AUR#816 Feb 15 Macroeconomic Situation Report by SigmaBleyzer; Constitutional Issues; Two Stark Choices; PACE; UPA; HIV/AIDS; Genocide In Dafur;

                 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       

             Ukraine achieved a remarkable macroeconomic outcome in 2006
              despite a 45% price hike in imported gas, political uncertainties
              and fluctuations in world steel prices. According to preliminary
                 data, the Ukrainian economy grew by 7% yoy in real terms.
                                                 [Article One]
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer

              –——-  INDEX OF ARTICLES  ——–
            Clicking on the title of any article takes you directly to the article.               
   Return to the Index by clicking on Return to Index at the end of each article
MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
“Ukraine – Macroeconomic Situation – January 2007”
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Thursday, February 15, 2007

           Ukraine must maintain the rule of law and must be in compliance
                      with the Constitution and the Constitutional Court.
INTERVIEW: With Judge Bohdan A. Futey
BY: Matthew Dubas for The Ukrainian Weekly newspaper

Ukrainian National Association (UNA)
Parsippany, New Jersey, Sunday, January 28, 2007

3.                           Q&A: UKRAINIAN CABINET LAW
BBC Monitoring research in English 3 Feb 07
BBC Monitoring Service, UK, Sat, February 3, 2007

                                 AGAINST CABINET LAW

Interfax-Ukraine news agency, Kiev, in Russian 6 Feb 07
BBC Monitoring Service, United Kingdom, Wed, Feb 07, 2007


Interfax-Ukraine news agency, Kiev, in Russian 1728 gmt 5 Feb 07
BBC Monitoring Service, United Kingdom, Mon, Feb 05, 2007

The Ukrainian Observer magazine,

The Willard Group, Kyiv, Ukraine, February 2007

                             FOR THE SAKE OF POWER
ANALYSIS & COMMENTARY: by Tetyana Nikolayenko,
In Ukrainian, translated by Eugene Ivantsov
Ukrayinska Pravda Online, Kyiv, Ukraine, Tuesday, Jan 30, 2007

8.                           “FOR LONG AND FOR SURE”
     Ukraine’s ruling party for more political reform to consolidate power
Ukrayinska Pravda website, Kiev, in Ukrainian 1 Feb 07
BBC Monitoring Service, United Kingdom, Thu, Feb 08, 2007

9.                                  FEELING THE PACE
INFORM Newsletter Issue 28, Yulia Tymoshenko Bloc (BYuT)
Kyiv, Ukraine, Sunday, January 28, 2007

Yalta European Strategy (YES), Kyiv, Ukraine, January, 2007

11.                 IF IFS AND ANS WERE POTS AND PANS.
       EU mandate for talks with Ukraine on a new enhanced agreement
       Ukraine sticks to the old wrong principle and again sets out on a
       journey without a compass, without a road map, and even without
                                any idea of where it is heading.

Dzerkalo Tyzhnya, Zerkalo Nedeli, Mirror-Weekly No. 3 (632)
Kyiv, Ukraine, Saturday, January 27 – February 2, 2007


Ukrainian News Agency, Kyiv, Ukraine, Mon, February 12, 2007

Ukrainian News Agency, Kyiv, Ukraine, Sun, February 11, 2007

                HIV/AIDS in Ukraine by Andriy Klepikov in Volume II
Judy Twigg, Editor, “HIV/AIDS in Russia and Eurasia”
Action Ukraine Report (AUR) #816, Article 14
Washington, D.C., Thursday, February 15, 2007


Ukrinform, Kyiv, Ukraine, Monday, February 12, 2007
The Associated Press, Kyiv, Ukraine, Tue, February 6, 2007

17.                            IMPORTING EMBARRASSMENT
LETTER-TO-THE-EDITOR: By Weldon T. Johnson
Action Ukraine Report (AUR) #816, Article 17
Washington, D.C., Thursday, February 15, 2007

SaveDarfur Full-Page Advertisement
Washington Post, Washington, D.C. Wed, February 14, 2006

MONTHLY ANALYTICAL REPORT: Olga Pogarska, Edilberto L. Segura
“Ukraine – Macroeconomic Situation – January 2007”
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Thursday, February 15 2007

[1] Ukraine achieved a remarkable macroeconomic outcome in 2006 despite
a 45% price hike in imported gas, political uncertainties and fluctuations
in world steel prices. According to preliminary data, the Ukrainian economy
grew by 7% yoy in real terms.

[2] Good GDP growth, more moderate increases in recurrent expenditures
and improvements in the collection of budget revenues allowed the
government to maintain a low consolidated fiscal deficit at 0.7% of GDP.

[3] Consumer prices grew by 11.6% yoy in 2006, driven by energy-price

[4] 2006 was another year with a credit boom, as credits to the real sector
and households surged 71% yoy.

[5] The merchandise trade deficit widened to $5.3 billion or about 5% of
estimated full-year GDP; however, the current account is estimated to be
around 1% of GDP.

[6] On January 24th, 2007, an Investment Council under the Cabinet of
Ministers was created.

                                 ECONOMIC GROWTH
According to preliminary estimates of the State Statistics Committee (SSC),
Ukraine’s GDP grew by 7% yoy in 2006, considerably exceeding the 2.5%
yoy growth forecasted at the beginning of the year. Though the nominal
value of GDP for 2006 (as well as its components) was not released, GDP
is estimated at UAH 527.3 billion ($104.4 billion).

The better-than-expected GDP growth was supported by the continuing
consumption boom, recovered investment activity and improved export

Consumption was the main contributor to economic growth. During the first
nine months of the year, private consumption advanced by a record high
18.8% yoy, underpinned by robust growth of real household disposable
income and favorable credit conditions.

Some slowdown in the second half of the year reflected decelerating real
household disposable income and energy price pass-through on services
tariffs. In turn, the slowdown in real household income was the result of
more moderate real wage growth and social security payments. Although
decelerating, real household income grew by a decent 16.3% yoy over
January-November 2006.

Unlike private consumption, government spending declined by 4.1% yoy
in 3Q 2006 primarily on account of collective consumption expenditures,
which dropped by 11.6% yoy over the quarter. The decline mirrored the
government’s approach to postpone some of the budget expenditures in
light of possible lack of budget deficit financing.

As of the end of September, privatization proceeds accounted for just 16%
of the target while new borrowings on the domestic and external markets
were resumed only in September. As a result, expenditures from the general
fund of the state budget were under-executed by almost 4% as of end of

Following a small decline in the previous year, investments demonstrated a
strong 12.1% annual growth in January-September 2006. Though political
uncertainties persisted throughout the year, investments were driven by the
need to strengthen productivity, innovation and competitiveness in view of
growing production costs (due to more expensive energy resources) and

This is accomplished through modernization of obsolete production
capacities, introduction of energy-saving technologies, R&D efforts and
exploitation of advantages in organization structure, marketing, logistics,
etc. Improved access to borrowed funds (both domestic and foreign) was
an important impetus to robust investment growth this year.

Favorable external conditions allowed exports of goods and services to
report real 1.3% yoy growth in 3Q 2006, which was not observed since the
end of 2004. Despite accelerating imports (up by 7.1% yoy in real terms for
3Q 2006), the negative contribution of net exports to GDP was further

On the production side, the increase in real GDP primarily reflected
positive contributions of service and industrial sectors. Buoyant
consumption growth supported further expansion in domestic-oriented
sectors and industries.

Thus, retail sales increased by 24.8% yoy in 2006, passenger turnover grew
by 4.4% yoy, output in the food industry was up 10% compared to the
previous year, construction of buildings (mostly residential) rose by 12.8%

Favorable external conditions and robust investment activity underpinned
output growth in machine-building (11.8% yoy), metallurgy (almost 9% yoy)
and utilities (6.7% yoy).

The chemical industry demonstrated an encouraging 3.2% yoy increase in
output, considering the 45% increase in the price of imported gas (natural
gas accounts for up to 80% in production costs for certain chemical
products). At the same time, the industry’s prospects for 2007 are not

Despite forecasted moderate growth in international prices for chemicals in
2007, profit margins in the export-oriented but energy-intensive industry
will further deteriorate due to a 37% increase in imported gas prices
starting at the beginning of 2007.

At the same time, chemical producers are actively seeking government
support for the industry, lobbying a draft law “On chemical industry
support”. If successful, the chemical industry may show reasonable
performance in 2007. However, the increase in sectoral subsidies may bear
efficiency losses to the country and inhibit the industry’s restructuring.

Robust growth of industrial output, which expanded by 6.2% yoy in 2006,
contributed to value added growth in wholesale trade (wholesale turnover
rose by 13.6% yoy), cargo transportation (turnover was up 4.2% yoy), and
construction. According to SSC data, industrial output surpassed 1990’s
level by about 0.8 percentage points, while GDP is still lagging behind.

At the same time, such comparisons should be treated with some caution
due to structure and price distortions that were present in 1990. To a large
extent, industrial output in 1990 was led by the military sector while
prices and volumes of production were determined by the government.
Moreover, countries that belonged to the Soviet Union, particularly Russia,
were the primary outlet for Ukrainian goods.

Now, CIS countries account for less than one third of Ukraine’s merchandise
exports, while production decision-making is primarily driven by market
forces. At the same time, the structure of Ukraine’s industry remains biased
towards raw materials and low-value-added products, though the share of
investment and high-value-added products has been growing in recent years.

Moreover, economic growth was primarily based on utilization of existing
capacities while the average accumulated depreciation approached 50%. This
signifies that despite the expansion in gross fixed capital formation during
the last few years, Ukraine still needs considerable investments to sustain
economic growth and meet new challenges related to rising energy prices.
This calls for further progress in creating a favorable business environment
and accelerating structural reforms.

Ukraine’s favorable 2006 performance allows being reasonably optimistic
about Ukraine’s economic developments in 2007. Although the price for
imported gas will increase by another 37% (to $130 per 1,000 m3), the
government expects GDP to grow at 6.5% yoy.

However, due to more moderate growth in real household income and
further weakening of Ukraine’s terms of trade, a real GDP growth rate at
about 5% looks more realistic.

                                    FISCAL POLICY
Throughout 2006, successful budget execution raised a number of concerns.
Adopted at the end of December 2005, the 2006 budget did not anticipate a
price hike in imported energy resources (particularly, natural gas) that
occurred at the beginning of the year.

Considering also that 2006 was an election year while world steel prices
were forecasted to continue weakening, GDP growth at 7% yoy, the rate
envisaged in the budget, looked unrealistic.

With sluggish privatization and the absence new borrowings, it became clear
in the middle of the year that the government may fall short of funds to
meet all government liabilities.

Though the situation with privatization proceeds did not improve much,
reaching only 28.6% of the targeted UAH 2.1 billion ($416 million) in 2006,
the government secured deficit financing by resuming domestic and external
borrowings in September 2006.

Good GDP growth, more moderate increases in recurrent expenditures in
2006 compared to 2005, improvements in the collection of budget revenues
introduced in 2005 (particularly elimination of free economic zones) and
some below target execution of expenditures allowed the government to
maintain a low fiscal deficit.

Consolidated budget revenues went up 28% yoy in nominal terms to reach
UAH 171.7 billion ($34 billion), while expenditures (including net credits)
grew by 23.6% yoy to UAH 175.4 billion ($34.7 billion). As a result, the
consolidated budget posted a deficit of 0.7% of GDP, considerably below
the originally targeted 2.6% of GDP.

By revenue structure, the collection of VAT was the most dynamic
component of fiscal revenues. According to preliminary data, VAT
proceeds to the general fund of the state budget grew by about 42%
yoy in nominal terms, which was 13% above target.

Though the government addressed the problem of VAT refund arrears (in
December VAT refunds were over-executed by 47.5%), full-year VAT
refunds were under-fulfilled by 5.2%. Improved fiscal performance of
enterprises in the second half of the year allowed the planned amount of
corporate tax (EPT) revenues to be collected.

Just in December, EPT proceeds were over-executed by 31.8%, which was
not surprising as enterprises pay the tax on profits achieved during the
first eleven months of the year[1] in December. Above-target VAT and EPT
receipts compensated for poor collections from excises and export duties.

In particular, excises were under-fulfilled by 12.1%, primarily due to poor
oil-refining industry performance. Due to high world crude oil prices
throughout the year and repairs on several oil-refineries, domestic
production of gasoline was displaced by imports.

Considerably lower domestic production of gasoline caused export
volumes of these commodities to decline, which contributed to under-
execution of export duties.

As usual, December saw considerable fiscal loosening. At the same time,
despite over-fulfillment of expenditures from the general fund by 12.3% that
month, full-year state budget expenditures were almost 6% below target.

Unlike the first half of the year when the fiscal deficit was financed by
the funds received from the re-sale of metallurgical plant Kryvorizhstal in
October 2005, the government actively borrowed from both domestic
market and abroad in the second half of the year.

Since September when new borrowings were resumed, the government
attracted UAH 11.8 billion ($2.34 billion), while the consolidated budget
deficit constituted just UAH 3.7 billion ($0.7 billion). Though nominally
this resulted in an increase in Ukraine’s total public and publicly
guaranteed debt to $15 billion at the end of 2006, in GDP terms the debt
declined from 17.4% in 2005 to less than 15.5% in 2006.

These funds will help to smooth budget execution at the beginning of 2007,
taking into account the possible shortfall in budget revenues due to
anticipated moderation of household income growth and the likely decline in
enterprise profitability due to the 37% price increase on imported natural
gas. In addition, the 2007 budget is likely to be amended in the first half
of the year, revising upwards the living wage and minimum wage.

Moreover, due to the absence of a clear privatization plan as well as the
aspirations of the Head of the State Property Fund (an agency in charge of
privatization) to keep controlling shares of strategic enterprises (such as
telecommunication monopoly Ukrtelecom and Odessa port plant) under
state ownership, the ambitious target to receive $2 billion of privatization
receipts may be hard to achieve.

                                MONETARY POLICY
In 2006, consumer prices grew by 11.6% yoy driven by an energy-price
pass-through. In particular, housing and utility tariffs grew by 85.7% yoy;
tariffs for railway transportation and communication were up 42.1% yoy and
30.1% yoy, respectively. Soaring real estate prices and utility tariffs
caused the cost of rent services to increase by almost 50% yoy. As a result,
the index of service tariffs rose by a record high 49.4% yoy.

At the same time, 2.2% month-over-month (mom) growth in service tariffs in
December suggests that the announced 3.4 times increase in housing and
utility tariffs in Kyiv (the capital of Ukraine and the single largest city
in terms of resident population and GDP contribution) was not incorporated.
A number of court appeals contesting the Kyiv authorities’ decision to raise
utility tariffs by that much might have been the reason.

The other components of CPI showed moderate growth in 2006. Robust
consumption growth, boosted by considerable social transfers from the
budget and loose credit conditions, as well as higher production costs
(related to more expensive energy resources, utilities and transportation
services) contributed to a food price increase in 2006.

However, over-production of some food products (e.g., meat, milk and dairy
products, eggs) on the back of unresolved trade relationships with Russia
translated into food price deflation during March-August. This helped to
contain food price inflation at a modest 3.5% yoy.

Non-food prices were primarily driven by domestic gasoline prices, which
in turn followed world crude oil price developments. The acceleration in
gasoline price growth during April-September was partly compensated for
by deflation in the last three months of the year as a result of the
agreement reached between the government and gasoline traders. Thus,
non-food prices reported a modest 2.5% yoy increase over the whole year.

The impact of monetary factors on inflation dynamics was rather limited in
2006, though it slightly increased in recent months following the notable
loosening of fiscal policy and large NBU interventions on the interbank
forex market. In particular, government cash balances on the account with
the NBU declined by 16.2% mom or UAH 3.6 billion ($713 million).

Improving export performance and robust capital inflow supplied the market
with foreign exchange in an amount considerably exceeding demand. Continuing
to maintain a de facto peg of hryvnia exchange rates with respect to the US
dollar at 5.05, the NBU intervened on the forex market with net purchases of
$530.7 million.

This allowed the NBU to replenish its gross international reserves to $22.3
billion, which corresponds to more than 5 months of prospective imports of
goods and services. Thus, the monetary base and money supply grew by
10.6% mom and 7% mom in December.

However, due to a high base effect, the growth rates declined in annual
terms from 53.9% yoy and 54.3% yoy in 2005 to 17.5% yoy and 34.7% yoy
in 2006 respectively. In addition, the leveling out of deposit growth (38.8%
yoy in 2006 compared to almost 60% yoy in 2005) also contributed to the
deceleration of money supply growth.

However, despite the flatter growth of the money supply, monetary conditions
for commercial banks were rather loose in 2006 as the NBU softened reserve
requirements several times and lowered the refinancing rate to 8.5%.
Refinancing operations totaled UAH 8.3 billion in 2006.

Moreover, commercial banks were active in attracting financial resources
from abroad. Thus, for the first nine months of the year, banking sector
external debt increased by 55% year-to-date to $9.6 billion.

As a result, lending growth continued to strengthen as loans to the real
sector and households grew by 71% yoy. Consumer lending has been gaining
weight in credit dynamics – loans to households grew by 134.2% yoy in 2006
(up from 126.6% yoy in 2005), bringing their share to 32%. At the same time,
on the back of buoyant investment demand, corporate lending expanded by
almost 60% yoy, remaining the major contributor to credit growth.

The continuing credit boom with a bias towards foreign currency borrowing
raises concerns over rising banking sector vulnerability. In particular,
foreign currency loans grew considerably faster than hryvnia-denominated
ones (95.4% yoy and 52.4% yoy respectively).

As a result, the credit portfolio of commercial banks was almost equally
split between hryvnia and foreign currency denominated loans. At the same
time, national currency deposits prevail in the structure of commercial
banks liabilities.

Their share accounted for 62% of total deposits. Though the NBU has
already taken several measures to curb robust growth of foreign currency
loans, currently it is developing new regulations that would contain more
restrictive requirements for granting loans in foreign currency.

In November, merchandise exports growth decelerated to 13.2% yoy (down
from 17.9% yoy); however, cumulatively exports increased by 11.4% yoy
(up from 11.2% yoy over January-October). The deceleration is primarily
attributable to the continuing decline in exports of cereals and mineral

Following the introduction of export quotas, exports of grain almost ceased
in November, declining by 72.2% yoy. As a result, cumulative growth
decelerated sharply from 25.7% yoy over January-September to 5.7% yoy
for January-November.

Exports of mineral products continued to decline, contracting by 17.1% yoy
over January-November. The decline was a reflection of poor coke and
oil-refining industry performance. At the same time, on the back of
industry’s output growth rebound beginning in December, export performance
of this commodity group may slightly improve in the coming months.

On the upside, benefiting from high world steel prices, exports of
metallurgical products picked up by 15.9% yoy over the first eleven months
of the year. Exports of Ukraine’s machinery and vehicles advanced by 16.3%
yoy over the period on the back of strong economic growth in CIS countries
(the major destination market for Ukraine’s export of these commodities).

Robsut private consumption and investment demand contributed to the
growth of imports by 22.4% yoy over January-November. At the same time,
merchandise imports continued to decelerate in November, posting a 20.6%
yoy increase down from 25.7% yoy in October. The slower imports growth
was driven by decelerating imports of mineral products, the weightiest group
in total goods imports.

Lower world crude oil prices and import volumes of natural gas and crude oil
(caused by warm weather conditions and poor coke and oil-refining industry
performance, respectively) resulted in just a 8.5% yoy increase in imports
of fossil fuels in November with cumulative growth declining to 13.7% yoy.
At the same time, vigorous investment demand in the country underpinned
imports of machinery and transport equipment, which expanded by 33.2%
yoy over January-October.

Despite recent improvements, the FOB/CIF merchandise trade deficit
continued widening to reach $5.2 billion (about 5% of estimated full-year
GDP). At the same time, due to large surpluses on foreign trade of services
and net transfers accounts, the current account deficit is estimated to stay
at less than 1% of GDP.

                         THE INVESTMENT CLIMATE
In mid-January 2007, the EU and Ukraine signed a new bilateral Steel
Agreement, according to which the export quota for Ukraine was increased
by 32% to 1.32 million tons and will be eliminated as soon as Ukraine joins
the WTO.

The new agreement creates additional opportunities for Ukraine’s steel
industry, which may help the Ukrainian economy to absorb the energy
import price hike in 2007.

On January 24th, 2007, an Investment Council under the Cabinet of Ministers
was created with the Prime Minister as Head. Though the members of the
Council were not announced, it will include representatives of Ukrainian and
foreign businesses as well as various government officials.

The Council will develop proposals for the formation of the state investment
policy, particularly for the elaboration of efficient dialogue between the
government and business, and implementation of government investment
projects. The Council will also participate in drafting and analysis of
legislation related to investment activity.

Though the council is defined as an advisory institution, its decisions will
be obligatory for state and local authorities’ consideration.

Currently, Ukraine is in the process of refining its political system,
though it is complicated by the insufficient depth of legislation, which
allows for ambiguous interpretation of important provisions built into the

The situation with the law on the Cabinet of Ministers demonstrates a
complex but democratic way of finding compromises between the powers
on controversial issues. Eventually, Ukraine will build effective an
coordination system between the powers that will enhance the carrying out
of structural reforms in the country.                        -30-
[1] This innovation was introduced by the 2006 budget law and prolonged
in the 2007 budget law. Before, corporate profit tax for the fourth quarter
was paid during the first quarter of the next year.
Chief Economist, Edilberto Segura; Editor, Rina Bleyzer Rudkin.
NOTE: To read the entire SigmaBleyzer/The Bleyzer Foundation
Ukraine Macroeconomic Situation Report for January 2007 in a PDF
format, including color charts and graphics go to the following link:

SigmaBleyzer/The Bleyzer Foundation also publishes monthly
Macroeconomic Situation Reports for Bulgaria and Romania. The
present and past reports, including those for Ukraine can be found at
Director, Government Affairs, Washington Office, SigmaBleyzer,
Washington, D.C.,, 202 437 4707.,

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
         Ukraine must maintain the rule of law and must be in compliance
                    with the Constitution and the Constitutional Court.

INTERVIEW: With Judge Bohdan A. Futey
BY: Matthew Dubas for The Ukrainian Weekly newspaper
Ukrainian National Association (UNA)
Parsippany, New Jersey, Sunday, January 28, 2007

Bohdan A. Futey is a judge on the U.S. Court of Federal Claims in
Washington, appointed by President Ronald Reagan in May 1987.

Judge Futey is a longtime advisor on legal reforms in Ukraine, has been
active in various rule of law and democratization programs in Ukraine since
1991, and served as an advisor to the working group on the Constitution of
Ukraine as adopted on June 28, 1996.

Below is an interview with Judge Futey conducted by Matthew Dubas.

[Ukrainian Weekly] On January 12, the Verkhovna Rada voted to further reduce
the power of the president and increase power for the Cabinet of Ministers.

What does this mean for President Viktor Yushchenko and Prime Minister
Viktor Yanukovych? What were the motivations behind this initiative? Does
the anticipated resulting system mirror any in Europe?

[Bohdan Futey] First of all, any law that Parliament adopts must be in
accordance with the Constitution. The law cannot extend the powers of the
Cabinet under the Constitution of Ukraine.

For that, you would need a constitutional amendment. This law does enlarge
the power of the Cabinet of Ministers and reduces the power of the

Therefore, the law, according to my understanding, would be against the
Constitution, and the president has the right to veto such law.

The Rada attempted to override the President’s veto, but, in reality, voted
a new law.  The President, therefore, had the right to use his veto powers
again because it was a different law presented to him.

This problem stems from the political reform that was initiated on December
8, 2004, to resolve the presidential election crisis that sparked the Orange
Revolution, which became effective on January 1, 2006.

The Verkhovna Rada passed several amendments to the Constitution and,
although these came as a result of the Orange Revolution, they were hastily
adopted and not thoroughly thought out.

This created a lack of a clear delineation of powers and responsibilities of
officials, including the Cabinet of Ministers and the president.

The Constitutional Court did not have a chance to review these reforms due
to the lack of a quorum. Parliament was instrumental in preventing a sitting
Constitutional Court and not allowing the judges to be sworn in. So that
created problems for the Constitutional Court to review these issues.

In 2006, Parliament passed legislation prohibiting the Constitutional Court
from reviewing the political reform, notwithstanding the fact that the
Constitutional Court decided on October 5, 2005, just prior to the
expiration of the nine-year term for most of the judges, that any changes in
the political system of Ukraine should be submitted to and approved by a
national referendum.

In this case, the political reform was not submitted for a national
referendum and was not legitimate from day one, as the Council of Europe

has stated as well as the Venice Commission.

This all stems from the political reform. Parliament is trying to resolve
these issues through political means rather than the legal system.

[Ukrainian Weekly] As a result of this recent vote, Yurii Lutsenko, Ukraine’s
former minister of internal affairs, has suggested hat Ukraine will return
to a situation similar to that of 1999. Is there the possibility of
restoring power to the president due to the illegitimate actions of the

What legal recourse can Mr. Yushchenko take to avoid being completely
stripped of power? What role will the Constitutional Court play in
determining the legitimacy of these actions by Parliament and why has there
been a lack of action from this legal body?

[Bohdan Futey] President Yushchenko has proposed a solution to the friction
in the executive branch by all of the parties sitting down and working out
these problems in a Constitutional Commission that will review these
constitutional reforms and make sure to “cross all the t’s and dot all the i’s,”
so it complies with the constitutional requirements.

The resulting agreement should be voted on by Parliament in accordance

with the Constitution and then submitted to a national referendum.

Whether there is the will on the part of the political sides to accomplish
this has yet to be seen. Although the president had confidence that the
Universal of National Unity would resolve all of these issues, it appears
that there is no political will for a compromise and a solution to be

The legal solution would be up to the Constitutional Court, and some of the
forces, like Yulia Tymoshenko, have submitted their grievances to the court.

These are currently under review by the court to see if the law passed on
August 4, 2006 that prohibits the Constitutional Court from reviewing
amendments to the Constitution is constitutional or not.

Regardless of which method is used – political or legal – there must be a
resolution to this political crisis because, unless it solved, the legal
chaos will continue. It is in the interest of the president, the prime
minister, the Rada speaker [chairman] and – most of all, the Ukrainian
people – that the situation be settled before Ukraine stumbles any further

I was surprised and bewildered that the Verkhovna Rada’s representative to
the Constitutional Court made an argument against reviewing the legislation,
using Russia as an example, suggesting that Ukraine should follow Russia’s

In my opinion this is a step backwards. Even more surprising was that
President Yushchenko signed the bill into law the next day after its passage
on August 4, 2006.

The only way to overturn any law is for at least 45 lawmakers to submit a
challenge to the Constitutional Court. If Ukraine is going toward Europe,
why look at Russia? Ukraine should look to countries like Germany and other
European states.

[Ukrainian Weekly] The Our Ukraine bloc has been marginalized with the
emergence of what appears to be a two-party system led by the Yulia
Tymoshenko Bloc and the Party of the Regions.

If these reforms are put to a national referendum, can we expect to see a
stronger opposition to the Anti-Crisis Coalition, due to them tacking on
amendments on the status of the Russian language and Ukraine’s position on
NATO? What do these recent reforms indicate for Ukraine’s economic,

foreign and domestic policies?

[Bohdan Futey] The Yulia Tymoshenko Bloc is looking forward to early
elections and with the recent actions regarding  Foreign Affairs Minister
Borys Tarasyuk, it is evidenced that Parliament does not respect the
decision of a court.

It is mind-boggling that the Constitution describes the separation of powers
and stipulates that Ukraine is based on the rule of law in Article 8, and
yet there is a decision made by the court and Parliament says we’re not
going to respect that. And the Cabinet of Ministers says the same thing.

The Rada chose to ignore the president’s foreign policy powers and, instead,
dismissed the minister of foreign affairs. Under the Constitution, the Rada
may only request that the president dismiss these ministers [nominated by
the President], but that decision is ultimately up to the President.

I cannot understand this, but this is what we have. We have a situation with
the Cabinet of Ministers not respecting the decision of the court, and the
case challenging the Cabinet of Minister’s actions has been filed with the
Constitutional Court and the Cabinet is cutting off funds to the Ministry of
Foreign Affairs.

The diplomats of Ukraine all over the world will not be paid now because
funds are being cut off. This is clearly a move, in my view, that is a
political maneuver rather than a legal solution.

Ukraine has gone through many transformations in many areas, including
economic and administrative matters, yet not in legal education.

I attended an international forum on legal matters in Ukraine on December 8
of last year [that focused] on democracy and the rule of law in Ukraine,
where a number of lawyers took part.

They stated that the legal system in Ukraine lacks proper education. Legal
education generally has been not of the Western type, but of the old Soviet
type and, as a result, we have the current situation.

When the Constitution was drafted in 1996, it was praised for its guarantees
of civil rights and the separation of powers into the three branches of
government, but it did not clearly define the responsibilities of government
officials. I’m not saying that Ukraine should stay as a presidential

That is for Ukrainians to decide. Rather, Ukraine must maintain the rule of
law and must be in compliance with the Constitution and the Constitutional

Parliament is not abiding by that and they are trying to force amendments by
political muscle rather than by legal proceedings in accordance with the
Constitution of Ukraine.  In a national referendum, Ukrainians will have to
decide what kind of government they want.                  -30-

The Ukrainian Weekly, Roma Hadzewycz, Editor-In-Chief, 2200
Route 10, P. O. Box 280, Parsippany, NJ,  07054. The Ukrainian
Weekly Archive, E-mail:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
3.                         Q&A: UKRAINIAN CABINET LAW

BBC Monitoring research in English 3 Feb 07
BBC Monitoring Service, UK, Sat, February 3, 2007

The Ukrainian law “On the Cabinet of Ministers” has further shifted power
from President Viktor Yushchenko to Prime Minister Viktor Yanukovych

and parliament, particularly in foreign and defence policy.
Q: What powers has President Yushchenko lost?
Yushchenko has lost the right to dissolve parliament if it does not approve
a candidate for prime minister acceptable for the president in 30 days since
the previous prime minister resigns.

The new law envisages that if the president fails to appoint the prime
minister in 15 days then parliament can do that without his approval.

The president also lost the right to appoint his own foreign and defence
ministers, the right envisaged in the constitution. The law says that the
president can select the candidates only from the list of candidates to
which parliament would agree. And again, if the president fails to nominate
candidates for these two ministers in 15 days then parliament appoints its
own candidates.

Yushchenko has effectively lost control over regional governors and heads of
other local administrations, because the law subordinates the heads of all
local administrations to the Cabinet of Ministers. The president still
formally appoints and dismisses local governors, but they should be
nominated by the Cabinet of Ministers.
Q: What could this lead to?
Ukraine’s NATO integration will be delayed, because the senior coalition
member, the Donetsk-based Party of Regions, is carrying out pro-Russian
foreign policy, and Russia has always been against Ukraine’s joining the

The Ukrainian defence doctrine could be amended and NATO integration

as a strategic goal could be excluded from it.

For the same reason, the Russian Black Sea Fleet could stay in Ukraine even
beyond 2017, the deadline envisaged in the Ukrainian-Russian treaty.

President Yushchenko will veto all laws adopted by parliament. However, this
will play in the hands of opposition leader Yuliya Tymoshenko, because the
ruling coalition will need her votes to override the president’s veto.
Q: What is Yushchenko’s reaction to publication of the law?
Yushchenko believes that the official publication of the law despite his
veto violated the constitutional procedure. He is going to refer the law to
the Constitutional Court.

It can take the court one to three months to consider the appeal. But before
doing so, Yushchenko wants to explain to the public why he vetoed the law.
Q: Why Yushchenko vetoed the law twice?
He vetoed the law for the first time in December 2006, saying that many of
its provisions violated the constitution, in particular, the procedure for
appointing the foreign and defence ministers.

In January 2007, the ruling coalition and the opposition Yuliya Tymoshenko
Bloc overrode the veto with two thirds of the votes in parliament.

The constitution says that in this case the president has to sign the law
or, if the president fails to do so, the law can be published without his
signature. However, there has not been a single instance in Ukraine since

Yushchenko vetoed the law again because the version that was passed with

the constitutional majority and submitted to the presidential secretariat did
not contain Paragraph 4 in Article 7, which was present in the original law.
Q: What are the arguments of the Party of Regions?
They say that the law does not violate the constitution, but regulates the
areas that are not mentioned in the constitution. Therefore, they consider
the law legitimate and do not recognize Yushchenko’s veto over a “technical
mistake”.                                              -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                               AGAINST CABINET LAW
Interfax-Ukraine news agency, Kiev, in Russian 6 Feb 07
BBC Monitoring Service, United Kingdom, Wed, Feb 07, 2007

KYIV – Ukrainian President Viktor Yushchenko has appealed to the
Constitutional Court against the law on the Cabinet of Ministers, which has
been passed by parliament. In his appeal, he said that the law was adopted
in defiance of the constitution and asked the court to rule that it is

Yushchenko vetoed the law, which makes him weaker vis-\a-vis the

government and parliament, twice, but it nevertheless came into effect,
signed by the speaker of parliament, Oleksandr Moroz.

The following is the text of a report by the Interfax-Ukraine news agency

on 6 February:

Kiev, 6 February: Ukrainian President Viktor Yushchenko has asked the
Constitutional Court to rule that the law on the Cabinet of Ministers is
unconstitutional, the president’s press service said today.

Viktor Yushchenko said that procedural violations in the course of adopting
the law and its coming into effect should be the reasons for ruling that the
law is completely unconstitutional.

In accordance with Clause 3 of Part 2 of Article 88 and Part 1 of Article 94
of the constitution, the speaker of the Supreme Council [parliament] signs a
law adopted by parliament and then immediately submits it to the president
[for signing].

In line with other provisions of Article 94, after receiving the law, the
president signs it within 15 days and promulgates or returns it to
parliament together with his proposals for new consideration.

If during further consideration the law is adopted again by no less than
two-thirds of the constitutional composition [300 out of 450] of the Supreme
Council, the president is obliged to sign and promulgate it within 10 days.

If the head of state does not sign the law, then it is promulgated by the
speaker of the parliament and is published under his signature.

In accordance with a provision of Part 2 of Article 94 of the constitution,
on which the Constitutional Court officially commented on 7 July 1998, if,
rejecting the president’s proposals or fully taking them into account, the
Supreme Council makes further amendments to the law at its own initiative,
which are not envisaged in the president’s proposals, then the law amended
in this way falls under Part 2 of Article 94 of the constitution.

That is to say the president has the right to return such law along with his
proposals for another consideration by parliament or sign and promulgate it,
the [president’s] submission goes on.

On 19 January 2007, Viktor Yushchenko returned the law on the Cabinet of
Ministers, adopted by the parliament on 12 January, together with his
proposals to the Supreme Council, because the text of the law submitted for
signing was different from the draft law that was signed by the speaker of
the Supreme Council on the results of a vote of the parliament on 21
December 2006.

The text contained amendments which were not envisaged in the president’s
proposals of 11 January 2007. The submission says that, in particular,
Clause 4 of Part 7 of Article 23 was excluded from the text of the law which
was submitted to the president for signing.

Thus, complying with provisions of the constitution and the decision of the
Constitutional Court dated 7 July 1998, the president exercised the right of
veto of the law. Legal consequences of such veto are the revocation of the
final results of the vote for the law on the Cabinet of Ministers and the
launch of a procedure for its new consideration in parliament.

The president stressed that on the basis of this, after the exercising of
the right of veto, the law cannot be signed by the speaker of the Supreme
Council, rather it has to be reconsidered and adopted again by parliament as
the constitution requires.

That is why the promulgation of the law, which was returned to parliament by
the president along with his proposals, is a violation of the constitution.

Moreover, the submission says, the procedure for the coming into force of
the law, which is defined in the constitution, was violated when the
speaker, in defiance of the constitution, signed the law for its

Viktor Yushchenko stressed that the violation of the procedure for the
consideration, adoption and coming into force of laws, which is defined in
the constitution, actually means contempt of the constitutional principle of
the supremacy of law.

Based on this, the president requested the Constitutional Court to recognize
the law on the Cabinet of Ministers as completely unconstitutional because
of the violation of the procedure for adopting it and its coming into force,
which is defined in the constitution, and to consider the constitutional
submission immediately because of the utmost social and constitutional and
legal significance of this issue.                          -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.
Interfax-Ukraine news agency, Kiev, in Russian 1728 gmt 5 Feb 07
BBC Monitoring Service, United Kingdom, Mon, Feb 05, 2007

KIEV – Ukrainian President Viktor Yushchenko has said that he has
signed amendments to the law introducing an imperative mandate for local

The president said this at a briefing in Kiev tonight [after meeting
opposition leader Yuliya Tymoshenko who insisted on passing this law].

“I signed the law on imperative mandate because 362 MPs approved this view
on the political destiny of local councilors. Nevertheless, I would like to
say that I believe that this almost unanimous position of parliament is not
in line with democratic norms,” he said.

On 12 January, the Ukrainian parliament introduced the imperative mandate
for members of the Crimean Supreme Council and local councils. According

to the law, a member of the Crimean Supreme Council or local council may
be recalled by a political force, on the ticket of which he or she was elected,
if he or she did not join the deputy faction including this political party,
or he or she withdrew from this faction, or he or she joined another
faction. Such councillor’s mandate will be revoked.         -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

The Ukrainian Observer magazine
The Willard Group, Kyiv, Ukraine, February 2007

The very fact that Ukraine now has a law on the Cabinet of Ministers is a
positive development.

During the Leonid Kuchma era, the president routinely vetoed the passage of
such a law, one of a number of key laws that are important to Ukraine’s
state and institution building process.

But, the difference between the Kuchma era and today is that parliament
under Kuchma never mustered the constitutional majority or the confidence to
over-ride Kuchma’s veto.

Last month, a constitutional majority overrode the president’s veto with the
support of the Yulia Tymoshenko bloc (BYuT). Such a temporary convergence
of the interests of both the authorities and the opposition was unlikely in
the Kuchma era.

Following the 1998 elections, pro-Kuchma centrists and national democrats
cooperated against the left’s domination of parliament. This coalition only
disintegrated following the parliamentary vote of no confidence in the
Viktor Yushchenko government in April 2001.

This split set the stage for a political realignment following the 2002
elections. >From the ouster of Yushchenko as prime minister the main contest
ran between national democrats and pro-Kuchma centrists, as reflected in the
struggle between two Viktors (Yushchenko and Yanukovych) in the 2004
presidential elections.

The wild card proved to be the left. The Communist and Progressive Socialist
parties always had close ties to the Kuchma regime authorities. It is not
therefore surprising that they aligned with the regime’s candidate in the
2004 elections (Yanukovych) and following the 2006 elections with the Party
of Regions.

The Socialist Party (SPU) backed the anti-Kuchma camp throughout the Kuchma
era and even played a leading role in the “Ukraine without Kuchma” movement
during the Kuchmagate crisis and then following this in the Arise Ukraine!

The SPU also played a strategically important role during the Orange
Revolution, but only in the second round when they defected to Yushchenko.
Moroz has come third or fourth during Ukraine’s three presidential elections
since 1994.

Following 14 years of opposition the SPU made the surprising defection in
July 2006 to the former Kuchma camp. The defection of the SPU made it
possible for the Party of Regions and its compliant ally, the CPU, to create
the so-called Anti-Crisis coalition (ACC). On August 4, 2006, Yanukovych
returned as prime minister of the ACC government.
                       YUSHCHENKO’S STARK CHOICES
In August, Yushchenko was faced with two stark choices, both of which

were not palatable: dissolve parliament and call fresh elections or agree to
the return of Yanukovych as prime minister.

Yushchenko agreed to the latter after the holding of a round-table of
parliamentary forces, four of whom signed the Universal Agreement on
National Unity. Only BYuT refused to sign.

Throughout the summer crisis, sources inside the presidential secretariat
told me that under no conditions would President Yushchenko ever agree to
the return of Yanukovych to government. Why then did he eventually agree?

There can be only three explanations.
Yushchenko believed that the four political forces that signed
the Universal would go on to create a parliamentary coalition that would use
the agreement as the basis of its government program.

The National Unity coalition would, in effect, be the same as the grand
coalition that Prime Minister Yuriy Yekhanurov and the Party of Regions
negotiated, on Yushchenko’s instructions, following the March 2006

But, again Yushchenko misunderstood that the grand and national unity
coalitions had two crucial differences that made the former a potential lost
opportunity and the latter a work of fiction.

In the grand coalition, the Party of Regions gave up the position of prime
minister to Our Ukraine while in the national unity coalition the Party of
Regions demanded the position for itself.

In the grand coalition there were also no Communists. The presence of
Communists in the national unity coalition and Yanukovych as prime minister
made it very likely that Our Ukraine would never join.

After another two months of indecision, following six earlier indecisive
months, Our Ukraine finally decided to go into ‘opposition’ as a badly
damaged and split political force.

It remains unclear if President Yushchenko and Our Ukraine naively believed
in the ability of the round-table negotiations to create a stable national
unity coalition.

[2] SECONDLY, President Yushchenko prepared a draft decree and television
address to dissolve parliament. But, at the final moment he backed away from
this step because of a mixture of indecisiveness and lack of political will.
This certainly sounds like the Yushchenko we know. If true, then he has only
himself to blame for subsequent developments.

[2] THIRDLY, President Yushchenko was pressured into backing away from
dissolving parliament. This explanation is widely known in the presidential
secretariat, according to a second member of the secretariat who confided to
this author in late November.

On the evening of August 3, Yushchenko received two visitors from the Party
of Regions, including First Deputy Prime Minister Andriy Kluyev who has
responsibility for the energy sector.

According to my informant, the two visitors threatened to publicly expose
Petro Yushchenko’s murky dealings in the energy sector and the laundering of
corrupt proceeds abroad. After this threat, Yushchenko backed down from
dissolving parliament and agreed to Yanukovych’s candidacy.

If the third explanation is correct, Ukraine’s politics continues to remain
little different from the Kuchma era. The explanation is particularly
galling because Andriy Kluyev was head of the unofficial Yanukovych election
campaign during the 2004 elections.

These headquarters undertook the dirty tricks and other numerous violations
(including possibly Yushchenko’s poisoning and the attempt to blow up
Yushchenko’s election headquarters) that would have led to him being put on
trial in any country with the rule of law.

In Peru, senior officials are either in jail or in exile over its tape
scandal. But, in Ukraine, similar officials are back in power, giving them
the possibility to make threats against the president.
                       TRAITORS AND ORANGE IDEALS
The vote on the cabinet of ministers law has led to accusations of betrayal
of the Orange Revolution, this time against BYuT.

In reality, the [1] first to betray the orange camp was President Yushchenko
himself in September 2005 when he dismissed the Tymoshenko government
after describing it as the best government in Europe only two weeks earlier
on Ukraine’s independence day.

This was followed by Yushchenko’s first memorandum with the Party of
Regions that included many surprising points, such as an ‘amnesty’ for
election fraud.

[2] The second betrayal came after the March 2006 elections when President
Yushchenko instructed Yekhanurov to hold negotiations with the Party of
Regions for a grand coalition.

Simultaneously, Our Ukraine under Roman Besmertnyi held negotiations with
BYuT and the SPU for an Orange coalition. Yushchenko did not want to see
Tymoshenko back in government but instead got Yanukovych with whom he has
even greater difficulties.

The SPU should be credited with backing negotiations for an Orange coalition
until the beginning of July. Nevertheless, this should not entitle SPU
leader Oleksandr Moroz to be named man of the year, as Korrespondent
magazine named him this year.

Moroz only defected after Our Ukraine put forward Petro Poroshenko for the
position of parliamentary speaker and following three months of double
dealing negotiations that resembled the well known Talking Heads song ‘The
Road to Nowhere’.

BYuT’s vote with the Party of Regions on the law on the cabinet of ministers
is the second such vote, and a strategic mistake that has led to widespread
criticism from within the ranks of its own supporters.

The first vote could be more readily explained as it took place in January
2006 when BYuT voted no confidence in the Yekhanurov government over
the gas contract it had negotiated with Russia.

BYuT could have abstained (rather than voted with the then opposition Party
of Regions)  to show their opposition to the hastily agreed gas contract and
the inclusion of the non-transparent Rosukrenergo intermediary.

BYuT is not the only political force that is critical of what was a lack of
any energy strategy. Oleksandr Chalyi, deputy head of the presidential
secretariat, described the gas agreement as one of Ukraine’s worst foreign
policy decisions last year.

What do recent developments tell us about Ukrainian parties?

Developments since the Orange Revolution tell us that Ukraine does not
possess real political parties that represent concrete ideologies. The
US-based National Democratic Institute and International Republican
Institutes take note.

During the Kuchma era, it was traditionally understood that left and
right-wing parties in Ukraine were ideologically driven while those in the
center were ideologically amorphous.

The line of conflict from Yushchenko’s dismissal as prime minister in April
2001 until his election in January 2005 therefore seemed to rest on a battle
between an ideologically driven opposition and materially driven
(‘pragmatic’) pro-regime forces. Following two years of Yushchenko’s
presidency, this framework for understanding Ukrainian politics is badly in
need of an upgrade.

The CPU was always a party that was willing to work with the authorities,
including with Kuchma and the oligarchs in the ACC. The CPU’s popularity
declined from 20 percent in 2002 to 3.5 in 2006. The evidence suggests that
the 2011 parliament may be Ukraine’s first without a Communist presence.

The SPU and its leader Moroz have damaged a positive reputation earned in
particular during the Kuchmagate crisis. What was most surprising about the
SPU was less its defection than the fact that only two of its 31 factions
rebelled against the decision to align with the Party of Regions.

The SPU will be severely challenged in its central Ukrainian heartland in
the next elections by both BYuT and former speaker and now deputy president
of the National Academy of Sciences, Volodymyr Lytvyn.

The Party of Regions never had any ideology and grew out of the 2002 For a
United Ukraine bloc, a five party pro-Kuchma alliance. Of the five parties,
the Party of Regions is one of two that has survived to the present day and
it won the largest number of votes in the 2006 elections.

The other survivor is the Party of Industrialists and Entrepreneurs which
has backed Yushchenko since the second round of the 2004 elections and in
the 2006 elections was a member of the Our Ukraine bloc.

Since the Orange Revolution, and especially after returning to power in the
ACC, the Party of Regions has had the opportunity to transform itself into a
post-oligarch and post-Kuchma party that adheres to democratic norms.

Ukraine’s wealthiest oligarch, Rinat Akhmetov, publicly acknowledges the
need to increase Systems Capital Management legitimacy and thereby to
improve the public and international standing of himself and the Party he

Events since the Orange Revolution show that the Party of Regions has little
interest in transforming along the lines it claims. There remains a wide
gulf between its Potemkin-like clean image abroad, fostered by a Washington
public relations firm, and the policies pursued by the Party of Regions back

Our Ukraine is perhaps the biggest disappointment as it obtained ten percent
fewer votes under Yushchenko than it did under Kuchma in 2002, following
strategic mistakes and a poorly conducted election campaign.

Our Ukraine in 2002 was a broad alliance of national democratic parties
united by Yushchenko that made it possible for them to receive 24 percent
support when traditionally Rukh only obtained 10.

By the 2006 elections many of these political parties had deserted Our
Ukraine to create separate blocs, leading to the rump Our Ukraine becoming
dominated by business groups, rather than by national democrats as in 2002.

These business groups, such as Kinakh’s Party of Industrialists and
Entrepreneurs and Poroshenko’s Solidarity, had more in common with the
Party of Regions than with BYuT.

By the end of 2006, Our Ukraine had become a divided and ineffectual
political force, thereby leaving a vacuum in the center-right political
spectrum that has always played an important role in post-communist states
in promoting reform and Euro-Atlantic integration.

BYuT emerged out of the Front for National Salvation (FNS), an umbrella
group created during anti-Kuchma protests in 2000-2001. During the 2002
elections, BYuT was a leading member of the FNS, the radical wing of the
anti-Kuchma protests, a feature that was also true of Tymoshenko during the
Orange Revolution.

In the 2006 elections, BYuT included the small Ukrainian Social Democratic
Party (USDP), but the key political force in BYuT is Tymoshenko’s Fatherland
Party that also has a center-left ideological niche.

The USDP and the SPU are Ukraine’s only two parties that have been admitted
to the Socialist International (the Social Democratic united Party headed by
Viktor Medvedchuk was refused membership as a party that has nothing to do
with social democracy).

The Fatherland Party is debating whether to make an application to join the
Socialist International which, if successful, would take away the SPU’s
voters. The move would also enhance BYuT’s emergence as a center-left bloc
that would eclipse the SPU.

Therefore, if the Ukrainian parliament continues to remain in place until
2011, it will do so with three of its five political forces in crisis: CPU,
SPU and Our Ukraine. The two largest factions – Party of Regions and BYuT –
who together control 70 percent of deputies will continue to determine the
outcome of parliament’s deliberations.

National democratic forces need to rebuild a new center-right political
force, rather than attempt to revive Our Ukraine, that could regain some of
its voters in the 2011 elections.
Ukraine’s president desisted from dissolving parliament in August 2006 for
one of three reasons outlined earlier. In BYuT’s view, the decision has been
merely postponed and it continues to call for early elections. Whether early
elections will come remain to be seen and are dependent less on BYuT than
on the president.

Following the vote on the law on cabinet of ministers, it is now plainly
obvious that Yushchenko is faced with a two fold dilemma.

He can either permit Yanukovych to remain in office until the next elections
in 2011 or he can make steps to dissolve parliament and call early
elections. As Yulia Mostova wrote last month in Zerkalo Tyzhnia, the ACC
and Yanukovych might be well here to stay until 2011.

If Yushchenko permits Yanukovych and the ACC to remain in place until
2011 he will have two unpalatable outcomes.

[1] FIRSTLY, his power will be non-existent as Ukraine could very well

have become a parliamentary republic.
[2] SECONDLY, important democratic, economic and international gains
from the Orange Revolution will have been reversed.

If the readers of this article believe that this prognosis is too
pessimistic then they should take a look at what the Party of Regions has
undertaken in only five months in office when they have another 50 months
until March 2011.                                       -30-
Dr. Taras Kuzio, PhD, is an Adjunct Professor at the Institute for European,
Russian and Eurasian Studies, George Washington University and president
of the Kuzio Associates consultancy.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                              FOR THE SAKE OF POWER

ANALYSIS & COMMENTARY: by Tetyana Nikolayenko,
In Ukrainian, translated by Eugene Ivantsov
Ukrayinska Pravda, Kyiv, Ukraine, Tuesday, January 30, 2007

Yulia Tymoshenko got tired of men who betrayed her all the time. She decided
to do everything by herself. Now BYuT leader intends to get enough seats in
the parliament to form her own government. To inspire local MPs for a
productive and fruitful work BYuT leader made them an imperative injection.

On Tuesday Yulia Tymoshenko gathered BYuT local MPs for the forum held
in Ukrayina Palace. It was there that she awarded them with medals for an
active participation in elections and also carried out comb-outs and
excluded undisciplined party members.

Now Mrs. Tymoshenko gathered local deputies to inform them on the new

The presidium of the forum was a bit unusual. It was for the first time that
it lacked Oleksandr Turchynov and Mykola Tomenko who were abroad with a
‘special mission’.

Instead of the abovementioned BYuT leaders Yosyp Vinskyi was present at the
forum. Obviously he took deep roots in the party as he was included to
presidium. Viktor Pynzennyk, whose party is now a full BYuT member, also
represented presidium at the forum.

Pynzennyk is said to work out economic bills for BYuT which the faction will
bring in for consideration of the parliament. The left and right sides were
occupied by Tymoshenko’s ally Yevhen Shago and SDPU new leader Yevhen

Serhiy Teryohin and Volodymyr Bondarenko were sitting together. A year after
the split, when Party Reforms and Order refused to join BYuT at elections
and Tymoshenko’s ministers deserted the party, they are together again.

However, native BYuT members looked somewhat tense. That’s why some
of them enjoyed cognac and BYuT champagne bottled especially for the
New Year Eve.
                                      ALL BY MYSELF
From the very beginning Tymoshenko made it clear that BYuT would never
again take part in any coalition games. It intends to hold all the power.

“We must admit that we do not have any reliable partners. BYuT is a
self-sufficient political party and we do not need to persuade any political
force to sit at negotiating table with us and form a coalition,” Tymoshenko
made her starting point, accompanied by an outburst of applause.

Besides, she is going to rely only on Ukrainian people and ask them to
abandon illusion that no other party but BYuT will ‘fight corruption, carry
out reforms and introduce fair legal procedures’.

During this hearty talk an incident happened in the hall.

When BYuT leader was saying that no one ever wanted her party to participate
in this political solitaire game the lights went off. Four thousand people
appeared in the darkness. “Hop-la,” laughed Mrs. Tymoshenko, while former
security service officer Mr. Kozhemyakin went pale and rushed to see what
had happened.

According to Tymoshenko’s advisor Mykhaylo Lyvynskyi it was a mere
negligence – someone just accidentally pushed a button on the panel.
However, BYuT leader reacted on the situation so skillfully that it even
looked like a specifically designed plan.

“Even if we have to hold the forum in darkness I want to say that our policy
became light and clear. That is why the people of Ukraine need it,” stated
BYuT leader.

Meanwhile the light was fixed and Mrs. Tymoshenko went on.

The key issue is opposition of the PM and the president. BYuT leader
persuades her party fellows that such a severe opposition between them is
a shame for Ukraine.

“Here I have only two articles by Ukrayinska Pravda. One of them says
“Americans Ask Yushchenko and Yanukovych to Coordinate their Actions”
Ukraine never knew such a shame. The US tries to reconcile two officials
like small kids in the sandpit,” Tymoshenko commented on the news.

“The next article says “Europe Calls Yushchenko and Yanukovych to Stop the
War” Is that what Ukraine should demonstrate to the European community?

They are all the same, both PM and the president,” Tymoshenko said her
last words in such a way so that if both Viktors peeped into the hall they
would not find it encouraging.

BYuT leader claims that her party voted for the Law on the Cabinet of
Minister to put end to confrontation between the two Viktors.

However, she presented another reason for that at the press conference.
“I am also convinced that the new government will work according to the
new Law on the Cabinet and the new opposition will benefit (even though
reluctantly) from the new Law on the Opposition as it will have no other
choice,” said Tymoshenko.

To accelerate this process BYuT leader urges her local MPs to make every
legal effort to call an early election to the Verkhovna Rada.

Tymoshenko underscores that her political party has no right to ask
Ukrainian people for support as these people were repeatedly deceived.

“I repeat that we have to make every effort to call early parliamentary
elections as soon as possible. Mafia cannot rule the country until 2011.
That’s why we appealed to the Constitutional Court,” she said.

Tymoshenko refused to specify those appeals. However, as only the president
is empowered to dissolve the parliament, BYuT is more likely to hope for the
court decision enabling President Yushchenko to exercise one of his rights.

As known there are three legal grounds for the president to dissolve the
Verkhovna Rada. So, the president is empowered to dissolve the parliament

1) the Verkhovna Rada fails to form a coalition of parliamentary factions
within one month, as provided by Article 83 of the Constitution of Ukraine;
2) the government is not formed within a 60-day term after resignation of
the previous government;
3) the parliament cannot start plenary sessions in a 30-day term.

The second variant is the most feasible. Moreover, once Mr. Yushchenko
wanted to exercise this right. Now with the help of Constitutional Court
BYuT leader will bear hard on the president, making him stick to the
Fundamental Law and perform his civic duty.

Only under such condition BYuT will make its dream come true, i.e. the
party will gain an overall majority and form the government.

Maybe that was the reason why she ran a risk of voting for the Law on the
Cabinet of Ministers with Viktor Yanukovych. Maybe she hopes to head the
future government with unlimited authority?

However, it is just a goal now. To reach her goal Yulia Tymoshenko started
an active work in the regions.
                                    TRAPS FOR RIVALS
“Each day of your life you have to win respect of Ukrainian citizens. If you
failed to do that you do not have the right to run the country,” noted Mrs.
Tymoshenko. Besides, MPs have to keep their electorate.

“About 30% of citizens spit on politicians. That is the result of this
so-called ‘democracy’. I know that four new political projects are about to
start soon. They will fool the people,” she said.

Yulia Tymoshenko called her party fellows to tell the people truth about
these projects. “Do not let them fool the people!” she urged.

BYuT leader did not name the projects. In response to a direct question if
she meant new projects started by Mr. Lutsenko and Mr. Katerynchuk, Mrs.
Tymoshenko said she did not want either to praise or discredit any

“It seems to me that this People’s Self-Defense will soon flow into Our
Ukraine Bloc and that will be a renewed Our Ukraine,” said Mrs. Tymoshenko
in an interview with UP.

She does not consider Mr. Lutsenko her rival as she claims everybody will
find a niche for himself. She also hesitated to state if they will cooperate
in the parliament. Time will show, she says.
                                     WHO IS THE BOSS?
At present, Mr. Tymoshenko has different goals. She is putting things right
in her own party. On January 12 Yulia Tymoshenko got an ace in her sleeve –
an imperative mandate.

This mandate will enable her to restore status quo in the regions, i.e. to
get rid of traitors and keep stable the number of deputies in the faction.

According to Tymoshenko, an imperative mandate will become an injection of
conscience for local lawmakers. She will fight for it to the bitter end.

Mrs. Tymoshenko warned President Yushchenko at the forum. His veto will
be overridden and the Law will be signed as there are certain agreements
with the other parties.

As for now, BYuT MPs must strictly obey their leader and, above all, score
electoral points.

Local MPs must actively work in the regions and gain authority for BYuT.
For instance, they may achieve communal tariff reduction in the regions.
“Use all legal methods in the cities where we do not have our mayors,”
stated Tymoshenko.

“Today we have to fill those hollows with our care and our active work. We
have to prove that our team is not just another disappointment. We are here
at the forum to work out a program and demonstrate the society our
responsibility and persistence,” marked Mrs. Tymoshenko.

Only this way BYuT will get the majority instead of 20-25% in case of early
elections. “I want to congratulate you with the victory at early elections in six
months,” Mrs. Tymoshenko voiced her primary objective.

At that I recalled The Magician movie when the main character was taught to
go through walls. “I see the goal and see no obstacles,” they said him. The
character, as known, almost broke his neck but reached his goal all in all.
All photos by Anna Andrievska

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    NOTE: Send in a letter-to-the-editor today. Let us hear from you.
8.                       “FOR LONG AND FOR SURE”
     Ukraine’s ruling party for more political reform to consolidate power

Ukrayinska Pravda website, Kiev, in Ukrainian 1 Feb 07
BBC Monitoring Service, United Kingdom, Thu, Feb 08, 2007

The ruling party of Ukraine, the Party of Regions, wants more political
reform to take away any existing powers still held by President Yushchenko
and to consolidate its power base, a Ukrainian site has said.

It said that the party has understood that the institution of the presidency
is now very weak. It concluded by saying that the party is likely to be in
power for a long time as the national democratic movement is split and the
Party of Regions itself has a lot of resources to draw on.

The following is the text of the article by Nazar Boyko, entitled “For long
and for sure”, posted on the Ukrainian web site Ukrayinska Pravda on 1
February; subheadings have been inserted editorially:

The subject of constitutional reform is once again on the political agenda.
Unfortunately, inability of political elites to formally complete this
reform or to eliminate it in order to return to it later continues to stir
up interest towards it.
                             BATTLE FOR POWER OVER
Against the background of serious negotiations and discussions, the fight
for powers in authority is heating up. The essence and value of the matter
are often lost in uninterrupted petty blackmailing, cheap scandals and
fights as well as similarly uninterrupted re-grouping of powers.

If we dismiss all the details which so generously sow the path of the
rivalry between the president, parliament and cabinet and focus on the
general and the whole then we will see that the fight for power, generally
speaking, is already won. Moreover, it was won a long time ago.

And now, there is the question of transition to a new political system that
is a more complicated process with farsighted outcomes.

If a fight for power is a search for the means to come to the top then a
fight for the introduction of a new political system is a search for
mechanisms and means to remain at the top.

Despite the aggressive behaviour of the Party of Regions and its satellites
with regard to the promotion of reform, some are looking for an answer to
the question: why is the Party of Regions stubborn in its stance?
Why, for instance, is a compromise exchange with the Yuliya Tymoshenko Bloc
more acceptable for them than an agreement with the president? The problem
here lies not in Yushchenko but in the institute of the presidency per se.

Helpless is the position of those who, referring to events in 2004, hurry to
accuse the Party of Regions of being unable to draw conclusions. Yet, they
have learned the most important lesson.

Namely: oligarchic capital that was formed under Kuchma realized that the
president can no longer be used as a shelter and a guarantor of immunity.

The result of the last presidential election demonstrated that no amount of
resources were able to help Yanukovych become president. But the issue here
is not so much the defeat of Yanukovych as a candidate, but the value of the
presidential office as such.

In view of this, the need emerged to seek such institutional constructions
that would help to restore former privileges and return lost power [as
Yanukovych was premier in 2002-04]. There was no need to reinvent the wheel.

Such a construction was offered by the parliamentary-presidential form of
government according to Kuchma’s interpretation of it accompanied by a new
model of electoral system. The mechanism worked and the Party of Regions,
having received only one third of the vote managed to create a majority in

The methods used to create this majority are, of course, controversial. Yet,
the fact remains true – the Party of Regions received the necessary minimum
of 226 votes to form the government. And the winners in Ukrainian politics
are never judged but talks are held with them.

The majority of seats in local councils in the east and south of Ukraine
became a reliable force in the battle for Kiev. Language parades,
no-confidence in governors, NATO-free territories and Crimea convincingly
proved the fact that local opposition is a very dangerous thing.

And this is true not only with regard to political competition but also in
the context of national security and territorial indivisibility.
It turned out that local councils can be a powerful weapon of blackmail in
the fight for state power. Successful approbation and use of this tool made
the Party of Regions speed up the reform of local self-governance.
The reform is aimed at strengthening local councils by eliminating district
state administrations and narrowing the scope of powers and authorities of
regional administrations.

Instead, executive bodies attached to respective councils will be created.
The goal of such transformations is to further undermine the president’s
administrative powers by depriving him of the entire vertical structure of
executive power.

Today, members of the Party of Regions are working hard to completely
disperse presidential powers. Some of them are to be transferred to
parliament, some – to the government and the rest – to bodies of local
self-government. The reasoning of the Party of Regions is quite

The logic of the post-election process and formation of the parliamentary
coalition is, first and foremost, determined not so much by election
arithmetic but rather by skilled negotiations and the number of zeros on the
end of monetary units.

In other words, 50 missing people’s deputies can be either persuaded or
trivially bought in parliament.
This is confirmed by the whole Ukrainian political experience, however short
it has been to date. In this context the question exists: is the rule of the
Party of Regions here for long?

Maybe. And for the following reasons.
[1] First, the absence of a serious rival in the south-east of Ukraine
offers the party the possibility of preserving their election niche intact.
All they need is to keep foreign elements away from their electorate.

Since national democrats failed to conquer eastern Ukraine after 2004 when
the Regions were in opposition then they will not be able to do it now.

Furthermore, today the Party of Regions has all the necessary resources to
undermine such initiatives at the very start – financial, staff and now
administrative tools too.

Having cut their voters away from at least any visible alternative and
warming their feelings, and playing at populism, one can expect if not an
absolute result then at least a sufficient result.

[2] Second, the existing model of the electoral system creates the
prerequisites for the Party of Regions to also preserve its leading
positions during the next parliamentary election.

It will benefit from the current three per cent threshold provision [for
entering parliament], which will encourage politicians with high ratings
from rival camps to create their own political projects.

In creating their own projects, the competitors of the Party of Regions will
willingly or not split the national democratic niche, which is already far
from unity. Members of the Party of Regions base their hopes on the
following ancient wisdom – divide and rule.

The logic of the political process makes us believe that the Party of
Regions will do its best to support and increase this division.
Of course, in theory it is possible that all democratic forces will unite
before the next election.

However, as previous experience demonstrated, this possibility will most
likely remain theoretical. The role of a black cat that crosses the path of
the unity of national democrats is successfully performed by their

Thus, it is very doubtful that the electoral threshold will be raised to 5-7
per cent. Unless the Party of Regions is able to secure that it creates the
majority before official promulgation of the election results.

This means that it manages to come to an agreement with its most popular [in
terms of votes] rival on the creation of a parliamentary majority on the
most favourable conditions for the Party of Regions.

Increasing the threshold without preliminary agreements will facilitate
unification of national democrats around the most influential and most
popular political force. And that is the least desirable result for the Party

of Regions.

Thus, using the opportunities it received or created, the Party of Regions
can secure its seats in parliament in a decent amount for the future. And
inside the Ukrainian parliament, arithmetical laws are not so categorical,
especially during the process to form the parliamentary coalition.

Hence, the course to decentralization that the parliamentary coalition is so
actively implementing today is aimed at shifting the center of power to the
area where the Party of Regions possesses a controlling interest.

This is done in order to secure not only the powers but also the tools of
influence on all the subsequent political processes.
The danger of such an approach to institutional design is that it is
determined not by negotiations but more often by the use of brutal force.

This can lead to constant institutional crises, the culmination of which
will be permanent amendments to the Constitution of Ukraine following the
changing social and political entourage.             -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

9.                                 FEELING THE PACE

INFORM Newsletter Issue 28, Yulia Tymoshenko Bloc (BYut)
Kyiv, Ukraine, Sunday, January 28, 2007

The Parliamentary Assembly of the Council of Europe (PACE) has issued a
damning report on the state of constitutional affairs in Ukraine. The
uncompromising report called on Ukraine to resolve its constitutional crisis
so that it could move ahead with serious reforms.

The document followed a fact-finding visit to Ukraine by Mrs Hanne
Severinsen (Denmark, Alliance of Liberal and Democrats for Europe) and
Mrs Renate Wohlwend (Liechtenstein, European People’s Party/Christian
Democrats) on 9-12 October 2006.

The monitoring mission stems from Ukraine becoming a member of the
Council of Europe in 1995.

The mission’s objectives were to gain a better understanding of the
political landscape and orientation following the March election, and to
check on progress made on implementing the previous government’s Action
Plan for the Honouring by Ukraine of its Obligations and Commitments to the
Council of Europe. This plan was approved by President Yushchenko in
January 2006.

But the findings were not all doom and gloom. The free and fair
parliamentary election of March 2006 was deemed a “democratic breakthrough.”
It noted that the electorate’s appetite for reform was not diminished, with
former Orange forces garnering 45% of the vote compared to 32% for the
Pro-Russian Party of Regions. For Mr Yanukovych this was a four percentage
point drop from the 36% share of the vote he took during the first round of
the presidential election in 2004.

Other positive developments were the development of a free media which was
described as “more pluralistic, competitive and independent from state

It was observed that Ukraine now enjoys a more responsive civil society with
people feeling “more confident about standing up for their rights and
challenging the government.”

It noted that the previous government made good on a number of commitments
and that legal reforms have progressed well.

However the report was damning over post election jockeying for power. “The
non-transparent way in which the coalition negotiations were conducted over
half a year, the mismatch of the political ‘colours’ of the so-called
coalition partners and the murky deals that the short-lived ‘grand coalition’

stemmed from means that people do not finally know who they voted for,”
read the report.

It also slammed the political and constitutional stagnation that has
paralysed the country during the past nine months.

President Yushchenko’s National Unity Pact, or Universal, was viewed
sympathetically as an attempt to maintain the course towards Euro-Atlantic
integration. “But in reality it only enabled the Party of Regions to come to
power and exercise it without too much regard for its provisions,” stated
the report.

The report also condemned the new Cabinet of Ministers for being top-heavy
with officials incarnating the corrupt business and election forgery that
triggered the Orange Revolution.

“This information confirms what we’ve known for some time,” said Yulia
Tymoshenko, leader of the opposition and her eponymous bloc, “it cites a
lack of strategy and transparency, and the lack of reform-minded
personalities in the government.”

“Is it any wonder Yanukovych received a lukewarm reception at the World
Economic Forum?” asked Hryhoriy Nemyria, BYuT deputy leader and top

foreign affairs adviser to Mrs Tymoshenko, “you can’t paint Ukraine as a
potential economic powerhouse when investors see rampant cronyism, and
powerful industrial concerns influencing government policy. And when a
respected European institution such as this is critical of the reforms, then it
speaks volumes.”

The constitutional malaise was described as an “incessant tug of war between
President Yushchenko and Prime Minister Yanukovych.”

“It is evident that Ukraine cannot move ahead with any serious reform
project as long as it does not resolve its constitutional crisis,” states
the report; underlining that the constitutional question “directly
influences domestic policies, economics and foreign policy.”

BYuT has long-called for the constitutional reforms to be overturned as a
means to stabilise the nation. Its leaders met with Mrs Severinsen and Mrs
Wohlwend during their visit, and endorse their call to:

     [1] Limit the immunity of parliamentarians, judges and public
          administrators to functional immunity only
     [2] Provide full financial disclosure of public authorities
     [3] Disclose conflicts of interests
     [4] Establish a Code of Ethics for government officials.

“We welcome this report,” said Mrs Tymoshenko. “We believe the best
route out of this crisis is for the revocation of the constitutional reforms
that underpin the moral, political and ethical stagnation. Our country needs
clear, accountable government and strong, solid leadership.”  -30-
NOTE: For more information please contact

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Yalta European Strategy (YES), Kyiv, Ukraine, January, 2007

KYIV – Though it lacks official status as a candidate country, many
observers are of the view that the Ukraine will, one day, also join the EU.

This forms the context to the Yalta European Strategy’s third survey of the
opinions of Europeans and the Ukraine’s membership of the European Union.
This follows on from two surveys on the same theme, carried out in March

and November of 2005.

Public opinion on Ukraine’s EU membership has become more clearly defined.
55% of all respondents in Germany, France, Italy, Spain, Poland, and the UK
say that they would be in favour of Ukraine joining the EU – should it meet
all necessary conditions – with around a third (34%) saying they would be
against and 10% unable to form an opinion.

Support has increased since November 2005 (by +4%), with the opinion
becoming more delineated and fewer respondents giving a ‘don’t know’


The youngest generation are particularly enthusiastic towards Ukrainian
membership, with 63% of those aged between 18 and 30 in favour. Polish
opinion remains the most favourable towards this particular accession.

At 73%, the level of public support here has increased by 9% since November
2005. Opinion is more favourable towards the potential accession of Ukraine
(55%) than it is towards those of Russia (45%), Turkey (40%) and Morocco

Although the highest level of opposition is seen in Germany (50% against),
the highest increase of opposition can be observed in the UK, where now 10%
more are against the Ukrainian membership. However, the noted increase in
opposition to Ukraine joining seems to be more due to a general trend in
opinion in the UK against further EU enlargement.

The vast majority seems of the view that Ukraine’s entry to the EU is
inevitable. Only 9% of the respondents say it will never happen.

Compared to November 2005, public opinion now envisions that Ukraine’s
accession has moved closer. The majority (59%) believe that Ukraine will
join in around 10 years’ time the latest (around 5 years, 26%; around 10
years, 33%).

Only a small proportion foresee the accession process taking place more
slowly (15 to 20 years,14%), although it should be noted that almost 1 in 5
(18%) lack a clear opinion. The Polish public is most likely to see
enlargement as happening within five years (37%), with the French public
least likely (18%).

Younger respondents are more enthusiastic towards Ukrainian membership:

7 in 10 of those aged between 18 and 30 say that this will happen in around
10 years or sooner.

The majority of respondents in the EU believe the EU should take a proactive
approach to Ukraine. Over half (52%), say that they think the EU should
acknowledge Ukraine’s eventual future lies within the EU, with a view to
encouraging the internal reforms necessary to opening negotiations in the

This view is shared by 7 in 10 (69%) of those who favour Ukraine’s
accession. 26% favour a more passive ‘wait-and-see’ policy, giving the
Ukraine no signs as to future possibilities. Less than 1 in 10 (9%) would
rather open negotiations immediately.

This figure remains low (14%) amongst those who favour Ukrainian accession,
indicating that even here there is strong recognition of the need for
reforms to take place before formal talks can commence.
                                       TECHNICAL NOTE 
In late December 2006 and January 2007, the research institute TNS Opinion
conducted – on behalf of Yalta European Strategy – a survey on ‘Europeans
and the accession of Ukraine to the European Union’.

For this survey, interviews were conducted in the six most populous
countries of the European Union (Germany, Spain, France, Italy, the United
Kingdom and Poland) as well as in Ukraine itself.

The sample in each country was designed to be nationally representative,
with around 1000 interviews in each country (1500 in Spain).

Quotas were used in all the countries, except in Poland, where respondents
were chosen randomly, using a random route. Extra interviews were conducted
amongst 18- 30 year olds, in order to allow for a more detailed analysis
concerning this group, amounting to around 300 young respondents in each
country.                                               -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
       EU mandate for talks with Ukraine on a new enhanced agreement
        Ukraine sticks to the old wrong principle and again sets out on a
       journey without a compass, without a road map, and even without
                               any idea of where it is heading.


Dzerkalo Tyzhnya, Zerkalo Nedeli, Mirror-Weekly No. 3 (632)
Kyiv, Ukraine, Saturday, January 27 – February 2, 2007

Amidst the hullabaloo around Transport Minister Rudkovsky [accused of

having arranged for Turkmen opposition leaders’ visit to Ukraine in late
December – A.B.], the news about the EU mandate for talks with Ukraine
on a new enhanced agreement went almost unnoticed. The comments
were scarce, skin-deep, incompetent, or gloating.

Some lamented that Ukraine’s European aspirations were “given up for lost”;
some reiterated, [1] “Don’t you see that we’re not welcome in Europe?”; [2]
some found yet another pretext for sacking Foreign Minister Boris Tarasyuk;
and [3] there were those who raised the issue of a cardinal revision of
Ukraine’s foreign policy.

In fact, nothing extraordinary happened in Brussels on January 22: the
European Commission just received a mandate for talks with Ukraine –

a kind of general framework instructions for negotiations.

It is wrong to regard it as a final “sentence”, at least before the talks
commence. The document issued by the EU Council only says that the new
agreement will not define future relations between the EU and Ukraine.

Why were the early comments so pessimistic? Does the published document say
that Ukraine may not be a member of the EU? No, it doesn’t. Neither does it
say that Ukraine may ever join the EU. What is so surprising?

It would be just stupid to hope for any welcoming signal after the French
and Dutch referendums on the EU Constitution, after the enlargement of up to
27 members, and after the December summit that ruled out very clearly any
further enlargements. Why cry over the sieve that never held milk?
What Ukraine really needs to do now is make the most of new opportunities.
Ukrainian politicians and diplomats should stop harping on the hackneyed
lexeme “European perspective”.

The talks are only just beginning. European Commission representative Emma
Oedwin says that she sees no reasons for revising the mandate approved by
the EU Council, but anything may happen in the course of the talks.

As is known, the initial agreement on simplifying the EU-Ukraine visa regime
mentions certain prospects for a visa-free regime, although the mandate for
talks on that agreement never provided for such prospects.

The European Union suggests “gradual economic integration” and “deeper
economic cooperation” (in other words, the Swiss or the Norwegian model of
relations with the EU, which is not at all bad for Ukraine). May God help
Ukraine succeed at least in the economic integration offered by the EU!

To most Ukrainians it is far more important and tangible than something
abstract like “political integration”. Besides, before Ukraine copes with
economic tasks, the European Union is very likely to change and, possibly,
resolve its institutional problems.

It might adopt the model of development offered by the UK and become less
centralized, thus shortening Ukraine’s path to the coveted goal.

Of course, the official status of a candidate would encourage and spur
Ukraine to carry out economic reforms and adapt its legislation to European
standards faster and less painfully (thanks to consultative and financial

It is obvious, however, that the substantially enlarged European Union can
hardly sustain Ukraine’s economic reform. Therefore, Kyiv should make the
most of what it is offered.

On October 9 2006, President Yushchenko decreed to draft a new base
agreement with the EU. He instructed the Cabinet of Ministers to staff
Ukraine’s delegation to talks with the European Commission and to draft
general directives to the delegation within one month. As usual, the
government has fallen behind on the task.

The talks are to commence in ten days, but the Presidential Secretariat is
still vetting the delegation’s personal composition and directives to it. It
is still unknown who will head the delegation (although he should have
toured all EU capitals prior to the talks).
There are several candidates: Deputy Foreign Minister Andriy Veselovsky,
Deputy Economy Minister Valeriy Pyatnystky, Economy Minister Volodymyr
Makukha, and Ukraine’s representative to the EU Roman Shpek.

The latter is the most ideal candidate. Having spent so many years in
Brussels, Shpek has many connections and knows all the tricks of the trade
called “European bureaucracy”.

He is quite agreeable to the leaders of influential political forces who
recognize him as a professional in economics (which is very important,
considering that a free trade area is supposed to be the basic provision of
the new EU-Ukraine agreement).

His appointment as Ukraine’s Commissioner for European Integration would
raise his status in the eyes of the Europeans and would give him levers of
influence on Ukrainian government agencies.
The active EU-Ukraine agreement on partnership and cooperation (APC) expires
on March 1 2008. As to the new agreement, it is not even in the works yet.
The EU side says the document will exceed the frameworks of the existing
bilateral agreements and embrace the entire spectrum of relations.

“We want to continue the road that will open possibilities for establishing
a free trade area and deepen our cooperation in the energy sphere,”
explained European Commission member Benita Ferrero-Waldner.

The EU suggests the so-called Norwegian model of general integration, i.e.
embracing the entire spectrum of issues, rather than the Swiss model, by
which it would negotiate on several specific economic sectors.

The Russian Federation, which is also going to negotiate a new agreement
with the EU, insists on the Swiss model: conclusion of sector agreements to
be supplemented by a general political declaration. Kyiv is still undecided.

Some experts believe that the Swiss model would be preferable, because it
would allow the Ukrainian side to negotiate with each economic sector
separately. That would make negotiations easier. However, the EU side
appears to opt for the Norwegian model.

Kyiv has to take into account the absence of the notorious “European
perspective” during the term of the new agreement. Therefore, the document
should not be long-term, unlike the APC which was concluded for ten years.

Every time Kyiv came up with some claims, Brussels pointed to “such a good
and comprehensive” document that could be implemented further and further.

It would be good to conclude the new enhanced agreement for a period
extending to 2013 – the termination of the EU seven-year financial cycle.
Then, under favorable circumstances, Kyiv could hope for some allocations in
the next seven-year budget.
Since a free trade agreement may not be concluded for three to five years,
competent experts offer an optimal variant: Ukraine and the EU conclude a
free trade agreement and sign a certain political declaration.

Thus, signing a long-term document on economic integration, Ukraine would
meet the EU Council’s requirement – not to define the character of
EU-Ukraine relations. At the same time, it would leave some room for
political maneuvering in the future.

A political declaration is not a legally binding document and does not
require a long process of ratification by all the 27 parliaments.

Kyiv could raise the issue of “membership perspective” as soon as favorable
conditions emerge within the EU, instead of waiting for the expiration of
the framework agreement.

Experts note that having no formal perspective of EU membership, Ukraine can
feel more freethan the former candidate nations. In legal terms, it is an
equal partner of the European Union, but unlike the EU members, it is not
bound by any membership or candidacy obligations, and may lay its own

Considering this legal parity, leading Ukrainian experts, engaged in the
preparations for talks with the EU, advise that Kyiv set the bar of claims
as high as possible and thus prepare a wider ground for future compromises
and mutual concessions.
                   ASSOCIATE MEMBERSHIP – WHY NOT?
The EU Council has not offered any title for the new enhanced agreement with
Ukraine, so Kyiv could offer its own, like an agreement on “associate
membership”. Why not?

Besides, Kyiv could propose that the preamble state EU membership as
Ukraine’s ultimate goal as well as Ukraine’s obligation to reach the Copenhagen
criteria during the time span of this document.

Unfortunately, such a scenario looks unfeasible, considering the experience
of the recent years: because of internal disagreements and the
near-sightedness of its political leaders, Ukraine has happened to lose many
times even at the vantage point.

The latest example is the renunciation of the NATO Membership Action Plan,
to which it could have acceded easily at the Riga summit.

The Ukrainian leaders of all colors have talked so much of the European
choice, but they are empty-handed ten days before the landmark talks with
the EU.

The government has not convened a single interagency meeting to work out

any strategy or tactics for the talks. Only experts are concerned. The top
leadership is preoccupied with problems that are far more important.

The meeting of the Ukraine-EU Troika is slated for February 6, but there is
no guarantee that it will take place as scheduled. Brussels made its
position clear: as long as Foreign Minister Boris Tarasyuk stays in limbo,
the EU delegation is not coming to Kyiv.
                      ESTABLISHING A FREE TRADE AREA
There is a more serious problem: Ukraine has too few capable specialists to
expertly negotiate with the EU on establishing a free trade area.

The government’s directives focus on the political aspects in every detail
but give the economic aspects just a once-over lightly. Without clear
prospects for membership, the value of the political component of the future
document tends to zero, while the main emphasis should be on the free trade
area as the key prerequisite for future economic relations.

The establishment of the EU-Ukraine free trade area is a far more serious
factor of influence on Ukraine’s economy than membership in the WTO.
Besides, unlike the neophyte EU members, Ukraine will receive no money to
balance off inevitable negative by-effects.

Kyiv is badly short of skilled negotiators, but for some reason, the
government never turns to the business circles for advice or financial
assistance (although unfavorable terms of the agreement may victimize them).
                     A JOURNEY WITHOUT A COMPASS
Regrettably enough, Ukraine sticks to the old wrong principle and again sets
out on a journey without a compass, without a road map, and even without any
idea of where it is heading.                           -30-

FOOTNOTE:  Subheadings inserted editorially by the AUR.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
If you are receiving more than one copy of the AUR please contact us.
Ukrainian News Agency, Kyiv, Ukraine, Mon, February 12, 2007

KYIV – Ex-minister of foreign affairs, Narodnyi Rukh of Ukraine party

leader Borys Tarasiuk says that the main objective of his political activity
is to restore the unity of Narodnyi Rukh of Ukraine and Ukrainian People’s
Party. He said this during an internet conference at the Korrespondent

In his words, resignation from the post of the foreign affairs minister gave
him more time for engaging in political activity.

“Naturally, as the Narodnyi Rukh leader I will pay much more attention to
political activity, unification and consolidation, in the first place of the
political forces of democratic, right-wing spectrum. Those efforts will
mainly involve reunification of Narodnyi Rukh of Ukraine and Ukrainian
People’s Party,” Tarasiuk said.

As Ukrainian News reported, the People’s Party and the Narodnyi Rukh

set up a workgroup for reunification of the two parties.
The UPP and the NRU agreed to restore their organizational unity on
December 20, 2006. UPP leader Yurii Kostenko and NRU leader Borys
Tarasiuk signed a corresponding declaration. The parties also decided to
form an NRU – UPP council of 12 members, six persons from each side.

The parties also signed a declaration calling on all national democratic
forces in Ukraine to fight for their political position in a joint effort,
encourage unification of deputy factions at local government agencies, and
jointly run in the next presidential, parliamentary and local elections.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
         Send in a letter-to-the-editor today. Let us hear from you.

Ukrainian News Agency, Kyiv, Ukraine, Sun, February 11, 2007

KYIV – Lviv municipality has decided to pay additional UAH 200 million

to monthly pensions of combatants and invalids of the Ukrainian Insurgent
Army (UPA) in 2007. The move is stated in the instruction of Lviv Mayor
Andrii Sadovyi.

Additional payments will be made by the welfare office of the Lviv city
council’s humanitarian policy department. As Ukrainian News earlier
reported, the executive committee of the Lviv city council granted UPA
veterans 100% discounts on utility services.

The municipal council has repeatedly requested that the national parliament
recognize the UPA as a participant in the Second World War. The municipal
council also requested social privileges for UPA fighters.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                 HIV/AIDS in Ukraine by Andriy Klepikov in Volume II

Judy Twigg, Editor, “HIV/AIDS in Russia and Eurasia”
Action Ukraine Report (AUR) #816, Article 14
Washington, D.C., Thursday, February 15, 2007

NEW BOOK:  HIV/AIDS in Russia and Eurasia,
Vols. I and II, Palgrave Macmillan, New York, January 2007
Edited by Judyth L. Twigg, Virginia Commonwealth University
Foreword by Strobe Talbott, Brookings Institution

VOLUME I: Introduction, Judyth L. Twigg
1. Murray Feshbach, The Early Days of the HIV/AIDS Epidemic

    in the Former Soviet Union
2. Celeste A. Wallander, Russian Politics and
    HIV/AIDS: The Institutional and Leadership Sources of an
    Inadequate Policy
3. Julie Stachowiak and Alena Peryshkina, NGOs and HIV in Russia:
    Lessons from a Unique Case Study
4. Shombi Sharp: The Economic Impact of HIV/AIDS in Russia:
    Current Trends and Perspectives
5. Vinay P. Saldanha, Has the Window of Opportunity Closed? The
    Contributions of Bilateral Donors Supporting HIV/AIDS Activities
    in Russia and Eurasia
6. Bertil Lindblad, International Donor Support to the Eastern Europe
    and Central Asia Region: Opportunities and Challenges
7. Robert Heimer, Robert E. Booth, Kevin Irwin, and Michael Merson,
    HIV and Drug Use in Eurasia
8. Joanne Csete, Rights and Lessons Scorned: Human Rights and
    HIV/AIDS in Russia and Eurasia
9. Harley Balzer, AIDS and Security in Russia
1. Alexey Bobrik and Judyth L. Twigg, HIV/AIDS in Russia
2. Andriy Klepikov, HIV/AIDS in Ukraine
3. Sandra Mounier, Martin McKee, Rifat Atun, and Richard Coker,
    HIV/AIDS in Central Asia
4. Samvel Grigoryan, HIV/AIDS in Armenia
5. Jamila Ibrahimova and Lyudmila Mamedova, HIV/AIDS in
6. Ketevan (Katie) Stvilia, Khatuna Todadze, and George Nizharadze,
    HIV/AIDS in Georgia
7. Ljudmilla Priimagi and Kristi Ruutel, HIV/AIDS in Estonia
8. Andris Ferdats, HIV/AIDS in Latvia
9. Saulius Caplinskas, HIV/AIDS in Lithuania
Contact Editor: Judy Twigg,
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukrinform, Kyiv, Ukraine, Monday, February 12, 2007

KYIV – Kyiv Mayor Leonid Chernovetskyi has commissioned the relevant

entities to hold the second phase of the competition for the best project
of the monument to Georgiy Gongadze and all the Murdered Journalists.

The relevant competition started on October 4 and ran through December 4.
Unfortunately, results were poor and the Kyiv authorities resolved to hold
another competition.

The competition will start on February 22 and will last to June 7, 2007. The
event means to be financed from the Kyiv budget. The first stage of the
competition suggested selection of three best projects. According to

Leonid Chernovetskyi, the monument will be inaugurated on the Georgiy
Gongadze’s Square.

Meanwhile, Kyiv artists state their disapproval of the event. Kyiv Chief
Artist Viktor Glib believes the competition lacks in openness and
transparency. The venue to inaugurate the monument is inappropriate. He
believes the monument must be inaugurated in front of the Kyiv Institute of
Journalism or the Union of Journalists Office.

Journalists Georgiy Gongadze disappeared on September 16, 2000. In

November a corpse, reputedly, of Georgiy Gongadze, was established in
a forest near the village of Tarashcha, Kyiv region. The Prosecutor’s
General Office instituted criminal proceedings.           -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

The Associated Press, Kyiv, Ukraine, Tue, February 6, 2007

KIEV, Ukraine – A Russian journalist has requested political asylum in
Ukraine, he said Tuesday, claiming that authorities in Siberia fabricated a
criminal case against him as retribution for his investigations into
suspected corruption among regional officials.

Alexander Kosvintsev said he feared for his safety in Russia because of his
work, including with a paper he founded in the 1990s in his home region of
Kemerovo, in central Siberia. He told The Associated Press that the subjects
of his journalistic probes included the regional governor, Aman Tuleyev.

He asserted that a criminal case authorities in Kemerovo opened against him
on charges of illegal entrepreneurship was politically motivated and
fabricated, and that law enforcement agents in the region have harassed his
relatives in their efforts to prosecute him.

“They create an environment in which it is impossible to work or to live,”
Kosvintsev said, adding that he filed an application for asylum. Ukrainian
authorities and officials in Kemerovo could not immediately be reached for
comment late Tuesday.

Journalists who criticize or investigate officials and companies,
particularly in Russia’s far-flung regions, often complain of harassment and
threats by local authorities and gangs.

Many observers contend that Russian authorities resent critical reporting
and are uninterested in solving journalists’ killings that have plagued the

For some time, Kosvintsev had a job as a regional promotional manager for
Novaya Gazeta, the Moscow newspaper where Anna Politkovskaya worked,

said Sergei Sokolov, an editor at the paper.

Politkovskaya, an investigative journalist and Kremlin critic who exposed
human rights abuses, was fatally shot in an apparent contract killing in
October. Sokolov said Kosvintsev fled Kemerovo and came to Moscow

last August. He later traveled to Ukraine and has not returned to Russia.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
17.                       IMPORTING EMBARRASSMENT

LETTER-TO-THE-EDITOR: By Weldon T. Johnson
Action Ukraine Report (AUR) #816, Article 17
Washington, D.C., Thursday, February 15, 2007

American ex-pats living in Ukraine learn to use their creative imagination
when Ukrainians ask embarrassing questions.

Which is what happened again a few weeks ago after Kyiv’s popular weekly
magazine “What’s On” published its annual Vlada Awards and designated
Ukraine’s “Import of the Year – Victor Yanukovich’s American Spin


The magazine cynically saluted the “team of American advisers” role in
perpetrating a “transformation nothing short of miraculous.” “Why do

Amerikans support the wrong guy? I was asked.

I’d been asked this before during the past year, and I’m never sure whether
to answer this by reciting that American quip “politics is show business for
ugly people” or explain American style political campaigns in terms of
Applied Potemkin Theory.

Ukrainians have had lots of experience with electing wrong guys (and
therefore sympathize with recent American experience in this area), but this
inconvenient fact of American involvement with promoting the wrong guy

from Donetsk over the Orange Messiah is increasingly difficult to hide.  Or

It’s not CIA, I said – they do revolutions, as you know.  And it’s not
USAID, although one can never be certain where its money goes.  And it’s not
the rest of the American government, which is now busy with other rogues.

It is just some free-lancing American beeznezmeny from those Washington
political consulting firms that make lots of money by telling politicians
what clothes to wear and how to paint their hair and when to smile broadly.
And in this case, speak Ukrainian.

“But why are all these guys Republicans?” I was asked.  And knowing
something about the Republican politics of Ukrainian-Americans, another

well informed Ukrainian asked, “The diaspora in Amerika did this?”

Ukrainians haven’t yet had much experience with political systems organized
around multiple political parties (blocs), and they still think that
political parties are actually grounded in certain philosophical principles.

From this perspective, it certainly appears that Yanukovich got (and still
gets) disproportionate Republican support from the United States because
Paul Manafort of Davis Manafort & Freedman is not the only GOP influence
assisting the Yanukovich machine.  Another is Robert Dahl, former advisor to
Newt Gingrich when he was Speaker of the House.  And there’s more, too.

During Yanukovich’s visit to Washington last December, it was reported here
in Kyiv that prominent Republicans in Washington (including Gingrich) sought
unsuccessfully to make the Ukrainian PM’s visit more visible by pressing the
White House for face time with President Bush; those efforts failed and
Yanukovich had to settle for Cheney and Rice without the coveted photo-ops.

Two days after Yanukovich left for Washington, Yanukovich’s 25-year old MP
son and ten others (four Regions MPs, aides and girlfriends and Ukrainian
businessmen) were transported to Washington and back to Kyiv on a non-stop
private jet reportedly chartered for $200,000 by MIC Industries, an American
supplier of military hardware where former GOP senator from Maine William
Cohen is chairman of the board and Republican Richard Armitage a board

Cohen, former Secretary of Defense in the Clinton administration, is now
president of The Cohen Group, an international business consulting firm with
interests in the region.

In Washington, Ukraine’s four visiting Regions MPs met with “senators and
high-ranked officials from the former Republican majority,” including Cohen,
while the three Ukrainian businessmen visited an American company near
Washington to learn “how to build houses and facilities for animals within a
short time.”

The premier’s son refused to tell reporters who he met with, but said he
left Washington for New York “to have a walk in the park away from other

After investigating this group’s curious and expensive visit to America,
Ukrayinska Pravda wondered, “Is a charter airplane for PM Yanukovych’s

son a typical American hospitality?”

Days following Yanukovich’s December visit to the States, former Enron
lobbyist and Republican National Committee chairman Ed Gillespie, now
another political consultant for hire, flew to Kyiv where he was accorded a
VIP welcome by the Yanukovych government and rushed through Borispol

Airport’s special passport and customs processing ordinarily reserved for
visiting state diplomats.

Near the end of December, Germany’s Der Spiegel magazine reported that
another Republican political consultant, Phillip Griffin, remains in Kyiv to
this day, maintaining a “deliberately low-key presence in a ground-floor
office at 4 Sophievska Street” where there is “no sign on the door, no
doorbell and no security guard.”

Like Manafort, Griffin continues as a “behind the scenes operator who makes
but never appears in headlines.”  Previously, Griffin was director of the
Moscow office of the International Republican Institute.

It’s hard to avoid connecting the dots, and coincidence isn’t very
persuasive as an explanation for the apparently aggressive involvement of
American Republicans with the current Ukrainian government.  Some

Ukrainian cynics see an explanation in shared values — about greed and
crony capitalism, arrogance of power and pervasive secrecy.

More generally, Ukrainians see a huge difference from the prior American
administration when President Clinton visited Kyiv three times, when the
Gore-Kuchma Commission met regularly to discuss substantive matters of
mutual interest, and when Ambassador to Ukraine William G. Miller and

former U. S. National Security Advisor Zbigniew Brzezinski and U.S.
Secretary of State Madeleine Albright took special interest in Ukraine’s
democratic future by, among many other things, actively supporting the
rebirth of politically independent and bribery-free Ukrainian universities –
the real revolution that had to start somewhere.

But that was before exporting democracy became merely fashionable

rhetoric to justify America’s dubious adventures.            -30-
NOTE: Weldon T. Johnson, Kyiv, is an American sociologist who
has conducted market research in Ukraine since 1993. Contact:
[return to index] Action Ukraine Report (AUR) Monitoring Service]
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SaveDarfur Full-Page Advertisement
Washington Post, Washington, D.C. Wed, February 14, 2006

                    PRESIDENT BUSH MUST ACT NOW.

After four years, 400,000 deaths, never-ending denials and countless
false promises, President al-Bashir continues to pursue his genocide
in Darfur.

In the face of looming humanitarian collapse, Congress, international
relief organizations and even many in the President’s own
Administration agree:  the time for talk has ended.  Plan A has failed.

It’s time for President Bush and other world leaders [including
Ukrainian President Viktor Yushchenko (AUR)] to move to Plan B by:

     [1] Enforcing a full range of targeted sanctions, including
          banning from our ports ships that have carried Sudan’s oil
     [2] Preparing and overseeing the deployment of international
          peacekeeping forces [including Ukraine]
     [3] Implementing a no-fly zone
     [4] Funding fully the U.S.’s share of peacekeeping and
           humanitarian aid
     [5] Producing a military contingency plan for a potential
          collapse of security and humanitarian aid networks.

                          VISIT WWW.SAVEDARFUR.ORG

         To Learn More And Send A Message to President Bush. 
                               DEMAND ACTION NOW
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