada for the regulatory policy and entrepreneurship Ksenia Lyapina
told REGNUM correspondent in Kiev Nov 7.

Lyapina did not mention particular names of officials who “impede the
process of joining WTO,” she merely maintained that the process “is directly
dependent on private agreements between Ukrainian and Russian sides.”

“If Ukraine joins WTO earlier than Russia, it will be able to get in the
working group for Russia’s joining WTO and articulate relevant requirements
toward its northern neighbor, which is not at all liked by Russia.

I do not know how to solve the problem; at least, Ukraine could sign some
joint agreement with Russia providing that we will not create any additional
conditions for each other and impede the processes of joining WTO.

But the fact is that Russia today is much more distant from WTO than
Ukraine, for Russia has not yet settled issues with the main player at WTO –
the US. We have settled all the issues,” Lyapina said.

According to Lyapina, “the Russian side fights trade wars with Ukraine, and
joining WTO may put an end to this.” As an example of a trade war Lyapina
brings Russia’s banning Ukrainian meat imports.

“A great geopolitical game is under way. But there is no way for Ukraine to
retreat. If we stop ‘at the roadside,’ it will be then more and more
difficult for us to joint WTO,” Lyapina concluded.

November 6, first vice prime minister, minister of finance of Ukraine
Nikolay Azarov said at meeting with ambassador of Great Britain to Ukraine
Timothy Barrow that Ukraine could be ready to join the WTO in late
January-early February 2007.

October 27 in Helsinki, president of Ukraine Viktor Yushchenko said he was
sure that the Supreme Rada of Ukraine would adopt the packet of bills
related to joining WTO until November 20, which would allow the country to
join the organization before the end of 2006.

Prime minister of Ukraine Viktor Yanukovich stated that as early as in
November the Supreme Rada would be able to ratify major bills required to
join WTO.

According to the plan of immediate measures of combating crisis in economic
and social spheres developed by the government of Yanukovich, finalizing of
the multilateral and bilateral negotiation process with countries-members of
the working group for considering Ukraine’s application to join WTO is
planned for December 2006.                               -30-
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 If you are receiving more than one copy of the AUR please contact us.
            The prime minister will not want to slow Ukraine’s WTO entry,
                             but gas prices may be a strong incentive.

The Economist Intelligence Unit Limited
New York, New York, Wednesday November 8, 2006

Ukraine is facing pressure from Russia to synchronise the two countries’
accession to the WTO-a move that would slow Ukraine’s entry and the
start of a free-trade deal with the EU.

On balance, despite his pro-Russian leanings, prime minister Viktor
Yanukovych is unlikely to agree, for it is scarcely in his interests to do

However, there is still doubt over whether Ukraine will now move swiftly to
join the WTO or whether Mr Yanukovych’s foot-dragging will continue.

In the wake of signing an agreement on October 24th on the price Ukraine
will pay for imported gas in 2007, Russian prime minister Mikhail Fradkov
urged Ukraine to hold talks with Russia over its accession to the World
Trade Organisation (WTO) and even to synchronise the two countries’ entry.

In practice this would amount to Ukraine slowing down its WTO entry, as
the country has an opportunity to wrap up this process by December.

Russia is a few steps behind Ukraine and while it could complete
negotiations and preparations in late 2006 or at some point in 2007, there
is a risk that the process could be extended, or that Russia’s government
could halt the process because it doesn’t like the terms on offer.
                                    FRADKOV’S GAME
There are three main elements to Mr Fradkov’s proposal.

[1] First, there is a matter of prestige: Russia would prefer to lead
     Ukraine (and Kazakhstan) into the WTO, rather than follow its
     fellow former Soviet states into the organisation.
[2] Second, Ukraine’s accelerated accession to the WTO would be
     followed by the start of EU-Ukrainian talks on a free-trade
[3] Third, there is a threat to Russia’s leverage over Ukraine.

If Ukraine entered the WTO first, it could conceivably seek to influence the
terms of Russia’s entry.

At present Russia has considerable leverage over Ukraine, primarily because
the latter depends on imports for around 75% of its gas consumption and the
pipelines delivering this gas are under Russian control. (Russia’s leverage
is not absolute, however, as it depends on Ukrainian pipelines to deliver
80% of its gas exports to Europe.)

If Ukraine were in a position to influence the terms of Russia’s WTO entry,
its leverage vis-à-vis Russia would improve. In an attempt to avoid this,
Russia seems to have persuaded WTO member the Kyrgyz Republic to
withhold its approval for Ukrainian accession to the WTO.

Mr Yanukovych is often described as pro-Russian, but this is only partly
correct. He enjoyed Russian support during Ukraine’s 2004 presidential
election and is certainly more favourably inclined towards Russia than the
election’s eventual winner, Viktor Yush-chenko.

At the same time, under the rule of Eastern Ukrainian politicians such as Mr
Yanukovych, prior to 2005 Russian business was largely shut out of Ukraine.
So it does not follow that Mr Yanukovych, although he is from
Russian-speaking Eastern Ukraine, will grant Mr Fradkov’s wish.

Indeed, synchronisation of accession with the WTO has drawbacks for Mr
Yanukovych. Domestically it would drive a wedge between his party, Regions
of Ukraine, and Mr Yushchenko’s Our Ukraine.

Accelerated WTO accession was a key element of the common agenda that
Messrs Yushchenko and Yanukovych agreed before the former named the
latter as prime minister.

For the president, swift WTO accession is vital because it increases
Ukraine’s international economic integration and paves the way for the start

of talks in February 2007 on an FTA with the EU.

Although Mr Yanukovych wields considerable power as a result of
constitutional changes that took effect at the start of 2006, he still has a
strong interest in good relations with Mr Yushchenko and Our Ukraine.

Synchronisation with Russia would also work against the interests of
Ukraine’s steel oligarchs, most of whom are Mr Yanukovych’s allies, as

WTO accession would increase export opportunities for Ukrainian steel.
                                     THE GAS ISSUE
For these reasons, we do not expect Mr Yanukovych to agree to synchronise
WTO accession with Russia. The main threat to this forecast is the question
of gas prices.

At the start of 2006 Ukraine’s government agreed to buy Central Asian gas
from RosUkrEnergo-a venture owned jointly by Ukrainian businessmen and
Russian gas monopoly Gazprom-at a price of US$95 per 1,000 cu metres,
which was nearly double the previous price.

However, this is still far below the “market price” prevailing in Western
Europe, which has been around US$240 per 1,000 cu metres for much of
2006, and Russia has indicated its intention to push gas prices for all CIS
states towards European levels.

At their October 24th meeting, Messrs Fradkov and Yanukovych agreed
that Ukraine would pay US$135 per 1,000 cu metres for gas in 2007.

The Ukrainian government is confident that, at this price, industry will
continue to prosper. However, the authorities were hoping to fix the gas
price for several years rather than just 2007.

If Russia explicitly links future gas pricing to the issue of WTO accession,
it is possible that Mr Yanukovych might be swayed in favour of Mr
Fradkov’s proposal.                                   -30-
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COMMENTARY: By Andriy Honcharuk, Advisor
To Prime Minister Viktor Yanukovych
Den, Kiev, Ukraine, in Russian 9 Nov 06; p 5
BBC Monitoring Service, United Kingdom, Thu, Nov 9, 2006

Ukraine should become some 10 per cent richer if it joins the WTO, Andriy
Honcharuk, an adviser to Prime Minister Viktor Yanukovych, has said in an
article. Metallurgy will make big gains, but agriculture may lose initially,
he predicted.

The following is the text of the article by Honcharuk entitled “What awaits
Ukraine from WTO accession?” published in the Ukrainian daily Den on 9

The process of Ukraine’s accession to the WTO is now in the concluding
stage. And it is important for our citizens to realize what Ukraine will get
from this step. The prime ministerial adviser and former minister of foreign
economic relations and trade, Andriy Honcharuk, talks about this:

WTO membership will be a stimulus for the creation of stable legislation and
an attractive investment climate. It will assist the implementation of
structural modernization of the economy as a whole, taking it up to world

According to expert forecasts, the overall growth of prosperity from
Ukraine’s joining the WTO will exceed 10 per cent of the volume of
nationwide consumption. These calculations are confirmed by the experience
of European countries that recently joined the WTO.

Let us examine what will happen to sectors of our economy after joining the
WTO. Metallurgy will be a big winner, of course. It is not only an export
oriented industry (its output accounts for over a third of Ukrainian
exports). It also suffers more than any from commercial restrictive

There are currently 24 anti-dumping sanctions operating in 11 countries in
relation to its output. Henceforth we will receive the possibility to defend
the interests of our metallurgists more effectively.

As a consequence, in the assessment of experts, this Ukrainian industry will
increase its overall output by 22 per cent in the long-term prospect after
joining the WTO. The situation is virtually the same for the chemicals

As far as the textiles industry is concerned, starting from 2001 it has
already been working in conditions of a multilateral textiles agreement.
This means that all the rates and norms operating in this area have been
corresponding for five years now to the obligations that Ukraine is taking
on when joining the WTO.

But we have to be prepared for the fact that domestic agriculture will be
the most vulnerable in the new liberal conditions. After all, WTO membership
requires full market reform of the agrarian sector to be carried out, and
access to the market of agricultural produce to be liberalized.

An unfavourable factor here will also be the fact that the agricultural
sector, which provides about 16 per cent of jobs and 14.5 per cent of the
country’s GDP, is insufficiently reformed at the same time. And therefore
global interventions in its work may be very painful at first.

However, those producers of agricultural goods who keep pace with time can
feel calm. It is also not unimportant that after both Ukraine and Russia
become members of the organization, the latter will no longer be able to
apply restrictive measures to our dairy and meat exports.

Apart from that, nobody will make Ukraine reduce support for agriculture in
such a way as to deal it irreplaceable losses. It is a matter only of
ensuring that the level of support that our agriculture wants to receive is

Thus, internal pricing support should be reduced over a period of five years
by 20 per cent in comparison with the base period.

But here the reduction does not apply to funding scientific research,
teaching and marketing programmes, creation of state reserves for ensuring
food security, insurance and guarantees of income security, payment of
compensation for losses from natural disasters and so forth.

It is also important to consider that for a number of reasons, if only
because our land, our black earth zones, are better and require less
expenditure to produce output, Ukrainian produce, given comparative quality,
will be cheaper than European produce, and hence it will be competitive.

An improvement in access to external markets will make it possible to
increase exports by 40 per cent.

Apart from that, a balanced state policy, directed towards the modernization
of agriculture and development of its infrastructure, will make it possible
to provide our agricultural produce with the necessary competitiveness and

Today it can also be said that after joining the WTO, state support for the
coal industry will be regulated. However, whereas today we are incapable of
controlling whether that support reaches every mine and every miner, under
WTO rules in future it will be directed, targeted.

Moreover, WTO rules allow state support directed at improving a region’s
environment and linked with the activity of harmful production.

This applies not only to the coal industry, but also to metallurgy, the
chemicals industry and so on. State support is also allowed for tackling
social questions in socially unfavourable regions of monoculture.

In other words, it is in effect not support directly for the coal industry,
but support for coal regions directed at improving people’s standard of
living.                                         -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                                OR STRATEGIC INTEREST?

ANALYSIS: By Kateryna Illyashenko, Ukraine Analyst
IntelliNews – Ukraine This Week, Kyiv, Ukraine, Nov 6, 2006

Ukraine is pursuing WTO membership strategy for the past 13 years. The
country’s pro-west-oriented president Viktor Yuschenko persuaded the
leading politicians to join his effort and push for WTO entrance before
end of 2006.

Officials say that a lot of work still has to be carried out for Ukraine to
join the organization. The government has plans to submit all of the draft
bills required for Ukraine’s accession no later than December.

As it was pointed out, the following issues remain unresolved: changing the
system of taxation for agricultural enterprises and curtailing the list of
commodities subject to mandatory certification. If the parliament adopts
these laws, local enterprises in a number of industries will face serious
competition from foreign companies.

President Yuschenko spoke about WTO entrance during Oct 31 meeting
with parliament speaker Volodymyr Moroz. Yuschenko asked the speaker of
parliament to do everything required to ensure the country’s quick accession
to the WTO. In addition he head of the country expressed concern about
slow adoption of WTO-related laws.

EconMin Volodymyr Makukha  was quite pessimistic about the country’s
chances of becoming WTO member by year-end. According to the minister
even if all the required laws are passed by the end of the year, Ukraine’s
accession will be postponed for technical reasons.

If parliament votes in favor of the twenty draft laws that bring Ukrainian
legislation in line with WTO standards the country can become the
organization’s member in Feb 2007, the earliest.

Three of the five parliamentary blocs – Our Ukraine, BYuT and the Party of
Regions voiced their support for the draft laws. Communist party leader
Petro Symonenko said that his party would not vote for the laws because he
believes this is not in the country’s interests.

WTO entrance will have a noticeable impact on the country. This is a
prerequisite for real, not simply declarative, integration with the European

In theory, joining the WTO could provide Ukraine many new opportunities.
Ukrainian producers and consumers should gain from a wider choice, higher
quality and lower prices of goods and services. This should result in more
effective competition.

Prices will go down not only for finished imported goods and services, but
also for domestic products, where imported components are used.

Also, we expect certain changed in changes in the volume and structure of
consumption because of closer integration of Ukraine in the international
market. Greater variety of goods will be available.

Producers could gain from easier access to the world markets of goods,
services and capital. The export-oriented industries will not face losses
from discriminative measures (which currently amount to USD 2bn -3bn
annually), particularly, anti-dumping investigations.

Thus, the country could have more possibilities to defend its national
interests using to the multilateral mechanisms of just resolution of trade
disputes which are applied within the WTO Operational risks will be lower
due to the establishment of a more stable trade regime.

Transport expenses will be also reduced due to guaranteed free transit of
goods within the WTO territory.

 This means that the cost of exported Ukrainian products will decline and
they will become more competitive. However, we have a lot of questions
regarding this statement as local goods lose to foreign competition because
of their quality and not price.

Ukraine to have basis on which to defend its interests —–
There is one more potential advantage; Ukraine may be internationally
authorized to defend its own market and industries in accordance with the
GATT Article 12. It permits the country to use disturb free trade in order
to ensure stable payment balance.

In addition, the country can negotiate deals related to protective measures
for agriculture, strict sanitary measures and subsidies and compensations
under GATT Article 6 on anti-dumping and compensatory measures.

More reforms on the way in order to enjoy more positive effects —–
However, in order to take advantage of WTO membership incentives for
additional reforms within the country are needed. Structural reform process
can speed up in the environment of organized competition and transparency.
Innovations will receive fresh impetus as well.

The creation of such environment can be facilitated by the adjustment of
the national legislation (on taxation, customs, standardization and
certification, services, competition, intellectual property) to the WTO
standards and rules.

Greater transparency can reduce level of corruption —–
If the government’s policy becomes more transparent and a lot preferences
are abolished the trade will be freed from administrative pressure. This
will reduce lobbing of y corporate interests in parliament. In turn this
will help to fight with widespread corruption.

The experience of many WTO members, especially of the developing
countries, proves that most of the possible positive effects for the country
and its industries do not come automatically with the entrance to the

They are achieved using a rational policy, which creates the possibilities
to take advantage of such opportunities. That is why one of the terms used
in the WTO today is capacity building, which is the creation of the
potential to use free trade opportunities.

Local producers can be pushed out of high value-added segments —–
In order to make the best of membership in the WTO, Ukraine has to be
aware of its disadvantages. Strong price competition is mostly seen in raw
material and some semi finished goods.  High tech and many finished
products compete on their quality.

So it is likely that lower quality Ukrainian goods will be push out of local
market by imports. The same reason will make it difficult for the country to
increase exports of such products. In this can be partially overcome by
government policies that will speed up innovation.

Country prepared to enter organization almost at any cost —–

It may be difficult to use WTO mechanism of multilateral dispute settlement
as local companies lack experienced specialists in international trade law.
So the companies may still face unfair treatment.

The long term advantages for WTO accession can be reduced by inadequate
approach to defense of national interests in the negotiation process. We get
the idea that WTO entrance is a personal ambition of the country’s president
and he is prepared to make any concessions and enter the organization almost
at any cost.

Under the laws needed for WTO entrance Ukraine will have to eliminate many
privileges that are enjoyed by the national coal-mining, metallurgy,
ship-building, automobile- and aircraft-making industries. They are
incompatible with WTO rules.

These changes can be regarded as a positive factor in the long run; however
in the short run they could cause problems for these sectors.

Many producers in the above mentioned industries work under the system of
state purchase orders and do not face open competition. So, many of them are
not ready for the tough international competition. Ukraine’s competitiveness
potential is still low by international standards.

On the whole, joining the WTO meets Ukraine’s strategic interests. In the
long run it will lead to better organization of the country’s business
environment  and gradual application internationally recognized regulations.

This step may become vital in the process of building a civilized market
economy, carrying out administrative and structural reforms and acceleration
of Ukraine’s integration with global and EU economic and political bodies.

The problems emerging during this path should not be regarded as reasons to
delay this process. However, during the entrance negotiations the country
should take care of its interests and not to try to enter the organization
as soon as possible regardless the cost.                   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


Millennium Challenge Corporation (MCC)
Washington, D.C., Wednesday, November 8, 2006

WASHINGTON – The Board of Directors of the Millennium Challenge

Corporation (MCC) today selected three new countries, Ukraine, Jordan and
Moldova, to join the 22 nations now eligible for development assistance from
the Millennium Challenge Account (MCA).

Ukraine, Jordan and Moldova were chosen to begin the process of applying

for Compact assistance.

Since its establishment in 2004, MCC has approved Compacts totaling nearly
$3 billion with 11 countries:  Armenia; Benin; Cape Verde; El Salvador;
Georgia; Ghana; Honduras; Madagascar; Mali; Nicaragua; and Vanuatu.  MCC
is also actively engaging with other eligible countries to assist them in
Compact development.

Each November, MCC’s Board of Directors meets to select countries eligible
to develop a proposal for assistance under the MCA.  The assistance program
is designed to reward good performance and also to create incentives for
countries to adopt policies that create a foundation for poverty reduction
and economic growth.

“Because of their ongoing commitment to good governance as well as sound
economic and social policies, our newly eligible countries demonstrate that
they are, in fact, taking necessary steps to create, reinforce, and maintain
a policy environment in which MCC’s aid can help them reach specific goals
of poverty reduction,” said Ambassador John Davilovich, MCC’s Chief
Executive Officer.

“Compact-eligibility is the reward for pursuing good policies.  These
countries are now invited to begin the process of creating their Compacts to
reduce poverty,” he added.

MCC measures policies in all candidate countries using 16 independently
measured and transparent benchmarks known as indicators, which have a
demonstrated link to poverty reduction and economic growth.

These indicators measure countries’ demonstrated commitment to policies that
promote, among other things, political and economic freedom, investments in
education and health care, control of corruption, and respect for civil
liberties and the rule of law.

MCC is using two supplemental indicators this year to evaluate performance
on countries’ commitment to promoting sustainable natural resources
management policies.

Once selected as eligible, countries begin a consultation process that
includes citizens, nongovernmental organizations, and representatives of the
private sector and government to identify the barriers to poverty reduction
and economic growth.

MCC teams then work in partnership to engage with countries on their

Compact proposals to ensure that projects meet economic growth and
poverty reduction targets.

A Compact also describes how the country plans to manage and implement

its MCA program, including how it will ensure financial accountability,
transparency, fair and open procurement, and measurable results.  Selection
as an eligible country does not guarantee funding.

Many countries have identified land tenure and agriculture projects,
micro-lending programs, and improvements to irrigation systems as well

as water and sanitation services as priorities in efforts to reduce rural

Other countries have proposed building industrial parks, a trade school,
health clinics, rehabilitation of roads, ports, and railroads as key to
improving access to markets and jobs. Better roads also have the benefit of
improving access by people to schools, health clinics and other essential
services.                                       -30-
Millennium Challenge Corporation (MCC), a U.S. Government corporation
designed to work with some of the poorest countries in the world, is based
on the principle that aid is most effective when it reinforces good
governance, economic freedom, and investments in people that promote
economic growth and elimination of extreme poverty.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: By Thomas Eymond-Laritaz
President of the Victor Pinchuk Foundation
“Delo” daily newspaper in Russian, Kyiv, Ukraine, Fri, Oct 27, 2006
Action Ukraine Report (AUR) #787, Article 16 in English
Washington, D.C., Friday, November 10, 2006

Some years ago prominent businessmen and statesmen took part in a rather
original seminar that was being held on efficient time management. The
presenter silently entered the auditorium and put a transparent glass vase
on the table.

Then he filled the vase with large stones. After that he added small stones
and sand and poured some water into it. Only after this he addressed the
audience: “What do you think I wanted to show you?”

Since the seminar was on proper time management, one listener hurriedly
answered: “You showed us that in your work schedule you can always find
time for resolving secondary issues (small stones, sand and water) after
resolving the primary ones (large stones).”

“You are mistaken,” the presenter said. “With this example I wanted to

show that if I had started filling the vase with water first, and then sand and
small rocks, I would not have had enough space for the big stones.”

Therefore, you could ask following question: which of the “big rocks” are
most important in your life, and do you always put them in the vase first?”

I liked this object lesson very much because it is applicable to the more
intimate aspects of our lives and to managing organizations or a country.

Which “big stones” are priorities for today’s Ukraine? I see the three such
stones, which, by outward appearances, were not put into the vase first
during the last few years: [1] reinforcement of rule of law (the fight
against corruption), [2] economic reforms, and [3] education.  I will come
back to the first topic some other time.

Concerning the economic reforms, Ukraine has fallen considerably behind its
Central European neighbors in that it could not reform, adapt and modernize
its legislative and administrative laws in accordance with the new economic
situation in the world.

The task is not easy; I am speaking about concluding the transition from a
planned, centralized and relatively closed economy to a market economy
based on free entrepreneurship that is open to all world markets.

The task lies in the following: to create conditions for economic
development with the goal of fighting poverty and unemployment and
raising the population’s purchasing power.

This lagging behind of the Ukrainian authorities in implementing the
necessary economic reforms can be explained by many factors.

Of course, in the way of justification you could say that Ukraine,
unfortunately, did not have the powerful stimulant of perspective induction
into the European Union that played an important role for its neighbor,

But at the same time, you could say that this only partially explains the
situation, as Ukraine could not implement economic reforms in a timely
fashion since the European Union did not open the door to Ukraine.

I feel that one of the main reasons for this delay is the lack of knowledge
in economic theory and market mechanisms on the part of Ukraine’s
political elite.

To support the above statement,  I can cite several examples of political
decisions made in 2005 that are absolutely absurd from an economics
point of view that led to a decline in GDP by five times in one year

This economic collapse in its own way is the antithesis of economic
indicators of countries throughout the world.

The third “big stone” concerns education of the rising generation.
Throughout the world, the emergence of a new generation of leaders, bearers
of new energy and fresh vision, constitutes major change in a country;
provided, however, that the new generation receives modern, advanced
education that meets the criteria for the highest degree of perfection.

Unfortunately, these conditions are absent in Ukraine. The educational
establishments possess promising potential, but they lack funding,
independence, flexibility and window to the world.

Taking into consideration these two factors – the low level of economic
culture of Ukraine’s elite and the educational system’s weaknesses – the
active state and private actors should embrace concrete measures.

In addition to other projects being implemented, the Victor Pinchuk
Foundation has decided to invest 10 million dollars in support of the EERC
Kyiv-Mohyla Academy’s program and to transform it into the “Kyiv
School of Economics.”

This program is the only one in Ukraine that has been developed in
accordance with world standards by an international board comprised noted
economists, along with many other professionals.

During a relatively recent presentation of the Kyiv School of Economics, one
of the guests, visibly impressed by the lectures delivered by Francis
Fukuyama and Noble Prize winner Robert Engle, asked a question: “When
will a representative of Ukraine be awarded a Noble Prize in economics?”

My answer would be the following: I do not know when Ukraine will have

a Nobel Prize winner, but I know that a new generation of economists is
emerging in Ukraine now, and soon they will play a major role in the
country’s transformation and modernization.

But Mr. Nobel will wait a little; Ukraine must first put the “big stones” in
the vase to be ready to meet the challenges of the 21st Century.
NOTE:  Article published with permission of Thomas Eymond-Laritaz.
English translation by Heather Fernuik for the Action Ukraine Report (AUR).

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

ANALYSIS: By Tammy Lynch
Institute for the Study of Conflict, Ideology & Policy at Boston University
Boston, Massachusetts, Thursday, November 9, 2006

On 9 November, Ukrainian Defense Minister Anatoliy Hrytsenko called for the
dismissal of the Prosecutor General, and accused some within the government
of attempting to use corruption charges to remove him from office. (1)

His statements came just days after being called to “report” before
parliament – a request that is usually associated with the desire of the
parliament to dismiss a sitting minister.

Hrytsenko, who is not a member of any political force, but has long been a
supporter of President Viktor Yushchenko, was appointed on Yushchenko’s
ministerial quota.

Technically, he can be dismissed only by the president.  Nevertheless,
almost from the moment Prime Minister Viktor Yanukovych took power, he has
been the subject of corruption allegations and has seen his defense budget

A week ago, parliament ordered Hrytsenko, Foreign Minister Boris Tarasyuk
and Interior Minister Yuriy Lutsenko (Yushchenko’s other quota appointments)
to report to them on their work.  (2)

Since that time, Hrytsenko and Tarasyuk have remained silent.  President
Yushchenko, meanwhile, at first called the decision “an inquisition,” and
suggested that “democratic processes in Ukraine are under threat.
The decisions that have been made seem to indicate that the function of law
enforcement and the minister in charge of the law-enforcement agency have to
be brought to heel, they have to be on a leash.” (3)

However, he soon urged the two sides to find compromise.  “Political
consolidation is what Ukraine needs today and will need for the next several
years,” he said on 9 November.  “The Presidential Secretariat … will only
build constructive relations and find compromises.” (4)  These statements
came on the heels of Ukrainian media reports that Yushchenko may be

amenable to replacing Tarasyuk.

Hrytsenko’s response seems to indicate that he feels the need to defend
himself.  The Defense Minister is one of the most respected officials in
Ukraine and finds significant support for his reforms internationally.

He has steadfastly moved toward a modernization of Ukraine’s military and
has waged one of the most successful battles against ministerial corruption
in the country, identifying numerous weapons deals that were inappropriate
and defense budget items that appeared to be used for other means.

It is no surprise that he would be targeted by individuals who may have
benefited in the past from the defense budget.

Hrytsenko spoke of numerous cases of defense ministry corruption sent to the
Prosecutor General for prosecution, but claimed that nothing has been done.
He further implied that his removal would allow these cases to be dropped

It is unclear whether President Yushchenko will fight actively for his
ministers when the report goes to parliament on 15 November.  Should he not,
he could sacrifice one of Ukraine’s most effective and respected reformers.
Source Notes:
(1) UNIAN News Agency, 0933 GMT, 9 Nov 06 via Lexis-Nexis.
(2) “Decision to Hear the Reports of Defense Minister Anatoliy Hrytsenko,
Foreign Minister Boris Tarasyuk and Interior Minister Yuriy Lutsenko,”
Verkhovna Rada, Bill No. 2466, 3 Nov 06 via
(3)  One Plus One TV, 1730 GMT, 3 Nov 06 via Lexis-Nexis.
(4) ForUm, 9 Nov 06 via
By Tammy Lynch (
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OP-ED: Walter Parchomenko, Kyiv Post, Kyiv, Ukraine, Thu, Nov 09 2006

Viktor Yanukovych was appointed premier about 100 days ago. Traditionally,
this is a time in politics when a newly appointed head of government
receives a first report card from political observers and the media, in
general. This tradition began in earnest only in 1933 in America with
President Franklin D. Roosevelt.

He inherited a panic-stricken nation still in the grips of a profound
economic and social depression. And in his first 100 days, known as the New
Deal, he did more than any other U.S. president has ever done. He
transformed the country’s psychological mood and put it firmly on the road
to economic recovery.

In the wake of FDR, many American presidents have scorned this practice,
claiming that it is premature and unfair. John F. Kennedy, for example, did
not hide his disdain for it.

He stated that even 1,000 days would not be enough to tackle the enormous
problems facing his administration and qualified his words, saying: “Nor
will it be finished . in the life of this administration, nor even perhaps
in our lifetime on this planet.”

For better or worse, this 100 day review remains a time-honored,
international political tradition. Today, the spotlight of media attention
falls inevitably upon Ukraine’s most important political figure, Viktor

Inevitably because Yanukovych and other Party of Regions leaders have
unwittingly invited close, early scrutiny of their record with their
incessant rhetoric, during the past six months, about the country’s “deep
economic and political crisis.”

Resurrected just a year ago from the political graveyard, ironically, as a
result of a strategic blunder by his arch rival Viktor Yushchenko, today
Yanukovych stands at the pinnacle of power in Ukraine and almost daily
overshadows the president.

How has the new premier fared in dealing with the country’s daunting
problems in just 100 days, and what are the critical challenges ahead?

To begin with, it should be acknowledged that many Ukrainians had very low
expectations of Yanukovych and other Party of Regions leaders.

This is not at all surprising given that most Regions leaders were trusted
lieutenants of the corrupt former President Leonid Kuchma. Moreover,
Yanukovych’s first premiership (2002-2004) was lackluster.

However, even if one has an allergic reaction to Yanukovych and Regions, it
is not difficult to acknowledge the following: During his first hundred days
as premier, he accomplished what Yushchenko was unable to do during his
entire presidency, namely good relations with Russia, the EU, and the U.S.

During his first 30 days, Yanukovych quickly restored warm relations with
Russia and shortly thereafter extracted a guarantee of stable, reasonable
prices for natural gas for 2006 and 2007 from Gazprom.

Fence-mending with Moscow came easily for Yanukovych. It is no secret that
Vladimir Putin has been his unconditional supporter in Ukrainian politics
since at least 2004.

Within 60 days, Yanukovych received promises of more intensified partner
relations with NATO and the EU. His Sept. 14 visit to NATO headquarters in
Brussels was a major media event.

There he told NATO and EU leaders that Ukraine would deepen cooperation with
NATO but pause in its drive toward membership until public support was
confirmed in a national referendum.

Although Yanukovych’s statement stunned and angered Yushchenko and his
handpicked foreign and defense ministers – they apparently still harbored
illusions about Party of Regions’ leaders – it was received calmly by NATO
and EU officials. In fact, Yanukovych simply told them what they already

While in Brussels, Yanukovych also pleasantly surprised members of his
parliament’s political opposition with his declaration that Ukraine would
not join a customs union with Russia, stating that this would violate
Ukraine’s Constitution; and he voiced support for the long overdue Ukrainian
public information campaign on NATO.

Not surprisingly, Yanukovych’s Brussels visit received mixed reviews in
Ukraine and abroad. Interestingly, supporters and even some critics of
Yanukovych observed that he “held his head high” during the meetings in
Brussels, in contrast to “Yushchenko’s beggarly manner,” and that he left
with assurances that today’s very good NATO-Ukraine and EU-Ukraine relations
would be intensified in numerous areas.

Significantly, during his first 100 days, Yanukovych received unambiguous
assurances from Washington officials that they desire to work closely with
his new government and seek to expand good partner relations with it.

Washington also made clear that it will closely monitor the new government’s
intentions to deepen relations with NATO and to move genuinely toward WTO
Yanukovych’s next 100 days will likely shed more light on three critical
questions facing the nation.

[1] Will the country’s future economic growth – predicted as high as 8-10
percent over the next 3-4 years with radical economic reforms that attract
substantial investment – trickle down to average Ukrainians; or as
pensioners here in Ukraine often pointedly ask: Will we be able to spread it
on our bread?

The recent past provides little grounds for optimism. During Viktor
Yanukovych’s first reign as premier (2002-2004) under President Kuchma,
there was no “Donetsk economic miracle,” even with 12 percent economic
growth in 2004.

True, Yanukovych’s business elite investor-colleagues grew much richer, but
miners and ordinary citizens did not. Today, many Ukrainians fear this
scenario may be repeated.

[2] Second, are Party of Regions’ leaders genuinely committed to
depolarizing the country? Issues such as the status of the Russian language,
along with NATO membership, continue to pull the country apart and are
commonly exploited by politicians.

President Yushchenko failed abysmally in addressing this challenge. His
administration did not undertake a single specific project to bridge the
wide gulf that still sharply divides the nation.

Surprisingly, just days after being appointed premier, Yanukovych took a
modest but positive step toward defusing the Russian language problem.

Addressing an audience in Ukraine’s Russian-speaking Crimea, he stated that
granting Russian the status of an official language in Ukraine was not
politically feasible under current conditions. However, to show true
progress in this Herculean task, Yanukovych will need to change the
psychological mood of the country.

He will need to provide tangible evidence, quickly and steadily, that he
genuinely has people’s interests at heart and that he will mobilize the
power of government to help citizens, regardless of their ethnic and
regional background – a very tall order, indeed.

[3] Finally, there is the critical problem of rampant corruption in
Ukrainian society, politics and business, in particular.

Are Yanukovych and the Regions-led coalition in parliament capable of
adopting a long-term coherent strategy with an action plan to tackle
corruption, or are we likely to see business as usual with the Donetsk
vector dominating Regions’ decision-making and trumping sorely needed
legislation proposed by the president?

The recent defeat of President Yushchenko’s anti-corruption draft laws in a
parliamentary committee chaired and dominated by Regions’ deputies is an
ominous sign. It is no secret that Regions’ deputies adhere to iron party
discipline in their voting.

Thus, it is inconceivable that their defeat of anti-corruption proposals did
not have the blessing of Yanukovych and other Regions party leaders.

If serious, they can begin to show genuine commitment on this crucial battle
front by approving the much needed legislation and by making immediate,
transparent use of the $45 million recently proposed by the U.S. to fight
corruption in Ukraine.

In summary, Viktor Yanukovych deserves a mixed report card for his

first 100 days as premier.

Clearly, his recent interaction with Moscow, Brussels and Washington is
evidence of a decisive, pragmatic, and action-oriented style of leadership –
unlike the wishful thinking, firefighting, endlessly bickering style of
Yushchenko’s camp.

The natural question, of course, is: In which direction is Yanukovych
leading the nation? Today, Viktor Yanukovych’s political capital in official
EU and U.S. circles is surprisingly high.

However, this can be squandered quickly. Yanukovych and Regions’ leaders
should understand that their recent rejection of anti-corruption draft laws
in parliament and their foot-dragging on legislation required for WTO
membership are not confidence building measures.

Rather, they are perceived by many in Ukraine and the West as placing
Donetsk business-elite interests and Russian sensibilities above the public

Lacking any moral authority, Yanukovych and his Regions-led government

will need to move quickly during their second 100 days in order to provide
compelling, growing evidence that they are reliable partners and responsible
rulers. Time is not on their side.

According to officials in Brussels and Washington, they will be judged
solely by their actions. And if they are to build credibility and support at
home and abroad, they will need to avoid the wide discrepancy between word
and deed which has been a hallmark of the Yushchenko presidency.
Walter Parchomenko, Ph.D., is a Senior Fellow with the Atlantic Council of
the United States currently based in Ukraine. The views expressed are purely
his own.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                         IT industry core to global e-crime battle

Tom Young,, United Kingdom, Thu, 09 Nov 2006

Earlier this month, Russian authorities jailed three criminals who used
distributed denial-of-service (DDoS) attacks to blackmail online businesses.

Ivan Maksakov, Alexander Petrov and Denis Stepanov were each sentenced to
eight years for extorting more than £2m from UK-based online casinos alone,
after threatening to hit sites with huge volumes of internet traffic that
would result in lost custom.

According to prosecutors, the gang made more than 50 similar attacks in 30
countries in their six-month spree.

One firm, Canbet Sports Bookmakers, which refused to pay a £5,000 ransom,
had its web site taken out of action by the hackers, costing £100,000 in
lost business for its day of downtime.

At the time of the attacks, the National Hi-Tech Crime Unit (NHTCU) was
still in existence, and passed information to Russian authorities to
prosecute the criminals in a rare example of successful international
co-operation on cyber crime.

But this high-profile example is the tip of the iceberg, says FBI
supervisory special agent Mike Eubanks. He estimates that fewer than five
per cent of international e-criminals are caught.

Eubanks, who works in the FBI’s Cyber Initiative and Resource Fusion Unit,
says international cyber crime is a particularly difficult problem.

‘Each year in the US, $70bn (£37bn) is lost to cyber fraud, and the problem
is getting bigger,’ he said. ‘Many of the criminals come from Russia,
Ukraine and Romania. These people are specialists in malcode, as well as in
covering their tracks. They communicate through email and chat forums.’
Eubanks says collecting evidence is also problematic.

‘In a computer crime the data is stale within weeks, and the evidence is in
many different areas – personal PCs, corporate databases, all over the
world – which makes it particularly difficult,’ he said. ‘The IT industry
needs to work with law enforcement, and use it as a selling point.

‘The industry can look to see if it is experiencing crime that police are
seeing, and vice versa. We need to put together a network that facilitates
the sharing of data to analyse global trends.’

But this solution is a long way off, according to other law enforcers and
industry experts. David Aucsmith, senior director of the Microsoft Institute
for Advanced Technology in Governments, says industry knowledge is
not being used enough.

‘Co-operation is very important because industry is in a better position to
know about crime than the police, and tends to have the expertise,’ he said.

‘Things are getting better, but reporting cyber crime globally is a confused
mess. Companies often don’t know who to go to. There is always a contact,
but finding that person is often difficult, and international co-operation
needs to improve.’ Eric Freyssinet, cyber crime projects co-ordinator for
the French Gendarmerie, agrees.

‘At the moment it is very difficult to exchange information between
countries. And general victim companies are not ready to launch complaints
about cyber attacks, which makes it very difficult to gather evidence,’ he

‘Only a few countries have ratified the cyber crime convention. But the
level of international co-operation has become much better in the past two
years. The EU is a very positive thing for us, and we have a clearing house
for spam to exchange information with international ISPs and the public,
which is the beginning of the co-operation process.’

Some 43 countries, including the US, have ratified the International
Convention on Cybercrime. The UK has yet to ratify the document fully,
which requires the implementation of the convention’s principles into
national laws, although most already exist under UK law.

The convention is the only legally binding instrument that addresses
computer-related crime specifically. It also aims to improve co-operation
between different countries.

Andreas Mitrakas, legal adviser for the European Network and Information
Security Agency (Enisa), says the convention could go further.

‘The convention makes significant steps towards defining crimes related to
computer systems, but it does not require companies to retain data or modify
their systems to facilitate interception,’ he said.

Some countries have already begun the recommended data retention schemes,
but at the moment it is not clear if service providers have to retain all
data or only that which does not infringe on privacy laws. Sceptics believe
that for the convention to be a deterrent, more states will have to sign up
and abide by its mandates.

Simon Perry, member of Enisa’s Permanent Stakeholders Group, says that
‘problem countries’ have yet to sign up. ‘The failure to get international
adoption of the laws allows the offshoring of the undesirable process,’ he

‘One of the best examples of this is the US Can-Spam Act: after that
legislation was passed, the spammers simply routed their traffic through a
portal in a different country.’
The convention requires signatories to:
[1] Define criminal offences and sanctions under domestic laws for four
categories of computer-related crime: fraud and forgery, child pornography,
copyright infringements and security breaches such as hacking.
[2] Establish domestic procedures for detecting, investigating and
prosecuting computer crimes, and collecting electronic evidence of any
criminal offence.
[3] Establish a rapid and effective system for international co-operation.
The convention deems cyber crimes to be extraditable offences, and permits
law enforcement authorities in one country to collect computer-based
evidence for those in another. It also calls for the establishment of a
24-hour contact network to provide immediate assistance with cross-border
investigations.                                   -30-
What do you think? Email us at:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Amnesty International, New York, NY, Tuesday, 7 November 2006

NEW YORK – The Ukrainian government should promptly implement the

recommendations of the UN Human Rights Committee, which issued its
concluding observations on 3 November 2006 following its examination
on 23 October 2006 of Ukraine’s sixth periodic report under the International
Covenant on Civil and Political Rights.

The findings of the Committee echoed concerns expressed by Amnesty
International regarding torture and other ill-treatment in police detention,
conditions in pre-trial detention, domestic violence, the failure to protect
the rights of asylum-seekers and in particular the deportation of 10 Uzbek
asylum-seekers in February 2006, and the failure to protect religious and
ethnic minorities from racist and anti-Semitic attacks.

Amnesty International supports the recommendations of the Human Rights
Committee, which include among other things

     [1] that the authorities “provide for the independent inspection of
detention facilities, with the authority to interview any inmates in
 private”; that the authorities “should not expel or deport aliens to any
country where there is a risk of torture or ill-treatment”;
     [2] that the government should “intensify its efforts to combat
domestic violence” and ensure that social and medical centres for victims
of domestic violence are available to all women and that the provision in
the law regarding “victim behaviour” should not be used to provide impunity
for the perpetrators;
    [3] that the government “should ensure that all members of ethnic,
religious, or linguistic minorities are protected against violence and

Amnesty International had submitted its own report to the members of

the Human Rights Committee detailing its concerns.

Amnesty International made its briefing public today. (Ukraine: Briefing to
the UN Human Rights Committee June 2006, AI Index: EUR 50/003/2006

See also Concluding Observations of the Human Rights Committee,
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
         Please contact us if you no longer wish to receive the AUR.    


Frank Shouldice in Odessa, Irish Times, Dublin, Ireland, Tue, Nov 07, 2006

International marriage is quite an industry in Ukraine. Western men look for
traditional wives, but the women are ready to leave tradition behind, writes
Frank Shouldice in Odessa.

For Yaroslav, a forcefully enterprising 22-year-old, Ukrainian girls make
the world go around. “I speak fluent English and German,” he declares. “I
can be your interpreter or guide, I can get you accommodation and I can get
you a girl.”

Yaroslav’s unsolicited advice is based on his formative experiences as a cub
matchmaker. “I once had a 57-year-old Canadian divorcee,” he continues
apace. “I took him to discos and he met a 28-year-old woman. And now?
They are in correspondence.”

The vision of a 57-year-old Canadian trawling Ukrainian discos had hardly
registered when he tells of another case that walked straight out of Marina
Lewycka’s bestseller A Short History of Tractors in Ukrainian .

“An English man came here looking to get married,” recalls Yaroslav. “He
found a woman who he liked. But he was 75 and she was 40. She was not
interested so he went home disappointed.”

International marriage is big business in Ukraine. Poverty is an underlying
factor but a ready supply of beautiful girls makes the former Soviet state a
magnet for Western men seeking a partner – or perhaps a trophy – for life.

Translator Vitaly Denisov, a former officer with the Soviet army, puts it
more prosaically. “The situation in Ukraine is like manure,” he says. “Out
of shit grows the most beautiful things.”

This is good news for the American-Ukraine Marriage Agency (AUMA) which
has some 700 girls on file. Based in Odessa, Anjelika, the agency’s
21-year-old director, considers the situation with disconcerting maturity.

“This isn’t the only country with this type of service – Russia, Belarus and
Moldova do it too,” she says. “Russian women in general are family-oriented.
They are not so career-motivated and their priority in life is family and

The women in our agency are single women who want to find a husband. The
first requirement would be to meet the man in person, not just to use the
man as a plane ticket to escape from Ukraine.”

Whatever its overlap with the sex trade, the proliferation of a matchmaking
industry here is almost inevitable. Ukraine was destroyed by the second
World War, losing a quarter of its population. The majority of casualties
were male, effecting a gender imbalance that will take generations to even

Such tragic origins cut little sympathy with Natasha Varetskaya, who set up
the Adam & Eva dating agency eight years ago.

“Unfortunately so many men who are still alive are hard to be called ‘men’
any more,” she says caustically. “Drugs and vodka do their job. They are
lost for society and for women as potential husbands.

Personally, I think it’s a sad thing. Each person – each woman – has a right
to have a family. If she can’t meet someone here in Ukraine and she wants to
have a family she has a right to go to another country.”

Varetskaya’s own story reflects the harsh realities of life in Ukraine. It
took almost two decades to complete her doctorate in oceanography and
secure a full-time academic position. Then the USSR collapsed, capsizing
her career.

“I had dedicated myself to getting a teaching post as a professor,” she
shrugs. “Then everything came apart – it was back to zero, having to start
all over again.”

Her marriage foundered and through the punitively lean 1990s she scraped by
as a car park attendant on $10 a month. She acquired a computer for her son
and used it to do translation work on the side.

It proved a lifeline – her translation work evolved into rewriting letters
for marriage suitors from abroad. With the development of internet and
e-mail she set up Adam & Eva in 1998. The agency now offers accommodation,
dating and marriage, a trinity of services improbable anywhere but in

Foreign men pay $180 (140) for one year’s membership, through which they are
introduced by mail to a selection of 220 girls. The soft money is earned by
ordering roses at $7 (5.50) each, chocolates for $35 (27.50) or perfume for
$85 (67) as part of the e-wooing process. In a country where GDP per capita
runs at $7,800 (6,136), these are extravagant gestures.

Slavic women have a handsome reputation in Europe and although Sarajevo
might make rival claims, this is particularly true in Odessa. Beauty is
commonplace and appearance paramount, making the Black Sea port-city a
popular destination for single men, particularly middle-aged men.

A SQUAT BODYBUILDER from Yorkshire joins the pilgrimage. Locked in
mortal combat with his mid-40s he has tree trunks for shoulders and biceps
that looks like someone has inserted a bowling ball under each armpit.

His bulk is emphasised by shorts and a basketball singlet, his toasted
bronze skin reflecting the rays of the gymnasium. But whatever his muscular
prowess, things are not working out for Paul. For six months he has been in
correspondence with Irina on the internet.

Finally he arrives in Odessa where Irina meets him at the airport.
“Good-looking bird,” confirms Paul ruefully. “But after two days I got
bored. It wasn’t happening.”

With hopes of romance fading, Paul consoles himself with a post-Irina beer
on fashionable Deribasovskaya Street. He is joined by a fiftysomething
American and thirtysomething Italian and the trio sit wordlessly, watching
the girls go by. The American suggests they try Adam & Eva, and Paul,
feeling he has nothing to lose, tags along.

Under such a libidinous assault, the office feels a little crowded. Natasha
and two female staff work quietly at their desks while two feckless cats
sprawl where they lay. The men are handed photo albums.

Each album presents an assortment of girls, a photo accompanied by
testimonials. A date is $30, which, if the chemistry is right, could be

Paul selects a raven-haired 27-year-old economics student. A short-skirted
agency employee takes details on a clipboard file.

Name? Age? “44.” Occupation? “Manager of a sports club,” says Paul, adding
as an afterthought, “Actually, you better tell her I’m a professional
bodybuilder. She might need to know that.”

Married? “No.” Children? “One.” Paul leans back on the sofa, almost crushing
one of the cats that has crept in behind him.

“Thought that was my bag,” he laughs, blushing, as he gently retrieves the
petrified creature. “Two days in this place,” he muses aloud. “It’s enough.”
The staffer makes a brief phone call. “Paul,” she quavers, fearing an
eruption on the couch. “That lady is not in town. She is in the country with
her grandmother.”

“Oh well, never mind,” sighs Paul, almost relieved at another setback. “Next
time!” “You wish I try her again?” asks the woman. “No, I’m going home
tomorrow,” replies the bodybuilder. “That’s why it had to be tonight.”

MARRIAGE AGENCIES – including numerous shady operations – are
pervasive in struggling Ukraine. It’s a lucrative business and internet
scams regularly fleece the lovelorn and the gullible through cyberspace.

Only one man in 10 will, like Paul, take the next step and actually visit the

“These men want family in the old-fashioned way,” says Natasha. “A wife
who will care for him. Ukrainian women are more traditional and there are
hundreds of thousands of women here who have no hope of starting a
family or having children.”

In some respects the exodus of beautiful women to richer countries is
comparable to a brain drain – a survival of the prettiest. Some Ukrainians
criticise the girls as opportunist, using their looks to jump a sinking

For the most part, however, survival is a respected art form in these parts.
What makes it awkward is that these women seldom speak the language of
their suitors – which enables dating agencies to cash in on interpreter

What’s more, the men might be looking for traditional Ukrainian women, but
the women they usually meet are educated and ambitious, ready to forsake
tradition and leave Ukraine behind.

But Adam & Eva reports three marital breakdowns in eight years, AUMA cites
one failure in 26 marriages – significantly lower than the national divorce
rate. What are the balancing factors in a relationship founded on

“That’s an interesting question,” says Varetskaya. “Maybe in the beginning
the man thinks he’s the boss because she comes from a poor country. But the
woman doesn’t see it that way.”

Elena, a 31-year-old economist, is a case in point. Elena lays down a few
ground rules before she will agree to meet anyone. “I want to meet a man,
not a black person, not a Chinese, not Muslim, not older than 40 and not
younger than 28, not obese, not a farmer, not too commanding, not a
religious fanatic, sincere, knowing what he wants from life, leading a sober
way of life,” she cautions.

“Preferably non-smoking, not a fan of noisy parties and leading a
not-too-extreme life – bungee, parachute jumping and things like that are
not for me. The colour of hair and eyes do not matter. He should have no
children, he would be realistic and optimistic, helping me to fight with my
inclination to pessimism. He should have no mental and genetic diseases.”

Unicef estimates that women outnumber men here by 117 to 100 and suggests
the situation has deteriorated since the country achieved independence in
1991. Marriage rates have declined and divorce rates increased, leaving the
foreign option the sole alternative to a single life for millions of
Ukrainian women.

“The matchmaking business will always be here,” insists Angelika, who, like
other Ukrainian marriage agencies, occasionally receives inquiries from
Ireland. “There will always be people looking for a partner.”

DAYS LATER AT the Adam & Eva offices Rimma (25), a very attractive
drama school graduate, is set to meet Larry, a 33-year-old businessman from
New Jersey. Rimma, whose sister Ella (27), a qualified accountant, is also
on agency books, confesses to being nervous that the man she is about to

meet is a prospective husband.

“Ukrainian men like to have a good time but now I want something more than
that,” she says. “Being with the agency increases my chances of meeting

If Rimma hits it off with Larry she will have to consider starting a new
home 5,000 miles away.

“I know,” she replies. “But if I meet a man who is right for me I could do
it. In my life I always make big steps. And if he’s a good man, age is not
important. I think it’s my choice to do this – my friends and family
understand that and they support me fully. Besides, it’s nobody else’s

Larry arrives right on time and under Natasha’s watchful eye, is introduced
to Rimma. Then the pair stroll out into Odessa’s streets.

“I never, ever thought I’d be doing this,” remarks Natasha, getting back to
paperwork. “But you must accept that things change and find a way to live
in new conditions.”                                   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
           Church leader believes Russian church conspires against Ukraine

Silski Visti newspaper, Kiev, in Ukrainian 3 Nov 06; pp 1, 2
BBC Monitoring Service, United Kingdom, Tuesday, Nov 07, 2006

Filaret, the head of the Ukrainian Orthodox Church of the Kiev Patriarchate,
has said that Russia fears NATO less than it fears a single Orthodox church
in Ukraine.

The Moscow church will never agree to an independent Ukrainian church
because it stands to lose over half of dioceses in that case, he said in an
interview. Filaret also suspects Russia disrupted unification talks between
him and the Ukrainian Autocephalous Orthodox Church.

The following is an excerpt from Filaret’s interview with Serhiy
Skorobahatko and Oleksandr Cherevko published in the Ukrainian newspaper
Silski Visti on 3 November under the headline “Patriarch Filaret: ‘Society
and the church have the same concerns'”; subheadings have been inserted
                                       RUSSIA’S FEARS
[Correspondent] Your Holiness, the subject of a single Ukrainian Orthodox
Church was widely discussed during the political talks before the signing of
the declaration of national unity [in August 2006].

However, this thesis was missing altogether in the final version of the
document and was replaced by the freedom of conscience declared by the
constitution. Why did it happen?

[Filaret] Political considerations were behind that. Russia fears a single
Ukrainian Orthodox Church in Ukraine more than it fears our joining NATO.

By signing the declaration of national unity different political forces
agreed in one way or another to Ukraine being a member of NATO but

spoke strongly against our own church.

Although every reasonable person understands that an independent country
needs an independent church. This is an axiom confirmed by Orthodox
Christianity in Bulgaria, Romania, Greece, Serbia and Georgia.

We all witnessed the conduct of the Ukrainian Orthodox Church of the Moscow
patriarchate during the recent presidential election. Canvassing was open
there and cross-bearing processions were organized in support of certain

Russia understands that the church of the Moscow patriarchate in Ukraine is
a great ideological force that may have an impact on Ukrainian society and
keep our state under Russian control.

This is why this provision was removed from the declaration of national
unity to please the politicians who depend on Moscow.

To tell you more, Moscow understands very well the impact of the church on
people’s minds and souls. This impact is more important for Russia than gas,
because gas will be over sooner or later, but faith will not disappear.

I would like to draw an example from the times of [Ukrainian 17th century
Cossack leader] Bohdan Khmelnytskyy. He was not making Ukraine a part of
Russia; what was going on was the making of an alliance treaty.

Since Moscow tsars understood very well the short life of political
agreements and foresaw the possibility of their rapid change, they realized
that relations could only be strengthened by subordinating the Ukrainian
church. This is why at the end of the 18th century the Russian tsar himself
was dealing with this issue via his ambassadors.

This is where the paradox of our time comes from – an independent Ukraine
has a dependent church. The church is being used to tie Ukraine to Russia.
This is why political forces have meddled with this issue. The Moscow
patriarchate cannot ideologically oppose the church of the Kiev

[Correspondent] And we wonder why the Ukrainian Communist Party has

become so religious. There must be also other reasons for this non-compliance?

[Filaret] The entire history of Christianity is linked to Kiev and not to
Moscow. Christianity was spread to what is now East Europe from Kiev and not
from Moscow. The same applies to cultural artefacts. “The word on Igor’s
army” and “The word on law and well-being” [medieval Kiev state manuscripts]
are Ukrainian artefacts.

So if Ukraine leaves the Moscow patriarchate alone, all this culture will
stay with us. And it turns out at the same time that the Russian church
originated not from the baptism of the Kiev Rus but from the formation of an
autocephalous church, which was in the 15th century.

One has to understand that the Moscow patriarch [Aleksiy II] is not only a
secular person. Presently the state authorities of the Russian Federation
seek to place their country in the first position in Orthodox Christianity
(now Russia occupies the fifth position) because it is the biggest country
and has the largest number of parishes and believers.

This is why the Moscow patriarch says now that there are no theological
reasons for the Russian church not to be the first and that Moscow is the
third Rome. But Moscow can receive this status only with Ukraine as an
integral part.

Imagine that the Ukrainian church is separated. The patriarchate will then
become 50 per cent smaller. Russia has 12,000 parishes now and Ukraine has
15,000 parishes representing all orthodox trends. It has to do with the
struggle within the church, [the protection of] its interests.

The idea to make the Russian Orthodox Church the first in the world is not a
recent one. This was the wish of Stalin, who in 1948 organized in Moscow an
ecumenical synod of bishops. The synod did not take place because a
significant number of bishops failed to arrive.

Today the Russian church feels that it is in the same boat with the powerful
state. And the Ukrainian church is a stumbling block. This is the cause of
fierce opposition to the creation of a single Ukrainian Orthodox Church.

[Correspondent] To completely clarify this issue: is the choice between the
Kiev and the Moscow patriarchates a question of faith?

[Filaret] No, this has nothing to do with faith. All Orthodox Christians
have the same faith. Orthodox canons and divine services are the same.
Probably the only difference is that we read the Our Father prayer in
different languages. The reason for the discrepancy is purely political.

[Correspondent] How do people go to church? Do they choose a patriarchate
consciously or do they simply go to a church nearby?

[Filaret] Most people go to church to pray to God. They have little to do
with all these political issues. At the same time certain parishes are
consciously under the influence of another country.

[Correspondent] After everything you have said it is impossible to see any
light because chances are slim that the Moscow synod is going to abandon its
intention and leave us in peace. How are we supposed to form our own church?
Is the participation of the state in this process mandatory?
[Filaret] Clearly, one cannot create a single Ukrainian Orthodox Church by a
presidential decree or a Supreme Council [parliament] resolution or a
government decision. I have proposed the following.

[1] First of all, I would like to get a real picture of the present
condition of the church of the Moscow patriarchate. In my view, many clergy
support creating a single Orthodox church. It would be worth knowing and
considering such aspirations.

[2] Second, one should find out the attitude of believers themselves towards
the creation of a single church and carry out an opinion poll. This will
show a real picture and prompt further a plan of action.

It is worth forming initiative groups by all Ukrainian Orthodox churches to
work to call a unifying synod to solve the only issue – the unification of
all Orthodox churches into one.

When this happens, it is necessary to register the single Ukrainian Orthodox
church at the Ministry of Justice and to re-register all the parishes. At
the same time, other churches will not be given the right to be called
Orthodox churches.

Those outside the process will be called, for instance, the Russian Orthodox
Church in Ukraine. It will be made clear for people whether this is their
church or a church of a different country.

[Correspondent] Who in this case is going to organize such polls? Does this
have to be the Ministry of Justice, the president or the government? Will it
not be considered state interference in church affairs?

[Filaret] In my opinion, local state bodies and at the same time central
power bodies have to deal with these issues in order to have objective
information about the condition of the Orthodoxy in Ukraine.

This would not be government interference in church affairs. I am referring
to the example of Russia and its president, Vladimir Putin.

During his official visit to the United States, he met the leader of the
Russian foreign Orthodox church and asked him to join the Moscow

Patriarchy. Nobody spotted any government intrusion in church affairs there.

On the contrary, this worked for the country’s authority and church
authority. I would like to specially emphasize that this was a visit to a
different state and a church of a different country. So, why our president
cannot initiate a unification process inside his own country?

[Correspondent] Did you send your proposals to the incumbent leadership

of the state? What was the reaction?
[Filaret] The president supports such approaches.

[Correspondent] On words or by actions?
[Filaret] On words so far. But he has a clear intention to move on to
actions. In the beginning a special working group will be set up. And the
working group will be that engine which will implement all these ideas and
plans. Otherwise everything will end up with talks.

[Correspondent] But this engine can grind to a halt as that the current head
of the executive power [Prime Minister Viktor Yanukovych] supports the

other church, not yours.

[Filaret] We take this into account. But one should not think that all the
authorities are the same. I am not talking about the Cabinet of Ministers.
These issues are solved by the local authorities, who have enough powers.
[Passage omitted: land issues, international relations]
[Correspondent] Why do you think the unification of the Ukrainian Orthodox
Church of the Kiev patriarchate and the Ukrainian Autocephalous Orthodox
Church has failed and what are the relations between them now?

[Filaret] The chance for unification was real. For the first time we came
close to holding a unification synod. But when Moscow learnt that
unification could actually happen some bishops from the autocephalous

church were summoned there.

They were told to hold talk to the very end but on conditions which would
force the Kiev patriarchate to refuse from unification on its own.

The unification synod was planned for 11 November 2005. At the last moment
those representatives said that unification would take place only when
patriarch Filaret gave up his post. I understood what is behind this. The
church would fall into pieces during the election of a new patriarch.

I agreed to this condition only if the Ukrainian Orthodox Church of the
Moscow Patriarchate also decided to unite with all Orthodox churches in
Ukraine. This would also be a prerequisite for the Ukrainian Orthodox Church
to be recognized in the world.

On these conditions I agreed to resign, because I would consider my mission
complete. I will not give up the post of patriarch when the struggle is not
over. [Passage omitted: Filaret criticizes modern Christian sects, he
recognizes the 1933 famine as genocide.]                 -30-

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

Interfax Information Agency, Kyiv, Ukraine, Wed, November 8, 2006

KYIV – There are two hard topics in the Ukrainian-Russian relations – the
topic of Holodomor and mutual use of languages, Russian Foreign Minister
Sergei Lavrov said at a meeting with Verkhovna Rada Chairman Oleksandr

Moroz on Wednesday.

Lavrov told Moroz, according Viktoria Shvedova, a spokesperson for the

Rada speaker, that mutual understanding on the two topics was achieved
during a meeting with Ukrainian President Viktor Yuschenko on Wednesday.

“The tragedy occurred and cannot be a subject of concealment or
speculations,” Moroz said in turn while commenting on the topic of
Holodomor. He noted that Holodomor killed people not only in Ukraine
but also in some regions of Russia.                         -30-
FOOTNOTE:  I have not been able to find any information in news
articles about this ‘mutual understanding’ FM Lavrov said he achieved
with President Yushchenko on the Holodomor and the language issues.
If anyone has any information about this please send it to me.  AUR EDITOR
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Karen Buckelew, The Daily Record
Baltimore, Maryland, Tuesday, 7 November 2006

ROCKVILLE, MD – It’s an all-expenses-paid trip to Ukraine for Sequella
Inc.’s tuberculosis diagnostic patch, courtesy of a Seattle-based charity –
a journey that holds special significance as a final leg of the product’s
odyssey to commercialization.

PATH, a Seattle-based international nonprofit health organization, is
funding a 300-subject, six-month Phase III, or pivotal trial, in Ukraine of
Sequella’s TB test, adding to the 1,100 subjects participating in similar
tests in Peru and the Philippines.

The value of the clinical trials, which are being funded by PATH through a
grant from the U.S. Agency for International Development and other sources
could be between $500,000 and $1 million, said Sequella CEO Carol A. Nacy.

Sequella will provide only the product for use in testing, with PATH
covering the remainder of the costs. “It’s good validation” of the
technology to be associated with aid organizations like PATH and USAID,
Nacy said. “And even though the money doesn’t come directly to us, it’s very
nice not to have to pay out that money.”

The Rockville firm’s product is a patch placed on the skin that uses a
genetically engineered protein to detect the presence of the active form of
the pulmonary disease.

 Current testing methods do not distinguish between inactive and active
forms of TB, meaning all patients who test positive must undergo extensive
further testing to determine if they require treatment.

Sequella is hoping to have its product in the hands of a corporate partner
for commercialization by the end of 2007, Nacy said. The company already is
in talks with a possible partner.

The Ukrainian subjects will be particularly useful, she added, because they
are a new genetic population for the patch.

“We’ve been in South America and Africa and Asia, but never in a Caucasian
setting,” Nacy said of previous tests. “There is a possibility that across
genetic backgrounds, you might not see the same response in every
population. It is good to have a variety of populations under our belt
before we field the patch for worldwide use.”

Tuberculosis is a large problem in certain areas of the world, infecting
one-third of the global population, according to the World Health

In 2004, the disease killed 1.7 million people worldwide, according to the
WHO. It is the leading cause of death in AIDS patients, causing 13 percent
of AIDS-related fatalities.

That is where Ukraine particularly is affected, said Teresa Guillien, a PATH
spokeswoman. “You see it in countries where the AIDS epidemic is growing,”
Guillien said of the disease. “That is the case in the Ukraine.”

In 2003, 360,000 people in Ukraine were living with AIDS, according to

PATH’s mission “is to improve health around the world,” Guillien said. “We
do that by advancing technologies, strengthening health systems and
encouraging healthy behaviors.”

The nonprofit regularly works with private companies like Sequella to help
advance health-related products that could assist developing countries, she
added. The group this year has a $135 million budget for its work.

Faster diagnosis of TB, not requiring syringes or other complicated
equipment, could be particularly of use in Ukraine, where the health system
has struggled under the political upheaval in recent decades, said Guillien.

Consultants for Sequella have estimated a $300 million to $400 million
global market for the company’s patch, especially in hot spots like India
and China, home to 20 percent of the world’s tuberculosis cases.

PATH’s support is encouraging as it marks the patch’s first trial to be
funded by an outside charity, Nacy said.

“We’re thrilled to death they were interested in the patch and saw its
utility,” she explained. “We think it’s going revolutionize the way we
diagnose TB, and we have other people who have the same sense about it.”
The Daily Record (Baltimore). Provided by ProQuest Information and

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
       Human rights group founded in Kyiv thirty years ago in Soviet Ukraine

Press office of President Victor Yushchenko
Kyiv, Ukraine, Thursday, November 9, 2006

KYIV – Victor Yushchenko has presented state awards to members of the
Ukrainian Public Group (also known as the Ukrainian Helsinki Group),
which was founded in Kyiv thirty years ago to monitor the adherence to
the Helsinki Accords in Soviet Ukraine.

In his speech, the President thanked them cordially on the part of the
Ukrainian nation.  “You laid the first brick in the reconstruction of
Ukraine’s civil society. You equated human freedom to the freedom of your
nation, and put human rights higher than the rights of your state,” he said.

Mr. Yushchenko said the group had renewed the Ukrainian state, challenged
the totalitarian system and preserved “profoundly democratic” traditions of
Ukrainians. He characterized these three achievements as seminal.

“The Ukrainian Helsinki Group transformed their fight against
totalitarianism into the universal democratic process,” he stated.

The President honored the most prominent members of the group, among
them Vasyl Stus, Ivan Kandyba, Oles Berdnyk, Mykola Rudenko, Vyacheslav
Chornovil, Yuriy Shukhevych, Levko Lukyanenko, Valeriy Marchenko and

He also said the Group had initiated a political movement in modern Ukraine.
“Today’s state awards for your personal contribution to Ukraine’s revival
show that the country remembers its heroes and wants to honor your exploit
performed for the sake of posterity,” he said.                  -30-

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