AUR#822 Mar 13 Energy Security, Ukraine Part Of EU Energy Problem; The New Seven Oil & Gas Sisters; Profiles Of The Prime Minister’s Inner Circle

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

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

                        
ACTION UKRAINE REPORT – AUR – Number 822
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., TUESDAY, MARCH 13, 2007

               –——-  INDEX OF ARTICLES  ——–
             Clicking on the title of any article takes you directly to the article.               
    Return to the Index by clicking on Return to Index at the end of each article
1.      ENERGY SECURITY: AT LAST, A RESPONSE FROM THE EU
          Clarity is needed from Ukraine. Ukraine is part of the EU’s energy
             problem: not only thanks to the Druzhba pipeline but because,
              with a GDP one-quarter that of Belgium, Ukraine is the sixth
                                largest consumer of gas in the world.
James SHERR, Fellow, Conflict Studies Research Centre
Defence Academy of the United Kingdom [1]
Mirror-Weekly on the web, No 9 (638)
Kyiv, Ukraine, Saturday, 8 – 16 March 2007

2.    HUNGARY CHOOSES GAZPROM OVER EUROPEAN UNION
             Budapest decides extending a pipeline beats bloc’s ‘dream’
By Judy Dempsey, International Herald Tribune
Paris, France, Monday, March 12, 2007

3.      THE NEW SEVEN SISTERS: OIL AND GAS GIANTS THAT
                       DWARF THE WEST’S TOP PRODUCERS
                         The seven are overwhelmingly state-owned
By Carola Hoyos, Financial Times, London, UK, Mon, Mar, 12 2007

4.                 “UKRAINE ENERGY REPORT” PUBLISHED
Research and Markets, Business Wire, Thursday, March 08, 2007

5AN ATLAS: GEOLOGY AND MINERAL DEPOSITS OF UKRAINE
Roman Senkus, Director, CIUS Publications Program
Canadian Institute of Ukrainian Studies, Toronto Office
University of Toronto, Toronto, ON, Canada, Thu, Mar 8, 2007

6. GAZPROM EYES OBLAST-LEVEL GAS NETWORKS IN UKRAINE
ANALYSIS & COMMENTARY: By Vladimir Socor
Eurasia Daily Monitor, Volume 4, Issue 36
The Jamestown Foundation, Wash, D.C. Wed, Feb 21, 2007

7.    UKRAINIAN PRIME MINISTER’S GOVERNMENT SEEKS TO

                  CUT POLAND FROM KEY PIPELINE ROUTE
       Slovak Detour Would Defeat Odessa-Brody Oil Transport Project
ANALYSIS & COMMENTARY: By Vladimir Socor
Eurasia Daily Monitor, Volume 4, Issue 41
The Jamestown Foundation, Wash D.C., Wed, February 28, 2007

8. PM YANUKOVYCH SAYS UKRAINE’S MILITARY INDUSTRIES
            SHOULD INCREASE COOPERATION WITH RUSSIA
Associated Press, Kiev, Ukraine, Monday, March 12, 2007

9.        PRIME MINISTER VIKTOR YANUKOVYCH’S ORBITS
                        Profiles of the prime minister’s inner circle
   Key influential people are Akhmetov, Azarov, Klyuyev and Lyovchkin
ANALYSIS & COMMENTARY: By Serhiy Leshchenko
Ukrayinska Pravda website, Kiev, in Ukrainian 3 Mar 07
BBC Monitoring Service. United Kingdom, Sat, Mar 10, 2007

10UKRAINIAN BOXER KLITSCHKO STOPS AUSTIN IN ROUND 2
AP Worldstream, Germany, Sunday, Mar 11, 2007

11.       UKRAINIAN BOXER WLADIMIR KLITSCHKO LEAVES
                      PLENTY TO PROVE IN UGLY MISMATCH
By Steve Bunce, The Independent, London, UK, Mon, Mar 2007

12.    ‘A GIVING HEART’: YOUNG FLORIDA WOMAN SERVING
                   AS PEACE CORPS VOLUNTEER IN UKRAINE
By Kate S. Peabody, Pensacola News Journal
Pensacola, Florida, Sunday, March 11, 2007

13BALTIMORE-TRAINED ARTIST SHARES UKRAINIAN EASTER
            EGG PAINTING CRAFT DURING HANDS-ON SESSION
By Laura McCandlish, Sun Reporter, Baltimore Sun
Baltimore, Maryland, Monday, March 12, 2007

14.       FOR HOLOCAUST SURVIVORS IN EX-SOVIET LANDS,
                      GOLDEN YEARS ARE DIFFICULT TIMES
By Lev Krichevsky, JTA, New York, NY, Monday, March 12, 2007
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1
ENERGY SECURITY: AT LAST, A RESPONSE FROM THE EU
       Clarity is needed from Ukraine. Ukraine is part of the EU’s energy
          problem: not only thanks to the Druzhba pipeline but because,
          with a GDP one-quarter that of Belgium, Ukraine is the sixth
                           largest consumer of gas in the world.

James SHERR, Fellow, Conflict Studies Research Centre
Defence Academy of the United Kingdom [1]
Mirror-Weekly on the web, No 9 (638)
Kyiv, Ukraine, Saturday, 8 – 16 March 2007

Will energy security be the death knell of Euro-scepticism? Or will it be
the death knell of the EU? There might not be a third option.

In the days when security was mainly guaranteed by armed forces, those who
championed the supremacy of the nation state could be confident that when
collective security was threatened, Europe could rely upon NATO.

But today, when in the words of Russia’s official energy strategy, it is
energy which ‘to a large extent determines [a] country’s place in
geopolitics’, then NATO, in the words of its Riga Summit Declaration, can
at most ‘add value’ to what only the EU can do.

But will the EU do it? Will it persuade Gazprom, Transneft and the Kremlin
that they are dealing not with 27 ‘little platoons’, but an integrated and
toughly regulated internal market?

Will it enforce its longstanding principles of market liberalisation,
transparency and competitiveness not only in defiance of Russia’s energy
giants, but the ‘national energy champions’ of some of its own member
states?

Will it apply its oldest principle, solidarity, in support of members facing
asset grabs, ultimata and supply cut-offs-and governments exposed to
bribery and blackmail? Or will it fail to display the quality that Ernest
Renan defined as essential to a nation: ‘the sentiment of shared sacrifice’?

Without this sentiment, how can the EU ‘move beyond’ the nation state or
even remain a repository of trust for new members and a pole of attraction?

Therefore, today’s Euro-sceptic does not fear the power of the EU, but its
fragmentation and impotence. Yet he can finally draw some comfort.

On 11 January of this year, the European Commission published a 22-pg
document entitled ‘An Energy Policy for Europe’. Its language is unusually
forthright and its recommendations unusually bold.

Mindful not only of rising EU energy demand, but of ‘external
vulnerability’-‘the progressive concentration of hydrocarbon reserves in a
few hands’, the ‘discrimination and abuse’ of monopoly and the overwhelming
dependence of several member states on ‘a single supplier’-its unmistakeable
conclusion is that ‘this situation cannot continue’.

‘A common voice’ in energy policy (which already exists in trade) has become
‘crucial to geopolitical security’, and energy must now ‘become a central
part of all external EU relations’.

This week, the European Council (heads of government) will meet to consider
the Commission’s ‘communication’. Needless to say, it is most unlikely that
they will endorse its most radical recommendation: the ‘unbundling’ of
large, vertically-integrated national energy companies which, like
mini-Gazproms, control energy networks, production and sales in their own
countries.

Eleven EU members have already made the transition from ‘managed markets’
to competitive markets, with significant energy efficiencies and price
savings for consumers. Yet for the time being, several others will refuse

to follow suit. That is unremarkable.

What is remarkable is that the European Council seems set to adopt most
of the Commission’s remaining recommendations, including:

[1] supporting projects that promote ‘diversity with regard to source,
supplier, transport route and transport method’;

[2] expanding nuclear power (which already satisfies one-third of EU
aggregate electricity demand) as well as new sources of energy and new
energy saving measures;

[3] strengthening the regulatory framework ‘based on the highest common
denominator’ of best practice;

[4] adopting a Priority Interconnection Plan, including construction of a
Power-Link between Germany, Poland and Lithuania and the Nabucco
pipeline, bringing gas from the Caspian to Central Europe

If implemented, these measures will have far-reaching consequences in
themselves. They will bring the EU into partnership with the United States,
Azerbaijan, Georgia and other countries seeking to develop transport routes
independent of Russia.

They will address the most acute energy security problem faced by Lithuania
and several other new member states: energy isolation, brought about by the
eastward orientation of pipeline infrastructure and the absence of
electricity connections to the rest of the EU. And whilst the Commission’s
call to break up national energy giants will not be accepted, the trend is
against them.

They already are on the defensive politically and are coming under
increasing legal pressure, because EU Directorate for Competition is
enforcing Community legislation, and even the strongest are being reminded
that the rules are the rules.

For Ukrainians to focus on the exceptions to these rules is to miss the
point of the story. The European Union has begun to establish an integrated
energy market and a liberalised one. But can it succeed in the face of
determined opposition from Russia?
                               THE RUSSIA COMPLEX
The Russia complex is, as ever, a combination of overweening confidence and
congenital insecurity. From the vantage point of Kyiv, Vilnius and Warsaw,
Russia under Putin has acquired money, power and the determination to use
both.

But from the vantage point of Beijing, Tokyo, Seoul and even Almaty, Russia
is a country characterised by stark demographic imbalances, decaying
infrastructure, dysfunctional governance and chronic underinvestment. It is
this combination of ambition and vulnerability which makes partnership with
Russia so difficult.

Where energy is concerned, this difficulty is felt in four respects:

(1) DIVERGENT ECONOMIC CULTURES. As Ukrainians well know,
Russia under Putin has experienced a considerable re-nationalisation of
economic power with a strong security service component. Like the
defence sector in Soviet times, the energy sector is now seen by many as
the engine of growth and modernisation.

Although leading Russian experts have exposed the deficiencies of this
model, it has brought short-term prosperity and the appearance of
international success.

This appearance of success makes it exceedingly difficult for the EU to
speak to Russia with authority, let alone persuade it that its approach
needs adjustment.

To Russia’s energy mastodons, ‘markets’ exist wherever money-commodity
relations exist, however unbalanced, inequitable or monopolistic they are.

But to the European Commission, monopoly is the antithesis of markets,
which, in principle, mean choice for buyer and seller.

To Alexei Miller, CEO [predsedatel’ pravleniya] of Gazprom, energy
security is guaranteed by a strong vertical of integration and control: ‘the
regulation from a single centre of regimes of extraction, transport,
underground storage and sales’.

From the Commission’s perspective, it is guaranteed by an impartial and
effective regulatory framework and by ‘diversity with regard to source,
supplier, transport route and transport method’.

(2) THE EMERGING GAS DEFICIT. The Russian fuel and energy
complex has become an increasingly important prop for the authority of
a state congenitally distrustful of decentralisation, alarmed by demographic
trends and conscious not only of China’s power, but the emerging
aspirations of resource rich Central Asian states.

It is this which largely explains the Kremlin’s arduous efforts to limit the
presence, bargaining power and ‘centrifugal influences’ of independent
energy actors, whether foreign or domestic (e.g. the former YUKOS).

Yet without major restructuring and market liberalisation, Russia will not
meet projected energy demand at home or abroad.

Production at three of Gazprom’s four major fields is already declining.
Even to maintain current levels of production, the International Energy
Agency calculates that 200 bcm [bn cubic metres] per annum will need to be
produced in new fields by 2015: a project which qualified experts believe
demands $11 bn p.a. in investment. But such investment is not taking place.
In the oil sector, the picture is no more encouraging.

(3) AN AGGRESSIVE RATHER THAN PRODUCTIVE PATTERN
OF INVESTMENT. Gazprom’s current investment strategy appears to
be focused on compensating for Russia’s emerging gas deficit rather
than remedying it.

Whilst under-investing in new fields and refurbishment of internal
infrastructure, it has displayed a marked appetite for export
infrastructure, downstream (i.e. foreign) acquisitions and non-gas projects,
whilst conducting what Mikhail Gonchar calls an ‘active hunt’ for energy
resources in other parts of the world.

In alliance with the Kremlin, it also seems determined to use every means at
its disposal to derail new energy projects that exclude Russia, such as
Nabucco and the South Caspian Gas Pipeline. Yet when pressed to say
where the gas from Russia’s own pet projects will come from, there are no
reassuring answers.

Whatever the motive behind this behaviour, it would be perilous for the EU
to reward it. By doing so, it will surrender its primary means of escape
from Russia’s already palpable energy crunch.

It will make itself increasingly hostage to Russia’s energy deficit and
whatever steps the Kremlin takes, or fails to take, to address it.

(4) GEO-ECONOMICS IN THE ‘NEAR ABROAD’. The ‘legacy’

issues of inter-elite ties, similar bureaucratic and business cultures, as well as
the multiplicity of economic linkages and dependencies means that energy
will continue to provide Russia with opportunities for geopolitical
tradeoffs and inducements to limit the sovereignty and samostoyatel’nost’
[capacity to exercise independence] of neighbours.

Why should such opportunities not be utilised in future as they have been
used in the past? Yet today there is a more worrying question.

Given the profitability of the EU market, the needs of the Russian economy
and the Kremlin’s fear of popular discontent, then upon whom will the
scissors first close as Russia’s resource constraints mount?

The answer is inescapable: energy dependent neighbours. Ukrainians have no
reason to doubt this answer. Yet it appears that many once again deny it,
preferring to believe that ‘fraternal relations’ will protect the country
from the consequences of Russia’s mistakes and Ukraine’s own weakness.
          UKRAINE: A PIVOT OF ENERGY SECURITY?
Ukraine matters, and the EU knows it. It was, after all, the January 2006
gas cut-off that prompted the EU to reconsider the mantra that ‘Russia is a
stable and reliable supplier of energy’. But the EU does not know what to do
about Ukraine except wait.

This is because it equates dvoevlastie [divided power] with paralysis,
rather than ferment. In this it is mistaken. But apart from Yulia
Tymoshenko, many of those best placed to point out this mistake are
unconvincing communicators.

Clarity is needed from Ukraine. This is because Ukraine is part of the EU’s
energy problem: not only thanks to the Druzhba pipeline but because, with a
GDP one-quarter that of Belgium, Ukraine is the sixth largest consumer of
gas in the world.

New efficiencies and new investment demand an energy economy constructed
on the basis of rules rather than deals. If Ukrainians who share this vision
do not make themselves known in Brussels, then Ukraine’s ‘European course’
will bear no resemblance to the EU’s European course.

Clarity is also needed, indeed candour, to counter the danger that the EU,
armed with more scepticism than knowledge, will make decisions that impact
unfavourably on Ukraine. In other words, Ukraine needs to demonstrate that
it can be part of the solution.

The first step in this direction has already been taken: the law on gas
pipelines passed by the Rada and signed into law by the President on 6
February. But the 6 February model needs to be more broadly applied:

[1] against the proposed Bohorodchany-Uzhhorod gas pipeline, which would
make the EU and Ukraine even more dependent on Russian gas and undercut
part of the market rational for Nabucco;

[2] against the moves afoot to transfer stakes in obloenergos [oblast’ level
distribution companies] to Gazprom: yet a further step to circumvent the 6
February law;

[3] against plans (some well advanced) to grant access to Black Sea gas
deposits on the basis of inter-governmental understandings with Russia
rather than open market tender;

[4] against the final assault on Naftohaz Ukrainiy and the transfer of vital
revenue from an entity which can be audited and monitored to another entity,
UkrGazEnergo, which cannot.

Outside parliament, the other founders of the 6 February model need to
become more cohesive and visible. Since absorbing the implications of the
RusUkrEnergo saga and his own responsibility for it, President Yushchenko’s
instincts about energy security have been unerring.

His group of officials in the Secretariat and the National Security and
Defence Council includes individuals of outstanding calibre.

But has the group become a team? Are European capitals aware of its
existence? Are they generating a body of ideas and alternative policies that
can be put to use once it becomes clear, even to the government itself, that
the present course leads to surrender and penury?

Moreover, it is presidential institutions, not parliament, who must take the
lead in responding to the three seismic shifts that have taken place in the
geopolitics of energy since the end of last year.

[1] The first of these is the decision by Azerbaijan to defy Russia, assist
Georgia and proceed with projects (including the Kars-Tbilisi-Baku railway)
that promise to provide effective energy connections between the Caspian,
the South Caucasus, the Black Sea region and Europe. This change of
course has brought GUAM back from the dead.

[2] The second shift is the quiet but unmistakable realisation in Kazakhstan
that the EU formula of ‘diversity with regard to source, supplier, transport
route and transport method’ now serves its own interests and is coming
within its means.

[3] The third is President Lukashenka’s brutal realisation that his policies
have left Belarus with no energy security at all. For the first time since
1994 the possibility of direct energy connections between the Baltic and
Black seas is now open.

The questions before Ukraine is so inescapable that even the government
understands it: is Ukraine to be a cavity in this matrix or part of the glue
that holds it together?

Is the EU prepared to be part of the glue that holds it together? Despite
the Commission’s report, that is still in doubt, because too many dogmas,
habits of mind and narrowly construed national interests stand in the way.

Clarity is therefore needed from the EU as well. It must ask itself what it
wants in Ukraine, the South Caucasus and the Caspian, and it must ask
itself what it will contribute in order to get it.

Only then will it be able to reformulate the old question with new
authority: where is Ukraine going and with whom?                 -30-
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[1] NOTE: The views expressed are entirely those of the author and do
not necessarily reflect the thinking of the Ministry of Defence or Her
Majesty’s government. James Sherr: james.sherr@lincoln.oxford.ac.uk.
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LINK: http://www.mirror-weekly.com/ie/show/638/56095/

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2. HUNGARY CHOOSES GAZPROM OVER EUROPEAN UNION
             Budapest decides extending a pipeline beats bloc’s ‘dream’

By Judy Dempsey, International Herald Tribune
Paris, France, Monday, March 12, 2007

BUDAPEST: As the European Union struggles to achieve a common energy
security policy, the Socialist-led government of Hungary has broken with the
bloc by joining forces with Gazprom, the Russian energy giant, to extend a
pipeline from Turkey to Hungary.

The joint project would compete directly with an EU plan to construct its
own pipeline to reduce dependence on Russian energy supplies.

Starting in Turkey and crossing Bulgaria and Romania, the extended Gazprom
pipeline, called Blue Stream, would follow almost the same route as the EU
project, cost just as much and be finished at about the same time.

The immediate advantage to Hungary in joining the Russian project was
unclear, because Budapest could end up contributing to the construction of
competing pipelines.

The opposition in Hungary claims that Prime Minister Ferenc Gyurcsany, who
leads the former Communist Party and has close ties to President Vladimir
Putin of Russia, supports Gazprom’s strategy to expand its influence in
central and southeastern Europe.

The Hungarian Economy Ministry, however, says that the country has ambitions
to become a major energy hub in central Europe and that the Blue Stream
project, with access to more Russian natural gas, would further this aim.

Gyurcsany said in an interview that because the EU project, known as
Nabucco, had experienced significant delays and could face further problems,
the Russian plan was more realistic.

When completed, at the earliest in 2011, the EUR5 billion, or $6.6 billion,
Nabucco project would benefit all the bloc’s 27 members and carry at least
30 billion cubic meters, or 1 trillion cubic feet, of natural gas a year to
the Union. Currently, more than a quarter of the Union’s gas, or 150 billion
cubic meters, is imported annually from Russia.

“Which of these two pipelines exists?” asked Gyurcsany, whose company
joined the Union in 2004. The Blue Stream line already runs under the Black
Sea to Turkey.

“The Nabucco has been a long dream and an old plan,” he said. “But we
don’t need dreams. We need projects.”

“The single problem with Nabucco is that we cannot see when we will have
gas from it,” Gyurcsany said. “If someone could say to me definitively, you
would have gas by a certain time, fine, but you can only heat the apartments
with gas and not with dreams.”

Andris Piebalgs, the Union’s energy commissioner, said the Nabucco pipeline
would transport natural gas across from the Caspian region, mostly from
Azerbaijan to Turkey. It would then be sent through Bulgaria, Romania and
Hungary and finally to Austria. These transit countries have established a
consortium for the Nabucco pipeline.

Gyurcsany said Hungary would support Russian plans to extend the Blue
Stream pipeline into central Europe despite its being a member of the
Nabucco consortium.

“Blue Stream is backed by a very strong will and a very strong
organizational power,” Gyurcsany said. “And there is capacity behind it.”

The cost of extending the Blue Stream pipeline to Hungary would be
EUR5 billion, according to the Hungarian Economy Ministry.

The Blue Stream pipeline is one of the world’s deepest undersea pipelines.
But because of low compression and other technical problems it pumps
less than three billion cubic meters of gas a year, well below the total of
regional needs. It was built to supplement Gazprom lines through other
countries, including Ukraine and Belarus.

Once the Russian natural gas arrives in Hungary through the Blue Stream
line, it is to be either sold to other European countries or stored in
facilities that Gazprom recently acquired.

Gyurcsany said he still wanted Hungary to diversify its energy supplies.
Hungary depends almost completely on Russia for natural gas.

Fidesz, the main opposition party in Hungary, said Gyurcsany was making
the country even more dependent on Russia by teaming up with Gazprom.

“I would be most thankful if we could diversify our supplies,” Gyurcsany
said. “I can hardly overestimate the risk that Hungary runs. Any prime
minister would be a fool if he did not want to diversify or if he bound
himself to one supplier. But chasing dreams is also foolish instead of
building on realities.”

Janos Koko, the Hungarian economy minister, said he saw no inconsistency in
the Hungarian position because it would lead to competition. “We also want
to diversify our energy supplies,” he said.

“Over 80 percent of our gas comes from Russia. There are two competing
projects. But Nabucco is more imagination than tangible. I would like to see
a stronger Nabucco.”

The EU agreed to speed up the construction of the 3,000-kilometer, or
1,900-mile Nabucco pipeline after an energy dispute between Russia and
Ukraine in January 2006 that led to shortages of natural gas in some EU
countries. Piebalgs said the Nabucco pipeline would “concretely contribute
to energy security.”

The pipeline has been subject to many delays, not least because of
uncertainty over whether it would be able to ship natural gas from Iran.
Iran is now subject to UN sanctions because it refuses to halt its uranium
enrichment program.

There also have been problems with financing the project. The European
Bank for Reconstruction and Development, which advocates competition
in the energy sector as well as diversification, agreed last year to finance
70 percent of Nabucco’s construction costs.               -30-
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LINK: http://www.iht.com/articles/2007/03/12/news/hungary.php

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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3.  THE NEW SEVEN SISTERS: OIL AND GAS GIANTS THAT
                     DWARF THE WEST’S TOP PRODUCERS
                        The seven are overwhelmingly state-owned

By Carola Hoyos, Financial Times, London, UK, Mon, Mar, 12 2007

When an angry Enrico Mattei coined the phrase “the seven sisters” to
describe the Anglo-Saxon companies that controlled the Middle East’s oil
after the second world war, the founder of Italy’s modern energy industry
could not have imagined the profound shift in power that would occur barely
half a century later.

As oil prices have trebled over the past four years, a new group of oil and
gas companies has risen to prominence.

They have consolidated their power as aggressive resource holders and
seekers and pushed the world’s biggest listed energy groups, which emerged
out of the original seven sisters – ExxonMobil and Chevron of the US and
Europe’s BP and Royal Dutch Shell – on to the sidelines and into an
existential crisis.

The “new seven sisters”, or the most influential energy companies from
countries outside the Organisation for Economic Co-operation and
Development, have been identified by the Financial Times in consultation
with numerous industry executives.

They are Saudi Aramco, Russia’s Gazprom, CNPC of China, NIOC of Iran,
Venezuela’s PDVSA, Brazil’s Petrobras and Petronas of Malaysia.

Overwhelmingly state-owned, they control almost one-third of the world’s

oil and gas production and more than one-third of its total oil and gas
reserves.

In contrast, the old seven sisters – which shrank to four in the industry
consolidation of the 1990s – produce about 10 per cent of the world’s oil
and gas and hold just 3 per cent of reserves.

Even so, their integrated status – which means they sell not only oil and
gas, but also gasoline, diesel and petrochemicals – push their revenues
notably higher than those of the newcomers.

Robin West, chairman of PFC Energy, an industry consultancy, says: “The
reason the original seven sisters were so important was that they were the
rule makers; they controlled the industry and the markets. Now, these new
seven sisters are the rule makers and the international oil companies are
the rule takers.”

The International Energy Agency, the developed world’s sectoral watchdog,
calculates that 90 per cent of new supplies will come from developing
countries in the next 40 years.

That marks a big shift from the past 30 years, when 40 per cent of new
production came from industrialised nations, most of it controlled by listed
western energy groups, noted a report published last week by Rice
University’s James A. Baker III Institute of Public Policy.

The biggest contributor will be Saudi Aramco, the world’s largest and most
sophisticated national oil company and thus number one on the FT list. After
the surge in crude prices since 2002, Saudi Aramco launched its most
ambitious expansion programme in a generation.

It aims to boost production capacity from 11m barrels a day – or 13 per cent
of today’s global consumption – to 12.5m b/d and then 15m b/d.

In doing so, Saudi Aramco will consolidate its position as the world’s most
powerful oil company, allowing Riyadh to remain the world’s central banker
of oil – turning taps on when there is a shortage of global supply, and off
when prices are falling below its comfort level.

International oil companies and the leaders of the main consuming nations
have come to accept Saudi Aramco’s dominance. But the recent shift in the
international influence of smaller national oil companies has been harder to
swallow.

By the end of last year, companies such as BP and Shell had lost their
leading positions on the world’s stock exchanges: Russia’s Gaz-prom and
PetroChina (88 per cent owned by CNPC) had pushed their way into second

and third place among the biggest listed energy groups.

ExxonMobil, perhaps the only energy company from the developed world that
can match the new batch in overall influence, now remains alone at the top.
Gazprom, Petrobras of Brazil and PetroChina have also outshone the others in
share price gains.

The main reason for this shift in power has been a resurfacing of the
re-source nationalism that began in Mexico in the 1930s, spread to the
Middle East in the 1970s and abated – and in some cases went into reverse –
when oil prices cooled in the late 1980s and 1990s.

Groups including Mattei’s Eni are having to accept new contract terms in
countries such as Russia and Venezuela, where national energy companies are
systematically clawing back control of fields.

Venezuela this month enacted a law that will give PDVSA majority control of
the Orinoco belt’s heavy oil fields, the largest such resource in the world.

In Russia the Kremlin wrested control of Shell’s $20bn (£10bn, EUR15bn)
natural gas project on Sakhalin Island at the end of last year and announced
Gazprom would lead the development of the vast Arctic Shtokman gas field,
relegating international oil companies to service providers.

This month Lord Browne, BP’s chief executive, travelled to Moscow to try to
head off becoming the latest Gazprom victim.

He proposed that BP marketed the Russian company’s future liquefied natural
gas abroad in an effort to stave off Gazprom’s ambitions to take control of
the Kovykta gas field, one of BP’s key Russian assets.

The impact of today’s nationalism is different from that of the 1970s. In
1975 Gulf, one of the original seven sisters and now part of Chevron and BP,
shifted all its movable investment dollars out of the developing world and
back to North America and the North Sea. This time international oil
companies are finding no new fields to escape to.

In fact, they have discovered no-where capable of pumping more than 1m b/d
since 2000, when Kazakhstan’s Kashagan field became the biggest find in 30
years.

Meanwhile, national oil companies are banding together to help to develop
each other’s reserves, leaving growth in the oil and gas industry – and the
resources for world economic development – in the hands of the new seven
sisters and the governments that control them.

The consequences of this could hardly be more profound. Fatih Birol, chief
economist at the IEA, estimates that the world is falling 20 per cent short
of making the $20,000bn investment needed to ensure adequate energy supplies
for the next 25 years.

Governments’ unwillingness to allow their national oil companies to reinvest
their recent windfall profits back into the industry lies at the root of
many of the worries about future supplies. Instead, those governments use
the money for social ventures or it is wasted.

President Hugo Chávez, of Venezuela, spends two-thirds of PDVSA’s budget

on his populist social programmes, with almost $7bn being funnelled in that
direction by 2005, compared with the $77m spent in 1997 by the previous
government, the Rice Univeristy report found.

Meanwhile, in Russia little of Gaz-prom’s earnings goes towards upgrading
Russia’s antiquated, leaking pipeline system, 30 per cent of which needs
replacing, the IEA warns.

In Iran, NIOC is still a gas importer despite controlling South Pars, the
world’s biggest gas field. It is hindered from boosting its oil production
or fixing its refineries because of the burden of financing subsidies that
keep petrol prices at just 10 US cents a litre.

But the poster child of what happens when a government restricts foreign
investment while using its national oil company as a bottomless piggybank is
Mexico. Pemex’s decline has excluded it from the FT list of the developing
world’s most influential energy companies.

The most pessimistic forecasters say the rapid ageing of Mexico’s giant
Cantarell field will turn America’s third largest oil supplier into a net
importer within a decade.

“The x-factor is [Mexico’s] Congress, with Pemex constantly locked in a
battle to secure sufficient funding and a reasonable fiscal regime, the
company cannot plan on a long-term horizon with great certainty,
handicapping its ability to manage declines,” says Ryan Todd, an analyst at
Sanford Bernstein, the US financial group.

This would contribute to a “severe problem” in world oil supplies within the
next three to five years. For Mexico, it would mean the gradual loss of 40
per cent of its tax revenue.

International oil companies are, however, competing not only with resource
holders but also with national oil companies thathave turned resource
seekers – highlighting the issue of energy security.

Jimmy Carter, who as US president during the oil shocks of the late 1970s
passed the most sweeping energy legislation in the country’s history, says
in an interview that energy insecurity is “still a major issue and will be
increasingly a crisis situation in the years to come”.

The present situation differs from the one he tackled in one main respect:
“Today we are experiencing on a global basis competition from China and
India that I didn’t know when I was president.”

The biggest of those competitors is CNPC. It has a solid foothold in China’s
large reserves, owning 88 per cent of Petro-China. But it is its rapid push
to secure international reserves that makes it so powerful.

Backed by Beijing’s feverish quest to secure the energy it needs for China
to develop, CNPC has fanned out across the globe into about 20 countries
from Azerbaijan to Ecuador.

It has pumped more than $8bn into the oil industry of war-torn Sudan, when
concerns over human rights deter others in the industry from involvement
with Khartoum.

“CNPC are the rule makers on access to new reserves in new markets and they
are changing the competition for resources, services, capital and markets,”
says Mr West.

Nor is CNPC the only company changing the rules in the race to secure
assets. Smaller national oil companies such as Petrobras and Petronas are
also keeping international energy executives awake at night.

Petrobras, for example, has been at the forefront of the technology needed
to pull oil out of ultra-deep waters, such as those that abut Brazil’s
shores. The company is now using those skills to compete head-on with the
likes of BP and ExxonMobil in Angola as well as the US Gulf of Mexico.

Malaysia’s Petronas has also spread out internationally, notably into Sudan
and Burma. It receives about 30 per cent of its corporate revenues from
abroad and operates in more than 26 countries, producing oil from about 50
projects, more than half of which it runs, Rice University’s report notes.

Companies such as Petrobras and Petronas have the advantage that they can
more easily woo fellow resource-rich national oil companies. International
oil companies continue to suffer from their 1980s and 1990s reputation as
haughty and patronising business partners.

Malcolm Brinded, head of Shell’s exploration and production, acknowledges
this when he says international oil companies need to ask themselves, “How
are we going to make this marriage work?” He describes Shell and other
international oil companies as “much less paternalistic than in the
partnerships of 20 years ago”.

Examples of this include anything from the tone the international groups use
in negotiations, to employing and training local engineers and building
infrastructure, such as desalination plants, even though it might not be
needed for the project in which the company is involved.

International oil executives are making these concessions because they
believe today’s power balance is unlikely to change any time soon.

Christophe de Margerie, chief executive of Total and the man who made his
mark brokering deals with national oil companies in the Middle East and
Africa, says: “I think this new world will stay even if the price of oil
drops a little bit. People will keep in their soul that they have this
power – it will take time before they change.”

But he adds that his optimistic side believes that eventually national oil
companies, many of them battling declining fields and other technical and
managerial challenges, “might be forced to consider, ‘well, whatever we
said, those people are worth working with because we need them to develop
our reserves’.”

The wish expressed by Mr de Margerie could not be further from the
self-assured position his predecessor at CFP, Total’s ancestor, used to
enjoy 60 years ago. Yet it is a worry not only for Mr de Margerie and his
peers.

If the new seven sisters do not live up to their potential, the world’s
continued economic growth, China’s development and the west’s comfort

and wealth will become far from assured.
SAUDIS HEAD A RICH FIELD
With 25 per cent of the world’s oil reserves and the capacity to produce
nearly triple the amount of any other group, Saudi Aramco is the world’s
most successful national oil company.

The House of Saud dictates energy policy but leaves day-to-day strategy to
the capable technocrats who run it. Saudi Aramco is investing $50bn (£26bn,
EUR38bn) over 15-20 years but its biggest fields are ageing.
GAZPROM
No other company keeps Europe, and increasingly Asia, on tenterhooks more
than Gazprom. As a tool of the Kremlin, it has been involved in a gas
dispute with Ukraine and a debate with Japan and China over competing
pipelines from Siberia as well as the grab of Royal Dutch Shell’s majority
stake in the Sakhalin II liquefied natural gas project.

Gazprom has increased its influence with upstream deals in central Asia,
including Iran. Downstream, its push  into the European market has set off
moves to limit its access.
CNPC/PETROCHINA
All three of China’s top oil companies have been making ambitious moves
abroad. But China National Petroleum Corporation, with its 88 per cent owned
PetroChina as a listed subsidiary, is the biggest and has the widest
international reach.

Petro China holds most of its overseas assets in a joint venture with its
parent and is active in about 20 countries from Azerbaijan to Ecuador. CNPC
retains sole control of its controversial assets in Sudan.
NIOC
Iran is one of the few Middle East countries with massive hydrocarbon wealth
that is open to investment by foreign energy companies. National Iranian Oil
Company has partnerships with Italian, French, Dutch and Norwegian companies
and collaborates with Chinese and Russian groups.

Yet South Pars, the world’s biggest gas field, remains so untapped that Iran
is a net gas importer.
PDVSA
Venezuelan President Hugo Chávez this year signed a law that allows PDVSA to
seize control of the $30bn Orinoco Belt heavy crude oil projects. PDVSA’s
production is shrinking but it is still important to the fortunes of
international energy groups, many of whose contracts are being rewritten.
PETROBRAS
The strength of Petrobras is in finding and producing oil from deep waters.
Expertise gained in Brazil’s waters is being applied in offshore west Africa
and the Gulf of Mexico, where its Cottonwood field is in production.
PETRONAS
Malaysia’s national oil company has been described as the role model others
would like to follow. Though a top-three exporter of LNG, Petronas risks
falling behind the gas groups of Qatar, Nigeria and Indonesia.
————————————————————————————————-
http://www.ft.com/cms/s/7b407c5e-d03e-11db-94cb-000b5df10621.html

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4.         “UKRAINE ENERGY REPORT” PUBLISHED

Research and Markets, Business Wire, Thursday, March 08, 2007

Research and Markets (http://www.researchandmarkets.com/reports/c51753)

has announced the addition of “Ukraine Energy Report” to their offering.

This report provides updated facts and figures on the evolution of the
national energy market. For the oil, gas, coal and power markets, the report
details the market organisation, institutions regulating the market, and
energy policy of the country.

Energy companies active on the market are analysed. Domestic production,
capacities, exchanges, consumption by sector and market shares are provided.
Energy prices levels and taxes are described. Finally, the driving issues,
and the market prospects are proposed.

Our Ukraine energy market report offers a precise and reliable overview of
the energy sector in the country. With a focus on oil, gas, coal and power
markets, the report provides a complete picture of the country situation,
dynamics, current issues and future prospects.

With timely updated market data and continuous follow-up of markets news,
this report brings clear and concise insights, to help tackle national
energy challenges and opportunities. We have published energy market

reports for 20 years.

With highly experienced energy experts, analysts and an active professional
network, we are reckoned to be a trustworthy energy source for data,
forecasts & analysis, globally.
                                      TOPICS COVERED:
List of graphs and tables
General overview; Institutions and energy policy; Energy companies;
Energy supply; Prices; Consumption; Issues and outlines; Data tables
                               COMPANIES MENTIONED:
Tsentrenergo; Dniproenergo; Donbaseenergo; Zakhidenergo; Vostokenergo
Ukrenergo; Goskomatom; AES Corp; Vez; Energorinok; Naftogaz;

Ukrgazprom; Ukrneft.                       -30-
———————————————————————————————-
Laura Wood, Senior Manager, Research and Markets
press@researchandmarkets.com
LINK: http://www.researchandmarkets.com/reports/c51753
————————————————————————————————
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========================================================
    Send in names and e-mail addresses for the AUR distribution list.
========================================================
5. ATLAS: GEOLOGY AND MINERAL DEPOSITS OF UKRAINE

Roman Senkus, Director, CIUS Publications Program
Canadian Institute of Ukrainian Studies, Toronto Office
University of Toronto, Toronto, ON, Canada
Thursday, March 8, 2007

BOOK: An Atlas of the Geology and Mineral Deposits of Ukraine
Edited by Leonid Galets’kyi, Translated by Walter Peredery
University of Toronto Press, Cloth: Mar 2 2007
176pp /76 illustrations, CAN$100 in Canada

Seventy-six full-colour maps with text present the geological
characteristics of Ukraine in this translation of an atlas first
prepared by scholars at the Ukrainian Academy of Sciences’ Institute
of Geology in 2001.

Widely acclaimed in its country of origin, An Atlas of the Geology
and Mineral Deposits of Ukraine includes up-to-date geological
concepts, as well as ecological, historical, and prehistoric items of
interest.

The seventy-six maps are grouped into seven categories: general
data, geophysical, structural, geological ‘slice,’ lithological,
ecological, hydrological, and mineralogical. Ukraine has for some
time been known as a country rich in mineral resources; as a result,
maps depicting its vast mineral deposits as well as its oil, gas,
and coal deposits may be of particular interest to foreign readers.

Leonid Galets’kyi is a department head in the Institute of Geology
of the Ukrainian Academy of Sciences.

Walter Peredery is a geologist who has worked across Canada and
internationally.                                   -30-
——————————————————————————————
ROMAN SENKUS, Director, CIUS Publications Program
Managing Editor, www.encyclopediaofukraine.com
Canadian Institute of Ukrainian Studies, Toronto Office
20 Orde St., Room 125, University of Toronto
Toronto, ON, M5T 1N7, Canada
tel. 416-978-8669, 416-978-6934, fax 416-978-2672
E-mail: r.senkus@utoronto.ca; www.utoronto.ca/cius
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6. GAZPROM EYES OBLAST-LEVEL GAS NETWORKS IN UKRAINE

ANALYSIS & COMMENTARY: By Vladimir Socor
Eurasia Daily Monitor, Volume 4, Issue 36
The Jamestown Foundation, Wash, D.C. Wed, Feb 21, 2007

Since the law initiated by opposition leader Yulia Tymoshenko and adopted

by parliament on February 6 has banned any form of alienating gas transit
pipelines and other Naftohaz Ukraine-owned assets (see EDM, February 7),
Russia’s Gazprom and officials in Kyiv seem to be adjusting their approach.

They now suggest transferring stakes in Ukrainian oblast-level and local
distribution companies to Gazprom, in return for Ukrainian “access” to gas
extraction projects in Russia.

Such transfers could, however, eviscerate Ukraine’s gas transport system
from within, aggravating Naftohaz’ already bleak financial situation and
potentially setting the stage for a transfer of the transit system itself
later on.

On February 19, Ukrainian Fuel and Energy Minister Yuriy Boyko indicated
that the government might transfer parts of Ukraine’s gas distribution
networks to Gazprom.

Speaking in the wake of talks with Gazprom president Alexei Miller, Boyko
said, “Russia is not interested in anything other than distribution networks
in Ukraine.”

Gazprom has proposed specific options to exchange Russian extraction assets
for Ukrainian infrastructure assets. Ukraine’s State Property Fund is
currently preparing sales of minority stakes in distribution companies in
certain Ukrainian oblasts (Interfax-Ukraine, February 19).

Swapping Ukrainian infrastructure for “access” to Russian oil and gas
deposits does not seem to be a viable proposition. Ukraine is hardly able to
provide the high inputs of technology and investment capital required by
extractive projects in Russia.

More likely, such “access” would become a cover for non-transparent
transfers of Ukrainian infrastructure portions to Gazprom or to companies
and individuals fronting for Gazprom.

These proposals are being accompanied by distracting suggestions emanating
also from Boyko’s ministry as well as from Prime Minister Viktor Yanukovych.

These profess intentions to seek production-sharing agreements for gas and
oil — including some offshore projects — in Turkmenistan, Uzbekistan,
Egypt, and Libya (Zerkalo nedeli, February 17; ICTV Television [Kyiv],
February 19).

Such intentions are also clearly beyond Ukraine’s means and might form a
smokescreen for the real game ongoing with Moscow.

More realistically perhaps, Yanukovych proposes that Naftohaz participate in
reconstructing Uzbek gas pipelines “together with the other interested
parties” — apparently referring to Russia, next to which Naftohaz could
only play a relatively minor role in Uzbekistan.

In a variation on this theme, Boyko cites Ukrainian investment projects in
Turkmenistan (building a bridge on the Amu Darya river, several gas
compressor stations, an irrigation water supply ring) as entitling Ukraine
to certain volumes of Turkmen gas (UNIAN, February 19).

However, most of these low-tech investments date back to the late 1990s and
have strained Ukraine-Turkmen relations because of long delays and cost
overruns.

This situation was a factor in Ashgabat’s December 2005 decision to renounce
direct sales of gas to Ukraine, selling the gas instead to Gazprom for
indirect delivery to Ukraine via RosUkrEnergo.

Members of President Viktor Yushchenko’s team are airing serious concerns
over proposals to sell infrastructure stakes to Russian interests.

In a February 19 teleconference with heads of oblast administrations, First
Deputy Head of the Presidential Secretariat Arseniy Yatseniuk criticized
such “regrettable schemes” for thwarting the creation of a competitive
environment in Ukraine and placing Russian interests in control.

Alluding to similar processes ongoing in European Union countries, Yatseniuk
decried the absence of a common energy policy for the EU or the former
Soviet countries (Interfax-Ukraine, February 19).

For his part, National Security and Defense Council Vitaliy Hayduk refutes
Russian President Vladimir Putin’s claim that Yushchenko presented a
“revolutionary proposal” to Putin about “unifying” Ukraine’s and Russia’s
gas transit systems during their summit in December (Interfax-Ukraine,
February 16).

That bold assertion by Putin in his February 1 press conference backfired,
prompting Tymoshenko’s legislative initiative and the Rada’s February 6 vote
to ban alienation of Naftohaz pipelines and other assets. However, that law
does not protect Ukrainian local and oblast-level gas distribution networks.

Meanwhile, both the presidency and the government support the creation of a
Russian-Ukrainian consortium to build the long-planned Bohorodchany-Uzhhorod
pipeline, which could add as much as 19 billion cubic meters to Ukraine’s
annual transit capacity for Russian and/or Central Asian gas to Europe.

While consistent with Ukraine’s interest in a narrow and short-sighted
sense, this line would actually increase Gazprom’s market share in Ukraine
and Europe and also expand the “single channel” for Central Asian gas
through Russia and Ukraine to Europe.

A Bohorodchany-Uzhhorod pipeline could preemptively absorb Central Asian

gas volumes that are needed for the projected trans-Caspian and Nabucco
projects.

With Tymoshenko in the forefront, the case is gaining political ground for
eliminating RosUkrEnergo — or any intermediary fronting for Gazprom —

from the Russia-Ukraine gas trade.

By the same token, Tymoshenko is calling for direct purchases of gas from
Central Asia, with Russia as transit country but not as commercial
intermediary (Ukrainian News Agency, February 16).

Last month, Yushchenko and Yanukovych separately signaled interest in

having Ukraine connected to the projected Nabucco pipeline for Caspian gas.
However, Yushchenko’s and Yanukovych’s signals on energy policy are
mixed and confusing (see EDM, December 14, 2006).

Given the magnitude of Ukraine’s gas market, some clear signals of Ukrainian
interest in the projected trans-Caspian pipelines could substantially
enhance those projects’ commercial attractiveness, demonstrating that market
demand is present and massive.                             -30-
————————————————————————————————-
LINK: http://www.jamestown.org
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7.   UKRAINIAN PRIME MINISTER’S GOVERNMENT SEEKS TO

                 CUT POLAND FROM KEY PIPELINE ROUTE
      Slovak Detour Would Defeat Odessa-Brody Oil Transport Project
ANALYSIS & COMMENTARY: By Vladimir Socor
Eurasia Daily Monitor, Volume 4, Issue 41
The Jamestown Foundation, Wash D.C., Wed, February 28, 2007

Ukrainian Prime Minister Viktor Yanukovych’s government seems to have
abandoned a project to extend the Odessa-Brody pipeline into Poland for
pumping Caspian oil outside Russian control.

Instead, Yanukovych is negotiating with the government of Slovakia on a plan
to transport both Caspian and Russian oil through a Russian-controlled
pipeline.

On February 26 in Kyiv, a Ukrainian-Slovak intergovernmental meeting chaired
by Yanukovych and Slovak Prime Minister Robert Fico discussed the
possibility to pump oil from Kazakhstan as well as from Russia through the
Druzhba pipeline system. The route would run from Ukraine to Slovakia and
farther into European Union territory.

The existing Odessa-Brody pipeline connects with the Druzhba system at
Brody. Instead of prolonging the line into Poland for Caspian oil, as
originally intended, the modified plan would pump the oil into the Druzhba
pipeline’s Slovak section, Transpetrol, which is about to pass under de
facto Russian control.

This plan, moreover, envisages a highly questionable way of using the
pipeline for both the high-quality oil from Kazakhstan and the lower-quality
Russian-Urals blend.

In order to avoid mixing the two types, it is proposed to alternate the
pumping of either type of oil, in a wave-by-wave process. This method is
being billed as “experimental,” its stated goal to preserve the quality of
either oil brand “to the maximum extent possible.”

The problem seems familiar from the Caspian Pipeline Consortium’s (CPC)
misadventures after 2001. There, light oil extracted mainly by U.S.
companies in Kazakhstan was being mixed with inferior-quality Russian oil on
the Russian stretch of the pipeline leading to the port of Novorossiysk.

For several years, the Russian side refused to compensate the U.S. and
Kazakh producers for the losses they incurred through the mixing of the two
brands. The compensation mechanism, known as an “oil quality bank” and used
in normal countries in such cases, does not seem to operate effectively on
the CPC’s Russian stretch.

Significantly, an oil quality bank is not being proposed for the
Odessa-Brody-Slovakia oil transport project. According to Fico, Slovakia is
eager to participate in the project, but any decisions must be made jointly
with Russian interests, which seem set to extend their reach into Slovakia’s
energy systems. Slovakia “has no effective control over the transit
pipeline,” he stated in Kyiv (Itar-Tass, February 26).

The Slovak transit pipeline, Transpetrol, has become a collateral casualty
of the destruction of Yukos in Russia. Yukos owned a 49% stake as well as
the operating rights in Transpetrol (technically through the
Netherlands-registered Yukos Finance company); the Slovak government
retained 51% and an option to buy the Yukos stake.

The Kremlin-controlled bankruptcy court in Moscow apparently intends to
award that Yukos stake with the operating rights to a Russian company. A
prime claimant, Russneft, now seems to be in retreat since its chief,
Mikhail Gutseriyev, lost out in some obscure political and business
infighting in Russia.

During the third week of February, Slovak Economics Minister Lubomir
Jahnatek discussed with Gazprom and Gazpromneft the possibility of their
taking over the Yukos stake (Vedomosti, February 21).

Transpetrol, 515 kilometers long and with direct connections to the Czech,
Hungarian, and Croatian transit pipelines, has a design throughput capacity
of 21 million tons annually.

Currently operating at somewhat over 50% of that capacity, it delivers more
than 5 million tons annually to the Czech Republic refineries at Kralupy and
Litvinov and some 6 million tons to the national Slovnaft refinery; and it
could take additional volumes of oil destined for Germany, where the Druzhba
system terminates.

Unsurprisingly, the Russian government seeks control over this strategic
pipeline. Loss of national control over Transpetrol could expose Slovakia as
well as Hungary to full dependence on Russian oil by precluding the import
option from the Adriatic Sea.

That long-discussed option envisages pumping oil from Croatia’s supertanker
port Omisalj, through the existing Adria pipeline northward into Hungary and
Slovakia and potentially farther afield.

For its part, Russia wants to “integrate” the Druzhba pipeline system with
the Adria pipeline, aiming to use it for pumping Russian oil to Adriatic
port terminals.

The move would be similar to Russia’s use of the Odessa-Brody pipeline since
2004 “in reverse,” north-south for Russian oil, instead of south-north for
non-Russian oil that would diversify Europe’s supply sources.

Just as the reverse-use of Odessa-Brody required cooperation by the
Ukrainian government, so would the Russian reverse-use of the Adria pipeline
and its “integration” with the Druzhba pipeline via Slovakia.

The first government of Viktor Yanukovych delivered politically on the first
reverse-use in 2004 and his second government now seems inclined to deliver
on the other reverse-use. In this case, however, the outcome depends on
Slovakia’s decision as well.

Since October 2006 both Yanukovych and President Viktor Yushchenko have
aired the idea of using the Slovak route instead of the Polish route, in
essence freezing the Odessa-Brody-Poland extension project. The Polish
option has the advantage of being immune to Russian control.

For its part, Poland seeks assurances that the existing Odessa-Brody
pipeline be also rendered immune to a Russian takeover, as a precondition to
extending it into Poland for Caspian oil.

To that end, Poland seeks a preemptive right for its PERN company to buy a
100% stake in that pipeline from the Ukrainian government, in the event that
the latter decides to sell it.

On that condition, Poland wishes to go ahead with the Odessa-Brody extension
project. Deputy Minister of Economics Piotr Naimski, responsible for energy,
discussed oil supplies to that project with the KazMunayGaz management in
Astana on February 21, in preparation for Polish President Lech Kaczynski’s
visit to Kazakhstan in March. (Interfax-Ukraine, February 19, 21, 26)
————————————————————————————————

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========================================================
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========================================================
8. PM YANUKOVYCH SAYS UKRAINE’S MILITARY INDUSTRIES
            SHOULD INCREASE COOPERATION WITH RUSSIA

Associated Press, Kiev, Ukraine, Monday, March 12, 2007

KIEV, Ukraine – Ukraine’s prime minister on Monday urged the country’s
defense industry enterprises to increase cooperation with Russia, a move
that could make it even more difficult for this ex-Soviet republic to join
NATO some day.

“We understand very well that today our main partner (in this sector) is
Russia,” the Russian-leaning Prime Minister Viktor Yanukovych said, ordering
his deputy to start talks immediately with his Russian counterparts.

Yanukovych put the brakes on Ukraine’s bid to become a NATO member last
year, dealing a blow to pro-Western President Viktor Yushchenko, who had
hoped Ukraine could win a place in the military alliance as early as next
year.

Ukrainians remain sharply divided over NATO membership. Many fear

membership would harm relations with Russia and hurt Ukraine’s military
industries, which remain closely linked with Russia. Supporters of NATO
membership argue it would increase Ukraine’s security and open up new
military markets to its products.

Yanukovych complained that Ukraine is seeing its military industrial
cooperation with Russia decrease.

He recalled that former Russian Defense Minister Sergei Ivanov had said that
if Ukraine is always talking about imminent NATO membership, Russia will
have to do its military industrial planning without Ukraine.

“Therefore we must clearly define our orientation,” Yanukovych said.

Communist and pro-Russian protesters, meanwhile, tried to prevent a pro-

NATO conference in the capital from getting under way by attempting to
block the entrance. Police had to call in reinforcements, and the conference,
part of a series of pro-NATO information events, went ahead.

“We are not a Western nation, we are Orthodox Slavs and our alliance should
be with Russia,” said 17-year-old protester Sergei Orlovsky, one of about 50
protesters. They prayed and held signs that read: “NATO, Hands Off Ukraine”
and “We are not Yankees. We are Slavs and Our Brother is Russia.”
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9.  PRIME MINISTER VIKTOR YANUKOVYCH’S ORBITS
                        Profiles of the prime minister’s inner circle
    Key influential people are Akhmetov, Azarov, Klyuyev and Lyovchkin

ANALYSIS & COMMENTARY: By Serhiy Leshchenko
Ukrayinska Pravda website, Kiev, in Ukrainian 3 Mar 07
BBC Monitoring Service. United Kingdom, Sat, Mar 10, 2007

The most influential people in Prime Minister Viktor Yanukovych’s inner
circle are businessman Rinat Akhmetov, First Deputy Prime Minister Mykola
Azarov, Deputy Prime Minister Andriy Klyuyev, and the head of the prime
minister’s secretariat, Serhiy Lyovochkin, a website has said.

Each of the four has his own group of loyal people among cabinet ministers
and prime minister’s advisers. The Lyovochkin and Klyuyev groups have
conflicting interests in the fuel and energy sector. Akhmetov has special
status and is the only one whom Yanukovych treats as equal, the author says.

The following is the text of the article by Serhiy Leshchenko entitled
“Viktor Yanukovych’s orbits” and published by Ukrayinska Pravda website

on 3 March; subheadings are as published:

Over 18 months, Viktor Yanukovych has covered the path from a ward at the
resort of Karlovy Vary to the cabinet on the seventh floor of the government
building.

The politician who was considered to be “a shot-down pilot” is now seizing
more and more of the steering instruments in the cockpit. By the way, this
is not a mere metaphor. Yanukovych really did study to fly planes for some
time. [ellipsis here and throughout as published]

Having returned to big politics, Yanukovych has changed his entourage. Many
old names were replaced with new ones. Some stars have faded, others drifted
away from the centre, while still others approached so close as to be in
danger of being burnt.
                              LYOVOCHKIN-KLYUYEV
The front line in Yanukovych’s team runs between Deputy Prime Minister
Andriy Klyuyev and the head of the prime minister’s secretariat, Serhiy
Lyovochkin.

Since the times of the complicated business history of Donbass [coal-mining
area in Donetsk and Luhansk regions], Andriy Klyuyev has been using an
armoured Mercedes – he survived several assassination attempts.

Lyovochkin has also been using the same kind of transport since his
relations with Viktor Medvedchuk deteriorated during their work in the
administration of [former President] Leonid Kuchma.

Klyuyev’s ascetic image is manifested in his was of brewing tea
soldier-style – right in a mug, which he then drinks in the presence of his
guests. Klyuyev once worked at a coal mine, and he does not understand

the Kievites who burn up their lives at night clubs.

It is also telling that Klyuyev’s post-graduate thesis in Soviet times was
on construction of missiles silos in zones of tectonic instability.

Lyovochkin’s thesis was entitled “The US state debt”.

Working as first aide to the president in 2004, Lyovochkin defended a PhD
thesis on macro financial stabilization in Ukraine. Thus he repeated the
record achievement of Dmytro Tabachnyk, who received his PhD at the age of
32 when he was the head of the presidential administration.

Klyuyev’s official tax declaration mentions over 50m [presumably hryvnyas].
He and his brother are the owners of Ukrpidshypnyk [ball-bearing producer].

According to Lyovochkin, his tax declaration has a figure “with more than
six zeros”. He sold the Kiev footwear factory to [Russian businessman]
Konstantin Grigorishin. His sister deals with the family’s business matters.

Lyovochkin is linked to the Klirinhovyy Dim bank, and the UESU-Avia. After
articles linked him to [gas import monopolist] RosUkrEnergo, he filed a
libel suit for 500,000 hryvnyas [100,000 dollars].

Klyuyev is the hawk in Yanukovych’s team, but Lyovochkin also does not suit
the role of a dove.
                                         KLYUYEV’S ORBITS
The conflict between Klyuyev and Lyovochkin is also connected with Fuel and
Energy Minister Yuriy Boyko, who is close to Lyovochkin and does not allow
Klyuyev to deal with the area he is in charge of – gas issues.

Klyuyev, for his part, from time to time plays on Boyko’s nerves by hinting
that RosUkrEnergo could be removed from the Ukrainian market.

As Boyko reduced Klyuyev’s influence on the fuel and energy sector, the
deputy prime minister finds compensation in other areas. In particular, he
influences personnel policy in the Interior Ministry.

For instance, with Klyuyev’s assistance, the most controversial figures of
the Orange Revolution period, Serhiy Popkov and Mykola Plyekhanov, were
appointed at the Interior Ministry.

Yuriy Lutsenko [former Interior Minister] said that Yanukovych suggested
that he return Plyekhanov as “a valuable professional who lost his job” to
the Interior Ministry, but Lutsenko refused.

After the coming of [new Interior Minister Vasyl] Tsushko, Plyekhanov is in
charge of personnel policy in the ministry, and Popkov is working as head of
the Interior Ministry’s main staff.

Mykola Dzhyha is in charge of Yanukovych’s people in police. The prime
minister supported Dzhyha’s appointment to “help” Lutsenko as his first
deputy.

However, neither Lutsenko nor Dzhyha himself showed any enthusiasm to
implement this vision of the head of government. Now Dzhyha can influence
the ministry from parliament.

Klyuyev is also considered in Yanukovych’s team to be the man behind a
moratorium on land sale. Opponents are convinced that the ban was prolonged
to allow land to be bought up cheaply.

Klyuyev also organized the transfer of profitable state assets, the
Ukrspetseksport state weapons exporter and Oshchadbank state bank, to the
control of the prime minister’s team.

This was done using similar technique.

In the case of Ukrspetseksport, Klyuyev at first only met its head, Serhiy
Bondarchuk, and advised him to submit a voluntary retirement notice. After
Bondarchuk refused, the government issued a resolution making the company
subordinate to the Cabinet of Ministers instead of the president.

Yushchenko appealed against the resolution in Constitutional court. The next
step was audits by the State Auditing Directorate. Then the tax
administration came to the company and began to study the company’s
operation during Yanukovych’s first term as prime minister.

The same happened to Oshchadbank. To subordinate the head of the bank’s
board to him, Klyuyev through his MP brother [Serhiy Klyuyev] is trying to
change the people in the bank’s supervisory board appointed on parliament’s
quota.

When it became clear that this is not enough, changes to the law were
organized to completely change the system of appointment to the bank’s
supervisory board. At the same time, inspections by the Main Auditing
Directorate were sent to the bank.

Political commentator Dmytro Vydrin, describing his first meeting with
Klyuyev right after his move to Kiev, recalled that Klyuyev greeted people
without getting up from his desk. Vydrin was astonished and predicted that
Klyuyev would never make a politician.

But his manners have improved significantly since then, and he has become
one of the main communicators with the orange camp.

Klyuyev’s kiss with Poroshenko [traditional friendly greeting between
Ukrainian men] in the heat of coalition talks last year was more eloquent
than words.

Klyuyev has close links with MP Volodymyr Sivkovych. The latter, due to his
KGB past, is the source of special information in the prime minister’s team.
Sometimes, he hunts with Yanukovych.

When Klyuyev was an MP, his subgroup in parliament included Taras Chornovil.
Rumours have it that the former member of Our Ukraine switched to the Party
of Regions in 2004 not only because his opinion was ignored in the orange
team, but also because Klyuyev, unlike Chornovil’s nationalist-democratic
colleagues, helped him solve many difficult personal problems, linked with
the health of Chornovil’s relatives.

Chornovil’s five minutes of fame started before the third round of the
presidential election, when Yanukovych, deserted by everyone, appointed him
head of the election headquarters. Chornovil’s influence has greatly
decreased now, although he is still present in the media space as one of the
Party of Regions spokespersons.

Chornovil, just like Hanna Herman [former chief of Radio Liberty bureau],
are tasked with creating an illusion of democracy in the party. At first
they promised that MP Oleh Kalashnikov, who beat up a journalist, would

lose his seat in parliament. This never happened.

Presently, they are opposing the secretary of the Donetsk city council
Levchenko, who called for making the Russia language a state one, leaving
Ukrainian for folk songs and funny stories.

Anatoliy Tolstoukhov is also near Klyuyev. Tolstoukhov manages the
500-strong staff of the cabinet’s secretariat. He was minister of the
Cabinet of Ministers in Yanukovych’s previous government and even

lived in the government building during the Orange Revolution.

But the incumbent leaders recalled Tolstoukhov only after the 2006
elections. He was not running on the Party of Regions list, but with the
marginal Eko Plus 25 Per Cent, which was set up by the shareholders of the
Industrial Union of Donbass company.

So, his appearance in the second row from Yanukovych looks like thanks

for the ordeal the loyal minister experienced. In particular, after the
revolution, his home was searched over a criminal case.

Tolstoukhov was accused of ordering the publication of the results of the
second round of the presidential election in the Uryadovyy Kuryer newspaper
despite a court ruling [suspending their publication].

Dmytro Vydrin recalls Tolstoukhov as the senior in his group in the Kiev
institute of political science: “He was very organized in that capacity and
did everything in a timely manner. But he is a strong official. And because
he is an official, he, unlike a businessman or a politician, cannot be
described. He is simply an official!”
                                  LYOVOCHKIN’S ORBITS
Despite his young age, Serhiy Lyovochkin entered big politics in 1999. The
then 27-year-old Lyovochkin was appointed Kuchma’s “scientific consultant”.

It is commonly believed that Lyovochkin junior was lobbied by Lyovochkin
senior, who headed the State Department for Implementation of Sentences,
which was in charge of all Ukrainian prisons. Allegedly, knowledge about
Yanukovych’s volatile youth, which he received in this post, allowed him to
promote his son in Kiev.

However, according to eye witnesses of the events, it was vice versa. Serhiy
Lyovochkin was brought to Bankova Street [where the presidential
administration was situated] by Kuchma’s chief of protocol on Yanukovych’s
request.

Lyovochkin’s father became head of the department thanks to Volodymyr
Lytvyn’s efforts [when he was head of Kuchma’s administration], rather than
the then Donetsk governor [Yanukovych]. Lyovochkin senior met Yanukovych
only in 2000, while his son knew him five years earlier.

The only fact beyond doubt is that from the outset, when he was appointed to
Kuchma’s administration, Serhiy Lyovochkin was positioned as a
representative of Viktor Yanukovych’s interests in Kiev. The parliamentary
elections in 1998 confirm this.

Lyovochkin was running in a constituency in Donetsk, where Oleksandr
Rzhavskyy won by a miracle. According to Rzhavskyy’s election headquarters,
the Donbass administration actively helped Lyovochkin then.

The owners of the title “president’s scientific consultant” at that time
were divided into two types.

[1] The first type appeared on Bankova Street on the day they received their
ID and never disturbed the administration with their presence ever since.
[2] The others carried out Lytvyn’s instructions. Lyovochkin was in the
second group. In late 1999, he visited the USA as part of Kuchma’s
delegation.

A rapid rise in Lyovochkin’s career occurred in 2002, when Kuchma appointed
him as his first aide to counterbalance the head of the presidential
administration, Viktor Medvedchuk.

Lyovochkin became “a good cop” with Medvedchuk being “the bad guy”. It was
with the help of his mediation that Yushchenko managed to meet Kuchma in
those years. The first aide was also the point of contact for Western
diplomats in Bankova Street.

Among Lyovochkin’s achievements was the cancellation of the scandalous
election of the Mukacheve mayor. Medvedchuk could not tolerate an
alternative channel of information for Kuchma and, according to some
reports, he initiated arrest of Lyovochkin junior several times but without
success.

However, despite good contacts with the Orange camp – Lyovochkin was even at
Yushchenko’s family birthdays recently – he worked for Yanukovych’s victory.

His name, together with Klyuyev’s, is mentioned on the “Rybachuk tapes” on a
transit server [which was allegedly used to help falsify the presidential
election results; the recordings of senior officials were made public during
the Orange Revolution by Yushchenko ally Oleh Rybachuk].

In the same year [2004], Leonid Kuchma agreed to change the gas middleman.
RosUkrEnergo became the operator of Turkmen gas supplies to Ukraine. The
press wrote repeatedly that this was done with Lyovochkin’s help. An
indirect proof is his close relations with the ideologists of the scheme,
Yuriy Boyko and Dmytro Firtash.

Lyovochkin even sued Yuliya Mostova from the Zerkalo Nedeli weekly for
500,000 hryvnyas to make journalists disinclined to mention the issue. The
suit will lead him straight to the list of enemies of the press.

Yet another hidden motive for such actions by Lyovochkin could be an attempt
to join in the war between Yanukovych and Defence Minister Anatoliy
Hrytsenko, Mostova’s husband, by making an additional hook to hold the last
propresidential minister on.

During the Orange Revolution, Lyovochkin organized secret meetings between
Yushchenko and Kuchma, and after the revolution he became parliament speaker
Volodymyr Lytvyn’s adviser. [Transport Minister Yevhen] Chervonenko, for
instance, offered him a post of deputy transport minister.

In Yanukovych’s current team, Lyovochkin wanted to be minister of the
Cabinet of Ministers. But this post was occupied by Tolstoukhov.

Another post in the prime minister’s close entourage – head of Yanukovych’s
secretariat – was occupied by the former deputy head of Medvedchuk on
Bankova Street, [Oleksiy] Ishchenko.

But he was dismissed after a few weeks and Lyovochkin was appointed to the
post. He turned the prime minister’s service into his secretariat, became
independent of Tolstoukhov and began a lobby struggle.

Lyovochkin strengthened Yanukovych with advisers, of whom he is in charge.
Some of them could see Yanukovych in flesh only once or twice in these
months because their work was collected by Lyovochkin at the entrance to the
prime minister’s office. He recruited into his team the people tested in
Kuchma’s times.

Four advisers are dealing with international issues for Yanukovych. They
solve many issues without even informing the Foreign Ministry.

The closest one to the prime minister in this group is the former Foreign
Minister Kostyantyn Hryshchenko, who is de-facto Yanukovych’s personal
manager for these issues.

It is said that, for instance the Estonian prime minister’s visit to Ukraine
was prepared by Hryshchenko, bypassing the Foreign Ministry. He also
organized Yanukovych’s trip to the USA instead of the Foreign Ministry.

Hryshchenko’s predecessor in the Foreign Ministry, Anatoliy Zlenko, who
received the tile adviser for special international issues, has failed to
find anything to do in Yanukovych’s team.

The appointment of Andriy Fialko as Yanukovych’s adviser was aimed to
neutralize the activity of Anatoliy Orel. They opposed each other for a long
time, when working in Kuchma’s administration: Fialko has a pro-Western
vision, while Orel has pro-Russian.

Orel – the former teacher of Italian at the Main Intelligence Directorate in
Moscow – played the defining role in Yanukovych’s foreign policy before the
appearance of Lyovochkin.

During that period he managed to make a few surprises for his boss. For
instance, he crossed out the essence from Yanukovych’s letter to Javier
Solana [EU high representative for common foreign and security policy] that
the new government will support a border regime with the Dniester Region
agreed with the European Union.

However, Orel was pushed away to Yanukovych’s distant orbits and the limit
of his ambitions was to be appointed ambassador to Russia or Italy. Orel
even tried to show his usefulness to the Orange team, saying that 90 per
cent of Ukrainians in Italy voted for Yushchenko thanks to his diplomatic
work in Rome.

A group of advisers is in charge of economic issues in the Yanukovych
government. For instance, former Foreign Trade Minister Andriy Honcharuk
deals with entry into the World Trade Organization. He was the only one from
among his colleagues who accompanied Yanukovych in Davos.

Former minister Ihor Yushko is in charge of finance. He and Honcharuk are
close to [Kuchma’s son-in-law and big businessman] Viktor Pinchuk.

Pavlo Haydutskyy (deputy head of Kuchma’s administration) became
Yanukovych’s adviser after dismissal from Bankova Street in 2006.
Yanukovych’s speeches show sometimes that their macroeconomic ideology is
written by another prime minister’s adviser, Anatoliy Halchynskyy (Kuchma’s
former adviser).

The group of Yanukovych’s legal advisers includes Leonid Pidpalyy (former
deputy head of Kuchma’s administration), Mykhaylo Ryabets (former chairman
of the Central Electoral Commission) and Pavlo Yevhrafov (retired
Constitutional Court judge).

The former governor of Dnipropetrovsk Region, Volodymyr Yatsuba, is the
secretary of the council of regions under Yanukovych, with the help of which
the prime minister is trying to control the regional governors.

Yanukovych’s another adviser is the former head of the Department for State
Affairs and Kuchma’s former doctor, Oleksandr Vozianov.

Experts see only one explanation for this appointment – taking into account
Vozianov’s connections with Feofaniya hospital [for top state officials],
Yanukovych can learn secrets of health condition of many Ukrainian
politicians.

Lyovochkin also supervises political consultants Yuriy Levenets and Andriy
Yermolayev, and adviser on mass-media image, Hanna Herman, who also edits
Yanukovych’s speeches from time to time.

Apart from advisers, Lyovochkin’s influence also extends on Tolstoukhov’s
subordinates. For instance, Yanukovych’s staff lawyer and first deputy
minister of the Cabinet, Olena Lukash, or Tolstoukhov’s another first
deputy, Ivan Kutsyk, are also close to Lyovochkin.

State service also connected Lyovochkin with another person, on whom the
prime minister’s security depends, the head of his personal guards, Ihor
Sulima. Sulima got the job in autumn 2004 after his predecessor was
dismissed over an egg-throwing act of terrorism against Yanukovych in
Ivano-Frankivsk.

Much has been written about Yanukovych’s constant need for heightened
security: in connection with an additional metal detector installed outside
his office and after heightened security measures on the days of the prime
minister’s visit to his home city of Donetsk.

The move of two bodyguards from Donetsk to Kiev during his first term as
prime minister also shows that Yanukovych cannot live in peace in this world
and trusts only well-tried people. These two former policemen were employed
by the State Guarding Service. Since then either one or the other accompany
Yanukovych everywhere.

As it happens in politics, Lyovochkin’s present closeness to Yanukovych
could unite against him other ambitious people in Yanukovych’s entourage.

However, Lyovochkin has recently strengthened his status by joining the
Party of Regions and immediately getting a seat in its political council.
So, from now on, apart from supporting Yanukovych in the Cabinet of
Ministers, he will also deal with his party life.

“Earlier, there were days when Yanukovych held up to 30 meeting per day. It
was impossible to live in such conditions! Today, Lyovochkin is the
bottleneck through which one has to pass if one wants to get to Yanukovych,”
people who know the Cabinet’s kitchen explain. Lyovochkin also has the
facsimile of Yanukovych’s signature.

Another Viktor Yanukovych’s “favourite”, Eduard Prutnik, is Serhiy
Lyovochkin’s close friend and Christian relative [either godfather of his
child or father of his godchild].

During recent elections he was in charge of PR escort of the incumbent prime
minister and after the coalition was created he received the post of the
head of the State Committee for Television and Radio.

Ambitious Prutnik positions himself as “the proper boy” in the eyes of
western diplomats. He is talking about readiness to create public television
and goes to Brussels in order to get the money for information booklets
about NATO.

Prutnik is building up muscles in his post. He has brought the state
printing industry and Ukrtelefilm under his control and is going to compete
with [Transport Minister] Mykola Rudkovskyy for the RRT system.

The RRT system is potentially lucrative because it encompasses broadcasting
towers, FM radio transmitters and cell phone transmitters etc.

Another project aimed at accumulating money flows is the creation of a mega
television channel on the basis of regional television and radio companies
and Kultura television channel with a joint advertisement shop.

From 2007, Prutnik supervised the distribution of funds of national
television and radio companies. He has also secured for himself the status
of number-one expert on media law in the anticrisis coalition.

The figure of the Fuel and Energy Minister Yuriy Boyko worries not only the
opposition but also Yanukovych’s colleagues in the Party of Regions.

Some fear that very soon, due to the RosUkrEnergo scheme, Boyko is going to
have the influence like [former transport minister] Heorhiy Kyrpa had in the
heyday of favouritism under Kuchma.

And if Yanukovych competes for the presidential post, Boyko will be the only
candidate for the prime minister’s post without alternative and he will have
plenty of resources to achieve this goal.

At the moment, Naftohaz Ukrayiny is managed from Boyko’s office. Almost
immediately after he was appointed fuel and energy minister six months ago
Boyko established control over Ukrhazvydobyvannya which until then was under
the patronage of Yushchenko’s teammate Ivan Vasyunyk and this broke one of
the conditions in the foundation of a grand coalition.

Ukrhazvydobuvannya is the most tempting asset of Naftohaz where the money is
not spent but made. And from the 1 March, when the head of
Ukrhazvydobuvannya, Yevhen Bakulin, became the head of Naftohaz, Boyko
achieved monopolistic control over this state owned monster.

Boyko’s another party comrade is Yanukovych’s international adviser,
Kostyantyn Hryshchenko. Boyko and Hryshchenko together recently tried to
carry out a project named the Ukrainian Republican Party [which Boyko
heads].

Another person close to Boyko is the first deputy internal affairs minister,
Mykhaylo Korniyenko. Before he came back to the Internal Affairs Ministry,
when [Vasyl] Tsushko took the post of the interior minister, Korniyenko was
deputy head of Naftohaz and security chief in this state- and Boyko-owned
company.

Before the last parliamentary elections Korniyenko was deputy internal
affairs minister for links with the Supreme Council. Despite of peace-making
title of his post, some sources say that he accumulated and later made
public information about opposition leaders and their family members.

The fact that Boyko in fact drove Volodymyr Sheludchenko out of Naftohaz,
because the latter could not compete with the minister, is another fact to
prove that Boyko has a special position in Yanukovych’s team.

This is given that Sheludchenko was close to Yanukovych since the times of
joint work in Donetsk Region when he was in charge of Donetskoblhaz and also
was Yanukovych’s tennis partner.
        PLANETS AND METEORITES WITHOUT “COVER”
Oleksandr Lavrynovych received his portfolio of justice minister in the
Yanukovych government due to the same reasons that helped him to take this
post for the first time when Kuchma was the president – Lavrynovych is
knowledgeable in nuances of the judicial field and has grounds to aspire for
one of the first places in the contest of officials most devoted to their
bosses.

Internal Minister Vasyl Tsushko has become closer to Yanukovych recently

due to his charisma of “a simple fellow”, whose street smartness is to
Yanukovych’s liking.

In addition, Tsushko is very sensitive to any wishes of the anti-crisis
coalition not only as regards staff reshuffles but also the smearing of
[former Interior Minister] Yuriy Lutsenko’s image.

Another Socialist minister, Mykola Rudkovskyy, also has limited impact in
his area, where people from Donetsk occupy leading posts.

He stumbles at scandalous reputation that has already been imprinted in
popular wisdom: “He is obnoxious like white-and-blue but makes a fool of
himself like orange.”

The story of a photo of Rudkovskyy holding a piece of paper which contains
words of harsh criticism of Defence Minister Anatoliy Hrytsenko should not
mislead anyone. According to information from government sources, they were
not written by Rudkovskyy in order to give it to Yanukovych.

The sources say the author of those words was Andriy Klyuyev, from whom
Rudkovskyy simply took the draft before a government session and awkwardly
got into a picture taken several minutes later.

Rudkovskyy and Shufrych have long history of relations. Their relations go
back to the times when the richest Socialist and the most scandalous Social
Democrat were partners in the gas-extraction business in Poltava Region.
Shufrych’s appointment as minister is originated in the principle of Donetsk
people “not to give up our guys”.

A few people remained with Yanukovych before the third round of [2004
presidential] election, and Shufrych was one of them. In addition, with
Shufrych coming to the government Yanukovych received a direct communicator
with his main opponent, Yuliya Tymoshenko [Shufrych and Tymoshenko are said
to have had a romance].

Another person from Yanukovych’s entourage is in contact with the Yuliya
Tymoshenko Bloc: Mykola Demyanenko, who is improving relations with

YTB MP Bohdan Hubskyy. Demyanenko ensures Yanukovych’s comfort.

Demyanenko was the office manager in the Donetsk regional administration
when it was headed by Yanukovych. During Yanukovych’s first term as prime
minister Demyanenko was first deputy minister of the Cabinet of Ministers
for these matters. He is an MP now.

Another man who has close personal relations with Yanukovych is Anton
Pryhodskyy, who is the focal point of all railway transportation of the
Donetsk group. The prime minister’s son, Viktor Yanukovych junior works
under Pryhodskyy in the parliamentary Transport Committee.

The Crimean dacha, where Yanukovych or members of his family sometime

stay, is called “a family-type holiday hotel” of the Interregional Industrial
Union corporation, which is co-owned by Pryhodskyy and [businessman and
MP Rinat] Akhmetov. Pryhodskyy is considered to be one of the most
effective lobbyists in Yanukovych’s inner circle.

According to the MP himself, he is one of the few who are not afraid to
contradict the prime minister, proving that they are right.

Pryhodskyy is in charge of Crimea. The Crimean parliament speaker,
Anatoliy Hrytsenko, is his creation.

Oleksandr Melnyk, who was detained by Lutsenko as head of the Seilem gang,
implements Pryhodskyy’s vision in Crimea. Taking into account that the
peninsular is Yanukovych’s electoral reserve, the results Yanukovych’s team
gets in the next election depends on Hrytsenko’s actions.

Pryhodskyy is also described as the man in charge of the Constitutional
Court in Yanukovych’s team. The prime minister has his own man among the
Constitutional Court judges, Vyacheslav Ovcharenko. Before his appointment
to the Court, Ovcharenko was the head of a court in Yanukovych’s home town,
Yenakiyeve.

If one digs deeper into Ovcharenko’s biography, one can find out that even
before receiving higher education, in mid-1980s he worked as legal adviser to
the car repair plans in the Ordzhonikidzevuhillya [coal company].

Yanukovych worked as head of Ordzhonikidzevuhillya’s automobile fleet.
Presently, Ovcharenko is Yanukovych’s eye and ears in the Constitutional
Court, on which the remit, and thus the future, of the incumbent prime
minister depends.

One of Yanukovych’s most valuable achievements in recent months was the
appointment of Volodymyr Radchenko as deputy prime minister. The head of
government got his man in the Security Service, which is formally under
Viktor Yushchenko’s supervision.

In Radchenko’s case Yanukovych carried out a quick operation – right after
he learnt that Radchenko attended an interview at the presidential
secretariat, he appointed him deputy prime minister on the following day.
This was not discussed with the coalition colleagues, as the news reached
them right in parliament.

Yanukovych’s appointment as head of government marked the transfer of the
Prosecutor-Generals’ Office under his influence. At first, Oleksandr
Medvedko began to follow the head of government. Then, even against
Medvedko’s will, he was strengthened with 100-per-cent Donetsk man, Renat
Kuzmin.

The final act of raising the flag of the Party of Region over the
Prosecutor-General’s Office was the appointment of another deputy
prosecutor-general, Viktor Pshonka. He became Yanukovych’s communicator in
this agency.

Links between [ombudsman] Nina Karpachova and the Party of Regions appeared
right after the arrest of Borys Kolesnykov, whom the ombudsman defended. The
Orange accused Karpachova of betrayal, and the white-blue invited her to
their election list.

Karpachova, violating the law, was the ombudsman and MP at the same time.
She wanted to become deputy parliament speaker, but when she understood that
the idea has no prospects, she decided to remain the ombudsman.

This caused a storm of protests by Western [human-rights] organizations,
which were indignant that the defender of human rights is politically biased.

Rayisa Bahatyryova was another candidate for deputy speaker. Having not
received the post to the left hand of Oleksandr Moroz, the most influential
woman in the Donetsk team felt a strong feeling of ingratitude to
Yanukovych.

Bahatyryova has become close to the Arfush brothers [who publish the
Paparazzi magazine and organize beauty contests], who not only act as her
promoters in France, but also are said to have helped her with treatment
leading to striking improvement of the appearance of the anticrisis
coalition’s coordinator.

Many connect these changes with rumours about Bahatyryova’s ambitions to
head the Party of Regions, because Yanukovych has to concentrate on his work
as prime minister. However, people in Yanukovych’s inner circle are opposing
this as much as they can.

Bahatyryova is working much on her own image and is trying to actively
remind people of herself. In particular, a group of writers prepares texts
that appear in various publications with her signature.

Bahatyryova is also trying to establish contacts in the international arena.
In January she, without attracting much attention, visited Paris, where she
met the French foreign minister.

However, sources say that it was not the ID of the Party of Regions that
helped her but… acquaintance with the lover of a French government
official, who works in the public relations industry.

Bahatyryova’s first deputy in the faction, Vasyl Kyselyov, heads the Party
of Regions in Crimea, one of the basic regions on the voters of which the
prime minister’s rating is held. Kyselyov distributes roles among his
colleagues: it depends on him when and what MP speaks and on what issues.

Judging by public speeches, Kyselyov is now trying to occupy the niche held
by Yevhen Kushnaryov [who died after a hunting incident], the role of the
factions’ spokesman. But this experiment causes doubts in its success –
Kyselyov has made fool of himself recently.

Trying to oppose the Yuliya Tymoshenko Bloc, which blocked the electricity
switchboard room, he began appealing to Tymoshenko’s past and touched the
taboo topic in the Party of Regions: “Who is a worse criminal – who stole
hats [reference to Yanukovych] or stole 7bn dollars?”

The deputy head of the parliamentary faction, Mykhaylo Chechetov, is
responsible for the voting results that are shown on parliament’s screen. He
conducts 186 votes of the Party of Regions and several more defectors in the
hall under the dome.

Chechetov gives orders whether to vote for or against a motion. The high
price of mistake in this post is shows by the example, where the Party of
Regions supported the ban to raise utility rates last year.

The anticrisis coalition had to cancel the popular decision, but the
Yanukovych government failed to clearly explain to the electorate why they
had to do so.

Yanukovych also has a personal minister for relations with the Supreme
Council. There was no such post in previous governments, and some people
even suspect that it was created specially for Ivan Tkalenko. He was head of
the Party of Regions’ secretariat in the time when Yanukovych was its
leader.

Tkalenko has friendly relations with deputy prime minister Volodymyr rybak
and fairly good relations with Mykola Azarov. However, despite high status –
minister after all – Tkalenko’s duties are to merely send papers between the
government and parliament and nothing more.
                                           AZAROV’S ORBITS
[First Deputy Prime Minister] Mykola Aarov is responsible for macroeconomic
policy of the government. The number of his opponents inside the Party of
Regions is increasing, but his ambitions don’t decrease.

Azarov became one of the most influential figures in Kiev politics much
earlier than Yanukovych. When Yanukovych was only one of 25 governors,
Azarov’s agency [State Tax Administration] were putting Borys Feldman [head
of the Slovyanskyy bank] behind bars.

In 2001, Yanukovych only dreamed about moving to the capital and brought
Holand-Holand rifles worth dozens of thousands of dollars to Kuchma as
presents while Azarov was creating the Party of Regions in its present form
by merging marginal parties. Thanks to his leadership in the tax
administration, the party’s numbers grew with great speed.

Azarov has much older history of relations with Viktor Yushchenko, which
began when the latter was the prime minister. They did not become enemies
after Yushchenko’s dismissal and, it is said, Azarov even took part in talks
on uniting the Party of Regions and Our Ukraine in the 2002 [parliamentary]
elections.

In 2002, Azarov – one of Leonid Kuchma’s favourites – had real chances to
become prime minister instead of Yanukovych.

According to eye witnesses, once Azarov and Yanukovych began a quarrel in
the presence of the then president. In 2004 Azarov de-facto ruled the
government instead of Yanukovych, when the prime minister was busy
campaigning for presidency.

The situation now is radically different for Azarov. He is a subordinate of
the prime minister, while his hands are itching to hold the cabinet’s
steering wheel.

His dissatisfaction grew even more when Yanukovych publicly, in the presence
of journalists, criticized Azarov, who still remembers the scope of his
remit three years ago. Azarov could do anything in Yanukovych’s first
government – up to employing his own son as prime minister’s adviser.

“In the current situation Azarov is guarding the house, but strategic
decisions where to spend money or what to privatize seized to be within his
remit,” a fellow party member of the first deputy prime minister has said,
describing the situation.

Azarov’s health is another problem. He has problems with his stomach. In
addition, orthodox Regionals cannot forgive Azarov his appearance on

Maydan [the heart of the Orange Revolution] together with Yushchenko’s
after the revolution.

At the same time, Azarov together with Yuriy Boyko are the most powerful
lobbyists of the pro-Russian policy in the government.

It is said that at a Cabinet meeting Azarov “buried” the discussion on a law
which was seemingly neutral.

It was about the work of foreign defence lawyers on Ukraine’s territory.
Azarov was extremely indignant that defence lawyers have to read their oath
in the state language and said: “Why are we discriminating the Russian
language?”

Although presently Azarov’s powers are limited, his influence on the
government’s work is one of the biggest even now. It is said that his
consultations with astrologists add to his confidence.

All the financial sector is in Azarov’s hands. Vadym Kopylov, who is close
to Azarov, is the de-facto head of the Finance Ministry. Anatoliy Brezvin,
who is not an alien to him, heads the tax administration, the beloved child
of the first deputy prime minister.

Azarov’s man, Volodymyr Makukha, also heads the Economics Ministry.

However, Makukha could be sacrificed according to the scenario:
“Yanukovych punishes the official responsible for raising utility rates.”
The prime minister has already warned the minister that the latter is the
first on the row to be dismissed.

The situation with Labour Minister Mykhaylo Papaya is somewhat different.
He owes his post to Yanukovych’s personal sympathy. But due to his duties,
Papaya works closely with Azarov and has a conflict with Tabachnyk.

They say that the minister and his curator, humanitarian deputy prime
minister are constantly quarrel over staff appointments in the state bodies
subordinated to them.

Dmytro Tabachnyk was included in Yanukovych’s second government to remind
the prime minister of comfortable work together in 2002-04 and also because
other candidates refused.

Chances were good that Yevhen Kushnaryov or Rayisa Bohatyryova would

become deputy prime ministers instead of Tabachnyk but they chose to
focus on the work inside the [parliament] faction.

Volodymyr Rybak is a representative of “old fellows from Donetsk” in the
Yanukovych government. Chances are slim that he will introduce radical
reforms in the public utilities sector and Yanukovych has already shown
signs of dissatisfaction with Rybak’s work. Rybak however must remain a
symbol that the previous generation of Donetsk elite is not forgotten.

Rybak is in fact a founder of the Party of Regions back in 1990s. It was
then called the Party of Regional Revival.

Rybak is notable for his peaceful nature and reluctance to start conflicts.
Immediately after the Orange Revolution, he said straightforwardly that he
recognized Yushchenko as president and criticized Nestor Shufrych who

called dfor continuing the struggle.

Among present leaders of Donetsk region, Anatoliy Blyznyuk, the head of the
regional council, is the most close to Yanukovych.

When the prime minister was leaving his governor’s office he managed to
persuade Leonid Kuchma to appoint Blyznyuk as governor, because he trusted
him more than the other candidate, Vasyl Dzharty.

The current head of the regional administration, Volodymyr Lohvynenko, comes
from the Donetsk-based group Enerho which is connected to former
Prosecutor-General Gennady Vastly and businessman Viktor Nuisances.

They are not Yanukovych’s closest favourites, but witnesses say that when
the issue of a new Donetsk governor rose, it was Yanukovych who proposed
Lohvynenko to Yushchenko.

The Donetsk mayor, Oleksandr Lukyanchenko, is close to Yanukovych because

of regional registration of the prime minister. Also in 2004 he played his role
and made sure that Yanukovych also had his Maydan in Donetsk.

Yanukovych’s monoregionalism remains his problem – people who are not from
Donetsk remain on remote orbits of the present government team. The leaders
of Kharkiv, Luhansk and Zaporizhzhya regions are important for Yanukovych
because they represent regions that are used to inflate his rating at
elections.

Oleksandr Yefremov and Viktor Tyhonov from Luhansk reached higher ranks in
the hierarchy of the Party of Regions than others. They are in charge of two
parliamentary committees – on parliamentary regulations and on state
building and regional policy.

This is another proof to the principle inside Yanukovych’s team – to thank
those who were persecuted after the revolution.

Kharkiv is represented in Yanukovych’s entourage by Kharkiv mayor Mykhaylo
Dobkin and the head of the regional council, Vasyl Salyhin, who was
acquainted with the mayor since 1990s.

In the previous parliament Dobkin remained with the United Social Democratic
Party almost until the very end and protected [Hryhoriy] Surkis’s
Poltavaoblenerho regional energy distribution company from [Russian
businessman Konstantin] Grigorishin’s managers with his own body, locking
himself in the director’s office.

However, right before the election, understanding the catastrophic situation
around the ratings of Medvedchuk’s bloc, he joined the Party of Regions and
ran from it for the mayor of Ukraine’s second largest city in terms of
population.

Oleksandr Peklushenko represents Yanukovych in electorally close
Zaporizhzhya, where the situation is difficult because governor Yevhen
Chervonenko is not controlled by the Party of Regions.

Kiev is another strategic region for Yanukovych. He remembers the lesson of
2004 – revolutions occur in capitals. This is the prime minister’s weak
spot. The Kiev branch of the Party of Regions headed by banker Vasyl Horbal
failed to change the situation in Kiev – Yanukovych is not accepted here.

According to some sources, Horbal became the head of Yanukovych’s Kiev
headquarters at the presidential elections with the help of Viktor
Medvedchuk. It is not ruled out that soon there will be attempts to move
Rayisa Bahatyryova’s son, Oleksandr – a deputy in the Kiev council, to the
first posts in Kiev.
                                       AKHMETOV’S ORBITS
The personality of Rinat Akhmetov requires a separate investigation and the
drawing of a separate universe. This is the only person in Yanukovych’s team
whom he treats as equal and even with emphasized respect.

“For instance, when Yanukovych organizes a meeting somewhere Klyuyev is
told: ‘come to that place’, Azarov is not invited at all, and they negotiate
with Akhmetov: ‘let us meet there or where it is more convenient for you’,”
sources describe relations in Yanukovych’s team.

According to eye witnesses, Yanukovych – already in the capacity of prime
minister – flew on Akhmetov’s plane and was even summoned to a meeting with
Akhmetov in his Kiev office.

Sources in the prime minister’s entourage deny the second fact. As regards
the plane, they say: yes, this happened once when Yanukovych returned from
Yevhen Kushnaryov’s funeral.

Akhmetov influences Yanukovych’s position through the parliamentary faction
of the Party of Regions. Nobody knows the number of people who are oriented
directly towards the richest Ukrainian businessman and this is the subject
of constant discussions among political experts. It varies from 60 to 100.

Ironically, Akhmetov is most interested in friendship between Yanukovych and
Yushchenko, because the country’s stability depends on this and thus the
value of his business.

Understanding that complete ownership of the System Capital Management [SCM]
poses the threat of becoming the victim of an outside attack, Akhmetov is
preparing for selling shares at stock exchanges.

Then the price of internal political stability amounts to a certain number
of billions of dollars which he gets or loses in the initial public offering
of shares.

Akhmetov’s friend Borys Kolesnykov heads the Party of Regions in
Yanukovych’s home base, Donetsk Region. Kolesnykov himself treats his party
leadership skeptically, and treats even more skeptically most government
officials.

Kolesnykov remembers Yanukovych’s inadequate reaction after his arrest
[after the Orange Revolution] and will hardly ever forgive this.

Also, he won’t forget the anecdote in the form of a commercial of the Jeans
mobile operator, which was widely spread in Kiev: “Yanukovych is calling
Kolesnykov and asking: ‘Borys, where are you? I am at the seaside!”

Another important person in Yanukovych’s entourage is US consultant Paul
Manafort, who was in charge of Yanukovych’s election campaign and lobbying
his interests in the USA. He was included in Yanukovych’s team by Akhmetov.
Manafort had a contract with SCM before that.

Vasyl Dzharty was the head of the Party of Regions’ election headquarters
during the last parliamentary election campaign. On the night after the
voting, an Ukrayinska Pravda correspondent witnessed Dzharty reporting to
Manafort that he had observed all Manafort’s instruction during a TV
interview. It is widely believed that Dzharty is close to Akhmetov.

In particular, it is said that the FC Shakhtar president [Akhmetov] lobbied
Dzharty’s appointment as Donetsk Region governor after Yanukovych

moved to Kiev.

However, sources in Akhmetov’s inner circle say that reports about their
close relations are invented, and the president of Shakhtar reprimanded
Dzharty right in the parliamentary session hall last year for spreading
rumours that he and Akhmetov have close contacts.

Coal Industry Minister Serhiy Tulub was one of the first among the officials
in the present government who moved from Donetsk to Kiev. In 1998, he moved
from the office of Yanukovych’s deputy to the post of the coal industry
minister.

Before May 2000 he was the minister of fuel and energy and left this post
after a scandal with then Deputy Prime Minister Yuliya Tymoshenko. When the
time came for Tymoshenko’s dismissal, she accused people who objected her
scenario of reforming the coal mining sector of organizing her dismissal.

It seems it was Tulub who represented their interests. Back then, this
Donbass-based business was concentrated around Ihor Humenyuk, Rinat
Akhmetov’s partner.

At the moment the link between Tulub and Akhmetov can be seen in the Miner’s
glory order which was handed by the minister to the president of the
football club. It is believed that with Tulub’s help managers from
Akhmetov’s enterprises received leading posts in state-owned mining
companies Rovenky Antratsyt and Sverdlov-Antratsyt.

Volodymyr Kozak is at the outer orbits. The director of Ukrzaliznytsya
[Ukrainian railways] sits on one of the biggest money flows in Ukraine.
Prior to this, Kozak was in charge of Lemtrans company, owned by Akhmetov
and Pryhodskyy.
                           YANUKOVYCH AND ETERNITY
Apart from political contacts, Yanukovych is also close to some religious
leaders of Ukraine – the head of the Ukrainian Orthodox Church of Moscow
Patriarchy, Volodymyr, and Donetsk and Mariupol metropolitan Illarion.

“The prime minister dines with Volodymyr on Christmas eve all the time in
metropolitan chambers, pays visits to him on his name-day, Easter and
Epiphany,” Hanna Herman says.

Svyatohorska Lavra stays under Yanukovych’s patronage. His wife also
intensifies religious influence on him.

According to Herman, Yanukovych “now maintains contacts with monks

of Mount Athon, whom he met during the Olympic Games in Greece”.
Yanukovych became religious after an unexpected encounter with an
elderly monk Zosima in Soviet times, when, according to Herman,
“Yanukovych was going through the most difficult time in his life”.

Now everything is changing in his biography.                -30-
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10. UKRAINIAN BOXER KLITSCHKO STOPS AUSTIN IN ROUND 2

AP Worldstream, Germany, Sunday, Mar 11, 2007

GERMANY – Wladimir Klitschko retained his IBF heavyweight title Saturday
night, dropping Ray Austin with a flurry of left hooks and stopping the
American challenger in the second round.

The Ukrainian knocked down Austin 87 seconds into the round with at least
three left hooks. The American climbed to his feet but referee Eddie Cotton
stopped the fight.

“I was surprised he got back up, but he wasn’t clear in the head,” Klitschko
said. “I was motivated by the talk from Austin and his promoter, Don King,
before the fight.”

Klitschko improved his record to 48-3 with 43 knockouts in the mandatory
defense, while Austin fell to 24-4 with four draws and 16 knockouts.

Neither Austin nor King, both of whom had called Klitschko heartless before
the bout, showed up at the post-fight press conference.

Klitschko established himself among the best of the heavyweight division
with wins over Samuel Peter of Nigeria, Chris Byrd and Calvin Brock.

Both fighters were listed at 2.00 meters (6-foot-6) and 112 kilos (246
pounds), with Austin’s camp hoping another big heavyweight would trouble
Klitschko.

But Austin didn’t land a meaningful blow in the first round. Klitschko
measured Austin with his left hand until he caught him on the ropes.

The Ukrainian snapped Austin’s head sideways with the first left hook, and
then followed with a series of hooks, some missing as the American fell to
the canvas.

Klitschko never used his right hand that was responsible for most of his
knockouts and earned him the nickname Dr. Steelhammer.
“What you saw today, you’re going to more of the future – Wladimir is
developing new punches, besides the right and the jab,” his trainer Emanuel
Steward said.

The crowd of 15,000 roared for Klitschko went he walked in, then jeered a
fight that featured just a handful of punches. Austin had been stopped just
once before in his four losses, in the ninth round, by Attila Levin in July
of 2001. It also was his last loss.

The 30-year-old Klitschko won the title in April, stopping Bird in the
seventh. Next up, his camp hopes, is a unification fight against WBC
champion Nikolai Value, the 2.13 meter (7-foot) Russian.

“Valuev wants it and I want it,” Klitschko said. “But you can imagine how
hard it is to deal with Don King.” Austin earned the title shot with a draw
in July against unbeaten Russian Sultan Ibragimov. The bout was televised in
more than a hundred countries. Former world champions Lennox Lewis and
Vitali Klitschko made short guest appearances in the ring.      -30-
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11. UKRAINIAN BOXER WLADIMIR KLITSCHKO LEAVES
                 PLENTY TO PROVE IN UGLY MISMATCH

By Steve Bunce, The Independent, London, UK, Mon, Mar 2007

Wladimir Klitschko knocked out Ray Austin in the second round to retain
his International Boxing Federation heavyweight title in Mannheim, Germany,
on Saturday after one of the least satisfying title fights for many years in
the sport’s once golden division.

Klitschko, who has stopped or knocked out 43 of the 48 victims he has
been matched against, dropped the reluctant Austin with a left hook and the
one-time sparring partner from Texas decided to stay on his belly for eight
of the count to 10. The crowd of 16,000 jeered the ugly conclusion.

Austin’s credentials were poor and the win failed once again to prove
conclusively that Klitschko has found the form that a few years ago left him
in the No 1 position to fill the void created by the retirement of Lennox
Lewis. However, concussive defeats in 2003 and 2004 clearly ruined the
Ukrainian’s confidence.

The plan now is for Klitschko to fight the World Boxing Association’s
champion Nikolai Valuev, who is unbeaten in 46 fights, in June or July, at
about the same time that his older brother, Vitali, returns to the ring to
meet Oleg Maskaev for the World Boxing Council version.

The fact that two Ukrainians, a Russian and a Kazakh fighter will contest
two of the heavyweight belts is one of the reasons why the the division is
as good as dead in America.

On the same night in Liverpool, Souleymane M’baye retained his WBA light
welterweight title with a disputed draw against Ukraine’s Andreas Kotelnik.
Three years ago M’baye beat Kotelnik in another controversial split
decision.

The nominal main event at the Olympia in Liverpool involved local boxer
Derry Matthews, who defended his World Boxing Union featherweight title
against the British featherweight champion John Simpson.

It ended with a points decision for Matthews, but he was down in the first
round and had two points deducted for hitting and holding in a bad-
tempered brawl, which left Simpson believing he had won.     -30-
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LINK: http://sport.independent.co.uk/general/article2350017.ece
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12.   ‘A GIVING HEART’: YOUNG FLORIDA WOMAN SERVING
                  AS PEACE CORPS VOLUNTEER IN UKRAINE

By Kate S. Peabody, Pensacola News Journal
Pensacola, Florida, Sunday, March 11, 2007

 It’s 8 degrees Fahrenheit outside. You just woke up and you have to walk
about 300 yards outside to fetch your drinking and cooking water.

Sounds lovely, right? No, but it’s a typical morning for Ashley Hardaway,
a young Pensacola woman now living in Ukraine.

The 22-year-old Pine Forest High School graduate is a U.S. Peace Corps
volunteer in the tiny town of Brylivka in Ukraine. She went to Eastern
Europe last fall to teach English to students in the fifth through 11th
grades.

She’ll be there for the next two and a half years, also teaching a healthy
living lifestyle course, which includes AIDS education and abstinence from
smoking and alcohol.

Being the only American in a town of 4,000 can be stressful, she said. “They
all know I am the American,” Hardaway said. “And you represent America.
Whatever you do or say, they will think all Americans are like that.”

And because no one speaks English, “it’s hard to make friends. No matter
how well you learn the language, you will never fully understand.”

Her mother is very proud. “My daughter has always had a giving heart, so I
was not that surprised when she told me at a young age that she wanted to
make a difference in the world,” said Elaine Hardaway of Pensacola.
                             LIFE IN EASTERN EUROPE
Life in Brylivka is far different than life in the Panhandle. Even
transportation can be a challenge. The buses usually are cramped, sometimes
with as many as 300 people, with most carrying along their produce —
potatoes, onions or carrots.

Hardaway said a recent bus trip was especially memorable. “I told the driver
I didn’t know where to get off, he said ‘I will tell you,’ ” she said.
Shortly thereafter, when the bus stopped, she said the driver called out,
“American, get off the bus.”

And she did, but soon realized she was at the wrong stop. “I had no idea
where I was,” she said. After waiting for about five minutes, “I literally
hitch-hiked in a car full of onions, beets and potatoes. It was odd, but I
made it to town,” she said.

Nevertheless, the rewards of living in Ukraine outweigh the drawbacks she’s
encountered. The people are generous and her students are eager to learn
English — that makes her work there worthwhile, she said.

“The people here are not wealthy, but when you go to someone’s house to
visit, they will give you the best food, the best wine they have, even
though they have no money,” she added. “You always hear about Southern
hospitality. I was raised on Southern hospitality and so I know. There’s
nothing like Ukrainian hospitality.”

The Ukrainians also are big on holidays, celebrating Christmas and New
Year’s each January. “Every month there is a holiday,” Hardaway said.

Men take time off from work on Men’s Day. And on Women’s Day, children
get the day off from school, “because all the women are teachers in the
town. The men cook dinners and give them candy.”

As much as Hardaway enjoys her time in the Ukraine, she still feels homesick
sometimes. Though she misses her family the most, she also longs for simple
things, such as buying a Diet Coke or dashing off to a fast-food restaurant.

The steady diet of potatoes — lots of potatoes — also takes getting used
to, Hardaway said. “There’s no such thing as the Atkins diet here,” she
observed with a laugh.
                               FOLLOWING HER DREAM
Hardaway is in Ukraine now to make good on a childhood promise. One
month after graduating with honors from the University of Central Florida
last summer, she took her degree in English literature and left home to follow
her dream.

Hurricane Katrina had an influence on the new college graduate. “It just got
me thinking,” she said. “There was just an influx of young people and
college students helping out, and it made you want to do something to help
the world before going into the work force.”

But those who know Hardaway best said her desire to help others came long
before Katrina devastated the Gulf Coast in August 2005.

Going into the Peace Corps has been her daughter’s lifelong dream, Elaine
Hardaway, 51, said. Ashley is the second of three children. Her other two
daughters are, Aimee, 20, is a pre-pharmacy student at Pensacola Junior
College, and Aubrey, 26, a hospitality worker in New York City.
                                TAUGHT TO GIVE BACK
The Escambia County teacher explained that each of her children were taught
very early about giving back. But it was Ashley who took giving to another
level.

Having her daughter move so far away on her quest to make a difference
hasn’t been easy for Elaine Hardaway, but the genius of text messaging helps
ease her concerns. She chats with her daughter each morning.

“It’s easy for us now with the cell phone,” Elaine Hardaway said. “We can
get messages to our kids quickly.” She and husband, Edward, and daughter,
Aimee, also keep a weekly schedule of one telephone call each Saturday.

Getting used to her sister being that far away is still a tad difficult for
Aimee Hardaway. “I miss her terribly, because she’s not just hours away
anymore, and you can’t just pop on the plane to go and see her,” Aimee
Hardaway said. “When she left for college it was hard enough on me,
because I loved having her at home.”
                            PARENTS ARE ROLE MODELS
Aimee Hardaway also is a volunteer in her church nursery and the pre-school
choir teacher. Both sisters said their desire to help comes from watching
their parents, their role models. “My mom always volunteered at the theater,
and my dad at Habitat for Humanity,” Ashley Hardaway said.

The Hardaways also taught their daughters not to expect recognition for the
things they did. “It is not important for people to know what you are doing
for them, only that someone cared enough to do it,” Elaine Hardaway said. “I
told them just know in yourself that you are a good person, that is what we
tried to instill in our children.”

Even while in college, Ashley found a way to reach out and lend a hand to
some homeless children. She and three other students conducted a creative
writing workshop at the Coalition for the Homeless in Orlando as part of
their course work.

A classmate on the project, Nathan Holic, said she not only planned the
weekly meetings with the other students but also continued to teach at the
coalition even after the assignment ended.

“It was a class credit, but she put lots more time in than she needed to,”
said Holic, who is currently in graduate school at the university. Although
she misses her daughter “tremendously,” Elaine Hardaway says she
understands her passion for reaching out to others.

“I was nervous at first,” Hardaway said. “Ashley is just a tiny girl. She
weighs about 100 pounds, and I worried that I would not be there to watch
over her. I pray for her every morning, but I have to leave it in the Lord’s
hands. He put it on her heart to go, He is going to take care of her.”
———————————————————————————————–
                          ABOUT THE PEACE CORPS MISSION
The Peace Corps traces its roots and mission to 1960, when then Sen. John F.
Kennedy, D-Mass., challenged students at the University of Michigan to serve
their country in the cause of peace by living and working in developing
countries.

From that inspiration grew an agency of the federal government devoted to
world peace and friendship. Since that time, more than 187,000 Peace Corps
volunteers have been invited by 139 host countries to work on issues ranging
from AIDS education to information technology and the environment.

Who can serve: The men and women who join the Peace Corps reflect the
rich diversity of America in race, ethnic background, age and religion. They
possess varying physical capabilities.

They come from all geographical regions, all personal backgrounds, all walks
of life. Each brings a unique perspective. They include college graduates,
retirees, married couples or people who want to change careers. Details:
www.peacecorps.gov. [Karen Peabody: kpeabody@pnj.com]     -30-
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http://www.pensacolanewsjournal.com/apps/pbcs.dll/article?AID=/20070311/LIFE/703110340

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13.  BALTIMORE-TRAINED ARTIST SHARES UKRAINIAN EASTER
             EGG PAINTING CRAFT DURING HANDS-ON SESSION

By Laura McCandlish, Sun Reporter, Baltimore Sun
Baltimore, Maryland, Monday, March 12, 2007

Baltimore-trained artist Nestor Topchy put a new spin on Easter eggs at a
workshop yesterday that brought participants ranging from children to
grandmothers to the Johns Hopkins University’s Evergreen House.

The eggs were not exclusively the province of Easter, however, but the
Ukrainian decorated sort. Topchy had some wooden ones adorned with
geometric patterns hanging from his Byzantine gold-leaf icon paintings on
display there.

Now a resident of Houston, Topchy was a child when he learned pysanky, the
ancient egg-painting craft, from his mother — and both of them shared their
knowledge with about 30 people at Evergreen.

“Everybody’s really into the creative act,” Topchy said. “This tradition is
older than memory, and it’s richer than anyone’s mind. It’s a reminder to
not forget the achievements of all our ancestors.”

The hands-on session brought to life the works in an exhibit that opened
Wednesday at the North Baltimore mansion. It features pieces by five
graduates of the Maryland Institute College of Art who benefited from the
Evergreen House Foundation’s annual scholarship program.

Topchy (Class of 1985) was joined by two of the others, sculptural
decorative artist Lauren Ross (1993) and fiber artist Colleen Ostrander
(1995), in the egg-decorating workshop.

“It’s just the perfect thing. I can imagine the Garrett family being glad
that this was happening,” Ostrander said of the mansion’s long-ago
residents, who were among Baltimore’s foremost patrons of the arts.

Crouched over circular tables, the artists worked with participants who
sketched beeswax designs on their raw eggs and repeatedly submerged
them in baths of dye.

Participants clutched a tool known as a kistka to write on the eggs with hot
wax, which protects the white surface and reveals other colors through
layers of dyeing. They started with light yellow dyes and ended with black.

The yolks of the uncooked eggs usually dry out eventually. The dye wouldn’t
properly cling to a cooked shell, said the artist’s mother, Nora Topchy of
Woodlawn. “The wax seals the egg,” Nestor Topchy said. “Each time, you
cover what you want to preserve and dye it again.”

With Easter four weeks away, it was a timely event. Ukrainian churches
display the ornate eggs for blessing during Easter services and sell them at
bazaars and festivals.

Yet the timeworn practice predates Christianity. The symbols on the eggs —
whether natural scenes, religious images or angular shapes — vary among
regions of Ukraine. The patterns resemble the cross-stitch panels
embroidered on the Ukrainian blouses worn by Nestor and Nora Topchy.

The Italianate mansion on North Charles Street showcased myriad cultures.
Attendees practiced the Ukrainian craft in a Russian folk art-inspired
theater designed by avant-garde artist Leon Bakst.

Ross gave a private tour of her mixed-media installation in the dining room
downstairs. She created tongue-and-cheek breakfast table settings for the
Eight Immortals featured in the Chinese Daoist paintings that grace the
room’s walls.

Topchy’s works embody that range of influences. His images of the Virgin
Mary and Christ child, the Buddha and wild beasts hang in the mansion’s
gallery.

Topchy and his Ukrainian-Argentine wife, Mariana Lemesoff, have taught their
9-year-old daughter the ancestral craft. Minerva Topchy said her dad taught
her a trick: move the egg, not the wand, when painting it with wax. The
lines are steadier that way.

“It’s actually a maternal tradition,” Lemesoff said. “Mothers teach their
daughters. There’s a very feminine element related to the egg.”

Two friends from Baltimore’s Park School, Josie Verchomin and Lexi
Andrea, both 12, experimented with abstract scribbles and flames on
their eggs.

Minerva passed on her skills to the other children, and even the
professional artists, at Evergreen. “It makes me feel happy, because I’m
a little one teaching someone big,” Minerva said.         -30-
—————————————————————————————–
E-Mail: Laura McCandlish, laura.mccandlish@baltsun.com
—————————————————————————————–
http://www.baltimoresun.com/news/local/bal-md.eggs12mar12,0,6754732.story?track=rss

———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
14.      FOR HOLOCAUST SURVIVORS IN EX-SOVIET LANDS,
                     GOLDEN YEARS ARE DIFFICULT TIMES

By Lev Krichevsky, JTA, New York, NY, Monday, March 12, 2007

DNEPROPETROVSK, Ukraine – For Holocaust survivor Maya Petrova,
the fall of the Soviet Union hasn’t been so wonderful.

A retired hospital clerk from Dneprodzerzhinsk, Petrova, 77, is living on a
monthly pension of $25 – about the average in her country – with utilities
and medicines consuming the bulk of her income.

Her biggest dream now is to save enough to repair the roof in the old wooden
house her family built in 1911, where she still lives with her husband.
“Thank God, we always lived a decent life. Only lately has it become really
bad,” Petrova says.

The fall of communism has brought a cruel paradox to the lives of Holocaust
survivors in the Soviet Union. They can now be open about their wartime
ordeals as Jewish victims of the Nazis, but in the post-Communist world,
they have no government-sponsored Social Security-type system to rely upon
when they reach the age of retirement.

The Communist government did not allow the Soviet victims of the Holocaust
to receive any compensation from Germany. After the fall of communism,
Holocaust survivors in the former Soviet Union became eligible for
compensation. But most never lived long enough to get any money.

Decades ago, a Social Security-type program was not all that important to
Soviet survivors. They were young and energetic enough to rebuild their
lives – quite often in the same places where they survived the occupation
and where the rest of their families fell victim to Nazis.

But now, with no meaningful government safety net in place, most of the
aging survivors in Ukraine, Russia, Belarus and elsewhere in the former
Soviet Union live on or beneath the poverty line.

“Holocaust survivors in the former Soviet Union are among the poorest Jews
on earth,” says Steven Schwager, the executive vice president of the
American Jewish Joint Distribution Committee, a group that provides a wide
array of social services to the population of survivors in the former Soviet
bloc.

Many are embarrassed that they cannot live in dignity. “When I needed to buy
a new pair of stockings last month, I had to give up fresh fruits and
vegetables from my daily ration for two weeks,” says an 80-year-old survivor
from Dnepropetrovsk who identified herself as Maria.

Sonya Khaikina, another survivor from Dnepropetrovsk, says she hasn’t lived
this poorly since World War II.

During the war, Khaikina, then a teenager, had to hide from the Nazis, who
killed the rest of her family. She spent a few weeks hiding in an abandoned
house’s attic on a diet of straw, which later caused her to lose all her
teeth.

“Blame it all on my age,” she says, trying to smile. “I got a whole bouquet
of diagnoses.” A retired clerk, Khaikina now receives a monthly government
pension of $24 and has no relatives to help her.

Claims Conference officials in New York say there are only about 9,000
Jewish survivors left in the former Soviet Union who meet the strict
requirements for lifetime pension set by Germany: those who survived at
least 6 months in a concentration camp or spent no less than 18 months in a
ghetto or in hiding.

A large portion of them live in Ukraine, home to half the 2.8 million Soviet
Jews killed by the Nazis.

Some criticize the German requirements for eligibility as unfair when
applied to the Soviet Union, where most ghettos existed for less than 18
months. In fact, about 40 percent of Soviet Jewish citizens killed during
the Holocaust died in the first six months of Nazi occupation.

Alexander Gurevich was 14 when he and his family became inmates of a Jewish
ghetto in Kharkov. In December 1941, he narrowly escaped a mass execution at
Drobitsky Yar, a ravine on the outskirts of this city in eastern Ukraine,
where 15,000 people died.

He escaped from the Kharkov Ghetto after most of the residents – including
his mother – already had been killed.

When Gurevich applied for a German pension a few years ago as a survivor of
a Nazi ghetto, it turned out he was shy a few weeks of the minimum
requirement for former ghetto inmates.

“I think it’s unjust. They should have taken my circumstances into
consideration. Had I escaped a few weeks later, then the Nazis should have
started killing us later,” he says bitterly.

Survivor advocates argue that different standards should be used to evaluate
the remaining survivor population in the former Soviet Union, and Schwager
says a broader definition exists: Holocaust victims who fled or lived under
occupation.

In the last several years, tens of thousands of needy elderly Jews who do
not meet the German requirements for pension eligibility have been
benefitting from social and charitable services provided by the Jewish
community, mostly through the JDC.

Raisa Bukhman, 85, is among them. Born in Dnepropetrovsk, she was evacuated
to eastern Russia before Germany occupied her native city. When she came
back after the war, she found out that her grandparents were killed, their
heads cut off and buried in the yard of their house.

Today, Bukhman – who worked until retirement at a food store and cafe – is
living in a cramped room in a dilapidated old house, the same house she was
born in and where her grandparents were brutally murdered.

Utility payments for the small apartment, which doesn’t have a bathroom,
consume almost half of her $23 monthly pension. She receives daily hot meals
from the local Hesed center, which is run by the JDC. “Without this help I
would have long been gone,” Bukhman says.

The JDC, the primary agency for providing these social services to Jews,
gets funding for Hesed’s $60 million annual budget from a number of recent
Holocaust-era settlements.

The bulk comes from the Claims Conference in the form of grants paid out
from proceeds from the sale of unclaimed Jewish properties in former East
Germany. The JDC also gets money from the International Commission on
Holocaust Era Insurance Claims and the Swiss banks settlement.

The JDC says it serves about 125,000 survivors in the entire former Soviet
Union, a number that includes all those who fall under the broad definition
of victims of Nazism.

They receive food, home care, medications, socialization and various
supplementary services through a network of 174 JDC-operated Hesed centers
that opened in the last decade across the former Soviet Union.

Grigoriy Kolodach, a young director of a JDC Hesed center in Dnepropetrovsk,
oversees services to some 7,500 needy Jewish clients, including about 5,000
wartime victims.

“Every person who was born before the war on the territory that fell under
German occupation automatically counts here as a Nazi victim,” Kolodach
says. “All these people get a special priority from us when it comes to
services.”

For victims of Nazism who depend on government aid for survival, the JDC is
a lifesaver.

“The aid – I don’t even know how would I live without it,” says Vladimir
Tereschenko, 67, a retired construction engineer. “You can’t live on a
pension alone.” The average Jewish senior who gets aid receives about $25
worth per month in services.

Most of the former Soviet republics heavily tax cash aid, so aid to
survivors there is channeled through the JDC in the form of social services.

Menachem Lepkivker, the JDC’s representative in eastern Ukraine, says the
JDC only is able to provide the bare minimum.

“There is not enough medication, and we could give more food,” he says.
“Now many people have to divide the daily lunch they get from Hesed into
three parts to live the whole day on it.”

Ironically, though the JDC’s money for these survivors is set to start
drying up in seven or eight years, the group believes that the death of
Holocaust survivors will shrink the population requiring aid.

Life has improved recently for Khaikina – making it much better than her
straw-eating days. She moved to a new Jewish old-age home in
Dnepropetrovsk, one of only three such facilities in the former Soviet
Union.

Opened two years ago and run with funds from Jewish charities, the
state-of-the-art Beit Baruch Assisted Living Facility is home to 50
residents, aged 75 to 98. Most of them are Holocaust survivors.

“I should be happy,” Khaikina says of her new home. “We are getting free
soap here. We have hot water around the clock so I can bathe as many
times a day as I wish. One should enjoy life in such conditions and never
die. But I’m just so tired and cannot enjoy it anymore.”        -30-
———————————————————————————————
http://www.jta.org/cgi%2Dbin/iowa/news/article/Forsurvivorsinex.html
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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