AUR#837 May 3 President Fires Two Constitutional Judges; Russian’s Blast Yushchenko; Foreign Minister in Wash; Shady Privatizations; PG Piskun

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AP Worldstream, Kiev, Ukraine, Tuesday, May 01, 2007
                            DISMISSING CONSTITUTIONAL JUDGES 
TV 5 Kanal, Kiev, in Ukrainian 1800 gmt 30 Apr 07
BBC Monitoring Service, United Kingdom, Tuesday, May 01, 2007

NTN, Kiev, in Ukrainian 1600 gmt 2 May 07
BBC Monitoring Service, United Kingdom, Wednesday, May 02, 2007


RIA Novosti, Moscow, in Russian 1133 gmt 2 May 07
BBC Monitoring Service, United Kingdom, Wednesday, May 02, 2007

                                 IS MAINTAINING DEMOCRACY 
Desmond Butler, AP Worldstream, Wash, DC, Wednesday, May 02, 2007

By David R. Sands, The Washington Times
Washington, D.C., Wednesday, May 2, 2007

Mara D. Bellaby, The Associated Press, Kiev, Ukraine, Wed, May 2, 2007

8.                        PRIVATIZATIONS GET SHADY AGAIN
By John Marone, Kyiv Post News Editor
Kyiv Post, Kyiv, Ukraine, Wednesday, Apr 25 2007

By Daniela Lazarova, Radio Praha

Prague, Czech Republic, Monday, April 23, 2007

                          Raiffeisen has bought the biggest bank in Ukraine
Haig Simonian, Financial Times, London, UK, Wednesday, May 2, 2007

ANALYSIS & COMMENTARY: By Oleksandr Shepotylo

The Ukrainian Observer magazine #231, The Willard Group
Kyiv, Ukraine, May 2007

                               An update on the political crisis in Ukraine
INTERVIEW: With Ilko Kucheriv, Pollster,
Director of the Democratic Initiatives Foundation
INTERVIEW BY: Yanina Sokolovskaya,
Izvestia, Moscow, Russia, Friday, April 27, 20007

                           The crisis in parliament has divided Ukrainians
INTERVIEW: With Nadia McConnell, President, U.S.-Ukraine Foundation

BY: Brian Whitmore, RFE/RL, Washington, D.C., Friday, April 13, 2007

                              PRECIPITATED POLITICAL CRISIS
By David R. Sands, The Washington Times
Washington, D.C., Saturday, April 14, 2007


Ukrayinska Pravda On-line, in Ukrainian, translated by Eugene Ivantsov
Kyiv, Ukraine, Tuesday, April 24, 2007

The Ukrainian Observer magazine #231, The Willard Group
Kyiv, Ukraine, May 2007

ANALYSIS & COMMENTARY: By Mykhailo Savchyn, for UP
Ukrayinska Pravda in Ukrainian, translated by Anna Platonenko
Kyiv, Ukraine, Sunday, April 29, 2007

18.                       UKRAINE’S CRISIS OF GOVERNANCE
Open Democracy, London, UK, Tuesday, May 1, 2007

  Ukraine’s new chief prosecutor’s ties with political leaders, tycoons profiled
ANALYSIS & COMMENTARY: By Viktor Chyvokunya
Ukrayinska Pravda website, Kiev, in Ukrainian 26 Apr 07
BBC Monitoring Service, United Kingdom, Tuesday, May 01, 2007

AP Worldstream, Kiev, Ukraine, Tuesday, May 01, 2007

KIEV – President Viktor Yushchenko on Tuesday dismissed a second
Constitutional Court judge in as many days, increasing the likelihood that
the court will be unable to make a ruling in the more than four-week-old
political crisis seizing this ex-Soviet republic.

Yushchenko signed a decree in early April dissolving the 450-seat
legislature and ordering new parliamentary elections for late May. Prime
Minister Viktor Yanukovych and his majority in parliament have refused to
fulfill the decree, and have set their hopes on the Constitutional Court to
declare it unconstitutional.

Yushchenko’s office announced that the president had dismissed Judge
Syuzanna Stanik for “a violation of (her) oath.” Yushchenko had earlier
accused Stanik of corruption, citing an allegation that a member of her
family had received expensive real estate. She denied the charge, and the
Prosecutor General’s Office also defended her.

On Monday, Yushchenko fired another judge on the 18-judge panel, accusing
him of violating court procedure. Both judges were part of the six-judge
quota that Yushchenko can appoint to the bench, but both were appointed by
his predecessor, President Leonid Kuchma.

Under Ukrainian law, the court needs a 12-judge quorum to work. Before the
court took the case, five of the 18 judges said that they believed
Yushchenko’s decree was constitutional and that they would not participate
in the hearings.

They later showed up to participate, but if those judges – considered allies
of the president – now bow out, the court will no longer have a quorum.

Many analysts say that Yushchenko is protecting himself in expectation that
the court’s decision will go against him. Last week, he canceled his
previous decree and reissued it, changing the date of elections to June 24.
His office then told the court that it should stop considering the earlier
decree, but the court continued to deliberate.

Ukraine’s political crisis erupted after Yushchenko accused Yanukovych of
trying to usurp power by wooing pro-presidential lawmakers over to the
majority coalition.

But tension between the two leaders had been building since Yanukovych
returned to power as premier after his party won the most votes in last
year’s election and put together a majority coalition.      -30-

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

TV 5 Kanal, Kiev, in Ukrainian 1800 gmt 30 Apr 07
BBC Monitoring Service, United Kingdom, Tuesday, May 01, 2007

KIEV – Ukrainian President Viktor Yushchenko had legal grounds to dismiss
the deputy head of the Constitutional Court, Valeriy Pshenychnyy,
presidential adviser Mykola Poludyonnyy said in the studio of 5 Kanal TV on
30 April.

“On 17 April this year, Mr Pshenychnyy publicly violated the secret of the
court’s consultation chamber. He announced who voted how on the decision of
the Constitutional Court regarding the case on the decree on 5 April 2007,”
Poludyonnyy said.

“Article 6 of the Law of Ukraine on the status of judges says directly –
among judges’ duties – that a judge must not make public the secret of the
discussion chamber,” he said.

Syuzanna Stanik, the reporting judge on the case of parliament’s
dissolution, can be dismissed next, because the president has serious
grounds to dismiss her for violating the law, Poludyonnyy said.

“These are issues connected with her taking the case without an instruction
from the Constitutional Court of Ukraine, her political statements, her
behaviour, which – in my opinion – are incompatible with the status of
judge. These are issues of observing the laws of Ukraine,” he said.

Pshenychnyy and Stanik were appointed Constitution Court judges on the
president’s quota by former President Leonid Kuchma.        -30-

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

NTN, Kiev, in Ukrainian 1600 gmt 2 May 07
BBC Monitoring Service, United Kingdom, Wednesday, May 02, 2007

KIEV – [Presenter] Syuzanna Stanik [former judge of the Constitutional Court
of Ukraine] has said that her dismissal was illegal.

[On 1 May, President Viktor Yushchenko signed a decree dismissing Stanik
from her post “for breaching the oath”.]

Speaking in an exclusive interview with NTN, she said that she did not
breach the oath.

The president’s decree of 1 May dismissing her lacks the observance of a
necessary procedure because, according to the law on the Constitutional
Court and the court’s procedures, the issue of breaching the oath should
first be considered by a special commission which should forward its
conclusions to the Supreme Council [parliament].

Article 126 of the constitution, which the president referred to, says that
judges can be dismissed by the body which appointed them.

[Stanik] The law on the Constitutional Court has a clear provision which
says that the issue of a judge breaching the oath should be considered by
the Supreme Council.

This is why, speaking or thinking about the decree, I arrived at a very
simple conclusion: whether the president of Ukraine has the right to
interpret the constitution and the laws of Ukraine. Our country’s laws say
he cannot. Article 150 of the Constitution of Ukraine grants such a right
only to the Constitutional Court of Ukraine.                -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
RIA Novosti, Moscow, in Russian 1133 gmt 2 May 07
BBC Monitoring Service, United Kingdom, Wednesday, May 02, 2007

MOSCOW- The [State] Duma Committee on CIS Affairs and Relations with
Compatriots will hold an extraordinary meeting today to prepare a statement
on the situation in Ukraine, the committee’s chairman, Andrey Kokoshin, has
told journalists.

In the draft statement the deputies say that a political crisis is still
continuing in Ukraine, and “is obviously deepening in connection with the
actions of the republic’s president, who decided to dismiss two
Constitutional Court judges”. [Passage omitted]

“When analysing the legality of this decision, we came to the conclusion
that this decision by the president violates Ukrainian law, both its form
and its procedure,” Kokoshin said.

He also said that “Viktor Yushchenko is moving further and further outside
the bounds of law and is making it impossible for the Constitutional Court
to function. The Constitutional Court should be protected from all kinds of
political influence”.

According to Kokoshin, both the Constitutional Court and the Ukrainian
parliament are currently forced to work under heavy political pressure.
Kokoshin said that the ongoing political crisis may turn into a social and
economic crisis, which causes concern to Russia both in the humanitarian
sphere, and in the sphere of economic cooperation between the two countries.

Moreover, Russia is worried about how “the political crisis will affect
Ukraine as a transit country for hydrocarbons from Russia to Europe”. He
said that European politicians are expressing similar concerns.

Kokoshin underlined that the Parliamentary Assembly of the Council of Europe
[PACE] had expressed its position, according to which the Constitutional
Court should have the final word in solving the conflict between the
president and parliament. “But in these conditions it will be hard for the
Constitutional Court to speak its mind,” he said.

Kokoshin said that “the president has not made one single step towards a
compromise during this whole time, even though he has spoken about it many
times and in a loud voice”.

He also said that the president had violated Ukrainian law more than once
and is drawing the country towards an abyss of instability.

Kokoshin believes that Western politicians should also take this situation
very seriously, and not feed any illusions regarding loud statements by the
“Orange group” about adherence to the law and constitution.

“All their loud statements turn out to be a simple bluff,” he said. Kokoshin
also said that in their struggle for power the Orange side is disregarding
the requirements of both their own country’s laws and global practice.

“The fate of the nation, and not personal considerations of the moment, such
as political power or economic motives, should have primacy,” he said.

Kokoshin said that the statement would be sent to Ukraine, PACE, the
national parliaments of European countries, the CIS parliamentary assembly,
the parliamentary assembly of the Collective Security Treaty Organization,
the Eurasian Economic Cooperation Organization and also to the parliaments
of a number of Asian countries, including China and India.         -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.
                                IS MAINTAINING DEMOCRACY 

Desmond Butler, AP Worldstream, Wash, DC, Wednesday, May 02, 2007

WASHINGTON – Ukraine’s Foreign Minister Arseniy Yatsenyuk assured U.S.
Secretary of State Condoleezza Rice Tuesday that his country would adhere to
democratic standards in resolving its current political crisis.

Yatsenyuk said that his political ally President Viktor Yushchenko was
seeking a compromise with Prime Minister Viktor Yanukovych over the
president’s order to dissolve Parliament and his call for new elections.

Yatsenyuk said that U.S. officials expressed concern that Ukraine maintain
the democratic progress it had made since the 2004 Orange Revolution brought
Yushchenko to power after another standoff with Yanukovych.

“We have to stick to democratic values, democratic standards — it’s obvious
for us,” Yatsenyuk said in an interview with The Associated Press.

Ukraine’s political stalemate erupted after Yushchenko accused Yanukovych

of trying to usurp power by wooing pro-presidential lawmakers over to the
majority coalition.

But tension between the two leaders had been building since Yanukovych
returned to power as premier after his party won the most votes in last
year’s election and put together the majority coalition. The election was
widely lauded as democratic.

Yushchenko signed a decree last month dissolving the 450-seat legislature
and ordering new parliamentary elections for late May. Yanukovych, however,
and his majority in Parliament have refused to fulfill the decree, and
challenged it before the country’s constitutional court, which is still

Unable to get funding for the election from the Yanukovych-controlled
government, Yushchenko postponed the election until June 24, but has said

he will not back down from holding it.

Yatsenyuk said he assured U.S. officials that there is a legal basis for
Yushchenko’s move to dissolve parliament. He said that the president would
seek a deal to end the impasse.

“Everyone is interested in compromise, but the president had to act and
react and had to protect the constitution,” he said. “In 2007 we faced for
the first time in our history the dissolution of the Parliament. It’s called

Yatsenyuk said that talks with Rice had been friendly. They discussed
intensifying talks on energy security, the country’s bid to join the World
Trade Organization as well as aspirations for the European Union and NATO.

He said that Ukraine was getting strong support from the U.S. in its efforts
to diversify its energy supply. The U.S. is aiding his country, he said, “in
terms of supply of nuclear fuel for Ukrainian nuclear power stations.”

On Monday, Yatsenyuk said in a speech in Washington that despite
disagreements between the political factions over pursuing NATO membership,
his government is committed to joining the alliance.               -30-

FOOTNOTE: Sixty members and guests of the U.S.-Ukraine Business
Council (USUBC) met in Washington on Monday, April 30, with Ukraine’s
new Foreign Minister Arseniy Yatsenyuk.  Yatsenyuk was previously the
Minister of Economy and is considered a top expert on economic and
business matters. Ukraine’s Ambassador to the United States Oleh
Shamshur also attended the meeting.
Minister Yatsenyuk assured the U.S.-Ukraine Business Council that
Ukraine will maintain its present course to become a member of the
WTO, will continue to move toward Euro-Atlantic integration and
welcomes investors and corporations from the United States to 
establish or expand their business operations in Ukraine.
The Foreign Minister presented a very positive outlook for Ukraine
and answered questions from the members of the Council very frankly
and honestly. The reaction from members of the Council was very
positive.  They are pleased Ukraine has a Foreign Minister who
understands the importance of business and economic reforms and
believes a positive business environment is very crucial to the long-run
success of Ukraine.  AUR EDITOR
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By David R. Sands, The Washington Times
Washington, D.C., Wednesday, May 2, 2007

The bitter power struggle in Kiev has not endangered Ukraine’s political and
economic reforms and should be resolved without outside help, new Ukrainian
Foreign Minister Arseniy Yatsenyuk said in an interview yesterday.

“What’s happening in Ukraine right now is something called democracy,” said
the youthful Mr. Yatsenyuk, in Washington this week for talks with Secretary
of State Condoleezza Rice and other U.S. officials. “It is much more a case
of temporary political turbulence, and less than a crisis.”

Mr. Yatsenyuk, a former banker and economics minister who has never held a
diplomatic post, owes his job to the high-stakes standoff between Ukrainian
President Viktor Yushchenko, a hero of the country’s pro-Western Orange
Revolution, and Prime Minister Viktor Yanukovych, widely seen as more
sympathetic to neighboring Russia.

Over Mr. Yushchenko’s objections, Mr. Yanukovych and his dominant
parliamentary coalition forced the ouster of pro-European Foreign Minister
Borys Tarasyuk in January, and twice vetoed the president’s first choice to
replace him.

The president then turned to Mr. Yatsenyuk, 33, seen as a politically
neutral technocrat. Parliament overwhelmingly approved his nomination in

In the interview, the foreign minister said he was not seeking U.S. help to
resolve Ukraine’s power struggles, despite fears in Washington that Kiev
may be slipping back under Russian influence.

In sharp contrast to the Orange Revolution, both the United States and the
European Union have been publicly neutral in the latest political wrangling.

“We don’t want to involve the United States in Ukraine’s internal political
situation,” he said. “This is a business that Ukrainian politicians
themselves will have to solve.”

Still, influencing opinion in Washington appears to be a priority for at
least some of Ukraine’s top players.

Both Mr. Yanukovych and opposition leader Yulia Tymoshenko, a sometime
ally of the president, have hired expensive public relations help in
Washington to sway opinion leaders here about the situation back home.

Mr. Yatsenyuk insisted that the political “turbulence” in Kiev has not
altered Ukraine’s drive to integrate politically and economically with the
United States and Western Europe. Mr. Yushchenko had put eventual Ukrainian
membership in the European Union and NATO as top foreign-policy goals.

Mr. Yanukovych has been far more equivocal, especially about NATO
membership. Mr. Yatsenyuk said in the interview that NATO still had an image
problem in parts of Ukraine, dating back to the Cold War.

“There are some bad feelings, because people still do not understand fully
what NATO means,” he said. “If you could change the name to, say,
‘Alliance,’ I think 80 percent of our people would say yes.”

The president and prime minister remain at odds over new parliamentary
elections. Mr. Yushchenko, saying lawmakers have undermined his authority,
has pressed for elections but has been blocked by Mr. Yanukovych and his

The politically feeble Constitutional Court, under heavy pressure from both
sides, has not ruled on the legality of the president’s decree to dismiss
parliament and order new elections.                       -30-

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

Mara D. Bellaby, The Associated Press, Kiev, Ukraine, Wed, May 2, 2007

KIEV, Ukraine: The fidgeting, wide-eyed girls and boys squeezed around a
table in Elizaveta Moklyak’s kindergarten class are helping lead a cultural
and political revolution.

With her pointer and colorful posters, Moklyak teaches Ukrainian to
Russian-speaking children – ensuring that by the end of the school year, the
language of their homeland no longer sounds like a foreign tongue.

Sixteen years after shrugging off Moscow’s rule, Ukraine is reclaiming a
language that – like scores of other local languages across the former
U.S.S.R. – the Soviet leadership once disdained as inferior to Russian.

Today Ukrainian has emerged from second-class status, slipping quietly into
the chambers of government and popular culture. This marks more than a
cultural change: It could doom any hopes Russia may have of restoring its
traditional political influence over this country of 47 million.

Just two years ago, some Russian speaking regions in eastern Ukraine talked
of secession, fearing dominance by Ukrainian-speakers in the west. The
language debate was one of the most divisive of the 2004 Orange Revolution,
which helped oust Ukraine’s pro-Moscow leadership.

While competition for political power continues, Ukrainian may already have
triumphed in the language war.

“I think there is the sense that Ukraine has passed over the hump on this
issue, that there has been a big, but quiet, victory,” said Ivan Lozowy, a
political analyst.

Russian was the lingua franca of the Soviet Union, but its use declined
sharply after the Soviet breakup in 1991. Native languages rebounded, and
English made inroads among intellectuals and business leaders.

Where Russian speakers in the Soviet republics once enjoyed social and
political advantages, many now struggle to keep up in school, to fill out
forms in government offices and to compete for jobs.

In Latvia and Estonia, Russian speakers complain of discrimination. That
resentment erupted in violence in the past week, when Estonia’s
Russian-speaking minority protested the removal of a monument honoring
Soviet soldiers from downtown Tallinn.

In Georgia and Azerbaijan, many youngsters now see English as a ticket to

However, Russian is still firmly entrenched in some former Soviet states,
including in Central Asia, where it is widely seen as having brought culture
and civilization to the medieval khanates that once ruled the steppes. But
even in places where Russian remains strong, nationalists are trying to chip
away at its dominance.

Russian President Vladimir Putin appears deeply worried about the erosion of
the use of Russian worldwide, and last week called for creation of a
national Russian Language Institute.

“Looking after the Russian language and expanding the influence of Russian
culture are crucial social and political issues,” Putin said in his state of
the nation address.

In countries like Ukraine, that influence is shrinking. The nation’s
Ukrainian-speaking west yearns to be part of Europe; the Russian-speaking
east and south is the base of politicians who want to maintain Ukraine’s
historic ties to Moscow.

Some Russian-speaking Ukrainians, who make up about half the country, say
they feel excluded from the Ukrainian-speaking society. In the past year,
many regions have tried to enshrine Russian in local laws, and their
champion, Prime Minister Viktor Yanukovych, has said he would oppose
aggressive “Ukrainianization.”

But even Yanukovych has brushed up on his Ukrainian and now uses it – not
only at official meetings, but at rallies of his Russian-speaking

Some Russian-speakers feel besieged. Mykola Levchenko, 27, secretary of

the Donetsk city council, said Russian-speakers like himself suffer daily
insults and some Ukrainians even question his patriotism. When he buys a
Ukrainian-made home appliance, he says, the directions come only in

“In world society, Russian is a major language, Ukrainian isn’t,” he said.
“Why would we give this up?”

After Ukraine became independent, it declared Ukrainian the sole state
language and switched over more than 80 percent of its schools. Nearly all
universities now teach in Ukrainian; as a result, parents push children to
study Ukrainian early.

“Without this it would be difficult for him in life,” said Yulia Bondarenko,
who speaks Russian at home to her 7-year-old son, Zhenya, but sends him

to a Ukrainian-language school.

Ukrainian and Russian both use the Cyrillic alphabet and have the same
linguistic roots, and it’s not uncommon to hear people slip seamlessly from
one to another. Many words are similar – the Russian word for apple is
“yabloko,” Ukrainian is “yabluko” – but differences also are common.

For example, thank you in Russian is “spasibo;” in Ukrainian, it’s
“dyakuyu.” And even simple words can be different: in Russian, yes is “da”
and no is “nyet;” in Ukrainian, yes is “tak” and no is “ni.’

Ukrainians in Kiev joke that if a traffic cop pulls them over, they’ll curse
in Russian, then switch to Ukrainian – which conveys an air of authority –
to try to persuade the officer not to write a ticket.

“We have nothing against Russian, we all use it,” said Yuliya Vladina, a
22-year-old DJ. “But we have a language – Ukrainian – so why shouldn’t we
promote that? It’s progressive. It’s hip.”

Ukrainian’s identification with pop culture appears to have been a key
factor in its success, particularly among young people.
Many popular bands sing in Ukrainian. “People are learning the language from
our songs,” said Svyatoslav Vakarchuk, lead singer of Okean Elzy.

Ivan Malkovych, director of a Ukrainian-language publishing house, rushed
out a Ukrainian translation of the fifth installment of the Harry Potter
series, beating Russian-language publishers. That success, he said, helped
attract young readers to other Ukrainian-language titles.

Russian does maintain its dominance in some fields. Most national newspapers
publish only in Russian, as do many magazines.

But every year, the demand for Ukrainian publications increases – propelled
by readers who began learning the language in kindergarten classes like
those taught by Moklyak.                          -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
    NOTE: Send in a letter-to-the-editor today. Let us hear from you.

By John Marone, Kyiv Post News Editor
Kyiv Post, Kyiv, Ukraine, Wednesday, Apr 25 2007

Oleksandr Ryabchenko, a privatization expert and president of the
International Institute for Privatization, Property Rights and Investments,
said shadowy privatization deals are again becoming a practice.

Tycoon Viktor Pinchuk is probably no longer concerned about the state
repossessing a highly lucrative ferroalloy plant that he took control of in
a controversial privatization deal while his father-in-law, Leonid Kuchma,
was still Ukraine’s president.

Nor should he be, considering the fickleness of the country’s courts and the
questionable policies of its main privatization body.

Ever since Viktor Yanukovych regained control of the government less than
a year ago, Ukraine’s privatization effort has gone from low gear into
reverse, with well-connected businessmen at home and in Russia again beating
the state out of billions of dollars in badly needed revenues.

“They are selling assets the way they used to in 2003 [under President
Leonid Kuchma],” said Oleksandr Ryabchenko, president of the International
Institute for Privatization, Property Rights and Investments.

According to Ryabchenko, it’s more a matter of certain well-connected
businessmen getting their way, than a set government policy.
                             THE NIKOPOL CASE
Only a year ago, the Supreme Court shot down what seemed like Pinchuk’s last
chance to hold on to the Nikopol Ferroalloy Plant, which analysts estimate
to earn about $30 million a month.

A company controlled by Pinchuk, one of Ukraine’s richest men, had bought a
50 percent plus one share stake in the enterprise for around $80 million
during controversial state tenders held in 2003. At the time, another
Ukrainian bidder offered significantly more but was barred from the final
bidding process.

By 2005, firebrand pro-Western politician Yulia Tymoshenko, the premier at
the time, was pushing along lawsuits that challenged the legality of this
and other shadowy privatization tenders conducted during Kuchma’s tenure.

That same year, Tymoshenko was successful in overturning another
questionable state auction from the days of Kuchma – that of Kryvorizhstal,
Ukraine’s largest steel mill, which fetched $4 billion more during its
resale at the end of 2005.

Kryvorizhstal had been originally sold by the state to companies controlled
by Pinchuk and Ukraine’s richest tycoon, Rinat Akhmetov, for $800 million.

In January 2006, the Supreme Court refused to consider an appeal to hold on
to Nikopol by Pinchuk’s Prydniprovia company, which actually purchased the
majority stake in the plant, the world’s largest producer of manganese-based

Nevertheless, neither the State Property Fund (SPF), the nation’s main
privatization body, nor the Prosecutor General’s Office were able to recoup
the majority stake, effectively allowing Pinchuk to continue reaping the
benefits of Nikopol’s profitable exports.

Throughout 2006, Prydniprovia threatened to appeal its case to the European
Court of Human Rights, while simultaneously calling for a so-called “peace
agreement,” or the payment of something near the difference between the
auction price and the market value of the plant.

But thanks to the latest ruling by the Supreme Court, Prydniprovia is no
longer dependent on the good will of the European Court or the SPF. The
Ukrainian Supreme Court recently cancelled all earlier decisions by lower
Ukrainian courts, which had called the 2003 tenders for Nikopol illegal.

The March 14 Supreme Court ruling effectively returned the state’s legal
battle against Pinchuk to square one. “Legally, this means that the original
sales contract is still valid,” according to Serhiy Vlasenko, a partner with
the Kyiv-based law firm Magister & Partners, which represents the interests
of Prydniprovia.

The Supreme Court never ruled in favor of the state’s lawsuit in January
2006, but merely dismissed Prydniprovia’s appeals against the lower courts’
decisions. Moreover, Vlasenko added, under former President Kuchma, the
high court had declared the 2003 privatization tenders legal on two earlier

Despite his recent victory with the Supreme Court, Pinchuk, in collaboration
with the other major shareholder in Nikopol, the so-called Privat Group, do
not appear to be taking any chances.

Pinchuk and Privat, a powerful industrial group co-owned by Ukrainian
tycoons Ihor Kolomoysky, Hennadiy Bogolubov and Oleksiy Martynov, have
battled fiercely with each other for control of Nikopol and other lucrative
Ukrainian enterprises.

Now they appear to be teaming up – against the state.

Even without the 50 percent plus one share package claimed by the state,
Pinchuk controls another, uncontested 23 percent stake in Nikopol, while
Privat controls the rest.

Recently announced plans by Nikopol’s management to conduct a fivefold share
capital increase would effectively water down the majority stake contested
by the state to a minority one.

The plans are scheduled to be approved during a shareholders meeting on
April 26, just before the country heads into weeks of holidays. A statement
released by the company’s management said the emission would be held to
attract investment.

But if the emission is approved, it will be closed to existing shareholders,
which means no one else, possibly even the state, will have a chance to take
part in it. The state is also not likely to muster enough funds to retain or
increase its legally disputed interest in the prized factory, anyway.

Kateryna Krasnova, a spokesperson for Pinchuk’s holding company, Interpipe,
confirmed that the share emission would be decided during the April 26
shareholders meeting, but added, “Prydniprovia is not the initiator of this

In response to the possible emission, which would water down the share
package claimed by the state, the SPF filed an appeal with a regional court
to arrest the 50 percent plus one share stake, but it was rejected.

Nina Yavorska, an SPF spokesperson, said privatization authorities had been
unable to force Prydniprovia to return the shares all last year due to a
“technical mistake” made by a Supreme Court justice.

However, even under current pro-Western Ukrainian President Viktor
Yushchenko, the SPF’s commitment to conducting transparent privatizations
has been called into doubt.
                               OTHER SHADOWY DEALS
Last month, the SPF auctioned off a lucrative locomotive plant for at least
half its market value to Russian investors during a highly questionable
tender. Yushchenko has called for an investigation into this allegedly
shadowy privatization deal.

But the increasingly marginalized president does not appear to have the
clout to ensure the deal is probed fairly by prosecutors allegedly loyal to
the governing coalition of Prime Minister Viktor Yanukovych, Yushchenko’s
longstanding nemesis from the Orange Revolution.

Luhanskteplovoz, a monopoly Ukrainian producer of locomotives and trams,
was only last year being eyed by major European investors, such as German
electronics giant Siemens, with some analysts estimating at the time that
the state could fetch as much as $200 million.

The SPF announced in March that the plant had been sold in a last-minute
auction that included, essentially, one bidder from Russia for around $60

The auction was supposed to have been held last October, but was suspended
immediately following public statements made by Yanukovych, who said the
issue should be studied more closely.

SPF head Valentyna Semenyuk is a member of the Socialist Party, which had
supported President Yushchenko’s rise to the presidency in 2004, only to
join a Moscow-leaning majority in the parliament backing Yanukovych’s

The head of the parliament’s Special Monitoring Commission on Issues of
Privatization, Andriy Kozhemyakin, a member of Yulia Tymoshenko’s opposition
Byut faction, said the sale of Lukhanskteplovoz was neither competitive nor
transparent, costing the state as much as $100 million in lost revenues.

Ryabchenko called the dubious privatization of Lukhanskteplovoz “a signal”
that more such non-transparent sales by the SPF could follow.

While international observers and investors have been busy following
Yanukovych’s ongoing battle for power against President Yushchenko, the
government continues to sell off valuable state assets at bargain basement
prices, sometimes foregoing the need for a tender.

The SPF announced last September that a joint venture between Russian and
Ukrainian investors would serve as the main investor in a potentially
lucrative but still unfinished ore-enrichment plant.

The SPF had pledged to privatize the Kryviy Rih Oxidized Ore-Enrichment
Plant in a transparent tender.

Instead, the plant ended up in the hands of Moscow-based Metalloinvest and
Dnipropetrovsk-based Smart Group on the basis of a closed-door government

The SPF said that the Ukrainian state would hold a controlling stake in the
plant and that no actual sale of state property was involved. However,
Metalloinvest is widely believed to be calling the shots, with Smart Group
acting as a junior partner.

More recently, the Cabinet confirmed a list of other state enterprises to be
sold off this year, including fixed-line telecom monopoly Ukrtelecom, the
Odessa Portside chemical plant, and stakes in several regional energy

If openly auctioned to the highest bidders, these deals could bring in
billions of dollars in state revenues. But if these assets are sold in
rushed and questionably transparent sales in the midst of Ukraine’s ongoing
political crisis, participation from Western investors that would be willing
to pay top dollar for state assets is likely to be limited.

Such a scenario clearly plays into the hands of Ukraine’s and Russia’s
leading business groups, providing greater opportunities to snatch prized
assets at bargain prices with little competition.                   -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


By Daniela Lazarova, Radio Praha

Prague, Czech Republic, Monday, April 23, 2007

Czech farmers are heading east. Not so long ago they criticized the fact
that farmers from Germany could rent out land in the Czech Republic. Now
they themselves are doing the same thing in Ukraine.

any Czech farmers struggling to cope with fierce competition
within the European Union have discovered new possibilities further east –
in Ukraine. Ukraine has more arable land than it can farm and the Ukrainian
government is encouraging Czech farmers to bring their know-how to the
former Soviet Republic.

Jan Veleba is president of the Czech Agrarian Chamber: “The Czech Agrarian
Chamber received word from the Ukrainian government that there are some 90
thousand hectares of arable land which can be leased out.”

 Although Czechs are fairly conservative and few make use of business
opportunities abroad, the common sense of taking up this offer was obvious
to many. The Jevisovice farming cooperative based in Moravia has leased
eight thousand hectares of land in Ukraine and the minute there’s a chance
to buy the land they will snap it up. As Bohumir Rada head of the coop
explains, the advantages are considerable:

“The price of diesel fuel is the equivalent of 11 Czech crowns per litre,
labour is very cheap and so are fertilizers and all the necessary

Already the low price of EU imported farming produce is threatening the
livelihood of many Czech farmers. For some of them “going east” might be the
only viable alternative. Hugo Roldan, Agriculture Ministry spokesman says
that it is expected that the number of farmers looking east will grow:

“It is to be expected that other farmers will follow, but as far as we know
there are still a great many administrative barriers for Czech farmers in
Ukraine and the ministry would welcome if this process was facilitated as
much as possible.”

Hugo Roldan says that there are other opportunities opening up in Ukraine.
The Ukrainian government wants to use rapeseed as a source of renewable
energy and is seeking an investor who would process rape seed into
bio-fuel – something for which the Czech Republic – a big rape seed producer
itself – has the technology.                            -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                      Raiffeisen has bought the biggest bank in Ukraine

Haig Simonian, Financial Times, London, UK, Wednesday, May 2, 2007

Stroll down Calea Victoria, a prestigious artery in the Romanian capital of
Bucharest, and the neon signs and glittering nameplates of Austrian-owned
banks blaze out against their grey surroundings.

From Sofia to Sarajevo, it is a similar story. In central and eastern
Europe – and now increasingly Russia and the former Soviet Union – Austria’s
three leading banks have gained outstanding prominence.

In one of the success stories of western Europe’s push eastwards since the
collapse of communism, Erste Bank, Raiffeisen and Bank Austria Creditanstalt
(BA-CA) have transformed themselves from domestic companies into regional

The tale of how they exploited their geographic and cultural proximity to
the region offers lessons for other companies in the art of managing growth

Longstanding historical links helped. “Just look at my name,” says Herbert
Stepic, chief executive of Raiffeisen International, the quoted subsidiary
that spearheaded Austria’s co-operative Raiffeisen banking group in its
eastward push. “It betrays Slavic origins. Much of Austria is a mix of
former east Europeans. We have a common history and a common destiny.”
Between them, Austrians control the biggest banks in Albania, Bulgaria,
Croatia, the Czech Republic, Romania and Slovakia.

Elsewhere, apart from Poland, they rank among the top three. Recently their
geographic focus has broadened. Raiffeisen has bought the biggest bank in
Ukraine, while BA-CA – now part of Italy’s UniCredit – has joined the top 10
in Russia.

The Austrians’ talent for spotting opportunities has been re-warded by
surging profits and spiralling share prices. But, with greater historical
perspective, it is their ability to integrate acquired banks and exploit the
abilities of new employees that is probably their biggest achievement.

The three banks started with different priorities. Raiffeisen and BA-CA were
pioneers, setting up greenfield operations to assist Austrian exporters in
central and eastern Europe when the region was still communist.

By contrast, Erste, which is primarily a retail bank, was a relative
latecomer. It started to expand only in the late 1990s, buying former
state-owned savings banks in a process culminating in the Euro3.75bn
purchase in 2005 of Banca Comerciala Romana – still by far the biggest bank
deal in the region.

Only in the past two years have their strategies converged as Raiffeisen and
BA-CA have developed into retail banking and Erste has started serving small
and medium-sized businesses.

However, all three have, to differing degrees, contended with similar
challenges of scanty legislation, limited supervision and archaic
information technology.

Buying and integrating big, overstaffed and vastly inefficient banks in
countries making the transition to market economies has been a gargantuan
task. “In many markets, we actively helped in drawing up banking
regulations,” Mr Stepic says.

Erste faced some of the biggest challenges because, unlike its two
counterparts, it had virtually no experience in eastern Europe. Moreover, as
a primarily retail bank, its acquisitions were particularly big – usually
decentralised and often struggling former state-owned mammoths, such as the
postal savings bank in Hungary.

“All the banks we bought had substantial problems. In the Czech Republic,
for example, Ceska Sporitelna (the former Czech national savings bank) was
challenged by impaired assets following the country’s transformation to a
market economy,” says Manfred Wimmer, the executive director behind most of
Erste’s deals.

Opportunities for mortgage-lending, for instance, were often hampered by
inadequate rules on property rights.

Surprisingly, however, restructuring was generally less problematic than
expected. While there were intractable pockets, eastern Europe’s rapid
economic growth proved extremely helpful in turning acquired banks round.

Pro-business, market-orientated governments that had introduced flexible
labour laws were beneficial, along with generally compliant labour unions
and employees.

“Many of the key politicians were quite young, highly educated and often
with experience of the west after having been forced abroad as dissidents
during communism.

That made an enormous difference,” says Andrea Moneta, a board member of
BA-CA.  Such compliance stemmed partly from the wish to modernise and “catch
up” with western Europe.

The fact that economic growth was sometimes nearing double digits also meant
displaced workers could usually find jobs elsewhere. And many restructuring
programmes were agreed with governments and unions – both keen to find
willing buyers of often-tarnished assets.

Romania’s Banca Agricola, for example, was “totally bankrupt” when bought by
Raiffeisen in 2001, Mr Stepic says. But in spite of needing dramatic reform,
only 500 of the 3,700 staff were unwilling to change working practices to
boost productivity. “Those 500, more or less left voluntarily, with a golden
handshake to help them restart,” he says.

But no matter how propitious the economic and political circumstances, the
Austrians’ experience was also built on their own – perhaps unique –

All three stress meticulous planning and acute sensitivity to local
concerns. “We defined projects and tasks. We set out milestones,” Mr Stepic
says. But flexibility within that framework was as important.

Mr Moneta says: “You must have a clear strategy and plan before you enter.
But you only really get the full picture once you’re in, so you also need to
know how to adapt.”

Maintaining a light touch and keen awareness of local sensitivities were
crucial attributes . Tact in management appointments was particularly
critical. “We’ve always wanted to have local management. If we have
expatriates, it’s only to complement the locals,” Mr Moneta says.

Erste, for example, recognised tensions in Czech-Austrian relations that go
back to the days of the Austro-Hungarian Empire by not selecting an Austrian
to run Ceska Sporitelna.

“We chose Jack Stack, an American, who had worked at Chase and Chemical
Bank,” Mr Wimmer says. “He wasn’t an eastern European specialist. But he had
tremendous experience in retail banking, particularly restructuring and
post-merger integration. That helped reduce any frictions that might have
arisen with an Austrian boss.”

Mr Stack will retire at the end of next month after seven years in the job.
In that period, Ceska Sporitelna has moved from losing Euro200m in 1999 to
net profits of Euro310m ($421m, £211m) last year. Similar transformations
have been seen at many of the other Austrian-owned banks – a testament to
the acquirers’ initial savvy and subsequent skill.

Nicolae Danila, chief executive of Romania’s Banca Comerciala, says: “We
knew we would have to adjust to the requirements of our prospective new
owner. Now all I can say is, lucky us.”
                                 EASTERN EXPERIENCE
The Austrians’ eastern European networks have created a breeding ground for
cross-cultural management development, as expertise from one turnaround has
been transferred to the next.

Raiffeisen International now has almost 30 locally hired eastern Europeans
working in senior positions at its Vienna headquarters. Less senior
specialists, such as accountants and controllers who were hired in earlier
deals, are deployed in the field to help implement more recent transactions,
such as in Ukraine and Russia.

“They have the technical knowledge of any westerner. But they also speak
Russian and have first hand experience of working in such a bank
 themselves,” says Mr Stepic.                         -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


ANALYSIS & COMMENTARY: By Oleksandr Shepotylo

The Ukrainian Observer magazine #231, The Willard Group
Kyiv, Ukraine, May 2007

Gulliver’s Travels by Jonathan Swift is one of my favorite books. It has
many allusions to the political situation in 18th century Europe described
in a genre of political satire.

One of the major themes in the book is the so-called egg dispute between the
Lilliputians who preferred cracking open their soft-boiled eggs from the
little end, and Blefuscans who preferred cracking the big end.

Deep ideological differences between Big-Enders and Little-Enders even led
the countries into war against each other. Lilliputians and Blefuscans could
have benefited greatly by ending the war and engaging in free trade to their
mutual benefit.

However, the issue that was irrelevant for economic development plagued
their relationships and considerably reduced potential for economic growth
and prosperity.

The seemingly ridiculous and artificial example of the egg dispute
illustrates a very deep problem faced by many nations over and over again:
ideological differences often prevent political parties from reaching a
consensus over mutually beneficial economic policies.

By using this example, Jonathan Swift satirized the animosity between
Catholics and Protestants to illustrate how ‘trivial’ matters often spoiled
the relationships between two nations – England and France – and slowed down
their economic development.

My task here is to explain how economists view this problem and how, in my
opinion, the current political and economic situation in Ukraine is related
to the egg dispute.
Democracy is a powerful political system that proved to be very successful
in generating economic prosperity and political stability in many countries.

There is a catch, though, nicely explained by Barry Weingast from Stanford
University. He studied why democracy was a stable and effective form of
governance in some countries and why it failed in other countries by looking
at interactions of population and elites.

Democracy works efficiently when there is a wide consensus over the
ideological values across different groups of population.

When the population is ideologically united and determined to protect their
economic and political rights, the ruling elites are forced to sign a mutual
pact even if they have serious conflicts of interest.

The elites have limited opportunities to manipulate public opinion and
prefer to follow the rules and agreements that mark the boundaries of their
political powers specified in the pact.

The Glorious Revolution in England in 1688 was an illustration of Weingast’s
ideas. In the aftermath of the revolution, the Bill of Rights had been
signed in 1689.

The document declared the separation of powers between the Crown and the
Parliament and outlined the basic rights of the citizens that could not be
violated by anyone, including the King and other influential individuals.

The Bill of Rights proved to be very successful and laid down the basis of
the unwritten British Constitution because it was accepted not only by
elites but also by the citizens.

On the other hand, a democratic country may be trapped into political
disputes and economic stagnation if a broad consensus of citizens has not
been reached. In these circumstances, any political agreement among elites
is unstable and frequently violated.

The problem of finding common ideological ground becomes more severe
when a country is sharply divided in religious, ethnic, or cultural

In his study, Weingast pointed out directly that countries with culturally
or ethnically diverse population have major difficulties in finding social
consensus and implementing efficient economic policies.

The Universal of National Unity signed in August of 2006 by the President
and by four political parties represented in the Verkhovna Rada in Ukraine
was meant to unite the nation and elites over some basic principles.
However, as we all observed, the Universal proved to be extremely
ineffective in reaching its declared goals.

The Universal was not reached as the consensus across various groups of the
whole population but was worked out as a partial compromise of political

Therefore, the Party of Regions felt comfortable to violate the Universal
because it was not obliged to follow the principles declared by the party’s

The Ukrainian example is not unique. The most culturally and ethnically
diverse countries are located in Africa according to a study conducted by
Alberto Alesina, a highly regarded Harvard University economist.

Therefore, it is not surprising that African countries have major
difficulties in forming stable governments and experience frequent military

Many Latin American countries also experienced political cycles during the
20th century, oscillating from democracy to dictatorship to democracy again.
In those countries, political parties exploited ideological differences and
spent resources to win political fights at the expense of economic reforms.
Why do voters often prefer to fight over “the right way” to break an egg
rather then discuss strategies of economic development?

An individual’s political choice depends on many things. We care about our
economic well-being, ecology, culture and many other issues that are
important for us.

When voting, we try to find a political party that would closely match our
views on those problems. However, it is rarely the case that the match
between the voter’s preferences and political party programs is perfect.

It is even less likely that the voter has all the knowledge and information
required to evaluate how various economic and social policies offered by
different political parties might influence his or her future.

Therefore, the voter simplifies his task by identifying the most important
issue that he feels comfortable to judge and votes accordingly.

For an individual voter, it is extremely hard to evaluate how a party’s
economic policies might influence his or her economic well-being. At the
same time, he or she has cultural and ethnic ties associated with specific
policy options and feels comfortable about making a political choice in that

As a result, deep discussion on economic and social policies that would
benefit the majority of population in Ukraine such as creating competitive
market environment, legal system reform, or development of the financial
system are sacrificed in favor of hot ideological disputes about the status
of Russian language, accusations of being Russian/US puppets, or initiation
of a referendum on NATO.
Regression analysis of the last parliamentary elections shows that the
choice of voters was primarily driven by ideological and cultural

The share of Ukrainian and Russian speaking population at the oblast level –
an indicator of cultural differences -explains about 86 percent of all
variations in the share of voters who voted for the “Party of Regions”.

Likewise, this explains 74 percent of the cross oblast differences in voting
patterns of the Block of Yulia Tymoshenko (BYT) supporters. The age
distribution of voters – which to a great extent captures the ideological
differences – explains a sizeable part of the pattern of Communist (CPU) and
Socialist (SPU) party supporters across the regions.

The regions with large populations of voters over 50 years old are more
likely to vote for either the Communist or Socialist Party with about 40
percent of variation in the voting behavior at the oblast level explained by
the age distribution.
                                   WHAT CAN BE DONE?
The ideal solution would by to put aside our differences and concentrate on
common economic interests. If our politicians accepted the current division
of power and started working on reforming the tax system, legal system,
social security, education and medicine we would all benefit, regardless of
the language we speak.

Unfortunately, our political leaders will not leave well-enough alone and
try as hard as they can to exploit our differences in their political games.
They have done it many times before and I see no reason why they would be
willing to stop these practices.

There is hope though. Speaking of the long term horizon, Ukraine is
demographically drifting to the European Union.

[1] First of all, the population mass is literally moving to the west –
Western regions of Ukraine and Kyiv outperforming Eastern regions in the
demographic dynamics – due both to natural demographic changes and to
migration processes.

[2] Secondly, the younger generations of Ukrainians are less likely to vote
for parties with the socialist or communist ideologies, as the regression
analysis showed.

Both trends work in favor of the Europe-oriented liberal economic model of
development and reduce ideological and cultural differences for the whole

The question that remains: can we afford waiting so long?       -30-
Oleksandr Shepotylo, Ph.D., is an assistant professor of economics in the
Master’s Program of the Economics Education and Research Consortium
in Kyiv. In addition, he conducts economic research in connection with
the Kyiv Economics Institute.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

If you are receiving more than one copy of the AUR please contact us.
                               An update on the political crisis in Ukraine

INTERVIEW: With Ilko Kucheriv, Pollster,
Director of the Democratic Initiatives Foundation
INTERVIEW BY: Yanina Sokolovskaya,
Izvestia, Moscow, Russia, Friday, April 27, 20007

Ukraine’s political conflict has split the country: not into
East and West, but into a dozen fragments. Prime Minister Viktor
Yanukovych has approximately equal numbers of opponents and
supporters, while President Viktor Yushchenko is losing support.
Pollster Ilko Kucheriv, director of the Democratic Initiatives
Foundation, comments on the situation.

Question: Do your polls indicate that Ukrainians are as
politicized now as they were in 2004?

Ilko Kucheriv: All the media are talking of a crisis, and
Ukrainians are paying a lot of attention to it. But they’re not as
politicized as they were in 2004. There’s obviously a power-
struggle under way – and citizens see it as a battle amongst those
at the top, with little relation to the masses.

Question: Is this conflict perceived as a battle for Ukraine
between Russia and the United States?

Ilko Kucheriv: The conflict is not being seen that way in
Ukraine. Citizens do not consider the current situation to be a
battle between external political factors. Russia does exert
influence on us, of course, but it’s not coming through so acutely
right now. The West has taken a restrained position; it is not
making statements in favor of any side in the conflict.

Question: Could there be a confrontation between Eastern and
Western Ukraine? Would it intensify after the Constitutional Court
rules on the question of whether President Yushchenko’s decree
dissolving the Rada was constitutional?

Ilko Kucheriv: Any decision made by the Constitutional Court
will be perceived as a loss for one region and a win for another.
Differences in political views depend on where people live. This
regionalization is intensifying as the political conflict

So it’s very important for everyone involved in the
conflict to reach agreement as soon as possible. We’re predicting
that Yushchenko and Yanukovych will reach agreement. This
development would be advantageous for political elites in Eastern
and Western Ukraine alike.

Question: How would people react if the Constitutional Court
rules against Yushchenko’s decree? Would they demonstrate in the

Ilko Kucheriv: What we have here is a battle between ruling
groups of oligarchs, not a battle of ideas. We are not seeing
competition between policy scenarios. Differences between the
right and the left have blurred. But the confrontation between
leaders is increasingly apparent: and whichever way the court
decides, someone will be displeased.

Question: If the Constitutional Court doesn’t make a decision
soon, what do you predict will happen?

Ilko Kucheriv: In any event, the opposing sides in this
conflict will come to terms. Both camps have some political forces
with an interest in stability. Above all, that means big business,
which is losing money as share prices drop and investment slows.
The business community wants reconciliation, and that’s a powerful
stabilizing factor. It’s also a force that is spread out equally
across all of Ukraine’s political groups.

Question: So what you’re saying is that business tycoons –
such as Yushchenko’s friend Petro Poroshenko and Donetsk-based
oligarch Rinat Akhmetov – will reach agreement and unblock the

Ilko Kucheriv: Poroshenko and Akhmetov have an interest in
stability. It’s hard to say if they’ll be able to get the election
called off. I think the parliamentary campaign will go ahead –
perhaps simultaneously with a presidential campaign. The most
striking factor in these events is the lack of electoral

As the Council of Europe has reminded us, Ukraine’s
current electoral system leads to authoritarianism. A handful of
party leaders determine the entire parliament’s future. We should
make a transition to the model used in Poland, introducing party
lists with preferences, so that Rada members will be accountable
to the citizenry as well as to their party elites.

Question: Yulia Tymoshenko has expressed outrage about Prime
Minister Yanukovych’s steadily high support rating: 42%. What are
the real popularity levels of Ukraine’s politicians?

Ilko Kucheriv: We’re now seeing equilibrium: 30% support for
the Regions Party, and 30% against it. Yanukovych’s personal
rating is around 30%, Yushchenko’s is around 15%, and
Tymoshenko’s is approaching 25%.

Everything depends on how the opposition forces are grouped as they

go into the election. If they use two to four groups, as they’re planning
to do now, they will lose voters. Their support overlaps in many regions,
especially in Western Ukraine.

Question: So the new parliament will largely resemble the present parliament?
Ilko Kucheriv: There won’t be any substantial changes.

Question: How realistic is the prospect of another revolutions, whether

Orange or Blue?

Ilko Kucheriv: Impossible. There will be a show of strength,
but only as a manifestation of political corruption. Everyone in
Kiev knows that demonstrators are paid for attending
demonstrations, and they’re not prepared to engage in violence.
Both political camps are drawing their forces into Kiev, in order
to show their strength to each other and to the president.
(Translated by Elena Leonova)                         -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
         Send in a letter-to-the-editor today. Let us hear from you.
                           The crisis in parliament has divided Ukrainians


INTERVIEW: With Nadia McConnell, President, U.S.-Ukraine Foundation
BY: Brian Whitmore, RFE/RL, Washington, D.C., Friday, April 13, 2007

WASHINGTON – While many observers have become skeptical about
the democratic gains from Ukraine’s Orange Revolution, Nadia McConnell,

the president of the U.S.-Ukraine Foundation, remains an optimist.

The organization McConnell leads seeks to promote democracy, free market
reform, and human rights in Ukraine. RFE/RL’s Brian Whitmore spoke with

RFE/RL: Looking back at the hope that accompanied the Orange Revolution

and looking at the situation in Ukraine today, are you discouraged or

Nadia McConnell: You know when you talk about the fall of hope, I guess I

do argue with that premise because I think what happened in the Orange
Revolution — the most significant thing that happened there — is really a
change, a sea change, in civil society. And I believe that remains to this

“You hear people from all the political spectrum say — and I think they
really believe it, they’re not just saying it — that everybody was changed
by the Orange Revolution.”

RFE/RL: Can you give an example of how this change has manifest itself?

McConnell: In the early years, people were grasping the freedoms of
democracy but had yet not paid attention to the other side, the
responsibilities within a democracy. And we see that now beginning to take
shape and hold.

RFE/RL: Are there any other examples you would like to add from your
organization’s work in Ukraine?

McConnell: We have been working at the local level with cities for over 12
years and we have seen some phenomenal changes. And that is perhaps why
we’re more hopeful because while we may be concerned about what is happening
at the national level we have seen continuous progress at the local level.

RFE/RL: Do you think that given the divisions in Ukrainian society between
the pro-European west and the pro-Russian east, efforts to join Western and
international institutions like NATO, the EU, and the WTO will continue to
be divisive?

McConnell: I don’t think there are as many divisions as are hyped. I think
unfortunately in politics everywhere — in this country and in Ukraine —
sometimes these issues are used for political purposes. We’ve been working
in eastern Ukraine for over 15 years and what we have come to understand is
that there is a lack of sometimes information and that people are still
making decisions based on stereotypes that they had for years.

RFE/RL: Do you think the changes you spoke about in society from the

Orange Revolution are permanent?

McConnell: The success of the Orange Revolution was that civil society —
and if you know anything about the history of Ukraine — that was such a
dramatic turning point and that I believe is permanent and will not change.

RFE/RL: Regardless of who is in power?
McConnell: Regardless of who is in power, because there was a fundamental
sea change if that is the correct term.

RFE/RL: Do you see any danger that these changes could be reversed?

McConnell: Of course there is always danger that there could be some
regression because what happens at the top does impact the population. But
you hear people from all the political spectrum say — and I think they
really believe it, they’re not just saying it — that everybody was changed
by the Orange Revolution.                           -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                          HE PRECIPITATED POLITICAL CRISIS

By David R. Sands, The Washington Times
Washington, D.C., Saturday, April 14, 2007

The man whose political defection last month sparked a government crisis
in Ukraine said in an interview yesterday that he is not to blame for the
constitutional stalemate plaguing the country just two years after the heady
events of the Orange Revolution.

“I acted on principle,” insisted Anatoly Kinakh, Ukraine’s new minister of
the economy after allying with the ruling coalition of Prime Minister Viktor
Yanukovych last month. “I never did and never would support an opposition
based solely on a policy of confrontation with the government.”

But Mr. Kinakh, in Washington for the annual meetings of the World Bank and
International Monetary Fund, acknowledged the crisis in Kiev has sparked
international concern about Ukraine’s economic development and could
undermine the country’s hopes to join the World Trade Organization by the
end of the year.

“Every day of uncertainty among the parties in Ukraine has a negative impact
for every component of our program to develop the economy,” he said,
speaking through an interpreter.

Capping a long and bitter power struggle, pro-Western President Viktor
Yushchenko, the hero of the 2004-2005 Orange Revolution, dissolved
parliament and ordered new elections for May 27 after Mr. Kinakh and about a
dozen deputies defected from the opposition to join Mr. Yanukovych’s

 Lawmakers from the president’s Our Ukraine bloc denounced Mr. Kinakh, a
former prime minister, as “treacherous” and “two-faced.”

Mr. Yanukovych, who lost out to Mr. Yushchenko in the hotly disputed
presidential election, which sparked the Orange Revolution, has challenged
the president’s right to call early elections. The matter is now before the
country’s constitutional court, which is under heavy pressure from both

Mr. Yushchenko and Mr. Yanukovych have feuded constantly since the latter
staged a political comeback to claim the prime minister’s post in August

Mr. Yanukovych is widely seen as closer to Moscow and skeptical of the
president’s hopes to push Ukraine closer to such Western institutions as

The two have also clashed over personnel and policy, including a nasty
dispute that resulted in the dismissal of Mr. Yushchenko’s pro-Western
foreign minister in February.

Mr. Kinakh said his decision to join the ruling coalition was not a
repudiation of the Orange Revolution. The Orange Revolution “was a unique
event in Ukrainian history, one in which the whole nation mobilized to
protect its right to honest government and fair elections,” he said.

“A revolution is an interesting thing, but then one still has to pass the
test of power, to prove that one can govern.” He said he complained to Mr.
Yushchenko that the political infighting in Kiev the past two years had
prevented action on a number of national priorities, from strengthening the
country’s judiciary and fighting corruption to tax and pension reforms.

Ukraine’s presidential election is set for 2009 and the parliamentary vote
for 2011. Mr. Kinakh said yesterday all sides in the standoff should abide
by the court’s decision on whether to hold early elections.

Mr. Kinakh hinted he would be open to postponing the vote until this fall,
if the court approved the compromise.

He sharply criticized comments by opposition leader Yulia Tymoshenko, who
demanded early elections in an interview with The Washington Times in
February and said Mr. Yanukovych was buying off lawmakers “like chickens
in a bazaar.”

“This is a very difficult time for the radicals in the opposition, because
they see that Ukraine’s economy is actually doing quite well,” he said.
“They can’t allow that to continue. So, unfortunately, their only hope now
is to destabilize the situation.”                                -30-

FOOTNOTE:  Members of the U.S.-Ukraine Business Council (USUBC)
have met twice with Minister of Economy Anatoly Kinakh in 2007.  The
first meeting was in Washington on February 2 when Kinakh was
a member of Parliament.  The second meeting was in Kyiv on April 3
just after Kinakh was appointed to be Minister of Economy.  Minister
Kinakh has considerable experience in the economic and business fields
and has been a leading supporter of a strong private economy. He told
the members of the U.S.-Ukraine Business Council he would work to
end the export controls on grain, support Ukraine joining the WTO in
2007 and promote business reforms.  AUR EDITOR
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukrayinska Pravda On-line, in Ukrainian, translated by Eugene Ivantsov
Kyiv, Ukraine, Tuesday, April 24, 2007

Members of the Western parliaments never vote with cards of other MPs. In
February of this year the parliament of Italy (the weakest democracy in the
Eastern Europe) failed vote of confidence to the government because one of
the seven senators-for-life supporting the ruling coalition was not at the

Mr. Yanukovych says he will not execute President Yushchenko’s decree as it
is unconstitutional. However, let’s recall that it is not the first decree
ignored by the PM. Other decrees were not given so much publicity.

Let’s move on. What would Mr. Yanukovych do if former President Kuchma
issued such a decree? I think the answer is obvious. Everybody remembers
that PM Yanukovych executed all decrees issued by Leonid Kuchma.

Why did Mr. Yanukovych execute all decrees then and refuses to do it now?
Leonid Kuchma could fire him any time while President Yushchenko is
helpless. This is logic of a typical criminal, isn’t it?

When German Chancellor called an early election, this decision was also
considered by the Constitutional Court. But everybody accepted the decree
until the Court announced its decision. There was not much publicity abroad
regarding such hearings in the Constitutional Court.

In parliaments of West-European and North American countries only those
businessmen, running an absolutely legal business and paying taxes, can
become MPs. Of course, in the US there are businessmen who have off-shores
actives but they are ‘minor league’.

Party lists must consist of active party members only who appear on the top
of the list having been a party member for many years or having joined
another party. Yulia Tymoshenko has persuaded the public that an early
election is necessary for ‘purification’ of the political parties. What
about ‘purification’ of BYuT itself?

A politician never forms his own party when he gains popularity. Hilary
Clinton could have easily formed her own party and run for the US presidency
in 2008 on behalf of this party.

Instead, as a devoted member of the Democratic Party she is going through a
tough competition which will end up in primaries this summer as if she is
nominated from the Democratic Party she will become a front-runner.

In Ukraine, every former PM and speaker has formed his own party. How long
does it take for us to learn from our mistakes?

Never betray your beliefs. Without an imperative mandate, members of Western
and North American parliaments never move from one faction to another. Now
the difference between the ruling Left coalition and the Right opposition is
one seat (158 to 157).

Civilized politicians never change their views depending on the political

In Ukraine leader of the opposition faction is an ardent supporter of an
imperative mandate but when the same leader is the Verkhovna Rada speaker he
conveniently cites provisions of the Venetian Commission against such a
mandate. An oppositional MP demands to adopt the Law on Opposition quickly
forgets about this bill, having gotten into a position of authority.

Blocs of political parties that run for parliament together never collapse
after elections. Looking for a compromise to form a coalition in Germany,
Gerhard Schroeder used to say that CDU/CSU was not one united party (that is
why his SDPG was a winner).

His statement caused a violent reaction as CDU/CSU is actually perceived as
one party, because in the West blocs are formed forever but not before each

By the way, when forming coalitions European parties take into account views
of their voters but not offices and positions they are offered. The Left
will never serve the Right and vice versa.

Formation of a broad coalition (when it is impossible to find out the
winner) of different parties is the only exception.

In Germany, when neither SDPG with the Green Party nor CDU/CSU with its
satellites failed to gain majority, the Green Party refused to form
coalition with CDU/CSU (as the Green Party is traditionally left oriented).
That is why SDPG and CDU/CSU formed a coalition together.

How can Lenin’s Ukrainian successors serve the most liberal party in
Ukrainian parliament that wanted to cut a number of social programs when
working out draft budget 2007 and consented to increase salaries only under
the president’s pressure?

Civilized politicians never cling to power. Resignation is a matter of honor
for them. For the short time of his premiership Romano Prodi repeatedly asks
to vote confidence to his government regarding most urgent issues. As known,
the parliament failed one of these confidence votes (regarding foreign
policy) and he resigned.

So, if Mr. Yanukovych was a Western-type politician, he would have
immediately resigned just after adoption of the Law declaring Holodomor a
genocide of the Ukrainian people. As known, his coalition split over this

When German Chancellor called early elections after loss of his party at
local elections in some regions of Germany, his coalition in the parliament
had a huge advantage while the situation after election did not look
particularly good for him.

Making such steps, Western politicians show that they are very attentive to
voters, checking if people still back them. Such politicians usually resign
if voters do not trust them anymore.

Mr. Moroz, having mixed up epochs, seems to dream of Brezhnev’s career.

There is another aspect. If a European politician violates the law, he
immediately resigns and resigns from politics and never performs that duty

Imagine that! For instance, a person in Sweden, who: 1) chaired Central
Election Commission (CEC) that rigged election, as proven by the Supreme
Court, 2) then works as the dean of a law school, 3) enters the parliament,
4) puts up a monument to himself 5) and then tries to get the position of
the CEC Chairman again!

Can’t those for whom he rigged elections give him enough money to start a
business and honorably quit politics and law? The same situation is with
former head of the State Property Fund whose confessions of cheap sales of
enterprises everybody has read about on the Internet.

Ladies and gentlemen, please leave so that the new generation does not
acquire your ‘wisdom’. It is dangerous to ignore opinion of minority both in
parliament and society.

In Ukraine, one third of the society supports an early election (Gallup
Polls are usually a week behind the public mind). What is the coalition
waiting for?

In such a situation, western lawmakers would have called early elections
long ago, without additional conditions like ‘simultaneous presidential and
parliamentary election’, ‘putting off till autumn so that we have time to
sell some enterprises’. Out of respect to their followers European lawmakers
never adopt important decisions in the end of the convocation.

PACE has repeatedly stated that an early election is a normal procedure.
Instead, Ms. Lukash says that the parliament may or may not accept
resignations from certain MPs. Does she understand that those 150 lawmakers
represent one third of Ukraine’s population, which is millions of people?

In 1993, when Russian parliament opposed President Yeltsin the parliament
was supported by most of lawmakers and the society. But the price for
ignoring interests of the minority was too high for Khazbulatov and Co.,
since Moscuvites were the minority that had its own opinion and eventually
supported Boris Yeltsin.

Angry minorities seizing power through military coups has become a tradition
in Latin America. Ukrainian politician refuse to learn lessons from their
own mistakes.

Do not lie. A ‘white lie’ (i.e. populism) is acceptable in politics. On the
other hand a ‘true lie’ is prohibited for statesmen. It is quite
understandable if the Interior Minister is embarrassed over the inability to
solve the murder of an accused escorted from the courtroom: no one taught
him political culture.

But when this man who must maintain law appears to be on a fake sick leave I
would like to ask him a question if anyone taught him that lying is bad?

It concerns ‘sick’ CEC members as well.                      -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

The Ukrainian Observer magazine #231, The Willard Group
Kyiv, Ukraine, May 2007

President Viktor Yushchenko’s decree of April 2 to disband parliament and
hold early elections came as a surprise to both Ukrainians and foreign
experts like me. Perhaps the fact that it was Easter week may have played a
role. After all, pysanky are usually brought out of safe keeping during that
time of year.

When we begin to analyze the background to the crisis we should not be
surprised that Yushchenko finally had one too many pokes in the eye. With
Yulia Tymoshenko it is more straightforward; you may succeed in poking her
once in the eye but you will not be given a second chance.

With Yushchenko it takes a considerable number of pokes before he deems it
necessary to set aside antique hunting and bee keeping to deal with the
lesser important affairs of state.

Yushchenko’s explosion of anger, and there is no other way of putting it,
was reminiscent of two earlier events and tells us a lot about the
personality behind the president. Until late March only Tymoshenko was in
favor of early elections.

In the third week of March, when Yuriy Lutsenko’s apartment was raided and
Anatoliy Kinakh defected from Our Ukraine to the Anti-Crisis coalition,
Yushchenko, his presidential secretariat, Our Ukraine and Lutsenko moved to
the Tymoshenko position.

The first thing we need to get clear is that the decree is not an example of
Yushchenko’s leadership qualities. Yushchenko has never had these and has
had no inclination to ever learn them.

President Yushchenko’s management style has been to envelope himself with
domestic and foreign sycophants who have repeatedly heaped praise on the
‘great leader’.

Yushchenko has never admitted to making a single mistake even though his
first two years in office are full of home goals.  A Ukrainian-American
close to the Yushchenko inner clique told me during the crisis that he had
advised Yushchenko to recruit an ‘honest broker’. His reply was instructive,
‘What is that?’ The very concept of a loyal, but critical ally is beyond
Yushchenko’s comprehension.

The April decree disbanding parliament was reminiscent of two earlier
periods in fall 2004 and fall 2005. In the first, the naive and trusting
Yushchenko was finally convinced that the authorities would never allow him
to win the elections.

But, this only came after he had been poisoned at an evening meal where he
had not taken his bodyguard. He should have reached this conclusion after
the Mukachevo elections in April of that year.

The second occasion was when he fired the Tymoshenko government without
thinking through the consequences of dividing the orange camp seven months
before crucial elections that would elect a new parliament that was not only
longer (five, not four, years) but also one that would obtain enhanced
powers from constitutional reforms.

Just when orange voters were still in shock Yushchenko then went on to score
a second home goal when he signed a memorandum with Yanukovych that
included a pardon for election fraud. Yushchenko left the obnoxious
Prosecutor Svyatoslav Piskun in office longer than his revolutionary ally


Another home goal was the handling of coalition negotiations following the
2006 elections. Until June, Yushchenko could not decide whether to back an
orange or grand coalition. In the end his decision was taken away from him
when Our Ukraine refused to support Oleksandr Moroz as parliamentary

The Socialist’s defection created the basis for the Anti-Crisis coalition.
Yushchenko had more legal grounds to dismiss parliament in August 2006,
thereby thwarting Yanukovych’s return to power, than he had in April, but he
did not take the opportunity.

The spring 2007 political crisis is therefore as much the fault of
Yushchenko as it is of Yanukovych.
                                   A BLASE’ PRESIDENT
Yushchenko has a propensity to do nothing of any substance for a long time
and then to have his emotions take over and explode. This either requires
him to sign up for anger management classes or leadership training, or for

In the event, my British colleague James Sherr is correct when he made the
following observation about Yushchenko’s first two years in power:

“In the event, Yushchenko acted as if he were the spiritual, rather than the
political leader of the country. He displayed no spirit of urgency in
employing the powers of the 1996 constitution to stamp a vision of change on
the country, establish a national strategy and energize a process of reform.

He showed an entirely haphazard appreciation of the importance of
institutions and appointed very few figures (e.g. Minister of Defense
Anatoliy Hrytsenko) committed to systemic change.

Instead, he displayed a marked predilection for empowering friends (e.g.,
Petro Poroshenko, then secretary of the National Security and Defense
Council and Oleksandr Tretyakov, then head of the Office of the President),
who engaged in a notorious spree of empire building.

By these sins of omission, Yushchenko lost the initiative almost as soon as
he had it.  He seemed blissfully unaware that most of his powers would
expire within a year of taking office, that his enemies in Ukraine were
still at large and that the Kremlin was banking on his failure.”

Yushchenko can only win the crisis by obtaining a positive verdict from the
Constitutional Court and through a subsequent orange election victory in
early elections.

In such an event, he could repair his ratings with orange voters by putting
in place an orange coalition with Tymoshenko as prime minister, a step he
should have done in spring 2006.
                                OUR UKRAINE RESURGENT?
It has taken a threat from the Yanukovych camp to again revive Our Ukraine
that gives it improved electoral chances. Following reforms inside Our
Ukraine in winter 2006-spring 2007 it again resembles the Our Ukraine of
2002, rather than that of 2006.

The leader of Our Ukraine, Vyacheslav Kyrylenko, is a former member of Yuriy
Kostenko’s Ukrainian People’s Party and opposed to a grand alliance with the
Party of Regions.

The UNP, like other national democratic parties who were members of Our
Ukraine in 2002 but not in 2006, will join the Our Ukraine bloc if elections
are held in 2007.

Our Ukraine was always divided into two wings: national democrats and ‘Dear
Friends’ (Liubi Druzi biznesmeny). In 2002 the former dominated while in
2006 the latter did. See for yourself which of the two was more successful:
in 2002 Our Ukraine won 24 percent while four years later it won ten percent

These two wings also have different coalition partners: the national
democrats incline to Tymoshenko while the ‘Dear Friends’ prefer the Party of

Kyrylenko supports the 24 February alliance with Tymoshenko, as does
presidential secretariat head Viktor Baloha. Baloha’s two predecessors,
Oleksandr Zinchenko and Oleh Rybachuk, are closer to the ‘Dear Friends’.

Our Ukraine went through a number of perturbations in 2006-2007 which now
makes it better placed to play an important role on the center-right of
Ukrainian politics where, as I wrote in the April issue of UO, there was for
too long a noticeable vacuum. The defection of Kinakh saved Our Ukraine the
job of expelling the Party of Industrialists and Entrepreneurs.

Unfortunately, there is still the Congress of Ukrainian Nationalists (KUN)
in Our Ukraine that also should be removed if President Yushchenko is
sincere in wanting to ‘rejuvenate’ his party. KUN takes away eastern
Ukrainian voters while adding none in western Ukraine.
                            TOO MANY POKES IN THE EYE
During the 2004 elections, Yanukovych was famously ridiculed for being an
unlikely ‘Professor’. It is certainly true that the California and Cambridge
academic centers that he was allegedly linked to are fictional.

The current crisis is final confirmation that Yanukovych is indeed
intellectually challenged. The Yanukovych government had a solid majority of
like-minded anti-presidential allies that meant it could have comfortably
stayed in power until the March 2011 elections.

Yanukovych was also the first person to benefit from the increased powers
given to the prime minister’s position following constitutional reforms.

All of this though was insufficient for those used to holding monopoly power
in Donetsk. Yushchenko’s unwillingness to fight back until poked in the eye
numerous times was understood as a sign of weakness by the Donetsk clan.

Increased prime ministerial powers were not enough for those who craved
monopoly power (Party of Regions) or those who had always been against the
institution of presidency (Socialists and Communists). The pokes in
Yushchenko’s eye have been numerous and unwarranted.

Yanukovych has sought to deepen constitutional reforms, strip away all
remaining powers from the president, including in the field of foreign and
defense policy, and to curb the rights of the opposition. Yushchenko did
have a moral right to issue a decree but whether he had a legal right to do
so is a different question.

The backdrop to all of this, as Judge Bohdan Futey repeats during his
presentations in the United States, are the hastily and illegally conducted
constitutional reforms.

The reforms adopted in the December 8, 2004 compromise package were
undertaken in only one parliamentary session (when they should have been
adopted over two) and each article that was changed was never debated
separately (but voted on as a package). The Council of Europe’s Venice
Commission also criticized the reforms as a step backwards.

Yushchenko had two options to deal with poorly inherited reforms.
[1] The first was to heed the Constitutional Commission that ruled in fall
2005 that a referendum should be held to obtain the people’s view on the
reforms. This would have been the more radical of the options supported by
Tymoshenko as Ukrainians would have probably voted against them.

[2] The second moderate option supported by Yushchenko was to create a
constitutional commission that would improve the reforms.

The Anti-Crisis coalition refused to send parliamentary and government
representatives to the president’s commission and in 2005 the then
opposition led by the Party of Regions prevented the Constitutional
Commission from functioning by parliament not allocating its quota of

The Anti-Crisis coalition has also damaged its democratic credentials by
restricting the activities of the opposition in two ways.

The group returned to the Kuchma era style repressive tactics against
Lutsenko’s People’s Self Defense NGO, including the planting of weapons and
explosives, a tactic last used in October 2004 against the Pora NGO. Trumped
up charges against Lutsenko and accusations he had Israeli citizenship were
also a return to past tactics.

The coalition also attempted to establish a constitutional majority by
bribing and intimidating opposition deputies. The only reason the
Anti-Crisis coalition would seek a constitutional majority would be to
change the constitution to transform Ukraine into a parliamentary republic.

The Anti-Crisis coalition also raised the issue of changing the constitution
to upgrade Russian to a second state language.

An additional poke in the eye was the Anti-Crisis coalition’s expansion of
its power over foreign and defense policies, the prerogative of the
president in the reformed constitution. Plans were laid to draft new laws on
the National Security and Defense Council and a new legal Outline of Foreign

On foreign visits Prime Minister Yanukovych regularly made statements on
foreign policy issues. Parliament unconstitutionally removed Borys Tarasyuk
as foreign minister, halted the financing of the Foreign Ministry and
refused to accept the President’s candidate to replace him, Volodymyr
                            LOOKING AHEAD TO 2009
It remains unclear even after the successful outcome of the crisis if
Yushchenko could win the 2009 elections against Yanukovych. It is also
unclear if Tymoshenko would, as in 2004, not stand in the 2009 elections.

Two questions remain to be answered.
[1] First, would Tymoshenko’s appetite for power be satisfied by the
enhanced prime minister position if early elections go ahead and an orange
coalition is created? Under the new constitution, Yushchenko could no longer
dismiss her as he did in 2005 under the old constitution.

[2] Second, who would be better placed to win an election against
Yanukovych? In my view, only Tymoshenko – not Yushchenko – could defeat
Yanukovych. Ukraine’s presidential elections are decided by central Ukraine,
Ukraine’s ‘Ohio’ in American election terms.

In 1994 the region voted for Kuchma and in 2004 it voted for Yushchenko. In
2009, central Ukraine would vote for Tymoshenko but it would vote less for

Ukraine’s presidential elections are not like in Georgia where candidates
win with results in the 90s (Mikheil Saakashvili won 96 percent in 2004!).
In Ukraine, the regional divide and swing vote in central Ukraine means that
victorious candidates obtain results in the 50s.

In 1994 Kuchma won 52 to Leonid Kravchuk’s 45 percent and in 2004

Yushchenko again won 52 to Yanukovych’s 44 percent. Even in 1999,
Kuchma won only 56 to Communist leader Petro Symonenko’s 38 percent.

A 2009 presidential election might never take place. If Yushchenko is
defeated by the crisis Ukraine will become a full parliamentary republic
where the President is elected by parliament.

With an Anti-Crisis coalition in place the Party of Regions could elect
Yanukovych as President and control two positions – Prime Minister and
President – thereby giving them monopoly power.

The move to a parliamentary republic would therefore lead to the Party of
Regions exercising a monopoly of power while preventing a Tymoshenko
victory in a presidential election.
The outcome of the crisis will decide Ukraine’s future and the survivability
of the democratic gains of the Orange Revolution.

Yushchenko could either be defeated, becoming a lame duck President, or
win and see his ratings revived. Yanukovych could win and stay on as prime
minister in the Anti-Crisis coalition or president in a parliamentary
republic. If he loses he would return to the opposition.

Tymoshenko is the only one to win whichever way the crisis goes: if
Yushchenko wins she becomes prime minister and if he loses she may become
president if the constitution is not again changed and elections are held in
2009.                                               -30-
Dr. Taras Kuzio is an Assistant Professorial Lecturer, Institute for
European, Russian and Eurasian Studies, Elliott School of International
Affairs, George Washington University and President of Kuzio Associates.

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

ANALYSIS & COMMENTARY: By Mykhailo Savchyn, for UP
Ukrayinska Pravda in Ukrainian, translated by Anna Platonenko
Kyiv, Ukraine, Sunday, April 29, 2007

The current constitutional crisis is a strong evidence that the Ukrainian
society misinterprets the character of the Constitution and the social
purpose it serves.

Unfortunately, the Constitution is viewed as a political instrument, which
sets rules of the game for the participants of a political process and does
not set the aim and contents of such activity.

But the main purpose of the Constitution is to secure the restriction of
power abuse and guarantee human rights and freedoms.

However, those who hold power in Ukraine believe, that by virtue of their
status, they can make decisions meeting the formal requirements only, i.e.
following the letter of the law.

The current activity of the Verkhovna Rada of Ukraine proves there is still
an illusion cherished by the majority of parliamentarians that this
representative organ exercises absolute power.

It is commonly believed that the Parliament may interfere with any social
issue, despite the constitutional principle of separation of powers.

Such interpretation perfectly fits into the Soviet stereotype of the boards
with absolute power, which used to be the instrument of legitimizing the
decisions made by party organs and had nothing in common with democracy.

However, today the Verkhovna Rada is still trying to interfere with the
competence of the President of Ukraine, the Constitutional Court or local
governments, the authority of which is secured by the Constitution of

This process is almost permanent. The Parliament adopts laws on the issues
which in essence do not correspond with the nature of law. This is very well
demonstrated by the common practice of granting privileges to various
enterprises or defining the privatization peculiarities of certain
enterprises at legal level.

This is the very thing that characterizes the politicians’ nature, according
to which people in power can make any decisions by virtue of their being
vested with proper authority.

It results in the fact that the government does not find itself restricted
by definite legal framework, for any official interprets a law at his own

Under weak judicial power, such state of affairs endangers public security
and creates all the possible conditions for law enforcement abuse.

One gets the impression that Ukraine is going through a stage of developing
constitutionalism, being somewhat behind the countries of Central and
Eastern Europe.

At the same time there is a wide gap in the development of civil society
institutions and, what is more important, of a political system.

However, in comparison with the countries of Central and Eastern Europe,
Ukrainian political parties rely upon big businesses, which is not at all
typical of the other countries of this region.

The establishment of a proportional election system as a means of
structuring the political system has exposed the presence of clientelism
between big businesses and the political parties.

The structuring of the political system would probably be of more benefit if
the proportional election system with the elements of preferences was
introduced in multimandatory constituencies (i.e. voting for the regional
party lists).

Under such a system, voters would therefore be able to define candidates in
the suggested list of political parties at their own discretion.

No matter what the country is, the forming of a political system in society
is closely connected with the government effectiveness.

By government effectiveness, one understands a real ability of the
government institutions to make clear-cut and firm administrative decisions
and implement them using minimum resources.

Democratic and authoritarian traditions considerably influence the legal
setting of the Ukrainian government. The democratic tradition, however, is
the result of natural development of Ukrainian community and society as a

The democratic tradition has been observed since the constitutional order in
the Cossack Hetman State (or Cossack Hetmanate), which reached its legal
setting in the Pacts and Constitutions of Rights and Freedoms of the
Zaporizhian Host (Sich), also known as the Constitution of Pylyp Orlyk

The authoritarian tradition in Ukraine was established when the Cossack
Hetmanate entered the Tsardom of Russia. This tradition was later repeated
in the totalitarian regime of the Soviet Union.

The Soviet constitutional heritage was based upon a non-recognition of
restrictions to power: especially, of separation of powers and judicial
control over the actions initiated by the authorities.

Courts in the Soviet Union were always considered as a mere appendage to the
state apparatus, aimed primarily at implementing the government’s repressive

While the struggle between the democratic and authoritarian conceptions is
still going on, a French model of government is being borrowed en route from
Russia to Ukraine.

The country is adopting a semi-presidential form of government, which
provides for the diffusion in the system of separation of powers and the
dualism of the executive power.

According to Andrei Medushevsky, this form of government “is now regarded

as the most adequate expression of aspiration to the constitutional
modernization, retaining the effectiveness of the executive power.”

Ukrainian form of government provides for the existence of either a powerful
government, or a powerful President, which depends on the results of the
Parliamentary elections.

In case the pro-presidential forces make up the majority in the Parliament
after the elections, the President has a very powerful, or even, deciding
influence on forming and implementing the government policy.

If the majority is made up of the opposition parties, a period of the
so-called “coexistence” is sure to begin. At the same time, strong rivalry
in exercising executive power may be stirred up, for the President reserves
the right to influence the government’s activity.

A semi-presidential system provides for the functioning of classical
political parties, which rest upon an ideological and organizational basis
and make up the main subject of forming the institution of state power by
means of elections.

Political parties form the basis of the national political system through a
branched network of party organizations and by means of inter-party
procedures of forming the political will and its expression in the form of
decisions, made by government bodies or suggestions to these decisions,

made by the opposition representatives.

Since the Fundamental Law determines the main principles of state
organizing, which rather characterizes the state as a semi-presidential form
of government, the Parliament therefore comes into conflicts with the

A semi-presidential form of government reaches its completion when the
political parties have a branched network of territorial centers,
systematically cooperate with the electorate and uphold the rights and
interests of the voters.

When the parties are weak and the political system remains unstructured, the
semi-presidential system switches over to the superpresidential form of
government what actually happened during Leonid Kuchma’s presidency.

Since the Parliament was unstructured at that time, it allowed Kuchma’s
administration to manipulate him using administrative-command leverage,
which was quite typical of the Soviet Union.

The Cabinet of Ministers had no support from the parliamentary majority.
That is why the decision-making center was concentrated in the President’s
hands, and government’s strategic functions were duplicated by the
President’s administration.

Today, due to the constitutional modernization, the semi-presidential form
of government is being combined with the structured political system and
weak political parties of absolutely civil nature, which establish relations
with the voters by means of clientelism.

In cooperation with the President, the Parliament received an opportunity of
forming the government, relying on active support of the majority, based on
the results of the Parliamentary elections.

Under such conditions the diffusion of power moves towards the relationships
between the parliamentary majority the government rests on and the

Owing to the weak parties with clientelistic tactics, there are a number of
favourable conditions today for forming a tyrannical system and applying it
to the parliamentary majority.

This system threatens the democratic principles of the constitutional order
and is a strong evidence of imbalance in the government.

In case there are conflicts over the competence of the government bodies,
they are to be resolved by an impartial and independent judicial body. Under
such conditions the Constitutional Court comes into action.

In the context of a semi-presidential government, the Constitutional Court
secures the separation of powers and also performs an integrative and
reconciliatory function.

Performing a reconciliatory function, the Constitutional Court secures the
exercise of powers of the government bodies by keeping them within the
constitutional framework.

If the point is that the conflicts over the competence in semi-presidential
republics are to be resolved, a reasonable functioning of legal institutions
should consist in the following:

The President performs the functions of a head of state and has reserve
power, which is only exercised in certain exceptional circumstances such as
government or parliamentary crises, or in a state of emergency.

The President can perform his arbitration functions in cooperation with the
Verkhovna Rada or the Constitutional Court.

The Parliament fulfills the function of a nation’s political forum, where
the principles of foreign and domestic policy are developed.

The Verkhovna Rada has a right to request that the government submits its
activity programme for consideration. Moreover, the Parliament performs a
legislative function adopting balanced laws, which are provided with all the
necessary organization and resource potential, and also controls government
and administration activity.

The government provides strategic planning with a view to further develop
the social spheres of vital importance, which form a basis for taking
definite political measures to secure the observance of  law and for issuing
the acts of individual character.

These are the minimum components that the Constitutional Court can take
account of when examining the issues on the competence of a government body
and its compliance with the Constitution.

If the analysis of the competence lies beyond this context, the overall
purpose of resolving the competence disputes, i.e. the separation of powers,
will be left out.

Performing the integration function, the Constitutional Court points to
legal ways out of the crisis situation by taking legal measures.

The guarantee of this should lie in a public procedure of examining the
problematic aspects of a government body’s activity, the constitutionality
of a legal act of which is appealed against in case this body abuses its
power or authority.

And again, the point is that the balance should be kept between the
government bodies, which according to the Constitution of Ukraine should
cooperate in order to achieve and promote common welfare.

There are two ways to secure an appropriate separation of powers in a
semi-presidential republic: by stating the fact that the balance between the
government bodies has been upset and by removing these violations, which is
not enough.

Another way is the separation of powers in a system of democratic balance
between the government majority and the opposition. No constitutional
justice can show a marked preference to one or the other government body.

Since the Constitutional Court itself is included into the constitutional
matrix, it is forced to be the element of this balance and under no
circumstances can let the country become authoritarian.

However, Ukraine desperately needs a balanced Fundamental Law today.
The legal community cannot make mistakes and write the Fundamental Law

for a certain political force or government institution any longer.

The men of law are bearing the brunt of implementing and interpreting the
regulations of the Constitution, which should serve the general welfare, and
first and foremost secure the rapid development of the country.    -30-

NOTE: Mykhailo Savchyn, a master of laws, an associate professor of
Zakarpatsky State University.
[return to index] Action Ukraine Report (AUR) Monitoring Service]
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18.                   UKRAINE’S CRISIS OF GOVERNANCE
     A fresh compromise may salve the major political faultlines in the troubled
          Ukrainian polity. But the depth of the country’s institutional, regional,
           and personal divisions make repair far harder, says Andrew Wilson.

Open Democracy, London, UK, Tuesday, May 1, 2007

Another year, another political crisis in Ukraine. After eight months of
accumulating political humiliation since he was forced to accept the return
of his arch-opponent Viktor Yanukovych as prime minister in August 2006,
President Viktor Yushchenko dramatically ordered the dissolution of
parliament on 2 April, and scheduled new elections for 27 May.

Not surprisingly, Yanukovych’s government and its majority in the “old”
parliament, which is only one year into a five-year term, refused to

The constitutional court was asked to arbitrate, but the judge acting as
self-appointed rapporteur was accused of taking $12 million in bribes, and
in a general atmosphere of legal nihilism rumours circulated that the court
would avoid making a definitive decision, to avoid the opprobrium of the
losing side.

What does the latest crisis tell us about the state of democracy in Ukraine
almost three years after the “orange revolution”? Or does the mere fact of
yet another crisis tell us all we need to know?
                                        A HOUSE DIVIDED
A first obvious underlying problem is that the power-sharing agreement made
in August 2006 is not working. This has little to do with what the agreement
actually says. The problem is with the political culture of the party led by
Yanukovych, the Party of (east Ukraine’s) Regions.

The party has enjoyed an extensive makeover from US political consultants
since many of its leading members tried to rig the 2004 election, but at
heart it is still a clientelistic and authoritarian organisation.

In order to function as such, it needs to reward its friends and punish its
enemies, and show who’s boss; and it needs to do this semi-publicly. To use
the local euphemism, “administrative resources” are used increasingly
blatantly and partially.

Notorious crooks like Volodymyr Shcherban, one-time “boss of bosses” in the
Party of Regions’ stronghold of Donetsk, have returned home; the
Prosecutor’s Office has been taken over by Donetsk “enforcers”.

A parliamentary committee is “reinvestigating” the alleged crimes of Yulia
Tymoshenko, who served as the first orange prime minister in 2005.

Donetsk enterprises like Azovstal and the Yelnakievo metal factory have
received preferential VAT refunds of 696 million Ukrainian Hryvnia (over
$120 million) instead of the 313 million Hryvnia originally proposed, while
other payments have been sharply cut back.

Even Oschadbank, traditionally the savings bank of first choice for the
average Ukrainian – a kind of glorified post office – has not been safe from
a conspicuous political takeover.

The new government has also waged a relentless campaign to further reduce
the president’s power from the levels agreed in August: challenging his
every decree, forcing out his favourite ministers, ramming through a
self-aggrandising “law on government” (in which Tymoshenko was shamefully
complicit), and even conducting a shadow foreign policy.

Ultimately, however, Regions over-reached themselves because this process
seemed never-ending. Yushchenko felt he had to stop them somewhere, somehow.
The final straw was the defection in April of eleven orange deputies to the
Yanukovych coalition.

This gave it around 260 deputies, and Regions boasted that it would have 300
by the summer (out of 450), giving it a two-thirds’ majority and vastly
increased freedom of action.

Increasingly, however, President Yushchenko has adopted similar methods to
try and compete. He has promoted “his” tough guys to head the presidential
administration, like Viktor Baloha, a businessman from Transcarpathia in
Ukraine’s wild west.

Yushchenko has appointed “his” businessmen to compete with Yanukovych’s
businessmen, like Vitalii Haiduk of the Industrial Union of the Donbass (the
traditional rival of Regions’ main business backer, the System Capital
Management (SCM) group run by Rinat Akhmetov), and Valerii Khoroshkovskyi,
president of the Russian steel giant Evraz since 2004.

Yushchenko has used their clout to bolster the National Security and Defence
Council as a rival power-base, and their money to help finance a relaunch of
the pro-presidential Our Ukraine party (and possibly finance the elections
themselves if government funds are blocked).

Further, Yushchenko has supped with the devil, negotiating in private with
odious figures like ex-president Leonid Kuchma’s former strong-arm
chief-of-staff Viktor Medvedchuk, who is thought still to control at least
two of the constitutional-court judges he helped appoint in 2002-04.
                                  A BLOCKED SYSTEM
A second underlying problem is that the constitutional settlement, agreed at
the height of the orange revolution in December 2004 and implemented in
January 2006, is clearly not working.

The new system disperses power more widely than in the past, but the
downside is a serious risk of stalemate or conflict, especially as the new
system also creates a “divided executive”.

The president makes some appointments (defence, foreign affairs, the
security services), the prime minister most others. Predictions as to who
might back whom in the most recent standoff often amount to no more than
pointing this out. In practice, most institutions would prefer to spot a
likely winner first.

The constitutional court is centre-stage in the current crisis, but its
demeaning behaviour has shown that its method of selection is not working
either. The court has eighteen members: six appointed by the president, six
by the parliament and six by a congress of judges themselves.

In the current conditions, that has simply transferred political gridlock to
the court. Judges can only serve one nine-year term. Judicial independence
would be better served by life-time appointments.

Yushchenko’s decree is also legally shaky. He cites the defection of the
un-magnificent eleven as his main reason for dissolving parliament, as the
new constitutional arrangements include the so-called “imperative mandate” –
deputies must stay in the party for which they were elected (the last
elections were decided by proportional representation, with national party
lists), or lose their seat.

But, and this is a big but, there is no explicit linkage between this
undoubted misdemeanour and Article 90 of the constitution which lays out the
grounds for dissolution.

Yushchenko has talked of putting the new constitution to a referendum,
possibly after even more revisions. One more round of constitutional
engineering won’t necessarily do the trick, however.

Not while more deep-rooted problems remain. One way of interpreting these
problems is to look at the original “orange revolution” as a drama in three

[1] In Act One, hundreds of thousands of protesters packed the streets of
Kiev and other cities. The crowd became a revolutionary actor, trumping the
calculations of all sides.

[2] In Act Two the story moved on to an agreed settlement between elites,
the ‘package’ agreed behind semi-closed doors on 8 December 2004 (incumbent
president Leonid Kuchma agreed to new elections, a new election law and a
new election commission in return for constitutional changes that would
shift many powers to parliament a year after any new president took office).

[3] In Act Three, the aftermath, Yushchenko made a disastrous decision to
avoid “revolutionary justice”. “Bandits to prison” was more than just a
slogan of the protestors in November 2004.

A few key prosecutions, involving at a minimum the perpetrators of the
election fraud, the killers of journalist Heorhii (Georgii) Gongadze whose
headless corpse was found in November 2000, and Yushchenko’s own
mysteriously under-investigated poisoning, would have changed the rules of
the game – and were definitely expected at the time by the panicky old

Instead, most of the suspects ended up with legal immunity on the Party of
Regions’s election list.

Together, Acts Two and Three made a disastrous combination. The package
agreement on its own, without the informal amnesty, would not necessarily
have turned parliament into a crook’s haven, as it is now. The informal
amnesty on its own would have been less of a problem if the system had been

Taken together, the old guard survived, prospered and returned. Despite a
universal agreement on non-violent protest in 2004, many now regret that the
orange revolution wasn’t a bit more revolutionary.
                                    A KYIV STALEMATE
The breakthrough conditions that were wasted in 2004 will be difficult to
recreate. New elections might not make much difference. Opinion polls
indicate that the same three players would finish in roughly the same order:
the Party of Regions might get around 30%, the Tymoshenko Bloc 25%, and Our
Ukraine around 10%.

Ukraine’s well-entrenched regional voting divides have not gone away. The
only surprise here is that Our Ukraine is somewhat reinvigorated, having
plunged even lower in the polls in recent months.

The Party of Regions could claim the legitimacy of a second plurality
victory. Tymoshenko would be a clearer leader in the orange camp. But the
same dynamics of mistrust would remain.

On the other hand, all three parties are coalitions, and their internal
dynamics may be shifting. The Party of Regions, to be fair, is a broad
church. Deputy prime minister Mykola Azarov is in charge of patronage.

The party’s big businessmen, particularly the biggest, Rinat Akhmetov of
SCM, worth an estimated $7.2 billion according to the latest rich list in
the Polish magazine Wprost , do not want their business expansion and IPO
plans to be disrupted by bad publicity.

Viktor Yanukovych’s makeover has worked, in the sense that he now functions
more effectively as a Ukrainian politician. It is not his job to be
pro-Russian or pro-business.

His job is to appear to give the people what they want – to champion
national business if it is conflict with Russia, to side with employees if
their jobs are threatened by national oligarchs.

The former governor of Kharkiv, Yevhen Kushnariov, was actually interested
in policy (that is, in the politics of east Ukrainian identity) but he died
in a mysterious and possibly alcohol-fuelled hunting accident in January
2007. Yanukovych will find the centre of gravity in his party, which may be
tilting towards compromise.

Change is also apparent in Yushchenko’s Our Ukraine party. One reason he
moved when he did was to capitalise on the relaunch of Our Ukraine in March
2007. The party’s business wing which favours cooperation with, and often
enough even defection to, the Party of Regions, was sidelined.

The Tymoshenko bloc has changed the least, at least in purpose. She remains
Ukraine’s most effective populist and political campaigner, with both eyes
on the next presidential election.

In the end, smaller parties may decide who ends up with a majority this
time, in what would be yet another close parliamentary election. There is a
barrier of 3% that parties need to cross to get any representation. The
polls indicate the Socialists would fail to do so, after they switched sides
from the orange camp to Regions last summer.

But their votes might go to the Communists or the (Natalia) Vitrenko Bloc
instead, both of which are allies of Regions. On the other hand, there is a
new party, claiming to carry the torch of the orange revolution, Samooborona
(“Self-Defence”), which includes many leaders of the youth movement Pora
(“It’s time”), prominent in the protests of 2004.

At the last elections in March 2006 it took three orange parties to win a
potential majority, which they then blew. Now there is a different potential
troika. And new parties are often quickly built from scratch in Ukraine.

The fact that all the main parties can convince themselves they might be
slightly better off, campaign expenses excepted, makes new elections more
likely than not. But they are still far from certain.

Ukraine may drift towards compromise, as is its wont. On 25 April Yushchenko
agreed to shift the elections to 24 June, though legislators are contesting
his very authority to make such a decision. More wheeler-dealing may be
around the corner.                                  -30-
NOTE: Andrew Wilson is senior lecturer in Ukrainian studies at the School of
Slavonic and East European Studies (SSEES), University College London. Among
his books are The Ukrainians: Unexpected Nation (Yale University Press, 2nd
edition, 2002), Ukraine’s Orange Revolution (Yale University Press, 2005),
Virtual Politics: Faking Democracy in the Post-Soviet World (Yale University
Press, 2005)

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
     Ukraine’s new chief prosecutor’s ties with political leaders, tycoons profiled

ANALYSIS & COMMENTARY: By Viktor Chyvokunya
Ukrayinska Pravda website, Kiev, in Ukrainian 26 Apr 07
BBC Monitoring Service, United Kingdom, Tuesday, May 01, 2007

The new Ukrainian prosecutor-general, Svyatoslav Piskun, cannot be trusted
by any political force, a website has said. He has a difficult history of
relations with all three sides in the current political crisis.

The website said that his latest return to the Prosecutor-General’s Office
is thanks to tycoon Ihor Kolomoyskyy. Piskun is also very close to one of
the leaders of the ruling party of Regions and richest Ukrainian
businessman, Rinat Akhmetov.

Although Piskun issued the arrest warrant for Akhmetov’s ally, Borys
Kolesnykov, he was elected to parliament on the election list of the Party
of Regions. President Yushchenko dismissed him twice, but now appointed

him again, trying to bring order to the Prosecutor-General’s Office.

Opposition leader Yuliya Tymoshenko, whom Piskun persecuted under former
President Leonid Kuchma, offered him a place on her bloc’s election list,
but then refused under pressure from her allies, the website said.

The following is the text of the article by Viktor Chyvokunya entitled
“Yushchenko made the move of Piskun” published by Ukrayinska Pravda

website on 26 April:

A new day brought a new sensation in the war for political power in Ukraine.
Viktor Yushchenko advanced in the arms race and introduced a new prosecutor
general. Traditionally, it was Svyatoslav Piskun.

Up until now, the Prosecutor General’s Office was controlled by Viktor
Yanukovych. The prosecutor-general went on sick leave and under dubious
circumstances Viktor Pshonka, a purely Donetsk man, became acting prosecutor
general. In addition, his son is a people’s deputy from the Party of

One of the most significant decisions made in this time was a criminal case
on events connected with [Constitutional Court judge] Syuzanna Stanik. The
case was filed, however, not against her, as representatives of the Orange
camp who accused her of taking bribes expected, but on the fact of pressure
on judge.

Against this background, the return of Piskun looks like the victory of
Viktor Yushchenko because the Bankova Street has now allegedly received a
chance to file criminal cases against those top officials who refuse to
fulfil the presidential decree [on early elections].
                          RELATIONS WITH TYMOSHENKO
As is known, Yuliya Tymoshenko at some meetings proposed that, at minimum,
charges against Deputy Prime Minister Andriy Klyuyev and the head of the
state treasury, Serhiy Kharchenko, be brought and, at maximum, Viktor
Yanukovych be arrested.

Now the situation has changed in the main law-enforcement body. However,
simple linear measures should not be applied to Piskun. His emergence mixed
cards in the present big game. Because he is a unique person.

Yuliya Tymoshenko once tried to pull his [luxury Swiss] Vacheron Konstantin
watch off his hand announcing that the price of the watch was ten thousand
dollars and Tymoshenko knew what she was talking about.

Piskun used to file criminal cases against Tymoshenko and submitted to
parliament a request to arrest her. Piskun was the reason why Borys Feldman,
Tymoshenko’s former close ally, found himself in prison.

However, after the Orange revolution Tymoshenko and Piskun became comrades.
Before Tymoshenko was removed from the prime minister’s post, Piskun
attended an evening session held by Tymoshenko at the Security Service

During 2006 parliamentary elections, Tymoshenko raised the issue of
including Piskun in the Yuliya Tymoshenko’s Bloc election list. Her party
comrades resisted and Piskun was not included.
During Piskun’s second coming, the Prosecutor General’s office filed a
criminal case against Borys Kolesnykov, and consequently Rinat Akhmetov’s
closest friend spent several months in a remand facility.

However, six months later Piskun was on the Party of Regions [election] list
and in twelve months he flew charter flights with the president of Shakhtar
football club [Akhmetov] to attend football games.

Piskun is Mykola Azarov’s political brother. Azarov included Piskun in the
Party of Regions list. They say that when Wednesday morning Azarov found out
that Piskun was restored in his post, he went to his flat to meet him but
did not manage to see him.

Piskun is the strongest actor in the Ukrainian drama. Should political Oscar
exist, Piskun would have received the statue as the best actor.

Piskun’s interests are represented in all political camps. Yuriy Trindyuk,
his daughter’s business partner, is in the Yuliya Tymoshenko’s Bloc faction.

Piskun’s Christian relative [godfather of his child or father of his
godchild], Petro Melnyk, is a member of the Party of Regions. Piskun’s old
friend Mykola Martynenko is in the Our Ukraine faction. Martynenko secured
his friend’s second appointment in 2004.

They say Piskun’s recent emergence in the Prosecutor-General’s office is to
the credit of another person whose name is Ihor and the last name is
                                  LINK TO KOLOMOYSKYY
Sources say that even Yuliya Tymoshenko did not know about Piskun’s
appointment before Wednesday [25 April] morning. Piskun played a good role
in Kolomoyskyy’s life in 2005, a criminal case was filed against the owner
of the Pryvat group in connection with an assassination attempt on the life
of a lawyer from Dnipropetrovsk, Karpenko.

A court received a request to issue an arrest warrant for the billionaire.
Piskun’s enemies say that he personally extracted documents from the court
and closed the case.

Not long ago, Piskun spoke as Kolomoyskyy’s witness in the London court of
arbitration in Kolomoyskyy’s conflict with [Russian businessman Konstantin]
Grigorishin on regional energy supplying companies.

Yushchenko’s decision to restore Piskun is to some extend a step of despair
because after his second sacking in 2005 Piskun considered Yushchenko his
main enemy.

Piskun is not the kind of person that should be trusted by any political
force. However bizarre it seems, this trait of Piskun may give an impetus to
political truce in Ukraine.

In his previous comings as prosecutor-general, Piskun tried to maintain
relations with different camps presenting his actions as a favour and
insignificant concessions as a sign of deep respect.

On the one hand, Kolesnykov was arrested because of Piskun, but on the other
hand, due to Piskun his conditions in the remand centre were not unbearable.

On the one hand Piskun requested the arrest of Tymoshenko, but on the other,
he wrote it so originally that the Supreme Council refused to consider them.

Investigators who worked on the Tymoshenko case before Piskun, under Mykola
Obikhod, were fired from the Prosecutor-General’s office. They are still
sure that Piskun on purpose disorganized their case and included in the
request to arrest Tymoshenko inexistent crimes instead of those containing
real proofs.
                      CONTROVERSIAL COURT RULING
The court ruling restoring Piskun in his post was accompanied by strange

[1] First, [former Prosecutor-General] Viktor Medvedko was on sick leave
till the very last moment.

It is therefore not ruled out that he is going to complain in court [because
the labour law does not allow sacking of people on sick leave]. There he has
chances for victory because Piskun himself was fired by Yushchenko when all
of a sudden got sick.

[2] Second, it was expected that top officials would be replaced in the
Shevchenkivskyy district court, but nothing of the kind took place.

The term of office of the previous chairman, Borys Hulko, has run out.
Usually the president appoints a new head of court after a request from the
Supreme Court and with the consent by the Council of Judges.

Last week, the Council of Judges recommended Iryna Telnykova as the head of
the Shevchenkivskyy district court. A request to the effect was submitted to
the presidential administration.

But instead of this, a presidential decree unexpectedly came out, appointing
an acting head of the Shevchenkivskyy district court of Kiev. Borys Hulko
was appointed the acting head of the court.

On Wednesday, 25 April, the case of Piskun was studied by judge Ostapenko.
She even refused to start court proceedings and explained that a similar
suit between the same people on the same issue was considered and tackled in

It is known that following the second sacking, indignant Piskun came all the
way to the Supreme Court. However, after the hearing started, he all of a
sudden recalled his claims and the court closed the case. According to the
rules of procedure, this means that Piskun has no more right to bring this
case to any court.

On Thursday morning, 26 April, the case of Piskun was considered by another
judge of the Shevchenkivskyy district court, judge Kukhaleyshvili who
received the case on Wednesday night. Those who at least once came across
court practice procedures, know that usually this process takes several

Furthermore, according to some information, a representative of the
president acknowledged the suit and thus automatically took Piskun’s side.

Kukhaleyshvili made the decision by himself whereas the Code of
administrative procedure reads that Piskun’s case should have been tackled
by a collegium of three judges. In fact the case was considered by a court
without authority.

When Piskun withdrew his claim from the Supreme Court, it looked like he put
up with people’s deputy carrier. It turned out however that he simply had a
different scenario in mind.

Judge Kukhaleyshvili is an interesting person himself. The Supreme Council
of judges is now studying a complaint on his actions. However it is a fair
statement that the reason for this complaint is ridiculous in comparison
with other decisions being made in the halls of justice now.

Ukrayinska Pravda found out that a Kiev resident accused Kukhaleyshvili that
he on purpose delayed considering a claim on reimbursing a state duty
amounting to eight and a half hryvnyas [1.5 dollars].

Court resolution on the claim contained a wrong district titles and read
that it could be appealed against in the Kiev city court which is

According to a member of the Supreme Council of Justice, who is working on a
complaint against Kukhaleyshvili, his violations do not contribute for a
severe punishment.

Kukhaleyshvili is going to face serious problems should the party of Regions
win in the present war. The Party of Regions achieved the sacking of a judge
in Mulacheve who failed to support the law on the Cabinet of Ministers.

Apparently, Piskun is a part of the Bankova Street [presidential
secretariat’s] scenario. It is difficult to find a different explanation
because it was normal for Yushchenko to ignore disadvantageous court rulings
and with restored prosecutor-general he acted immediately.

And now Piskun is a strengthening point in the new decree dissolving
parliament. But all previous life proves however that Yushchenko should not
be confident in Piskun’s loyalty. Although Yanukovych, or anybody else
should not be either.                               -30-

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