AUR#807 Jan 22 GDP To Grow 4.5% In 2007 Says World Bank; Grain Of Truth; Mostly Unfree

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

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

 
                                     FOREIGN POLICY
“IT DOES NOT SERVE UKRAINE’S INTERESTS WHEN POLITICAL 
     INFIGHTING CARRIES OVER INTO THE FOREIGN POLICY
                 ARENA” AMB. STEVEN PIFER (Article Nineteen)
                        
ACTION UKRAINE REPORT – AUR – Number 807
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., MONDAY, JANUARY 22, 2007
 
                NATIONAL UNITY DAY – JANUARY 22, 1919
         The Union of the Ukrainian National Republic (UNR) and the
    Western Ukrainian National Republic (ZUNR) was declared in Kyiv.

               –——-  INDEX OF ARTICLES  ——–
             Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1. WORLD BANK EXPECTS UKRAINE’S GDP TO GROW 4.5% IN 2007
Interfax Ukraine Business Express, Kyiv, Ukraine, Wed, January 17, 2007

2.         GOVERNMENT NEEDS TO INCREASE PRICES FOR GAS

        PRODUCED IN UKRAINE SAYS WORLD BANK ECONOMIST
Interfax Ukraine News, Kyiv, Ukraine, Thu, January 18, 2007

3.               UKRAINE EYES ENERGY PROJECTS IN TURKEY
By Andrea R. Mihailescu, UPI Energy Correspondent
UPI, Washington, D.C., Friday, January 19, 2007

4 POLAND’S KETY ALUMINUM GOODS PRODUCER TO INVEST
        ALMOST $10M IN ITS UKRAINIAN DAUGHTER COMPANY
Interfax Ukraine Economic, Kyiv, Ukraine, Friday, January 19, 2007

5.         POLISH CAR MANUFACTURER FSO CONSIDERS SUING
DECISION OF EUROPEAN COMMISSION ON LIMITING PRODUCTION
                    FSO is owned by Ukrainian company AwtoZAZ
Polish News Bulletin, Warsaw, Poland, Thu, Jan 18, 2007

6.              POLAND BROADCASTS “TRUTH” TO BELARUS
      Radio Racja is helping wage an information war against a dictatorship
By Chris Johnson, Reuters, Bialystok, Poland, Sun Jan 14, 2007

7UKRAINE’S TWO LARGEST CARMAKERS TO DOUBLE INVESTMENT
       Ukraine automotive companies Bogdan & ZAZ plan production in Russia
EIU IndustryWire – News Analysis, The Economist Intelligence Unit Limited
New York, New York, Wednesday, January 10, 2007

8.     EBRD CONSIDERS LOAN TO BRITISH CADOGAN PETROLEUM
                  FOR MINING UKRAINIAN GAS AND OIL DEPOSITS

Ukrainian News Agency, Kyiv, Ukraine, January 19, 2007

9.   UKRAINIAN GRAIN ASSOCIATION EXPECTS RESUMPTION OF
            GRAIN EXPORTS FROM UKRAINE IN LATE JANUARY
       Losses from grain export restrictions are already around $100 million
Interfax Ukraine Business Express, Kyiv, Ukraine, Tue, January 16, 2007

10.                     UKRAINE ECONOMY: GRAIN OF TRUTH
Government actions jeopardises Ukraine’s WTO entry & investment prospects.
Country Briefing: EIU Economy – News Analysis
The Economist Intelligence Unit Limited
New York, New York, Thursday, November 16, 2006

11.      CHRONICLE OF RECENT DEVELOPMENTS IN UKRAINIAN
                       LEGISLATION, NOVEMBER-DECEMBER 2006
Dr. Irina Paliashvili, Russian-Ukrainian Legal Group, P.A.

Action Ukraine Report (AUR) #807, Article 11
Washington, D.C., Monday, January 22, 2007

12UKRAINE 125TH IN HERITAGE FOUNDATION FREE ECONOMY LIST
                        Placed in the “mostly unfree” category of countries.
Interfax Ukraine Focus, Kyiv, Ukraine, January 16, 2007

13.                              WANTED: POLITICAL WILL
            Study points out Ukraine still lags far behind on the economic front.
EDITORIAL: Kyiv Post, Kyiv, Ukraine, Wed, Jan 17 2007

14UKRAINE: POLITICAL PARTY TRAINING FOR ECONOMIC REFORM
Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Thursday, January 4, 2007

15. BROAD STREET CAPITAL GROUP NAMED EXCLUSIVE FINANCIAL
        ADVISOR OF $120 MILLION UKRAINE POWER PLANT PROJECT
       Receives $696,000 U.S. Government Trade & Development Agency Grant
Business Wire, New York, NY, Thursday, January 18, 2007

16U.S. GRANTS USD 0.55 MILLION FOR FEASIBILITY STUDIES FOR
 MODERIZATION OF UKRAINE’S PIVDENMASH HEAT & POWER PLANT
Ukrainian News Agency, Kyiv, Ukraine, Thursday, January 18, 2007

17UKRAINE GOVN’T INTENDS TO OFFER VANCO INTERNATIONAL
      40% OF THE PRODUCTS MINED IN BLACK SEA’S TRANS-KERCH

Ukrainian News Agency, Kyiv, Ukraine, Friday, January 19, 2007

18. “EVER SINCE WE GOT MARRIED WE HAVE BEEN DECORATING
                             CHRISTMAS TREES TOGETHER”
                  Interview with U.S. Ambassador & Mrs. William Taylor
INTERVIEW: With U.S. Ambassador & Mrs. William Taylor
By Klara Gudzyk, The Day Weekly Digest #1
Kyiv, Ukraine, Tuesday, January 16, 2007

19“IT DOES NOT SERVE UKRAINE’S INTERESTS WHEN POLITICAL
           INFIGHTING CARRIES OVER INTO THE FOREIGN POLICY
                                   ARENA” AMB. STEVEN PIFER.
INTERVIEW: With Former U.S. Ambassador to Ukraine Steven Pifer
By Mykola SIRUK, The Day Weekly Digest #1
Kyiv, Ukraine, Tuesday, January 16, 2007

20.          UKRAINE: THE BEST AND THE WORST LIST FOR 2006
ANALYSIS: By Oksana Bashuk Hepburn, Canada
Action Ukraine Report (AUR) #807, Article 20
Washington, D.C., Monday, January 22, 2007

 
21.                         THE PAST IS UNPREDICTABLE,
                   CONFLICTING VIEWS OF SOVIET HISTORY
     A subtler clash of cultures is echoing through Kyiv’s St Cyril’s Church
Economist.com, London, UK, Thursday, Jan 18th 2007
 
22.    UKRAINE MP MEMBER KUSHNARIOV BURIED IN KHARKIV
Ukrainian News Agency, Kyiv, Ukraine, Saturday, January 20, 2007
 
23.          THE WESTERN UKRAINIAN NATIONAL REPUBLIC
                          AND THE WAR IN GALICIA, 1918-19
         On 22 January 1919 the union of ZUNR and UNR declared in Kyiv
FEATURE: Internet Encyclopedia of Ukraine (IEU)
Dr. Marko R. Stech, Managing Director, CIUS Press
Canadian Institute of Ukrainian Studies, University of Toronto
Toronto, Ontario, Canada, January 2007
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1
. WORLD BANK EXPECTS UKRAINE’S GDP TO GROW 4.5% IN 2007
  
Interfax Ukraine Business Express, Kyiv, Ukraine, Wed, January 17, 2007

KYIV – The World Bank has confirmed its forecast for Ukraine’s GDP in 2007
to reach 4.5% and inflation of 10.7%, World Bank lead economist for Ukraine
Martin Raiser said at a press conference on Wednesday.

Ukraine should expect continued growth in foreign investment in 2007,
although the possibility of a fall in metal prices on the international
market and consumer demand will also remain in place, he said.

The World Bank could revise its forecast for the Ukrainian economy based on
results of the first quarter of 2007, Raiser said.

Commenting on the 2006 results, Raiser said GDP growth is expected to reach
7%, which would be a surprise to World Bank experts and is much higher than
previous forecasts.

This GDP growth was primarily influenced by a surge in metal prices on the
foreign market, high domestic consumer demand, and the significant potential
of the Ukrainian industry, which has managed to adapt to new energy prices,
he said.

Speaking about the price of natural gas for Ukrainian consumers, Raiser said
its increase has been positive, as it has prompted businesses to modernize
their production facilities and reduce energy consumption.

It was reported earlier that real GDP in Ukraine could grow higher than 7%
in 2006 against the background of a dramatic increase in productivity and
intensified production.

The government expected GDP to grow by 5.8%-6% in 2006. The State

Statistics Committee revised GDP growth forecast up to 5.4% from 5%
based on the results of the first half of 2006.

Ukraine’s GDP grew by 6.7% in January-November 2006. In 2005, Ukraine’s

GDP dropped to 2.6% from 12.1% in 2004.                  -30-
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2.   GOVERNMENT NEEDS TO INCREASE PRICES FOR GAS
   PRODUCED IN UKRAINE SAYS WORLD BANK ECONOMIST

Interfax Ukraine News, Kyiv, Ukraine, Thu, January 18, 2007

KYIV – The Ukrainian government should continue introducing market
mechanisms for setting energy prices, including for natural gas, World Bank
lead economist for Ukraine Martin Raiser said at a press conference on
Wednesday.

A further hike on prices for gas produced in Ukraine will help reduce the
country’s energy dependence, he said. The World Bank thinks it is necessary
to increase the price of the gas that Ukraine produces to the level of
imported gas prices.

This would increase gas production, thus Ukraine would not be as dependent
on imported gas from other countries, Raiser said. An increase in domestic

energy prices would also increase transparency in the energy sector, he said.

Relatively low prices for imported and Ukrainian gas benefit shadow
operations on the market and the re-export of gas to Europe where prices are
much higher, Raiser said. This possibility exists amid non-market prices.
There is transparency when there are market prices, Raiser said.  -30-
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3.       UKRAINE EYES ENERGY PROJECTS IN TURKEY

By Andrea R. Mihailescu, UPI Energy Correspondent
UPI, Washington, D.C., Friday, January 19, 2007

WASHINGTON – Ukraine said it is ready to participate in Turkey’s energy
projects, including the multilateral Nabucco gas pipeline project, Viktor
Yanukovych, prime minister of Ukraine, said after holding talks with Recep
Tayyip Erodgan, prime minister of Turkey, in Ankara Wednesday.

Nabucco involves five countries and Turkey “cannot hold a negative stance,
if any neighbor wishes to join the project,” Erdogan said. “The main thing
is that Nabucco becomes powerful and improves the distribution of
resources.”

Kiev, which says it has considerable potential for making gas-compressing
equipment, wants to be an active participant in oil and gas pipeline
projects wherever it successfully wins tenders.

“Therefore we will be using every possibility to take part in projects such
as Nabucco,” Yanukovych said.

The two sides are considering enhancing cooperation in throughout the energy
sector not only oil and gas, including with plans to build power plants in
Turkey. Ukraine has offered its assistance to build nuclear power plants in
Turkey, Yanukovych said.

Yanukovych said his country is interested in expanding Turkish transport
networks, primarily gas and pipelines. “The Turkish policy in fuel
transportation to Europe deserves attention and here we are partners, not
competitors,” he said.

Other possible projects include development of offshore fields in the Black
Sea.                                              -30-
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http://www.upi.com/Energy/view.php?StoryID=20070119-021851-3228r
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4.  POLAND’S KETY ALUMINUM GOODS PRODUCER TO INVEST
       ALMOST $10M IN ITS UKRAINIAN DAUGHTER COMPANY

Interfax Ukraine Economic, Kyiv, Ukraine, Friday, January 19, 2007

KYIV – Grupa Kety S.A., Poland’s largest aluminum goods producer, in 2007
plans to invest 29 million zloty (around $9.6 million) in its Ukrainian
daughter company Aliupol Ltd. in Borodianka in Kyiv region, which produce
aluminum profiles, according to the group’s financial forecast for 2007.

The total volume of capital investment of the group in 2007 is planned to be
163.6 million zloty, reads the report.

Earlier, Grupa Kety said that it planned to invest 30 million zloty in
Aliupol Ltd. in 2006 to launch output of aluminum products for the Ukrainian
and Russian construction markets.

The new facilities are to be launched in the fourth quarter 2006, although
the launch was set back to the second quarter 2007, Aliupol told
Interfax-Ukraine. A new press machine at the plant will have a capacity of
8,000 tonnes of products per year.

According to the group’s report, a 9% increase in aluminum products output
is expected in 2007, mainly through the launch of the Ukrainian facilities.

Grupa Kety Head Dariusz Manko in early January 2007 said in an interview
with the Bloomberg Agency that Grupa Kety could additionally invest 30
million zloty in Aliupol if the company attracts new Ukrainian clients.

Grupa Kety S.A. is the largest aluminum construction product producer in
Poland. In 2006, the group forecasted a 46.2% rise in sales, to 544 million
zloty.

In 2007, the group plans to increase aluminum product sales to 592 million
zloty, and total sales to 1.214 billion zloty. Grupa Kety actively exports its

products to Ukraine.                              -30-
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5.        POLISH CAR MANUFACTURER FSO CONSIDERS SUING
DECISION OF EUROPEAN COMMISSION ON LIMITING PRODUCTION
                      FSO is owned by Ukrainian company AwtoZAZ

Polish News Bulletin, Warsaw, Poland, Thu, Jan 18, 2007

WARSAW – FSO, a major Polish car manufacturer, is considering placing a

suit against the decision of European Commission, which allows a company to
receive state aid from the State in return for limiting production to
150,000 cars yearly.

The limit is unfavourable for GM, as it plans to produce the Chevrolet Aveo
into the Warsaw based factory. The decision on using or refusing the state
aid will be made by the owner of FSO, Ukrainian AwtoZAZ.

The company, which is a part of UkrAwto concern, has been granted

ZL400m of guarantees for an investment loan.

FSO has the right to appeal to the European Court of Justice, however the
proceedings may last for up to two years and within that time, the
production limit ordered by the EC would have to be obeyed, if the company
decides to use the state aid.

Following the decision, GM has already started to look for new options, as
it plans to get a solid share in the European market. One option is
acquiring former Daewoo factories in Romania.             -30-
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6.       POLAND BROADCASTS “TRUTH” TO BELARUS
       Radio Racja is helping wage an information war against a dictatorship

By Chris Johnson, Reuters, Bialystok, Poland, Sun Jan 14, 2007

BIALYSTOK, Poland – From simple back offices in a provincial Polish
town, a radio station is broadcasting around the clock to Belarus, giving
the ex-Soviet republic one of its few sources of independent news.

Run by opponents of Belarus President Alexander Lukashenko, Radio Racja
(Truth) is helping wage an information war against a regime branded by U.S.
Secretary of State Condoleezza Rice as “Europe’s last dictatorship”.

Supported by the Polish Foreign Ministry and Budapest-based Open Society
Institute founded by U.S. billionaire investor George Soros, Radio Racja is
one of only two independent stations broadcasting freely into Belarus.
Reuters Pictures

The station uses Web technology to mix popular music and social commentary
with uncensored news in both Belarussian and Russian, aiming to provide a
platform for both opposition parties and Belarussian bands, some of which
are banned at home.

“I dream of a free and independent Belarus,” says editor-in- chief Wiktor
Stachwiuk, a 58-year-old exile. “I want to give Belarussians a taste of a
free society. Official media do not let them hear what is really going on.”

Lukashenko, in power since 1994, keeps a tight rein on the eastern European
country and its 10 million inhabitants, sandwiched between Poland and
Russia.

He rejects all criticism of his rule and has called for vigilance to keep
Belarus safe from Western “lies and violence”. Opposition politicians and
journalists have disappeared and all media outlets face serious
restrictions.   .

Western countries accuse Lukashenko of systematic crackdowns on the
opposition and dismiss all Belarus elections over the last decade as unfair.
They say the president blatantly rigged elections last year to engineer a
landslide win for himself.

“I could not simply stand by and watch what was happening in my country
without doing anything,” Stachwiuk said. He first set up Radio Racja in
1999 and it broadcast from the Polish capital of Warsaw until 2002.
                                       INTIMIDATION
His Warsaw station eventually ran into financial problems and it took
Stachwiuk and his associates three more years to raise enough money to
launch the station in Bialystok, closer to Belarus and able to broadcast
deeper into the country.

It now has a budget of $1 million a year, half of which is spent on
transmitters: two in Poland and two in Lithuania.

Almost a year after its relaunch, Stachwiuk estimates Radio Racja, with a
staff of just 32, has an audience of up to 400,000 mostly in western
Belarus, plus tens of thousands of exiles, and says it is building up
rapidly on short and medium wave and on a newly launched FM band:
“The station can be heard well on medium wave all the way to (Belarus
capital) Minsk and can even be picked up in Finland.”

The station has a small network of reporters, mostly working under
pseudonyms, across Belarus who record programs using MP3 technology
and send them via the Internet to Bialystok or to one of two covert editing
stations in Belarus.

Radio Racja editors say their correspondents face daily harassment from
the  Belarus authorities — mostly just petty intimidation but occasionally
arrest and jail.

“Several of our people have been put in prison for a few days, one for 10
days, but nothing more serious so far,” said Michal Andrysiuk, 47, head of
FM broadcasting.

“One of our correspondents broadcast live from a police car after being
arrested on a charge of cursing in the street. Hooliganism is the most
frequent official excuse to arrest people who are obviously known to the
police,” he said.
                            “NO TRUTH IN THE NEWS”
Belarus opposition politicians and journalists welcome Radio Racja’s efforts
to break the state media monopoly but say its impact so far has been
limited, partly because most Belarussians rely on television for news.

Zhanna Litvina, head of the Belarussian Association of Journalists, said by
telephone it was a “comforting thought that such radio stations exist and
that Belarussians are working for them”.

“Unfortunately, you cannot say that such projects are very effective in
current Belarussian conditions. To make them effective you would need
transmitters in Belarus and under current conditions that is impossible.”

But the radio station’s backers in Poland are convinced that there is an
audience and that it is growing: “I was in Belarus some time ago and met
people listening to the radio and glad of it,” said Michal Dworczyk, a key
advisor on eastern European issues to Polish Prime Minister Jaroslaw
Kaczynski. “The media role in the fight for democracy is indisputable.
For Belarus and its people, it is essential.”

And Radio Racja’s staff say they are not discouraged and will keep
broadcasting, even if the audience is tiny.

“We really want to show what is going on. We try to be objective, asking
for comment from the government, but they won’t talk to us,” said
program director Jana Kamienskaja, 37.

“‘There is no news in the truth, and there is no truth in the news’ —
unfortunately this old Soviet proverb is still valid in Belarus.” Belarus
officials declined to comment on Radio Racja.            -30-
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Additional reporting by Andrei Makhovsky in Minsk and Gabriela
Baczynska in Warsaw. Link: http://today.reuters.com/news/home.aspx.
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7. UKRAINE’S TWO LARGEST CARMAKERS TO DOUBLE INVESTMENT
       Ukraine automotive companies Bogdan & ZAZ plan production in Russia

EIU IndustryWire-News Analysis, The Economist Intelligence Unit Limited
New York, New York, Wednesday, January 10, 2007

Ukraine’s two largest carmakers, Bogdan and ZAZ, have announced plans to
more than double their earlier level of investment to establish a joint
venture for the production of cars, buses and trucks in Russia, with plans
to invest US$700m to set up the venture, which would make it the largest
foreign investment to date by Ukrainian companies. The project would also be
the first investment from a former Soviet country in Russia’s automotive
sector.

In October last year the two companies unveiled plans to invest US$300m to
set up a production base in the Nizhny Novgorod region in Russia (BEE Oct
20th 2006).

According to initial plans, the new plant will have annual production
capacity of 25,000 trucks, 6,000 Bogdan-Isuzu buses, and 25,000 Chevrolet
Lanos sub-compact models.

Bogdan already holds licences for the production of buses produced by Isuzu
(Japan) and for the Lanos model produced by Chevrolet, a unit of car giant
General Motors (GM; US). Ouput is expected to be sold primarily in Russia as
well as other CIS countries.

The two companies did not explain the reason for the increase in the
investment volume to set up the joint venture, and according to reports the
annual production capacity remains unchanged from the information released
in October. According to the initial information, the new plant should reach
output capacity in 2009.

ZAZ, Ukraine’s largest carmaker, currently assembles several car and truck
models under licensing agreements, including Opel, Chevrolet and Daewoo
models owned by GM.

Bogdan, Ukraine’s number-two carmaker, operates the Lutsk automobile plant
(LuAZ) and bus production facilities in Cherkassy, 200 km south-east of the
capital, Kiev. The company produces other carmaker’s models under licensing
agreements, including Lada models produced by leading Russian carmaker
AvtoVAZ.

Since 2003 ZAZ and Bogdan have operated joint-venture products in Ukraine
for the production of Lada models.                      -30-

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8.  EBRD CONSIDERS LOAN TO BRITISH CADOGAN PETROLEUM
               FOR MINING UKRAINIAN GAS AND OIL DEPOSITS
 
Ukrainian News Agency, Kyiv, Ukraine, January 19, 2007

KYIV – The European Bank for Reconstruction and Development [EBRD]

may loan EUR 18.3 million to British Cadogan Petroleum for mining
Ukrainian gas and oil deposits. The bank disclosed this in a statement.

The funds are given for two years to perform works and exploit the developed
territories. Total cost of the project reaches USD 700 million. EBRD board
of directors will consider question of allotting funds by February 20.

Cadogan Petroleum was established in 2005 and specializes in developing and
exploiting gas and oil deposits.

As Ukrainian News reported, in Ukraine Cadogan Petroleum operates
preparation and exploration of condensed gas deposits on the area of 121
square kilometer at the Dnipro-Donetskyi basin.

It owns Cadogan Ukraine (former Rentoul), which in its turn purchased two
Ukrainian companies – Astro-Invest and Hazodobuvannia.

The first one owns 70% in the agreement of joint development of Pirkivske
deposit (the rest 30% belong to Nadra Ukrainy), the second one – 100% in the
Pokrovske deposit (Poltava region).

According to the bank’s data, as of January 1, 2007 EBRD undertook financing
of EUR 2.86 billion for 133 projects. In 2006 amount of investments in
Ukraine totaled EUR 797 million.                       -30-

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9.  UKRAINIAN GRAIN ASSOCIATION EXPECTS RESUMPTION OF
            GRAIN EXPORTS FROM UKRAINE IN LATE JANUARY
           Losses from export restrictions are already around $100 million

Interfax Ukraine Business Express, Kyiv, Ukraine, Tue, January 16, 2007

KYIV – The Ukrainian Grain Association, uniting grain-trading companies in
Ukraine, expects that the export of grain from Ukraine will be resumed in
late January. Grain exports have been suspended since the start of the year,
as export licenses were not issued to companies.

“We expect that first licenses for the export of grain will be issued on
January 20 or January 21,” Ukrainian Grain Association President Volodymyr
Klymenko has told Interfax-Ukraine.

He said that licenses for the export of grain within the quotas set for the
current marketing year (MY, July 2006-June 2007) have not yet been issued
due to the checks of the authenticity of documents submitted for receiving
the licenses.

Klymenko said that at present, the Agriculture Ministry is completing these
checks, and a concrete decision will soon be made.

He said that according to the assessments of the ten top exporters, the
losses from the restrictions in the export of grain are already around $100
million, and another $650 million could be lost if the export of grain is
not resumed.                                      -30-

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10.               UKRAINE ECONOMY: GRAIN OF TRUTH
Government actions jeopardises Ukraine’s WTO entry & investment prospects.

Country Briefing: EIU Economy – News Analysis
The Economist Intelligence Unit Limited
New York, New York, Thursday, November 16, 2006

Ukraine, the world’s sixth-largest grain exporter, has halted all exports in
order to keep down bread prices, following forecasts for a reduced harvest
this year.

The government’s actions in the grain market since mid-year underline
several problems: [1] a lack of strategic planning; [2] administrative
opacity; and a [3] tendency to overreaction.

Yet the most serious problem is the government’s instinctive tendency to
intervene in the economy, rather than allow markets to work. This
jeopardises Ukraine’s WTO entry and investment prospects.

Ukrainian grain exports in the first half of November have been a fraction
of their usual level, owing to administrative obstacles in the wake of a
government-introduced export quota.

Speaking on November 17th, President Viktor Yushchenko said that vessels
with 200,000 tonnes of grain were stuck in ports, with a further 1.4m tonnes
waiting to be loaded.

He called on the government to take action to resume the grain trade, noting
that the current situation threatened to deprive Ukraine of its traditional
markets and to create tension with trading partners. Underlying his comments
is a fear that the government’s interventionism could impeded accession to
the WTO.
                                BREAD IN EVERY MOUTH
The government of Prime Minister Viktor Yanukovych-the oligarchic rival of
Mr Yushchenko-has intervened in the grain market following forecasts of a
weaker harvest this year.

In 2004 Ukraine’s grain harvest was 41.8m tonnes; in 2005 it was 38m tonnes
and is forecast to be 35.1m tonnes this year. Wheat production is forecast
to fall to 14.4m tonnes, from 18.7m tonnes in 2005, according to the
agriculture ministry.

Data from the state statistics committee show that grain stocks as of
October 1st were down 23% year on year.

In response, prices have risen to HRN534/tonne in the first nine months of
this year, compared with HRN474/t in the corresponding period of 2005;

wheat prices have risen to HRN551/t from HRN485/t over the same period.

Indeed, global prices have risen in response to poor harvests in many
countries in the last two years.

Consequently, Ukrainian grain producers have increased exports: according

to data from the agriculture ministry, grain exports in the first four months
of the marketing year (which began in July) amounted to 5.7m tonnes, which
is up 30% year on year.

The rise in prices frustrated the government’s belated efforts to build a
strategic grain reserve, comprising 400,000 tonnes of bread-quality wheat.
The responsible state agency was unable to make the purchases at the target
price.

According to a Financial Times report, state officials then sought to force
grain traders to sell their stocks at a US$20/tonne discount, but were
rebuffed.

Instead of agreeing to pay more, the government on September 28th introduced
without warning a new licensing regime for exports; its complexity and the
lack of preparation time sharply curbed grain exports.

Following industry protests, this was replaced on October 11th by export
quotas to the end of the year. The overall grain export quota was set at
1.6m tonnes, comprising: 600,000 tonnes of maize; 600,000 tonnes of barley;
400,000 tonnes of wheat; and 3,000 tonnes of rye.

The quotas have been successfully challenged in court but remain in place.

Indeed, confusion over the legality of shipments under the new arrangements,
and the required licensing, have all but halted grain purchases for export.

Seaport grain shipments during November 1st-15th fell by 79% to 77,600
tonnes, from 373,850 tonnes during October 1st-19th. There is also
considerable confusion over the method by which quotas are to be allocated.

                 PM YANUKOVYCH IS UNAPOLOGETIC
Mr Yanukovych is unapologetic for the losses inflicted on Ukrainian and
foreign investors in the agricultural sector-which are likely to be around
several hundred million dollars.

He insists that the government had to act, in order to prevent bread prices
from doubling. Nor is the end necessarily in sight: Deputy Agriculture
Minister Petro Verbytskiy said on November 15th that the government might
impose an export quota of 1.8m tonnes for the first half of 2008.
                                   CLUMSY AND OPAQUE
Several aspects of the grain-quota affair are noteworthy.

[1] First, the government has acted in an opaque manner. The licensing
requirements were introduced without warning, let alone any consultation,
leading to huge confusion.

Business plans have been wrecked by the cabinet’s decisions, and the
paralysis of exports since the start of November is squarely a consequence
of confusion within the state customs service over how the new export

regime is to work in practice.

Perhaps most importantly, there is little or no clarity over how mechanism
for distributing quotas. Nor is it certain that the cabinet is moving
determinedly to resolve this problem-the longer it goes on, the lower
domestic grain prices will go.

On November 15th the authorities formally authorised the customs service to
resume exports, but simultaneously it suspended licenses that cover
approximately half the wheat and barley quotas.

[2] Second, it can be argued that the government has engaged in overkill. In
a joint public statement, the US, Dutch and German ambassadors to Ukraine
described the intervention as unnecessary because there are credible
estimates that the 2006/07 harvest will be in line with historical averages.
They added that there was insufficient clarity over the level of reserves
held by the government.

Even if action on wheat was necessary, to keep bread prices down, the
restrictions on barley and other grains are questionable. Volodymyr
Klimenko, the president of the Ukrainian Grain Association (UGA), has said
that his organisation is prepared to accept a 1.3m tonne quota for wheat
exports to mid-2007, but argues that barley and maize production this year
is sufficient to satisfy both domestic and foreign demand.

The UGA estimates that Ukraine can export 5m tonnes of barley and 1.5m
tonnes of maize in the 2006/07 marketing year without risking shortages on
the domestic market.
                                 SAME OLD MEDDLERS
Most significantly, the affair reveals the economic philosophy of Ukraine’s
current government-which is little different to that of most previous
Ukrainian governments. Nearly every Ukrainian administration has struggled
to establish and run the strategic grain reserve in an efficient manner.

Equally, they have failed to develop strategies and institutions to bring
stability to the grain market; instead, when faced with a crisis, they have
intervened directly. This mode of operating is not limited to Mr Yanukovych’s
government, nor to the agricultural sector.

In 2005 the “Orange” government led by Yulia Tymoshenko responded to

rising oil prices in the country by blocking fuel exports and forcing the
country’s oil companies to accept price caps.

If there was a hope that Mr Yanukovych’s administration-with much more
experience of running the country-would be better at managing such crises,
it has been disappointed. The Ukrainian state’s instinct to interfere, and
its inability to plan strategically or build effective institutions, remains
the same.

The implications of this are manifold, but two stand out: the highly
negative signal sent to [1] domestic and foreign business, and to [2] the
countries whose support Ukraine needs to join the WTO.

For businesses, the fact that a Ukrainian government has once again
intervened directly in the market, at the first sign of political trouble,
highlights the risks of investing the country.

No investor, foreign or Ukrainian, is likely to be reassured by the content
and tone of Finance Minister Mykola Azarov’s justification for government
action.

Having claimed that traders wanted to buy grain “for nothing”, he continued:
“The price that was set now is a normal market price, which covers all of
the expenses of the producers and creates a certain profitability. The state
cannot allow itself to buy grain at unrestricted prices.”

Nor has the grain market intervention done Ukraine any favours in its WTO
bid. As the three Western ambassadors noted, foreigners have invested nearly
US$1bn in the Ukrainian agricultural sector but will probably lose several
hundred million dollars as a result of export restrictions.

Mr Yanukovych has expressed a hope that Ukraine’s trade partners be
understanding and says that “in the future we will build normal relations.”

However, Ukraine’s governments have such an established track record of
interventionism, that it is not clear why anyone should give the current
prime minister the benefit of the doubt.

If Mr Yanukovych is forced to choose between keeping bread prices low and
bringing Ukraine into the WTO, it seems he will opt for the former without
hesitation.                                        -30-
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================

11. CHRONICLE OF RECENT DEVELOPMENTS IN UKRAINIAN
                 LEGISLATION, NOVEMBER-DECEMBER 2006

Dr. Irina Paliashvili, Russian-Ukrainian Legal Group, P.A.

Action Ukraine Report (AUR) #807, Article 11
Washington, D.C., Monday, January 22, 2007

The “Chronicle of Recent Developments in Ukrainian Legislation” is a
monthly summary of the most important legislative developments in Ukraine
in the area of business and corporate law, and is prepared, published and
distributed by the Russian-Ukrainian Legal Group as a free service.

The Chronicle is prepared in an effort to capture news of greatest interest
to the widest cross-section of our firm’s clientele, without restating all
legislation published and drowning our readers in too much information.

Due to the winnowing process necessary when preparing the Chronicle,
we cannot and do not guarantee that it contains a comprehensive list of
all Ukrainian legislation relevant to your business.

The Chronicle is distributed only via e-mail attachment, in English and
Russian, by the middle of each month, and summarizes the legislative
developments of the previous month. In order to begin receiving the
Chronicle direct to your e-mail box, please fill out the subscription form
found at http://www.rulg.com/subscription_form.asp. The Chronicle will
only be distributed to subscribers who fill out this form. The “unsubscribe”
option is available at any time.

Finally, please bear in mind that this summary does not constitute legal
advice; it is an informational service only.  Should you wish to receive
further information or actual legal advice, please do not hesitate email us
at chronicle@rulg.com
                                                INDEX
       Accession to the World Trade Organization; Consumer Protection;
         Corporate Registration; Customs; Intellectual Property; Permits

                             System; Use of Subsoil, Oil and Gas

  ACCESSION TO THE WORLD TRADE ORGANIZATION
1) List of bills intended to harmonize national Ukrainian legislation with
standards and principles of the World Trade Organization (“WTO”). All laws
required for Ukraine to accede to the WTO have been adopted. As a reminder,
some of these laws were adopted as early as mid-2005 (see the August 2005
edition of this Chronicle). In November 2006, the following laws were
adopted by Ukraine’s Parliament and signed by the President:

Law of Ukraine No. 317-V “On Amending Article 25 of the Law of Ukraine ‘On
the Publishing Industry'” dated 2 November 2006. The Law deletes from the
Law on the Publishing Industry the ban on setting-up and operating in
Ukraine a “printed output distribution organization” in which foreign
investments constitute more than 30% of the charter capital. The Law will
take effect five years after Ukraine accedes to the WTO;

Law of Ukraine No. 316-V “On Amending Article 8 of the Law of Ukraine ‘On
Protecting Rights to Indicate the Origin of Goods'” dated 2 November 2006.
Please see item 7 of this Chronicle. The Law took effect on 24 November
2006;

Law of Ukraine No. 374-V “On Amending Certain Laws of Ukraine Concerning
Fees for Licenses and Excise Duties on the Production of Alcohol, Alcoholic
Beverages and Tobacco Products” dated 17 November 2006. Effective 2007,
the fees for said licenses have been decreased and the rates of the excise
duties have been increased. The Law took effect on 1 January 2007;

Law of Ukraine No. 357-V “On Amending the Law of Ukraine ‘On Insurance'”
dated 16 November 2006. The Law regulates specific aspects of non-resident
insurers’ activity in Ukraine.

In particular, it stipulates that non-resident insurers are allowed to
insure large risks (sea and air carriage, space rocket launches, etc.) in
the territory of Ukraine in cases stipulated by law, after Ukraine accedes
to the WTO. The Law will take effect after Ukraine accedes to the WTO;

Law of Ukraine No. 356-V “On Amending the Law of Ukraine ‘On the Export
Duties on Live Cattle and Rawhide'” dated 16 November 2006. The revised
Law establishes the rates of the export duties on live cattle and rawhide.
Effective 1 January of the year following Ukraine’s accession to the WTO,
such rates will decrease annually until they reach a certain amount. The Law
will take effect after Ukraine accedes to the WTO;

Law of Ukraine No. 362-V “On Amending Article 9 of the Law of Ukraine ‘On
Pharmaceuticals'” dated 16 November 2006. The Law stipulates that for five
years after registration of a pharmaceutical in Ukraine, the registration
data used in filing the application for State registration cannot be used to
file an application for another pharmaceutical, except for in cases when the
right to refer to or use such data is obtained in the procedure prescribed
by law.

It is stipulated that state registration of pharmaceuticals may be rejected
if, as a result of such registration, the effective proprietary rights to
intellectual property protected by the patent are violated, including in the
process of production, use, and sale of pharmaceuticals. The Law took effect
on 12 December 2006;

Law of Ukraine No. 360-V “On Amending the Law of Ukraine ‘On Foreign
Economic Activity'” dated 16 November 2006. The Law defines the legal
regimes for goods imported from WTO member states (national treatment and
most favored nation status) and specifies the procedures for automatic and
non-automatic licensing of foreign economic operations.

The list of grounds for introducing the licensing regime includes measures
to protect domestic manufacturers in the event of acute fluctuations of the
volumes of export-import operations, as well as the liability of subjects of
foreign economic activity for violating the licensing regime.

Additionally, the Law prohibits the export from Ukraine (import into
Ukraine) of exhaustible natural resources and the export of goods in the
context of executing the UN Security Council’s resolutions. The Law alters
the functions of agencies responsible for state control over foreign
economic activity. The Law took effect on 9 December 2006;

Law of Ukraine No. 358-V “On Amending the Law of Ukraine ‘On Banks and
Banking'” dated 16 November 2006. The Law grants foreign banks the right to
open branches in the territory of Ukraine. It contains an exhaustive list of
the conditions under which a foreign bank shall be entitled to open its
branch in Ukraine, and describes the procedure for accrediting foreign
banks’ branches and representative offices in the territory of Ukraine and
the rules for such branches performing banking activity.

Certain provisions of this Law took effect on 8 December 2006; the remainder
will take effect after Ukraine accedes to the WTO;

Law of Ukraine No. 401-V “On Amending the Law of Ukraine ‘On State Support
of the Agricultural Sector of Ukraine'” dated 30 November 2006. The Law
repeals provisions of the effective Law “On State Support of the
Agricultural Sector of Ukraine” concerning the setting of minimum / maximum
import prices and the establishing of non-tariff restrictions (quotas) with
regard to importing or exporting agricultural goods included on the list of
goods subject to state price control.

Moreover, the Law cancels the rules for performing export-import operations
through the regulatory mechanism for defining the customs value of goods
subject to their established maximum or minimum purchase prices. The Law
took effect on 16 December 2006;

Law of Ukraine No. 402-V “On Amending the Law of Ukraine ‘On Milk and Dairy
Products'” dated 30 November 2006. The Law cancels export subsidies granted
to producers of dairy products, the quota on output and sale of milk to
processing enterprises, the requirements for supplying dairy products to the
national material reserve, the minimum purchase prices of milk and dairy raw
materials and the limits on retail mark-ups for dairy products.

Additionally, the Law specifies the mechanisms for extending state support
to the producers of milk and dairy raw materials. The Law will take effect
after Ukraine accedes to the WTO;

Law of Ukraine No. 335-V “On Amending Article 7 of the Law of Ukraine ‘On
Pesticides and Agrochemicals” dated 14 November 2006. The Law states that,
for the first 10 years after a company registers a pesticide or agrochemical
in Ukraine, no one is permitted to use the information contained in the
documents, that describe the rules for safe application of said substances,
absent the permission of the company that registered said substances. The
Law took effect on 14 December 2006;

Law of Ukraine No. 403-V “On Amending the Law of Ukraine ‘On Controlling the
Production and Sale of Sugar by the State'” dated 30 November 2006. The Law
simplifies the control mechanism in the sphere of production and sale of
sugar. The “B” quota (on delivering sugar under international agreements)
and “C” quota (on owners selling sugar exclusively abroad) are cancelled.

The Law also repeals the requirement for the mandatory export of sugar
produced from imported raw materials. The Law will take effect after Ukraine
accedes to the WTO;

Law of Ukraine No. 404-V “On Establishing a Tariff Quota on Importing Raw
Cane Sugar into Ukraine” dated 30 November 2006. Effective 1 January of the
year following the year Ukraine accedes to the WTO, regulations will go into
effect establishing an annual tariff quota on raw cane sugar imported into
Ukraine.

Specifically, the first 260,000 tons imported will enjoy an import duty of
2% of their customs value. The Law will take effect on 1 January of the year
following the year Ukraine accedes to the WTO;

Law of Ukraine No. 441-V  “On Establishing Export Duty Rates for Ferrous
Scrap, Non-Ferrous Scrap and Semi-Finished Products Produced Using Same”
dated 13 December 2006.

The Law states the export duty rates for alloyed ferrous scrap, non-ferrous
scrap and semi-finished products using same and stipulates that after
Ukraine accedes to the WTO such rates will decrease every year until they
reach a certain amount. The Law will take effect on 1 January of the year
following the year Ukraine accedes to the WTO;

Law of Ukraine No. 400-V “On Amending the Law of Ukraine ‘On the Export Duty
on Iron-and-Steel Waste and Scrap’ dated 30 November 2006. The Law restates
Law of Ukraine “On the Export Duty on Iron-and-Steel Waste and Scrap” and
will take effect after Ukraine accedes to the WTO.

The Law stipulates that the export duty rates on iron-and-steel waste and
scrap will decrease every year following Ukraine’s accession to the WTO.

After the seventh year following Ukraine’s accession to the WTO, the export
duty rates will hold steady at the same rates reached in the seventh year.
The Law will take effect after Ukraine accedes to the WTO.
                                  CONSUMER PROTECTION
2) State Committee of Ukraine for Technical Control and Consumer
Policy Order No. 331 “On Approving the Procedure for Conducing Inspections
of Subjects of Economic Activity in the Sphere of Trade and Services,
Including the Restaurant Business, the Quality of Goods, Compliance with the
Mandatory Requirements for Safety of Goods and Observance of the Rules of
Trade and Services Rendering” dated 25 October 2006.

The Procedure defines the mechanism for maintaining state control in the
sphere of consumer protection. Control will be effected by means of
performing inspections according to a special working plan prepared by the
agencies responsible for consumer protection.

Unscheduled inspections will be conducted by officials exclusively on the
basis of consumers’ applications (complaints) concerning enterprises’
violations of the law. The Order took effect on 2 December 2006.
                              CORPORATE REGISTRATION
3) Law of Ukraine No. 489-V “On the State Budget of Ukraine for 2007” dated
19 December 2006 (“Law on the 2007 State Budget”). Effective 1 January 2007,
Ukraine’s minimum salary has been set at 400 UAH. Therefore, the legislated
minimum amount of charter capital for limited liability companies (no less
than 100 minimum salaries) amounts to 40,000 UAH. Moreover, effective 1 July
2007, the minimum salary will increase to 420 UAH, and effective 1 December
2007, to 450 UAH. The Law took effect on 1 January 2007.
                                               CUSTOMS
4) Cabinet of Ministers of Ukraine Resolution No. 1654 “On Approving the
Procedure for Issuing A.T.A. Books (Carnets)” dated 29 November 2006. The
Procedure has been approved in connection with Ukraine’s accession in April
2004 to the Convention on Temporary Admission adopted on 26 June 1990 in
Istanbul (“Convention”).

As we previously informed in the April 2004 edition of this Chronicle, an
A.T.A. book (carnet) is a document used for the temporary importation of
goods, except for transport vehicles. The use of the book facilitates the
procedure of temporary importation.

The Chamber of Commerce and Industry will issue these books in the territory
of Ukraine on the basis of applications from Ukrainian-resident individuals
and legal entities.

Together with the application, it is also necessary to file certain
documents, the list and requirements for the execution of which will be
defined by the Chamber of Commerce and Industry. The term of a book’s
validity cannot exceed one year. The Resolution took effect on 22 December
2006.

5) Cabinet of Ministers of Ukraine Resolution No. 1766 “On Approving the
Procedure for Declaring the Customs Value of Goods Moved through the

Customs Territory of Ukraine and Submission of Data to Prove this Value”
dated 20 December 2006.

A new Procedure defining the conditions of and mechanism for declaring the
customs value of goods moved through the customs territory of Ukraine and
submission of a declarant’s data proving this value has been approved.

The 2003 Procedure, about which we informed in the August 2003 edition of
the Chronicle, will terminate after the new Procedure takes effect. The
Resolution has not yet been published, but will take effect 30 days after
its official publication.
                               INTELLECTUAL PROPERTY
6) Law of Ukraine No. 311-V “On Amending the Law of Ukraine ‘On Protecting
Rights to Plant Varieties'” dated 2 November 2006. The concepts expressed in
the Law “On Protecting Rights to Plant Varieties” has been amended. In
particular, such concepts as “patent” and “variety’s author” have been
reinterpreted; the concept of an “owner of proprietary intellectual
property’s right to spread a variety” is defined, etc.

The Law specifies the sphere of its application and defines holders of
intellectual property rights to a plant variety. It also introduces
essential amendments to the procedure for acquiring, terminating and
invalidating intellectual property rights to a plant variety. The Law took
effect on 29 November 2006.

7) Law of Ukraine No. 316-V “On Amending Article 8 of the Law of Ukraine
‘On Protecting Rights to Indicate the Origin of Goods'” dated 2 November
2006.

According to the amendments, legal protection will not be granted for a
qualified indication of goods’ origin related to a geographical place in a
foreign state, if such right is not protected in this state. The Law took
effect on 24 November 2006.

8) Law of Ukraine No. 359-V “On Amending the Customs Code of Ukraine
(Concerning Assistance in Protection of Intellectual Property Rights During
Goods’ Movement through the Customs Territory of Ukraine)” dated 16
November 2006.

The Law grants customs bodies the right to suspend the customs clearance of
goods on their own initiative in the event of discovering the movement
through the Ukrainian customs territory of goods, for which an application
for protecting intellectual property rights has not been presented, if there
are reasonable grounds to suspect the violation of intellectual property
rights.

Herewith the Law introduces an innovation: a person holding a proprietary
right to an object of intellectual property rights, in compliance with
Ukrainian legislation, shall reimburse the customs bodies or owners of
temporary storage warehouses for the costs connected with storage of goods,
with respect to which a decision to suspend the customs clearance was
adopted, and for any damage caused by such suspension.

The Law also describes the sanctions that may be imposed on citizens who
move goods through the customs territory of Ukraine in violation of
intellectual property rights.

Finally, the Law describes how assistance may be rendered in protecting the
rights of persons holding proprietary rights to an object of intellectual
property in compliance with Ukrainian law. The Law will take effect on 10
February 2007.
                                         PERMITS SYSTEM
9) State Committee of Ukraine for Regulatory Policy and Entrepreneurship
Order No. 101 “On Approving the Form and Technical Description of a
Reference from the Register of Permit Documents” dated 9 November 2006.
References from the register of permit documents will be issued in
accordance with the form approved by the Order on the basis of any
individual’s or legal entity’s request. The Order took effect on 1 January
2007.
                            USE OF SUBSOIL, OIL AND GAS
10) Law on the 2007 State Budget. In addition to the information provided in
item 3, above, the Law suspends for 2007 a number of regulations contained
in normative documents (60 regulations in all), among which several relate
to the use of subsoil.

For instance, as has happened in previous years, the Subsoil Code of
Ukraine’s regulations concerning deduction of funds for exploration
performed at the expense of the state budget for the development of mineral
resources base has been suspended.

The regulation stipulating that the amount of the duty for the issuance of
special permits to use certain subsoil plots shall be defined by the Cabinet
of Ministers of Ukraine on the basis of costs entailed by the examination of
applications, materials and grounds to use subsoil, organizational and other
expenses related to the issuance of special permits has been suspended once
again.

The Law also suspends the regulations contained in the Law of Ukraine “On
the State Geological Service of Ukraine”, in particular with respect to the
conditions for granting special permits to use subsoil. The issuance of
estimated tax bills for gaseous hydrocarbons to be imported into Ukraine has
also been suspended. The Law took effect on 1 January 2007.

11) Law of Ukraine No. 398-V “On Amending Certain Legal Acts of Ukraine
Concerning Taxes” dated 30 November 2006. The Law defines the basic norms
of payment for using subsoil to extract minerals. Previously, such norms had
been defined in laws on the State Budget. Except for certain provisions, the
Law took effect on 1 January 2007.
                                                 TAXES
12) Law on the 2007 State Budget. In addition to the information provided in
items 3 and 10 above, the Law states that in the event of a taxpayer’s
change of legal address, after the taxpayer’s re-registration, all taxes and
duties shall continue to be paid at the place of previous registration until
the expiration of the then-current budget period.

The Law also increases the amount of duty for mandatory state pension
insurance from 31.8% up to 33.2%, which duty employers must pay directly
to the budget. The Law took effect on 1 January 2007.

13) Cabinet of Ministers of Ukraine Ordinance No. 565-r “On Measures Aimed
at Reducing the Tax Debt” dated 15 November 2006. The Cabinet of Ministers
obliged state enterprises to reduce their overdue debt to the State budget.

The measures aimed at reducing the tax debt stipulate, in particular,
developing a bill on canceling the moratorium on the compulsory sale of
property of state enterprises and economic societies when the State’s share
in their charter capital constitutes at least 25%. The Ordinance took effect
on 15 November 2006.                       -30-
—————————————————————————————————–
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should be sent via e-mail to chronicle@rulg.com.  Website: www.rulg.com
Chronicle: http://www.rulg.com/chronicle.asp
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12. UKRAINE 125TH IN HERITAGE FOUNDATION FREE ECONOMY LIST
                        Placed in the “mostly unfree” category of countries.

Interfax Ukraine Focus, Kyiv, Ukraine, January 16, 2007

KYIV – Ukraine ranks 125th out of 161 countries in the rating of economic
freedom published annually by the Wall Street Journal and the Heritage
Foundation [Washington, D.C.], the Heritage Foundation’s official Web site
has reported.

The level of economic freedoms in Ukraine was rated at 60.9% of the possible
100%. It belongs to the “mostly unfree” category of countries.

Top in the world rating was Hong Kong with 89.3%. In second place was
Singapore (85.7%) and 3rd was Australia (82.7%). The United States ranked
fourth with 82%, whereas New Zealand and Britain shared the fifth and sixth
places with 81.6%.

Ireland was seventh with 81.3%, Luxembourg occupied the eighth place
(79.3%), and Switzerland placed ninth (79.1%). Canada was tenth with 78.7%.
The first seven countries belong to “economically free” category of
countries.

Eight former Soviet countries were above Ukraine in the rating. Estonia was
in 12th place, Lithuania ranked 22nd, Armenia was 32nd, Georgia 35th, Latvia
41st, Kazakhstan 75th, Kyrgyzstan 79th, Moldova 81st, Tajikistan 98th, and
Azerbaijan 107th. Russia was 120th in the rankings.

Three post-Soviet countries were below Ukraine in the rating – Uzbekistan
(132nd), Belarus (145th), and Turkmenistan (152nd).

Cuba and North Korea were bottom of the rating. Heritage Foundation analysts
could not assess Sudan, Serbia, the Democratic Republic of Congo, and Iraq
for various reasons.

The index assesses 161 countries on 50 independent parameters, broken into
ten categories of economic freedom, including banking, the influx of capital
and foreign investment, monetary policy, state and fiscal burdens, revenue
and prices, the country’s intervention in economic policy, property rights,
legal regulations and the existence of a black market.

The countries in the rating are divided into five categories: “free,”
“mostly free,” “moderately free,” “mostly unfree,” and “repressed.” -30-
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========================================================
13.                            WANTED: POLITICAL WILL
         Study points out Ukraine still lags far behind on the economic front.

EDITORIAL: Kyiv Post, Kyiv, Ukraine, Wed, Jan 17 2007

Ukraine has, without a doubt, made great strides toward advancing democracy
since the Orange Revolution of 2004. But a study published this month points
out that the country still lags far behind on the economic front.

The study, an index featured in this week’s issue of the Post, indicates
that Ukraine appears not to have made major progress of late in establishing
a business-friendly environment.

Conducted by the United States-based think tank Heritage Foundation, in
cooperation with The Wall Street Journal, the study ranks countries
according to an index measuring ‘economic freedom,’ a mark designed to
reflect how many barriers businesses face.

The index rates countries’ levels of business, monetary, financial,
investment, trade, labor and fiscal freedom. Freedom from government and
corruption, as well as the strength of property rights, are also measured.

A score between 50 and 59 percent means that a country’s economy is
“mostly unfree.” Higher scores label a country as “free,” while lower
indexes indicate that a country’s economy is not “free,” and thus significant
barriers face businesses and entrepreneurs.

According to the Foundation’s 2007 Index of Economic Freedom, which was
released on Jan. 16, Ukraine scored 53.3 on a 100-point scale, ranking 125th
out of the 157 countries rated.

In this year’s 13th annual Index of Economic Freedom, Ukraine scored 2.2
percentage points lower than last year, the Heritage Foundation reported. In
the 2006 Index of Economic Freedom, Ukraine was ranked 99th of 161 rated
countries.

The big picture is that Ukraine has not really made progress relative to
other countries, continuing to rank amongst the “mostly unfree” batch, along
with, surprisingly, neighboring Poland and the usual suspects, such as
Cameroon, Ethiopia, Haiti, Moldova, Nepal, Nigeria, Russia and Uzbekistan.

Higher up in the ranking with so-called “moderately free” scores are other
former Eastern Bloc countries, such as Armenia, the Czech Republic,

Georgia, Hungary and Kazakhstan.

Nevertheless, the so-called “mostly free” countries include former Soviet
republics like Estonia, Latvia and Lithuania. And higher up are the
economically “free” countries, such as powerhouses Hong Kong and the
United States.

Without a doubt, it will take more than a decade and tremendous efforts
before Ukraine has a chance of joining the “free” echelon, but climbing up
the ranks toward Hungary and the Baltic states is not mission impossible.

It would just require a show of strong political will and the execution of
much talked about reforms, many of which have been on the backburner for
a decade.

Where to start?

The study rated Ukraine’s fiscal freedom as high, with a relatively low
personal income tax of 15 percent, top corporate income not exceeding 25
percent, and overall revenue from taxes not compromising a high percentage
of the nation’s gross domestic product.

However, Ukraine is weak in many other key areas.

The government continues to interfere in markets. Take for example the
government’s decision this year to slap restrictions on grain exports and
its inability in more than a decade to push through a clear tax system. VAT
is still not refunded in full and on time to exporters.

Insiders say only the privileged few who have connections to top government
officials get timely refunds. Corruption remains rampant, property rights
insecure, and regulations put unnecessary burdens on a burgeoning business
community, which is ever more eager to pay its full share of taxes.

Business has pleaded for fair rules, openly expressing its desire to come
out of the shadows, but top politicians continue to stick to the old ways of
doing business, where influence clears a path through the bureaucratic
minefields.

Ukraine can make a major leap, rising up in the rankings in next year’s
Index of Economic Freedom. Everyone knows what needs to be done. It is
only a question of whether the politicians in charge set these reforms, or
their own ambitions, as the priority. Where there’s a will, there’s a way.

We urge Ukraine’s divided leadership to put politics aside and unite around
the goal of pushing forward with these key reforms.

After all, it will benefit them by garnering more public support from
potential voters, as opposed to demoralizing the electorate ever more
toward radical politicians with empty promises.            -30-
———————————————————————————————
LINK: http://www.kyivpost.com/opinion/editorial/25874

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14. UKRAINE: POLITICAL PARTY TRAINING FOR ECONOMIC REFORM

Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Thursday, January 4, 2007

KYIV – The Project “Political Party Training for Economic Reform” is
implemented by the Ukrainian Center for Independent Political Research
(UCIPR) in assistance with the Center for International Private Enterprises
(CIPE/USA) [Washington, D.C.].

PROJECT OBJECTIVES:
[1] To raise level of understanding among representatives of major political
parties in the target regions of economic policy issues, [2] To increase the
capacity of major political parties in the target regions to embrace
economic reform within their platforms and to partner with the private
sector to achieve mutual goals

PROJECT ACTIVITIES:
Under the project, the UCIPR will work with major political parties in 4
target regions to assist them in develop effective economic platforms that
would address business community priorities and will serve as regional
economic development priorities for the next years until the next elections.

At the o­nset of the project, the UCIPR will carry out an interview with
political parties representatives in four target regions to determine their
understanding of market economic concepts and policy-making tools,
understanding of Ukrainian business community priorities, and level of
public-private dialogue in the regions, and also focus groups studies with
leaders of business-associations.

In May-June 2007 UCIPR will carry out a 3-days international seminar for
leaders of political parties and business-associations in four target
regions.

The UCIPR experts will work closely with the Task Force Groups providing
guidance and making recommendations at every stage of the process.

The UCIPR will also facilitate public discussions of the draft Regional
Economic Platforms and will assist Task Force Groups with finalizing the
economic platforms, incorporating recommendations made at the public
discussions.
PLATFORMS FOR ACTION BROCHURE TO BE PUBLISHED
Based o­n the materials of the training seminars and its work with the
regional administrations and political parties in the target regions, the
UCIPR, in cooperation with CIPE, will publish a brochure “Political Parties
and Economic Reform: Platforms for Action.”

The brochure will provide recommendations o­n policy-making tools for
political parties and examples of the best economic programs or program
elements in the target regions.

The UCIPR will publish 1,500 copies of the brochure (in Ukrainian) and will
present it at the final conference of the project. CIPE will also distribute
the brochure among its network in Eurasia region.
                NATIONAL CONFERENCE TO BE HELD
At the end of the project, the UCIPR will hold a national conference
“Political Parties and Economic Reform: Building Platforms for Action” for
about 100 participants including leaders of major political parties and
blocs, leaders of business associations, representatives of Ukrainian think
tanks, and the media.

At the conference, the UCIPR will present its experience in working with the
regional administrations and political parties and will introduce its
brochure and the results of two surveys in the target regions.
Representatives from the four target regions – both from political parties
and business community – will also share their experience.

The UCIPR anticipates that if successful, such an innovative approach to
developing economic platforms by political parties can be replicated in
other regions of Ukraine in the future.

During the course of the project, the UCIPR will compile, publish, and
disseminate six issues of the “Priorities” journal in Ukrainian.  The
journal, which UCIPR launched at the outset of the CIPE-sponsored National
Business Agenda program (2002), will contain information about project.

The “Priorities” journal will help the UCIPR draw media and public attention
to the economic platforms of major political parties and their
implementation.                                  -30-

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15. BROAD STREET CAPITAL GROUP NAMES EXCLUSIVE FINANCIAL
        ADVISOR OF $120 MILLION UKRAINE POWER PLANT PROJECT
       Receives $696,000 U.S. Government Trade & Development Agency Grant

Business Wire, New York, NY, Thursday, January 18, 2007

NEW YORK – Broad Street Capital Group announced today its appointment

as the exclusive financial advisor to State Enterprise Production Association
Southern Machine-Building Plant named after A.M. Makarov (PA Yuzhmash)
in the reconstruction of a combined heating and power plant (CHP) in the
Ukraine.

The estimated $120 million project will be developed in Dnipropetrovsk and
will be financed through a combination of senior debt from commercial banks
and international financial institutions, export trade finance, carbon
credits and government funding.

“We are delighted to have been selected as the financiers for this
extraordinary project,” stated Alexander M. Gordin, Managing Director of
Broad Street Capital Group.

“Not only is this project a fine example of energy efficiency and industrial
modernization taking place in Ukraine, but it is also a tremendous
illustration of US-Ukrainian commercial cooperation,” continued Mr. Gordin.

“We are confident that our international merchant banking expertise coupled
with our extensive experience in financing complex state-owned industrial
projects will be pivotal to the success of this exciting venture.”

At an invitation-only ceremony this afternoon at the Premier Palace Hotel in
Kiev, the Management of PA Yuzhmash revealed that once completed, the

CHP will have a power generation capacity of 122MW.

This significantly increased output will allow for the servicing of the
electrical needs of the approximate 200,000 residents of Dnipropetrovsk as
well as generate substantial electrical energy capacity to sell into the
electrical grid and will create a self-sufficient plant providing all of
CHPs energy needs.

Featuring state-of-the-art gas turbines from one of the world’s leading
manufacturers, the power plant will be gas fired, and will also provide for
the use of alternative fuels such as coal or biomass.
             U.S. TRADE & DEVELOPMENT AGENCY GRANT
In addition to its role as the exclusive financial advisor to the management
of Yuzhmash CHP project, Broad Street Capital Group has been awarded a
$696,000 contract supported by a United States Trade and Development Agency
grant of $556,929 [U.S. Government] to perform the technical, economic and
financial feasibility study to be used by the project sponsors to determine
the best allocation of resources and provide detailed project information to
potential lenders, equity investors and government officials.

Bridgestone Associates Limited, an energy service firm based in Chadds Ford,
Pennsylvania, has been selected as the engineering consultant on the
feasibility study project.
                ABOUT BROAD STREET CAPITAL GROUP
Based in the heart of the financial district of New York City, Broad Street
Capital Group is an international private merchant bank with offices and
affiliates in Kiev, Moscow, and Toronto.

Founded in 1996, the firm carries on centuries of honored merchant banking
traditions, providing a comprehensive array of services to international
private and state owned companies, including merchant banking, trade and
project financing, strategic business development and professional business
services. (www.broadstreetcap.com)                   -30-
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16. U.S. GRANTS USD 0.55 MILLION FOR FEASIBILITY STUDIES FOR
MODERNIZATION OF UKRAINE’S PIVDENMASH HEAT & POWER PLANT


Ukrainian News Agency, Kyiv, Ukraine, Thursday, January 18, 2007

KYIV – The United States Trade and Development Agency has decided

provide a grant of USD 0.55 million for financing feasibility studies for
modernization of the heat-and-power generating plant of the state-owned
Pivdennyi machine-building plant named after Makarov or Pivdenmash
(Dnipropetrovsk).  The press service of the United States embassy in
Ukraine announced this.

According to the announcement, United States Ambassador to Ukraine William
Taylor will sign on January 18 an agreement under which the United States
Trade and Development Agency will grant USD 0.55 million to Ukraine for
financing feasibility studies for modernization of the heat-and-power
generating plant of the state-owned Pivdennyi machine-building plant.

Moreover, Broad Street Capital (United States), which will conduct the
feasibility studies, will provide an additional USD 0.140 million, bringing
the total amount of money for the feasibility studies to USD 0.700 million.

According to the press service, the feasibility studies is the first stage
of preparation for the USD-120-million modernization project, which will
improve energy efficiency, reduce the release of harmful substances, and
increase the capacity of the heat-and-power generating plant, which supplies
heat and electricity to 200,000 residents of Dnipropetrovsk.

As Ukrainian News earlier reported, the Pivdennyi machine-building plant
applied to the National Electricity Regulation Commission (NERC) in July
2006 for a license to perform business operation involving production of
heat energy.

According to the Top 100 rating of Ukrainian companies published by the
InvestGazeta newspaper states that Pivdenmash ended the year 2005 with a
loss of UAH 61.5 million and that its net revenues increased by UAH 46.44
million or 9.43% to UAH 538.74 million in 2005, compared with 2004.

Pivdenmash produces the Zenit and Tsyklon rocket launchers, the Okean-O

and Sych-1M spacecraft, wind-energy equipment, city buses, and agricultural
transport machines.                                       -30-
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17. UKRAINE GOVN’T INTENDS TO OFFER VANCO INTERNATIONAL
      40% OF THE PRODUCTS MINED IN BLACK SEA’S TRANS-KERCH
 
Ukrainian News Agency, Kyiv, Ukraine, Friday, January 19, 2007

KYIV – Ukraine intends to offer Vanco International Ltd. (Switzerland)
[United States] to share products, that will be mined at the Black Sea shelf’s
Trans-Kerch segment after the deposit launch, with the state’s 60% and
the investor’s 40%.

A well-informed source told this to Ukrainian News, referring to the draft
agreement that is now being worked out by the Interagency Commission for
Signing and Implementation of Product-Sharing Agreements.

In his words, the new project foresees sharing products with the ratio of
the state’s 30% and the investor’s 70% at the first stage, until start of
mining (till offset of investment costs) and with the state’s 60% and the
investor’s 40% – after start of mining at the deposit.

“These conditions suit us, almost all the problems with the project
preparation have been settled, only a couple of nuances are left,” he said.
He could not tell if Vanco International has the draft agreement.

At the same time, as the manager for project development, Uliana Bets, from
the Radnyk PR agency, servicing Vanco International, told to Ukrainian News,
as of January 18, the company did not receive the draft agreement.

She told Vanco International needs time to translate the agreement on
receiving it and for the company’s lawyers to analyze it through. Only after
that the company will continue negotiations with the Cabinet of Ministers.

As Ukrainian News earlier reported, the Cabinet intends to extend the period
during which the Interagency Commission is to draft an agreement with Vanco
International on sharing products mined in the trans-Kerch segment of the
Black Sea shelf. Previously the Cabinet instructed the Commission to draft

the agreement by January 18.

John Imle, the Ukrainian president of Vanco International, said in November
2006 that the company could accept an agreement that provided for sharing
products from the trans-Kerch segment of the Black Sea shelf at the ratio of
45:55 (45% to the investor and 55% to the state) after the start of
development and 60:40 during the stage before recoupment.

The Cabinet declared Vanco International as the winner of a competition for
the right to develop the Trans-Kerch segment in April 2006, after which the
company announced that it was ready to invest USD 2 billion in its
development.                                -30-
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18. “EVER SINCE WE GOT MARRIED WE HAVE BEEN DECORATING
                             CHRISTMAS TREES TOGETHER”
                  Interview with U.S. Ambassador & Mrs. William Taylor

INTERVIEW: With U.S. Ambassador & Mrs. William Taylor
By Klara Gudzyk, The Day Weekly Digest #1
Kyiv, Ukraine, Tuesday, January 16, 2007

Shortly before New Year’s Day and Eastern-rite Christmas Day, United States
Ambassador to Ukraine William B. Taylor, Jr., granted an interview to The
Day and wished our readers happy holidays

Ambassador Taylor’s wife Deborah, who is a religion scholar, also took part
in the interview. The talk was not about strategic, political, or
international matters linked to Ukraine (these are not very festive topics):
it pivoted on such a pressing issue as the celebration of New Year’s Day and
major Christian feasts. Nevertheless, there was no avoiding politics.

The Day presented the Taylor couple with the books that our newspaper has
published in the past few years. They were most interested in the book Day
and Eternity of James Mace about the American national who did so much for
Ukraine.

William Taylor noted that the US Embassy has requested the government of
Ukraine to rename a Kyiv street in honor of James Mace.

[The Day] “Mr. Ambassador, how would you assess Ukraine’s prospects for
2007? Do you think 2006 showed a total defeat of the Orange forces and that
we failed to take advantage of the ‘green light’ that the West gave us? Many
realists in Ukraine think that there was simply nobody to go through the
door that was opened for us.”

[Amb Taylor] “In my opinion, Ukraine has all sorts of possibilities and
considerable potential to develop in 2007 the achievements of the past two
years.

“Proof of this is, first of all, two very important events, i.e., the last
Ukrainian elections (the runoff presidential election in 2004 and the
parliamentary election last March) which were free and fair, and
internationally approved and acclaimed. It was on the basis of those
elections that the West gave a ‘green light’ to Ukraine.

“Challenges certainly remain; political challenges for Ukraine. The
president and the prime minister need to find a way to work together for
the good of Ukraine.

“I believe that the international community – and definitely the Americans –
we believe that Ukraine will be stronger if the president and the prime
minister find a way to work together. We hope that 2007 can be a good year,
we hope it will.”

[The Day] “According to the distinguished Western philosopher Bertrand
Russell, the ancient Greeks, who were very gifted people famous for their
art and philosophy, were incapable of political consolidation and thus failed to
form a single mighty state, something like ancient imperial Rome, although
they were skilful warriors and strategists. Do you think that Ukrainians
also have a similar historical draw back ?”

[Amb Taylor] “I think Kyiv is as beautiful as many Greek cities. And I think
the Ukrainian people are every bit as able to consolidate democracy as any
country in ancient or current history.

“Democracy in ancient Greece was messy, and democracy in Ukraine is messy;
democracy in the United States has been messy, even in recent years. So,
again, I have confidence in the Ukrainian people as I do in the Americans.”

[The Day] “Mrs. Taylor is a religion scholar by profession and occupation.
Are you interested in the history of Ukrainian Orthodoxy? Would you please
tell our readers about the institutions that research and monitor religion
in the US and about social problems that crop up in your country on
religious grounds? Can there be any comparison with the religious situation
in Ukraine? Or perhaps the point is just in the historical traditions of
Byzantine churches?

Another question: it is common knowledge that the US Senate supports
Ecumenical Patriarch Bartholomew I. Should he promote recognition of
the independent Ukrainian Orthodox Church more actively?”

Mrs. Taylor: “I think this is definitely a separate topic. I only arrived in
Ukraine in September, and I have to confess that at this point I still don’t
know much about Orthodoxy except that there are different groups. So far,
I’ve been spending my time settling in the house and settling in the
American community.”

[The Day] “Maybe later?”

Mrs. T.: “Absolutely later. And my own work actually focuses on very early
Christianity. Once you get to the 2nd or 3rd century…I don’t know much
more than any other educated person. I am primarily interested in the Jewish
nature of early Christianity.”

[The Day] “May I ask you the following in this connection? Church historians
are well aware of the impact of the Judaic Old Testament (especially the
Torah and the prophets) on Christianity. But has there been at least some
modest impact of Christianity on Judaism?”

Mrs. T.: “I think that there are Christians who may think differently, but I
think that with the destruction of the Temple in 70 A.D. the Jewish people
had massive problems continuing their own community and Christianity did

not have a major impact.

“I am therefore trying to get a clearer view of the divisions within the
Orthodox Church and the division between Orthodoxy and the Greek Catholics.

“My own experience as a Christian in the United States and my scholarly work
on the early church don’t incline me to believe that there has ever been a
case that Christianity has been a happy and undivided family.

“So I would be surprised if the problems that Orthodoxy has were much worse
than the ones we have had throughout history in trying to understand the
common way for our faiths.

“In fact, my image of the church is sort of captured by the Church of the
Holy Sepulcher in Jerusalem. A year ago we were in Jerusalem, and I was very
anxious to go to this church. I’d heard from many Americans that it was so
different from what they were used to that they felt unsettled.

“It has to be remembered that many churches in the United States in many
ways do not look very different from this room. They don’t have statues,
they don’t have pictures, they are white, and they look like a place where
you have just come to have a meeting. This applies to Protestant churches
and, much less, to Catholic ones.

“But the Church of the Holy Sepulcher is almost the exact opposite in its
variety, its lack of clean organization. I thought I had visited a community
of saints because here were people from everywhere who dressed differently,
who worshipped in different ways, and this has to be what heaven would be
like.

“After we all leave here, we will have to reconcile our different visions,
but I liked the Church of the Holy Sepulcher. It seems emblematic to me
because it captivates you like no other church can, it shows the variety of
Christianity, and it captures the problems of Christianity in the six
different groups that have official hold of the church and do not get along
very well because of many disputes.”

[The Day] “Are you going to hear old Ukrainian Christmas and Epiphany carols
in Ukrainian churches or on the streets? Some people say they are one of the
most remarkable Ukrainian contributions to world culture. One more question:
did you visit Kyiv’s theaters or the Philharmonic during the Christmas
vacations?”

Mrs. T.: “I will gladly mention the Christmas carols because my Ukrainian
teacher gave me a book with the music and a CD. So I am really looking
forward to learning some of these Christmas carols. I don’t know what I am
going to do for Christmas.

“My husband’s going to be in the United States for a while, but he’ll be
back by Christmas Day. But I am hoping that this next year I will have an
opportunity to visit many different churches, to worship in many different
churches.

“We plan to go to many cultural performances here. In fact, we are going to
one tonight. There’s a Strauss concert at the Opera House. Last week we saw
the opera Taras Bulba and about three weeks ago we saw Natalka-Poltavka. I
did like it, I like the folk music. You have a genius for creating a simple
song that everybody can sing. That is just incredible.

“And we have also heard what we think was the first performance of the
Italian opera Barber of Seville in Ukrainian. It was wonderful. I must say I
tend to be nervous when operas get translated, particularly from a beautiful
language like Italian.

“Certainly, when one is translated into English, it’s a step down in its
beauty. In general, an opera in English works quite well, but an Italian
opera in English is not superb. Ukrainian itself is such a musical language
that everything worked so well.

“We are just learning Ukrainian, and people often ask what Ukrainian is like
and what its relationship is to Russian. I always say that it is the Italian
of the Slavic languages!”

[The Day] “How did you celebrate Christmas in Kyiv, far away from your
homeland?”

Mrs. T.: “This year we tried to celebrate Christmas here the way we
celebrate it at home, which means decorating our house and inviting our
friends and their families.

“And the trimmings of this tree: when I was still in elementary school, my
mother, who doesn’t do anything halfway, bought me a new Christmas tree
and some other things.

And every year we were buying a few more things, and by the time we were
married we had a very nice tree, and we have enjoyed decorating it every
year, we enjoy people’s reactions to it, and we continue to look for things,
especially things that remind us of people and places where we’ve been. So
this tree has many memories for us.”

[The Day] “How is life in this Podil villa, in the shade of Saint Andrew the
Apostle’s Hill? Do you have a chance to get to know Podil and its historic
places?”

Mrs. T.: “For me it is a great honor to be here. You just mentioned St.
Andrew’s Church. One of the most wonderful things for me is that on the

very top floor of this building there is a room that I’ve taken over as my
office, and it has a skylight that looks out directly onto the church, and I
spend quite a lot of time there. I think I will manage to get a lot of work
done, looking at a church like this.”

(At my request, the Taylors kindly agreed to show us this top floor with a
skylight that looks out on Rastrelli’s church and which, for some reason,
conjures up a vision of Paris.)

[The Day] “I am sure that if you make more skylights on the top floor of
your Kyiv house toward the other cardinal points, you will be able to see
fine urban landscapes, for example, the Church of the Holy Virgin’s
Intercession designed by the architect Hryhorovych-Barsky or the Dnipro
River with Trukhaniv Island almost beneath the windows.”

Mrs. T.: “We know the church of the Holy Virgin’s Intercession very well:
we listen to its choir practice on Saturdays. It is a superb choir indeed.”

[The Day] “I am certain that The Day’s readers will be glad to become more
closely acquainted with the US ambassador to Ukraine and his wife. Thank
you very much.”                                   -30-
————————————————————————————————
                                            DOSSIER
William B. TAYLOR, Jr., graduated from the US Military Academy at West
Point and saw service in Vietnam and other hot spots. In 1997 he graduated
from Harvard University with an M.A. in public politics.

He worked at the US Department of Energy, served in Brussels as deputy
defense advisor at the US Mission to NATO, was the coordinator of USG
assistance to the former Soviet Union and Eastern Europe, and has visited
Ukraine numerous times.

The ambassador has an excellent familiarity with Ukraine’s political
establishment. Many Ukrainian and American experts agree that in all his
activities William Taylor will adhere to the principle that he formulated in
2002: “Ukraine is important to the region. It’s important to the world that
this country be stable and independent. We want to support its
independence and sovereignty.”
———————————————————————————————-
LINK: http://www.day.kiev.ua/175424/
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19. “IT DOES NOT SERVE UKRAINE’S INTERESTS WHEN POLITICAL
          INFIGHTING CARRIES OVER INTO THE FOREIGN POLICY
                                      ARENA” STEVEN PIFER.

INTERVIEW: With Former U.S. Ambassador to Ukraine Steven Pifer
By Mykola SIRUK, The Day Weekly Digest #1
Kyiv, Ukraine, Tuesday, January 16, 2007

Steven Pifer has held various diplomatic posts, including the office of US
Ambassador to Ukraine. He left the diplomatic service in 2004 and is now
Senior Advisor at the Center for Strategic and International Studies.

In the US State Department Pifer was responsible for US policy in the
European region, particularly Ukraine. He continues to deal with these
questions and obviously can speak more openly about this sphere than
currently serving diplomats can allow themselves to say.

How does the US view relations between Washington and Ukraine and
prospects for their development? How does it assess the current conflict
between the president and the prime minister of Ukraine? Will the anticrisis
coalition last long? Does Ukraine have a prospect of joining the NATO
membership action plan?

The answers to these questions are contained in the American analyst’s
interview in The Day .

[The Day] Because of the recent elections in the US, the problems that your
country has in Iraq and Afghanistan, and Iran’s nuclear agenda, there is a
feeling in Ukraine that Washington is forgetting about it and even ready to
give Kyiv away to Russia in exchange for Russian support in the fight
against terrorism and help in preventing Iran from becoming fully nuclear.

Now the election is over and Democrats prevail in both Houses. What place
does Ukraine now have on the US foreign policy agenda or will have in the
near future? How can Ukraine influence this agenda?

[Amb. Pifer] The White House today is preoccupied with Iraq. After Iraq,
other priority issues are Afghanistan, the overall war on terror, the
Arab-Israeli peace process, and how to deal with the nuclear weapons
ambitions of Iran and North Korea. Unfortunately, this foreign policy

agenda leaves little time for Ukraine.

It would be a mistake, however, to think that Washington will sacrifice
Ukraine’s interests in return for securing Russian support on other
questions – there is no evidence to support that.

Both Democrats and Republicans in Congress are positively inclined toward
Ukraine; to the extent that Ukraine pursues coherent policies aimed at
becoming a modern European state, it can command greater attention on
Washington’s foreign policy agenda, as was the case in early 2005.

[The Day] Usually, experts see Ukrainian-American relations as a Moscow-
Kyiv-Washington triangle. Now that Yanukovych is in power, does this
triangle have even sides? What should be done to achieve balanced relations
between these three countries?

[Amb. Pifer] I do not believe that a Moscow-Kyiv-Washington prism is the
best way to view Ukrainian-American relations. That usually implies that
Ukraine can be an object of US-Russian maneuvering.

Since the early 1990s, US policy has sought to develop strong bilateral
relations with Kyiv, regardless of the state of US-Russian relations.

For its part, Ukraine should aim to have good relations with the United
States and to integrate more closely into Euro-Atlantic institutions, while
at the same time maintaining good relations with Russia. These objectives
are not, and should not be seen to be, mutually exclusive.

[The Day] Is there any possibility to institutionalize a strategic dialogue
between the US and Ukraine by creating a commission as an analogue to the
Yushchenko-Putin Commission or restoring a kind of Gore- Kuchma
Commission?

[Amb. Pifer] When it came into office in 2001, the Bush Administration chose
to end the high-level commissions that Vice-President Gore had co-chaired in
the 1990s (these included the Gore-Kuchma and Gore-Chernomyrdin
Commissions).

However, the bilateral working committees established under the Gore-Kuchma
Commission on foreign policy, defense, and economic issues continued to
meet.

By most accounts, Vice-President Cheney is interested in Ukraine, but I
doubt that a formal high-level commission will be established; it is not the
practice of this Administration.

[The Day] What are the chances that the new bill on energy diplomacy and
security will be enacted during the first 100 days after the first session
of Congress? Will this bill give any firm guarantees for Ukraine’s integrity
and sovereignty?

[Amb. Pifer] The Energy Diplomacy and Security Act was first introduced

by Senator Richard Lugar in March 2006. The first few months of the new
Congress will focus on domestic issues and, on the foreign policy side,
Iraq. So it is unlikely that this bill will be acted on soon.

The Act is primarily a policy statement aimed at getting the State
Department and the US government to devote more attention to energy

security issues in general. It does not call for specific actions regarding
Ukraine.

[The Day] Publications in the Ukrainian mass media indicate that you
preferred the creation in Ukraine of a broad coalition of White- Blue and
Orange. This has not happened. Do you think the current anticrisis coalition
will be vital, stable, and lasting?

[Amb. Pifer] My preference does not count. Ukrainians made their views

clear in a free and fair election last March, and the subsequent coalition
formation process produced the current majority coalition. The process took
longer than people would have liked and was perhaps a bit messy, but it was
not undemocratic.

As for the longevity of the coalition, that will depend on the legislation
it passes. If the legislation is good and advances Ukraine’s national
interests and prosperity, that should increase the durability of the
coalition.

[The Day] How do you and official Washington assess the cooperation
between President Yushchenko and Prime Minister Yanukovych and
especially the latter’s desire to get rid of Minister of Foreign Affairs
Tarasiuk?

How does all this and the president and prime minister’s differences
concerning certain foreign policy matters influence relations between the US
and Ukraine? Do you see Ukraine as a predictable country?

[Amb. Pifer] Some maneuvering between President Yushchenko and Prime
Minister Yanukovych was expected; that is the nature of politics. But it
does not serve Ukraine’s interests when political infighting carries over
into the foreign policy arena.

There is confusion, for example, in NATO capitals over how far and how
fast Ukraine wishes to go in its relationship with the alliance. It appears
that the president has one policy, while the prime minister has another.

As for Mr. Tarasiuk, what signal does it send other capitals when the
president says he is the foreign minister, and the Cabinet says he is not?

These kinds of confusion make it harder for the United States and other
countries to deal with Ukraine, and Ukraine risks not being taken seriously
by its international partners.

The president and the prime minister need to find a way to work together, in
a spirit of compromise and cooperation, so that Kyiv has a single, coherent
foreign policy.

[The Day] Many experts say that last year Ukraine lost the chance to get the
MAP. How has this [Yanukovych’s statement in Brussels on Sept. 14 to slow
down integration into NATO] affected Ukraine’s security and image? In your
opinion, when will Ukraine get another chance?

[Amb. Pifer] In early 2006, the expectation in Washington was that a
membership action plan for Ukraine was possible at the November NATO
summit in Riga.

It became clear in September, however, that there was no unified view
between the president and the prime minister regarding a membership action
plan. The alliance does not press countries toward membership faster than
they are prepared to go, so the Riga opportunity was lost.

At the same time, NATO has made clear that the door remains open and that it
is interested in close cooperation with Ukraine. If the Ukrainian government
wants to revive the prospect of a membership action plan, it needs to make
clear that that is the policy of the prime minister as well as the
president.

[The Day] Did you and other American officials get any assurances from
Yanukovych [in Washington] that Ukraine will definitely join NATO? Did

you see that he has a clear-cut strategy of integration into NATO?

[Amb. Pifer] The prime minister has stated several times that he supports
deepening cooperation between Ukraine and NATO, but there is some
ambiguity regarding his position on NATO membership.

When he visited Washington in early December and spoke at the Center for
Strategic and International Studies, Mr. Yanukovych indicated that he has no
strategic differences with President Yushchenko on foreign policy issues,
just differences regarding tactics.

One could interpret this to mean that the prime minister agrees that Ukraine
ultimately should be in NATO, though he does not regard now as the time to
move in that direction. But Mr. Yanukovych has not said that explicitly.

[The Day] Some Ukrainian experts and officials say that Ukraine’s accession
to NATO depends on a consensus between the political elites, which together
may lead Ukraine to membership in this alliance.

Do you believe that Yanukovych can or will convince the eastern part of the
country that Ukraine should become a member of NATO?

[Amb. Pifer] The first thing that has to happen is for there to be consensus
within Ukraine’s executive branch, that is, between the prime minister and
the president.

Then there needs to be broader support in the Rada and among the

Ukrainian public. Most opinion polls show that a majority of Ukrainians
oppose membership in NATO.

My sense is that much of that opposition is due to a lack of understanding
about what NATO is today and the advantages of NATO membership.

The prime minister has indicated that he would support a public information
campaign on NATO. I hope there is a serious effort to explain NATO, as
befits such a serious question.

I believe NATO membership is in Ukraine’s interest and that, with a better
understanding of the alliance, support for membership will grow. But this is
a decision for Ukrainians to make.

Whether the Ukrainian people decide that NATO membership is in their
interest or not, that decision should be based on a good understanding of
NATO, not on outdated Cold War stereotypes about the alliance.

[The Day] One Russian expert, Dmitrii Trenin, has said that Ukrainian
accession to NATO would be different from Poland’s. It would not be

based on fear towards Russia.

Do you believe that Ukraine can convince Russia not to be afraid of
Ukraine’s membership in NATO and accept this fact? How this can be

done?

[Amb. Pifer] Russia today appears ambivalent about NATO. Moscow

seems to understand that NATO is not a military danger, and the Russians
cooperate with the alliance on some issues, but at other times they suggest
hat any enlargement poses a threat to Russian security interests.

Seeking NATO membership is not and does not have to be an anti-Russian
move. Countries can have good relations with and even join NATO while at
the same time having stable, positive relations with Russia, and Kyiv should
be making this point to Moscow.

It will take some work, as many in Moscow continue to view Ukraine and
NATO in zero-sum terms, that is, if Ukraine moves closer to Europe, this
somehow is a loss for Russia. That kind of thinking is outdated, but we
have to understand that it is still there.

Perhaps you heard the statement by Russia’s foreign minister that NATO’s
expansion to the east would be a mistake and that there is no need for

NATO because new challenges may be met by other organizations.

[The Day] Recently I read an article by a Slovakian parliamentarian, who
proposes to dissolve NATO and instead create a new security organization
that would include Russia.

What do you think about such statements and this article? Can such a thing
as the dissolution of NATO happen; and if so, under what conditions?

[Amb. Pifer] I do not expect NATO to be dissolved any time soon. NATO
has developed considerable experience over the past 50 years.

It still plays a valuable role in strengthening Euro-Atlantic security, for
example, through Operation Active Endeavor, which works to limit the
proliferation of materials related to weapons of mass destruction.

NATO has particular expertise in assembling and commanding multilateral
military activities, including peacekeeping and stabilization operations in
Bosnia, Kosovo, and Afghanistan.

Finally, there are the habits of political and security cooperation, which
develop naturally within an organization in which consensus is the rule.

No other international organization has the alliance’s capabilities and
characteristics. Rather than dissolving NATO, it would be better to draw
Russia closer and deepen existing cooperative links between the alliance
and Russia.                                         -30-
———————————————————————————————
LINK: http://www.day.kiev.ua/175425/
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20. UKRAINE: THE BEST AND THE WORST LIST FOR 2006

COMMENTARY: By Oksana Bashuk Hepburn, Canada

Action Ukraine Report (AUR) #807, Article 20
Washington, D.C., Monday, January 22, 2007

Almost everyone has a favorite list or two this time of year: best movies,
best books, person of the year.  For the forth year I am putting forward my
BEST and WORST list, BaWL, dealing with things of particular interest to

the global Ukrainian community.

This years’ list is particularly critical of Ukraine’s and other governments
but it includes exceptional  individuals, publications, organizations,
awards, that contributed to or undermined Ukrainian issues in 2006.
                                          BEST
1. Yulia Tymoshenko, leader of the Yulia Tymoshenko Bloc, for obtaining

the highest number of votes in the March 2006 elections to Ukraine’s Rada,
parliament among the Orange forces.  And, for persistent attempts to honour
the will of the people of Ukraine by cobbling an Orange power coalition for
dominance in Ukraine’s parliament and attempting to form and lead a
government.

2. The people of Ukraine for expressing their disapproval of President
Yushchenko’s months of indecisiveness after the March parliamentary
elections which led to the creation of an anti-West government by Prime
Minister Victor Yanukovych .

3. Canadian of Ukrainian decent, Ed Stelmach, winner of Alberta’s provincial
Progressive Conservative party leadership race.  He is now the Premier of
Alberta.

4. Ukraine’s media for being well on its way to meeting a global standard
for independent reporting and critical analyses.

5. The Taras Shevchenko Foundation in Winnipeg, Canada for establishing

the Kobzar Award to honour literary works on Ukrainian themes published in
Canada.

6. Alexis Kochan, the magical Canadian singer of Ukrainian decent for her
latest CD Fragmenti.  Original, lyrical and beautiful.

7. Ukraine’s football team for its super performance at the World Cup in
Germany this summer.

8. Heidimarie Stefanyshyn Piper, the American astronaut of Ukrainian and
German decent, who flew a space mission last summer.  She is the second
female astronaut of Ukrainian descent in space.  The first was Canada’s
Roberta Bondar.

9. Jack Palance for providing prominence to his Ukrainian heritage on and
off screen.  Vichnaja pamjat’.

10. Canada’s Yaroslav Kokodyniak for ten years of invaluable internet
services www.infoukes.com to the global Ukrainian community.
                             WORST
1. President Victor Yuschenko for failing to carry out the will of the
people who gave the Orange forces a slight majority in the March Rada,
parliament, elections by failing to call them to power for months until it
was too late.

2. Victor Yanukovych , then leader of the Party of Regions, for blocking
entrance to Ukraine’s Rada and denying the Orange government coalition from
taking its rightful place as the nation’s government.  And again, for
recently blocking access to parliament to Foreign Minister Borys Tarasiuk.

3. Ukrainian diaspora organizations in the free world, including the World
Congress of Ukrainians (Askold Lozsynskyj, President, wrote a personal
denunciation of the events), Ukrainian Canadian Congress, for failing to
condemn the undemocratic events in Ukraine-items 1 and 2 above– thus

giving tacit consent to the anti-Ukrainian, anti-West, anti-democratic and
pro-Russian developments which are contrary to the wishes and spirit of
the Orange revolution which had swept the country the previous year and
contrary to the mandates of such diaspora organizations.

4. Western governments who failed to use suasion to convince President
Victor Yushchenko to honour the results of the March elections and offer

the Prime Ministerial job to the Orange forces winner, Yulia Tymoshenko.

5. Minister of Energy Yurij Boyko for selling out Ukraine’s energy sector in
favour of Russia, RosUkrEnergo, et al.

6. The author, signatories and all the eminent witnesses to President
Yushchenko’s Universal of national unity, a worthless initiative as it has
no consequence for non compliance.

7. Jerusalem Post for its anti-Ukrainian article written in conjunction with
the grand opening in Ukraine of Stephen Spielberg’s film “Spell Your Name.”

8. Dmytro Tabachnyk,  Deputy Prime Minister of Ukraine, for his public
statements undermining the Ukrainian language in Ukraine.

9. The virtual lack of protest form Ukraine’s President, Prime Minister,
government  the people of Ukraine or the Ukrainian diaspora calling for
resignation, retraction, apology for abuses sited in # 7 and #8.

10. The self mutilation and suicide of Nasha Ukrajina, Our Ukraine, party
and its inability to recoup losses by joining forces with Yulia Tymoshenko
who continues to hold strong popular support with Ukraine’s people. -30-
———————————————————————————————–
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21.                       THE PAST IS UNPREDICTABLE,
                 CONFLICTING VIEWS OF SOVIET HISTORY
        A subtler clash of cultures is echoing through Kyiv’s St Cyril’s Church

Economist.com, London, UK, Thursday, Jan 18th 2007

DEPENDING on your sympathies, your education and your historical
experience, a giant bronze Soviet-era soldier in Tallinn, Estonia, may
celebrate the liberation of the Estonian capital from fascism; or it
may depict the “unknown rapist” in Soviet uniform whose arrival
marked the end of one occupation and the start of another.

In Kiev, the capital of Ukraine (or Kyiv–even spelling can be
controversial), the church of St Cyril is to some a precious symbol of
Kievan Rus’; the fabled medieval principality from which both
Ukraine and Russia claim descent; to others an obscure museum that
badly needs a new coat of paint and proper management.

These are not academic arguments among historians. The Estonian
parliament has infuriated Russia with a new law on war graves allowing
the bronze soldier to be shifted to the suburbs.

Such a move would be “akin to the [Spanish] inquisition’s destruction
of the texts and monuments of classical antiquity”, said Vyacheslav
Nikonov, a Kremlin fixer and a grandson of Stalin’s foreign minister,
Vyacheslav Molotov, who negotiated with the Nazis to divide Europe in
1939. From the upper house of the Russian parliament, Mikhail Margelov,
another foreign-policy heavyweight, has called for a suspension of
diplomatic relations.

A subtler clash of cultures is echoing through St Cyril’s, where the
Ukrainian Orthodox Church of the Moscow Patriarchate, tied
ecclesiastically to Russia, has influence. Moves may be afoot to
redecorate the interior, which contains unique frescoes showing the
life of St Cyril.

That thought has provoked anguish among Ukrainians who fear that
their country’s religious and cultural heritage is being bought, taken or
spoiled by their neighbours to the north. They suspect Russian
religious conservatives of wanting to do down Ukraine as a rival
claimant to the spiritual and historical legacy of Kievan Rus’.

Even so, there ought at least to be common ground that the best thing
to do with anything rare and fragile is to study it first. It is
unbelievable if, as one scholar insists, the interior of St Cyril’s has
not been exhaustively photographed and catalogued, the more so in a
country with few surviving medieval monuments and with hardly any
with iconographic evidence from the Byzantine period.

The argument over Estonia’s bronze soldier is both more banal and more
visceral. It has been got up partly by the Reform Party, a member of
the ruling coalition, which wants to burnish its patriotic credentials
before parliamentary elections in March.

In a narrow sense it has succeeded. It has turned Estonians who reject
everything about the Soviet era against Estonians with a lingering
respect for the Red Army’s bravery.

But it is hard to argue that Estonia needs this argument right now, and
even harder to argue that Estonia should be expending shamefully scarce
diplomatic capital defending its behaviour abroad. Most Western
countries reckon that war graves should be depoliticised where
possible–though, even here, the facts are in dispute. Estonia says
there are no Soviet war dead beneath the bronze soldier. Russia says
there are.

For good measure the Estonian parliament may designate September 22nd,
when Soviet forces captured Tallinn, a “resistance memorial day”; and
penalise public display of both Nazi and Soviet symbols.

Fair enough, you might say. But there are so many other things which
should have a prior claim on politicians’ attention. Look at the
suspicious renationalisation of Estonia’s railways, the rampant
corruption in parts of government, xenophobic migration laws, and
foolish short-termism in party politics. Patriotism may not always be,
as Dr Johnson once claimed, the last refuge of a scoundrel. But it does
afford a convenient camouflage.                      -30-
——————————————————————————————

LINK: http://www.economist.com
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22.   UKRAINE MP YEVHEN KUSHNARIOV BURIED IN KHARKIV

Ukrainian News Agency, Kyiv, Ukraine, Saturday, January 20, 2007

KYIV – Verkhovna Rada Deputy Yevhen Kushnariov was buried in Kharkiv on
January 19. The ceremony of parting with Kushnariov and the remembering
service were being held at the Blahovischenskyi cathedral from 8:00 pm on
January 18 to 7:00 am on January 19.

The civil service followed at Kharkiv’s Lysenko Academic Theater of Opera
and Ballet, where the body of Kushnariov was reposing in state from 9:00 am
to 12:30 pm on January 19. The service of the dead was broadcast live by
local television channels Simon, OTB, and the Seventh Channel.

Taking part in the funeral ceremony were: Prime Minister Viktor Yanukovych,
Minister for Emergency Situations and Protection of Population from
Chornobyl Accident Consequences Nestor Shufrych, Justice Minister Oleksandr
Lavrynovych, Transport and Communications Minister Mykola Rudkovskyi,

Fuel and Energy Minister Yurii Boiko, First Deputy Prime Minister, Finance
Minister Mykola Azarov, Health Minister Yurii Poliachenko, ex-President of
Ukraine Leonid Kuchma, Verkhovna Rada Chairman Oleksandr Moroz, Kyiv
Mayor Leonid Chernovetskyi, Prime Minister’s adviser Volodymyr
Semynozhenko.

Members of Parliament Oleksandr Feldman and Andrii Shevchenko (Yulia
Tymoshenko Bloc faction), Viacheslav Chornovil, Hanna Herman, Volodymyr
Sivkovych, Rinat Akhmetov, Serhii Kivalov (Party of Regions faction), Petro
Poroshenko (Our Ukraine bloc faction) also took part.

The funeral ceremony also included Deputy Prime Minister Dmytro Tabachnyk,
Donetsk Governor Volodymyr Lohvynenko, People’s Party leader Volodymyr
Lytvyn, as well as the heads of the city of Kharkiv and Kharkiv region,
Ambassador Extraordinary and Plenipotentiary of Russia to Ukraine Viktor
Chernomyrdin, Russian Duma MP Konstantin Zatulin, delegations from almost
all regions of Ukraine, leaders of a number of regions of Russia.

Many of residents of Kharkiv who were willing to pay their last tribute to
Kushnariov failed to do so, as, according to police, a mere of 5,000 people
passed the coffin of Kushnariov over three hours of the civil service, while
about 30,000 were in the square near the theatre and in the Peremohy park
outside the theatre.

The people willing to pay their last tributes to Kushnariov queued in a line
of up to a kilometer along the alleys of the Shevchenko Garden and Sumska
Street, reaching Svobody Square.

Those who managed to approach the theater by the end of the ceremony gave
over their flowers to the police officers cordoning off the building, asking
that the flowers be taken to the hall. About 2,500 policemen were guarding
the public order during the civil service and the burial ceremony.

Later the ceremony participants went to the second city cemetery where
Kushnariov would be buried. The mourning meeting was held there.

Premier Viktor Yanukovych addressed the meeting. “His [Kushnariov’s] policy
was understood by the whole Ukrainian people. He was respected not only by
his comrades in the party, but also by opponents,” Yanukovych said at the
meeting.

Also addressing the meeting were Kharkiv regional governor Vasyl Salyhin,
Kharkiv Mayor Mykhailo Dobkin, and Kharkiv First Deputy Mayor Oleksandr
Kryvtsov.

After the end of the meeting and a short service the coffin with the body of
Kushanriov was buried under the sounds of salvo from carbines.

As Ukrainian News reported, Kushnariov died at the Izium city hospital
(Kharkiv region), where he had two surgeries after a firearm injury received
at hunting.                                                  -30-
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
23.   THE WESTERN UKRAINIAN NATIONAL REPUBLIC
                          AND THE WAR IN GALICIA, 1918-19
        On 22 January 1919 the union of ZUNR and UNR declared in Kyiv

FEATURE: Internet Encyclopedia of Ukraine (IEU)

Dr. Marko R. Stech, Managing Director, CIUS Press
Canadian Institute of Ukrainian Studies, University of Toronto
Toronto, Ontario, Canada, January 2007

After the independent Ukrainian National Republic (UNR) was established in
January 1918 on the central Ukrainian territories, in the western Ukrainian
lands that formed part of the Austro-Hungarian Empire, the Ukrainian
National Rada was formed in Lviv in October 1918 and proclaimed a Ukrainian
state on the territory of Galicia, northern Bukovyna, and Transcarpathia.

It assumed power in Galicia on 1 November 1918 and in the Ukrainian part of
Bukovyna on 6 November. On 9 November the UNRada announced the
establishment of the Western Ukrainian National Republic (ZUNR) and formed
a government. The Polish rejection of Ukrainian efforts to take control of
eastern Galicia lead to an armed conflict between the Ukrainian Galician
Army and the Polish troops.

On 22 January 1919 the union of the ZUNR with the UNR was solemnly
proclaimed in Kyiv; following this event, the ZUNR officially became the
Western Province of the Ukrainian National Republic.

Learn more about the history of ZUNR and the Ukrainian-Polish War in
Galicia, 1918-19, by visiting:
http://www.encyclopediaofukraine.com/featuredentry.asp or by visiting:
http://www.encyclopediaofukraine.com and searching for such entries as:

WESTERN UKRAINIAN NATIONAL REPUBLIC (ZUNR). A nation-state
established on the Ukrainian ethnic territory of former Austria-Hungary on
19 October 1918 by the Ukrainian National Rada in Lviv. The Constitution of 13
November 1918 determined its name and defined the territory of the ZUNR as
that which encompassed the Ukrainian regions of the Austrian crown lands of
Galicia and Bukovyna and the Transcarpathian Szepes komitat, Sros komitat,
Zemplen komitat, Ung komitat, Bereg komitat, Ugocsa komitat, and Maramaros
komitat.

A Ukrainian government took power on 1 November 1918 in Galicia,
on 6 November in Bukovyna, and on 19 November in Transcarpathia. The
governments in the last two territories were short-lived. In spite of the
Ukrainian-Polish War in Galicia, the government of the ZUNR held out
longest in eastern Galicia…

UKRAINIAN-POLISH WAR IN GALICIA, 1918-19. The Ukrainian-Polish
War broke out in late 1918 as a result of the Polish rejection of Ukrainian
efforts to establish an independent state-the Western Ukrainian National
Republic-in the wake of the dissolution of the Austro-Hungarian Empire.

The major issue of dispute in the conflict was control over eastern Galicia,
a predominantly Ukrainian ethnic territory regarded by the Poles as an
integral part of the historical Polish realm. As the boundaries of the new
Polish state had not yet been established, and the ZUNR had not been
granted international diplomatic recognition, the matter was ultimately
reduced to a question of control by military force. The outbreak of
hostilities can be dated to 1 November, when Poles in Lviv organized
resistance to Ukrainian efforts to take control of the city…

NOVEMBER UPRISING IN LVIV, 1918. The first stage of armed conflict

in the Ukrainian-Polish War in Galicia, 1918-19. The proclamation of the
Ukrainian National Rada on 18 October 1918 concerning the founding of an
independent Ukrainian state initiated preparations on the part of Ukrainians
for taking power in eastern Galicia. The Rada originally hoped to establish a
Ukrainian administration with the support of the Austrian authorities, but
when those hopes were only partially fulfilled, it decided to act
unilaterally.

The seizure of Lviv was planned originally for 3 November 1918. It was to
be carried out by the Ukrainian soldiers who constituted the majority of the
Austrian troops garrisoned in the city as well as by a brigade of the
Ukrainian Sich Riflemen garrisoned in Bukovyna. The creation in Cracow of

the Polish Liquidation Commission compelled the Ukrainian politicians to
move up the date of the operation.

UKRAINIAN GALICIAN ARMY (UHA). The regular army of the Western
Ukrainian National Republic. It was formed around a nucleus consisting of
the Legion of Ukrainian Sich Riflemen and other Ukrainian detachments of the
Austro-Hungarian army, which recognized the authority of the Ukrainian
National Rada and took part in the November Uprising in Lviv, 1918. The UHA
was a well-organized and disciplined force. It was established as a regular
army of the ZUNR by the law of 13 November 1918 on compulsory military
service, which empowered the State Secretariat for Military Affairs to
divide the country into military districts, to define an organizational
structure for the army, and to call up Ukrainian males between the ages of
18 and 35 for military duty…

PETRUSHEVYCH, YEVHEN, b 3 June 1863 in Buzke, Galicia, d 29 August
1940 in Berlin. Lawyer, political leader, and president of the Western
Ukrainian National Republic. An executive member of the National Democratic

party, he was elected to the Austrian parliament and to the Galician Diet and
served as vice-chairman of the Ukrainian Parliamentary Representation in
Vienna (1910-16) and the Ukrainian caucus in the Diet (1910-14).

At the end of 1916 he was elected chairman of the Ukrainian Parliamentary
Representation in the Austrian parliament and was recognized as the leading
Ukrainian politician of his day. With a number of other Slavic leaders he
proposed to transform Austria-Hungary into a federation of national states,
including a Ukrainian one composed of eastern Galicia, northern Bukovyna,
and Transcarpathia.                              -30-
———————————————————————————————
The preparation, editing, and display of the IEU entries associated with
the history of the Western Ukrainian National Republic and the
Ukrainian-Polish War of 1918-19 was made possible by the financial support
of the MICHAEL KOWALSKY AND DARIA MUCAK-KOWALSKY
ENDOWMENT FUND at the Canadian Institute of Ukrainian Studies
(Edmonton, AB, Canada).

ABOUT IEU: Once completed, the Internet Encyclopedia of Ukraine will be
the most comprehensive source of information in English on Ukraine, its
history, people, geography, society, economy, and cultural heritage. With
over 20,000 detailed encyclopedic entries supplemented with thousands of
maps, photographs, illustrations, tables, and other graphic and/or audio
materials, this immense repository of knowledge is designed to present
Ukraine and Ukrainians to the world.

At present, only 10% of the entire planned IEU database is available on the
IEU site. New entries are being edited, updated, and added daily. However,
the successful completion of this ambitious and costly project will be
possible only with the financial aid of the IEU supporters. Become the IEU
supporter and help the CIUS in creating the world’s most authoritative
electronic information resource about Ukraine and Ukrainians!
———————————————————————————————–
Dr. Marko R. Stech, Managing Director, CIUS Press
Project Manager, Internet Encyclopedia of Ukraine
Project Manager, Hrushevsky Translation Project
Canadian Institute of Ukrainian Studies, University of Toronto
20 Orde Street, Rm. 124, Toronto, Ontario M5T 1N7
tel: (416) 946-7326; fax: (416) 978-2672, m.stech@utoronto.ca
www.utoronto.ca/cius, www.encyclopediaofukraine.com
————————————————————————————————

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