Monthly Archives: June 2007

AUR#853 Jun 20 Control Of Nuclear Energy Handed To Russia?; Ukraine Plans To Join Russian Uranium Enrichment Centre; Putin’s Dead Ukrainian Horse

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                    Ukraine hands control of nuclear sector over to Russia
Delovaya Stolitsa, Kiev, Ukraine, in Russian 11 Jun 07
BBC Monitoring Service, United Kingdom, Monday, June 11, 2007

Hanna Kukhta, Ukrainian News, Kyiv, Ukraine, Monday, June 4, 2007

Hanna Kukhta, Ukrainian News Agency, Kyiv, Ukraine, June 4, 2007


Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 17, 2007

Ukrainian News Agency, Kyiv, Ukraine, Friday, June 15, 2007

Interfax Ukraine, Kyiv, Ukraine, Friday, June 15, 2007

Reuters, Moscow, Russia, Tuesday, June 19, 2007

RIA Novosti, Moscow, Russia, Tuesday, June 19, 2007


Ukrainian News Agency, Kyiv, Ukraine, Tuesday, June 19, 2007
                           Ukraine ninth in the world in uranium extraction
Interfax Ukraine, Kyiv, Ukraine, Sunday, June 17, 2007
By James Brooke, Bloomberg, Tbilisi, Georgia, Wed, June 20, 2007

COMMENTARY: By Keith C. Smith, Senior Associate
Center for Strategic and International Studies (CSIS)
Washington, D.C., June 2007

Agence France Presse (AFP), Baku, Azerbaijan, Tuesday, June 19, 2007

14.                          PUTIN’S DEAD UKRAINIAN HORSE
COMMENTARY: By John Marine,
Kyiv Post Senior Journalist, Kyiv, Ukraine,, Moscow, Russia, Wednesday, June 13, 2007

15.                    UKRAINE HAS A CLAIM IN THE G8 TALKS
COMMENTARY: By Yulia Tymoshenko, Member of Parliament,

Leader of the Opposition, Former Prime Minister of Ukraine
Le Monde, Paris France, Thursday, June 7, 2007 (in French)
Action Ukraine Report (AUR) #853, Article 15, (in English)
Washington, D.C., Wednesday, June 20, 2007

16.                             THE LIAR’S LAST REUNION
      Bush and Putin have exemplified the arrogance of power run amuck
New York, New York, Tuesday, June 5, 2007

INTERVIEW: With William Taylor, Ambassador of the USA to Ukraine
By Mykola Siruk, The Day Weekly Digest #17
Kyiv, Ukraine, Tuesday, 12 June 2007


Interfax Ukraine News, Kyiv, Ukraine, Monday, June 18, 2007

By James Sherr (presented in his behalf)
Session VIII:  Security Advantages of Euro-Atlantic Integration
Ukraine’s Euro-Atlantic Future: International Forum I
Diplomatic Academy of Ukraine, Kyiv, Ukraine, 11-13 June 2007

Published by the Action Ukraine Report (AUR) #853, Article 19
Washington, D.C., Wednesday, June 20, 2007

                             Ukraine’s Euro-Atlantic Future Forum in Kyiv
New Europe, The European Weekly, Issue 734
Brussels, Belgium, Saturday, 16 June 2007

Financial Times, London, United Kingdom, Friday, June 15 2007
                  Ukraine hands control of nuclear sector over to Russia

Delovaya Stolitsa, Kiev, Ukraine, in Russian 11 Jun 07
BBC Monitoring Service, United Kingdom, Monday, June 11, 2007

A protocol on cooperation in the nuclear sector signed last week between
Ukraine and Russia shows Kiev has acknowledged it cannot develop its
nuclear sector on its own, a business weekly has reported.

The author said the document will give Russia the right to mine uranium in
Ukraine, build nuclear power stations and manage machine-building for the
energy sector, while Ukraine’s Ukratomprom will be marginalized.

He said subsequent initiatives by the Ukrainian government to corporatize
state enterprises in the sector will only make it easier for Moscow to
control Ukraine’s nuclear industry.

The following is the text of the article by Dmytro Ryasnoy, entitled “Keep
the change: Andriy Derkach will help Russia achieve its plans regarding
Ukrainian nuclear energy”, published in the Ukrainian newspaper Delovaya
Stolitsa on 11 June, subheadings appear as in the original:

The 16 years of inertia on the part of the Ukrainian energy sector has born

In signing a protocol between Russian and Ukrainian nuclear energy
enterprises on intentions to cooperate (the document was signed by
Ukratomprom Director Andriy Derkach and Rosatom Director Sergey
Kiriyenko), Kiev admitted it is unable to develop its nuclear sector on
its own and agreed to help from Moscow.

Henceforth, Rosatom will extract uranium in our country, build nuclear
stations and supervise energy-sector machine tooling. Ukratomprom will be
left to satisfy itself with the name “nuclear outsider”.
According to the document, the sides agreed to set up a number of joint
enterprises for extracting and enriching uranium as well as the production
of nuclear fuel at enterprises in Ukraine and Russia.

Besides this, they committed themselves to carry out joint work on extending
the service life of nuclear reactors and designing and building new ones.

The organization of the strategy of the sides’ mutual activities envisioned
in the protocol will be handled by a joint venture that is to be established
on an equal basis by the Kharkiv scientific-research institute Enerhoproyekt
(which is part of Ukratomprom) and the open joint-stock company Atomic

and Energy Machine-building (a sub-department of Rosatom).

The mere agreement by Kiev to divide control over the Kharkiv institute with
Moscow is astonishing. This institute is the only general contractor
available for work at the Zaporizhzhya and South Ukrainian nuclear power

And if one recalls that just a month ago, Kiev gave up control over the
capital’s Enerhoproyekt (the exclusive contractor at the Rivne and
Khmelnytskyy nuclear power stations) to Russian businessman Mikhail Abyzov,
one can say Ukraine already can no longer carry out construction in the
nuclear sector on its own.

“The memorandum does not leave any zone closed. We can cooperate in all
directions and are ready to move fully to an exchange of assets, acquiring
them in Ukraine.

“Besides scientific-research institutes, enterprises involved in making
nuclear fuel, enriching uranium and machine-tooling could be subject to such
exchanges. We are ready to present Ukratomprom with similar enterprises in
Russia,” Sergey Kiriyenko said, revealing Moscow’s true intentions.

Andriy Derkach said that at the first stage the foundation of the process of
mutual participation in assets will be agreements on joint activities on the
level of the main companies managed in the countries (Ukratomprom and the
to-be-established Atomenerhoprom), while exchanging enterprises would come
before they are independently valued.

“We will begin with agreements on joint activity as a stage in the process
linked to the real value of the assets and entering into these joint
ventures”, Derkach said.
                               ATOMIC MISALLIANCE
At first glance, such nuclear cooperation appears to be equal. But in fact,
Russia, which in contrast to Ukraine is fully independent in making nuclear
fuel and building nuclear reactors, will get the ability to turn our country
into its eternal consumer.

Ukraine has never had its own nuclear fuel systems and will now be deprived
of the possibility of building its own nuclear power stations.

For a greater show of illusion, Sergey Kiriyenko said Rosatom had reserved
for us the ability to obtain a stake in the Intergovernmental Uranium
Enriching Centre (IUEC, Angarsk, Russia). Participation in this project will
give Ukraine supplies of low-enriched uranium, but will fully cut it off
from enrichment technology.

The example of Kazakhstan, which floated a desire to participate in that
project a year ago and which has not made a single step forward since then,
shows Kiev’s participation in IUEC is not at present very interesting.

Nevertheless, the head of Rosatom said a Ukrainian Fuel and Energy Ministry
delegation will visit Angarsk at the end of June and in two months the sides
may reach a relevant intergovernmental agreement.

They already agreed to prepare and agree a list of specific cooperation
projects by 1 July (this rush is probably due to the looming election,
before which the current authorities want to resolve nuclear issues as they
see fit). The Russians have already shown which Ukrainian assets interest

According to data from Rosatom, the Russian Federation is ready to begin in
the very near future to jointly develop the Novokostyantynov uranium deposit
(Kirovohrad region), finish building two reactors at the Khmelnytsk nuclear
power stations, and set up a joint venture based on the open joint-stock
company Turboatom in Kharkiv.

It is clear that by investing in Kirovohrad uranium (where reserves are
estimated to be 100,000 tonnes), Moscow will want guarantees on deliveries
of the raw material. And for joint work at Turboatom – to supply the
turbines for new reactors.

By the way, the unique electric machinery at the Kharkiv plant is perhaps
the only weak link in nuclear energy that our neighbour to the north has;
the Russians still have no modern production lines for slow turbines
stations for nuclear power plants.

In light of the fact that Rosatom plans to outfit seven nuclear reactors by
2015 and bring three or four reactors on line every year from 2015 to 2020,
this card in Ukraine’s hand is quite significant. It is another matter that
the government does not plan to make use of it and more likely to the
contrary will probably agree to a suspicious cooperation deal like joint
construction of new nuclear reactors.
[1] Above all, all of this excludes any hope of outfitting new Ukrainian
reactors with equipment from either BNFL/Westinghouse (UK-United

States) or Areva (France and Germany) in place of Russian equipment.

And despite the prospect of such diversification being written into our
country’s energy strategy, it appears the Viktor Yanukovych cabinet as
decided to reject it in a bow to Russian interests.

[2] Second, the Russians will probably want to compensate part of their
expenses in building new reactors with the exclusive right to supply their
own electric parts.

“We are ready to not only take part in construction, but also to invest in
building nuclear stations, including the possibility of exporting electric
energy to Europe. This is an understandable joint project which we hope to
become engaged in,” Mr Kiriyenko said not even trying to hide the real
intentions of his structure.

One must give the government its due in terms of a consistent nuclear

Literally a day after the joint protocol on cooperation between Ukraine and
Russia was signed, the cabinet of ministers asked parliament to approve the
corporatization of four state enterprises which are part of Ukratomprom –
the Skhidniy ore-enriching plant, the Ukrainian industrial technologies
scientific-research and development institute, the state enterprise Smoly
(all in Dnipropetrovsk region) as well as the management structure of an
enterprise being built on the base of the Novokostyantynov uranium deposits
(Kirovohrad region).

And the intent under which this is all being done are good – changing the
format of the enterprises makes it possible to attract credit, naturally
with assets as collateral.

In the context of these recent events, no-one doubts anymore that money will
come from Russia, which in return will get a share in the corporatized
structures of Ukratomprom.

With a portion of the shareholder capital, for example in the Skhidniy
ore-enriching plant and the Novokostyantynov uranium deposits, Rosatom will
take control of extracting Ukrainian uranium and making concentrate out of

In principle, our country is already under the monopoly control of TVEL, to
which it supplies concentrate from Zhovtyy Vody and gets fuel rods in
return. But the agreement only lasts until 2010, something which apparently
causes Sergey Kiriyenko some discomfort.

Also, control over Smoly guarantees Rosatom control over the production of
raw material for refining uranium deposits. Perhaps only Andriy Derkach
knows who needs Russian money on these conditions.           -30-

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

Hanna Kukhta, Ukrainian News, Kyiv, Ukraine, Monday, June 4, 2007

KYIV – The state-owned Ukratomprom nuclear concern and Russia’s Federal
Nuclear Energy Agency (Rosatom) have signed a protocol on cooperation
between Ukrainian and Russian nuclear industry enterprises.

The protocol was signed by Ukratomprom’s Director-General and the

Enerhoatom national nuclear power generating company’s President Andrii
Derkach and Rosatom’s Chairman Sergei Kiriyenko.

Ukratomprom and Rosatom intend to develop cooperation in the area of
scientific technical support for the nuclear industry, improving safety
levels at nuclear power stations, extending the service lives of nuclear
reactors, design and construction of new nuclear power stations, development
of enterprises with fuel nuclear fuel cycles, and joint access to the
markets of third countries.

The plans of Ukratomprom and Rosatom for the near future include studying
the possibility of creating joint enterprises in the area of production and
enrichment of uranium and production of nuclear fuel at Ukrainian and
Russian enterprises.

Ukratomprom and Rosatom plan to compile and agree a list of cooperation
projects by July 1, 2007. Cooperation between Ukratomprom and Rosatom

is expected to be organized on the basis of a joint entity in which they will
own equal stakes.

The Kharkiv-based Enerhoproekt scientific research and design institute will
co-found the entity on behalf of Ukratomprom while Atomic and Energy
Machine-Building will co-found it on behalf of Rosatom.

As Ukrainian News earlier reported, the Ukrainian Cabinet of Ministers will
consider Russia’s proposal to participate in the work of an international
center on uranium enrichment in the town of Angarsk (Russia).  -30-

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

Hanna Kukhta, Ukrainian News Agency, Kyiv, Ukraine, June 4, 2007

KYIV – Russia is ready to invest into development of the Novokostiantynivka
uranium ore deposit (Kirovohrad region). Chairman of the Federal Nuclear
Power Agency (Rosatom) Sergey Kirienko told this at a briefing.

“We agreed that our cooperation object will be the Novokostiantynivka
uranium deposit, in which we’re ready to invest and ensure development of
this biggest deposit of uranium in Europe,” Kirienko said.

According to him, Russia is ready to invest into development of the deposit
as much as necessary, proportionally to its share in the statutory fund of
the enterprise that will extract uranium at the deposit. Round 3-4 months
are needed for signing corresponding agreements and working through the
financing schemes.

As Ukrainian News earlier reported, Ukraine intends to invest about UAH 250
million in the uranium mining industry by 2008.

Capital investments in development of the uranium deposits of the state
enterprise called Skhidnyi Ore Mining and enrichment Plant (Zhovti Vody,
Dnipropetrovsk region) are planned at UAH 150 million while capital
investments in development of the Novokostiantynivka uranium ore deposit
(Kirovohrad region) are planned at UAH 100 million in 2007.

The Cabinet of Ministers approved the statutes of the Ukratomprom nuclear
concern at its meeting on March 1. The concern is being founded for the
purpose of creating a nuclear-fuel production cycle in Ukraine.

The program for creation of a nuclear-fuel cycle is financed only with
Enerhoatom’s money. At present, the Southern Ukrainian nuclear power station
is performing pilot operation of six Westinghouse-made experimental fuel
cassettes loaded into its third reactor.                       -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


Ukrainian News Agency, Kyiv, Ukraine, Sunday, June 17, 2007

KYIV – President Viktor Yuschenko has directed the National Security and
Defense Council’s Secretary Ivan Pliusch and Prosecutor-General Oleksandr
Medvedko to check the information that preparation is underway for creation
of a Ukrainian-Russian joint venture in the area of nuclear energy. Pliusch
announced this at a press conference.

“Prosecutor-General Oleksandr Ivanovych Medvedko and Pliusch have been
directed to consider the agreements that were reported in the press – that
someone concluded intergovernmental agreements – and inform the President
together with proposals on their conformance to the active legislation,”
Pliusch said.

At the same time, he was unable to specify the agreements. “In this
paragraph, it is somehow inconvenient to take from the President the letter
he read.

They involve comments that a Ukrainian-Russian joint venture is being
created for processing nuclear fuel, that a sort of closed nuclear cycle is
being created here. There is something I cannot understand: who is creating
it with whom?” Pliusch said.

According to him, Yuschenko received a letter in Kirovohrad on June 14 and
read it at a meeting of the National Security and Defense Council on June
15. The letter expresses concern over creation of such a joint venture.

“It speaks about the concern of citizens that some sort of enterprise is
again being created in order not to diversify even fuel for nuclear reactors
and atomic stations,” Pliusch said.

As Ukrainian News earlier reported, Pliusch recently called on the Cabinet
of Ministers to stop signing documents that contravene Ukraine’s national
interests in the energy sector.

Ukraine’s state-owned Ukratomprom nuclear concern and Russia’s Federal
Nuclear Energy Agency (Rosatom) have signed a protocol on cooperation
between Ukrainian and Russian nuclear industry enterprises.

The Ukrainian Cabinet of Ministers will consider Russia’s proposal to
participate in the work of an international center on uranium enrichment in
the town of Angarsk (Russia).

Ukratomprom and Rosatom plan to compile and agree a list of cooperation
projects by July 1, 2007. Russia is interested in investing in construction
of nuclear power stations and production of energy equipment in Ukraine.
Russia is prepared to invest in development of the Novokostiantynivka
uranium ore deposit (Kirovohrad region).                  -30-

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Ukrainian News Agency, Kyiv, Ukraine, Friday, June 15, 2007

KYIV – Ukraine intends to increase uranium production by 212.5% or 1,700
tons to 2,500 tons per year to fully provide nuclear power plants with
uranium by 2013. The Fuel and Energy Ministry disclosed this in a statement
concerning results of National Security and Defense Council meeting on
energy security.

Besides, Ukraine intends to increase uranium production to 5,900 tons in
2014-2025 and to 6,400 tons in 2025-2030.

The indicators are foreseen by sectoral program entitled Uranium of Ukraine
and by Energy Strategy for the period until 2030.

As Ukrainian News earlier reported, Fuel and Energy Minister Yurii Boiko
considers that Ukraine may increase uranium production by 75% or 600 tons a
year to 1,400 tons by 2010.

The Fuel and Energy Ministry plans to launch uranium production at
Novokostiantynivka field (Kirovohrad region) extracting 100 tons of uranium
in 2008. Commissioning of start-up complex with the capacity of 500 tons of
uranium is planned to take place by 2010.

Currently, Ukraine produces about 800 tons of uranium and provides 30% of
needs of Ukrainian NPPs. The Fuel and Energy Ministry considers that
materials published before National Security and Defense Council meeting on
June 15 do not take in account positive changes in the fuel and energy
sector.                                                 -30-

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

Interfax Ukraine, Kyiv, Ukraine, Friday, June 15, 2007

KYIV – Ukraine’s Fuel and Energy Ministry plans to extract the first 100
tonnes of uranium at the Novokonstiantynivske deposit in 2008, and the
complete complex with an annual production capacity of 500 tonnes will be
launched by the end of 2009.

This information is included in the ministry’s commentary on materials
published on Thursday for the next National Security and Defense Council

Achieving the deposit’s projected top capacity of 1,500 tonnes is scheduled
for 2013. According to the ministry, uranium extraction in Ukraine in
2014-2025 should soar to 5,900 tonnes, in 2025, and by 2030 to 6,400 tonnes.

Currently Ukraine extracts 800 tonnes of uranium ore annually, which covers
30% of the demand from Ukraine’s nuclear power plants.            -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Reuters, Moscow, Russia, Tuesday, June 19, 2007

MOSCOW – Ukraine is interested in joining an international uranium
enrichment project being set up by Russia to give developing nations the
chance to build nuclear power stations, Russia’s atomic energy agency said

The centre was proposed by President Vladimir Putin last year as a way to
allow countries to develop civilian nuclear power without setting up their
own enrichment cycles.

Russia is basing the centre at a Soviet-built nuclear research plant in
Angarsk, more than 5,100 km from Moscow. A Ukrainian delegation visited

the plant today after a visit to Ukraine earlier this year by Russian nuclear
chief Sergei Kiriyenko.

”During the consultations with the Ukrainian side they confirmed their
interest in participating in the project to create an international uranium
enrichment centre,” Russia’s atomic energy agency (Rosatom) said in a

Ukraine joins Kazakhstan and Russia in the project and Rosatom is searching
for other partners. Armenia has held discussions with Russia about the

Russia, which is reorganising its atomic sector, wants to take a larger part
of the booming world market for nuclear products. Nuclear power is again in

vogue because of high oil prices and concerns over carbon dioxide emissions.

World powers are trying to stop proliferation of nuclear technology to
states that could try to build nuclear weapons under the cover of a civilian
nuclear programme.

The International Atomic Energy Agency (IAEA) visited the Angarsk Chemical
Electrolysis Plant, where the enrichment centre will be based, earlier this
year.                                               -30-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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RIA Novosti, Moscow, Russia, Tuesday, June 19, 2007

MOSCOW – Ukraine intends to join an international uranium enrichment

center being established by Russia and Kazakhstan in the near future,
Ukraine’s Fuel and Energy Ministry said Tuesday.

“Ukraine intends to become a full-fledged participant in the international
uranium enrichment center in the next few months,” the ministry said in a

Russia and its ex-Soviet neighbor Kazakhstan, which holds 15% of the world’s
uranium reserves, signed documents last October to establish their first
joint venture to enrich uranium.

The center, part of Moscow’s non-proliferation initiative to create a
network of enrichment centers under the UN nuclear watchdog’s supervision,
will be based at a chemicals plant in Angarsk in East Siberia, and will also
be responsible for the disposal of nuclear waste.

Ukraine will be the second country after Kazakhstan to join Russia’s
initiative. The center will come on stream in 2013 and offer uranium
enrichment services to countries interested in developing nuclear energy for
civilian purposes.

Russian President Vladimir Putin first raised the idea of joint nuclear
enrichment centers early last year, in a bid to calm tensions over Iran’s
controversial nuclear program. The president said the centers would give
countries transparent access to civilian nuclear technology without
provoking international fears that enriched uranium could be used for covert
weapons programs.                                    -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Ukrainian News Agency, Kyiv, Ukraine, Tuesday, June 19, 2007
KYIV – A delegation from the Fuel and Energy Ministry confirmed Ukraine’s
interest in participating in a project for creation of an international uranium
enrichment center during a visit to Angarsk (Russia).

The press service of Russia’s Federal Nuclear Energy Agency (Rosatom)
announced this in a statement, a text of which Ukrainian News obtained.

Ukrainian-Russian consultations on a wide range of issues connected with
creation of an international uranium enrichment center on the basis of the
Angarsk electrolytic chemical plant in accordance with the agreements that
were reached during a recent visit to Ukraine by Rosatom’s head Sergei

The Russian side provided detailed information about the model for creation
of the center, including such information as cooperation with the
International Atomic Energy Agency as well as the rights and duties of the
shareholders of the center.

According to the press service, the two sides reached an understanding on
the need to resolve jointly with Kazakhstan in the next few months practical
issues on Ukraine’s involvement in the creation of the center as a fully
fledged member.

The Russian delegation was led by Rosatom’s deputy head Nikolai Spassky

and the Ukrainian delegation by Deputy Fuel and Energy Minister Yurii
The Angarsk electrolytic chemical plant’s director-general Viktor Sholen
also participated in the consultations.

A tour of the production facilities of the Angarsk electrolytic chemical
plant was also organized for the Ukrainian delegation as part of its visit
to Angarsk.

As Ukrainian News earlier reported, Russia proposed in early 2007 that
Ukraine participate in the creation of an international uranium enrichment
center in Angarsk (Irkutsk region of Russia).

Ukraine’s state-owned Ukratomprom nuclear concern and Rosatom recently
signed a protocol on cooperation between Ukrainian and Russian nuclear
industry enterprises.

The Ukrainian Cabinet of Ministers intends to consider Russia’s proposal to
participate in the work of an international uranium enrichment center in
Angarsk. Ukratomprom and Rosatom plan to compile and agree a list of
cooperation projects by July 1, 2007.                           -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                           Ukraine ninth in the world in uranium extraction

Interfax Ukraine, Kyiv, Ukraine, Sunday, June 17, 2007

KYIV – Zurich-based 3D Capital AG (Switzerland), which specialized in
organizing IPOs on the Frankfurt Stock Exchange (FSE) for companies

with small amounts of capital, is entering the Eastern European market and
opening an office in Kyiv.

“After the opening of the office in Frankfurt, 3D Capital indicates its
presence on the attractive Eastern European market by opening an office in
Kyiv,” reads the company’s press release issued on Monday.

3D Capital said that its arrival in Ukraine is linked with interest of
companies located in Switzerland in such sectors of the Ukrainian economy

as energy and mining.

In particular, in the third quarter 2007, an international company located
in Switzerland, which is engaged in investing in the energy and uranium
sectors, is to be quoted on the FSE, reads the release.

3D Capital said that since 1996, uranium extraction in Ukraine has doubled
and reached 800 tonnes per year, which puts the country ninth in the world
in uranium extraction, and the country plans to increase the extraction to
3,000 tonnes per year.

The company also said that one of the companies from its investment
portfolio is in talks on receiving a concession to mine gold in Ukraine.

In 2006, 3D Capital enlarged its portfolio of consulting mandates to receive
the status of public companies by nine, to 25, and plans to increase this
number to 31 this year, next year to 39, and in 2007 to help at least 10
companies gain listings on the exchange. The company is conducting the
diversification of its business to the mining business.

In December 2006, 3D Capital placed 24.2 million of its own stocks, worth
around EUR 2.5 each, on the FSE. This year, the company plans to open
offices in London and New York.                       -30-

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

By James Brooke, Bloomberg, Tbilisi, Georgia, Wed, June 20, 2007

TBILISI, Georgia – The white marble Stalin museum in Gori, Georgia, the
dictator’s hometown, will soon be overshadowed by a new attraction: a
military base built to train Georgian troops for NATO missions.

Gori’s transformation from Soviet pilgrimage site to an outpost of the
U.S.-led military alliance underscores Georgia’s drive to sever its ties to

Georgia’s determination to assert its independence, and its location between
oil-rich central Asia and the Black Sea, has made it a conduit for energy
shipments to world markets.

International investors are pumping more than $3 billion into Georgia to
build pipelines, ports and refineries that will allow oil and gas from
Azerbaijan and Kazakhstan to bypass established trade routes through Russia.
That has angered the Kremlin, which last year imposed a trade embargo on

“There is no alternative” for the countries of central Asia, President
Mikheil Saakashvili said in the capital, Tbilisi. “Considering that Russia
is on one hand their partner but also their competitor, they have an obvious
interest in having an alternative — the Black Sea corridor.”

Georgia is the most dramatic example of the geopolitical shift taking place
in the former Soviet Union.

From Estonia in the north to Azerbaijan in the south, Russia increasingly is
confronted by former Soviet republics that are expanding links to the U.S.
and Europe.

That has sparked a backlash in Russia, with President Vladimir Putin
decrying the expansion of the North Atlantic Treaty Organization and U.S.
plans to build a missile defense system in Eastern Europe.
                                      ‘REAL OUTLIERS’
“Georgia and the Baltic states are the real outliers, and the Russians have
gone out of their way to be really nasty with all of them,” said Andrew C.
Kuchins, director of the Russia and Eurasia program at the Center for
Strategic and International Studies in Washington. By punishing Georgia and
the Baltics, the Kremlin is trying to reverse the drift toward the U.S.
among other former Soviet republics, he said.

Georgia, a nation of 4.6 million people on the eastern shore of the Black
Sea, was ruled by Russia for most of the period from 1801 until it declared
independence in 1991.

The country cemented its turn to the west in 2004, when Saakashvili replaced
former Soviet boss Eduard Shevardnadze and pledged to steer the country
toward membership in NATO and the European Union.

Russia opposes Georgia’s bid for NATO membership. The Baltic states of
Estonia, Latvia and Lithuania have already joined the alliance, and
Ukrainian President Viktor Yushchenko wants his country to join.
                                     ‘NOT A FAN CLUB’
“NATO is not a fan club of democracies; NATO is a military bloc, a military
and political alliance,” said Andrei Denisov, Russia’s first deputy foreign
minister. “With all these hectic activities to engage Ukraine and Georgia
into NATO, to have these half-baked members in NATO, what should we feel?”

Yet Russia can’t afford to antagonize Georgia. Putin wants Russia to enter
the World Trade Organization before he leaves office next May. Admission
requires treaties with each member state, including Georgia. A first round
of talks broke up last month without agreement.

Saakashvili says he’s wants the Kremlin to let Georgia install customs
control points in Abkhazia and South Ossetia, two breakaway regions
controlled by Russia.

“I want to see what Georgia gets to sign off on WTO,” Clifford Isaak,
managing director for the Caucasus region at PricewaterhouseCoopers, said in
Tbilisi. “Unless Georgia gets something big it is not going to happen.”
                                      ECONOMY BOOMS
Divorce from Russia hasn’t condemned Georgia to economic collapse. The
country’s gross domestic product grew at an annual rate of 13 percent in the
first quarter, driven by international investment and trade with western

The government is reducing taxes, cutting red tape and adopting pro-investor
policies, according to the American Chamber of Commerce in Tbilisi.

“The corruption has more or less disappeared from the traffic police, from
customs,” said Esben Emborg, president of the chamber and general manager
of Nestle SA’s local unit. “This is a much more level playing field than it
used to be. Anyone who runs a serious business will do well.”

Last summer, London-based BP Plc started pumping 800,000 barrels of oil a
day through a 1,116-mile pipeline that stretches from Azerbaijan through
Georgia to Ceyhan on Turkey’s Mediterranean coast.

Separately, BP and Norway’s Statoil ASA are shipping 1 million cubic meters
of gas a day from Azerbaijan to Georgia, replacing 20 percent of imports
from Russia. By December, the pipeline will be linked to Turkey and through
it to Europe.
                                      ENERGY CORRIDOR
“Georgia is in a critical position in the East-West energy corridor,” said
David Glendinning, a spokesman for the BP Plc venture that built and now
operates the pipeline. “The East-West energy corridor is a reality.”

Azerbaijan and Kazakhstan, just across the Caspian Sea, have more than 46
billion barrels of oil reserves, 59 percent of those in Russia, the world’s
largest energy exporter, according to BP.

On May 25, Georgia approved a $1 billion oil refinery that KazMunaiGaz, a
Kazakh state-owned oil and gas producer, plans to build at Batumi on the
Black Sea coast. The State Oil Company of the Azerbaijan Republic plans to
build a similar project.

“We would like to get gas and more supplies of oil from the Caspian Sea
region,” European Energy Commissioner Andris Piebalgs said April 30 at a
press conference in Brussels, where he spoke alongside Georgian Foreign
Minister Gela Bezhuashvili. Georgia is ready to provide the necessary supply
corridors toward the European Union.”
                                    HIGHWAYS, PORTS
Near Gori, where a medieval fortress overlooks the vineyards that produce
Georgia’s famous red wines, crews are paving the first stretch of a
600-mile, four-lane highway from Azerbaijan’s capital, Baku, to Batumi. Work
is also starting on a railroad linking Georgia and Turkey.

Outside the Black Sea town of Poti, Georgian officials plan to create a free
economic zone, reducing most taxes to zero to spur development. Earlier this
month, the investment authority of Ras Al Khaimah, one of the seven members
of the United Arab Emirates, agreed to develop the project.

The authority is preparing a master plan for what could be a multibillion
dollar port, industrial zone and power project, said General Manager Raman

“This is traffic basically across the Silk Road, traditionally the road from
Asia, toward the Middle East and Europe,” Saakashvili said.
                                 RUSSIAN EMBARGO
Georgia’s emergence as a competitor helped prompt Russia to crack down

on its former colony last year.

Russia cut all travel and import links, citing Georgia’s expulsion of
Russian soldiers accused of spying. It also deported about 4,000 of the
estimated 1 million Georgians working in Russia, mostly for alleged visa

OAO Gazprom, Russia’s state-controlled gas export monopoly, raised prices

to $235 per 1,000 cubic meters, four times 2005 levels, as part of a plan to
phase out Soviet-era “friendship pricing.”

The trade ban taught Georgians to look elsewhere. “We were concentrated too
much in Russia,” said Badri Japardize, whose Borjomi mineral water brand
lost $20 million in Russia last year. “We are reallocating our resources to
the Baltic states, U.K., Kazakhstan, Azerbaijan. Our U.S. sales have gone
from 20,000 bottles to 3 million.”

Looking south, Georgia dropped visa requirements for Turkish citizens last
year, and Turkish Airlines now treats Georgia’s new airport in Batumi as
part of its domestic network.

While the Russian flag is almost invisible in Tbilisi, the blue and gold
European Union flag is everywhere. “This is a way of preparing people to
think of themselves as Europeans,” Nestle’s Emborg said.
                            GEORGE BALANCHINE STREET
U.S. influence is on display at a new $62 million airport terminal in
Tbilisi, where the gates are emblazoned with the English words “Welcome to
Georgia.” Taxis traveling to the new Marriott Courtyard hotel head down
George W. Bush Street.

At the corner of George Balanchine and John Shalikashvili Streets, two
boulevards recently named for prominent Georgian- Americans, stands the new
U.S. embassy, a $56 million building where 480 people work.

On May 2, the U.S. Navy destroyer USS The Sullivans conducted exercises

with the Georgian Navy on the Black Sea, for 150 years a Russian lake. On the
same day, General David McKiernan, commander of the U.S. Army in Europe,
arrived in Georgia to watch U.S.-led military exercises.

Georgia’s success in distancing itself from Russia may teach the Kremlin to
moderate its stance toward the new nations on its fringe, said Thomas de
Waal, Caucasus editor of the London-based Institute for War and Peace
                              WANING RUSSIAN INFLUENCE
“Russia is rich, but it is losing its influence heavily in the South
Caucasus — it is relying disastrously on hard power,” he said by e-mail.

“The Russian blockade has pushed Georgia further into the American embrace,
and Russia is doing nothing to cultivate its major asset in the region, the
Russian language.”

Back in Gori, one mile from the museum marking Stalin’s birthplace, a
Turkish-Georgian company is building a military base that will comply with
NATO standards and house a brigade of Georgian troops. Nearby, a billboard
displays a photograph of Saakashvili and Bush shaking hands.      -30-
To contact the reporter on this story: James Brooke in Tbilisi through
Moscow at

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
If you are receiving more than one copy of the AUR please contact us.

COMMENTARY: By Keith C. Smith, Senior Associate
Center for Strategic and International Studies (CSIS)
Washington, D.C., June 2007

The European Commission and leading politicians in Europe seem able to
couner Russia’s willingness – and ability – to block the EU’s plans to
diversify the continent’s pipeline systems in order to diversify its sources
of oil and gas.

Some leaders even appear surprised that Russia is able to stop Central Asian
states of Kazakhstan, Turkmenistan and Uzbekistan from sending their growing
energy resources directly to Europe.

It is readily apparent that these countries could receive much greater
profit than they do via the present system in which Moscow acts as their
energy middleman.

More worrisome is that Europe is only slowly coming to grips with the
willingness of individual EU members, such as Hungary, Slovakia and Bulgaria
to reach separate deals with Russia that either thwart or seriously delay
official EU plans to diversify sources of energy imported into Europe.

What will it take for Europe to understand that they are competing with a
Russian leadership that does not believe in the win-win concept that drives
most economic leaders in Europe and America?

The KGB and GRU veterans who run the Kremlin and Russia’s energy companies
are fixated on national power and suspicious of any competitor’s motives.

The Putin Administration believes that the international respect that it so
desperately craves comes from wielding its energy resources, including the
use of energy blackmail and hidden financial arrangements with foreign
political groups.

The current Russian leadership also clings to the belief that profit made by
Western energy companies operating in Russia only comes at the expense of
the Russian people – or at least from the bank accounts of its new
political/business oligarchy.

Notwithstanding repeated disruptions since 1990 of energy supplies to the
West (one should include the Baltic States and Ukraine) Brussels, Berlin,
Paris and Rome still apparently cling to the belief that they are somehow
immune from Russian economic warfare.  The cyber war just unleashed by the
Kremlin on Estonia should be a wake up call.

But why hasn’t the West already reacted to the gas cut- offs to Ukraine and
Georgia in January 200(6), or to Lithuania, Belarus and Georgia also in
In the past two years, President Putin has made 13 visits to the leaders of
Kazakhstan, Turkmenistan and Uzbekistan.  Meanwhile, Manuel Barroso,
Chancellor Merkel, ex-President Chirac and President Bush have scarcely
glanced at the region.

It goes without saying that those diplomats from the EU and U.S. who have
visited Kazakhstan or Turkmenistan never had anywhere near the political
clout of President Putin when it came to wooing -or strong arming- Central
Asian leaders.

In any event, a Europe with no enforceable common energy policy should not
expect to compete effectively with a Russia that plays by a different rule
book – whether in Central Asia or in Central Europe.

While Russia emphasizes politics, including the non-transparent version,
well before economics in advancing its pipeline policies, European
democracies are unable and unwilling to match Russia’s efforts, even when
their energy security and national defense concerns are at stake.

Europe has sat on the sidelines while Russian state companies have taken
dominant stakes in the energy infrastructure of the three Baltic States,
Ukraine, Georgia, Bulgaria, Armenia, Moldova and Greece, and threaten to do
the same in Slovakia, the Czech Republic and Serbia.  Meanwhile, the Turks,
with their crucial supply routes, are now drawing closer to Moscow in their
energy policies.

Russia has recently concluded non-transparent energy deals with Hungary,
Slovakia and Bulgaria (and Ukraine, Moldova and Greece) that undercut EU
energy policy.

The EU Commission responds that it lacks the “competency” to demand that
these agreements be vetted by its Directorate General for Transportation and
Energy or by the Directorate General for Competition Policy.

The same “explanation” was offered when then-Chancellor Schroeder agreed to
a gas pipeline deal with President Putin, even though the agreement raised
serious security and environmental concerns for other EU states.

Should not the fact that this agreement was quietly negotiated by Mattias
Warnig, a former Stasi agent and Cold War colleague of President Putin have
provoked a greater degree of policy coordination and  insistence on
transparency from member states?.  It did not.

Can Europeans genuinely believe that these bilateral deals were reached by
means of open discussion by both sides on the business merits?  Did their
parliaments consider the national security implications of linking their
energy systems more closely with that of Russia?  Does the EU really believe
that the anti-corruption rules of the OECD or EU were scrupulously followed
in all cases?

Even a cursory look at how energy business is conducted inside of Russia
adequately reveals the fundamental nature of these deals in Europe’s own

The takeover of Shell’s interests in the Sakhalin project by Gazprom was
tied to alleged environmental concerns; concerns that evaporated as soon as
the majority shares were transferred to friends of the Kremlin.

BP’s interests in Kovytka were threatened by the company’s alleged
non-development of that field; development that was and is prevented by
Russian interests who are now set to take control of this highly desired
energy source.

Meanwhile Russian companies are free to buy controlling shares in Western
companies.  The West plays on a playing field tilted in Russia’s favor.  But
still the game goes on.
The Russians are world-class chess players, while their European and
American competitors play gentlemanly amateur croquet.

The Gazprom deal with Hungary is designed to strangle the economic argument
for the Nabucco pipeline that would bring Caspian natural gas to Europe via
Azerbaijan, Turkey and the Balkans.

The Hungarian Government of Prime Minister Gyucsany has come up with a

lame explanation for its action, but the deal was not reached openly, nor was it
debated extensively in Parliament before the Prime Minister flew off to
Moscow for a private chat with Putin.  And why, for that matter, was it
negotiated by Prime Minister Gyurcsany directly with President Putin?

Why, indeed, are all of Russia’s energy agreements negotiated directly with
President Putin?  What Western president or prime minister insists on
negotiating all of the country’s energy deals?  Does it take a rocket
scientist to understand why?

But the same lack of transparency marks Slovakia’s agreement to pass up its
option to buy Yukos’ 49% of Transpetrol, one of Europe’s most strategically
situated energy companies.

Caving in to Russian demands for ownership gives the Kremlin the ability to
block any future Odessa-Brody oil pipeline from the Caspian region, as well
as any gas pipelines that would run from Central Asia to southern Germany
via Slovakia.

Why did the Bulgarians and Greeks agree to give Russia a majority ownership
in the Burgos-Alexandropolous oil pipeline?  Again, a very opaque deal with
Russia completed at a high level and not vetted thoroughly by the EU

Perhaps the EU should delegate management of Europe’s energy policy to the
UK’s MI 5 or MI.  At least that betters the odds of a more level playing
field when it comes to pipeline negotiations with Russia and attempts to
guarantee the West’s energy security.                  -30-
NOTE: The Center for Strategic and International Studies (CSIS) is a
private, tax-exempt institution focusing on international public policy
issues. Its research is nonpartisan and nonproprietary. CSIS does not take
specific policy positions; accordingly, all views, positions, and
conclusions expressed in these publications should be understood to be
solely those of the authors.

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

Agence France Presse (AFP), Baku, Azerbaijan, Tuesday, June 19, 2007

BAKU – Leaders of four ex-Soviet countries vowed Tuesday to boost
cooperation and seek closer ties with the West as they aim to shake off
Russian influence.

The presidents of Georgia and Ukraine, Mikheil Saakashvili and Viktor
Yushchenko, were in the Azerbaijani capital Baku for a summit with
Azerbaijani President Ilham Aliyev and Moldovan Prime Minister Vasile

Their four countries make up the GUAM (Georgia, Ukraine, Azerbaijan and
Moldova) group of former Soviet states, which is seen as a counterweight to
the Kremlin-led Commonwealth of Independent States (CIS).

Polish President Lech Kaczynski, who was also attending as an observer,
promised to support their efforts to limit what he called “energy blackmail”
by Moscow.

At their meeting the four GUAM states promised to pursue plans to ship

oil from Azerbaijan through Georgia and Ukraine to Europe.

Their efforts were heartily welcomed by Kaczynski, while the staunchly
pro-Western Saakashvili hailed the meeting as “ageopolitical revolution.”

In a clear reference to Russian control of European energy supplies,
Poland’s Kaczynski said that “under conditions of energy blackmail, energy
projects (with GUAM states) are of great interest.”

Azerbaijan is the start point of a strategic new oil pipeline to the West
that has been backed by Washington as a way of reducing Moscow’s grip on

oil supplies from the former Soviet Union, the Baku-Tbilisi-Ceyhan (BTC)

Aliyev, whose country’s oil and gas reserves are keenly sought by fellow
members of GUAM and by the European Union, said the organisation was

gaining in international weight.

“GUAM, in a short time, has turned into a serious organisation. Its goals
are of interest to many countries,” Aliyev said.  By boosting transport and
energy links, GUAM members are “building a bridge between Europe and

Asia,” he said.

Saakashvili thanked Azerbaijan for increasing gas exports to his country
after a large price-hike by Moscow at the end of last year that some critics
saw as politically motivated.

“It was a heartfelt gesture and an important strategic decision,” he said,
adding that GUAM was surpassing the CIS as a basis for cooperation. “GUAM
seriously differs from the CIS, which has become only a club for meetings of
heads of state,” he said.

Kaczynski, Lithuanian President Valdas Adamkus and Romanian President

Traian Basescu attended the talks in a show of support for GUAM’s pro-
Western aspirations. Kaczynski said he would support the efforts of some
GUAM members to join the European Union and NATO.

Aliyev said the members would also present a united front in dealing with
separatist conflicts in their countries. Azerbaijan, Georgia and Moldova are
all dealing with breakaway regions.

But Russian newspapers on Tuesday detected cracks within the GUAM group.
While Georgia and Ukraine have primarily viewed GUAM as a pro-Western
regional bloc, Azerbaijan has been more cautious and Moldova’s position is

The Russian newspapers said Moscow would take comfort from the absence on
Tuesday of Moldovan President Vladimir Voronin and the sending of his prime
minister instead.

Voronin is to meet Russian President Vladimir Putin in Moscow on Friday,
Kommersant newspaper reported. “Moscow managed to strike a pre-emptive

blow against its opponents,” the paper wrote. “Voronin has apparently decided
to stay away from the company of Russia’s enemies.               -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: By John Marine,
Kyiv Post Senior Journalist, Kyiv, Ukraine,, Moscow, Russia, Wednesday, June 13, 2007

Russian President Vladimir Putin has once again accused Ukraine of
sponging Russian gas. So what else is new?

Nothing – the accusations refer to the past, but Putin’s reasons for
reviving them are in fact very forward looking if not misguided.

If you want to punish someone for doing something that isn’t considered
wrong by everyone else, it’s very convenient to come up with another
justification, even if you have to dig it up from the past.

Speaking in Moscow on the eve of the G-8 summit in Germany, Putin said that
Russia was through with subsidizing Ukraine and other post-Soviet states
with energy resources.

Moreover, he added, the price Ukraine pays for its gas imports would go up
by as much as 17 percent to compensate for past losses.

Ukraine and the rest of Europe have long gotten used to tough talk coming
out of the Kremlin, which has used its position as the continent’s biggest
energy supplier to demand the kind of respect it got during Soviet times.

And although it may be acting against its own best interests in the long
term, Moscow has not hesitated to follow up on its threats.

A year after Ukraine’s Orange Revolution, which set the country on a
distinctly westward course, Russian state gas monopoly Gazprom raised the
price Ukraine pays for its imported gas. It went from around $50.00 per
thousand cubic meters to $130 within the space of a year.

More importantly, the suddenness which with the first price hike was carried
out – during the Christmas holidays in subzero temperatures – led to
temporary shortages in Europe.

In response to international criticism that the Kremlin was trying to reel
in stroppy former satellites, Moscow blamed everything on Kyiv, repeating
earlier allegations that Ukrainians are inveterate gas thieves.

The Kremlin’s key message to Europe seemed to be that the newly independent
states which popped up after the breakup of the Soviet Union were unreliable
in matters of importance. And the delivery of clean burning gas to
environmentally conscious Europe is just such a matter.

Even Belarus, whose dictatorial President Aliaksandr Lukashenka has made the
country a pariah state in the eyes of the West, has had its energy bill
raised unilaterally by Moscow.

Of all former Soviet Republics, Belarus has clearly been the beneficiary of
dirt cheap Russian energy, allowing Lukashenka to pacify the country’s
population with high pensions and low consumer prices.

Ukraine, on the other hand, is a horse of a different color. Pro-Western
Ukrainian President Yushchenko’s team was quick to respond to Putin’s recent

Oleksandr Chaly, the deputy head of Yushchenko’s Secretariat, called the
Russian leader’s statements “absolutely baseless”.

However, if you throw enough mud at a wall, some of it’s going to stick.
Putin’s intended audience included not only Europe, which gets most of its
eastern gas via Ukraine, but Russians increasingly subject to arbitrary
government, and Ukrainians increasingly doubtful as to who is in charge of
their country.

While Putin has tightened his grip on his country since coming to power,
Yushchenko has lost most of his authority.

That’s why pressure from Moscow is particularly hard felt in Ukraine, which
has found itself wedged between an aloof EU and an indignant Russia.

Chaly tried to parry Putin’s verbal attack by arguing that the price Ukraine
paid for gas delivered from Russia between 1992 and 2000 was lower than the
average paid by Europe.

The fact is that during Soviet times, Russia subsidized Soviet Republics as
well as members of the Warsaw Pact, which have all, to one extent or
another, had their energy bills raised closer to the international market
price since the breakup of the Soviet Union.

Chaly also mentioned Russia’s reliance on the gas pipelines that run through
its former satellite states, noting that Ukraine charges transportation fees
below the international rate. Here, he hit the nail right on the head.

But this is no news to the Kremlin, which has attempted to make itself less
dependent by building pipelines around countries with Western-friendly
regimes such as Ukraine, Poland and the Baltics.

It won’t be easy to replace Ukraine’s transit pipeline, though, which is why
Moscow has continually proposed schemes to gain joint control over it.

Fearing that the country’s pro-Russian parliamentary majority might act
against the nation’s long-term interest, President Yushchenko signed a bill
put forward by the opposition that prohibits transfer of control over the

Unfortunately, what Chaly failed to mention in his arguments is that most if
not all of the gas that Ukraine gets from Russia originates in Central
Asia – about three fourths of Ukraine’s total consumption.

Russia merely transports the Central Asian gas along its pipelines, just as
Ukraine does for Russia.

Not only does this fact blow a hole in Putin’s moral argument that his
country’s generosity is being used, but it also reveals the weakness of
Russia’s position overall.

As Russia began to raise the price it charges for the gas it sells to
Ukraine, Central Asian states like Turkmenistan followed suit.
But for now, the Kremlin still holds a few trump cards, as Central Asia is
dependent on Russian pipelines to market its products.

That’s why Kazakhstan has been cool on US-brokered proposals to build an
oil pipeline around Russia. It would be too risky for the newly independent
state to upset the Region’s power broker.

But as the Chinese and Indian economies continue to heat up, demanding more
and more fuel to drive their expanding economies, Central Asia might
eventually consider other offers.

In the mean time, Ukraine has been courted by Western-based energy giants
offering to explore for newer, less accessible hydrocarbon deposits.

Shell Group obtained exploration license more than a year ago, while US
Marathon has just announced a joint agreement with Ukraine’s state oil and
gas company Naftogaz Ukrayiny.

Simultaneously, Ukraine’s gas-guzzling industry is investing in energy
saving technology.

So as Putin defines his country’s relations with Ukraine, he would be better
off looking to the future, when Russia’s energy monopoly may be a lot less
of a threat to its neighbors.

Accusing Ukraine of sponging or stealing Russian gas is like beating a dead
horse – a horse that doesn’t even belong to Russia.               -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: By Yulia Tymoshenko, Member of Parliament,

Leader of the Opposition, Former Prime Minister of Ukraine
Le Monde, Paris France, Thursday, June 7, 2007 (in French)
Action Ukraine Report (AUR) #853, Article 15, (in English)
Washington, D.C., Wednesday, June 20, 2007

Over the course of the past two months, as Ukraine’s political crisis
deepened, I have heard the West repeatedly admonish Ukraine, saying:

“Once again, the young Ukrainian democracy is vacillating”.

The European Union has looked at Ukraine as if it was a difficult and
immature child. But Ukrainians showed the world that they could control
their destiny.

A political compromise was reached, setting the date for new parliamentary
elections on September 30th,, thus the political deadlock. This agreement
among competing parties is a victory of national interest over personal and
factional rivalries.

Since this event, a new and growing political crisis has co-opted the
attention of European countries: Russia has threatened to find new targets
in Europe if the United States moves forward with its intent to install a
missile defense system in Poland and the Czech Republic.

Western leaders have expressed grave concern at the nature of these threats,
and they are right to do so. Countless times I have attempted to call the
attention of European leaders to the potential dangers posed by a resurgent
and increasingly aggressive Russia.

I do not believe that a new Cold War, one that would divide Europe anew, is
imminent. Yet we must certainly consider Russia’s long diplomatic history,
traits that have certainly not changed substantially since the collapse of
the Soviet Union.  Russia continues to seek to influence and shape the
political landscape in its near abroad; this includes Ukraine.

The numerous challenges that exist within the geopolitical triangle that is
Russia-Ukraine-EU require a cooperative and trilateral approach. On the one
hand, there is the issue of collective security and the process of the
steady democratization of the post-Soviet space.

On the other is the issue of a common energy market. Yet the possibilities
for partnership are real and, as Russia’s immediate neighbor, Ukraine must
contribute to this debate in the G8 summit in Heiligendamm.  Resolution of
the ‘Russian question’ is vital.

It is time to make Russia understand that, in spite of its economic
leverage, articulated principally via the actions of Gazprom, European
dependence on Russian energy is really a co-dependence. Suppliers depend
just as much on consumers as consumers on suppliers. This is why we need a
genuine “energy alliance.”

Grandstanding must yield to moderation and a reassessment of Russian power,
which is altogether limited. It is our duty to reconsider our relation with
a Russia which, fortunately for all of us, recovered from the chaos of the
Yeltsin years.

It is time to formulate a new diplomacy that is no longer founded on
resentment and cynicism, and to adopt simultaneously realistic and
constructive steps towards progress on the critical issues in our common

In this international context, our elections next September could be a
turning point both for Ukrainian political life, as well as the future of
Russo-European relations, and thus world stability as a whole.

The successful democratization of Ukraine will deliver an important message
to Moscow – it must re-examine its regional and political ambitions. In the
Russian collective consciousness, Ukraine is Russia. Ukraine’s elections
could thus mark a decisive stage towards normalization.

This is why I supported whole-heartedly the new parliamentary elections,
because our constitutional system is currently deadlocked. Our
political-economic institutions are still weak and must be deeply reformed.
It is this issue of reform upon which I wish to commit myself to

Ukraine needs a new strategy of political, social and economic development.
It is a priority for all Ukrainians. Without a normal, and stable, political
system, we can make no further progress.

We must reform the institutions because only they can guarantee a proper
democratic process, political life, business community, and improve the
standard of living of Ukrainians.

To put an end to the political impotence; to gather all Ukrainians around a
genuine program for Ukraine, instead of dividing them – this is my party’s

By reaching for European standards of governance, with governing teams
invested in the public welfare rather than their personal enrichment,
Ukraine will be able to become a credible political actor on the European

Nicolas Sarkozy promised to have a frank dialogue with Vladimir Putin. This
frankness is very much needed for everybody – for Russia, France, Ukraine
and the European Union as a whole.                          -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
16.                 THE LIAR’S LAST REUNION
          Bush and Putin have exemplified the arrogance of power run amuck

New York, New York, Tuesday, June 5, 2007

Next week’s G-8 summit will probably be the last such meeting for Presidents
George W. Bush and Vladimir Putin. Seven years ago, at their first meeting
in Ljubljana, Slovenia, Bush looked into Putin’s eyes and somehow spotted
the soul of a Christian gentleman, not that of a secret policeman.

Next week, they shouldn’t be surprised if they see a mirror of each other,
because both men have exemplified the arrogance of power.

Bush and Putin both came to power in 2000, a year when their countries were
scrambling to regain international respect, Russia from the chaos of the
Yeltsin years and the US from the failed impeachment of President Clinton.
Each country thought it was getting an unthreatening mediocrity.

But both men, on finding themselves in positions of authority, ruled from
their default positions: Bush as an evangelical convinced that God was on
America’s side, and Putin as a KGB graduate convinced that all power comes
from intimidation and threats.

And what was the result? Convinced that he is right, and incurious to hear
contrary arguments, Bush felt free to undermine the rule of law in America
with warrantless domestic surveillance, erosion of due process, and defense
of torture, in addition to misleading the public and refusing to heed expert
advice or recognize facts on the ground.

From the tax cuts in 2001 to the war in Iraq, Bush’s self-righteous
certitude led him to believe that he could say and do anything to get his

The damage Bush’s self-confidence and self-delusion has inflicted was
magnified by his gross overestimation of America’s power. Quite simply, he
thought that America could go it alone in pursuing his foreign policy
because no one could stop him.

While his father lined up world support, and troops from over a dozen
countries, for the first Gulf War, the son thought that allies were more
hindrance than help; except for Tony Blair, he did not care to have them.

Four years later, Bush’s arrogance and mendacity have been exposed for the
entire world, including the American public, to see.

Putin also succumbed to the same arrogance of power. Buoyed by high oil
prices, he now seeks to bestride the world as if the social calamities that
bedevil Russia – a collapsing population, a spiraling AIDS and tuberculosis
crisis, corruption mushrooming to levels unimagined by Yeltsin – do not

At a high-level security meeting in Munich this past February, Putin, who
usually draws on the secretive, manipulative, and confrontational Cold War
paradigm of what constitutes Russian diplomatic behavior, lashed out at the
United States with the sort of language unheard of since Khrushchev said “We
will bury you.” American actions were “unilateral,” “illegitimate,” and had
forged a “hotbed of further conflicts.”

Putin’s assessment of US unilateralism (if stripped of its overheated
rhetoric) may be correct; the trouble is that he lacks credibility to extol
moderation in foreign policy. High oil prices have helped him rebuild and
centralize the “strong state” that was his goal from the outset of his

But his recent attempts to use Russia’s energy resources for political
coercion in Georgia, Ukraine, Belarus and elsewhere have exposed Russia as
an unreliable partner, unnerving even the Chinese, who do not wish to see a
reconstituted Russian empire on their border.

The Russian public, habituated to authoritarianism, wants Russia’s rulers to
be firm. Yet the true test of a ruler is not to pander to his people’s
expectations, but to peer into the future and match the country’s
aspirations with its needs and capacities.

In this, Putin’s arrogance is failing Russia miserably. His monomaniacal
drive to centralize power is driving out the very expertise that the country
needs to flourish.

Shell and BP are being expelled from the oil industry at the very moment
that Russian oil production is declining dramatically. His embittered
attempts to counter American power are equally short-sighted: helping Iran
develop its nuclear program and selling high-tech weapons to China are
hardly in Russia’s long-term strategic interest.

As usual, history is set on fast-forward in America. Everyone can now see
the gross and historic failures of the Bush presidency. Indeed, the American
people have preempted the historians, rebuking Bush by electing a Democratic
Congress in November 2006.

Meanwhile, Russia’s troubles remain hidden behind the strong arm tactics and
oil bloated coffers of Putin’s autocratic bureaucracy.

But the fact that Russia’s social and economic diseases are going
unaddressed has consigned the country to the long-term decline that his
presidency was supposed to reverse.

In the twentieth century, the Cold War parity between Russia and America was
apparent. For Russians, America was an evil empire, the world of capitalist
exploitation and a nuclear superpower, but also a cradle of economic
prosperity and individual freedom.

For America, Russia, too, was an evil empire, the world of communist
expansionism and a nuclear superpower, but also a cradle of science, spirit,
and soul.

A similar parity characterized the Bush-Putin era. Unlike America, however,
Russia’s people have not yet understood the price of arrogant power run
amuck. (
NOTE: Nina KHRUSHCHEVA teaches international affairs at The New

School in New York. Her book “Imagining Nabokov: Russia Between Art
and Politics” will be published this autumn.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

INTERVIEW: With William Taylor, Ambassador of the USA to Ukraine
By Mykola Siruk, The Day Weekly Digest #17
Kyiv, Ukraine, Tuesday, 12 June 2007

Does the US believe that Ukraine’s Verkhovna Rada is legitimate and that the
political crisis has been resolved? Has the crisis affected relations
between Ukraine and the US in any way?

These and other questions are answered in the following interview with
William TAYLOR, Ambassador Extraordinary and Plenipotentiary of the
USA to Ukraine.
[The Day] Mr. Ambassador, you must have received a note from President
Viktor Yushchenko on the illegitimacy of the Verkhovna Rada. Do you
consider the Ukrainian parliament legitimate?

[Ambassador Taylor] “What is obviously legitimate is the deal made by the
president, the prime minister, and the Verkhovna Rada speaker. We are all
very glad that the three leaders reached an agreement.

“Holding an election on Sept. 30 is, naturally, part of this deal. The three
leaders also agreed on how to hold these elections in a lawful,
constitutional, and peaceful way.

“In our view, this plan of action appears to be fully legitimate. As for the
details of how this agreement will be fulfilled, we understand that the ball
will start rolling when at least 151 Verkhovna Rada deputies resign their

“This raises the question of how this should be done. Who should announce
it, what is the role of the Verkhovna Rada speaker, and what is the role of
the Central Election Commission? And these kinds of detail should not be
commented on by outsiders.

“All we can say is that we are glad that an agreement has been reached on
how to legitimately head into the new elections. We can only encourage all
the sides to move in the projected direction.”

[The Day] Do you consider the note lawful?

[Ambassador Taylor] “Well, I do not question the president’s word. I
attended the president’s briefing last Wednesday. He explained his stand
with clear and carefully-worded phrases. The president said that the
deputies had completed their work, as far as their powers as members of the
Verkhovna Rada of this convocation are concerned.”

                                     BE IMPLEMENTED”
[The Day] Do you think the crisis in Ukraine has been resolved?

[Ambassador Taylor] “I think it has. The agreement that the president, the
prime minister and the speaker reached outlines a way that is peaceful,
democratic, and constitutional. Naturally, it is important that the
agreement be honored and implemented.”

[The Day] What would be a sign that the agreement is being honored? Would it
be holding the elections on Sept. 30 or maybe some other event that should
take place before this date?

[Ambassador Taylor] “Naturally, an important component of this deal is the
resignation of at least 151 deputies. This seems to be the case, although
reports are circulating that some parliamentarians have changed their minds
about this. One way or another, it will be important that at least 151 MPs,
or even more, do this.”

[The Day] The Ukrainian media reported that David Kramer, Deputy Assistant
Secretary of State for European and Eurasian Affairs, and William Miller,
former US ambassador to Ukraine, visited Ukraine during the crisis. You also
had meetings with the representatives of all parties to the conflict. Did
the US play any role in reaching this agreement?

[Ambassador Taylor] “The US has been speaking with all sides in the
government and all the representatives of the opposition. Every time our
people from Washington visit us, they also meet high-ranking Ukrainian

“This happened when David Kramer came and this also happens in other

cases. In other words, we try to seize every opportunity for these kinds of

“As for the US role in reaching this agreement, I agree here with the
president of Ukraine. The Ukrainians arrived at this agreement by

                                SERIOUS CONCERN”
[The Day] Has this crisis affected relations between Ukraine and the US in
any way?

[Ambassador Taylor] “The United States government in Washington, as well as
its representatives here, was closely watching the unfolding crisis. We said
repeatedly: we hope Ukraine comes out of this crisis as a more democratic,
more united, and more European country.

“There were moments when we were concerned that Ukraine might ride out this
crisis without gaining more democratic features. We were also worried that
potential clashes, in which interior ministry forces could take part, might
leave Ukraine less united.

“Since we are firm supporters of Ukraine’s movement towards Europe, we
feared that such dubious actions of the opposing sides in the heat of the
crisis might make Ukraine less attractive to Europe. In other words, there
were moments when we felt serious concern.

“This is why, as I said earlier, we are very glad that the three leaders
reached this agreement. If any lessons have been learned from this
situation, which will help Ukraine become more democratic and united and
come closer to Europe, all this was worth it.”

                                    TOWARDS MATURITY”
[The Day] The US and the EU showed restraint vis-a-vis the situation in
Ukraine. But Russia’s leader said that Ukraine was heading toward “tyranny.”
Can this phrase be taken seriously?

[Ambassador Taylor] “I would not like to comment on Russian statements. I
heard Russia’s Ambassador Chernomyrdin saying that the statements of
Russia’s top leadership are no joke. Our view is that Ukraine is a democracy
that is moving towards maturity.

“The Ukrainian people are expecting and demanding from their government that
the country remain on this democratic path so that Russia as well as other
countries in this region can see how the democratic process should unfold.”

[The Day] “In a wide-ranging interview, Putin said recently that if some
countries meet democratic standards, this means they are serving somebody

else’s interests, mainly American.

[Ambassador Taylor] “I think it is in the interests of Russia, the US,
Europe and, of course, for Ukraine to remain on this democratic path.”

[The Day] Then why is the US planning to cut its aid to Ukraine? Does this
mean that democracy in Ukraine has strengthened to such a degree that it
doesn’t require as much aid from the US?

[Ambassador Taylor] “In a way, this truly is an indicator of the progress
that Ukraine has made in its democratic development. But perhaps even more
this reflects the position of Washington about concerted efforts to build
democracy in some other regions of the world.

“We would like new democracies that are struggling for survival in other
parts of world to achieve the same level of development as Ukraine. But we
will continue to support Ukrainian democracy.”
                               IMPOSED FROM OUTSIDE”
[The Day] Lately, many experts have been saying that democracy cannot be
introduced by force in other countries, and they cite the example of Iraq.
Do you think it is time to change the approaches to expanding or promoting
democracy in other countries, especially in the Muslim world?

[Ambassador Taylor] “I accept the idea that democracy cannot be imposed
from outside. What we are trying to do in Iraq is to let the Iraqis decide
by themselves. For them to be able to decide what form of government they
need, we must provide them with at least some measure of internal security.

“It would be best if the Iraqis themselves could ensure this security. We
and our coalition allies are working there to help achieve a kind of
security that will enable the Iraqi people to decide what form of government
they need.

“As you know, I worked in Baghdad for some time, and I can assure you that
the Iraqis have their own opinion of what kind of government and what form
of democracy they need.”

[The Day] What exactly?

[Ambassador Taylor] “They very much value the right to elect their leaders.
I was there during one of the first elections in Iraq. Nobody knew on that
morning if the Iraqis would be brave enough to go to the polls and vote.

“Everything began with one or two people at a time coming into the polling
station. Then five or six, and finally all the Iraqis headed out in droves
to the stations.

“There are a lot of challenges facing the Iraqis. But it is obvious that the
Iraqis – Shiites, Sunnis, and Kurds alike – want to freely elect their

[The Day] When do you think the Iraqis will have a level of democracy that
will allow them to govern their country without foreign assistance and to
ensure internal security?

[Ambassador Taylor] “I think they are capable of ruling themselves. What
they are still unable to do on their own is ensure an adequate level of
personal safety for Iraqi citizens.

“I think the international community, including the US, should help them for
some additional time, at least as long as they want to ask for this help.”

[The Day] President Yushchenko recently urged the US and the EU to help
combat corruption. Have you given him an answer yet?

[Ambassador Taylor] “I made note of this request. I am pleased that the
president has again emphasized that he is aware of the negative impact that
corruption has on governmental structures and society as a whole.

“We are actually in the process of reacting to these queries: we are now
offering 45 million dollars’ worth of anti-corruption assistance to the
judiciary, education, and accountability of governmental bodies to the

[The Day] Does this mean providing additional funds apart from the
above-mentioned 45 million dollars?

[Ambassador Taylor] “Of course, we will want to see the way the programs
already in operation are being carried out. Then we will see if any
additional funds are needed. But in all probability, the political will of
Ukraine’s leadership is by far the most important component of the success
of anti-corruption programs.

“On our part, we can only issue calls for this. But this political will
should emanate from the very top, i.e., the state’s political leadership.”

[The Day] In other words, you see the will on Yushchenko’s part but not on
the other part of the governmental spectrum?

[Ambassador Taylor] “This should come from all the country’s leaders.”

[The Day] Last year plans were made for President Bush to visit Ukraine
and meet Yushchenko this year. Is Mr. Bush coming to Ukraine?

[Ambassador Taylor] “I hope so. I doubt this will happen before the
elections. President Bush usually visits countries after they have held a
democratic election and have a stable government that works and has a
program of action.

“I also think that President Bush would not like it to seem that the US
government is involved in the pre-election process and the election
campaign. It is a Ukrainian election, and Ukrainians themselves should be
making their choice.”                                  -30-
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Interfax Ukraine News, Kyiv, Ukraine, Monday, June 18, 2007

KYIV – U.S. President George W. Bush may visit Ukraine in 2008, deputy

head of the Ukrainian presidential secretariat Oleksandr Chaly has said.
“Under earlier understandings the visit of President George W. Bush is
slated for 2008,” he told the press in Kyiv on Saturday.
Chaly also said that Ukrainian President Viktor Yuschenko is planning to
visit the United States. “We are preparing a working visit of the president
to the United States,” he said.                      -30-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By James Sherr (presented in his behalf)
Session VIII:  Security Advantages of Euro-Atlantic Integration
Ukraine’s Euro-Atlantic Future: International Forum I
Diplomatic Academy of Ukraine, Kyiv, Ukraine, 11-13 June 2007

Published by the Action Ukraine Report (AUR) #853, Article 19
Washington, D.C., Wednesday, June 20, 2007

As ever, my views are my own, and they do not necessarily correspond to
those of the British government. (Mr. Sherr was not able to attend the Forum
so his remarks were presented on his behalf).

Let us put this question in context.

1. Until Ukraine makes substantial, sustainable progress in adopting
Euro-Atlantic standards, the advantages of integration will be outweighed by
its strains, traumas and risks.

2. The most fundamental of these standards is public trust in the integrity
of state institutions, beginning with the judiciary, but encompassing as a
sine qua non the National Security and Defence Council, the Ministry of
Defence and Armed Forces, the security and intelligence services and the
departments of law enforcement.

This explains why NATO and the EU have put such emphasis on helping

Ukraine develop its institutional capacity.

To mature democracies, the character of institutions matters more than the
character of politicians.  When politicians are stronger than institutions,
the country is hostage to their personal whims, ambitions and weaknesses.
Democracies cease to be effective, and political conflict threatens the
foundations of the state.

3. The issue of Euro-Atlantic standards-which is essentially apolitical-must
not be confused with the issue of membership in Euro-Atlantic institutions,
which is a matter of political choice. Sweden, Switzerland and Finland are
not members of NATO.

Yet their armed forces, security services and law enforcement structures
adhere to the same high standards of accountability, transparency, and civil
democratic control as in Britain, The Netherlands and Germany.

Why? Because these standards enhance security. They strengthen training
regimes, career development and competence; they  encourage honesty,
communication and the sharing of expertise; they provide value for money,
and they secure public support.

Debate about NATO membership in Ukraine will inevitably be political. But it
is time that the issue of Euro-Atlantic standards were removed from
political controversy.

If Ukraine were to join NATO, what would the advantages be?

1. From the moment that Ukraine joined NATO, it would never have to deal
with any serious security problem on its own.  It would be part of a
collective structure in which risks and burdens are shared.  Why should this

For good or ill, Ukraine is situated in an extremely important area of the
world, not only for Ukrainians, but for other states and also for powerful,
transnational criminal structures. President Kuchma once remarked that
Ukraine is not Switzerland.  Neither is it China.

It is neither safe enough nor powerful enough to master its own geopolitical
environment.  If it turns its back on Euro-Atlantic integration, it will be
obliged to defer to another neighbour who might not have Ukraine’s interests
at heart and whose commitment to its independence is questionable.

2. Ukraine would also be joining an organisation that shares costs and
provides disproportionate benefits to its less powerful members.  Even a
member as powerful as the United Kingdom spends only 2.2 per cent of its

GDP on defence, and most members spend less.

Even the UK cannot meet the full spectrum of its defence and security needs
with the money it spends.  But thanks to NATO, its integrated military
structures and its strategic assets, it can rely upon support from others
when its interests are threatened.

3. Does that mean that joining NATO will save money?  Not necessarily.
Meeting Euro-Atlantic standards costs money.

Decriminalising the state, modernising and reforming the police, security
and border services costs money.  But what are the costs of keeping things
as they are?  Security costs more money than insecurity.

Security inside NATO will cost more money than insecurity outside it.  These
choices need to be faced squarely and realistically.  And they need to be
made by Ukrainians.  It is not for NATO to make them.

4. Finally, Ukraine will be joining an organisation that makes decisions by
consensus.  And it will be joining an organisation based upon the
sovereignty of its members.  The Iraq conflict never became a NATO conflict
for the simple reason that several NATO members opposed it.

And whilst 26 members have agreed that NATO should conduct military
operations in Afghanistan, not all members contribute armed forces to that
operation, and some do so under restricted rules of engagement.  No one but
Ukrainians will have the authority to send Ukrainians into armed conflict.

Finally, what are the possible disadvantages of joining NATO?

There are many mythical disadvantages.  But in reality, there is only one.
It is obvious, and today it divides Ukraine: the risk, as continually
reiterated by Moscow, that joining NATO will have ‘grave consequences’ for
Ukraine’s relations with Russia.

A hasty, ill-prepared path to NATO membership would turn this risk into a
threat.  But the threat is only made real by the divisions and
vulnerabilities of Ukraine. The challenge is to overcome these
vulnerabilities and, by doing so, change the calculus of thinking in Russia.

That challenge dictates a more gradual, but also more determined course
towards integration: improving public understanding, diminishing regional
divisions and developing Ukraine’s capacity, cohesion and samostiynist’.

Russia cannot be expected to respect Ukraine’s choice until it is clear that
Ukraine has made one-and until Ukraine has the capacity to act on it.

NATO will continue to help Ukraine make choices and act upon them.  The
question today, as in the past, is whether Ukraine will help itself.   -30-
CONTACT: James Sherr, Our thanks

to Walter Zaryckyj for providing the AUR with James Sherr’s remarks.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
                           Ukraine’s Euro-Atlantic Future Forum in Kyiv

New Europe, The European Weekly, Issue 734
Brussels, Belgium, Saturday, 16 June 2007

BRUSSELS – NATO member states are ready to support Ukraine’s aspiration

to integrate into European organisations, but it is up to the Ukrainian people
to take a final decision on the issue, Interfax quoted the alliance’s
Secretary General Jaap de Hoop Scheffer as saying in Brussels on June 14,
following a session of the Ukraine-NATO Commission.

The Ukrainian authorities’ task and responsibility is to persuade the
population that NATO primarily means democratic values, while NATO as

“a military machine is a secondary” function, Ukrainian Defence Minister
Anatoly Hrytsenko said.

The US will welcome Ukraine in NATO when the country wants to join and when
it is prepared for this, US Ambassador to Ukraine William Taylor said at an
international forum that discussed Ukraine’s Euro-Atlantic future in Kiev on
June 13.

The door to NATO is open for Ukraine, but it is only Ukraine and its people
who can decide on joining the alliance, he said. Ukraine should initiate
comprehensive debate on joining NATO within the next several years, and the
people should receive all information about the organisation, he said.

Ukraine has made significant progress in its defence policy and in bringing
its armed forces closer to Euro-Atlantic standards in the past several
years, Taylor said. The country has also seen considerable economic growth,
he said.

At the same time, there are certain problems affecting security inside the
country, Taylor said. Other problems include confrontation between different
law enforcement and security agencies, the need to improve the investment
climate, and observance of the rule of law, he said.

Borys Tarasyuk, the leader of the Popular Rukh of Ukraine and former
Ukrainian foreign minister, has called on various political groups in the
country to refrain from gambling on Ukraine’s Euro-Atlantic integration
during the election campaigns.

“NATO and Euro-Atlantic integration should not be a subject of election
manipulation and gambling,” Tarasyuk said at the forum in Kiev on June 13.

A decision on Ukraine’s NATO membership needs a consensus between political
elites inside the country, Tarasyuk said. “I urge those who voted completely
for Ukraine’s NATO membership at least to honour the laws they adopted
themselves,” he said.

Ukraine needs to adopt European and Euro-Atlantic standards in all political
and social areas, he said. Tarasyuk also called for avoiding populist
rhetoric in discussing Ukraine’s possible NATO membership and approaching
these issues pragmatically.

Joining NATO, Ukraine would defend itself from the “imperial ambitions of
certain states,” speed up political and economic reform, and turn into a
reliable energy supplier for Europe, Tarasyuk said. In addition, accession
to NATO would open a path to the European Union, he said.   -30-

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21.                                 THEIR UKRAINE

ANALYSIS: By Stefan Wagstyl and Roman Olearchyk,

Financial Times, London, United Kingdom, Friday, June 15 2007

Ukraine’s President Viktor Yushchenko seems to have recovered from the
lethargy that almost overwhelmed him after his triumph in the Orange

Perhaps the after-effects of his poisoning in 2004 are wearing off. Perhaps
he has summoned new reserves of energy. Perhaps he has been inspired by

the country’s turmoil.

Whatever the reason, Mr Yushchenko is back in action. The immediate result
has been a sharpening of his conflict with his Orange Revolution rival,
Viktor Yanukovich, the prime minister.

Last month, in Ukraine’s most serious political incident since the 2004
uprising, doors and windows were smashed when Mr Yanukovich’s

Both sides drew back from the brink and provisionally agreed to hold early
parliamentary elections in September, which the president hopes will clear
the air.

As he told the FT in a recent interview: “It’s very important to understand
that the political forces that then will come to the new parliament . . .
even if the [same parties] come back again . . . will be different. I think
they will attach more importance to political dialogue from now on.”

But there is considerable doubt in Kiev whether a reinvigorated president or
early elections can quickly resolve the country’s political problems, which
are rooted in Ukraine’s regional divides, its difficult post-communist
transformation and its proximity to its huge neighbour, the resurgent

The current crisis dates back to 2005, when the pro-western Mr Yushchenko
failed to take full advantage of his Orange Revolution triumph or prevent
destructive rows between his supporters and those of his then ally, Yulia

Under the compromise outcome to the Orange Revolution, the president was
obliged to transfer power to parliament in early 2006 and hold parliamentary
polls. To Mr Yushchenko’s shock, Mr Yanukovich bounced back to power

at the head of his Regions party and became prime minister.

Their co-habitation has been an unruly failure. At first, Mr Yushchenko gave
ground, hoping to secure an accommodation with Mr Yanukovich. But –
chargesMr Yushchenko – the Regions party concentrated on expanding its
parliamentary power principally by bribing other MPs to change sides.

In April, the president dissolved parliament and called early elections.
Accused of acting illegally, he has struggled to enforce his decision:
although Mr Yanukovich reluctantly agreed to the new elections, there is
resistance from his parliamentary allies and it is still not clear whether
the vote will take place, as planned, on September 30.

It is even less clear what will happen afterwards. Three big groupings will,
as now, dominate parliament – Mr Yushchenko’s Our Ukraine, Mr Yanukovich’s
Regions and Ms Tymoshenko’s bloc.

Mr Yushchenko and Mr Yanukovich broadly agree on business-oriented economic
policies, in contrast to Ms Tymoshenko, who has campaigned on a platform of
curbing oligarchs – despite questions about her own wealth.

On promoting democracy, Mr Yushchenko and Ms Tymoshenko stand much

closer. Mr Yanukovich, despite recent attempts at a makeover, still behaves like a
Soviet-era party boss.

Many analysts expect the post-election negotiations to last for weeks if not
months, raising questions about the government’s capacity to make decisions
over this time.

However, the risk of violence, which seemed a real possibility during the
events of last month, is now discounted, given the lack of public interest
in what is largely seen as a struggle within a faction-ridden political

The outcome of any coalition talks will depend as much on the distribution
of power and influence as on political principles.

Corruption will not go away. Business people favour a Yushchenko-Yanukovich
coalition or a Yushchenko-Yanukovich-Tymoshenko grand alliance. But whether
these rivals can co-operate more successfully than in the past is a moot
point. So is the question of how they will tackle Ukraine’s fundamental
political challenges.

The country is halfway along the road from Soviet totalitarianism to full
democracy. It remains divided between a pro-Yushchenko western region that
fears Russia and wants rapid integration with the European Union and Mr
Yanukovich’s base in the industrial east, which if not pro-Russian treats
the former imperial power with more deference.

Politics is dominated by business groups ready to bribe officials and
parliamentary deputies alike. Such groups are increasingly interested in the
access to global markets that comes through EU integration and support
recent moves to join the World Trade Organisation. But, for some Ukrainian
industrialists, Russia’s booming markets remain a priority.

The Orange Revolution supporters’ hopes that the events of 2004 would mark a
break with the past have been dashed. The public is thoroughly disenchanted
with politics. Fortunately, a strong economy is generating jobs and boosting
incomes, allowing Ukrainians to focus on economic rather than political

Yet the gains of the Orange Revolution have not been lost. There is a free
press and there is real – if often corrupt and brutal – competition for
power. Unlike in Russia, where the Kremlin is tightening its authoritarian
controls, there is a democracy in the making in Ukraine. What it lacks are
democratic institutions, notably effective courts.

As Vadym Karasiov, a liberal political commentator, says: “Ukraine is going
in the right direction but taking the wrong steps. Russia is going in the
wrong direction but taking the right steps.”

Ukraine might go faster “in the right direction” if it were not for its
geopolitical position. Even in the 1990s, when Russia was weak, it was hard
for Kiev to break free of Moscow’s orbit. Today, with Russia increasingly
willing to reassert itself in the former Soviet Union, it remains difficult
despite most Ukrainians’ preference for joining the EU (even though that is
a remote possibility).

The Kremlin mishandled the 2004 presidential polls when it failed to secure
the election of Mr Yanukovich and block the rise of Mr Yushchenko.

But it continues to play politics, supporting pro-Russian parties and
non-government organisations, notably in Crimea, where ethnic Russians
predominate and where the Russian Black Sea fleet is based in the Ukrainian
port of Sevastopol.

Valentyn Nalyvaichenko, the acting head of Ukraine’s security services,
warns of the dangers of Russian interference, saying: “We are a young
country. For any country it is dangerous when domestic politics is being
interfered with by foreign sources.”

Russian President Vladimir Putin insists that he wants good relations with
Kiev but he rarely misses an opportunity to fire off an insult, recently
calling Ukraine “a tyranny”.

The Kremlin’s aim is to portray the Orange Revolution as a chaotic failure –
and reduce the appeal of western-style democracy in Russia and elsewhere in
the former Soviet Union.

For their part, Russian companies see investing in Ukraine as good
business – both in non-political sectors such as retail and in the intensely
politicised energy industry, where Russia’s dominance as a supplier can
generate political as well as commercial dividends.

The EU remains ambivalent about Ukraine. Poland and some east European
member states are pressing Brussels to engage more with Kiev and perhaps
offer eventual future membership. But so strong is enlargement fatigue in
the Union that this is off the agenda.

Mr Yushchenko, who hoped for more just after the Orange Revolution, now
accepts that the way forward is through developing economic links and
securing EU aid.

He knows the free trade agreement that Kiev can negotiate once WTO accession
is in place will drive Ukraine to implement about half the acquis – the EU’s
membership rules.

It was hard enough for Kiev to balance east and west when there was less
tension in relations between Russia and the US and EU.

Now, it is more difficult. As Oleh Rybachuk, Mr Yushchenko’s adviser, says:
“Unfortunately for Ukraine, every time there is a conflict between the west
and Russia we suffer.”                                  -30-

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16. SWIFT FOUNDATION, San Luis Obispo, California
17. TRAVEL TO UKRAINE website,,
A program of the U.S-Ukraine Foundation, Washington, D.C.
18. BUYUKRAINE.ORG website,
A program of the U.S.-Ukraine Foundation, Washington, D.C.
19. DAAR FOUNDATION, Houston, Texas, Kyiv, Ukraine.

If you would like to read the ACTION UKRAINE REPORT- AUR,
around three times a week, please send your name, country of residence,
and e-mail contact information to Information about
your occupation and your interest in Ukraine is also appreciated.
If you do not wish to read the ACTION UKRAINE REPORT please
contact us immediately by e-mail to  If you are
receiving more than one copy please let us know so this can be corrected. 
If you do not receive a copy of the AUR it is probably because of a
SPAM OR BULK MAIL BLOCKER maintained by your server or by
yourself on your computer. Spam and bulk mail blockers are set in very
arbitrary and impersonal ways and block out e-mails because of words
found in many news stories or the way the subject line is organized or
the header or who know what.
Spam blockers also sometimes reject the AUR for other arbitrary reasons
we have not been able to identify. If you do not receive some of the AUR
numbers please let us know and we will send you the missing issues. Please
make sure the spam blocker used by your server and also the one on your
personal computer, if you use a spam blocker, is set properly to receive
the Action Ukraine Report (AUR).

We are also having serious problems with hotmail and yahoo servers not
delivering the AUR and other such newsletters. If you have an e-mail
address other than hotmail or yahoo it is better to use that one for the AUR.

                          PUBLISHER AND EDITOR – AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation

Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council, Washington;
Founder & Trustee, Holodomor Exhibition & Education Collection
P.O. Box 2607, Washington, D.C. 20013,
Mobile in Kyiv: 8 050 689 2874;
       Power Corrupts and Absolute Power Corrupts Absolutely.
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