AUR#831 Apr 20 Ukraine & Poland To Host Euro Soccer Championship; Retail Growth; PACE Resolution; Containing Russia; Orange Revolution Film Wins Award

                 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       

Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer

               –——-  INDEX OF ARTICLES  ——–
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                     HEADS EAST TO POLAND & UKRAINE IN 2012
By Andrew Warshaw in Cardiff, Financial Times
London, United Kingdom, Wednesday, April 18 2007

By Judy Dempsey, International Herald Tribune (IHT)
Paris, France, Wednesday, April 18, 2007

By Jean-Luc Testault, AFP, Warsaw, Poland, Wed, Apr 18, 2007


                         PROVIDED THEY CAN GET BUILDERS IN 
              Nick Szczepanik finds out how the former bloc countries will
         cope with the descent of galácticos and pampered Premiership stars
By Nick Szczepanik, From The Times
London, United Kingdom, Thursday, April 19, 2007

The Ukrainian Observer, Kyiv, Ukraine, Thursday, April 5, 2007

                “The government is encouraging IT exports in the country in
                     each possible way,” says Deputy Head of Kiev Region
By Imrana Khan,  Global Services, Manhasset, New York, Wed, April 18, 2007

7.                                  UKRAINE: ROOM FOR RETAIL
Oxford Business Group, UK, Friday, 23 March 2007

Oxford Business Group, UK, Monday, 16 April 2007

9.                                    KIEV’S POLITICAL CRISIS
LETTER-TO-THE-EDITOR, (Signed by 13 European Leaders)

International Herald Tribune (IHT), Paris, France, Tuesday, April 17, 2007

LETTER-TO-THE-EDITOR: Oleksandr Moroz, Chair, Ukrainian Parliament
International Herald Tribune, (IHT) Paris, France, Tuesday, April 17, 2007

Parliamentary Assembly Council of Europe (PACE)
Provisional edition, Resolution 1549 (2007) (1)
Strasbourg, France, Thursday, April 19, 2007


The Associated Press, Strasbourg, France, Thursday, April 19, 2007

                       Yushchenko and Tymoshenko factions quit parliament
Eurasia Daily Monitor, Volume 4, Issue 77
Jamestown Foundation, Wash DC, Thu, April 19, 2007

                         Alleged US Role in Kiev’s Political Crisis Examined
COMMENTARY: By Igor Yavlyanskiy, Izvestia

Moscow, Russia, Wednesday, April 18, 2007

       Scrubbed Images Open Doors, Assure Investors; A ‘Most Wanted’ Client
By Glenn R. Simpson and Mary Jacoby, The Wall Street Journal,

New York, New York, Tuesday 17 April 2007, A1

16.                                 “CONTAINING RUSSIA”                           

By Yuliya Tymoshenko, Leader of Ukraine’s parliamentary opposition.
From January to September 2005, She was Prime Minister of Ukraine
“Foreign Affairs”, Council on Foreign Relations, NY, NY, May-June 2007


The Washington Group, Washington, D.C., Thursday, April 19, 2007
        Puts Latest News from Ukraine into Perspective, To Be Shown in Toronto
York Zimmerman, Washington, D.C., April 2007

By Andrew Warshaw in Cardiff, Financial Times
London, United Kingdom, Wednesday, April 18 2007

Poland and Ukraine will be the first eastern European nations to hold a big
international football tournament since the break-up of the Soviet bloc.

In what was viewed as a turning point in the history of the game, the two
countries were named joint hosts of the 2012 European Championship. They
beat the favourites Italy and another joint bid from Croatia and Hungary.

Since 1976, when the Championship was staged in Yugoslavia, it has been
played in the commercially more attractive west.

Michel Platini, the new Union of European Football Associations (Uefa)
president, has made no secret of his intention to boost the image of the
game in eastern Europe. But the result, which sent the Polish and Ukrainian
delegation into raptures, came as a surprise.

Poland was threatened with expulsion from international competition recently
after its government tried to dissolve the national football association
following a scandal involving referees. The bid had been further undermined
by the unstable political climate in Ukraine.

The Poland-Ukraine bid was in third place when Uefa shortlisted the final
three candidates 18 months ago. But Wednesday they received eight votes to
Italy’s four from the 12 members of Uefa’s 15-man executive committee who
were eligible to vote. Croatia and Hungary received none.

Poland’s Dutch head coach, Leo Beenhakker, said the decision was hugely
important for the development of football. “Eastern Europe has a great
history in sport and in football, and they still have great players. But
what they have been missing has been good infrastructure, stadiums and
training facilities,” he said.

“Now the governments and the football federations are obliged to realise all
their promises within the next five years and make these improvements.”

After Mr Platini opened the envelope to reveal the winner, a jubilant Polish
FA chairman, Michal Listkiewicz, said: “There are 85 million people now
waiting for this big football event.

“The friendship between our two nations has a very long history. This big
tournament will be an important milestone in the history of our two Slavic

Poland and Ukraine’s bid team staged an impressive final presentation on
Tuesday. It featured Chelsea striker Andriy Shevchenko, Liverpool keeper
Jerzy Dudek as well as boxer Vitali Klitschko, former Olympic champion
Sergei Bubka and Victor Yushchenko, Ukraine’s president.

Games will be played in at least eight venues in the two countries. Kiev’s
Olympic Stadium, which hosted football at the 1980 Moscow Olympics, is
earmarked for the final.

Recent troubles, on and off the field, clearly hit Italy’s bid, even though
they won the World Cup in Germany last July.
Italian football has had a nightmare 12 months, with a match-fixing scandal
and the death of a policeman.

This month, baton-wielding riot police and Manchester United fans clashed
during a Champions League tie in Rome.                    -30-

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

By Judy Dempsey, International Herald Tribune (IHT)
Paris, France, Wednesday, April 18, 2007

BERLIN: Officials from Poland and Ukraine said Wednesday that their serving
as co-hosts of the European soccer championships in 2012 could have immense
positive repercussions for two nations whose leaders are struggling to calm
domestic instability.

President Lech Kaczynski of Poland is trying to hold his shaky conservative
nationalist government together as his coalition squabbles over how to deal
with the communist past, fight corruption and introduce a ban on abortion.

In neighboring Ukraine, President Viktor Yushchenko, brought to power during
the pro-democratic Orange Revolution of December 2004, is struggling to
preserve what remains of his popularity as Prime Minister Viktor Yanukovich,
his archrival, continues to gnaw at his authority.

Both presidents are at odds with Russia. Poland, a member of the European
Union, is blocking a new EU-Russia trade agreement until President Vladimir
Putin lifts a ban on Polish meat imports. Yushchenko is at odds with the
Kremlin over his government’s effort to strengthen relations with Europe.

Roman Shpek, Ukraine’s ambassador to the European Union, said he could not
underestimate the Wednesday decision. “It is one more step toward Ukraine’s
integration to the EU,” he said.

“This is a good example of our collaboration with an EU member state who is
also our direct neighbor. After all the political debates and struggles over
the past several months, this is really good news for the Ukrainian people.”

Poland’s efforts to shepherd Ukraine closer to the EU began to diminish
after Kaczynski succeeded Aleksandar Kwasniewski in January 2006.

Kwiasnewski and Javier Solana, the EU’s foreign policy chief, mediated
during the Orange Revolution, much to the anger of Putin. The Kremlin, which
according to Russian analysts was unnerved by the swell of democracy in
Ukraine, accused Poland and other EU countries of meddling.

Undeterred, Poland established lobbies in London, Paris and Berlin to
persuade Brussels to offer Ukraine the possibility of eventually joining the

But under Kaczynski, Poland’s influence in Brussels has waned, particularly
with important member states like Germany, as Warsaw clashed with the EU
over the pace of Polish privatization, disputes over the environment and
other issues. Poland had been expected to wield significant power in
Brussels and to lobby effectively for Ukraine and Belarus.

“In terms of helping Ukraine in Brussels, we lost influence because of all
the tensions between Poland and the big EU member states,” said Gienek
Smolar, director of the Center for International Relations in Warsaw. “With
the football decision, we now have a chance to really achieve something,
together with Ukraine.”

Perhaps the biggest immediate bonus is that despite all the delays over
introducing economic reforms in Ukraine and modernizing Poland’s dilapidated
infrastructure, the championships could give both countries the incentive
for new initiatives.

“Here is the opportunity for Ukraine to build new hotels, which are sorely
needed, improve the public transportation and attract foreign investment,”
said Professor Igor Burakovsky, director of the independent Institute for
Economic Research and Policy Consulting in Kiev.

Since the Orange Revolution, successive governments have failed to tackle
corruption and introduce substantial reforms. “We should have no more
excuses not to act,” Burakovsky added.

Poland is in a much stronger position to benefit from the championship
because, unlike Ukraine, it has access to EU funding.

Between 2007 and 2013, Poland has been allocated Euro67 billion, or $91
billion, of EU structural and development funds, of which at least half will
be used for building new roads and improving sanitation and the environment.

Grazyna Gesicka, Poland’s minister for regional development who is in charge
of overseeing the EU funds, said she hoped all the bureaucratic obstacles
for improving the infrastructure would now be overcome, particularly since
Poland has less than five years to prepare for the championships.

“Here is a big motivation to speed up the use of the funds for building
motorways and helping companies build hotels,” Gesicka told Polish
television. As for the construction of new stadiums, she said, the Polish
state budget – not the EU – would have to provide financing.

“And then,” Smolar said, “all we have to do is to win the championships.”

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

By Jean-Luc Testault, AFP, Warsaw, Poland, Wed, Apr 18, 2007

WARSAW – Poland and Ukraine will have their work cut out preparing for Euro
2012, facing a mammoth task of getting their stadiums, transport and hotels
up to scratch, as well as overcoming a legacy of hooliganism and graft.

Organisers insist they will roll up their sleeves in order to ensure the
success of the football championships, after Poland and its eastern
neighbour’s shock win over Italy and fellow joint bidders Hungary and
Croatia in the race to host the quadrennial tournament.

In the lead up to Wednesday’s decision by European football’s governing body
UEFA at a meeting in Cardiff, the Polish-Ukrainian bidders spared no effort
to calm jitters.

Polish President Lech Kaczynski travelled to the Welsh capital with
Ukrainian President Viktor Yushchenko to make an 11th-hour pitch for their
bid. After the announcement, Kaczynski took stock of what needed to be done.

“We must not forget the enormity of the task of organising Euro 2012, but
that is also excellent news for Poland. There will be new stadiums built in
Warsaw, Gdansk, Wroclaw and Poznan. That can only be seen in a positive
light,” Kaczynski said.

“Five years is long enough and I am sure that with the mobilisation and
determination of the local authorities and the people, we will succeed.”

It will be the first time that either Poland or Ukraine have hosted a major
football championship.

Polish authorities said last week that around 26 billion euros (35 billion
dollars), including EU financing, have been earmarked to upgrade

As it stands, a fan wanting to travel by road from Gdansk in northern Poland
to Donetsk, a host city in eastern Ukraine, needs stamina to cover the
2,000-kilometres (1,240-miles).

The 22-hour trip — not counting the lengthy wait at the Polish-Ukrainian
border — is mostly on single lane roads. Only 23 kilometres (14 miles) of
the trip is on motorway.

Despite major EU funding since the fall of communism in 1989 and Poland’s
membership of the bloc in 2004, the country still hasn’t built a basic
motorway network connecting its major cities. The situation is worse in

And train travel is little better: it currently takes 43 hours, at best, to
get from Gdansk to Donetsk. Lack of investment means it is too dangerous

to use high speed trains on the aging tracks.

While booming low-cast airlines carry hundreds of thousands of Poles back
and forth to western Europe every year, there are still no cheap links
between Ukraine and Poland.

Outside major cities, particularly in Ukraine, good hotels are hard to come
by — or at least in sufficient numbers to cater for tens of thousands of
fans, journalists and football officials.

Polish football is also blighted by hooliganism. Fears that Polish fans
would cause trouble at last year’s World Cup in neighbouring Germany led to
a massive police operation in both countries, although in the end the
hooligans stayed away. At home, however, it could be a different story.

In addition, Polish football’s image has been dented by corruption. A
two-year-old match-fixing scandal has led to more than 60 arrests, including
several referees, a member of the Polish Football Association (PZPN)
leadership and a string of club officials.

In Ukraine, meanwhile, foreign embassies regularly warn their citizens about
the risk of attacks by skinheads. Poland also has a flourishing far right.

Although Ukraine is currently locked in political crisis pitting supporters
of the president and prime minister, its opposing forces are united about
Euro 2012.

Four Ukrainian cities selected as venues have already started preparations
including upgrading their existing football facilities. And the Kiev mayor’s

office has said the capital would completely renovate its 86,000-seat
Olympic stadium.

In the west of the country, Lviv city authorities have said they will
renovate the city’s 28,000-seat stadium and increase its capacity.

Ukraine’s reigning champions Shakhtar Donetsk are currently building a new
50,000-seat ground, while Dnepropetrovsk, who finished sixth last season,
had also began the construction of a new arena in their town.

Ukraine’s Sports Minister Viktor Korzh said major investors were ready to
step in alongside the authorities. “There are serious investors, who are
ready to invest up to 37 billion hryvnias (about 5.7 billion euros, 7.7
billion dollars) in the construction of airports, roads, hotels and
improving sports infrastructure,” he said.                   -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
            Nick Szczepanik finds out how the former bloc countries will
        cope with the descent of galácticos and pampered Premiership stars

By Nick Szczepanik, From The Times
London, United Kingdom, Thursday, April 19, 2007

The thousands of Polish builders working in this country may find that they
have more pressing business back home after the announcement yesterday
that Poland and Ukraine will host the 2012 European Championship finals.

The building of new stadiums and the refurbishment of old ones in the
countries will be a considerable boost to the local economies of the host
cities and will require the mobilisation of missing manpower.

Both nations have been among the more ambitious of those who gained
independence from communism – Poland in 1989 and Ukraine in 1991 –
and the authorities will be confident in their ability to marshal the
resources required to improve infrastructure and upgrade stadiums.

But in countries where cynicism became a way of life for many years, there
will be intense local scepticism about funding and completion dates, despite
an influx of money from the EU in Poland at least.

For example, a new 70,000-capacity national stadium, scheduled for
completion in June 2009, is to be built in Warsaw and will stage the opening
match, group games and one semi-final. The existing international venue in
the Polish capital, the Legia Stadium, holds about 15,000.

On the other hand, construction is under way on the new Shakhtar Stadium in
Donetsk that, when completed, will be a Uefa five-star venue and promises to
be the most modern stadium in the world.
                      Italy pays for rotten state of its football
                          Platini gets his way as power shifts

Shakhtar Donetsk are backed by Rinat Akhmetov, Ukraine’s leading oligarch,
whose fortune is estimated at more than $11 billion (about £5.48 billion).

“We have a lot of work in front of us, almost five years of it,” Lech
Kaczynski, the President of Poland, said. “We have to prepare a serious
infrastructure system. You can’t be late with this. There will be new
stadiums, the infrastructure tied to that, the infrastructure tied to
tourism, for large crowds.”

But if those obstacles can be overcome, politics, both national and
sporting, are likely to remain unpredictable. Fifa threatened Poland with a
worldwide ban this year after Government interference in the workings of the
Polish FA and 80 people have been imprisoned as a result of an investigation
into corruption in the sport.

Viktor Yushchenko, the President of Ukraine, recently dissolved the
country’s parliament and although Akhmetov is a key ally of Yushchenko and

a member of Ukraine’s political establishment, he was once suspected of
involvement in organised crime and faced questioning by the police.

Nevertheless, Uefa felt confident enough in a bid that included guarantees
from local, regional and national governments about the organisation of the
event and agreements from host cities about hotels and stadiums.

“It’s very good for Poland,” Witold Banasik, a power station foreman in
Lodz, Poland’s second city, said. “I’m happy, even though Lodz missed out. I
don’t think there will be problems building the stadiums. Most were already
planned before the announcement.

Maybe individuals are not rich, but there is money in the country, or people
know where to find it. The problem could be materials and people. All the
talented young people in my street, including my daughter, have gone

The projected Polish venues are Gdansk, Poznan, Warsaw and Wroclaw, with
Dnipropetrovsk, Donetsk, Kiev and Lviv the host cities in Ukraine. Neither
country has previously hosted a leading finals tournament, although both
have strong footballing traditions.

Poland finished third in the World Cup in 1974 and 1982, while Ukraine
reached the World Cup quarter-finals last year and Dynamo Kiev, Ukraine’s
leading club, are a traditional powerhouse in European football. Ukraine are
at No 11 in the Fifa world rankings, and Poland, 24.

Leo Beenhakker, the former Holland and Real Madrid coach who manages Poland,
welcomed the decision but also called for a rapid move forward in advance of
the tournament. “It means a lot for Polish football and I am very happy,” he

“The Government and federation have to start working to create better
infrastructure, better stadiums and training facilities. That is the most
important task for Polish football at the moment.”

When communism held sway, sport was well funded, but when democracy took
over, football was forced down the pecking order and the success of clubs
depended on the wealth of owners. Shakhtar were among the lucky ones, but
some of the rest of the area’s football infrastructure can best be described
as “ramshackle”.

The decision to stage a leading finals series in Eastern Europe is as much a
mark of Michel Platini’s desire to take more high-level football away from
its traditional power bases as a vote of confidence in the sport in Poland
and Ukraine, but the people are not complaining.

An estimated 300,000 work in the UK and, apart from those who may return
home looking for construction work, it might be a good idea not to look for
a plumber, nanny or waitress during the tournament. “For sure, I will be in
Poland,” Tomasz, an electrician visiting Magdusia’s Polish food shop in
Brighton, East Sussex, yesterday, said. “It will be a big party. With plenty
of vodka.”
                    Violence confined to intense club rivalries
Last year’s World Cup finals in Germany may have removed Uefa’s misgivings
about the hooliganism that had blighted Polish football for many years and
persuaded European football’s governing body that there would be no problems
in the event of it awarding the 2012 European Championships to Poland and

The group match between Poland and Germany, its western neighbour, had been
expected to be a focus for confrontations between hardcore elements from
both nations, but in the event there was little trouble, despite Poland’s
1-0 defeat and effective elimination from the tournament.

Intense and long-lasting club rivalries, such as that between Widzew Lodz
and Legia Warsaw, have been the cause of violent clashes over many seasons,
but it appears that, in most cases, those tendencies do not carry over on to
the international stage.

Of more concern may be the racist elements among football supporters in
Eastern Europe, although progress appears to have been made on that front.

While a Serbian player in the Wisla Krakow team was accused of making racist
remarks to Benni McCarthy, the Blackburn Rovers striker, during the Uefa Cup
tie between the teams in Poland last October, it was noticeable that none of
the black players in the Blackburn team received any abuse from the home
team’s fans.
                     Beer and cabbage should hit the spot
                                     The fan experience
Although the common perception is that the weather gets colder the farther
east you go, Poland and Ukraine are usually hotter than the UK during
summer, especially away from the coast. But if you need to cool down, beer
may be a better starting point than the many varieties of vodka – especially
for the inexperienced.

These days, the larger cities have plenty of recognisable fast-food outlets,
but the local cuisine is worth sampling. Most dishes are a combination of
pork, cabbage and potatoes, with a vegetarian option of, well, cabbage and

The local police will be expected to take a relaxed attitude to large groups
of supporters, especially in view of the success of similar policing methods
in Germany last year, but relatively recent memories of hooliganism may lead
to itchy fingers on batons.

Transport will be relatively straightforward in Poland, with an extensive
rail network that will seem cheap to British visitors, but distances are
greater in Ukraine.

If travel between group matches takes you from, say, Poznan to Donetsk, be
prepared for a journey roughly the equivalent of London to Lisbon.

Hotels are also relatively good value outside Warsaw, where prices were
driven skyward by an influx of Western consultants and advisers on expense
accounts after the fall of communism in 1989.
                   Land of Lenin, salt mines and Chernobyl
In between matches, there is plenty to see in and around the host cities.
Gdansk is the home of the Lenin Shipyard, the birthplace of the trade union,
Solidarnosc, whose formation led to the overthrow of communist rule in
Poland. Southern Poland has the spectacular Tatra mountains and the
Wieliczka salt mines.

Kiev and Lviv are historic cities, while the Crimean peninsula and the Black
Sea coast are popular with Ukrainians. However, the Chernobyl nuclear power
plant north of Kiev, the site of the world’s worst nuclear accident in 1986,
is not expected to reopen its visitor centre for 24,000 years.
                             OPENING UP THE IRON CURTAIN 
Slaski Stadium Built: 1927; under renovation Planned capacity: 60,000 Chief
attraction: General Jerzy Zietek Voivodeship Culture and Leisure Park
Population: 116,000 Distance from Birmingham: 912 miles
Municipal Stadium Built: 1980, under renovation Planned capacity: 46,500
Matches: Group Chief attraction: Oldest cathedral in the country Population:
572,000 Distance from Birmingham: 791 miles
Olympic Stadium Built: 1936; under renovation Planned capacity: 45,000
Matches: Group Chief attraction: Massive rotunda with panoramic painting
Population: 636,000 Distance from Birmingham: 811
Baltic Arena Built: between 2008-2010 Planned capacity: 44,000 Matches:
Group, quarter-final Chief attraction: Handsome port city Population:
461,000 Distance from Birmingham: 852 miles
Wisla Stadium Built: 1954; under renovation Planned capacity: 33,000 Chief
attraction: Cultural capital of Poland Population: 757,000 Distance from
Birmingham: 952 miles
National Stadium Built: 2007-2009 Planned capacity: 70,000 Matches: Opening,
group, quarter-final, semi-final Chief attraction: Diverse capital with a
street named after Winnie the Pooh Population: 1,700,000 Distance from
Birmingham: 961 miles

Ukraina Stadium Built: 1927; planned renovation or rebuilding Planned
capacity: 40,000 Matches: Group Chief attraction: One of the oldest
universities in Europe Population: 733,000 Distance from Birmingham: 1,130
Olympic Stadium Built: 1923; proposed renovation Planned capacity: 83,300
Matches: Group, quarter-final, final Chief attraction: One of Eastern
Europe’s most important cities Population: 2,611,000 Distance from
Birmingham: 1,390
Central Stadium Built: 1936; under renovation Planned capacity: 34,362 Chief
attraction: Huge labyrinth of catacombs Population: 1,013,000 Distance from
Birmingham: 1,508 miles
Metallist Stadium Built: 1960s; proposed renovation Planned capacity: 30,000
Population: 1,461,000 Chief attraction: Trade and cultural centre Distance
from Birmingham: 1,639 miles
National Stadium Built: By September 2007 Planned capacity: 34,000 Matches:
Group Chief attraction: Financial centre of Ukraine Population: 1,065,000
Distance from Birmingham: 1,652 miles
Shakhtar Stadium Built: By end 2008 Planned capacity: 55,000 Matches:
Group, quarter-final, semi-final Chief attraction: Industrial centre of Ukraine
Population: 1,016,000 Distance from Birmingham: 1,758 miles
Olympic Stadium Planned capacity: 34,000
(Places in brackets denotes reserve stadium) 
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.
The Ukrainian Observer, Kyiv, Ukraine, Thursday, April 5, 2007
KYIV – Ukraine’s Minister for the Economy Anatoliy Kinakh has called
for foreign investors to continue their interest in Ukraine as continued
growth demonstrates high potential.

On April 3 Kinakh spoke to members of United States-Ukraine Business
Council, which included representatives of the largest American companies
that work on the Ukrainian market (“Cargill”, “Bunge”, “SigmaBleyzer”,
“Toepfer” and others). Recently elected Council President Morgan

Williams, SigmaBleyzer, conducted the meeting.

Kinakh underlined that the last year has determined a lot in
Ukrainian-American relations: the government of the United States has
acknowledged the economy of Ukraine as a market economy and Congress
abolished the Jackson-Vanik amendment.

A bilateral protocol has been signed relating to access to the markets of
both countries in the context of Ukraine’s entry in the World Trade
Organization (WTO).

During his appearance Kinakh described the range of priorities of government
activity: “providing for a competitive economy and energy-efficient
production and energy savings.

” The minister reminded that the general volume of commodity turnover and
services between Ukraine and the United States increased in 2006 compared
with 2005 by 18.33 percent ($413.3 million) and amounted to $2.7 billion. He
also underlined that there is a potential for this amount to increase.

Specifically noting that he was speaking on behalf of the government, Kinakh
said: “The question of a proper business environment will be in an area of
primary attention for executive power. One of such questions is improvement
of Ukraine’s corporate legislation, in which the proposed law on joint-stock
companies occupies a key place.

The final formulation of this law should make illegal raiding almost
impossible.” A proper formulation has already been introduced in the
Verkhovna Rada, the minister said.

Representatives of large American grain traders who attended the meeting
reminded Kinakh about the necessity of improvements in procedures for grain
export from Ukraine and the abolition of licenses and quotas, which they
cited as an obstacle to the entry of Ukraine into WTO.

The minister described the position of government and its planned work in
abolition of these quotas. Kinakh also said that based on the preliminary
estimates after spring-field work it is possible to expect abolition of the
current grain export licensing completely. He repeated several times that he
believes it impossible that a grain situation like that in 2006 could ever
happen again.

Kinakh further mentioned his personal interest in continuation of dialog,
and suggested conducting the next meeting during his visit to Washington of
April 12-15 this year.

The minister offered the American company representatives a part in the work
of governmental joint committees and workings groups responsible for
decision-making in the field of enterprise and improvement of the business
environment.                                             -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
               “The government is encouraging IT exports in the country in
                    each possible way,” says Deputy Head of Kiev Region

By Imrana Khan,  Global Services, Manhasset, NY, Wed, April 18, 2007

Ukraine , an Eastern Europe country with a small population of 46.7 million,
has started making its mark as an IT outsourcing destination. In the last
five years the country’s export of IT and related services has only risen.

In 2006, Ukraine ‘s IT exports reached $280 million registering a growth of
over 60% over the previous year. This is remarkable compared to the paltry
$70 million in 2003.

In the recent past, the country has attracted many technology companies like
Cisco, Motorola and IBM. In 2005 Belarus-based software development
company EPAM that services American and European clients also opened
a development center to leverage on low-cost engineering skills in the

TechnoPark and GlobalLogic are other companies that have bet on Ukraine ‘s
promise. Some of these companies are planning more centers in the country.

“GlobalLogic is planning to set up two more development centers in Kiev ,”
says Rohit Sharma, Director, Marketing, Global Logic. “We are also planning
to establish a center of excellence for telecom software. Ukraine offers a
skilled and cheap talent pool. “

The Ukrainian government is actively supporting the industry with pro-active
legislation. In 2006 the government passed more than 20 laws, and many laws,
including those to do with intellectual-property issues, are being revised
to provide impetus for growth.

The government is also actively promoting Ukraine as an outsourcing
destination by participating in roadshows and organizing events.

“We have developed liberal rules for the IT sector,” says Yuriy Kovbasyuk,
Deputy Head of Kiev Region, State Administration. “We are taking several
initiatives to attract foreign companies and to make Ukraine a promising
outsourcing hub.”

Ukraine stands tall in one of the fundamental drivers for globalization of
service delivery – having a large base of educated and skilled labor pool.
Its large labor has been instrumental in keeping wages stable, and its
software programmers are comparatively cheaper in the region.

IT salaries in the country are less than the salaries of EU and U.S. IT
specialists, according to research by Jones Lang LaSalle, a real-estate
services and money-management firm.

A number of professional organizations has contributed to the development of
industry in Ukraine : Ukrainian Association of Software Developers, which
espouses policies and conducts programs to promote technology and market
growth, and IT Committee of American Chamber of Commerce in Ukraine ,
committed to the development of the IT market in the country.

Ukraine has been in the spotlight for sometime with all the right elements
to score as an outsourcing destination: Skilled labor pool, stable wages,
low operational cost and favorable government initiatives. Tholons, an
outsourcing advisory firm has ranked Kiev , the capital of Ukraine among the
top 50 outsourcing cities in the world.

Its geographic proximity to Europe makes it an ideal nearshore destination.
While it cannot match the scale of India or scale it can position as a
desirable destination for small and medium companies.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
7.                          UKRAINE: ROOM FOR RETAIL

Oxford Business Group, UK, Friday, 23 March 2007

French retail giant Auchan announced last week it plans to open 10 new
hypermarkets throughout the country within the next two years, with the
first scheduled for January 2008 in Kiev.

Local press reports the total investment in the country will amount to
hundreds of millions of dollars, especially in light of the surging price of
land and projected size of the developments.

Auchan, the 10th largest retailer in the world, has partnered with Ukraine’s
second biggest supermarket chain, Furshet, in a deal that will give Auchan a
20% stake in the domestic retailer. Kyiv-based Furshet owns 69 stores in
Ukraine and one in Moldova.

According to the agreement, the two retailers will create two new companies.
One will operate Auchan’s future chain in Ukraine while the other will
develop Ukrainian shopping malls designed to include either an Auchan or
Furshet outlet.

Auchan’s announcement echoes intentions voiced by other foreign retailers,
such as Germany’s Metro and Russia’s O’key. Metro, who currently operates

13 wholesale outlets in the country, has been considering the introduction of
its Real hypermarket brand in Ukraine.

The interest of major international hypermarket retailers in the Ukrainian
market is not surprising. According to industry insiders, the market is
still big enough for multiple players as the hypermarket niche remains
largely unfilled.

The retail sector has experienced tremendous growth in recent years.
According to Moody’s, which performs financial research and analysis on
commercial and government entities, the sector expanded by 25.3% in 2006,
adding to the 23% recorded in 2005.

The State Statistics Committee reported that total retail sales amounted to
around $24.5bn in 2006, with Kiev, Dnipropetrovsk and Donetsk accounting for
the largest growth.

With personal incomes gradually rising and easier access to bank loans,
hypermarkets are not the only gainers. More Ukrainians are investing their
earnings in the purchase of new cars.

According to Gennady Ovcharuk, the general director of a Kiev-based
distributor of Bentley automobiles, the Ukrainian new car market jumped 40%
year-on-year in sales in 2006. “In 2005, 265,000 new cars were sold, and in
2006 that figure grew to 371,000,” he said.

In comparison, the Western European market grew by only 1%. Moreover,
Ukrainians are increasingly inclined to buy mid-range foreign automobiles.
Ovcharuk told OBG that Ukraine ranked 9th in the world in terms of imported
car volumes. Ukrainian car dealerships posted $6.1bn in car sales last year,
up from $3.6bn in 2005.

Another beneficiary of retail growth is the restaurant sector. Oleg
Derevianko, the CEO of Ukraine’s largest restaurant operator Kozyrna Karta
told OBG that the growth is not just rapid, but the clientele is changing.
“It is no longer just the wealthy who eat out.

The restaurant business is growing across all segments. If restaurants in
Ukraine fail, it is not because there is no market, but because they aren’t
delivering the right concept at the right place.” The group currently
operates 60 restaurants and plans 20 more projects.

Much like the hypermarket segment, the restaurant niche has thus far not had
significant foreign investment. Market potential should lead to more foreign
chains exploring possibilities in Ukraine.

The entry of foreign retailers such as Auchan and the expansion of domestic
players is likely to continue as long as unemployment remains low, wages
continue to grow and easy credit access helps growing an increasingly large
middle class.

However, some structural challenges could hinder development of the sector,
most significantly the limited availability of land. In Kiev, particularly,
property prices have risen substantially, and plots suitable to large
hypermarkets are difficult to find. Controls on the sale of agricultural
land and bureaucratic hurdles exacerbate the problem.

Swedish retailer IKEA has delayed entry into Kiev for three years due to its
problems finding land suitable for its megastore. Insiders say that land
issues have also been one of the barriers to the introduction of Metro’s
hypermarkets in the country.

IKEA originally planned to construct an outlet over 55-60 acres on the
outskirts of Kiev near Borispil airport. The proposal amounted to between
$350m and $400m of investment and envisioned construction of six stores
across Ukraine, as well as the creation of parks and amusement complexes.

Although this plan was rejected by city officials, the company recently
agreed to purchase a 30 acre site in Kiev’s suburbs, though several
ownership issues remain unsettled.

All in all, 2006 proved a growth year for Ukraine’s retailers in spite of
higher costs for energy, political instability and strong inflationary
pressures. Spending growth remained in double digits throughout the year.

2007 is expected to be another year of double-digit growth, as year on year
growth for the first two months has exceeded the 2006 level. Moody’s reports
retail turnover came to UAH 10.11bn (US$2bn) in February, a 31.2% growth
compared to February last year. (

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    NOTE: Send in a letter-to-the-editor today. Let us hear from you.

Oxford Business Group, UK, Monday, 16 April 2007

Market insiders are predicting Ukraine’s insurance market is set for another
year of growth, as the historically underdeveloped sector is buoyed by
increased international investment, rising incomes and increased consumer

In 2006, insurance premiums reached $2bn, 2% of the country’s GDP. In
Western Europe, the percentage of gross premiums to GDP is between 8 and
10%. While these numbers are lower than the peaks recorded in 2004,
approximately 65% of these premiums are now part of the regular insurance

In 2004, the bulk of the market was tied up in captive insurance, which are
insurance companies set up within larger companies in a tax-optimisation

While macro-economic conditions and the increased adoption of standards

and practices of major multinational firms almost guarantee growth, there are
several challenges that continue to hinder the market.

Some industry analysts argue there is significant room for legislative
improvement, citing a raft of pending laws, such as increased minimum
capital requirements for company start-up, improved regulation of agents,
and tax incentives that could further boost the sector. However, in the
words of one executive, political considerations have thus far hindered the
passage of such legislation.

Another often-cited problem is the low minimum capital required for
start-ups. The current requirement for non-life insurance companies is (1m.
Most industry insiders would like to see that increased. Ukrainian insurance
executives have also called for that figure to include only available liquid
reserves, not total assets.

There is continued uncertainty about the government’s position on health
insurance. Several draft laws designed to make the purchase of medical
insurance obligatory have failed to secure approval. Companies are not given
incentives to allocate money to provide medical insurance to their
employees, further hindering uptake.

Though industry observers had expected significant legislative changes
favouring the industry would be passed in 2007, the current political
standoff between the president and the leaders of parliament make this less

The past has also shown that passing laws is often not sufficient. Massive
growth in the auto insurance business was anticipated after third-party
liability insurance was made mandatory in 2005.

While this has led to a growth in the number of policyholders, weak
enforcement has left insurers disappointed. Some estimate this $50m market
should be four times as large.

The sector has benefited in the last two years from foreign investment.
Firms from the West and Russia have entered the market through greenfield
operations or as shareholders of Ukrainian firms. For example, Italy’s
Generali Group took a majority stake in Ukraine’s Garant Auto Group in 2006,
setting up new companies for life and general business.

 American Insurance Group (AIG) has full ownership of two local firms AIG
Ukraine and Alico AIG Life. Germany’s Allianz group is present in the market
via its 97% share in Russia’s ROSNO, which entered Ukraine in 2005.

Though the effects of these investments are regarded almost universally as
positive, some industry insiders feel the country is burdened by the number
of companies in the market. There are currently over 400 general insurance
companies operating in Ukraine. Most expect the market will consolidate,
although legislative changes would help speed the process.

One of those changes would be a revamping of the tax code to dissuade
businesses from establishing non-classical insurance companies.

At the moment, Ukraine’s legal framework still makes this a particularly
attractive prospect for firms, as such insurance companies can be used to
house income and lower or even avoid corporate taxes on profits. Changing
the tax laws would likely find many more companies and individuals looking
externally for insurance.

There is concern from traditional insurance firms regarding the large number
of captive insurance companies and the effect they could have on public
perceptions of the market.

As one managing director of a local traditional insurer told OBG, these
companies are not run by insurance professionals, but usually from within
the particular industry of the parent company. Their knowledge is not
sufficient to properly evaluate risks and provide effective product

On the client side, insurance companies have worked to grow consumer
confidence. People in Ukraine do not trust the insurance sector like other
investments, said Irina Sirenko, president of Ukrainian insurer Providna.

During the hyperinflation of the mid-1990s, many Ukrainian insurance
companies went bankrupt. Insurance savings, levels of cover and payouts
became worthless.

To compensate, large firms are focusing on improving consumer awareness,
investing in training agents to international standards and focusing on
client service rather than policy innovations to grow their market share.
Indeed, customer service is where most insurers seek their competitive

Nataliya Bezbakh, director general of Universalna, told OBG, With the
competition, every company is now trying to raise the level of service. I do
not think you will see a price war.

An increasing foreign presence has helped. The influx of foreign companies
has led to the introduction of better products and services, with more
customer-oriented products. This leads to more value for the client and, in
the long term, more trust in the industry, Konstantin Bergmann, CEO of the
Russian insurer ROSNO, told OBG.

Many in the industry predict future growth will be focused on the retail
end. Growth in mortgages and consumer loans will lead more people to
purchase property insurance in order to secure bank loans.     -30-

CONTACT:; Editorial Enquiries
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
9.                        KIEV’S POLITICAL CRISIS

LETTER-TO-THE-EDITOR, (Signed by 13 European Leaders)

International Herald Tribune (IHT), Paris, France, Tuesday, April 17, 2007

The political crisis in Kiev is a matter of great concern to those who
welcome the political progress made since the Orange Revolution. It is vital
that this situation is resolved in line with the rule of law and democratic
principles consistent with European values, and above all in accordance with
the democratically expressed wishes of the Ukrainian people.

We have to accept that the European Union has not done enough to prevent
this crisis from developing. Whereas other European countries that made the
transition from Soviet rule to democracy benefited from substantial
political and material support, Ukraine has been asked to overcome a very
difficult political legacy largely on its own.

Because of the Union’s internal preoccupations, adequate attention has not
been devoted to the task of nurturing and encouraging Ukraine’s democratic
gains. It is now time for Europe to engage in a more committed and
consistent manner.

European leaders must understand and acknowledge the context in which the
crisis has arisen. President Viktor Yushchenko acted responsibly by agreeing
to share power with his former rival, Viktor Yanukovych, after last year’s
parliamentary elections produced a stalemate.

Unfortunately, Yanukovych has since used the office of prime minister to
initiate a self-serving political power grab and has upset the delicate
political balance of Ukrainian society.

There is therefore little utility in calling for Ukraine’s leaders to reach
a sensible internal settlement when one side is unwilling to share power and
normal constitutional mechanisms have fallen into disrepair.

This difficult moment is a challenge to Europe to set out a practical course
of engagement to resolve this crisis, which has wider implications for

André Glucksmann, Essayist, France
Bronislaw Geremek, Former foreign minister of Poland
Otto Lambsdorff, Former economics minister of Germany
Edward McMillan Scott, Vice president, European Parliament
Jacek Saryusz-Wolski, Chairman, Foreign Affairs Committee,
European Parliament
Jerzy Buzek, Former prime minister of Poland
Neil Kinnock, Former vice president, European Commission
Marielle de Sarnez, French member of European Parliament
Mart Laar, Former prime minister of Estonia
Pat Cox, Former president, European Parliament
Vaclav Havel, Former president of the Czech Republic
Vytautas Landsbergis, Former president of Lithuania
Anthony Giddens, Former director, London School of Economics
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

LETTER-TO-THE-EDITOR: Oleksandr Moroz, Chair, Ukrainian Parliament
International Herald Tribune, Paris, France, Tuesday, April 17, 2007

There is no legal basis for Yushchenko’s dismissal of Parliament. There
is only one article in Ukraine’s Constitution – Article 90 – that specifies
three provisions for dissolving Parliament. None of these criteria can be
applied in the current case.

To justify his action, the president refers to other articles in the
Constitution that define the position of the president as a guarantor of
the Constitution and of state sovereignty.

But none of these articles provides the president with the right to dismiss
Parliament or with any other specific rights. Such rights may be potentially
interpreted by the Constitutional Court.

The president did not consider it necessary to discuss his decision with the
prime minister. Instead he informed the government, the Parliament and
society about his action in a televised address.

Resolving the crisis will require good will among all parties. Unfortunately,

the president has overstepped his authority and undermined our democracy.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Parliamentary Assembly Council of Europe (PACE)
Provisional edition, Resolution 1549 (2007) (1)
Strasbourg, France, Thursday, April 19, 2007

1.       The Parliamentary Assembly is concerned by the political
developments in Ukraine which have evolved in recent months and
culminated in President Victor Yushchenko’s decree of 2 April 2007
announcing the early termination of powers of the Verkhovna Rada
(Parliament) of Ukraine. The continuing political instability is the
result of the systematic failure by the successive Ukrainian governments
to establish coherent policies backed by substantial legal,
administrative and economic reforms. The political reforms that would
set “the rules of the game” and enable law-based institutions to
guarantee democratic rights and freedoms and promote political
competition have not been completed to date.

2.       The Assembly stresses that the current crisis in Ukraine is
also the result of the hasty and incomplete constitutional and political
reform of 2004, under which a number of changes have been introduced to
the Constitution of Ukraine without taking into account the reservations
of the Venice Commission and without holding a comprehensive public
debate in the country. The Assembly regrets that the strong criticism
expressed in its Resolution 1466 (2005) and its repeated calls on the
Ukrainian authorities to address these issues as a matter of urgency, in
order to secure the legitimacy of the constitutional changes of 2004 and
their compliance with European standards, have gone unheeded.

3.       In this context, the Assembly recalls its numerous earlier
appeals to reform the institutions in Ukraine as expressed in
Resolutions 1179 (1999), 1239 (2001), 1244 (2001), 1346 (2003), 1364
(2004), 1466 (2005) and Recommendations 1395 (1999), 1416 (1999), 1451
(2000) and 1722 (2005). It recognises the achievements of the Orange
Revolution that have allowed for key democratic freedoms to take root in
Ukraine: the country now enjoys freedom of speech and of the media,
freedom of assembly, freedom of political competition and opposition,
and a vibrant civil society. Moreover, a year ago the country proved its
ability to conduct free and fair legislative elections. What Ukraine
lacks today, however, are guarantees built into its democratic
institutions that would consolidate those newly acquired freedoms.

4.       Personal rivalries and short-sighted fights for personal gain,
linked to posts and positions, have led to various attempts by some
political forces to take advantage of the constitutional vacuum that
emerged with the coming into effect of the controversial 2004
constitutional amendments in January 2006. The Assembly regrets that the
absence of independent counterweights allows the key state bodies to
feel themselves above the law. This has seriously tarnished the
reputation of all the political leaders in Ukraine.

5.       The Assembly launches an urgent appeal to the President, the
members of Parliament and the Government of Ukraine to resolve their
current crisis in a legitimate, strictly constitutional and peaceful
manner, either by calling legitimate early elections, emanating from the
ruling of the Constitutional Court, or by way of a negotiated
compromise. In this process, all political forces should abstain from
sharp and biased public statements in support or condemnation of any
political force in Ukraine.

6.       In this regard, the Assembly notes that the top leaders of the
country have maintained dialogue throughout the ongoing crisis. It also
takes note of the fact that the Ukrainian leadership has so far
succeeded in maintaining stability and civil peace in the country, which
testifies to the existence of an internal potential to overcome the
current crisis. Furthermore, it is a positive sign that the law
enforcement agencies have so far performed their function of sustaining
public order and safety without direct involvement in the political
struggle and that the armed forces have maintained their neutrality.

7.       However, the Assembly is concerned by the reports of engaging
minors by some political forces in mass political actions, which is in
violation of the United Nations Convention on the Rights of the Child.
It stresses that such practices are unacceptable and calls upon all
political forces in Ukraine to honour the said Convention to which
Ukraine is a party.

8.       The Assembly calls on the political forces of Ukraine, as a
matter of urgency, to resume working on the improvement of the
Constitution of Ukraine and the related legislation in order to
establish at last an effective system of checks and balances and bring
constitutional provisions in line with European standards.
Constitutional reform should be part of the discussions aimed at the
resolution of the current political crisis. The Assembly expresses its
expectation that the Venice Commission will be actively involved in the
process of drafting constitutional reform proposals.

9.       The Assembly reaffirms that the recall of people’s
representatives by the political parties (“imperative mandate”) is
unacceptable in a democratic state. The relevant constitutional
provisions need to be abrogated in line with the recommendations of the
Venice Commission in 2004; similar provisions also need to be deleted
from ordinary legislation. The Assembly believes that a consistent
political programme, responsible and committed party membership and
scrupulous screening of parties’ candidates are more effective tools for
encouraging party and faction discipline.

10.       The Assembly recognises that both regular and pre-term
elections constitute a legitimate democratic instrument for the people
to choose and control the authorities that act in their name. Early
elections are a normal practice in all democratic countries of the
Council of Europe and as such could be accepted as a key building block
of the political compromise. However, the Assembly underlines that for
any elections to be considered democratic, they should be conducted
according to a legitimate procedure that allows fair campaigning and
free choice for voters.

11.       In this respect the Assembly notes with concern that the
existing provisions of election legislation that regulate pre-term
elections within the constitutionally set timeframe (60 days) are
insufficient and do not guarantee proper conditions for free and fair
elections. It regrets that the government has not complied with the
legally valid decree (until proven otherwise) and has not allocated the
required funding for these elections.

12.       The Assembly also urges the Ukrainian authorities and
political forces to address as soon as possible the problem of the
parliamentary election system of Ukraine which may represent one of the
causes of the weakness of the political system. A fully proportional
system with closed party lists and with all of Ukraine being treated as
one single constituency, as endorsed by the constitutional amendments of
2004, does not guarantee the election of a parliament representing
Ukrainian society in all its diversity.

13.       The Assembly deplores the fact that the judicial system of
Ukraine has been systematically misused by other branches of power and
that top officials do not execute the courts’ decisions, which is a sign
of erosion of this crucial democratic institution. Independent and
impartial judiciary is a precondition for the existence of a democratic
society governed by the rule of law. Hence the urgent necessity to carry
out a comprehensive judicial reform, including through amendments to the

14.       The Assembly reiterates that the authority of the sole body of
constitutional justice – the Constitutional Court of Ukraine – should be
guaranteed and respected. Pressure in any form on the judges is
intolerable and should be investigated and criminally prosecuted. On the
other hand, it is regrettable that in the eight months of its new full
composition, the Constitutional Court has failed to produce judgments,
thus failing to fulfil its constitutional role and to contribute to
solving the crisis in its earlier stages which undermines the
credibility of the court. There is an urgent need for all pending
judgments, and in particular the judgment concerning the
constitutionality of the Presidential Decree of 2 April 2007, to be
delivered. If delivered, the latter should be accepted as binding by all

15.       In the light of the above, the Assembly recommends to the
Ukrainian authorities the urgent adoption of the following concrete
measures to address the causes of the crisis and prevent further
dysfunctioning of democratic institutions in Ukraine:

15.1.       to re-launch the constitutional reform project, in close
co-operation with the Venice Commission, in order to improve the Basic
Law of Ukraine and bring it in line with European standards, in
particular as regards the provisions on the separation of powers, the
imperative mandate, the judiciary and the prosecutor’s office as
stipulated in various opinions of the Venice Commission on the subject
and Assembly Resolutions 1364 (2004) and 1466 (2005);

15.2.       to adopt and enact without further delay basic
constitutional laws (laws on the Rules of Procedure of the Verkhovna
Rada of Ukraine, on the parliamentary temporary special and
investigatory commissions, on central bodies of the executive power, on
the parliamentary opposition, on referendum, etc.) and to bring the Law
on the Cabinet of Ministers of Ukraine in line with the Constitution of
Ukraine, taking into account relevant European standards and the opinion
of the Venice Commission;

15.3.       to amend the Law on the Elections of People’s Deputies of
Ukraine in order to set up proper procedures for the organisation of
pre-term elections in case of dissolution of the Parliament;

15.4.       to envisage changing the system of elections to the
Parliament, for example by introducing open party lists whereby voters
could indicate their preferences as to particular candidates included in
the election lists proposed by political parties (blocs) and by dividing
the country into different constituencies;

15.5.       to carry out the reform of the judiciary on the basis of the
Judicial Reform Concept adopted by the President of Ukraine in May 2006
with the aim of establishing an independent and effective judiciary in
Ukraine, taking into account the recent opinion of the Venice

15.6.       to launch the reform of the criminal justice system and law
enforcement agencies and to take active legislative and practical
measures to tackle all forms of corruption, including political

16.       The Assembly believes that in order to effectively implement
the above recommendations, all parties involved in the conflict should
engage in an open and constructive dialogue on the settlement of the
situation in Ukraine.

17.       The Assembly calls upon the Secretary General of the Council
of Europe, as a matter of priority, to take all appropriate measures in
his competence to contribute to the process of settlement of the crisis
in Ukraine. It also considers that the activities relating to the
Council of Europe Action Plan for co-operation with Ukraine should be
stepped up in order to achieve a noticeable strengthening of democratic
institutions in Ukraine.

18.       The Assembly asks the Venice Commission to give an opinion on
the existing legislative basis for pre-term parliamentary elections in
Ukraine and on the possible ways to improve electoral legislation based
on European practice.

19.       The Assembly confirms its readiness to help Ukraine overcome
its current deadlock either through its assistance mechanisms or other
specific arrangements. Nevertheless, it is up to the Ukrainian political
leaders to work out the most appropriate solution for its internal
problems. The Assembly believes that not all domestic avenues for a
quick, efficient and legitimate political compromise have been exhausted
as yet. It therefore calls upon the Ukrainian leaders to build up new
political confidence through establishing sound safeguard mechanisms for
national unity, fair political competition and coherent and
comprehensive reforms, the main directions of which are outlined in the
Assembly’s Resolution 1466 (2005).                        -30-
(1) Assembly debate on 19 April 2007 (16th Sitting) (see Doc. 11255,
report of the Committee on the Honouring of Obligations and Commitments
by Member States of the Council of Europe (Monitoring Committee),
Rapporteur: Mrs Severinsen and Mrs Wolhlwend). Text adopted by the
Assembly on 19 April 2007 (16th Sitting).
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If you are receiving more than one copy of the AUR please contact us.
The Associated Press, Strasbourg, France, Thursday, April 19, 2007

STRASBOURG, France — European lawmakers on Thursday criticized

Ukraine for what they said was a failure to carry out substantial legal and
administrative reforms since President Viktor Yushchenko’s rise to power
three years ago.

They also said the country’s hastily adopted new constitution did not
safeguard democracy.

Lawmakers from the Council of Europe’s 46 member states said the

escalating political crisis in Ukraine was a direct result of insufficient
constitutional reforms introduced in 2004, which they said did not fully
define the competencies of the president, government and the parliament.

“The political reforms that would set the rules of the game and enable
law-based institutions to … promote political competition have not been
completed to date,” the council’s parliamentary assembly said in a
resolution after a heated debate in which both Yushchenko and Ukrainian

Prime Minister Viktor Yanukovych were criticized.

Ukraine’s parliament speaker, Oleksandr Moroz, told journalists before the
debate that his country would resolve the crisis “by our own means,” without
involvement from abroad.

Yushchenko issued a controversial decree on April 2 to dissolve the
parliament and call early elections, accusing Yanukovych of trying to usurp

Yanukovych and his majority in the parliament called it unconstitutional and
appealed to the Constitutional Court to weigh in. Both Yushchenko and
Yanukovych have agreed to abide by the court’s ruling.

European lawmakers warned that the Ukrainian Constitution did not clearly
define how and when early elections should be carried out.

“National constitutions usually contain clear provisions, a package of rules
describing how early elections can be conducted. Ukraine does not have
that,” Danish Liberal deputy Hanne Severinsen said.               -30-

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         Send in a letter-to-the-editor today. Let us hear from you.
                     Yushchenko and Tymoshenko factions quit parliament

Eurasia Daily Monitor, Volume 4, Issue 77
Jamestown Foundation, Wash DC, Thu, April 19, 2007

On April 18, the opposition Yulia Tymoshenko (BYuT) and Our Ukraine blocs
permanently withdrew their deputies from Ukraine’s parliament. Together, the
factions account for 202 of the Rada’s 450 deputies.

With no constitutional majority, the parliament — which was disbanded by
presidential decree on April 2 — has no legal standing. A minimum of 300
deputies is required for parliament to constitutionally operate.

This move is the culmination of eight months of political fighting between
Prime Minister Viktor Yanukovych and his government and the disunited and
partially discredited opposition.

But now the opposition has transformed into an energized political force.
Reflecting this growing confidence, President Viktor Yushchenko, Our
Ukraine, and Yuriy Lutsenko’s People’s Self-Defense movement no longer
oppose early elections.

Opposition unity was made possible by a shift in the balance of power within
Our Ukraine and an effort to reach out to the Tymoshenko bloc. BYuT had
always been in opposition to the Anti-Crisis Coalition (ACC) and had never
supported a grand coalition with Yanukovych’s Party of Regions.

Following the 2004 Orange Revolution, the “Liubi Druzi” (business cronies or
“Dear Friends”) wing of Our Ukraine had dominated, and then-prime minister
Yuriy Yekhanurov disastrously led it during the 2006 parliamentary

The “Liubi Druzi” supported a grand coalition — and opposed Yulia
Tymoshenko — while the national-democratic wing backed an Orange coalition.
Both coalition variants were negotiated simultaneously from April-June 2006
but neither succeeded, and the ACC was established following the defection
of the Socialist Party.

In August 2006 all parliamentary forces except BYuT signed a “Universal
Agreement” that created a still-larger grand coalition, now including the
Communists. Two months later Our Ukraine pulled out and declared itself in
opposition to the ACC.

It took another four months before Our Ukraine signed an opposition alliance
with BYuT. The alliance reflected the new dominance of Our Ukraine’s
national-democratic wing.

The  “Liubi Druzi” opposed the opposition alliance and, together with
inducements such as government positions, prompted defections to the ACC

the following month, led by Anatoliy Kinakh’s Party of Industrialists and
Entrepreneurs (PPPU).

A second echelon of defectors came from “Liubi Druzi” closer to President
Yushchenko’s inner circle. Petro Poroshenko was offered the position of
minister of finance and was reportedly considering defecting. Poroshenko had
been a founding organizer of the Party of Regions in 2000-2001 until moving
to Our Ukraine in 2002.

Yushchenko had called for Our Ukraine to be “radically overhauled.” The
withdrawal of Kinakh’s PPPU has been followed by the marginalization of
“Liubi Druzi” such as Poroshenko, and the culling of other unpopular parties
and discredited members. Two of Our Ukraine’s remaining four parties have
joined the Ukrainian Rightists bloc, while another has joined People’s

The fourth party, the Congress of Ukrainian Nationalists, was not invited to
join any bloc because its leader, former Naftohaz CEO Oleksiy Ivchenko, was
discredited two years ago when it was revealed that he had purchased a
$225,000 Mercedes car with Naftohaz Ukrainy state funds.

Yushchenko’s decision to dissolve parliament served as a pre-emptive strike
against further defections that threatened to lead to a constitutional

Yushchenko, Our Ukraine, and the People’s Self-Defense embraced BYuT’s

call for early elections after Kinakh’s defections and the police raids on
Lutsenko’s apartment and offices.

People’s Self-Defense was established by Our Ukraine businessmen, such as
Davyd Zhvannia, who had become discontented by the “Liubi Druzi.”

On March 31, the Our Ukraine congress elected Vyacheslav Kyrylenko as its
head. This confirmed a national-democratic takeover, as Kyrylenko is a
former member of Yuriy Kostenko’s Ukrainian People’s Party (UNP), one of
three offshoots of the pre-1999 Rukh movement.

This development was matched by the change in leadership of the presidential
secretariat. Viktor Baloha is the third secretariat head since Yushchenko’s
election and the first with managerial skills.

Baloha, like Kyrylenko, is a national democrat and closer to BYuT. The two
ousted secretariat heads (Oleksandr Zinchenko, Oleh Rybachuk) and former

Our Ukraine head (Yekhanurov) are aligned with the “Liubi Druzi.”

Kyrylenko has ruled out any grand coalition after the elections. “We are
strong members of the united opposition and are going into elections
practically as one front, and, I think, that democracy will again flourish,”
he said.

Yushchenko has called for the creation of a mega center-right
“pro-presidential bloc.” Baloha is seeking to unite the disparate
center-right into such a bloc.

Currently the center-right is divided among Our Ukraine, the Ukrainian
Rightists (Rukh, UNP, and the Republican Party ‘sobor”) and Lutsenko’s bloc
(People’s Self-Defense, Christian-Democratic Union, European Platform, and
Forward Ukraine!).  Center-right unity would facilitate a two-pronged
right-left opposition with BYuT representing the center-left wing.

The opposition more closely resembles that found in the 2002 and 2004,
rather than the 2006, elections. However, in the 2002 and 2004 elections the
opposition still had moderate (Our Ukraine) and radical (BYuT, SPU) wings.
Now, Our Ukraine has moved from a moderate to a BYuT radical stance for the
first time in its six-year history.

These developments explain both President Yushchenko’s radicalized stance
and the unity of the opposition. The Party of Regions has been taken aback
by this new opposition energy and unity and remains in a state of denial
that Our Ukraine and Yushchenko have the same stance as BYuT.

“Inside Our Ukraine and BYuT there are principled differences on tactics
that its leaders are proposing,” Party of Regions faction leader Raisa
Bohatiorova believes.

The ACC has sought to appease Yushchenko by dealing with many of the issues
that provoked him to act and support BYuT’s call for early elections, hoping
to again divide Our Ukraine and BYuT.

After parliament was disbanded the ACC voted to eject deputies who had
defected to it, and it has agreed to support the imperative mandate and
transforming the 2006 Universal into law.

Yushchenko’s handling of the crisis, the revamped Our Ukraine, and
opposition unity have ramifications for the 2009 elections, which is far
enough in the future to rebuild Yushchenko’s popularity. In the last month,
Yushchenko’s ratings have increased nearly two-fold from 11% to 18%.

Although Yushchenko’s ratings remain half those of Yanukovych (35%) he now
has pulled even with Tymoshenko, and together the two Orange candidates have

With the same ratings as Tymoshenko, Yushchenko can now argue that he should
be the Orange candidate, something he could not plausibly do before the
crisis.                                                         -30-
(Ukrayinska pravda, April 7-18, Zerkalo Tyzhnia, April 14-20)

Eurasia Daily Monitor,
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                   Alleged US Role in Kiev’s Political Crisis Examined

COMMENTARY: By Igor Yavlyanskiy, Izvestia

Moscow, Russia, Wednesday, April 18, 2007

One can hardly suspect me of being prejudiced against Ukraine: I was born in
Kuban, my mother’s maiden name is Zozulya, and great grandfather’s surname
was Lysenko.

On my mother’s side, we are from Chernigov. Therefore, I have a vital
interest in what is happening on the historical homeland of my forebears.

I dare say: The present crisis in Ukraine was thoroughly planned by Viktor
Yushchenko along with Yuliya Tymoshenko, and coordinated by them with
Washington. In saying this, it is unlikely that I am making some great

This is being said by the “multi-colored” demonstrators on Nezalezhnost
Maydan, as well as in Moscow kitchens. The motivating force of the
overseas “partners” is quite understandable.

In recent times, the U.S. State Department has been monitoring the process
of strengthening of Viktor Yanukovych’s positions with unconcealed alarm
and apprehensiveness.

In Washington, they understood that, if the process were allowed to follow
its own course, then not only would the pro-Western President Yushchenko
turn into a purely nominal political figure, but the oxygen would also be
cut off to his potential successor, Yuliya Tymoshenko.

At the end of February and beginning of March, Pani Yuliya visited the USA
and received support for the idea of early parliamentary elections. On 15
March, Tymoshenko held a key meeting with Yushchenko and discussed
the plan of further actions with him.

It is unlikely that the Ukrainian president took the words of his fellow
associate at face value, as she had already deceived him on a number of

Therefore, US Ambassador to Ukraine William Taylor came to Yushchenko
at the same time, and confirmed the agreements that had been reached with
Tymoshenko in Washington. It is notable that, already then, it had been

The motivating factor for all of Yushchenko’s subsequent actions would be
the concern for “preserving the spirit of the Ukrainian Constitution,”
which, in his opinion, is much more important than the letter of this

Aside from support of the united opposition, the US Administration made
efforts to establish cooperation with the extra-parliamentary opposition
political forces–“People’s Self Defense,” “Student Brotherhood,” and

At the beginning of March, there was an unofficial meeting in Washington
between State Department adviser John Belinger and the leader of the
so-called “Pora” civil party, Vladislav Kaskiv, who was asked to become
the financial aid coordinator for the aforementioned organizations.

We might add that the “Pora” leadership had successfully fulfilled such a
“mission” also in the course of the “orange revolution,” when it was
specifically through the network of non-state centers of this “party” that
the main part of the American infusions passed, which went for organizing
the mass protest  actions in Kiev and other Ukrainian cities.

The USA is relegating a specific role in the present-day Ukrainian scenario
to Poland and Georgia. The goal is clear: It is unseemly for Washington to
“expose itself” by demonstrating its direct participation in the Kiev

This may not only anger Moscow, but may also prove to be counterproductive
and play into the hands of the pro-Russian forces in Ukraine.

In March, the head of the Commission on Foreign Affairs of the Polish Seim,
Pavel Zalevskiy, visited Washington. He was prompted: The USA is expecting
Warsaw to step up actions in the Ukrainian direction.

The Poles were presented with one more task: To persistently announce the
need to guard Ukraine against Russian intervention at the level of NATO and
the EU (European Union).

It is no accident that Polish ex-President Aleksandr Kvasnevskiy came to
Kiev with a mediation mission. His participation in the Ukrainian events at
the end of 2004 largely facilitated the fact that the scales were ultimately
tipped in the direction of the “orange” forces at that time.

At the end of March, at the personal request of the President of Georgia,
Georgiy Targamadze, chairman of the Committee on Defense and Security
of the Georgian parliament, asked to come to Kiev and was received at the
highest level.

His “mission” was to provide methodical and expert assistance to the
“democratic forces,” and to coordinate a propaganda campaign with the
participation of Tbilisi against “Moscow’s intervention in the domestic
affairs of sovereign Ukraine.”

The culmination of the “operation” planned by the Americans were the abrupt
anti-Russian statements of Yuliya Tymoshenko. Immediately after her
“business trip to Washington,” she stated in an interview with the Austrian
newspaper, Die Presse:

     “I would like to tell the people that every individual will win out
     more from a Ukraine oriented toward the West, than from a pro-
     Russian policy of the country–only the clans supported by Russia
     would win out from that. If the West turns away from us, then we
     will once again fall into the Russian trap.

    There, they are just waiting to restore the status quo of the Soviet
    Union. Russia should not acquire political influence on Ukrainian
    territory. Crimea may be used as a springboard for further actions on
    destabilizing pro-Western forces. I am calling upon the West to take
    a close look at what is going on there today.”             -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Scrubbed Images Open Doors, Assure Investors; A ‘Most Wanted’ Client

By Glenn R. Simpson and Mary Jacoby, The Wall Street Journal,

New York, New York, Tuesday 17 April 2007, A1

Former Federal Bureau of Investigation director William Sessions once
condemned Russia’s rising mafia. “We can beat organized crime,” he told a
Moscow security conference in 1997.

Today, Mr. Sessions is a lawyer for one of the FBI’s “Most Wanted”:

Semyon Mogilevich, a Ukraine-born Russian whom the FBI says is one
of Russia’s most powerful organized-crime figures.

Mr. Sessions is trying to negotiate a deal with the U.S. Department of
Justice for his client, who is charged with racketeering and is a key figure
in a separate Justice Department probe of energy deals between Russia and

A number of notable Washington insiders are earning big fees these days by
representing controversial clients from the former Soviet Union.

From prominent businessmen — some facing criminal allegations — to top
politicians, well-known ex-Soviets are lining up to hire help with criminal
cases, lobbying and consulting.

These figures, many of whom made fortunes in the wide-open 1990s amid the
Soviet Union’s disintegration, hire Washington insiders to help rehabilitate
their reputations in the West or to persuade investors and regulators they
are committed to good corporate governance.

Sensitive foreign clients are nothing new for Washington’s lobbying
industry. Among others, Jack Abramoff — convicted of fraud and bribery last
year — represented clients in Pakistan and Russia, while former Liberian
President Charles Taylor, awaiting trial on war-crimes allegations, once
employed his own Washington lobbyist.

But recent years have seen a growing number of former Soviet officials and
industrialists seeking assistance in the U.S. capital. Many are playing an
increasingly important role in the global economy, as they wrest
ever-greater control of Eurasia’s vast energy reserves and other natural

All have become politically powerful in their home countries as well, making
them — and by extension their U.S. advisers — key players in Western
efforts to promote regional stability.

Among recent examples:

— For a $560,000 fee, Bob Dole, the former Senate majority leader and 1996
Republican presidential nominee, helped a Russian billionaire accused by
rivals of bribery obtain a visa to visit the U.S. in 2005, among other

— Leonid Reiman, a powerful member of Russia’s cabinet and close ally of
President Vladimir Putin, uses a Washington public-relations consultant.

Mr. Reiman is under federal investigation in the U.S. over money laundering
and is locked in a high-stakes battle with Moscow conglomerate Alfa for
control of a Russian telecommunications empire.

Alfa has paid Barbour Griffith & Rogers — the influential lobbying firm
co-founded by Mississippi Gov. Haley Barbour — nearly $2 million in
lobbying fees.

— Paul Manafort, a former adviser to Mr. Dole’s presidential campaign, has
advised a Ukrainian metals billionaire and his close political ally,
Ukrainian Prime Minister Viktor Yanukovich.

Mr. Yanukovich, who favors closer ties with Mr. Putin’s administration, is
embroiled in a power struggle with pro-Western Ukrainian President Viktor

In some cases, the details of how these ex-Soviet clients made their
fortunes are murky — and the source, amount and purpose of the fees they
pay Washington consultants can be as well. In 2005, for example, Ukrainian
politician Yuri Boyko used a Caribbean shell company to pay a Washington
lobbyist for help arranging meetings with top Republicans.

Mr. Boyko, currently Ukraine’s minister of energy, was the architect of gas
deals between Russia and Ukraine now being investigated by the U.S. Justice
Department for possible ties to the alleged mafia client of Mr. Sessions.

Mr. Boyko said the $98,000 in fees was paid by a small political party he
heads. Annex Holdings, the Caribbean firm that paid Mr. Boyko’s lobbyist,
also had a stake in the gas deals, corporate records show.

At times, even clients’ names are camouflaged by lobbyists — despite
federal laws making clear that they aren’t allowed to disguise identities by
taking fees from intermediaries. Without such rules, says prominent
Washington ethics lawyer Jan Baran, “you would just have a bunch of shell
organizations identified as clients of lobbyists and lobbying firms.”

In 2004, for instance, a United Kingdom shell company called Foruper Ltd.,
which had no assets or employees, paid Barbour Griffith $820,000.

Foruper was established by an attorney who structured the natural-gas deals
being investigated by the U.S. Justice Department. Prosecutors are
investigating whether there are ties between the attorney who set up Foruper
and Mr. Mogilevich, Mr. Sessions’s client.

In its filings, Barbour Griffith said the fees were for “promotion of
greater cooperation and financial ties between Eastern Europe and the West.”

In 2002 and 2003, a group called “Friends of Ukraine” paid Barbour Griffith
$320,000. Tax records show that Friends of Ukraine, which no longer exists,
was headquartered at Barbour Griffith’s own office in Washington.

The group’s chairman was firm partner Lanny Griffith. Mr. Griffith said in
an email that the firm as a policy doesn’t discuss client matters but added
that Barbour Griffith “has been scrupulous in our compliance” with laws
governing the disclosure of lobbying clients.

Barbour Griffith is locked in a legal battle with associates of Mr. Reiman,
the Russian minister, whose Washington adviser is a former Wall Street
Journal reporter named Mark D’Anastasio. Mr. D’Anastasio said he once

helped Mr. Reiman as a favor to a friend but doesn’t work for him.

Longstanding federal laws require Americans to register with the federal
government if they do lobbying or public-relations work for foreign clients.
But details in those filings often offer only a vague sense of the work
being done.

Mr. Dole, for instance, disclosed in lobby filings with the U.S. Senate his
work for Russian billionaire Oleg Deripaska. He described it as involving
“U.S. Department of State visa policies and procedures.”

Mr. Deripaska, who has close ties to the Kremlin, emerged from Russia’s
“aluminum wars” of the 1990s with a virtual monopoly on the nation’s
aluminum production.

Mr. Deripaska has long been dogged by allegations from business rivals in
courts in the U.S. and U.K. that he used bribery, intimidation and violence
to amass his fortune.

Those accusations, which he denies, have never been substantiated and no
criminal charges have been filed. But for years they helped keep the State
Department from granting him a visa.

In 2003, the Russian industrialist paid $300,000 to Mr. Dole’s law firm,
Alston & Bird, according to lobbying reports. After that, Mr. Dole worked

to persuade U.S. officials his client isn’t a criminal and that his business
operations are transparent, said people with knowledge of the matter.

In 2005, the State Department reversed itself and granted the visa. Mr.
Deripaska then paid Mr. Dole and his firm an additional $260,000, filings

Mr. Deripaska traveled to Washington in 2005 and also made trips to the

U.S. last year, said people with knowledge of the situation. Mr. Dole and
a State Department spokeswoman declined to comment.

Simon Moyse, a London-based spokesman for Mr. Deripaska, said the
businessman currently possesses a multiple-entry U.S. visa. He declined to
comment further or provide documentation of Mr. Deripaska’s visa status.

The former Dole strategist Mr. Manafort and a former Dole fund raiser, Bruce
Jackson, have received fees and donations from Ukrainian billionaire Rinat
Akhmetov, the political patron of Ukrainian Prime Minister Yanukovich.

Messrs. Manafort and Jackson played prominent roles in the Ukrainian’s
recent visit to Washington. The visit included meetings with U.S. officials,
including Vice President Dick Cheney.

A company controlled by Mr. Akhmetov donated $300,000 in 2005 to a
human-rights charity run by Mr. Jackson and his wife, an Internal Revenue
Service document reviewed by The Wall Street Journal shows. Mr. Jackson

said he was grateful for the support.

Mr. Manafort, who isn’t registered as a consultant to the Ukrainian leader,
didn’t respond to requests for comment.

Mr. Sessions’s client, Mr. Mogilevich, is accused in a 45-count racketeering
and money-laundering indictment in Philadelphia of masterminding an
elaborate stock fraud using a web of shell companies in Europe.

The Justice Department also is investigating whether there are any ties
between Mr. Mogilevich and a recent series of billion-dollar natural-gas
deals between Russian gas giant OAO Gazprom and Ukraine, people familiar
with the matter said. The probe is being led by the Justice Department’s
Organized Crime and Racketeering Section.

According to people familiar with the matter, Mr. Sessions recently
approached former colleagues at Justice with an unusual offer: Mr.
Mogilevich would provide the U.S. with intelligence on Islamist terrorism if
prosecutors opened negotiations to resolve his legal problems in the U.S.
Federal prosecutors rejected that offer, lawyers and others familiar with
the matter said.

Mr. Sessions’s firm and a Justice Department spokesman declined to comment.

The Mogilevich talks were brokered by a prominent Washington security expert
named Neil C. Livingstone, who was briefly in the news during the 1980s
Iran-Contra scandal for his work on terrorism issues with White House aide
Oliver North. He declined to discuss the Mogilevich talks, other than to say

they involved “very sensitive issues.”

Until recently, Mr. Livingstone was chief executive of GlobalOptions, a
Washington corporate-intelligence firm he founded. Mr. Sessions sits on the
firm’s advisory board. Most of its clients, the firm says, “operate in
Russia and the Caribbean.”

GlobalOptions has worked with former Soviet businessmen in the past. In
2004, Mr. Livingstone said, lobbyists at Barbour Griffith introduced
GlobalOptions to a Cyprus-based firm called Highrock Holdings.

Highrock is controlled by Dimytro Firtash, a Ukrainian businessman who
acknowledges the company’s major shareholders once included Mr.

Mogilevich’s wife.

In 2003-2005, Mr. Firtash brokered several billion-dollar deals between
Gazprom and the government of Ukraine. They netted big profits for
Highrock — and criticism from the U.S. ambassador to the Ukraine at the
time for the deals’ lack of transparency.

Mr. Livingstone said Highrock hired GlobalOptions in 2004 to help it win
federal safety certification for passenger jets it hoped to export to
Central Asia.

However, in a recent lawsuit filed by GlobalOptions against Highrock
claiming unpaid bills, the security firm alleged that Mr. Firtash hired
GlobalOptions for an unspecified “special operation” on behalf of a
Ukrainian government official.

The two sides ceased litigating the suit, which was filed in U.S. District
Court for the District of Columbia, after the bill was paid, but the suit
was never withdrawn.

“We have no knowledge of a company called GlobalOptions,” a spokesman

for Mr. Firtash said, adding that he severed his ties to Mr. Mogilevich several
years ago.                                            -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
16.                          CONTAINING RUSSIA

By Yuliya Tymoshenko, Leader of Ukraine’s parliamentary opposition.
From January to September 2005, she was Prime Minister of Ukraine
“Foreign Affairs”, Council on Foreign Relations, NY, NY, May-June 2007

Summary: Russia’s imperial ambitions did not end with the fall of the Soviet
Union. The Kremlin has returned to expansionism, trying to recapture
great-power status at the expense of its neighbors, warns one of Ukraine’s
most prominent politicians. The United States and Europe must counter with a
strong response — one that keeps Russia in check without sparking a new
Cold War.
Sixty-one years ago, a telegram arrived at the State Department from the
U.S. embassy in Moscow. Its purpose was to examine the sources of the
conduct of the men who ruled in the Kremlin. Its impact was immediate. The
“Long Telegram,” penned by a young diplomat named George Kennan, became
the basis for U.S. policy toward the Soviet Union for the next half century.

Although the Soviet Union is long gone, the West is once again groping to
understand what motivates the leaders in the Kremlin. Many believe that the
principles behind Kennan’s policy of “containment” are still applicable
today — and see a new Cold War, this time against Vladimir Putin’s
resurgent Russia, in the offing.

I do not believe that a new Cold War is under way or likely. Nevertheless,
because Russia has indeed transformed itself since Putin became president in
2000, the problem of fitting Russia into the world’s diplomatic and economic
structures (particularly when it comes to markets for energy) raises
profound questions. Those questions are all the more vexing because Russia
is usually judged on the basis of speculation about its intentions rather
than on the basis of its actions.

In the aftermath of communism’s collapse, it was assumed that Russia’s
imperial ambitions had vanished — and that foreign policy toward Russia
could be conducted as if former diplomatic considerations did not apply. Yet
they must apply, for Russia straddles the world’s geopolitical heartland and
is heir to a remorseless imperial tradition.

Encouraging economic and political reform — the West’s preferred means of
engaging Russia since communism’s end — is of course an important foreign
policy tool. But it cannot substitute for a serious effort to counter
Russia’s long-standing expansionism and its present desire to recapture its
great-power status at the expense of its neighbors.
                                     THE RUSSIAN JANUS
Thanks to high energy prices, the chaotic conditions that prevailed across
Russia in the early 1990s have given way to several years of 6.5 percent
annual economic growth and a trillion-dollar economy. Living standards have
improved (although life expectancy has not), the middle class is growing and
increasingly confident, and the stock market is booming.

Russia possesses the third-largest hard-currency reserves in the world, and
it is running a huge current account surplus and paying off the last of the
debts it accumulated in the early 1990s. The ruble has been made fully
convertible and may even be undervalued. Russian membership in the World
Trade Organization (WTO) beckons.

Ordinary Russians are grateful to Putin for the country’s stability and
economic growth, and they are proud that Russia appears to matter when great
global issues are debated. No wonder, then, that Putin’s popularity rating
is around 70 percent — a sustained achievement that any politician would

Yet, for every step forward that Russia has taken over the course of Putin’s
second term, it has taken a step backward. Greater state control of the
economy — especially in the energy industry, where, according to the
Organization for Economic Cooperation and Development (OECD), the state’s
share of oil production has doubled in three years — has bred corruption
and inefficiency.

Serious political opposition has been muzzled. Newspapers and television and
radio stations have been shut down or taken over by the government and its
allies. Kremlin cronies have replaced elected regional governors, and
Russia’s parliament, the Duma, has been emasculated as part of the Kremlin’s
drive to monopolize all state power.

Russia’s foreign policy has been equally troubling. Moscow has given Iran
diplomatic protection for its nuclear ambitions, and Russian arms sales are
promiscuous. The Kremlin has consistently harassed neighboring countries;
former Soviet nations, such as Georgia, have faced near economic
strangulation. In February, Putin spoke favorably about creating a “gas

None of this should be surprising, for Putin’s aim has been unvarying from
the start of his presidency: restore Russian greatness. Unlike Boris
Yeltsin, who accepted dissent as a necessary part of democratic politics —
it was, after all, as a dissenter from Mikhail Gorbachev’s rule that he
gained the presidency of Russia — Putin was determined from the outset to
curtail political opposition as an essential step toward revitalizing
centralized power.

Mikhail Khodorkovsky, of Yukos Oil, for example, is in prison for daring to
challenge the Kremlin’s authority and perhaps aspiring to succeed Putin.
Order, power (including the power to divide the spoils of Russia’s
natural-resource wealth), and reviving Russia’s international influence, not
democracy or human rights, are what matter in today’s Kremlin.

The backgrounds of the people who make up Putin’s government have something
to do with this orientation. A study of 1,016 leading figures in Putin’s
regime — departmental heads of the president’s administration, cabinet
members, parliamentary deputies, heads of federal units, and heads of
regional executive and legislative branches — conducted by Olga
Kryshtanovskaya, director of Moscow’s Center for the Study of Elites, found
that 26 percent at some point served in the KGB or one of its successor

Kryshtanovskaya argues that a closer look at these biographies — examining
gaps in resumes, odd career paths, or service in KGB a/liates — suggests
that 78 percent of the top people in Putin’s regime can be considered
ex-KGB. (The significance of such findings should not be exaggerated: former
secret police may hold many of Russia’s highest o/ces, but Russia is not a
police state.)

Despite strong economic growth, Russia’s domestic problems are awesome. In
the long run, the country’s systemic weaknesses may prove more disruptive to
the world than its revived strength. Alcoholism and a collapsing health
system are fueling a demographic catastrophe: the population has been
shrinking by 700,000 annually for the past eight years despite the fact that
the country’s HIV/AIDS epidemic has not yet peaked.

Male life expectancy is among the lowest in the world. Most demographers
expect that Russia’s population will shrink even more dramatically, perhaps
to below 100 million people by the middle of the twenty-first century.

Russia’s robust growth, moreover, is precarious, because it is based on high
oil prices that seem unlikely to last and rising production that clearly
cannot be sustained, owing to grossly inadequate investment. Natural
resources such as oil and gas are a mixed blessing for Russia, just as they
are for other countries. High energy prices and raw material exports have
allowed Russia to become the world’s tenth-largest economy.

Energy exports finance about 30 percent of the Kremlin’s budget. But that
figure is based on the assumption that oil will remain at $61 per barrel,
which it has already fallen below. Aside from energy, Russian industrial
exports primarily consist of armaments, with advanced aircraft accounting
for more than half of sales. This lack of economic diversification leaves
Russia vulnerable to any downturn in world oil and commodity prices.

Social inequality is vast and growing. Corruption, the OECD reports, is far
higher today than it was under Yeltsin. State interference in business
decision-making is at its highest level since the end of communism.
Moreover, without the rule of law, today’s growing middle class will never
acquire the confidence it needs to sustain a modern economy. Meanwhile, the
insurgency in Chechnya has been met by the Kremlin’s local strongman, whose
minions openly terrorize, kidnap, and kill opponents.

The North Caucasus is a tinderbox. The Russian army is riddled with graft,
with o/cers selling conscripts into virtual slavery. And dangerous new forms
of tuberculosis — as well as of Islamist extremism among the 17 percent of
the Russian population that is Muslim — are being incubated through

Throughout the 1990s, it was fashionable to liken Russia to Weimar
Germany — a nation humiliated and shaken to its core by depression and
hyperinflation that might fall under the spell of some reckless nationalist.
But the defeated Germany of the 1920s was already a modern industrialized
state, and the Nazi regime was only possible because it could seize the
levers of such a state.

These conditions did not exist in Yeltsin’s Russia. Corruption and
governmental chaos meant that Russia could not mount any sort of serious
strategic challenge. But today’s oil-fueled revival and the more disciplined
government Putin has imposed may allow Russia to mount just such a
challenge, particularly where world energy supplies are concerned.

After the Soviet Union’s collapse, the West made the mistake of assuming
that Russia’s reduced status meant it was unnecessary to accord the Kremlin
any special diplomatic consideration — that Russia neither deserved nor
should be offered a major role in world affairs. Accordingly, instead of
drawing Russia into a network of dialogue and cooperation when it was
weak — and thereby helping it form habits that would carry on when Russia
regained strength — the West ignored Russia.

This indifference caused Russia to regard the West’s attempts to reassure
eastern European countries about their security and place in the West as
unfriendly acts, leading to today’s problems. Had Russia been handled better
in the 1990s — had its sense of insecurity not been aggravated — the
country’s tendency toward expansionism might well have been moderated.
                                     UKRAINE EXPOSED
Ukraine’s national experience has taught its citizens to regard peace as
fragile and fleeting, its roots too shallow to bear the strain of constant
social and political upheaval. We Ukrainians accept the lessons of our
history and work toward solutions that relieve the sources of this strain,
lest neglect allow war to overtake peace and authority to subvert freedom.

This is why we see our future in the European Union: the goal of the EU is
to confront instability and insecurity with a lasting structure of peace and
prosperity in which all of Europe’s nations and neighbors have a stake.

To ensure that Europe’s structure of peace is secure in the former Soviet
East, a clear understanding of the existing power dynamic is needed. Much
like the periods following the treaties of Westphalia and Versailles, the
aftermath of the Soviet Union’s collapse features a powerful country
confronting a group of smaller and unprotected new states.

Given the economic and institutional links that arose in the decades of
Soviet misrule, Russia’s influence in the region was bound to be strong.
This is a fact of life that I, as a practicing politician in Ukraine, live
with every day.

It is a fact with which the EU must come to grips under the current German
presidency, by beginning to negotiate a new EU-Russia treaty to replace the
one written at the nadir of Russia’s power. In the coming months, German
Chancellor Angela Merkel must answer the question of how Europe can forge a
lasting and mutually beneficial relationship with the powerful new Russia
that has emerged under Putin.

As a convinced European, I support Germany and the EU in this effort.
Relations with Russia are too vital to the security and prosperity of all of
us to be developed individually and ad hoc. If there is one country toward
which Europeans — and, indeed, the entire West — should share a common
foreign policy, it is Russia.

With high world energy prices allowing Russia to emerge from the trauma of
its postcommunist transition, now is the time for a clear-sighted reckoning
of European security in the face of Russia’s renewed power. Relying on
Russia’s long-term systemic problems to curb its pressure tactics will not
prevent the Kremlin from reestablishing its hegemony in the short run.

Moreover, now is a moment of maximum flexibility, because dependence on
Russian energy supplies will only continue to grow. Indeed, a recent Center
for Strategic and International Studies report estimates that Germany will
depend on Russia for 80 percent of its gas imports — compared with 44
percent today — once the proposed trans-Baltic pipeline is completed.

Unfortunately, political leaders usually have the least idea of what to do
when the scope for action is greatest. By the time they have a better idea,
the moment for decisive and effective action may have passed.

In the 1930s, for example, the French and British governments were too
unsure of Hitler’s objectives to act. But their obsession with Hitler’s
motives was utterly misguided. Realpolitik should have taught them that
Germany’s relations with its neighbors would be determined by relative
power, not German intentions alone.

A large and strong Germany bordered to the east by small and weak states
would have been a threat no matter who ruled in Berlin. The Western powers
should thus have spent less time assessing Hitler’s motives and more time
counterbalancing Germany’s strength. Once Germany rearmed, Hitler’s real
intentions would be irrelevant.

This was Winston Churchill’s message throughout his “wilderness years.” But
instead of heeding Churchill, the British and the French continued to treat
Hitler as a psychological problem, not a strategic danger — until it was
too late. What matters in diplomacy is power, not the state of mind of those
who wield it.

For most of the past 15 years, the response to Russian actions by the United
States and Europe has been driven by their perceptions of Russian reform.
Western policy seems to be based on the premise that peaceful evolution can
be ensured by democracy and by concentrating Russia’s energies on developing
a market economy. Western diplomacy has thus seen its main task as
strengthening Russian reform, with the experience of the Marshall Plan
rather than the traditional considerations of foreign policy in mind.

But a far more important factor than reform is Russia’s attempt to restore
its preeminence in the territories it once controlled. The Russia that
emerged from the collapse of the Soviet Union on Christmas Day 1991 came
with borders that reflect no historical precedent.

Accordingly, Russia is devoting much of its energy to restoring political
influence in, if not control of, its lost empire. Alongside this effort has
come a shift of Russia’s focus eastward, making it a more active participant
in the dynamic Asia created by China’s rise.

In the name of peacekeeping in places such as Abkhazia, South Ossetia, and
Trans-Dniestria (restive regions within former Soviet republics), Russia has
sought to reestablish its tutelage, and the West has largely not objected.
The West has done little to enable the Soviet Union’s successor states —
with the exception of the Baltic nations of Estonia, Latvia, and
Lithuania — to achieve viable international standing.

The activities of Russian troops in Belarus, Georgia, Moldova, Ukraine, and
the former Soviet states of Central Asia are rarely questioned, let alone
challenged. Moscow is treated as the de facto imperial center — which is
also how it conceives of itself.
                                   THE RUSSIA QUESTION
What can the West do to dissuade the Kremlin from pursuing Russia’s age-old
imperial designs? In the 1990s, an enfeebled Russia needed help from abroad.
Unless oil prices unexpectedly collapse, no such leverage will be available
in the near future.

On the contrary, political pressure from outside is likely to aggravate
rather than change Russian behavior. With the Kremlin once again firmly in
control, Russia will change from within — or not at all.

That is not to say, however, that the United States and the rest of the West
can have no influence. Putin, like Russian leaders before him, is sensitive
to outside criticism, as demonstrated by the Kremlin’s paranoid desire to
curtail the activities of nongovernmental organizations within Russia,
particularly those with foreign backing.

Outsiders must be willing to criticize his misdeeds while trying to avert
the emergence of a leader even more assertive than Putin. Maintaining this
balance will be hard. Yeltsin was gifted at deflecting international
skepticism about his rule by portraying himself as the last bastion against
a communist revival; Putin also relies on promoting that type of
better-the-devil-you-know thinking.

Western leaders should speak out against any moves away from democracy,
Putin’s policy in Chechnya, and his use of energy to bully Russia’s
neighbors. (Many western European countries have been far too circumspect in
their criticism and too anxious to make separate deals that will supposedly
guarantee their national supplies of energy.)

As the Russian presidential election in March 2008 approaches, the West must
insist, beginning now, that amending the constitution to allow Putin to run
again is unacceptable and could result in Russia’s expulsion from the G-8
(the group of advanced industrialized nations). Western leaders should press
for free and fair elections, even if the Kremlin’s handpicked candidate is
almost sure to win.

A realistic Russia policy would also recognize that even Yeltsin’s reformist
government stationed Russian troops in most former Soviet republics — all
members of the United Nations — often against the express wishes of the
host governments.

These forces participated in several of these republics’ civil wars, even as
successive Russian foreign ministers have put forth the concept of a Russian
monopoly on peacekeeping — essentially Russian domination — in what the
Kremlin calls “the near abroad.”

 Russia has legitimate security interests in its neighborhood. But Europe’s
peace and international stability require that these interests be satisfied
without Russian military or economic pressure or unilateral intervention.

For example, Russia must not be permitted to use Kosovo’s gaining its
independence from Serbia as a precedent for promoting secessionist movements
in Abkhazia, Nagorno-Karabakh, South Ossetia, Trans-Dniestria, and, most
important, Crimea, in an attempt to destabilize the national governments.

The short-term prospects for peace depend on whether Russian military forces
can be induced to return home and stay there. Russia’s relations with the
Soviet successor states must be thought of as an international problem,
subject to the accepted rules of foreign policy, rather than as solely
Russia’s problem, subject to unilateral decision-making that the West can
hope to influence only by appealing to the Kremlin’s goodwill.

The West must seek to create counterweights to Russia’s expansionism and not
place all its chips on Russian domestic reform. Such a policy would divide
the risks of any possible energy blockade equally among all Europeans,
rather than having governments make separate deals that leave others
vulnerable to energy blackmail.

Of course, not every European nation has the same interest in resisting any
particular act of aggression, and so there will not always be agreement on
when and how to oppose Russian assertiveness.

Some nations may balk at taking action on issues they feel do not
immediately concern them. But the principle of collective security, which
has ensured Europe’s peace and prosperity since 1945, must continue to be
pursued. Merkel’s proposal to create a “collective energy market,” which she
made during a summit with Poland’s prime minister last November, is a good
start toward building a pan-European energy security policy that includes
                                     PIPELINE POLITICS
One key question is just how reliable the Russian energy supply really is.
Despite having the world’s largest gas reserves, Russia now faces a domestic
shortage of gas. Gazprom, the country’s dominant gas supplier (which, when
it comes to foreign policy, doubles as an arm of the Kremlin), is not
producing enough for an economy growing at more than six percent a year.

Production from Gazprom’s three biggest gas fields, which account for
three-quarters of its output, is in steep decline. The one large field that
the company has brought on-stream since the end of the Soviet era is
reaching its peak. Overall gas production is virtually flat.

According to the Institute of Energy Policy, in Moscow, Gazprom’s capital
investments in new gas production in the years 2000-2006 were one-quarter
the size of its investments in other activities: media companies, banks,
even chicken farms, as well as its downstream investments in western
Europe’s energy networks.

Despite the enormous revenues to be gained from the new production of gas,
Gazprom rarely attempts to find or produce more. As a result, it is unable
to come up with enough gas to meet internal demand and its export

After more than ten years of delay, Gazprom has decided to develop a big
field on the Yamal Peninsula — a barren and barely accessible region in the
Arctic. But the earliest that gas from Yamal will reach the market is 2011.

Meanwhile, demand for gas — from RAO Unified Energy System of Russia
(UESR), Russia’s electricity monopoly, as well as from expanding industrial
companies and households — is growing by about 2.2 percent annually,
according to a recent report by the investment bank UBS. “The risk of supply
crisis is real,” the report noted, if growth in demand accelerates to 2.5

The impending shortage means that Gazprom will not be able to increase gas
supplies to Europe, at least in the short term — something that European
countries should be aware of and concerned about. This may explain why
Gazprom abandoned its plan to send gas from the Shtokman field, in the
Barents Sea, to the U.S. market as liquefied natural gas and diverted it to
Europe instead.

The decision, initially interpreted as a move intended to irk Washington,
may actually have been a sign of desperation: sending Shtokman gas to Europe
would free up Siberian output for domestic consumption.

The problem, of course, is not a lack of gas — Russia has 16 percent of the
world’s total known reserves — but Gazprom’s investment strategy. Over the
past few years, the company has spent vigorously on everything but
developing its reserves.

It has built a pipeline to Turkey, taken over an oil company, invested in
UESR, tried to gain footholds in European distribution markets, and become
Russia’s biggest media company. All this was done in the name of creating
and sustaining a “national energy champion.” Yet investment in Gazprom’s
core business was grossly inadequate.

There is another problem facing Gazprom: the actual engineering costs of
developing new gas fields in Russia. In the Shtokman gas field and on the
Yamal Peninsula, in particular, the engineering costs, including the cost of
transporting the output to Europe, are twice as high as for new gas fields
in North Africa and the Middle East. The international gas market is already
beginning to recognize this, and, over the long term, it could be enormously
dangerous for Russia.

Indeed, Russia may actually be putting itself out of the gas business,
because high engineering costs for new projects in Russia are signaling to
the market that Russia and Gazprom lack the capacity to develop these
fields. Western companies could come in and do the job, but given the
Kremlin’s recent usurpation of Shell’s investments on Sakhalin Island, these
companies would be remiss in their fiduciary duties if they undertook such

The only way to avoid a crisis is to break Gazprom’s monopoly on pipeline
infrastructure and to license independent gas producers. Independent
producers already account for 20 percent of domestic gas sales in Russia and
are boosting their output.

Further gains would require market-based incentives. Europe can help by
explicitly linking its acceptance of Russia’s WTO membership to Russia’s
ratification of the Energy Charter and its attendant Transit Protocol, which
would guarantee access to Russian pipelines for Gazprom’s competitors.

Any worthwhile energy security policy for Europe would also seek to loosen
Gazprom’s monopolistic grip on the pipelines. European competition policy,
which has successfully brought companies as big as Microsoft into line,
could — if used skillfully — also help turn Gazprom into a normal

Establishing an independent regulator, as Russian Economy Minister German
Gref has suggested, would also be an important step toward splitting Gazprom
into a pipeline operator and a production company. But Putin has vehemently
rejected such a move. Thus, he now faces a choice between domestic gas
shortages that threaten to slow economic growth and losing the Kremlin’s
“national energy champion.”

Beyond tackling Gazprom’s monopolistic power, a realistic energy policy for
Europe would also seek to share the risks of any possible energy blockade
equally among all Europeans, rather than allowing separate deals that leave
others vulnerable to energy blackmail. Such a policy would need to
incorporate a consensus that no country could reach a deal with Gazprom that
undercuts EU plans to help construct pipelines from Central Asia that bypass

Another counterweight could be built through trade. By extending the single
market eastward to include Ukraine, the EU would shift the center of gravity
for the region’s trade relations. Today’s negotiations over a “deep free
trade agreement” between Ukraine and the EU need to lead, eventually, to an
agreement that will give Ukraine candidate status for EU membership.

                                      A NORMAL COUNTRY
The West should support Russia when it pushes for democracy and free markets
but bolster the obstacles to its imperial ambitions. Indeed, Russian reform
will be strengthened if Russia is encouraged to concentrate — for the first
time in its history — on developing its national territory, which sprawls
over 11 time zones from St. Petersburg to Vladivostok, leaving no rational
cause for claustrophobia.

It does Russia no good to be treated as if it were immune from the normal
considerations of foreign policy; treating it so will only force Russia to
pay a heavier price later on, by luring it into taking steps from which it
cannot easily retreat. The West should not fear frank discussions about
where its interests and Russia’s converge and diverge.

Western leaders should not hesitate to insist that signed agreements, such
as those to withdraw troops now stationed in the countries of the former
Soviet Union, be fully honored. Realistic dialogue will not unhinge the
leaders in the Kremlin. They are smart and can readily grasp a policy based
on mutual respect. In fact, they are likely to understand such a calculus
better than appeals to goodwill and friendship.

Two objectives must be kept in balance when dealing with Russia: influencing
Russian attitudes and affecting Russian calculations. Russia should be
welcomed in institutions and agreements that foster cooperation — most
important, Europe’s Energy Charter and the Transit Protocol, with their
reciprocal rights and responsibilities.

But Russia’s reform will be impeded, not helped, if the West turns a blind
eye to its imperial pretensions. The independence of the republics that
broke away from the Soviet Union, including Ukraine, must not be tacitly
downgraded by the West’s acquiescence to Russia’s desire for hegemony.

Ukraine can help Europe and the United States create a viable structure
within which Russia can exist securely. Our destiny is to be neither a
forgotten borderland nor a bridge between the so-called post-Soviet space of
“managed democracy” and the real democracies of the West. By strengthening
our independence, we can shape Europe’s peace and unity as we roll back the
crony capitalism and lawlessness that are now the norms of the post-Soviet

During my premiership, we sought to achieve just that, working with Moldova
and Romania to standardize the region’s customs regimes and thereby crack
down on criminal enterprises in the breakaway region of Trans-Dniestria
(which is trying to secede from Moldova only because of Russian support).

We acted in concert with our neighbors because we know that
self-determination does not mean isolation. Achieving national independence
today means having a new status, not withdrawing from the world scene. New
nations can build with their former occupiers the same kind of fruitful
relationship that France now has with Germany — a relationship founded on
equality and mutual interests. That is the relationship I seek with Russia,
and that is how Ukraine can help extend the zone of Europe’s peace.

The real test of statesmanship is the ability to protect one’s country
against unfavorable and unforeseen contingencies. The fatal flaw in Russia’s
current oil- and gas-powered assertiveness is that the leaders in the
Kremlin have lost their sense of proportion.

Today’s budget surpluses have allowed them to overestimate the extent of
Russia’s economic renewal, and they seem to have forgotten that by bullying
their immediate neighbors they are also sending shock waves across the
entire West.

Of course, the Kremlin leadership will find it hard to admit that the
centralized system that it is re-creating lacks the capacity to spur
initiative, that Russia, despite its vast natural resources, remains a very
backward country. The subservience that the Kremlin demands is stifling the
vitality and creativity that Russia needs if it is to grow for the long
term, let alone sustain its place in the world.

Russia will damage its own interests if it turns down serious U.S. and
European offers to participate on an equal basis in the structures of
European and Middle East security. Failure to cooperate sincerely on energy
security would eventually isolate Russia in the face of serious strategic
challenges to its south and east; it would deprive Russia of all but the
crudest methods of influence.

Russia’s leaders deserve understanding for their anguished struggle to
overcome generations of Soviet misrule. They are not, however, entitled to
being handed the sphere of influence that tsars and commissars coveted for
300 years.

If the West, particularly Europe, is to ensure its economic prosperity and
energy security, it must be ready to demand of Russia what Russia has so far
been unwilling to provide. And if Russia is to become a serious partner for
the West, it must be ready to accept the obligations of stability as well as
its benefits.                                                -30-

Council on Foreign Relations:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
The Washington Group, Washington, D.C., Thursday, April 19, 2007
WASHINGTON, D.C. – The Washington Group is proud to co-sponsor:
WHAT: A showing of the recently-completed film “The Orange Chronicles – A
Documentary on Ukraine” directed by Damian Kolodiy, Independent Filmmaker.

The Orange Revolution was a unique event in human history that transformed
Ukrainian society forever. “The Orange Chronicles” focuses on the passionate
people who filled the frozen streets of Kyiv during the Presidential
Elections of 2004 to protest an unjust election and the corrupt government
that created it.

Narrated by the filmmaker, Damian Kolodiy, who volunteered as a UCCA
International Election Observer, the documentary captures the revolution
from the vantage point of the people, and in the process of documenting the
revolution, Kolodiy rediscovers his own modern Ukrainian identity.

Amid the Ukrainian landscape, he sees firsthand the continuation of his
grandparent’s struggle for a free and independent country. Kolodiy captures
the erection of Tent City, the blockading of government buildings and
interviews many of the people who had come to Kyiv to demand their voice

be heard.

Follow Kolodiy as he joins a caravan traveling through censored Ukrainian
regions delivering news of the Orange Revolution before the new elections.

Along the film’s journey, Kolodiy rediscovers the roots of Ukraine’s tragic
history that has left the country divided. In the end he is able to weave
the narrative together with his personal family history in Ukraine.

The Orange Revolution was a time of hope, a time of passion, a time of
faith, one of the Ukrainian people’s finest moments on the world stage.

“The Orange Chronicles” acknowledges the continued struggle for democracy

in Ukraine, as well as the timeless affects of the Orange Revolution, both for
the filmmaker and Ukraine.

The Orange Chronicles is the definitive documentary of what it was like to
be on the ground in Ukraine during this time. It’s an incredible educational
tool, already integrated into the academic world. The film planstour the US
and Canada in 2007. The film’s running time: 96 minutes

WHEN: Wednesday, April 25; 6:00 PM – 8:00 PM
WHERE: The Elliott School of International Affairs George Washington
University, 1957 “E” Street, N.W., Washington, D.C.
Damian Kolody, or telephone (202) 994-6240
SECOND SCREENING: Friday, April 27th
SAIS/Johns Hopkins University, Rome Auditorium, The Rome Building
1619 Massachusetts Ave., N.W., Washington, D.C. 20036
(Red Line Metro to Dupont Circle)
A trailer for the film can be viewed at
Q&A after the film with filmmaker and Ukraine political analyst Taras Kuzio.
[return to index] Action Ukraine Report (AUR) Monitoring Service]
     You are welcome to send us names for the AUR distribution list.
        Puts Latest News from Ukraine into Perspective, To Be Shown in Toronto

York Zimmerman, Washington, D.C., April 2007

WASHINGTON, DC – A new documentary by veteran filmmaker Steve

York has won the Chicago Doc President’s Award from the Chicago
International Documentary Festival, where it had its world premiere to a
sold-out audience.

Orange Revolution provides an in-depth look at Ukraine’s historic nonviolent
revolution of 2004, and arrives in film festivals around the country just as
Ukraine makes headlines once again as it teeters on the edge of another
political crisis.

With footage not yet seen even in Ukraine, in-depth conversations with those
who made the revolution, and music performed live at pivotal moments, Orange
Revolution captures the spirit and the determination of the most successful
political protest of the decade – a nonviolent victory that must be
remembered, now more than ever.
The film can be seen next as an official selection at the Hot Docs Canadian
International Documentary Festival in Toronto April 20 and 23, and will be
in competition for the prestigious Golden Gate Award at the San Francisco
International Film Festival, May 3, 6 and 10.

The Ukrainian premiere took place April 18 in Kyiv for invited guests at the
famous Zhovten Theatre. It will also screen at the Seattle International
Film Festival (May 24- June 17, 2007).

It was just after 2 a.m. on November 22, 2004, when the call went out: “The
time has come to defend your life and Ukraine. Your victory depends upon

how many people are ready to say ‘No’ to this government, ‘No’ to a total
falsification of the elections.”

Regime-controlled media claimed victory for Viktor Yanukovych, handpicked

by the corrupt sitting president. But credible exit polls showed Viktor
Yushchenko, the opposition candidate, had won.

It was shocking enough that Yushchenko had been poisoned — and nearly
killed– while on the campaign trail. When reports came in of blatant voter
intimidation and damaged ballots, people were outraged. When they realized
election officials were in on the fraud, the people had had enough.

In freezing temperatures, over one million citizens poured into the streets
of Kyiv and took up residence there. They marched in protest and formed
human barricades around government buildings, paralyzing all state

Restaurants donated food, businessmen sent tents, and individuals brought
blankets, clothing, and money. Rock bands kept their spirits up with
open-air concerts, day and night.

For seventeen days, these throngs of ordinary citizens kept up their
extraordinary resistance, demanding their votes be respected, standing firm
even when an internal army is mobilized to remove them. Capturing the songs
and spirit of this historic moment, Orange Revolution is story of a people
united, not by one leader or one party, but by one idea: a better future, in
a country of their own.

“It’s exhilarating to watch what happens when ordinary people, who are
normally considered powerless, recognize their own power, and decide to take
action. In this film, we see Ukrainians, long described even by themselves
as passive and apathetic, at a historic turning point.

Their choice: whether to endorse the corrupt regime they’d had since the
Soviet Union collapsed, or to demand a more open, responsive, democratic
government.” – Director Steve York

Orange Revolution is a York Zimmerman Inc. production, presented by A Force
More Powerful Films. The film is produced and directed by Steve York. The
editor is Joseph Wiedenmayer.  Managing Producer is Miriam A. Zimmerman.
Associate Producer is Sommer Mathis. Executive Producer is Peter Ackerman.
Miriam A. Zimmerman; Managing Producer; York Zimmerman Inc.
2233 Wisconsin Avenue NW Suite 502; Washington, DC 20007 USA
Tel (202) 337-3291   Fax (202) 337-0614;
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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Chairman; Victor Gekker, Executive Director, Kyiv, Ukraine;
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                          PUBLISHER AND EDITOR – AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation

Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council, Washington;
Trustee, Holodomor Exhibition & Education Collection
P.O. Box 2607, Washington, D.C. 20013, Tel: 202 437 4707;
       Power Corrupts and Absolute Power Corrupts Absolutely.
return to index [Action Ukraine Report (AUR) Monitoring Service]

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