Monthly Archives: August 2007

AUR#861 Aug 23 Economic Growth Roaring; Shell; Marathon; EBRD/Oisiw Limited/SigmaBleyzer; Privat Bank; Boeing; Amb Taylor; Transcarpathia Hot;

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


Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
 
              INDEPENDENCE DAY
                     Friday, August 24, 2007
                        
ACTION UKRAINE REPORT – AUR – Number 861
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., THURSDAY, AUGUST 23, 2007
INDEX OF ARTICLES  ——
Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article
1.  UKRAINE: WHAT CRISIS?
Despite political turmoil, economic growth is roaring
Eastern Europe: by Jason Bush, Moscow Bureau Chief
BusinessWeek, New York, New York, Wed, August 22, 2007
 
2GROWTH OF FDI IN UKRAINE IN H1 ESTIMATED AT $2.553 B
Interfax Ukraine, Kyiv, Ukraine,  Sunday, August 19, 2007

3SHELL, RUSSIAN GROUP ALLIANCE CREATE JOINT VENTURE TO
RUN GASOLINE FILLING STATIONS UNDER SHELL TRADEMARK
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 22, 2007

 
Naftohaz Ukrainy working with Marathon & Shell in Dnipro-Donets basin.
Ukrainian News Service, Kyiv, Ukraine, Thursday, August 16, 2007

Co-investment vehicle managed by SigmaBleyzer Southeast European Fund IV
Interfax Ukraine, Kyiv, Ukraine, Tuesday, August 14, 2007
 
6PRIVATBANK PURCHASES 11,000 PAYMENT TERMINALS
Leading Bank Extends Electronic Payments to Retailers Throughout Ukraine
Business Wire, Phoenix, AZ, Tuesday, Aug 21, 2007
 
7 LATVIA’S PARITATE BANKA RENAMES TO PRIVATBANK
Ukraine’s Privatbank owns 95.06% of the Latvian bank
Interfax, Riga, Latvia, Monday, Aug 20, 2007

8.   BOEING SEES RUSSIA, CIS COUNTRIES SPENDING US$70
BILLION ON PASSENGER PLANES OVER NEXT 20 YEARS 
AP Worldstream, Moscow, Russia, Wednesday, Aug 22, 2007

9UKRAINIAN PLANT MOTOR SICH TO SUPPLY 74 AIRCRAFT

ENGINES TO RUSSIAN LEASING COMPANY 
Interfax-AVN military news agency website, Moscow, 
BBC Monitoring Service, United Kingdom, Wed, Aug 22, 2007

10POLAND’S ICONIC SHIPYARD GDANSK FIGHTS EU CUTBACK
Two investors – Italy’s FVH and ISD, owned by Ukraine’s Donbass

Industrial Union – have already expressed interest in privatization.
By Jan Cienski in Gdansk and Andrew Bounds in Brussels
Financial Times, London, UK, Wed, August 22 2007 03:00

11UKRAINIAN PRIME MINISTER SAYS NO RETURN TO
MEAT AND DAIRY WARS BETWEEN UKRAINE AND RUSSIA 
NTN, Kiev, in Ukrainian 1600 gmt 22 Aug 07
BBC Monitoring Service, United Kingdom, Wed, Aug 22, 2007
 
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Thursday, August 23, 2007
 
Business Wire, Minneapolis, MN & Purchase, N.W., Mon, August 20, 2007 
14TRANSCARPATHIA NEW HOT EMS DESTINATION IN UKRAINE
Western Ukraine is trying to become Europe’s answer to the challenge of
cheap Chinese factories despite bureaucratic red tape and political turmoil.
Companies like Jabil and Flextronics are investing in this area.
Evertig, Ekero, Sweden, Tuesday, August 21, 2007

15FLEXTRONICS BUILDS PLANT IN MUKACHEVO, UKRAINE
Evertiq, Ekero, Sweden, Tuesday, August 21 2007

16UKRAINIAN PRESIDENT TO SPEAK AT SOFIYSKA SQUARE

Interfax-Ukraine, Kyiv, Ukraine, Tue, August 21, 2007 
17DEATH OF PROKOPENKO MARKS THE PASSING OF UKRAINE’S
GREAT SOCCER COACHING TRINITY. THEY’RE ALL GONE.
The three great Ukrainian coaches of their generation – Valeriy
Lobanovskyi, Yevhen Kucherevskyi and now Viktor Prokopenko
– all dead, all cut down before their time.
Jonathan Wilson, Guardian Unlimited, London, UK, Tue, Aug 21, 2007

18UKRAINE’S RULING PARTY URGES EXTRAORDINARY
PARLIAMENT SESSION TO ABOLISH IMMUNITY FOR PM’S 

Interfax-Ukraine news agency, Kiev, in Russian 1220 gmt 22 Aug 07
BBC Monitoring Service, United Kingdom, Tue, Aug 22, 2007

19BYuT BREAKTHROUGH BLUEPRINT FOR THE FUTURE
“Ukrainian Breakthrough: Towards a Fair and Competitive Country”
Inform Newsletter, Issue 43, BYuT Party, Kyiv, Ukraine, Wed, Aug 8, 2007

20AUTHORITIES TRY TO SHUT OUT BYuT FROM CAMPAIGN
BYuT Newsletter, Kyiv, Ukraine, Wed, 22 August, 2007

21UKRAINE: “TYMOSHENKO CHANGES COURSE”
Writer analyses opposition leader’s decision to join European right
ANALYSIS & COMMENTARY: By Viktor Chyvokunya
Ukrayinska Pravda website, Kiev, in Ukrainian 7 Aug 07
BBC Monitoring Service, United Kingdom, Tue, Aug 21, 2007
22PARLIAMENT LIST OF OUR UKRAINE-PEOPLE’S SELF-DEFENCE:
QUOTAS OF PRYVAT, BALOHA, LUTSENKO, ‘LUZHNIKI GROUP’
Ukrainian propresidential bloc’s election list analysed
Ukrayinska Pravda website, Kiev, in Ukrainian 13 Aug 07
BBC Monitoring Service, United Kingdom, Tue, Aug 21, 2007
23UKRAINIAN COURT OBLIGES ELECTION BODY TO ADOPT
NEW RULES FOR HOME VOTING/MOBILE BALLOT BOXES 
REPORT: By Olena Heda, Kommersant-Ukraina, Kiev, in Russian 21 Aug 07
BBC Monitoring Service, United Kingdom, Tuesday, Aug 21, 2007
24CINCINNATI MAYOR MALLORY OFF TO KHARKIV, UKRAINE
Howard Wilkinson, Enquirer, Cincinnati, Ohio, Monday, Aug 20, 2007
25FLORIDA WOMAN QUILTS FOR ORPHANS IN UKRAINE
Brad Buck, Staff Writer, DailyCommercial.com, Florida, Mon, Aug 20, 2007
26FLORIDA RESIDENT FINDS CALLING IN SIMFEROPOL, UKRAINE
Roxanne Brown, Staff Writer, DailyCommercial.com
Leesburg, Florida, Monday, August 20, 2007
27PATIENTS TOAST UKRAINE’S ‘WINE THERAPY’
By Helen Fawkes, BBC News, Alushta, Crimea, Friday, Aug 17, 2007
28SONGS YOUR MOTHER SHOULD NEVER HAVE TAUGHT YOU?
Erotic Symbolism in Ukrainian Folk Songs”
Lecture in English, comments and singing in Ukrainian,
Saturday, August 25, 2007, Ivan Honchar Museum, Kyiv, Ukraine
Action Ukraine Report #861, Article 28
Washington, D.C., Thursday, August 23, 2007
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1
UKRAINE: WHAT CRISIS?
Despite political turmoil, economic growth is roaring

Eastern Europe: by Jason Bush, Moscow Bureau Chief
BusinessWeek, New York, New York, Wed, August 22, 2007

Stroll around downtown Kiev these days, and it’s hard to miss the signs of
growing prosperity. The Ukrainian capital’s golden-domed cathedrals share
the skyline with towering cranes and snazzy apartment complexes. Giant
billboards plug the latest Samsung (SSNKF) MP3 players and Nokia (NOK)
phones.

Diners spill onto the street from posh new eateries on Independence Square,
where three years ago hundreds of thousands of Ukrainians staged the
so-called Orange Revolution that propelled President Viktor Yushchenko to
power.

To look at the scene, you’d never know that Yushchenko and his bitter rival,
Prime Minister Viktor Yanukovych, remain locked in a fierce power struggle
that is unlikely to be resolved even after parliamentary elections on Sept.
30.

The lesson: Political instability and economic crisis don’t always go hand
in hand, at least not in the former Soviet Union. Despite the standoff among
Ukraine’s politicians, the economy is booming and foreign investments
continue to pour in.
Politics Stays Out of Business
Gross domestic product powered ahead by an impressive 8% during the first
half of 2007, and economists expect the strength to continue, boosted by a
surprisingly diverse economy of services, manufacturing, and raw materials.

Metals, mainly steel, account for 40% of exports, but most of the growth is
coming from manufacturing and services. Production of heavy equipment rose
22% in 2006. And Ukraine’s software houses saw their exports jump by 50%
last year, to some $250 million.

Investors see promise in the growth. The Kiev stock exchange has more than
doubled in size this year, and now boasts a market capitalization of $76
billion-a sixfold increase since late 2004. And a real estate boom has
pushed up housing prices by 60% in 12 months.

“We joke that as long as all these disputes are going on, [politicians]
don’t have time to interfere in business,” says Taras Kutovyy, chief
financial officer at XXI Century Investments, a leading developer that in
May raised $175 million in Eurobonds to finance new apartments, hotels, and
hypermarkets.

The boom is being fueled by Ukraine’s 46 million consumers, who are opening
their wallets for everything from houses to washing machines to big screen
TVs.

Consumption has been growing by double digits since 2003, as roughly 70% of
Ukrainians can now afford new cars, furniture, and other big-ticket items,
up from 40% in 2003, according to market researcher GfK Group (GFKG.DE).
Luxury Mall
“It’s clear that there is a growing Ukrainian middle class,” says Tetiana
Sytnik, GfK’s senior researcher in Kiev. That has attracted multinationals
seeking to sell to them. In June, PepsiCo (PEP) plunked down $542 million
for Ukrainian fruit juice maker Sandora, which has 50% of the local juice
market.

Two months earlier, French supermarket chain Auchan entered the country via
a joint venture with local retailer Furshet, with a view to constructing 10
hypermarkets over the next two years.

Ukraine’s new wealth is on display at Arena City, a six-story shopping and
entertainment complex that opened in 2005. The mall’s 60 boutiques stock
expensive French and Italian clothing, furniture, and jewelry, and it
features dealers for Porsche (PSHG_P.DE), Bentley, and Mercedes (DAI).
“People are earning more money, and demand for exclusive cars and real
estate is rising.

We can see it everywhere,” says Sergei Korolyov, sales manager at the Kiev
showroom for Porsche, which is on target to sell 350 cars this year, at an
average price of $140,000-up from 100 in 2005.

And it isn’t just the premium nameplates flying out of showrooms: Sales of
all new cars jumped 40% last year-the highest rate of increase in Europe-to
370,000, as Ukrainians traded-in cheap Russian imports for pricier Western
models. The market is tipped to grow by an additional 25% this year.
Booming Bank Sector
The buying binge is being fueled by an explosion in consumer credit. Shiny
new bank branches are sprouting around town.

And in downtown Kiev, rows of portrait artists and old women hawking
souvenirs are flanked by young people in boxy costumes shaped like houses,
promoting a mortgage bank. Last year, the volume of retail loans surged by
137%, to $15.5 billion.

Previously almost nonexistent, Ukraine’s banking sector-the fastest-growing
in Europe-hasn’t gone unnoticed farther west. Over the past two years,
foreigners have bought four of Ukraine’s top five banks.

In the most recent deal, Italian bank UniCredit (CRDI.MI) in July announced
plans to acquire Ukrsotsbank, the second-largest Ukrainian financial
institution, for $2.2 billion.

Of course, not everyone is benefiting from the economic boom. “We thought
that things would get better, and now we’ve lost faith,” says Nataliya
Kolesnikova, a 32-year-old artist. She and her husband, a photographer,
enthusiastically joined the protests during the Orange Revolution.

But they complain that now corrupt tycoons and officials remain at liberty
while ordinary folk struggle to get by and are forced to pay endless bribes
demanded by policemen, doctors, and even teachers.

Ukraine still has a lot of catching up to do with more advanced economies in
the region. It remains one of Europe’s poorest countries, with an average
income of just $3,000-half Russia’s level and only 8% of Britain’s.

And despite average annual growth rates of more than 7% stretching back to
2000, national output still hasn’t recovered from the chaotic economic
transition of the 1990s and remains below the levels achieved in the Soviet
era.

“If you compare the situation today to 10 years ago, the progress is
absolutely obvious,” says Finance Minister Mykola Azarov. “But it isn’t
fast enough to satisfy people.”
Business-Friendly Standoff
There’s also a risk that the political standoff in Kiev could start to take
a toll on growth if it delays passage of key legislation.

“The political crisis has derailed structural economic reforms: pension
reform, tax reform, judicial reform-which Ukraine badly needs as a
post-Soviet state,” Azarov says. Still, in some areas Ukraine’s government
is plowing ahead.

In early July, Parliament approved laws that lower export tariffs on metals
and toughen copyright protection. Those measures, plus others enacted over
the past year or so, should help pave the way for Ukraine’s entry into the
World Trade Organization, now expected by next year.

Indeed, for all their feuding, Ukraine’s leading politicians seem to share a
sense of purpose when it comes to improving the environment for business.
That’s not surprising since many are closely allied with Big Business
interests.

Although both the government and private companies continue to be dominated
by wealthy oligarchs, the adoption of market economics has also fueled rapid
development of new businesses in telecommunications, real estate, and
software.

Corporate managers, meanwhile, are too busy making money to lose sleep
over the long-term need for tax or pension reform. Says Porsche salesman
Korolyov, “I think people have now started to understand that politics is
politics, and business is business.”
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http://www.businessweek.com/globalbiz/content/aug2007/gb20070822_029442.htm
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2.  GROWTH OF FDI IN UKRAINE IN H1 ESTIMATED AT $2.553 B

Interfax Ukraine, Kyiv, Ukraine,  Sunday, August 19, 2007

KYIV – The growth of foreign direct investment (FDI) in Ukraine in the first
half of 2007 was $2.553 billion, which was 50.3% up on year-over-year, the
State Statistics Committee reported on Friday.

According to the source, foreign investors injected $3.2763 billion in
direct investments into Ukraine’s economy in the first half of 2007, while
withdrawing $820.3 million.

The overall amount of FDIs in Ukraine by July 1, 2007, was $24.172 billion,
which was 11.8% up on the figure registered by January 1, 2007, or $518.6
per capita.

In the first quarter of 2007, investments from Cyprus grew by $950.5
million, those from the Netherlands rose by $330.5 million, those from
Austria by $323.2 million, those from Russia by $235.3 million, and those
from the United Kingdom by $225.3 million.

Investors from France increased their investments by $104.6 million, those
from Germany by $99.9 million, those from Poland by $88.1 million, and

those from Sweden by $73.4 million.
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3. SHELL, RUSSIAN GROUP ALLIANCE CREATE JOINT VENTURE TO
RUN GASOLINE FILLING STATIONS UNDER SHELL TRADEMARK

Ukrainian News Agency, Kyiv, Ukraine, Wed, August 22, 2007

KYIV – Shell International Petroleum Company Ltd concern and Alliance
Group (Russia) have created a joint venture to operate a chain of 150
gasoline filling stations in Ukraine under the Shell trademark.  Ukrainian
News learned this from their joint statement.

According to the statement, operating management of the new enterprise is
up to Shell, who owns 51% in the joint venture while 49% belong to Alliance.
The enterprise became operational on August 21. During the first stage the
chain will be transferred to the joint venture for operating management.

The process of transfer is expected to finish within two months of the day
the joint venture was put in operation (i.e. by October 22).

The companies said that all gasoline filling stations in the chain would be
modernized to meet Shell’s high world standards of environmental and
industrial safety.

The companies passed a decision to appoint Khristo Ivanchev to the post
of director general for development of the Shell network in Ukraine.

‘The new joint venture is a combination of the world experience of Shell
Concern and extensive experience of Alliance and its expanded presence
on the Ukrainian market of gasoline filling stations. It gives us
competitive advantages on the market, helps us to react to the needs of our

clients better by way of providing good-quality products and ensuring high
level of service,’ he said.

As Ukrainian News earlier reported, in July 2006, Shell and Alliance Ukraine
oil company (Kyiv), which is part of Russia’s Alliance Group, agreed to use
the Shell brand at the gasoline filling stations of Alliance Ukraine.

In March 2007, the companies announced their intention to set up a joint
venture to manage 150 stations under the Shell trademark. Shell is one of
the biggest petroleum concerns in the world. Alliance and Alliance Ukraine
oil companies belong to Alliance Group.

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NOTE:  Shell is a member of the U.S.-Ukraine Business Council
(USUBC) in Washington, D.C.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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4.  UKRAINE: JOINT VENTURE CREATED FOR DEVELOPMENT OF

ODESA AND BEZIMENNE DEPOSITS ON BLACK SEA SHELF
Naftohaz Ukrainy working with Marathon & Shell in Dnipro-Donets basin.
 
Ukrainian News Service, Kyiv, Ukraine, Thursday, August 16, 2007
KYIV – The Naftohaz Ukrainy national joint-stock company passed a
decision on August 17 to create a joint venture of Chornomornaftohaz
and Ukrhaz-Energo companies for the development of Odesa and
Bezimenne deposits on the Black Sea shelf. Naftohaz Ukrainy spokesman
Oleksii Fedorov disclosed this to Ukrainian News.

He said Naftohaz Ukrainy owns 100% in Chornomornaftohaz and 50% in
Ukrhaz-Energo, and the State will control 75% of the future joint venture to
be founded on a parity basis.

Fedorv said the move would solve the problem of distribution of
Ukrhaz-Energo profits for 2006.

“In such a way, the profit of Ukrhaz-Energo will be directed to the mining
of gas on the Black Sea shelf through a joint venture which will be under
control of Naftohaz Ukrainy,” he said.

Fedorv added that the decision on Ukrhazvydobuvannia’s suspension of the
Odesa deposit project resulted from the need to direct efforts to increasing
inland hydrocarbon production and production in the Subbotine oil field,
which is the most promising field on the shelf.

He reminded that Naftohaz Ukrainy and Marathon International Petroleum

Ltd. had earlier agreed on joint exploration of the north-western side of the
Dnipro-Donets basin. Besides, the talks on joint activity with the
British-Dutch company Shell are about to finish.

“Naftohaz Ukrainy keeps on taking efforts to attract funds from professional
investors for additional research and development of hydrocarbon reserves
that are hard to reach, according to the Energy Strategy of Ukraine for
until 2030,” Fedorov said.

He stressed that the end goal of all these efforts is to boost production of
Ukrainian hydrocarbons and ease dependence from external sources of

energy supply.

As Ukrainian News earlier reported, the development of Odesa and Bezimenne
deposits will require an investment of UAH 5.8 billion for both. The
deposits have estimated natural gas reserves of 22 billion cubic meters.

The Ukrainian continental shelf is believed to have 1.7 trillion cubic meters

of gas reserves. Maximum production in Odesa and Bezimenne fields is
expected to amount to 1 billion cubic meters a year. Ukraine set a gas
production target at 21 billion cubic meters for 2007.
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NOTE:  Shell and Marathon are members of the U.S.-Ukraine Business
Council (USUBC) in Washington, D.C.
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5. EBRD MAY MAKE EUR22.3M EQUITY INVESTMENT IN OISIW
LIMITED TO DEVELOP UKRAINIAN TELECOMS, MEDIA

Co-investment vehicle managed by SigmaBleyzer Southeast European Fund IV

Interfax Ukraine, Kyiv, Ukraine, Tuesday, August 14, 2007

KYIV – The European Bank for Reconstruction and Development (EBRD)
may make a EUR22.3-million equity investment in Cyprus-based Oisiw
Limited, a special purpose co-investment vehicle to invest alongside and
be managed by SigmaBleyzer Southeast European Fund IV (SBF IV), to
improve telecoms and media infrastructure in Ukraine.

As EBRD reported on Tuesday, the total project cost is up to EUR 200
million. EBRD’s equity investment will be made alongside with other equity
co-investors and limited partners associated with SigmaBleyzer Southeast
European Fund IV.

The project focuses on private sector development in the telecoms and

media industry sector, increasing competition, efficiency and delivery
of service.

An improved product offering and lower prices will be provided for

improved electronic communications in the regions.

As was reported earlier, SigmaBleyzer, a leading private equity firm focused
on Ukraine and Southeastern Europe, in February 2007 closed its fourth

fund, SigmaBleyzer Southeast European Fund IV (SBF IV).

The fund was closed at EUR 250 million ($326 million), the maximum
amount allowed by the partnership agreement, and 25% above its target.

A total of 40 partners invested in the new fund, with investments ranging
from a few million euros to 20% of the fund, provided by the largest partner
in SBF IV, the European Bank for Reconstruction and Development.

Other investors in the fund include Goldman Sachs, UBS, LVMH, Bank
Austria, InvestKredit and other large financial institutions and family
offices.

SBF IV announced plans to make investments of EUR 10-70 million, with
larger investments possible through a series of co-investment agreements
with its partners.

SigmaBleyzer created the first Ukrainian Growth Fund (UGF) in 1996. Since
that time, UGF has grown into a family of three funds consisting of UGF I,
UGF II, and UGF III. SigmaBleyzer runs offices in Bulgaria, Romania,
Ukraine, the Netherlands, [Kazakhstan] and the United States.

Among SigmaBleyzer’s Ukrainian projects is the country’s largest cable

TV operator – Kyiv-based CJSC Volia-Cable.
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NOTE:  SigmaBleyzer Emerging Markets Private Equity Group is
a member of the U.S.-Ukraine Business Council (USUBC) in
Washington, D.C.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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6.  UKRAINE: PRIVATBANK PURCHASES 11,000 PAYMENT TERMINALS
Leading Bank Extends Electronic Payments to Retailers Throughout Ukraine

Business Wire, Phoenix, AZ, Tuesday, Aug 21, 2007

PHOENIX – Hypercom Corporation (NYSE: HYC) today announced that

PrivatBank, one of the leading banks in Ukraine, has purchased 11,000
Optimum T2100 and M2100 GSM/GPRS card payment terminals.

This latest purchase follows the more than 4,000 units order of the same
terminals delivered early in 2007, and increases to 15,000 the total number
of GSM/GPRS Hypercom Optimum terminals purchased by PrivatBank as
it extends electronic payments to retailers throughout the Ukraine. Hypercom
was selected over all other global payment suppliers in a competitive
process.

The Hypercom electronic card payment terminals were supplied by Servus
Systems Integration (SSI), the distributor of Hypercom products in Ukraine.
PrivatBank selected SSI because of the high level of technical support,
consultancy and training services they can offer the banking network.

“This latest commitment from PrivatBank further strengthens our already
significant position in the Ukraine, giving us an even better opportunity to
maintain market leading share as the adoption of electronic payments
throughout this important region continues to rise,” said Kazem Aminaee,
Managing Director of Hypercom EMEA.

“The continued expansion of our POS network is directly in line with the
bank’s strategy of providing the highest quality products and services to
our clients,” said Yuriy Kandaurov, vice-chairman of the Board of Directors
of PrivatBank.

“Our goal is to provide maximum comfort and safe payments in a trading
network for our clients, enabling consumers to quickly and easily pay for
purchases with plastic cards in any Ukrainian city, regional center or
village.”

“This second agreement speaks to our long standing relationship with
Hypercom and the consistent quality of Hypercom’s product,” said Elnura
Mamedli, Deputy General Manager, Director of Payment Systems’
Department of SSI.

“By working together, we have achieved first position POS product market
share leadership in the Ukraine and have positioned ourselves to maintain
that leadership as the market continues to grow.”
About PrivatBank (www.privatbank.ua)
PrivatBank is the leader of banking services in Ukraine. Nationwide,
PrivatBank’s servicing network consists of 2,475 branches and offices all
over Ukraine. As of July 1, 2007, PrivatBank maintained 12 million personal
accounts, the attracted amount of individual clients’ sums gained UAH15.188
mln.

PrivatBank is the leading issuer and service operator of plastic cards in
Ukraine. Currently, PrivatBank’s number of issued cards exceeds 12.5
million, and there are 3,864 ATMs and 29,782 POS terminals in its card
servicing network.
About Servus Systems Integration (www.ssi.com.ua)
SSI is one of the leading companies in the field of self-service and payment
systems technologies. Its dominant activities include self-service systems,
software support for payment systems, warranty and post-warranty for the
solutions provided in all regions of the Ukraine, and training and
consulting services.
About Hypercom (www.hypercom.com)
Global payment technology leader Hypercom Corporation delivers a full suite
of high security, end-to-end electronic payment products and services.

The company’s solutions address the high security electronic transaction
needs of banks and other financial institutions, processors, large scale
retailers, smaller merchants, quick service restaurants, and users in the
transportation, healthcare, prepaid, unattended and many other markets.
Hypercom solutions enable businesses in more than 100 countries to securely
expand their revenues and profits.

Hypercom and Optimum & Design are registered trademarks of Hypercom
Corporation. All other products or services mentioned in this document are
trademarks, service marks, registered trademarks or registered service marks
of their respective owners.

This press release includes statements that may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995.

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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7.  LATVIA’S PARITATE BANKA RENAMES TO PRIVATBANK
Ukraine’s Privatbank owns 95.06% of the Latvian bank

 
Interfax, Riga, Latvia, Monday, Aug 20, 2007

RIGA – Latvia’s Paritate Banka has changed its name to Privatbank, as

Ukraine’s Privatbank owns 95.06% of the bank, the bank said in a press
release. The bank also increased its charter capital by 7.1 million lati to
10.65 million lati.

Privatbank Advertising Director Gita Markovska declined to comment on

the name change and said a bank spokesman would give a press conference
next week. The shareholder structure has not changed, he said.

Privatbank was 16th among 24 Latvian banks by assets at the end of June.
Privatbank was 18th on the Interfax-1000 ranking of CIS banks
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8. BOEING SEES RUSSIA, CIS COUNTRIES SPENDING US$70
BILLION ON PASSENGER PLANES OVER NEXT 20 YEARS 

AP Worldstream, Moscow, Russia, Wednesday, Aug 22, 2007

MOSCOW – Boeing Co. believes airlines in Russia and the 11 other former
Soviet republics in the Commonwealth of Independent States may buy more

than 1,000 new passenger planes worth US$70 billion (A52 billion) over the
next 20 years, the U.S. company said Wednesday.

“We will witness significant growth in the demand for air travel as the
economies of Russia and the CIS continue to expand,” said Craig Jones,

vice president of Sales for Russia/CIS, Boeing Commercial Airplanes,
according to a statement on the U.S. company’s Web site during a major air
show outside Moscow.

Boeing said it forecasts that airlines in the region will take delivery of
about 470 planes in the Boeing 737 size range or its equivalent, worth US$30
billion (A22 billion), while the demand for twin-aisle jets such as the
Boeing 777 and 787 will total 110 airliners worth US$20 billion (A15
billion) over the 20-year period.

Most of the rest of the demand will be for smaller regional jets, it said on
the site.

With more people traveling as the 1991 collapse of the largely closed Soviet
Union recedes and economies grow, Jones said that domestic and international
air traffic in Russia and the CIS has increased by 36 percent over the last
decade. “Most indicators point toward continued economic growth for the
region,” he was quoted as saying.

The CIS comprises Russia, Ukraine, Belarus, Armenia, Azerbaijan, Georgia,
Moldova, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan.

Russian airline Aeroflot has signed deals this year to buy 22 Boeing 787
Dreamliners and 22 Airbus A350 XWB.

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NOTE:  Boeing is a member of the U.S.-Ukraine Business Council
(USUBC) in Washington, D.C.
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9.  UKRAINIAN PLANT MOTOR SICH TO SUPPLY 74 AIRCRAFT

ENGINES TO RUSSIAN LEASING COMPANY 

Interfax-AVN military news agency website, Moscow, 

BBC Monitoring Service, United Kingdom, Wed, Aug 22, 2007

ZHUKOVSKIY, Moscow region – Ukraine’s Motor Sich signed an agreement

for the supply of 74 D-436-148 engines to power An-148 airliners at the
MAKS 2007 airshow in Zhukovskiy on Wednesday [22 August].

The deal was signed by Motor Sich’s CEO Vyacheslav Bohuslayev and

Russian [aircraft leasing company] Ilyushin Finance’s head Aleksandr Rubtsov.

“Under the contract, 74 air engines and 34 auxiliary power plants for An-148
aircraft will be shipped,” Rubtsov said, noting that some of the engines and
auxiliary power units are to equip 12 An-148s bought by the state-owned
Rossiya transport company from Ilyushin Finance under a contract signed on
Tuesday.

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10.  POLAND’S ICONIC SHIPYARD GDANSK FIGHTS EU CUTBACK
Two investors – Italy’s FVH and ISD, owned by Ukraine’s Donbass

Industrial Union – have already expressed interest in privatization.
 
By Jan Cienski in Gdansk and Andrew Bounds in Brussels
Financial Times, London, UK, Wed, August 22 2007 03:00

Poland’s Gdansk shipyard, cradle of the Solidarity union that helped bring
down communism, is fighting European Commission demands to slash
capacity to compensate for past aid.

The shipyard yesterday sent the Commission a report spelling out its planned
route back to viability, a plan that does not agree with the commission’s
determination that it shut down two-thirds of its production capacity.

“We could close one slipway but closing two would mean the end of the
shipyard,” Andrzej Jaworski, the yard’s CEO, told the Financial Times. The
second slipway could be closed after the yard is privatised and the new
investor has built a floating dock, he added.

The yard is more than a business with 3,000 workers – it is a political
icon, especially for the Law and Justice party government and the leading
opposition Civic Platform party, both of which trace their roots to the
Solidarity movement. Solidarity was formed in 1980 after a sit-in at Gdansk
shipyard, then known as the Lenin shipyard, led by Lech Walesa, who went
on to become president.

With early elections looking increasingly likely this year, the shipyard’s
future is likely to become a key political battle, especially if the
Commission is painted as wanting to cripple the yard.

The government of prime minister Jaroslaw Kaczynski has long placed large
symbolic value on the Gdansk shipyard. Mr Kaczynski has held a political
rally there and Mr Jaworski, a politician and a Kaczynski loyalist, was
appointed to head the yard last year.

Neelie Kroes, the European competition commissioner, is aware of the
political sensitivities but determined that Gdansk does not gain an
advantage over rivals that have already been through painful restructuring,
costing thousands of jobs.

A spokeswoman for Kroes said yesterday: “What the Commission wants to
see is not a closed Gdansk shipyard, but a genuine, far-reaching
restructuring of a company that would ensure its long-term viability.”

The shipyard’s plan does not appear to meet that definition. Indeed,
officials said yesterday it could increase capacity because of proposed
future investment.

“They should close capacity and then build back up. Poland wants to do it
the other way round [to avoid job losses],” said one official. “We have to
ensure a level playing field . . . for the sake of competitors.”

Poland’s three big shipyards, in Gdansk, Gdynia and Szczecin, have been in
and out of bankruptcy ever since the fall of communism in 1989, with much
of the problem coming from workers’ and politicians’ resistance to job cuts.
All are now controlled by the state.

The Commission, which says the yards have received Euro1.3bn ($1.8bn,
£900m) in aid since Poland entered the EU in 2004, has already signed off
on restructuring plans involving capacity cuts for Gdynia and Szczecin.

Mr Jaworski says the Gdansk yard will be ready for privatisation in about
three months and two investors – Italy’s FVH and ISD, owned by Ukraine’s
Donbass Industrial Union – have already expressed interest.

At a time when other shipyards are taking advantage of soaring demand for
shipping, Gdansk could have a decent future if it is allowed to restructure,
he said.
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11.  UKRAINIAN PRIME MINISTER SAYS NO RETURN TO
MEAT AND DAIRY WARS BETWEEN UKRAINE AND RUSSIA 

NTN, Kiev, in Ukrainian 1600 gmt 22 Aug 07
BBC Monitoring Service, United Kingdom, Wed, Aug 22, 2007

Ukrainian Prime Minister Viktor Yanukovych has said that there will be no
more meat and dairy wars between Ukraine and Russia as he has settled all
issues in this area during his 21 August visit to Moscow. The following is
an excerpt from a report by the Ukrainian NTN TV channel on 22 August:

[Presenter] It is up to a special commission to decide on the dismissal of
[Emergencies Minister] Nestor Shufrych, Ukrainian Prime Minister Viktor
Yanukovych has said. Such was the prime minister’s reaction to the
president’s demand that the minister be sacked.

The emergencies minister, as well as other cabinet ministers, came to
Poltava today for a visiting session of the Cabinet of Ministers. The key
issues on the agenda are the regulation of food prices and the preparation
of the housing utility sector for winter. [Passage omitted: repetition]

[Correspondent] Viktor Yanukovych is satisfied with his visit to Moscow.
There will be no more meat and dairy wars.

[Yanukovych] We have worked out a mechanism for cooperation with

Russia, and there will be no return to the so-called meat and dairy wars.
You will feel that almost everything has been settled by now.

If there are any practical issues that need to be dealt with for the sake of
peaceful functioning on the Russian food market, we will have to make all
the necessary steps together. [Passage omitted: repetition]

[At 1330 gmt, the Interfax-Ukraine news agency quoted the head of the
presidential secretariat, Viktor Baloha, as accusing Yanukovych’s cabinet of
inability to deal with the increasing illegal import of meat.]

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12.  U.S. AMBASSADOR TO UKRAINE, WILLIAM TAYLOR, MEETS
WITH THE U.S.-UKRAINE BUSINESS COUNCIL IN WASHINGTON

 
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Thursday, August 23, 2007
 
WASHINGTON – U.S. Ambassador to Ukraine, William Taylor, met
with fifty-five members and guests of the U.S.-Ukraine Business Council
(USUBC) at a working luncheon/roundtable on Monday, August 20th,
in Washington.
 
Ambassador Taylor brought some opening remarks and then answered 
a series of questions regarding business, economic and political issues 
raised by those at the luncheon. 
 
Ukraine’s Ambassador to the United States, Oleh Shamshur, also
attending the meeting, brought some remarks and participated in the
question and answer/roundtable discussion session.
 
Issues discussed at the luncheon/roundtable included: Ukraine’s
accession to the WTO; Decree 31 which sets caps on gas prices; U.S.
OPIC’s continued closure for Ukraine; preventing corporate raidership;
accelerating VAT tax refunds; repealing grain export restrictions; private
land purchases as of January 1, 2008; business corruption; judicial reform;
intellectual property rights violations; Millennium Challenge Corporation
program for Ukraine; need for a new economic/civil code; creating
nuclear waste storage facilities in Ukraine; creating an alternative source
of nuclear fuel; lack of energy conservation programs; the current
governmental and political climate and the upcoming Parliamentary
elections.
 
The U.S.-Ukraine Business Council announced it has doubled its
membership in 2007 and now has forty-five members. The Council
expects to have sixty members by the end of the year.
 
Company and organizations who had representatives at the luncheon
included: Ukrainian-American Environmental Association; Cisco Systems;
Vanco Energy Company; Heritage Foundation; Rand Corporation; Bunge
North America; Bracewell & Guiliani, LLP; International Monetary Fund;
Marathon Oil Corporation; The Coca-Cola Company; Heller & Rosenblatt;
Bechtel Corporation; U.S. Civilian Research & Development Foundation;
Westinghouse; Emerging Markets Group, Ltd; Open World Leadership,
Library of Congress; U.S. Department of State; PBN Company; Russian-
Ukrainian Legal Group; International Environmental Trading Group; Boeing
Company; Deere & Company; Center for Strategic and International Studies;
SASI; U.S.-Ukraine Foundation; Vital Voices Global Partnership;
SigmaBleyzer Private Equity Group; Lockheed Martin, Cargill; Global Trade
Development and Access International.
 
Ambassador Taylor returned to Ukraine on Wednesday to be in Kyiv for
the 16th Independence Day Celebration on Friday, August 24th. 
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13.  PEPSIAMERICAS AND PEPSICO COMPLETE JOINT ACQUISITION
OF LEADING JUICE COMPANY SANORA LLC IN UKRAINE
 


Business Wire, Minneapolis, MN & Purchase, N.W., Mon, August 20, 2007 

MINNEAPOLIS & PURCHASE, N.Y.- PepsiAmericas, Inc. (NYSE:PAS)

and PepsiCo (NYSE:PEP) today announced that they have completed
the joint purchase of 80 percent of Sandora, LLC (“Sandora”), the leading
juice company in Ukraine. The joint venture expects to acquire the remaining
20 percent interest in Sandora in November 2007.

“We’re excited to extend our strong partnership with PepsiCo and begin
working with the Sandora team and its market-leading brands to capture the
growth opportunity in Ukraine,” said Robert C. Pohlad, Chairman and Chief
Executive Officer of PepsiAmericas.

“We have a clear strategy to grow and expand our international business and
Sandora is a great fit, providing immediate scale
 in a high growth market.”

“We now serve consumers in over 10 countries in Central and Eastern Europe,
in both developing and emerging markets. Combined with our scale and
profitability in the U.S., we have a balanced portfolio of markets that
position us well for long term sustainable growth.”

As previously announced, PepsiAmericas expects the acquisition to be $0.02
to $0.03 dilutive in 2007. This is included in its previously announced full
year earnings per share outlook.

The Sandora transaction is expected to add approximately 4 percentage points
to volume, lower net pricing by 2 points and cost of goods sold per unit by
1 point, while adding a point to selling, delivery and administrative
expenses.

The company forecasts that Sandora will add an estimated 1 percentage point
to operating profits, driving estimated reported operating profit growth to
15 to 18 percent.

This operating income contribution in 2007 will be offset by higher related
interest expense and the minority interest recorded primarily for PepsiCo’s
40 percent interest in the joint venture. PepsiAmericas will consolidate the
joint venture into its financial results.

The transaction is not expected to have an impact on PepsiCo’s previously
announced earnings per share guidance for 2007.
About Sandora
Sandora has established itself as the leader in the high growth juice
category with a range of distinctly positioned brands that represent
approximately half of the total juice volume consumed in Ukraine.

With over 3,500 employees, Sandora has a powerful sales and distribution
organization and two modern production facilities located in Nikolaev.
About PepsiAmericas
PepsiAmericas is the world’s second-largest anchor bottler in the Pepsi
system and in the U.S. serves a significant portion of a 19 state region,
primarily in the Midwest.

Outside the U.S., the company has operations in Europe and Caribbean,
specifically in Poland, Hungary, the Czech Republic, the Republic of
Slovakia, Romania, Ukraine, Puerto Rico, Jamaica, the Bahamas, and

Trinidad and Tobago.

The company also has distribution rights in Moldova, Estonia, Latvia,
Lithuania and Barbados. The company serves areas with a total population of
more than 150 million people. PepsiAmericas manufactures, distributes and
markets a broad portfolio of PepsiCo and other national and regional
beverage brands. For more information, please visit www.pepsiamericas.com.
About PepsiCo
PepsiCo (NYSE:PEP) is one of the world’s largest food and beverage
companies, with 2006 annual revenues of more than $35 billion. The Company
employs approximately 168,000 people worldwide, and its products are sold in
approximately 200 countries.

Its principal businesses include: Frito-Lay snacks, Pepsi-Cola beverages,
Gatorade sports drinks, Tropicana juices and Quaker foods. The PepsiCo
portfolio includes 17 brands that generate $1 billion or more each in annual
retail sales.

PepsiCo’s commitment to sustainable growth, defined as Performance with
Purpose, is focused on generating healthy financial returns while giving
back to communities the company serves. This includes meeting consumer needs
for a spectrum of convenient foods and beverages, reducing the company’s
impact on the environment through water, energy and packaging initiatives,
and supporting its employees through a diverse and inclusive culture that
recruits and retains world-class talent. PepsiCo is listed on the Dow Jones
North America Sustainability Index. For more information, please visit
www.pepsico.com.
Cautionary Statement
This release contains forward-looking statements of expected future
developments, including expectations regarding anticipated earnings
associated with the Sandora acquisition.

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14.  TRANSCARPATHIA NEW HOT EMS DESTINATION IN UKRAINE
Western Ukraine is trying to become Europe’s answer to the challenge of
cheap Chinese factories despite bureaucratic red tape and political turmoil.
Companies like Jabil and Flextronics are investing in this area
.

Evertig, Ekero, Sweden, Tuesday, August 21, 2007

Zakarpatye region is divided into 18 administrative territorial units,
including 5 regional administrative centers (Uzhgorod, Mukachevo, Khust,
Beregovo, and Chop), and 13 districts.This province is based in the

Uzhgorod area and the province is known as Transcarpathia.

Jabil is building a 280,000-square-foot factory that will employ 2,400. The
company expects to invest $90 million in the region and produce 300,000

cell phones per week.

EMS provider Flextronics is building a plant in the town called Mukachevo.
The investment is expected to be worth $ 29 million.

Zakarpatye region became a focus of attention for such well-known
transnational companies like Volkswagen, Skoda, Audi , Fischer, Philips,
Hewlett Packard, Flextronics, TDK, Leoni, Delphi, Yazaki, Jabil, Le-Go,
Henkel, and others, which are already running their investment projects in
the region.

The area in Western Ukraine is known for its poverty and high unemployment.
The region wants to attract foreign companies to invest in the region by
escaping rising wages, taxes and real estate costs in neighboring countries.

Analysis of the region’s economic development in the last few years proves
sufficient influence of investments upon its growing development rates.

As of January 1, 2007, according to data of the statistics department, the
region has 773 enterprises running with direct foreign investments. In
general, over the period of foreign investing the region received USD 298.2
mn of direct foreign investments.

 
Per capita figure makes USD 239.7 and by this indicator the region ranks
ninth among all regions of Ukraine.
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15.  FLEXTRONICS BUILDS PLANT IN MUKACHEVO, UKRAINE

Evertiq, Ekero, Sweden, Tueday, August 21 2007

EMS provider Flextronics is building a plant in Mukachevo, Ukraine. The
investment is expected to be worth $ 29 million, and the new plant will
employ 3000 people.

The production date is still unknown, according to the Transcarpathian
Investment Agency in Uzhgorod, Ukraine. Flextronics officials declined to
comment, edn reports.

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http://www.evertiq.com/newsx/read_news.aspx?newsid=8509&cat=1
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16. UKRAINIAN PRESIDENT TO SPEAK AT SOFIYSKA SQUARE
IN KYIV ON INDEPENDENCE DAY, AUGUST 24

Interfax-Ukraine, Kyiv, Ukraine, Tue, August 21, 2007 
 
KYIV – Ukrainian President Viktor Yuschenko will participate in events
marking Ukraine’s Independence Day on Friday, August 24.
At 0900, Yuschenko and his wife will participate in a prayer for Ukraine at
St. Sophia Cathedral, the presidential press service has reported.
At 1000, the president will deliver a speech at Sofiyska Square. Yuschenko
will also take part in a ceremony to present awards to those who made a
significant contribution to Ukraine’s development and a presentation of
passports to those young people from all Ukrainian regions who were born
on August 24, 1991.
At 1200, events with Yuschenko’s participation will continue on Independence
Square. At 1930, a ceremonial reception on the occasion of Ukraine’s
independence will be held.
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17.  DEATH OF PROKOPENKO MARKS THE PASSING OF UKRAINE’S
GREAT SOCCER COACHING TRINITY. THEY’RE ALL GONE.
The three great Ukrainian coaches of their generation – Valeriy
Lobanovskyi, Yevhen Kucherevskyi and now Viktor Prokopenko
– all dead, all cut down before their time.

Jonathan Wilson, Guardian Unlimited, London, UK, Tue, Aug 21, 2007

So that’s it. They’re all gone. The three great Ukrainian coaches of their
generation – Valeriy Lobanovskyi, Yevhen Kucherevskyi and now Viktor
Prokopenko – all dead, all cut down before their time.

As a journalist, you can get blase about death. Footballers or coaches die,
you go through your old notebooks and make a couple of calls, you check

a few facts, you write their obituaries, you move on.

On Sunday, though, when I read the email saying Prokopenko had died the
night before, it was like a blow to the pit of the stomach.

For one thing, I couldn’t quite believe he was as old as 62; for another,
the manner of his death, slipping outside a barber’s shop and banging his
head, seemed cruelly trivial. And for a third, Prokopenko was an open and
ebullient man, a great interviewee, and somebody who once did me an

enormous favour.

Prokopenko was the least successful of the great trinity, but he was also
the one whose side played the most consistently entertaining football.

Lobanovskyi, who died of a stroke in May 2002, won eight Soviet titles, six
Soviet Cups, five Ukrainian titles, three Ukrainian Cups and two European
Cup-Winners’ Cups; Kucherevskyi, killed in a car crash last August, took
Dnipro Dnipropetrovsk to the Soviet title in 1988; but Prokopenko was the
eternal runner-up.

He did win the Ukrainian Cup with Chornomorets in 1992, but he was more
famous for finishing second. His Rotor Volgograd side lost in the 1995
Russian Cup final – although they did

There was no great outcry against Prokopenko, but there was a sense that he
was at times perhaps a little too aggressive. That, though, suited Shakhtar
fans who, rather like Newcastle under Kevin Keegan, revelled in the idea
that they played football in what they saw as the right way.

They were honest, blue-collar, salt-of-the earth, as opposed to Dynamo,
whose style, based around Lobanovskyi’s statistics, was seen as drier,
somehow less noble.

Still, there comes a time when you have to win. Shakhtar and Dynamo had

been all but inseparable through the first half of the 2001-02 season.

Shakhtar struck twice in the last 10 minutes to draw 2-2 away at Dynamo in
the second game of the season, and the following week a late Julius Aghahowa
goal gave Shakhtar a 2-1 win at Polihraftechnica Olexandria, while Dynamo
were held by Dnipro.

From then on, though, they matched each other win for win. When Shakhtar
were held at CSKA, Florin Cernat missed a late penalty that would have given
Dynamo victory at Metalurh Donetsk. Come October and the last game before
the winter break, Shakhtar still led Dynamo by two points.

Shakhtar were away to Vorskla Poltava. I arrived on the morning of the game
on a night-train from Kyiv, and interviewed Prokopenko in his hotel.

Perhaps because I was foreign, he was astonishingly forthright, talking at
length about the pressure of Dynamo’s pursuit and his continuing belief in
attacking football.

That night, in atrocious conditions, Shakhtar took an early lead, piled
forward in search of a second, were caught on the break, and ended up
drawing a game they should have won at a canter.

As news came through that Dynamo had come from behind to win away at
Zakarpattya, the small cluster of travelling fans set fire to the plastic
seating.

I’d arranged to speak to Aghahowa after the game, but when I approached him
in the corridor outside the dressing-room he brushed by me, muttering “not
now, not now” over his shoulder. Prokopenko, though, as he passed on his

way to the mandatory press conference, leaned close and murmured, “I’m
resigning”.

And so it was that, by the time the Ukrainian press got out of an emotional
press conference, I’d already broken the news of Prokopenko’s resignation
through onefootball.com, the website I worked for at the time.

A little later that night, as Ukrainian sports editors panicked, we were
able to publish the interview I’d done earlier in the day, and so seemed
remarkably ahead of the game. A small thing perhaps, but on such minor
triumphs are a journalist’s self-esteem built.

Prokopenko certainly remembered, and we talked about that night the last
time we met, a little over three years ago. Appropriately, it was at a
reserve game between Shakhtar and Chornomorets, the team where

Prokopenko had established his reputation as a player.

It was a dire goalless draw but he was as bullish as ever, laughing at the
tedium of the football, and insisting, half-jokingly, that he never got the
credit he deserved for the success of that 2001-02 side, which, under Nevio
Scala, went on to break Dynamo’s monopoly on the title, finishing the season
unbeaten. That was, as he said, his team – just guided by a more pragmatic,
less fretful soul.

This feels like the end of an era. Oleh Blokhin, Oleksiy Mykhailychenko or
Oleh Protasov, perhaps, may come in time to be regarded as great, but none
are anywhere near the class of Lobanovskyi, Kucherevskyi or Prokopenko yet.

And without Prokopenko’s booming laugh, Ukrainian stadiums will be a quieter
place. He will be missed.
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http://football.guardian.co.uk/europeanfootball/story/0,,2153224,00.html
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18.  UKRAINE’S RULING PARTY URGES EXTRAORDINARY
PARLIAMENT SESSION TO ABOLISH IMMUNITY FOR PM’S 

Interfax-Ukraine news agency, Kiev, in Russian 1220 gmt 22 Aug 07
BBC Monitoring Service, United Kingdom, Tue, Aug 22, 2007

KIEV – The leader of the Party of Regions’ parliamentary faction and the
coordinator of the parliamentary majority in the Supreme Council
[parliament] of the fifth convocation, MP Rayisa Bohatyryova, has called on
President Viktor Yushchenko and the [propresidential] Our Ukraine party to
attend an extraordinary parliamentary session on 4 September to consider the
abolition of immunity [from prosecution] for MPs.

Bohatyryova was speaking in an exclusive interview with the Interfax-Ukraine
news agency on Wednesday [22 August].

Bohatyryova said that she is going to proceed with the preparation for the
emergency session of the Supreme Council of Ukraine.

“We are ready to abolish immunity for MPs even today. I am calling on the
Ukrainian president to back our initiative to amend the constitution at a
special meeting during the 4 September extraordinary session, and to attend
the session, together with his political force,” she said.

She stressed that Our Ukraine’s refusal to attend the session would mean
that this political force, which is urging the abolition of immunity for
MPs, is “insincere, that they are manipulating society’s and that they are
ready to do anything for the sake of power”.

“If we turn out to be hostages to political sabotage by the Yuliya
Tymoshenko Bloc and the Our Ukraine-People’s Self-Defence bloc, we

will give a preliminary approval to an appropriate constitutional bill on the
abolition of the untouchable caste in Ukraine in accordance with the
Ukrainian constitution, laws and the Supreme Council’s rules of procedure,
and will refer it to the Constitutional Court to get its conclusions,”
Bohatyryova said.

She added that a decision on the abolition of all benefits for state
officials of all levels, including the sale of their state dachas [country
houses] at auctions and on a requirement for them to use Ukrainian-made

cars as their official vehicles, instead of Mercedes, would be adopted
simultaneously.
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19.  BYuT BREAKTHROUGH BLUEPRINT FOR THE FUTURE
“Ukrainian Breakthrough: Towards a Fair and Competitive Country”

Inform Newsletter, Issue 43, BYuT Party, Kyiv, Ukraine, Wed, Aug 8, 2007

KYIV – Last week, BYuT unveiled its blueprint for Ukraine’s strategic
development. In a document entitled “Ukrainian Breakthrough: Towards a Fair
and Competitive Country,” the faction conveyed 12 provisions, representing
the basis of its electoral programme.

 “Our objective is to set high goals and to propose pragmatic and simple
ways to achieve them,” said Yulia Tymoshenko, BYuT’s leader.

The provisions are wide ranging and address issues as diverse as the
Constitution, through to attracting foreign investment and greater energy
independence.

 “The Ukrainian Breakthrough is key to our country’s future prosperity,”
said Ms Tymoshenko, noting that the programme “is designed to put the
country on a fast-track.” She expressed her hope that it would “be used by a
new and professional government as the foundation for its work.”
Summary of the 12 provisions:
[1] Constitutional Breakthrough: proposals for a national referendum to
approve and adopt a new Constitution. The people would have a direct say,
deciding on far ranging issues such as the type of government (whether
presidential or parliamentary); the elimination of parliamentary privileges
and deputy immunity; the ability to strip corrupt deputies of their
mandates; expand powers for regional government, etc.

[2] Judicial Breakthrough: a judicial reform programme, including measures
to protect the judiciary from political, administrative and corrupt
influences. A key proposal is to raise salaries for judges and abolish a
requirement for them to hear specific cases. Also envisaged is a legal aid
scheme for poor citizens.

[3] Information Breakthrough: reforms to remove media bias. The package
includes the creation of public broadcast television; greater transparency
and disclosure of ownership of media interests; the establishment of
agreements between owners of media outlets and journalists in order to
facilitate open and honest editorial policy; widespread internet
availability, etc.

[4] Anti-corruption Breakthrough: a systematic programme to combat
corruption. Its cornerstone is less government interference in the economy
and a huge reduction in bureaucracy.

Measures include establishing a special committee to analyse legislation and
statutory acts with a view to eliminating avenues for corruption; the sale
of non-agricultural land by auction; providing the parliamentary opposition
with control of the Chamber of Accounts; instigating declarations of
expenditure for all public employees; stiffer penalties for corruption
offences and the reintroduction of anti-smuggling initiatives.

[5] Demographic Breakthrough: a programme to increase the population and
provide improved social welfare services and payments.

Key measures include obligatory medical insurance coupled with free state
medical services for those that need it; affordable medication and a rural
doctor programme; increased payments for each newborn child (Hr 10,400 for
the first, not less than Hr 15,000 for the second and Hr 25,000 for the
third).

In addition, there are proposals for increased baby care allowances and
long-term low interest loans for young families.

[6] Intellectual Breakthrough: an initiative to reverse the brain drain by
restoring simultaneously the status, and raising the standards, of the
education system. Measures include incentives for investment in professional
and higher education, and in research and
development.

Businesses will be supported to invest in production technologies and there
will be free competition in high tech industries (particularly Internet and
mobile). Other measures include a system of Intellectual Property Rights and
the goal to put every household online.

[7] Transit Breakthrough: a package of measures to utilise Ukraine’s
geographical position as an east-west transit country. The programme
envisages building new oil and gas pipelines and expanding public-private
partnership investment to improve road, railways and airports whilst
liberalising the regime for the transit of passengers and goods.

[8] Business Breakthrough: a concerted effort to address the imbalance
between large enterprises, which dominate the business sector, by encouraging
the growth of wealth creating small and medium-sized enterprises.

The programme proposes to reduce the tax burden through the adoption of a
new tax code while expanding assessment, minimising tax remissions and
abolishing VAT.

Other growth measures include simplifying the process to set up and
administer businesses and establish lower business lending rates in line
with European levels.

Also proposed are measures to liberalise banking and insurance services and
to encourage longer-term lending. Shareholder rights will be protected, the
permit system reformed and bureaucracy cut.

[9] Energy Efficiency Breakthrough: a raft of strategic initiatives, core to
which is to overturn the nation’s dependence on monopolies for importing
energy, while strengthening collaboration and coordination of energy policy
with the EU.

Policies include integration with the European market for the supply and
consumption of electricity and measures to reduce oil and gas consumption
while increasing utilisation of brown coal and the production of synthetic
fuel.

Completion of the Odessa-Brody-Plotsk (Gdansk) transit pipeline and the
building of a gas transit pipeline linking the Caspian (running through
Azerbaijan, Georgia and the Black Sea) is proposed, as well as surveys and
hydrocarbon extraction in the Black Sea and Azov Sea.

[10] Investment Breakthrough: the goal is to make Ukraine a highly
attractive investment proposition. Measures include tightening legislation
and legal contradictions which currently hinder investment.

Procedures will be streamlined to allocate land under long-term leases to
investors who will build new and hi-tech facilities in Ukraine.

Proposals include transparent and open privatisations and tender processes,
while a network of regional ombudsman will be established to simplify
processes for obtaining import certificates.

Special emphasis will be made to attract investment in the power sector and
all new legislation enacted will be in accordance with WTO practices.

[11] Construction Breakthrough: a programme to encourage development of this
vital sector. Proposals include a system of mortgage lending with low rates
for house purchases.

Policies include offering tax breaks for building industrial facilities,
while government targets will be set for social housing projects. Wider
powers will be given to regional governments with targets for construction
of housing and industrial facilities.

[12] Agricultural Breakthrough: a programme aimed at establishing a stronger
more profitable and environmentally responsible agricultural sector. Crucial
measures include the availability of development funds, agricultural
exchanges, insurance funds and land-banks.

Other initiatives involve the promotion of agricultural products to overseas
markets. Another goal is to facilitate a functioning land market.
Agricultural producers will have access to low interest loans, with
incentives put in place for the development of cooperative banks and credit
unions in rural areas.

Viktor Baloha, President Viktor Yushchenko’s chief of staff, welcomed the
programme describing it as a “clear and intelligible” signal to society
about the intentions and priorities of the bloc.

“The announced programme is more than just the usual electoral declarations.
To my mind, this is more proof that Ukraine’s democratic forces do not speak
the language of pseudo-exposing criticism and blatant lies with their
people, but offer them an effective agenda to improve the country,” said Mr
Baloha.

He went on to say that the BYuT programme, together with plans by Our
Ukraine – People’s Self-Defence (OUPSD), may be enacted in a coalition
between the two blocs after the election.

Mr Baloha’s words go some way to counter speculation that OUPSD is
considering forming a coalition with the pro-Russian Party of Regions after
the election. Last week OUPSD diffused the situation saying that the best
coalition would be one with BYuT.

When asked if the prime minister’s job was her goal in such a coalition, Ms
Tymoshenko responded, “The position does not matter, what matters is
breaking the political deadlock so that this country can really develop and
prosper.

“People want economic stability but with transparency, they want a
government that is not self-serving but does its utmost to generate and
safe-guard jobs, increase investment and provide a decent standard of
living. They want a welfare system that looks after the needy and a system
of good healthcare.

They want schools, universities and institutions that are not corrupt and a
judicial system that is fair, honest and dependable.

They want elected officials that are accountable and work for them – who

won’t be busy in office lining their pockets. In short they want effective,
accountable government. That is what matters. That is what we will deliver.”
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Questions or comments? E-mail us at nlysova@beauty.net.ua
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
20.  AUTHORITIES TRY TO SHUT OUT BYuT FROM CAMPAIGN

BYuT Newsletter, Kyiv, Ukraine, Wed, 22 August, 2007

Kyiv authorities appear to be attempting to thwart the bloc of Yulia
Tymoshenko (BYuT) from campaigning and last week started to dismantle

the opposition force’s advertising in the city.

On Friday a group of unidentified persons followed by police cars began
taking down “The Ukrainian Breakthrough” advertising placed by BYuT

on Paton bridge. In an hour some 40 advertisements were removed.

The activities soon attracted the interest of journalists who filmed the
illegal removal of the advertisements. Once spotted, the group and police
retired sheepishly.

 “The time of Kuchma is back. They are ready to use any methods to get rid
of us,” said Yulia Tymoshenko, Leader of the Opposition and of her eponymous
bloc. “Kyiv Mayor Leonid Chernovetsky gave this illegal order. Now we are to
guard our billboards.”

Ms Tymoshenko said that she would appeal to the courts, adding that Mr
Chernovetsky is merely fulfilling the demands of Ukraine’s Prime Minister,
Viktor Yanukovych.

Prior to the removal of the billboards, BYuT was warned by advertising
agencies about pressure being exerted by the City’s administration, which
included refusing to provide services for placing advertising and threats to
withhold business licenses.

Mr Chernovetsky, the Mayor of Kyiv is a controversial figure who is dogged
by persistent rumours connecting him to bribery, administrative pressure,
corruption and intimidation.

Artem Skoropadsky, a journalist from Kommersant-Ukraine, who has been
critical of Mr Chernovetsky, was beaten last week on the porch of his house
in the Obolon district.

Ms Tymoshenko has drawn attention to the removal issue on Ukraine’s

Channel 5 TV.  The opposition bloc also appealed to international monitoring
organisations, alleging that the Party of Regions and its allies are making
a concerted effort to subvert early elections in Ukraine and violate the
principle of equality for all political forces in the electoral process.

BYuT is appealing to advertising agencies not to give in to threats and
promises that those responsible for the removal will be subject to the full
force of the law.

But as of now, BYuT is resorting to party activists and people passing in
their cars to report any attempts to remove billboards.

Also on Friday, the Kyiv election headquarters of Ms Tymoshenko’s ally,
Oleksandr Bryhinets was broken into. The burglars were selective and stole
only a computer containing election information.

 “I am sure this robbery was politically motivated. It happened on the same
day when authorities were dismantling our advertising. They plan to declare
a real war against the opposition in Kyiv,” said Mr Bryhinets.

Also this month BYuT’s local headquarters in the city of Malyniv,
Zhytomirsky region was burgled. Once again the burglars seemed intent on
obtaining election information, stealing digital storage media while leaving
other valuables behind.
———————————————————————————————-
For further information or comments please contact Natasha Lysova:

email nlysova@beauty.net.ua
———————————————————————————————–
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========================================================
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21.  UKRAINE: “TYMOSHENKO CHANGES COURSE”
Writer analyses opposition leader’s decision to join European right

ANALYSIS & COMMENTARY: By Viktor Chyvokunya
Ukrayinska Pravda website, Kiev, in Ukrainian 7 Aug 07
BBC Monitoring Service, United Kingdom, Tue, Aug 21, 2007

Opposition figure Yuliya Tymoshenko rapidly changed her priorities and
decided to join the conservative European People’s Party recently and not
the Socialist International, Viktor Chyvokunya says in a report posted on a
popular Ukrainian website. He said that Tymoshenko did not hold any talks
with the parties that formed her bloc for the coming election.

Tymoshenko confirmed to the site that she would be on the left wing of the
European People’s Party but Chyvokunya concluded by saying that the move
will mean Tymoshenko will have to alter her views on policies or risk
eventual exclusion from the European People’s Party.

The following is the text of the report by Viktor Chyvokunya, entitled
“Tymoshenko changes course”, posted on the Ukrayinska Pravda website
on 7 August; subheadings inserted editorially:
TYMOSHENKO CHANGES COURSE
Yuliya Tymoshenko has carried out a revolution within the bloc named after
her. To date the Yuliya Tymoshenko Bloc [YTB] has always been presented
as a leftist political force.

However, last Sunday [5 August] Tymoshenko motioned a suggestion that was
voted on without any discussion, which turn everything upside down in YTB
ideology.

The YTB congress that convened last Sunday was attended by a VIP guest from
Brussels – the president of the European People’s Party, Wilfred Martens. He
invited Tymoshenko’s bloc to join the club of the European People’s Party.

After Martens’ presentation, [senior YTB figure] Oleksandr Turchynov put to
the vote whether or not the Fatherland Party [led by Tymoshenko] should
acquire the status of an observer in the European People’s Party.

This looked quite odd, as this was done at a congress of the Yuliya
Tymoshenko Bloc, while the presentation was addressed specifically to the
Fatherland Party.
JOINING PARTY MEANS SHIFT FROM LEFT TO CONSERVATISM
However, the participants of the meeting, without a thought about the
consequences of this decision, unanimously supported a decision to integrate
into European People’s Party, that is, to turn Tymoshenko into a
conservative politician. To date, Tymoshenko has had nothing in common
with the European right.

It is also known that a year ago, she announced her intention to join an
opposing body – the Socialist International. “We will surely become a member
of an international association of parties. We are looking at the Socialist
International as this is the most serious association of parties,”
Tymoshenko said about her intention to become a Socialist in late May 2006
at the “congress of YTB victors”.

Still earlier, at the beginning of the previous election campaign [February
2006], Tymoshenko claimed she adhered to the ideology of solidarism, which
also has a great deal in common with leftist ideas.

Furthermore, Tymoshenko’s bloc includes the Social Democratic Party whose
leader is Vasyl Onopenko’s son-in-law, Yevhen Korniychuk. The ideological
roof for Social Democrats in the world is also the Socialist International.

Another YTB member are the liberals led by [Viktor] Pynzenyk, who are not
joining the European People’s Party but the Liberal International.

Add to this the fact that YTB representatives in the Parliamentary Assembly
of the Council of Europe belong to liberal (Olena Bondarenko and Oleksandr
Feldman) and socialist factions (Hryhoriy Nemyrya) and not the European
People’s Party.

Tymoshenko’s recent ideological summersault can be explained by the fact
that the European People’s Party is, in fact, the most powerful political
association in Europe – this is the party of French President Nicolas
Sarkozy with whom Tymoshenko began to develop relations two years ago,
German Chancellor Angela Merkel, European Commission President Jose
Manuel Barroso and the president of the European Parliament, Hans-Gert
Pottering.

Yet, the prospect of turning all these political players into allies is not
a reason for such a rapid change of political views.

Moreover, the Socialist International brings together equally powerful
personalities. To date, the status of observers in the European People’s
Party has been Our Ukraine and [Borys] Tarasyuk’s People’s Movement
[Rukh].
TYMOSHENKO WAS INVITED TO JOIN
Ukrayinska Pravda’s sources say that negotiations about Tymoshenko’s
joining the European People’s Party lasted for two months.

However, in Tymoshenko’s words it was not Fatherland that applied for
membership of the European People’s Party but the latter invited the most
charismatic Ukrainian politician to join it.

Martens was very surprised to learn that not so long ago Tymoshenko
proclaimed that her party’s course was to join the Socialist International.
“I have no confirmation of this information; I didn’t know this,” said the
leader of the European People’s Party answering a question from Ukrayinska
Pravda at the YTB congress on Sunday.

Integration into the right was backed in Tymoshenko’s team by [MP] Hryhoriy
Nemyrya. In the internal struggle his opponent was former Socialist Party
faction member Yosyp Vinskyy, who advocated joining the Socialist
International.

There were attempts to discuss this issue at the level of the YTB
leadership. Namely, statutory materials of both organizations were handed
out but in the context of the [coming] early election no-one wished to
consider such a minor problem.

As a result, it looks like the socialist idea in Tymoshenko’s bloc lost and
the rightist won. Integration into the European People’s Party is a fiasco
for Vinskyy who is, in fact, the third most important person in Tymoshenko’s
team today. From his answers it can be concluded that he is thinking about
leaving YTB.

In his interview with Ukrayinska Pravda, Vinskyy confirmed that negotiations
had been held regarding Fatherland joining the Socialist International but
it never came to a membership application.

“Today, the party decided to join the European People’s Party. As you saw,
it was unanimously supported by the congress. They have the right to do so.
And I have the right to decide whether to stay with this party. When they
receive their membership status then I will make up my mind,” Vinskyy said.

He also pointed to an obvious discrepancy: “I am a social democrat. Yuliya
Tymoshenko is a leftist politician and the European People’s Party is a
association of rightist Christian parties.”

It follows logically that having started the process of joining the European
People’s Party Tymoshenko will have to correct her ideological messages –
for example, to protect the inviolability of private property instead of
demanding a review of unfairly privatized facilities.

However, Yuliya Tymoshenko herself told the Ukrainska Pravda website that
her appearance in the European People’s Party is an exotic phenomenon.

“What are your personal views?”
“Centre-left, of course,” was Tymoshenko’s confident answer.
“Then you need to join the Socialist International!”

“Listen, the European People’s Party has a left wing that includes agrarian
parties, peasant parties and social democratic parties. This leftist wing of
the European People’s Party is much further to the left than the Socialist
International.”
SITUATION TRICKY NOW
Tymoshenko did not lie. But she didn’t say the whole truth either. The
European People’s Party really does include the Agrarian People’s Union of
Bulgaria. However, it positions itself as a “centre-right” force.

Portugal is represented in the European People’s Party by social democrats
that are so only in name and, in fact, they are conservatives, while in this
state the leftist force is the Socialists. After the 1974 revolution, all
parties in Portugal sought to add something leftist to their brands and this
causes confusion.

Portuguese social democrats used to be called the People’s Democratic
Party. The leader of the Portuguese social democrats is Jose Barroso – the
president of the European Commission and a person with rightist views.

It is difficult to forecast what Tymoshenko will do in the future. Even if
she receives the status of a full member of the European People’s Party this
status will have to be confirmed by actions on the basis of conservative
ideology.

Thus, she will have to protect not a hired worker but the owner of the
enterprise. She will have to speak against abortion and in favour of
reducing unemployment benefits.

Her readiness to take steps which are unpopular with ordinary people is not
compatible with all Tymoshenko’s previous activities in politics. If
Tymoshenko fails to change her stance then her actions that run contrary to
rightist ideology could become grounds for her expulsion from the European
People’s Party.

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22.  PARLIAMENT LIST OF OUR UKRAINE-PEOPLE’S SELF-DEFENCE:
QUOTAS OF PRYVAT, BALOHA, LUTSENKO, ‘LUZHNIKI GROUP’
Ukrainian propresidential bloc’s election list analysed

Ukrayinska Pravda website, Kiev, in Ukrainian 13 Aug 07
BBC Monitoring Service, United Kingdom, Tue, Aug 21, 2007

There are three large groups in the election list of the propresidential Our
Ukraine-People’s Self-Defence bloc: President Viktor Yushchenko’s, tycoon
Ihor Kolomoyskyy’s and former Interior Minister Yuriy Lutsenko’s, a popular
website has said. It profiled the three factions and other smaller groups in
the bloc.

The following is the text of an article by Viktor Chyvokunya entitled “The
list of Our Ukraine-People’s Self-Defence: quotas of Pryvat, Baloha,
Lutsenko, ‘Luzhniki group'” and published on the Ukrayinska Pravda website
on 13 August; subheadings are as published:

The Orange bloc moves towards the early election under the slogans of
cancelling people’s deputy immunity, with the money of new sponsors of the
project and with oaths not to form a grand coalition [with the Party of
Regions].

A week ago, the list of Our Ukraine-People’s Self-Defence was agreed and
voted at a congress, however so far it has not been published. One of the
delegates of the congress gave his copy of the list to Ukrayinska Pravda,
otherwise we would not have been able to get hold of it.

According to calculations inside the headquarters, about 100 positions in
the list are expected to make it to parliament. This means that the Our
Ukraine-People’s Self-Defence will have to receive a little over 19 per cent
of votes in the election, considering the distribution of votes given to
outsider parties.

Should some deputies move to executive offices, those below the 100 mark
will become MPs. Contrary to the list of the Party of Regions, where the
people of [tycoon] Rinat Akhmetov dominate, the list of the Our
Ukraine-People’s Self-Defence bloc can be divided into several sectors.
Tretyakov-Kolomoyskyy group
The president’s former first aide, Oleksandr Tretyakov, who waited for hours
in [the head of the presidential secretariat, Viktor] Baloha’s reception for
a meeting, was in 59th position.

The president’s former press secretary, Iryna Herashchenko, who is now in
charge of the UNIAN news agency, which Kolomoyskyy passed on to

Tretyakov, will manage it.

Tretyakov’s friend, Eduard Zeynalov, is 76th. He is the head of the
Kirovohrad regional headquarters of Our Ukraine-People’s Self-Defence.

Tretyakov’s impact turned out to be quite limited. His close associate Yuriy
Ruban was in 195th position and Tretyakov’s long-time friend and partner,
Volodymyr Karetko, a former first deputy head of the Ukrnafta board of
directors, was as low as 331st. However, the head of Ukrnafta, Ihor

Palytsya, is in 68th place.

He is a creature of Ihor Kolomoyskyy, who mediates contacts between the
oligarch and Viktor Baloha. Palytsya is a guarantee that the orange camp
considers interests of the Pryvat group in exchange for all kinds of
assistance from this financial-industrial group.

Lawyer Andriy Bohdan, who cooperated with Yushchenko in the times of the
Orange Revolution, is in 93rd place. He represents the Judicial Advisers
firm, which used to be called Pukshyn and partners, named after the deputy
head of the presidential secretariat, Ihor Pukshyn.

This structure was the Cabinet of Minister’s lawyer in the case of the
privatization of the Nikopol ferroalloys plant, where the interests of
Tymoshenko and Kolomoyskyy coincided. The lawyers said then that they
provided services to the Cabinet of Ministers for free.

Bohdan was included in the bloc’s list on the quota of People’s
Self-Defence. Contrary to Viktor Baloha’s announced ban for state officials
from the presidential secretariat and governors to run for parliament, there
are some exceptions.

Roman Tkach, the governor of Ivano-Frankivsk Region, is in 54th position in
the list. This region is the second strategically important one after
Dnipropetrovsk Region for the Pryvat group.

Here they own an oil refinery, a regional energy distributing company and a
ski resort. When after the revolution Konstantin Grigorishin tried to change
the management at regional energy distributing companies, Tkach came
personally to restore Kolomoyskyy’s managers at the enterprise.

It is not ruled out that Tkach was put forward as parliamentary candidate
for Pryvat to be able to have an even more loyal governor in Ivano-Frankivsk
Region.
Lutsenko-Babakov group
The biggest surprise in the list of Our Ukraine-People’s Self-Defence was
former Kiev mayor Oleksandr Omelchenko. He is part of Lutsenko’s quota.

It is expected that Omelchenko will support the former interior minister
[Lutsenko] in mayoral elections, which the orange camp strives to hold next
year.

There is a forecast that Omelchenko is going to be a deputy head of the Kiev
headquarters of Our Ukraine-People’s Self-Defence. This idea is supported by
the head of Our Ukraine’s Kiev branch, Mykola Martynenko.

People’s Self-Defence leader Yuriy Lutsenko is not just the number one in
Our Ukraine list. He filled the list with a large group of his supporters.
Some of Lutsenko’s people are directly linked with the Russian Luzhniki
group of Russian MP Aleksandr Babakov and influential entrepreneur Mikhail
Voyevodin.

Number 17 in the list is Ivan Spodarenko, the owner of Silski Visti
newspaper, which is the most popular publication in provincial areas.

Spodarenko left the Socialist Party and joined Lutsenko, who managed to find
sponsors for the newspaper. According to some sources, people related to
Babakov helped the publication.

Oleksandr Cherevko, one of the Silski Visti managers, is in 137th position
in the list. Number 41 in the list is Hennadiy Moskal, who used to be
Lutsenko’s deputy [interior minister] and was involved in the investigation
of the case of [Party of Regions MP] Borys Kolesnykov. It is now a matter of
honour for the head of the Party of Regions election headquarters
[Kolesnykov] to bring him to book.

Moskal is close to Lutsenko and at the same time to Davyd Zhvaniya. When
Zhvaniya was in charge of the Our Ukraine headquarters in Luhansk, Moskal
was the governor there.

When Zhvaniya was the emergency situations minister, he appointed the head
of the Crimean directorate of the ministry Serhiy Vasylenko, who used to be
Moskal’s office manager when Moskal was in charge of the State Committee for
Migration. Serhiy Vasylenko now occupies 77th position in the list of the
propresidential bloc.

No 49 is Kateryna Lukyanova, head of Lutsenko’s organizations in Vinnytsya,
such as Anticriminal Choice and Forward Ukraine. Before that she was in
charge of the Socialist Party in Vinnytsya and Moroz and Lutsenko even came
down to christen her daughter.

Serhiy Kharovskyy, former head of the internal security department of the
Interior Ministry in times when it was headed by Lutsenko, holds 69th
position. Work in police structures is not the only element in Kharovskyy’s
biography.

He once was the director of a combine plant in Kherson following his links
with Ukrahromashinvest structures. When Viktor Pinchuk received control of
Ukrahromashinvest, he removed Kharovskyy and after the revolution Kharovskyy
removed Pinchuk from Ukrahromashinvest.

Kharovskyy also was a member of the Ukrnaftoprodukt supervisory board in
times when the structure was part of the sphere of interests of Andriy
Derkach [businessman who now heads the Enerhoatom nuclear energy company].
Sources in the People’s Self-Defence say that Derkach and Kharovskyy split
several years ago.

In addition, Kharovskyy was the head of the Khersonnaftoprodukt supervisory
board. MPs from the Party of Regions, Lisin and Zlochevskyy, and a Russian
group Alyans are shareholders of Khersonnaftoprodukt.

Kharovskyy was formally nominated to the election list of the
propresidential bloc by the Forward Ukraine party. He is positioned as a
member of the coordination council of the nongovernmental organization
Anticriminal Choice.

Yuriy Hrymchak, a former deputy governor of Donetsk Region and earlier the
head of Donetsk regional branch of the Socialist Party of Ukraine, where
Lutsenko appointed him instead of himself, is in 73rd place in the list.
After Lutsenko broke up with the Socialists and moved to Forward Ukraine,
Hrymchak became the Forward Ukraine leader in Donetsk Region.

Oleksandr Bobylyov, a former head of Dnipropetrovsk police in Lutsenko’s
times, is in 81st place. As a leader in a Ukrainian region which is crucial
for the Pryvat group, he built relations with Kolomoyskyy, although,
according to sources in People’s Self-Defence, the relations “transformed
into antagonism”.

Yuriy Lutsenko’s brother, Serhiy, the founder of the Anticriminal Choice, is
in 85th place. Orest Drul, People’s Self-Defence spin doctor, who was hired
by Taras Stetskiv last autumn to make up the concept of this project which
was then called “people’s justice”, is No 101. Taras Stetskiv himself is in
29th position.

There are several Lutsenko’s fellow townsmen in the list. A journalist from
Rivne, Oleksandr Smyk, is in 113th position. He was in charge of the
Ternopil branch of the Anticriminal Choice and of the Forward Ukraine party.

A deputy chief editor of Rivne Vechirne newspaper and former Socialist,
Serhiy Shturhetskyy, is in 133rd position. When Lutsenko joined the Forward
Ukraine party, Shturhetskyy became its leader in Rivne Region.

Lutsenko’s friends from the Russian Babakov-Voyevodin group are represented
in the list by two people. Kyrylo Kulykov was in charge of the Ukrainian
Interpol bureau when Lutsenko was the internal affairs minister. Before
that, Kulykov was a representative of the Luzhniki group in some business
projects on the territory of Ukraine.

Ihor Pikovskyy is in 97th place. He is mentioned as “a public activist” in
Forward Ukraine documents. It is not known what he does, but several years
ago he was appointed the head of the supervisory board at the Promzvyazok
plant, which belongs to the Luzhniki group.

A large part of Babakov and Voyevodin’s assets is registered on the
territory of the Promzvyazok plant on 6 Moskovskyy avenue, particularly, the
First Investment Bank.
Kyrylenko group and Yushchenko family
Some time ago Viktor Yushchenko’s brother Petro sold his shares in the First
Investment Bank to this Russian group. Petro Yushchenko is in 39th position
in the list. His son, the president’s nephew and the head of the Kharkiv
branch of Our Ukraine, Yaroslav Yushchenko, is in 87th position.

No 12 is Liliya Hryhorovych, ready for self-immolation, who with the help of
a bottle of gasoline ensured herself a life-long place among members of the
propresidential bloc.

Yushchenko’s relative through the christening of children and former head of
Azhio bank, Stanislav Arzhevitin, is No 63. On the day prior to Yushchenko’s
inauguration, Arzhevitin made him hetman of Ukrainian Cossacks. A memorial
plaque stating this event is located right in Bohdan Khmelnytskyy Square in
[central] Kiev.

A former industrial policy minister, Volodymyr Shandra, is in 75th position.
He is a relative of the president’s son-in-law, Oleksiy Khakhlyov. Khakhlyov
himself, as is known, was not accepted by the Our Ukraine congress this
spring.

The editor-in-chief editor of Donetsk based newspaper Ostrov, Yevhen
Talyshev, is No 83. His quite privileged position can be explained by
Talyshev’s conceptual struggle against Yanukovych in his newspaper for
several years. Another explanation is that Talyshev is close to the
president’s brother and Petro Yushchenko’s deputy carries a press card of
the Ostrov newspaper.

Illya Rybchych, No 90, was removed after Yanukovych’s second arrival, from
the post of the head of Ukrhazvydobuvannya, the most profitable subdivision
of Naftohaz.

He is believed to be close to the “hutsul” group in Yushchenko’s circles and
to Petro Yushchenko. Rybchych was included in the list on the quota of the
Ukrainian Right.

It is worth remembering that Our Ukraine leader Vyacheslav Kyrylenko owes
his position to the fact that Petro Yushchenko liked him. Kyrylenko is in
second position in the list and his friend and head of the Our Ukraine
executive committee, Oleh Humenyuk, in No 34.

The head of Our Ukraine youth organization, Stepan Barna, is in 108th
position. He is also said to be close to Kyrylenko, although Baloha played a
significant role in Barna’s career by supporting his election as a member of
Our Ukraine presidium.
Zhvaniya’s group
Davyd Zhvaniya used to be Viktor Yushchenko’s favourite once and at the

peak of their friendship they became relatives through christening.

Their relations cooled down with time and Zhvaniya accused the president of
weakness and left Our Ukraine. It was not so easy for him to even receive a
place in the election list because the president himself was against it.

Eventually People’s Self-Defence succeeded in securing independence in
forming its quota and Zhvaniya, who at the beginning of the project was the
first to invest in Lutsenko, received 21st position.

Recommended by Zhvaniya, Nataliya Lukyanova, the head of the chemical
addiction prevention and AIDS, is in 89th position.

There are two more people close to Zhvaniya: 105th Nataliya Musevych and
141st Yuriy Rezunnyk. Both are included in the People’s Self-Defence quota.
Musevych was responsible for legal advice from the very beginning of the
project.

Rezunnyk and Musevych were members of the Enerhoatom management team

when Zhvaniya cooperated with this state company. Also, Rezunnyk and
Musevych are founders of the Financial Investments firm which was used at the
presidential elections as a cover. At that time, Zhvaniya was deputy head of
Yushchenko’s election headquarters.

Financial Investments owns a six-litre G-class Mercedes, which Andriy
Yushchenko [the president’s son] drives. When the scandal with Andriy
Yushchenko’s BMW M6 broke out, the Financial Investments company

sacrificed the numberplate of one of its cars so that Andriy Yushchenko’s
sports car with Czech numbers did not stand out among other cars.
Katerynchuk’s group
The fact that Mykola Katerynchuk refused to vote with indignation for the
Our Ukraine-People’s Self-Defence list at their joint congress is explained
by him being fooled.

It was first planned that he should receive three positions in the first
100. However, only Katerynchuk himself turned out among the first 100
positions. He was in fifth position but it was made clear for him that he
would only be used as a ceremonial bystander.

Katerynchuk’s second person, spin doctor Viktoriya Pidhorna, is in 121st
place and Svitlana Kustova, a lawyer from Moor and Krosondovych firm is in
145th place. Katerynchuk’s partner in this firm, Oleh Boyko, received 250th
place.
Petro Poroshenko’s group
After Petro Poroshenko refused to run for parliament in exchange for a post
with the National Bank, it was expected that his father will run for
parliament instead of him. It was announced by the former secretary of the
National Security and Defence Council [Poroshenko], who said: “I cannot say
that there will be no Poroshenko on the list.”

However, Poroshenko’s father, who has been in charge of the Vinnytsya branch
of Our Ukraine for many years, was not included in the final version of the
list. According to some reports, Oleksiy Poroshenko got seriously ill – he
had a stroke. Although for the sake of justice and honour he should have
been included in the list.

Yuriy Stets, producer general of the 5 Kanal television channel, can
conditionally be considered Poroshenko’s man. He is from Lutsenko’s quota
and has No 53 in the list.

Viktor Korol, who did not become the head of Security Service of Ukraine, is
in 88th position. Like Oksana Bilozir (44) and Pavlo Zhebrivskyy (67), Korol
did not undergo lustration executed by the new party leaders towards
Poroshenko, which was much targeted and not quite fair.
Viktor Baloha’s group
Although Baloha is the head of the presidential secretariat and the head of
the propresidential bloc election headquarters, he does not have a very big
team.

Olesya Orobets, the daughter of deceased people’s deputy Yuriy Orobets, is
in 18th position. Her father took active part in the election in Mukacheve
[Transcarpathian Region] when victory was stolen from Viktor Baloha.

Orobets himself was heavily beaten in the conflict.

Ihor Kril is in 40th position. He is Baloha’s first deputy in the election
headquarters and is very close to him personally. No 60 is Mukacheve city
mayor Vasyl Petyovka, Baloha’s cousin.

Vlad Kaskiv owes his 31st position in the list to an invitation from Viktor
Yushchenko supported by Baloha. Kaskiv’s companion, Illya Shevlyak (123rd
position) was appointed the head of the propresidential election
headquarters in Luhansk, following Baloha’s decision.

Mykola Kovach, who is in 99th position, is in charge of the Transcarpathian
Hungarian institute. Some of Baloha’s people did not make it to the upper
part of the list, such as his advisers Anatoliy Medvid (203) and Serhiy
Lukyanenko (287), Halyna Horokhovska from Mukacheve knitting factory (306)
and the head of Uzhhorod district administration, Anatoliy Kolibaba (383).

Besides the groups of influence in the election list of Our Ukraine-People’s
Self-Defence, there are also several interesting details. Oleksandr
Bakumenko, who is in 118th position, is the head of the Union of poultry
breeders association was proposed by the Ukrainian Right.

The owner of Nasha Ryaba [poultry company] is also a member of the Ukrainian
Right, which provides the answer to the question whose creation Bakumenko
is.

There is also an interesting tandem of opponents in the election list of the
propresidential bloc. The previous Kiev mayor, Oleksandr Omelchenko, is in
13th place and his son in 120th place. The father of the present secretary
of the Kiev city council [Oles Dovhyy], Dovhyy Senior is in 55th place and
the uncle of the secretary, Dovhyy Junior, in 119th place.

To confirm agreements concerning Petro Poroshenko, the head of the National
Bank of Ukraine, Volodymyr Stelmakh, is in 28th place.

There are two enigmatic figures in the upper part of Our Ukraine. No 61 is
Yuriy Anatoliyovych But, who was taken from Lutsenko’s personal quota.

In the documents of People’s Self-Defence, But is written down as “a public
activist” and in the tax administration database he is registered as a
cofounder of United Consultancy of Ukraine. This company’s second founder is
a Russian company dealing with tax optimization, United Consultants FDP.

According to sources in the Party of Regions, But moved to Ukraine from
Russia not long ago. In Russia, he worked in some projects with Putin’s
administration.

Another interesting story is No 107 in the list, Burzu Khanhulu Aliyev
[Burza Xanqulu oglu Aliyev]. The only mention of him on the Internet is the
deputy president of the public organization with the complicated title “Kiev
centre of journalistic research of GUAM countries Silk Route”.

Our sources in the political council of the Our Ukraine-People’s
Self-Defence bloc told us seriously that Aliyev was included in the list
based on agreements between Yushchenko and the Azeri president within

the framework of friendship of nations and oil corridors.

There has been no information in the media about Burzu Aliyev. However,
Ukrayinska Pravda managed to find out that until recently Aliyev worked as a
top manager in Ekmi-furniture and Ekmi-colour that produce dye for hair.

Aliyev moved to Kiev from Azerbaijan in the years when the present foreign
minister of Azerbaijan, Elmar Mammadyarov, studied at the international
relations department of the Kiev Taras Shevchenko University.

They were friends as representatives of the same Diaspora. Maybe this is the
source of information about secret grounds for Aliyev to appear in the Our
Ukraine-People’s Self-Defence list.

And there is another totally unexpected coincidence. A representative of the
Armenian Diaspora, Garegin Arutyunov, runs for parliament in the election
list of the Yuliya Tymoshenko Bloc in 106th position. Considering that
Aliyev of Our Ukraine is from Nagornyy Karabakh, there might be another
conflict line in the new convocation of parliament – Armenian-Azerbaijani.
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
23.  UKRAINIAN COURT OBLIGES ELECTION BODY TO ADOPT
NEW RULES FOR HOME VOTING/MOBILE BALLOT BOXES 

REPORT: By Olena Heda, Kommersant-Ukraina, Kiev, in Russian 21 Aug 07
BBC Monitoring Service, United Kingdom, Tuesday, Aug 21, 2007

The District Administrative Court of Kiev has satisfied law suits brought by
the opposition Yuliya Tymoshenko Bloc and the pro-presidential Our
Ukraine-People’s Self-Defence bloc over the Central Electoral Commission’s
13 August decision that would allow people to vote at home without proving
their inability to vote at polling stations.

The blocs said that this would open the way for vote-rigging at the 30
September parliamentary election.

The following is the text of the report by Olena Heda, entitled “Court does
not limit the freedom of movement. The Central Electoral Commission has
been obliged to adopt new rules for voting at home” and published in the
Ukrainian newspaper Kommersant-Ukraina on 21 August:

At its session yesterday [20 August], the District Administrative Court of
Kiev obliged the Central Electoral Commission [CEC] to define the procedures
for proving voters’ inability to move independently and to cast ballots at
polling stations.

The court rendered this decision after considering suits filed by the Yuliya
Tymoshenko Bloc [YTB] and the Our Ukraine-People’s Self-Defence bloc.

The suits were prompted by the CEC resolution dated 13 August that said that
the individuals who want to vote at home can simply file a statement to this
effect.

“It was not determined who should confirm that such citizens cannot move
independently, because this creates conditions for possible vote rigging,”
the deputy head of the Our Ukraine-People’s Self-Defence legal department,
Valeriy Karpuntsov, told Kommersant.

Representatives of the two blocs immediately filed the suits in an attempt
to declare the CEC resolution as unlawful. They insisted that the CEC should
be obliged to define a clear procedure for confirming the inability to move
independently by the citizens who expressed their wish to vote at home. The
two suits were considered as a consolidated case during their hearing.

Having listened to the arguments by the sides, a board of judges declared
the commission’s resolution as unlawful “in the part dealing with the
approval of the form of an application by a voter who is temporarily
incapable of moving independently with a request to allow voting at home”.

The court obliged the CEC to adopt a resolution that should approve
mandatory requirements for statements on voting at home and to approve the
procedure for checking the information in such statements.

“Unfortunately, this court decision, as well as the court’s previous one on
the YTB registration, does not look to be credible,” Vladyslav Zabarskyy, a
representative of the [ruling] Party of Regions in the CEC, told Kommersant.

He said that territorial election commissions have been given sufficient
powers to check the justification for voting at home in each specific case.

“In reality, there are no grounds to use home voting for the sake of vote
rigging,” Zabarskyy said. He believes that about 2m voters will not be able
to cast ballots at home if the requirements are made tougher.
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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24.  CINCINNATI MAYOR MALLORY OFF TO KHARKIV, UKRAINE

Howard Wilkinson, Enquirer, Cincinnati, Ohio, Monday, Aug 20, 2007

CINCINNATI – Cincinnati Mayor Mark Mallory will head Tuesday
to Kharkiv, Cincinnati’s sister city in the Ukraine, for three days of
talks with a group of mayors from around the world.

On the agenda, the mayor said, will be building business relationships
with officials from other countries and promoting the city’s cultural
and business opportunities.

“My goal has always been to take Cincinnati’s story out to the rest of
the world; and it’s a pretty good story to tell,” said Mallory, who
will be making his first international trip as mayor.

Cincinnati has had a “sister city” relationship with the Ukrainian
city since 1989. Mallory won’t be the first to visit – former mayor
Charlie Luken has been there; and, in 1995, then-mayor Roxanne
Qualls led a 32-member delegation for a nine-day visit.

Mallory’s delegation will be much smaller – only five people,
including himself. He will be accompanied by Stan Bahler, president of
the Cincinnati-Ukraine Partnership; Lt. Kurt Byrd of the Cincinnati
Police Department, and two of his staff members, chief of staff Carl
Walker and press secretary Jason Barron.

Cincinnati taxpayers won’t be picking up the tab – the
Ohio-Kentucky-Indiana Sister City Coalition and Kharkiv City Council
are sponsoring the trip.

Kharkiv officials have also invited mayors from Russia, the Czech
Republic, Bulgaria, Latvia, Lithuania, Georgia, Germany, Israel and
Poland for a celebration of the 64th anniversary of Kharkiv’s
liberation from Nazi occupation in World War II.

“We’re hoping, that by continuing these exchanges with Kharkiv, we’ll
e looking at more opportunities for economic development here in the
future,” Bahler said.

In addition to meetings with the mayors from other international
cities, Mallory said he plans on meeting with the heads of various
Kharkiv city departments.

Mallory said he is taking a gift for his counterpart in Kharkiv – a
painting by Jarrett Jamison, a Walnut Hills High School graduate who
is studying art at UC, who painted his work “Freedom” for Cincinnati’s
ArtWorks program.
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http://news.enquirer.com/apps/pbcs.dll/article?AID=/AB/20070820/NEWS01/308200034/&template=printpicart

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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25. FLORIDA WOMAN QUILTS FOR ORPHANS IN UKRAINE

Brad Buck, Staff Writer, DailyCommercial.com, Florida, Mon, Aug 20, 2007

BUSHNELL – Sandra Shield has turned a lifelong passion for sewing into
quilts for orphans in the Ukraine. “I’ve been sewing since I could hold a
needle,” she said. Shield, 68, gets plenty of help from George, 69, her
husband of 50 years.

They’ve lived in Bushnell for about five years, coming here from Lynchburg,
Va. Between the two places, they’ve also lived in Ocala and Leesburg, where
George Shield worked as an educator and associate pastor.

The Shields’ son, Ron, works in upper management for McDonald’s. Sandra
Shield had sewn several quilts for people staying at Ronald McDonald houses,
where families of dying children can stay while the kids are hospitalized.

A few years ago, Ron Shield and his wife, Tami, visited the Ukraine and came
back with about 3,000 photographs, George Shield said Friday from the
Bushnell family room.

When George and Sandra saw the pictures, they knew they had to help the
orphans. “That’s when the Lord put it in me,” she said.

Working together in the what they call their “sweat shop,” George and Sandra
have made seven afghans so far for orphans in the Ukraine. They send them
either to the 700 Club or to Operation Blessing International, both in
Virginia Beach, Va. From there, the materials go to the Ukraine.

The Shields said they’ve learned to mass produce quilts. She starts the
quilts, he adds some touches and she finishes the job.

“There’s just something about a quilt,” Sandra Shield said. “You just feel
like Linus and his security blanket.”

Orphans abound in the Ukraine, where more than 30,000 of them live,
according to Operation Blessing. Many of orphans’ parents lead lives filled
with alcohol, drugs and crime and abandon the children at an early age,
George Shield said. Then, unfortunately, after many of the orphans get too
old to live in an orphanage, they too turn to a life of crime, he said.

The Shields have not had the privilege of visiting the Ukraine, but they
hope to go someday soon. They receive DVDs from the church, and through
them, they feel like they know the children.

“We’re just trying to show those kids that somebody loves ’em and cares
about ’em,” George said. For more information or to help the Shields make
and ship more quilts to the orphans, call them at 569-0166.
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http://dailycommercial.com/Main.asp?SectionID=31&ArticleID=21074
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
26.  FLORIDA RESIDENT FINDS CALLING IN SIMFEROPOL, UKRAINE

Roxanne Brown, Staff Writer, DailyCommercial.com
Leesburg, Florida, Monday, August 20, 2007

GROVELAND – It’s been said that one person can make a difference. For
special needs children in Simferopol, Ukraine, that person is Amy Gomes
from Groveland.

Gomes, the founder of Hope Haven Ukraine, now a 501(c) nonprofit
organization, intends to provide education and therapy for those children by
building them a school.

Gomes is leaving to Simferopol this week for 4 to 5 months to see if she can
get things going. “I think there’s a reason God said, ‘You’re going to
Ukraine. You’ll be working there,’ ” said Gomes.

Gomes, a therapist and owner of Central Florida Pediatrics, has traveled to
Russia and Romania, providing therapy and other services to children living
in orphanages.

Things changed in 2001 when Gomes said she ended up in Ukraine and
found her calling in life.

Gomes said she noticed kids with even the slightest disability were shunned
from society, hidden by their families in their homes or placed in
orphanages – even if they weren’t orphaned.

Gomes said disabled kids are not easily accepted; special needs students are
not allowed to attend public schools.

A child with something as simple as a leg length discrepancy faces serious
problems. Gomes said people there would only see how that child would
interfere with other children in the crowded schools because they wouldn’t
be able to keep up or climb steps.

Families may also be financially unable to provide the proper care for their
children.

She said many parents are single moms without governmental support and
services and are forced to stay home with their children. This creates a
greater financial hardship, forcing parents to place the child in an
orphanage.

“Although the mentality is changing in Ukraine, special needs kids are
taboo. The people believed that having a child with a disability was like
sin in the family or a sign that you’d done something wrong,” said Gomes.

“I just want to give them a little hope that their child, if disabled, can
be as productive as possible and have a life regardless of their physical
disability.” “In fact, that’s where the name (Hope Haven Ukraine) came

from,” she said.

After that first visit, Gomes kept thinking there was something there she
needed to do but didn’t know what. It was just a feeling. She visited
several more times and even ended up adopting a child who is now grown

and helping in her efforts.

One day, Gomes said she heard her inner voice telling her she was to build a
school for the children in Simferopol. She said the moment she spoke out
about it after that, things started coming together in every direction.

“It was incredible. It’s got to be God. It’s not my imagination. I just
stood back in awe and said, “Wow, this is cool,” Gomes said.
Gomes said people started donating every type of item needed for a special
needs school.

Walkers, wheelchairs, supplies, books and every item imaginable started
rolling in and before she knew it, filled up a hauler truck and then two.

She was able to secure a bank loan for construction costs and not only
received the blessing of Clermont’s Real life Christian Church, her church
of 22 years, but their support, both emotionally and as much as they could
do financially.

The local Girl Scouts organization chipped in and donated a load of toys,
desks and backpacks and a local airport owner even donated office and
school supplies he had stored away in his hangar.

Gomes said when the school is built, it will be the first school of its kind
in Simferopol. It will not only provide therapy clinics, which there is a
few of there, but education as well, which there is not.

“I really hope it will be the beginning of a really unique thing. In fact, I
know it won’t be the last school I open there,” said Gomes.

On Aug. 25, Gomes will leave for Simferopol to find, secure and purchase
the location for Hope Haven.

Although Gomes said she is aware of about 300 disabled children who could
benefit from such a school, Hope Haven will begin with 50 children, ages
3-18, with various disabilities.

Teachers, therapists, nurses, the director and all non professional
personnel will be nationals (from Ukraine), with salaries provided through
the American based, non-profit corporation.

Parents of the children in the school will be expected to participate in
voluntary services and a small fee will be charged per month, which will be
offset by scholarships set up here to cover tuition.

Gomes is hoping to have the 5,000 square-foot $250,000 building
constructed and open by 2008.

She said it will have handicap accessible playgrounds and gardens, along
with a barn filled with horses and other animals; something Gomes thinks
will add to the therapy’s benefits.

As of now, Gomes said she has sufficient supplies to start the first school,
but still needs financial donations for construction, tuition costs and
upkeep.

She also said her dream includes donated buses with wheelchair lifts to get
the children to and from school. “There’s no need to open the schools if I
can’t get the kids there,” she said. Besides all that, another thing Gomes
said she needs plenty of is prayers.

“I don’t know where all the money is going to come from yet, but I don’t
care. I just know it will come, whatever I have to do,” said Gomes. “If I
have to sell my home or use my retirement for it, that’s fine. I’ll just
work till I die.”

“It’s just that I know these kids are sitting at home not going anywhere or
doing anything and it breaks my heart,” she said.

For more information or to make a donation, visit www.hopehavenschool.com
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http://dailycommercial.com/Main.asp?SectionID=31&ArticleID=21074
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
27.  PATIENTS TOAST UKRAINE’S ‘WINE THERAPY’

By Helen Fawkes, BBC News, Alushta, Crimea, Friday, Aug 17, 2007

ALUSHTA, Crimea – We are all being told to lay off too much booze,
but a Ukrainian health spa is prescribing patients a course of cocktails.

The Crimean Stars Sanatorium in Alushta has devised a treatment called
“wine therapy”.

It claims the treatment can help alleviate a range of medical problems like
stress, impotence and heart disease. Even though it may sound like a
joke, the sanatorium takes its “wine therapy” very seriously.

Your first stop is not the bar. Instead, there is a medical consultation.
Patients are then advised which cocktail they should take.
MODERATION
Dr Alexander Sheludko, who came up with the treatment, points out that
medical research has shown that wine in moderation can be good for you.

He boasts that hundreds of people have now had a taste of his medicine.
“Wine is a live product which contains vitamins. It has lots of compounds
which are biologically active,” he says.

There are seven different types of cocktails on offer. The formula is simple
 – lots of dried herbs are mixed with lots of Crimean wine. Sometimes
vodka is added for an extra kick.

Then all you have to do is sit back, relax and make sure you take your
“prescription” three times a day for a week or two. Small glasses of the
drink are served from 0700 in the sanatorium’s cafe.
‘RELAXING’
Lena Borodina, who works as a hairdresser in Russia, has tried lots of
alterative treatments. She says that living in Moscow is stressful and that

she travelled to the Ukrainian clinic for something to help her unwind.

“I think that wine therapy is an excellent type of treatment. It relaxes
you, gives you strength and fills you with vigour,” she adds. “I’m happy

that it seems to be working well and I rather enjoy it.”

But Ukrainian health experts are sceptical about whether there are any
real medical benefits from “wine therapy”.

There is also the question about whether it is such a good idea in a
country that has high levels of alcoholism.

“I think that such therapy could lead to someone becoming addicted to
drink. It could become the first step towards psychological dependence,”
Dr Iryna Lipych, a specialist in alcohol dependency, says.

“It is also important to remember that alcohol causes lots of medical
problems, and especially that it has a bad effect on liver.”

Some of the Crimean cocktails taste very strong. If they are drunk on an
empty stomach, they could well make you feel a bit tipsy.

Wine therapy may not be a panacea, but it does give a whole new
meaning to the phrase “just what the doctor ordered”.
———————————————————————————————-
LINK: http://news.bbc.co.uk/2/hi/europe/6951660.stm
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
28. SONGS YOUR MOTHER SHOULD NEVER HAVE TAUGHT YOU?
Erotic Symbolism in Ukrainian Folk Songs”
Lecture in English, comments and singing in Ukrainian,
Saturday, August 25, 2007, Ivan Honchar Museum, Kyiv, Ukraine

Action Ukraine Report #861, Article 28
Washington, D.C., Thursday, August 23, 2007

WASHINGTON- Remember all those old Ukrainian folk songs you have been
singing all these years, the ones you learned from your mama and baba? Do
you really know what they’re about?  The love song lyrics have special
meanings, and are rich in deep ancient symbolism of a most interesting kind.

Orysia Tracz of Winnipeg , Manitoba, Canada, a specialist in Ukrainian
ethnology, writer, translator, columnist for The Ukrainian Weekly,
translator of Ivan Honchar’s album Ukraine and Ukrainians, will present a
lecture in English with comments and singing in Ukrainian on “Songs Your
Mother Should Never Have Taught You? Erotic Symbolism in Ukrainian
Folk Songs” in Kyiv on August 25th.
           KOKHANNIA po-ukrains’ky / LOVE Ukrainian-style:
                            Love Themes in Ukrainian Folk Art
15:00  [3 P.M.]  Saturday, August 25, 2007
Ivan Honchar Museum — Ukrainian Centre of Folk Culture.
29, Sichnevoho povstannya, Kyiv    [east of Pecherska Lavra]
With an exhibition from the Museum’s collections —

All expats, the business community, tourists, lovers of Ukrainian song
welcome! Proceeds to benefit the educational programmes of the

Ukrainian Centre of Folk Culture ” Ivan Honchar Museum”.

Bus #24 to the final stop at Pecherska Lavra. TROLLEYBUS #38

Pecherska Lavra. Nearest Metro station is Arsenal’na, then transfer to bus.
Telephone(+380-44) 288 9268, 288 5419; Fax: (+380-44) 288 9268
E-mail: honchar_museum@ukr.net.                     
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
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14. EUGENIA SAKEVYCH DALLAS, Author, “One Woman, Five
Lives, Five Countries,” ‘Her life’s journey begins with the 1932-1933
genocidal famine in Ukraine.’ Hollywood, CA, www.eugeniadallas.com.
15. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
16. SWIFT FOUNDATION, San Luis Obispo, California
17. TRAVEL TO UKRAINE website, http://www.TravelToUkraine.org,
A program of the U.S-Ukraine Foundation, Washington, D.C.
18. BUYUKRAINE.ORG website, http://www.BuyUkraine.org.
A program of the U.S.-Ukraine Foundation, Washington, D.C.
19. DAAR FOUNDATION, Houston, Texas, Kyiv, Ukraine.

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AUR#860 Aug 22 Parliamentary Election Concerns; Big Orange Wolf; Moscow & Kyiv Elections; Shadow of Russia’s Dairy & Meat War With Ukraine;

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
                        
ACTION UKRAINE REPORT – AUR – Number 860
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., WEDNESDAY, AUGUST 22, 2007
INDEX OF ARTICLES  ——
Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article
National Democratic Institute (NDI), Kyiv, Ukraine, Mon, Aug 20, 2007

2REPORT: COMMITTEE OF VOTERS OF UKRAINE, MONITORING
OF THE EARLY PARLIAMENTARY ELECTION IN UKRAINE
Committee of Voters of Ukraine (CVU), Kyiv, Ukraine, Wed, Aug 15, 2007

3NO ONE IS AFRAID OF THE BIG ORANGE WOLF
OPINION: By Alexei Pankin, The Moscow Times
Moscow, Russia, Tuesday, August 21, 2007. Issue 3725. Page 9.

4UKRAINE: ELECTION SET TO BRING ANOTHER CRISIS
ANALYSIS & COMMENTARY: by Zoltán Dujisin
Inter Press Service (IPS), Rome, Italy, Monday, August 20, 2007

5THE REALITY OF UKRAINE’S REVOLUTION
Three years after the Orange revolution, reform is glacially slow

ANALYSIS & COMMENTARY: By Lawrence A. Uzzell,
President, International Religious Freedom Watch
The Christian Science Monitor, Boston, MA, Tue, Aug 21, 2007

6NEW OLD PROPOSITIONS: CANCELLATION OF IMMUNITY OF
DEPUTIES AS A REGULAR SLOGAN OF THE ELECTION CAMPAIGN
By Anastasia Smagina, UCIPR analyst, Research Update. Vol. 13, No 24/496,
Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Wednesday, 11 July 2007

7AN UNHAPPY BIRTHDAY FOR UKRAINE’S CONSTITUTION
ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Senior Journalist, based in Ukraine.
Eurasian Home, Moscow, Russia, Monday, June 28, 2007

8KIEV’S HAND
Moscow and Kiev are interested in each other’s upcoming elections
ANALYSIS & COMMENTARY: By Leonid Petrov
Versiya, No. 32, Moscow, Russia, Mon, August 20, 2007

9RUSSIAN LIKES AND DISLIKES IN UKRAINE
ANALYSIS & COMMENTARY: By Vyacheslav Nikonov
President of the Politika Foundation.
RIA Novosti, Moscow, Russia, Thursday, August 16, 2007

10“KIEV RESORTS TO TRANSIT BLACKMAIL”
Russian-Ukrainian Relations Remain Difficult; Presidential Meeting Postponed
Meat and dairy trade wars announced by Russia at the beginning of 2006
ANALYSIS & COMMENTARY: By Ilona Zayets
Nezavisimaya Gazeta, Moscow, Russia, Wed, August 15, 2007

11WHOSE PROMISE IS SWEETER? UKRAINIAN PARTIES HAVE
STARTED PRESENTING THEIR ELECTION PLATFORMS
ANALYSIS & COMMENTARY: Alla Yeremenko, Nataliya Yatsenko
Mirror-Weekly 30 (659), Kyiv, Ukraine 18-24 August 2007

12PROMINENT WRITER CALLS FOR RECOGNIZING NICHOLAS
II, FAMILY AS VICTIMS OF POLITICAL REPRISALS
Interfax, Moscow, Russia, Saturday, August 11, 2007

13RUSSIA: GREAT TERROR REMEMBERED
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, August 10, 2007
========================================================
1
NATIONAL DEMOCRATIC INSTITUTE (NDI) DELEGATION
VOICES CONCERNS  IN ADVANCE OF UKRAINE’S ELECTIONS

National Democratic Institute (NDI), Kyiv, Ukraine, Mon, Aug 20, 2007

KYIV – The National Democratic Institute’s pre-election delegation today
concluded that the campaign period is so far free from the most egregious
problems that marred previous Ukrainian elections, but the delegation is
troubled by some election procedures that appear to be a step backward and
could lead to fraud.

The delegation was composed of former Congressman and House Democratic
Caucus Chair Martin Frost, elections consultant and former Deputy Director
of the OSCE’s Office for Democratic Institutions and Human Rights (ODHIR)
Peter Eicher, former United Nations Assistant Secretary General Cedric
Thornberry, and NDI Eurasia Deputy Director Katie Fox.

“This election offers Ukrainians a genuine choice among several political
blocs waging vigorous campaigns that are widely reported to voters by the
media,” said Martin Frost.  He added that, “unfortunately, changes in the
election law represent a real step backward from recent progress towards
more democratic elections.

Changes to the law make it easier to commit fraud, could create confusion,
and may lead to the disenfranchisement of many Ukrainians..   We are
hopeful, however, that these elections will meet international standards for
democratic elections.”

The pre-election delegation was particularly concerned with several changes
to the election law;

Changes to the requirements for voting at home that increase the possibility
this procedure could be abused as it has been in the past.

A new provision that requires border guards to track voters who have left
the country, raising the possibility that large numbers who return shortly
before the election could be disenfranchised.

The abolition of any provision for absentee voting by people who have either
moved or are traveling inside the country  away from their home precincts.

Another concern is the politicization of the Central Election Commission
(CEC), which has led to an erosion of trust among political parties in its
ability to organize the election fairly.

“It is not too late for the CEC to take steps to remedy the problems we’ve
outlined,” said Peter Eicher.  “If CEC members can summon the courage to
overcome political influences, and act in the spirit of cooperation, they
could do a great deal to build confidence in the electoral process.”

Katie Fox concluded, “As election day approaches, all electoral blocs and
election officials must be genuinely committed to democratic practices.”

NDI is a non-profit organization working to strengthen and expand democracy
worldwide. NDI has conducted over 100 impartial pre-election, election day,
and post-election observation delegations around the globe. NDI does not
seek to interfere in Ukraine’s electoral process.
———————————————————————————————–
STATEMENT: BY NATIONAL DEMOCRATIC INSTITUTE’S (NDI)
PRE-ELECTION DELEGATION TO UKRAINE’S SEPTEMBER
30, 2007 PARLIAMENTARY ELECTIONS REGARDING THEIR
OBSERVATIONS, CONCERNS, RECOMMENDATIONS

National Democratic Institute (NDI)
Kyiv, Ukraine, Monday, August 20, 2007

This statement is offered by an international pre-election delegation
organized by the National Democratic Institute (NDI). The delegation
visited Ukraine from August 14 to August 20 to assess preparations for
the September 30, 2007 Parliamentary elections.

This delegation was composed of former Congressman and House
Democratic Caucus Chair Martin Frost, elections consultant and former
Deputy Director of the OSCE.s Office for Democratic Institutions and
Human Rights (ODIHR) Peter Eicher, former United Nations Assistant
Secretary General Cedric Thornberry, and NDI Eurasia Deputy Director
Katie Fox.

The delegation.s purposes were to demonstrate the interest of the
international community in the development of a democratic political process
and democratic governance in Ukraine, and to present an accurate and
impartial assessment  of the political environment and its implications for
democratic development.

In late September, NDI will deploy a 30-person international observer
delegation that will monitor the September 30 elections and the
post-election period. NDI.s programs in Ukraine are funded by a grant
from the U.S. Agency for International Development.

The NDI pre-election delegation met with a diverse group of Ukrainian
political and civic leaders, non-governmental organizations and domestic
election groups, electoral authorities, government officials, and
representatives of the media and the international community in Kyiv.

The delegation conducted its activities in accordance with the laws of
Ukraine and the Declaration of Principles for International Election
Observation.

NDI does not seek to interfere in Ukraine.s election process, and recognizes
that, ultimately, it will be the people of Ukraine who will determine the
credibility of their elections and the country.s democratic development.
SUMMARY OF OBSERVATIONS:
With the September 30 elections, Ukraine is at a crossroads. It can
consolidate progress from the 2006 elections, or risk slipping back to
discredited, fraudulent practices. The delegation noted few problems in the
early campaign period, which is a positive sign.

However, recent changes to the legal framework for elections represent a
step backward. Meeting the challenges posed by these amendments will
require real commitment to democratic processes by all electoral blocs.

Election observation, both foreign and domestic will be important, but not
sufficient to monitor all of Ukraine.s nearly 34,000 polling places.

These elections offer Ukrainians a genuine choice among several political
contestants waging vigorous, but peaceful campaigns that are widely
reported to voters by the media.

The campaign period is so far free of the most egregious problems that
marred previous Ukrainian polls. Fundamental human rights are respected.
State censorship and direct state interference with campaigning are no
longer issues.

The blatant and coercive use of state power to garner votes that has been
documented in past elections does not appear to be a problem. All major
electoral blocs have access to the media, although paid political
advertising is often disguised as news.

New arrangements for voting at home, absentee voting and purging from
the voter rolls Ukrainians who may be out of the country on election day
threaten to disenfranchise some voters, as well as open the door to
significant falsification of votes.

In addition, more strictly partisan composition of election commissions has
already stalled registration of one electoral bloc, and risks further delays
and manipulation of election procedures for political advantage.

The delegation noted a broad lack of confidence in the Central Election
Commission (CEC) to conduct the election free from political influence,
and to an even greater extent the courts to fairly resolve electoral
disputes.

As election day approaches, all of Ukraine.s electoral blocs must
demonstrate the political will to advance the country.s democratic progress.
POLITICAL AND ELECTORAL CONTEXT
The September 30 elections are pre-term elections, resulting from the
political turmoil that has roiled Ukraine since 2004. Ukraine.s next
regularly scheduled parliamentary elections were to be held in 2009.

However, in summer 2007, President Victor Yuschenko dismissed the
parliament and called for new elections, in response to an apparent drive
by Prime Minister Victor Yanukovych.s parliamentary majority coalition
to increase its numbers in parliament to 300 seats.

Three hundred votes are needed to amend the constitution and potentially
impeach the president. Amid allegations of bribery, a number of members
of parliament changed their loyalties.

The Prime Minister.s coalition challenged the dissolution of parliament as
unconstitutional but when the courts failed to rule, early elections were
agreed to through political compromise.

The confrontation between the President and Prime Minister dates to at least
2004. The two faced each other in a presidential election deemed fraudulent
by domestic and international observers and eventually invalidated by
Ukraine.s Supreme Court.

Yuschenko won the resulting re-run election but was never able to hold
together the coalition of parties that supported him.

More significant than the specific electoral outcome, perhaps, was the
dynamics of Ukraine.s Orange Revolution, in which hundreds of thousands of
ordinary Ukrainians peacefully and successfully protested in support of free
and fair elections.

This was an exceptional demonstration of citizen mobilization in support of
political and governmental accountability, through exercising citizens.
right to participate in governmental and public affairs The Prime Minister.s
Party of Regions (PoR), President Yuschenko.s Our Ukraine/ People.s Self
Defense bloc (OU/PSD) and the Bloc of Yulia Tymoshenko, the former Prime
Minister (BYT) are now the three main electoral contenders. Several smaller
parties are also in competition.

The Ukrainian electorate goes into the campaign deeply polarized. The
regional division between the OU/PSD and BYT .orange. Western Ukrainian
voters on one hand and PoR.s Eastern, and Southern citizens on the other is
pronounced. Two and  half years of public squabbling have hardened positions
and bred mistrust on both sides.

Current polls indicate a near tie between the pro-Yanukovych .blue. forces
and the combined supporters of the Yuschenko and Tymoshenko blocs.

This summer Ukraine hastily revised its election law and procedures. The
changes, which were the product of a political compromise to give the
President the early elections he sought, introduce new arrangements for
compiling the voter lists, voting by the homebound, and limitations on
voting by those who have traveled abroad. All of these are problematic,
because they open possibilities for disenfranchisement and illegal voting.

Other new provisions establish a 50 percent minimum turnout requirement
and call for a CEC formed of eight representatives of the Prime Minister.s
parliamentary majority and seven of the opposition faction.

District Election Commissions  (DECs) are composed of equal numbers of
representatives of the parliamentary majority and opposition. Precinct
Election Commissions (PECs) contain representatives of  the five blocs in
the current parliament.
OBSERVATIONS:
[1] Electoral Progress to Date:
[1-A] Freer Media Environment:
The delegation found that the major blocs contesting the election have equal
access to the media, in part because all have the resources to pay for it.

Television is the medium by which Ukrainians overwhelmingly get their news.
On most national channels coverage of candidates is equally available to
all, if – and only if – it has been purchased.

Importantly, this includes time on programs labeled news. This violates
Ukraine.s election law, which prohibits political advertising on news shows
(Article 71.17).

It potentially limits the media access of smaller, poorer parties and
undermines the long term credibility of the media. Despite these
shortcomings, which are serious, the current media environment represents
an improvement over previous elections.

In 2004 and previous elections candidates were denied or limited in their
access to national media leaving voters without the information needed to
make well informed choices.

The delegation found no evidence of state censorship or confirmed reports of
violence against journalists, both of which have figured prominently in past
elections.

[1-B] Freedom to Campaign:
Ukraine.s campaign period officially began August 2. At this early stage, no
significant interference with freedom to campaign was noted. Some of the
delegation.s sources referred to misuse of government resources, so-called
.administrative resources,. for which Ukraine was infamous in 2004.

The delegation heard no specific allegations of severe abuses of state
power, such as coercion of state employees or students, by either side.

In many oblasts, however, state employees, including oblast governors, are
serving as campaign chairs. This does not appear to violate Ukrainian
election law, as long as they do not campaign on state time or using state
resources.

However, the delegation recommends that local officials and national
Cabinet Ministers, many of whom are also candidates, take extra care
to avoid the perception that they are campaigning while performing
government duties.

Abuse of .administrative resources. is a red flag in Ukraine, considered to
be widespread, and at the root of stolen and illegitimate elections.

NDI’s experience worldwide has found that confidence in an electoral
system and a perception of fairness are as important as the letter of the
law.

When serious doubts are raised as to the fairness of an electoral provision,
as with government  officials who are also campaign workers or candidates,
additional safeguards should be introduced even if the law meets an
otherwise acceptable standard.

[2] Matters of Continuing Concern:
[2-A] Potential Abuse of Home Voting:
In 2004, the mobile ballot box became a major instrument of fraud. Under
Ukrainian procedures the mobile box is physically brought to the sick and
disabled at home so they can cast votes.

In the 2004 elections, the number of those allegedly ill and disabled and
requesting home voting was massively and fraudulent inflated, reaching one
third of the total electorate in one oblast.

In response, legislation passed in 2005 required voters wishing to vote at
home to present evidence of their medical conditions. It  also required them
to request home voting at least a week ahead of elections.

Under the 2007 amendments and CEC regulations, home voting is still
intended solely for the sick and disabled.

However, the new rules dilute important safeguards against fraud by allowing
voters to request home voting without any medical documentation, and to do
so up to two days before the election. This re-opens a loophole in the law
that was closed precisely to eliminate fraud. As such, it is very troubling.

[2-B] Voters Traveling Abroad and Absentee Voting:
Ukrainian voter lists are in the process of compilation; most sources
reported they expected some inaccuracies as in 2006. The most serious
problems, however, concern new provisions for Ukrainians traveling abroad
on election day.

The 2007 election law amendments stipulate that three days before the
election, Ukrainian border guards must compile a list of those who have left
the country since August 2 and have not returned. The border authorities
transmit the names to local election commissions which strike them from the
list of eligible voters.

This provision is problematic for several reasons. It could disenfranchise
many voters who return to Ukraine within three days of the election. Some
suggested to the delegation that this system may even be abused through
schemes to conceal  the fact of voters. departure in order to later
fraudulently cast votes in their places.

Even with good intentions this scheme will be difficult to implement. There
is no central registry where departures from Ukraine.s numerous border
crossings are recorded. Border formalities have traditionally been few at
Ukraine.s borders with Russia and Belarus.

The system places a large burden on the border guards, who are not trained
or accustomed to playing this role in elections.

It could also create an administrative nightmare, as hundreds of DECs
scramble to compile and transmit to thousands of PECs accurate accounts
of voters to be stricken from lists, all within the three day period in the
law.

The 2007 amendments also abolished absentee voting procedures for
Ukrainians who are within the country but away from their home precincts.

This effectively disenfranchises the many voters currently resident in a
place different from that of their formal registration. It affects many more
traveling for business or personal reasons.

This provision may also hinder recruitment of election observers to spend
election day in precincts other than their own. In the past, parties have
sent their observers to regions of the country they consider hostile to
their interests, the East and South for BYT and OU and the West for PoR.

This was cited by many as both a deterrent to fraud and an important source
of confidence in voting and counting procedures. There is provision in the
election law for those serving as election commissioners to vote outside
their home precincts.

[2-C] Election Commissions and Courts:
Election commissions at all levels are now more partisan than in previous
elections, with membership on the bodies divided between representatives
of opposing electoral blocs.

In the short time this CEC has existed, both the parliamentary majority and
opposition members of the CEC have boycotted sessions.

The CEC has split along partisan lines on such important issues as documents
needed for home voting. In early August, the CEC voted along partisan lines
to deny BYT registration on technical grounds.

The CEC vote delayed the start of BYT.s campaign. It forced the bloc to get
a court order, after which the CEC voted unanimously to register BYT.

The delegation is concerned about future problems in election administration
if the CEC and other commissions cannot work collegially.

Some of the delegation.s interlocutors raised the possibility that
partisanship might lead to unnecessary obstacles to certifying election
results. This would severely undermine Ukrainians. confidence in those
results.

The delegation was struck by the nearly unanimous lack of confidence in
Ukraine.s judicial system to arbitrate impartially election disputes.
Everyone with whom the delegation spoke described the courts as beholden
to one political force or another.

This is very worrisome given that both the results and the conduct of voting
and counting on election day are likely to be challenged in court.

RECOMMENDATIONS:
The delegation would like to thank all with whom they met. The insights
provided were valuable and the warm welcome provided to the delegation
was greatly appreciated.

In the spirit of international cooperation the delegation respectfully
offers the following recommendations in the hopes of contributing to
those working to improve the election process.

[1] For the Central Election Commission (CEC) and Courts:

[1-A] The Central Election Commission should operate in a spirit of
consensus. Its members should seek solutions and take decisions that bridge
the political divide and build confidence and garner broad support for the
electoral process. Lower level election commissions should operate in the
same spirit.

[1-B] The Central Election Commission should issue regulations requiring
verification that those voting at home are entitled to do so, to ensure
there is no abuse of Article 84 of the Law on Election of Peoples. Deputies.
Article 84, as amended, makes clear that home voting by mobile ballot box is
intended only for voters who cannot move on their own due to age, disability
or health conditions.

Regulations and procedures should ensure that voting at a place of residence
is strictly limited to persons in these categories, as required by the law.

[1-C] The Central Election Commission and the Border Guard Service

should stipulate detailed procedures for the implementation of Article 102-3,
paragraph 9, of the Law on the election of Peoples. Deputies, as amended,
to ensure consistent application of the law throughout the territory of
Ukraine.

The procedures could include publicizing lists of people to be stricken from
the voter lists, in time for them to correct errors, or other measures to
ensure that persons returning to Ukraine within the final three days before
the election are not deprived of their right to vote.

[1-D] Central Election Commission should take steps to ensure the full
transparency of election results by posting immediately at every level of
tabulation and on the CEC website all results . down to the polling station
level . as soon as they are received.

[1-E] The Central Election Commission should develop procedures to ensure
compliance with Articles 71.17 and 102-6.14 of the Law on the Election of
peoples. Deputies, which stipulates that election propaganda placed in the
media shall contain the full title of the party or bloc which has ordered
the propaganda.

Neither media outlets, nor parties, nor election officials should tolerate
the apparently prevalent practice of hidden, paid political advertising.

[1-F] The Central Election Commission should ensure that international and
domestic non-partisan observers are registered through an inclusive, rapid,
simple and effective procedure that ensures the broadest possible presence
of observers on election day, as well as during the pre-election and
post-election periods.

[1-G] The Central Election Commission should issue regulations ensuring
that observers have full access to all aspects of the electoral process,
including observing data entry at the District Election Commission level.

[1-H] The Central Election Commission, the media and non-governmental
organizations should undertake a widespread public information campaign to
encourage every voter to check his or her registration, to ensure the
accuracy of the voter lists and to prevent any eligible voter from being
turned away from the polls on election day.

[1-I] The District Election Commissions should take care to refrain from
appointing to PECs any individuals associated with fraudulent practices in
past elections.

[1-J] All courts adjudicating election cases should take prompt,
well-reasoned decisions that comply fully with the letter and spirit of the
law and with Ukraine.s international obligations to support democratic
practices.

[2] For the Media:

[2-A] The media should devote more effort to, and develop a better

capacity for, analytical reporting on the election campaign.
 
[2-B] The media should sponsor debates among the leaders of the major
parties or blocs standing in the election.

[3] For the Political Parties:

[3-A] Political parties should ensure that they field the largest possible
numbers of party agents to polling stations throughout the country, in order
to help ensure the integrity of the polling process on election day.

[3-B] Political parties should seek gender balance in their nominations of
polling station officials.

[4] For the Voters and NGOs:

[4-A] Since the law does not provide for absentee voting in these early
elections, voters should check to ensure that they are included on lists for
their current places of residence in order not to be disenfranchised on
election day.

The Central  Election Commission and other authorities compiling voter
lists should make a maximum effort to include voters at their current places
of residence.

[4-B] We encourage domestic and international organizations to field the
largest possible numbers of non-partisan short and long term observers as a
means of discouraging malpractice and building public confidence in the
electoral process.

In this regard, NDI will be sending its own team of election day observers,
and has provided funding and support for other international observers.

[5] Although it is too late for these elections, the following
recommendations should be taken into account for future elections:

[5-A] The election law should be thoroughly reviewed and brought fully

into line with international standards and best practices. As part of this
process, Ukraine should fulfill its commitments to implement
recommendations on election reforms set out by the OSCE and the
Council of Europe.

[5-B] Detailed guidelines should be established on the use of so-called
.administrative resources,. making absolutely clear what is and is not
permitted of public officials of all levels during a campaign period.

[5-C] Political parties should adopt more open, transparent and democratic
methods for establishing their candidate lists and party platforms.

[5-D] Parties should place more women on their candidate lists, in positions
that ensure their election to office.

[5-E] The new parliament should develop clearer and more comprehensive
rules governing campaign financing, aimed at enhancing transparency and
accountability.

[5-F] Ukraine should continue to take steps to strengthen the independence
of the judiciary in order to advance the rule of law and to create greater
public confidence that the court system can provide an effective remedy for
complaints.
CONCLUSION:
This election presents Ukrainians of all political stripes with an
opportunity. The parliamentary elections of 2006 were an achievement
following a long history of troubled elections. The September 30 election
provides an opportunity to build on that achievement.

It is a chance to demonstrate to the Ukrainian voters that despite the
fractious, partisan maneuvering that led up to this election, all Ukrainian
political leaders are irrevocably committed to free and fair elections, as
an integral part of democratic development.

This goal is well within reach. The campaign period has so far been
relatively free of problems. As election day approaches, all of Ukraine.s
electoral blocs must  demonstrate the political will to advance Ukraine.s
democratic progress.
———————————————————————————————-
NDI METHODOLOGY:
An accurate and complete assessment of any election must take into account
all aspects of the process, and no election can be viewed in isolation from
the political context in which it takes place.

Among the factors that must be considered are:
[1] the legal framework for the elections set by the constitution,
     including electoral and related laws;
[2] the ability of citizens to seek and receive sufficient and accurate
     information upon which to make political choices;
[3]the ability of political competitors to organize and reach out to
     citizens in order to win their support;
[4] the conduct of the mass media in providing  coverage of parties,
     candidates, and issues;
[5] the freedom that citizens and political competitors have to engage in
     the political and electoral process without fear of intimidation,
     violence, or retribution for their choices; the conduct of the voter
     registration process and integrity of the voter register;
[6] the right to stand for election;
[7] the conduct of the voting, counting, results tabulation, transmission,
     and announcement of results; the handling  of election complaints;

     and      the installation to office of those duly elected.

It should also be noted that no electoral framework is perfect, and all
electoral and political processes experience challenges.

NDI is a nonprofit organization working to strengthen and expand democracy
worldwide. Calling on a global network of volunteer experts, NDI provides
practical assistance to civic and political leaders advancing democratic
values, practices, and institutions. NDI has conducted over 100 impartial
pre-election, election-day, and  post-election observation delegations
around the globe.
————————————————————————————————
CONTACT INFORMATION: in Kyiv, Sam Sager at 38-044-569-8840,

ssager@ndi.org; in Washington, DC: Nelson Ledsky at +1 202 728 5500
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.  REPORT: COMMITTEE OF VOTERS OF UKRAINE,
MONITORING OF THE EARLY PARLIAMENTARY
ELECTION IN UKRAINE

Committee of Voters of Ukraine (CVU), Kyiv, Ukraine, Wed, Aug 15, 2007

KYIV – The Committee of Voters of Ukraine is the all-Ukrainian NGO that
has been performing comprehensive monitoring of campaigns in Ukraine in
terms of observance of the national legislation and international standards
of fair and democratic election by all stakeholders since 1994.

 
From the moment when the snap parliamentary election campaign started,
the CVU monitored the election process.
Observations of the CVU based on the campaign monitoring:
1. Political actors nominate their candidates freely and openly; no
obstacles in conduction of party congresses were registered. However, the
procedure of discussion and adoption of election lists is not democratic
enough; “rank and file” party members have no influence upon nomination of
candidates. Also, the CVU has registered minor procedural violations in
nomination and filing documents on registration of candidates.

2. Party members and ordinary voters have no detailed information on
candidates put on election lists. The CVU recommends parties to promulgate
full biographical data of candidates and information on their income in
party periodicals and web-resources.

3. Campaign continued despite on the ban on official agitation. Political
parties and blocs resort to hidden agitation and pay for it from other
sources than election budgets (funds).

4. The CVU is concerned about officials, who take part in the campaign in
their working time; CVU believes that hours spent for agitation should not
be accounting as working hours. Officials should go on leave for the period
of campaign.

5. Yulia Tymoshenkos’ Bloc has initiated campaign for the constitutional
referendum. Given current legal conditions, it is impossible to observe all
procedural requirements for conduction of the referendum on September 30,
2007. Combined voting at the parliamentary election and the referendum might
impede both processes.
Central Election Commission and Pubic Authorities activities —
From the beginning of the election process, the CEC has been operating in
compliance with the current legislation and provides valuable election
campaign organization. At the same time, the CVU points out that CEC’
members are still politicized and there is a risk that they will block
operations of the supreme electoral body.

In particular, the Central Election Commission failed to approve a form of
application for voting at home, while some Commission’ members objected to
the requirement that a voter should present a document confirming his/her
inability to vote at a poling station.

Given experience of prior election campaigns, the CVU warns against
uncontrolled “home voting”, which is often used for falsification of
election results.

Therefore, more detailed regulation of the voting at home is quite
justified, given the current social and political situation. CVU urges CEC’
members to adopt the norm making a voter give grounds for his/her voting
at home.

Also, the CVU expects discussions at formation of constituency election
commissions, as the legislation on nomination of commissioners by factions
of the Our Ukraine and Yulia Tymoshenko’s Bloc is ambiguous. The problem
is that leaders of both factions had resigned prior to formation of
constitution election commissions.

The CVU recommends the former faction leaders to nominate candidates
against their own signatures saying that the given person headed the faction
with the Verkhovna Rada of the 5th convocation.

The CVU also appreciates efforts of the President’s Secretariat facilitating
organization of the snap election. In particular, they have assigned
representatives of the Secretariat to regions for inspection of premises
allocated for election commission, activities of the voter registration
groups and production of posters.
Nomination of candidates for national deputies —–
During the first week of the campaign, all major political forces conducted
their congresses, where candidates for national deputies were nominated. In
the CVU’s opinion, major drawbacks of nomination was lack of open
inter-party discussion on formation of election lists and violations of some
procedural moments of nomination.

First, individuals affiliated with other parties were put on election lists
of some parties and blocs, which is prohibited by the law. In particular,
the Congress of the Party of Regions approved their election list on
August 4.

Among persons nominated for national deputies were Anatolij Kinakh and
Vasyl Hurjev, Head and the Deputy Head of the Party of Industrialists and
Entrepreneurs, respectively. Election list of the Party of Regions was
approved about 2.00 p.m.

At 3.00 p.m. of the same day the Congress of the Party of Industrialists and
Entrepreneurs started its work in the Ukrainian House. Anatolij Kinakh
presided over the Congress, and Vasyl Hurjev participated in its work.

The Congress terminated the party membership of the above persons upon
proposal of the Head of the Party of Industrialists and Entrepreneurs after
5.00 p.m.

Only after that A.Kinakh and V.Hurjev lost their party affiliation.
Therefore, the Party of Regions could not nominate individuals who were
affiliated with other party as of execution and approval of the list.

Similar infringement was committed at approval of the election list of the
Our Ukraine – People’s Self-Defense Bloc. In particular, Oleksandr
Omelchenko, number 13 in the election list, was elected head of the Unity
Party on June 23, 2007. On August 4, 2007, the second stage of the Unity’s
Congress was held.

There, they resolved that the Party should not take part in the snap
election on its own; instead, they decided to support the Our Ukraine –
People’s Self-Defense Bloc. However, the Congress did not consider
replacement of the Head and termination of his affiliation with the party.

Therefore, the Our Ukraine – People’s Self-Defense Bloc should not have put
member of another party on their election list. The same is true for another
candidate from the Our Ukraine – People’s Self-Defense Bloc, Yevhen Hirnyk,
who was the Deputy Head of the Congress of Ukrainian Nationalists as of
conduction of the Bloc’s congress.

It is confirmed with resolution of the Main Board of the CUN, which expelled
Yevhen Hirnyk from the party after the Bloc’s congress.

Another procedural violation was committed by the Yulia Tymoshenko’s Bloc.
On August 2, congresses of individual parties made resolution on creation of
the YTB.

Immediately after execution of the agreement, representatives of Yulia
Tymoshenko’s Bloc informed the Central Election Commission about that
and filed all required papers with the CEC, including notification on the
inter-party congress to be held on August 5.

Subject to paragraphs 8 and 9 of Article 57 of the Law of Ukraine On
Election of National Deputies of Ukraine, heads of parties comprising the
election bloc should inform the CEC on time and venue of the inter-party
congress no later than in five days prior to such congress.

Mass media should be informed on the event no later than in three days prior
to the congress. Therefore, the YTB infringed requirements of the law on
informing the CEC and mass media on convocation of the supreme executive
body of the Bloc, when announced on August 2, that the Congress would be
held on August 5.

In compliance with the law, the Bloc should have conducted the Congress no
earlier than on August 6. Although two members of the Central Election
Commission (elected by quota of the Yulia Tymoshenko’s Bloc) witnessed
the inter-party congress, such minor violation might impede registration of
candidates for deputies.

Subject to sub-paragraph 1 of paragraph 1 of Article 62 o the Law, the
Central Election Commission shall refuse in registration of candidates, if
laws on creation of an election bloc and nomination of candidates are
infringed.
Challenges of the Election Campaign —–
Despite the fact that the election process started on August 2, and
agitation may start upon registration of candidates with the Central
Election Commission, many political parties and block continue their
hidden campaigning.

There are many big boards with slogans of the leading political forces. Such
advertisements do not contain full names of political parties, names of
publishing houses and other details. The CVU believes that such agitation
violates principles of fair election.

Another problem is participation of officials of executive agencies and
local self-government bodies in the election campaign. Although the law
does not contain the explicit requirement that officials should go on leave
during the election campaign, they can not participate in the campaign
during working hours.

The President of Ukraine delivered a speech to the inter-party congress of
the Our Ukraine – People’s Self-Defense Bloc on August 2. In his address,
Viktor Yuschenko touched upon political, personal and other qualities of
candidates, which could be treated as agitation subject to Article 66 of the
Law.

Also, other top officials – Head of the Secretariat of the President of
Ukraine, heads of local state administrations – were present at the congress
during working hours.

Also, address of the President of Ukraine Viktor Yuschenko on cancellation of
deputy immunity, which was broadcasted by private TV channels on September
9, may be regarded as campaigning in favor of the Our Ukraine – People’s
Self-Defense Bloc, because the President mentioned the Bloc’s name in his
address.

At the same time, members of the Cabinet of Ministers and other officials
witnessed the Congress of the Party of Regions on Saturday. However, the
Party of Regions filed documents on registration of candidates with the CEC
on Monday, August 6. Among persons, who handed over documents to the
CEC, was Nestor Shufrych, incumbent Minister of Emergencies.

The CVU urges all officials of governmental agencies and local
self-government bodies, involved in the election campaign, to go on leave.
Other officials should refrain from participation in the campaign during
working hours.
All-Ukrainian referendum on constitutional

Amendments Initiated by Yulia Tymoshenko’s Bloc —–
Yulia Tymoshenko’s Bloc held meetings of steering groups and filed
documents on registration of such groups with local councils in many
regions.

However, the CVU expects problems with registration of some groups,
as in some cases they failed to observe the procedure and did not execute
documents in due course.

At the same time, the CVU believes that the national referendum should not
be conducted simultaneously with the parliamentary election. Organization of
the referendum would complicate the election process. In addition, the
legislation on referenda in Ukraine is ambiguous and controversial.
————————————————————————————————
Milena Zherdiy, International secretary, Committee of Voters of Ukraine,
Kyiv; tel./fax: (044) 492-27-67; E- mail: press@cvu.kiev.ua; Ukrainian
version is available on the CVU web-site http://www.cvu.org.ua.
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.  NO ONE IS AFRAID OF THE BIG ORANGE WOLF

OPINION: By Alexei Pankin, The Moscow Times
Moscow, Russia, Tuesday, August 21, 2007. Issue 3725. Page 9.

I was in Ukraine last week sitting with an old friend in his kitchen. We
were talking about politics, recalling the Moscow barricade of 1991 after
the coup attempt against Soviet leader Mikhail Gorbachev and the 2004
Orange Revolution in Kiev. About 200 meters away from us, a few
thousand supporters of Yulia Tymoshenko were happily picketing the
Central Election Commission building.

Local residents hurried past without showing any particular interest in the
gathering. The bored faces of the few unarmed policemen on the scene
contrasted sharply with the events in Moscow in April, when heavily armed
riot police broke up the Dissenters’ March. At that demonstration, the
police outnumbered the protesters by a margin of at least three to one.

“I think Ukraine is not threatened by disintegration,” my friend said. He
explained that among Ukraine’s nationalist political elite there are
individuals who are willing to let the Russian-speaking eastern half of the
country break away and form their own Donetsk republic.

But for Renat Akhmetov, that isn’t enough. He wants all of Ukraine, and that
is why he will be negotiating with both Viktor Yushchenko and Tymoshenko
regardless of the election’s outcome.

Akhmetov is Ukraine’s top oligarch. He is also the brains and financier
behind the Party of the Regions, also know as the Blues, headed by Prime
Minister Viktor Yanukovych.

Among other things, Akhmetov puts big money into the development of the
largest daily newspaper, Sevodnya, which enjoys a national readership. The
paper supports the Blues, but not so much as to turn readers away to other
parties.

Immediately following the Orange Revolution two years ago, the city’s mayor
and supporter of former President Leonid Kuchma, Ruslan Bodelan, was
ousted from office on charges of falsifying the mayoral election.

The mayor was replaced by his “losing” election opponent, former Odessa
Mayor Eduard Hurvits, who was connected with the Orange movement.

Those with political and business connections to Bodelan were in a panic and
expected to be persecuted. Today, those people are counted among Hurvits’
admirers. Serhiy Kivalov, founder of a law academy in Odessa, especially
benefits from his patronage.

This is the same Kivalov who was chairman of the Central Election Commission
in 2004 and was accused by Orange Revolution leaders to be one of the worst
perpetrators of election fraud.

Nonetheless, prominent members among both the ruling authorities and the
opposition bought land on a Black Sea beach, erected a fence around it, and
built their resort palaces there.

True, townspeople must now make a large detour to visit one of the most
popular beaches, but is that too high a price to pay for peace and harmony
among the elite?

This recent trip to Ukraine has left me with the impression that regardless
of how strongly political passions may have raged there, most of the
political establishment — regardless of its “color” — is basically
peaceful and ready to strike a bargain with anyone as long as its own
interests are honored.

A publisher from the “Orange” city of Rovno in western Ukraine had a huge
desire to do something nice for me because I was a publisher and because I
was from Russia. He first expressed his gratitude to the Western embassies
that supported him in his conflicts with local authorities.

He then went on to praise President Vladimir Putin for his hard political
line with the West, saying that was the only way Putin could get the West to
respect him.

Is this the same Orange Revolution that so frightened Russian authorities?
Kuchma labored so hard to build a power vertical that finally collapsed —
and nobody suffered as a result.

Just the opposite happened: The thieves and the honest folk are all living
much better these days, and they love Ukraine more than they ever did.
What’s so scary about that?
——————————————————————————————-
Alexei Pankin is the editor of Strategii i Praktika Izdatelskogo Biznesa, a
magazine for publishing business professionals.
——————————————————————————————-
LINK: http://www.themoscowtimes.com/stories/2007/08/21/007.html

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4.  UKRAINE: ELECTION SET TO BRING ANOTHER CRISIS

ANALYSIS & COMMENTARY: by Zoltán Dujisin
Inter Press Service (IPS), Rome, Italy, Monday, August 20, 2007

BUDAPEST – The political crisis that has ravaged Ukraine since President
Viktor Yushchenko decided to dissolve parliament is not likely to end with
the early elections scheduled for Sep. 30.

On Apr. 2 President Yushchenko issued a decree dissolving parliament and
calling for fresh parliamentary elections, which was disobeyed by the
pro-governmental majority. The President claimed the government was usurping
power after some opposition parliamentarians moved to the ruling coalition.

The number of pro-government deputies was getting dangerously close to 300,
and that would be enough to make constitutional changes that could weaken
the President’s power and set aside any presidential veto.

With both sides feeling that the slightest concession to the opponent meant
a public admission of guilt, finding a compromise became a daunting task.

Prime Minister Viktor Yanukovich and the President bickered for weeks over
the legality of their actions, and even over the loyalty of Ukraine’s
uniformed agencies, creating widespread fears of a violent escalation of
events.

Unlike on previous occasions, both the West and Russia refrained from
intervening in Ukraine’s domestic affairs, opting to adopt the stance that
the post-Soviet republic should sort out its own problems.

Yushchenko’s decree raised many eyebrows among legal experts, and the
country’s Supreme Court was expected to rule against him.

Repeated dismissals of judges by the President, and what the head of the
Ukrainian Supreme Court Vasyl Onopenko termed as “unprecedented pressure”,
presumably from both sides of the conflict, contributed to paralysing the
court’s procedures.

Nevertheless, Yanukovich was likely to accept the early election anyway,
using it as an extra trump card in negotiations with the opposition.

While the May 27 agreement to hold an early election in September is a
victory for the national-liberal opposition, the date of the election is to
the ruling Party of the Regions’ liking.

The government will have time to increase its support ratings by raising
pensions and the minimum wage.

“The Party of the Regions agreed to the election because they think they can
play this game and win even more votes,” Ivan Presniakov, political analyst
at the Kiev-based International Centre for Policy Studies told IPS.

On Jun. 27 Yushchenko temporarily agreed to suspend his decree dissolving
parliament to allow deputies to approve amendments to the election law which
are needed to conduct the elections.

After the session one-third of the members of parliament gave up their
mandate, giving Yushchenko legal grounds to sign a fourth decree dissolving
parliament on Aug. 1 and legitimising the upcoming election.

Experts have, however, warned that inconsistencies in the law will provide
fertile ground for any losing force to contest the election result,
something which populist opposition leader Yuliya Tymoshenko, leader of

the bloc named after her, has already begun to suggest.

Ukrainian politics remains shady and closed, and the multitude of
behind-the-stage deals and possible alliances are the subject of constant
and often contradictory speculation by Ukrainian journalists and pundits.

The uncertainty over the election outcome and the similar support rates of
both sides gives strength to the idea that more important than a few more
votes will be the coalition-forming negotiations.

The Party of the Regions will run on its own, but leaving open the
possibility of re-enacting the coalition if communists, socialists or both
make it into parliament.

Much of the Ukrainian media has speculated on dissension within the ruling
Party of the Regions, but the recent publication of the Party’s list did not
indicate any significant power loss for Yanukovich, who was also confirmed
as the Prime Minister candidate for the party.

A grand coalition has also not been excluded by Yanukovich’s party, which is
striving to be seen as a mainstream pro-European force, and has to cope with
the socialists loss of popularity and the communists’ radical demand of
eliminating the presidency altogether.

But so far opposition forces are dismissing a joint cabinet with elements of
the current government. The question in the ‘orange’ liberal camp backed by
Yushchenko remains which party will put forward the Prime Minister candidate
in case of victory.

Yuliya Tymoshenko’s bloc is expected to take the biggest chunk of opposition
votes, but Yushchenko’s Our Ukraine Party has strengthened its support base
by joining forces with the People’s Self-Defence bloc, a popular movement
set up by former interior minister Yuriy Lutsenko.

Moreover, pro-presidential forces are hoping that thanks to the President’s
recent bold steps, Tymoshenko can be outplayed by presenting an “image of a
strong President who is struggling against Yanukovich, which is also a good
start for his presidential campaign in 2009,” Presniakov told IPS.

In the meantime, the public continues to grow cynical as the idealism of
past years fades away. Ukrainian media speculates that television channels
might refuse to allow key political figures to debate on television, and
instead expose their populist tendencies.

Some claim that behind the ideological battle lie purely economic interests.
Kost Bondarenko, a Ukrainian political analyst, wrote in the local media
that “it is precisely the economic factor that was definitive in sparking
the crisis” after the government prevented the ‘orange’ side from benefiting
from privatisation deals.

Still, in Presniakov’s view, “there is no single reason for the conflict; on
all sides there are different people with different goals and incentives.
The structural conflict between the Prime Minister and the President is more
important.”

The existence of a structural political problem has been admitted by all
main sides in the political conflict, and there is relative consensus on the
need for a new constitution.

The opposition and the pro-presidential forces want to introduce a binding
mandate in parliament to avoid future desertions, whereas the Party of the
Regions would like to see the new constitution envisaging that only
parliament, and not the President can initiate the legislative branch’s
dissolution. Both sides have also suggested that high-ranking officials
should be stripped of immunity.

There is no unanimity on how and when to approve a new document, but
Tymoshenko is demanding a referendum on the same day as the elections, and
is collecting signatures in support of the idea. Nobody will be surprised if
Ukrainian politicians fail to agree once again. (END/2007)
——————————————————————————————–
LINK: http://www.ipsnews.net/news.asp?idnews=38948
————————————————————————————————

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========================================================
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5.  THE REALITY OF UKRAINE’S REVOLUTION
Three years after the Orange revolution, reform is glacially slow
and may yet prove too painful.

ANALYSIS & COMMENTARY: By Lawrence A. Uzzell,
President, International Religious Freedom Watch
The Christian Science Monitor, Boston, MA, Tue, Aug 21, 2007

FISHERVILLE, Va. – Americans should look at reality rather than
Hollywood-style happy endings when they gauge the progress in Ukraine
and other post-Soviet states.

Many Americans still prefer the memory of Boris Yeltsin’s stirring 1991
speech atop a Moscow tank, but they ignore the aftermath: the suppression
of legislators and journalists.

More than two years since the electrifying “revolutions” in Ukraine,
Georgia, and Kyrgyzstan, it is time to reflect on the results.

The reality is disappointing in contrast with the hopes of Ukraine’s 2004
“Orange Revolution.” The bad news: Ukraine is moving at a glacial pace in
reforms.

The good news: At least Kiev has avoided any major deterioration. Ukrainians
can be grateful that they won secession peacefully in 1991 from
hypercentralized Moscow.

According to a draft report published by Washington-based Freedom House,
the overall “democracy score” in Ukraine became slightly worse from 2006 to
2007.

Ukraine’s current performance in economic freedom is declining, as rated in
the free-market report published annually by The Wall Street Journal and The
Heritage Foundation, a conservative think tank in Washington.

In fact, Ukraine’s economy is seen as slightly less free than Russia’s. The
January report stated, “Ukraine is ranked 40th out of 41 countries in the
European region, and its overall score is much lower than the regional
average.”

However, Ukraine’s freedom in terms of civil society had improved
significantly from the 1990s to 2005. Freedom of the press has clearly
improved since the “Orange Revolution.” Ukraine has far more religious
freedom than Russia.

The Freedom House report concluded that in Ukraine, “nationwide television
channels in most cases provided balanced news coverage; representatives of
the ruling parties as well as the opposition had equal access to the media.”
Nevertheless, many local governments still dominate the local news media.

According to a nongovernmental organization specializing in monitoring the
media, at least 14 journalists were attacked or intimidated in Ukraine in
2006. Last year a Ukrainian court issued a guilty verdict for five murderers
after the 2001 death of a television journalist.

This is in dramatic contrast with post-Soviet Russia, where not one murder
of a high-profile journalist has been solved. Nine Russian journalists were
killed in 2006 alone.

Ukraine’s freedom of the press improved significantly from 2004 to 2005,
then again from 2005 to 2006 – but failed to improve during the 12 months up
to the spring of 2007.

Ukrainians and Russians enjoyed the end of state-enforced atheism in the
late 1980s. However, their paths have diverged since the mid-1990s. Russia’s
1997 law formally reestablished state control over religious life, brazenly
contradicting its own 1993 constitution.

In contrast, Ukraine is essentially observing its own constitutional
guarantees for rights of conscience. Unlike Russian bureaucrats, both in law
and in practice, Ukrainian bureaucrats do not suppress freedom of religious
speech – nor do they expel foreign missionaries.

Nevertheless, during the past decade, Ukrainian leaders of all traditional
religions have complained about the government’s glacial progress in
restoring worship buildings confiscated by the Soviet regime – including
Orthodox Christian, Catholic, Muslim, and Jewish properties.

Also unsatisfactory has been the continuing record of provincial or
municipal bureaucrats harassing religious minorities. For example, the Roman
Catholic Church’s charitable activities have experienced difficulties with
Odessa’s city council. Evangelical Protestants have had difficulties trying
to buy real estate in order to build new churches.

Observing Ukraine’s lack of progress during the past two years, the US State
Department’s annual reports about religious freedom have concluded, “There
was no change in the status of respect for religious freedom during the
period covered by this report.” (The 2006 report repeated those identical
words from the 2005 report.)

Paradoxically, post-Soviet Ukraine’s sluggishness in reforms is linked in
some ways with Ukraine’s lack of Russian-style despotism. Many would-be
reformers instinctively assume that strong, centralized presidencies are
preferable, while legislatures or provincial governors are nuisances.

Washington’s Beltway mentality likes the domestic policies of leaders such
as Lyndon Johnson, producing huge federal programs and detailed regulations.

During the 1990s, the Beltway usually found excuses for the “excesses” of
Moscow’s self-proclaimed “reformer” Boris Yeltsin. Washington looked the
other way when the Kremlin decided in 1993 to crush the legislature by means
of tanks.

Fortunately, Ukraine’s three post-Soviet presidents have not imitated the
Kremlin’s most extreme methods, and Kiev’s legislature now has genuine
powers.

In the real world, the model of “tough-guy” leadership has both advantages
and disadvantages. The principle of the rule of law can obstruct radical
reforms. Constitutional checks and balances can impede a president.

The majority of Ukrainians may decide that reforms seem too painful. With
popular elections, antireform opposition candidates may win against
pro-reform incumbents. Democracy has real tensions with freedom.

A continuing global temptation has been the myth of “revolution” inherited
from 18th-century France. Revolutionaries have often expected their
victories to be swift and unambiguous, but they have usually turned out to
be wrong.

Ukrainians recall all too vividly the past century’s experiences of
revolutionary Marxism. We should understand that Ukrainians may prefer
evolution, not radical upheavals – without Hollywood-style myths.
—————————————————————————————–
LINK: http://www.csmonitor.com/2007/0821/p09s02-coop.html?page=2

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6.  NEW OLD PROPOSITIONS: CANCELLATION OF IMMUNITY OF
DEPUTIES AS A REGULAR SLOGAN OF THE ELECTION CAMPAIGN

By Anastasia Smagina, UCIPR analyst
Research Update. Vol. 13, No 24/496,
Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Wednesday, 11 July 2007

Officially the election campaign is starting in August, though we can
observe all-out false starts of the political actors. One of the many signs
of the impetuous start of the premature election campaign is the process of
formation of the lists of potential deputies of the future parliament.

Besides, we can observe immense increase of social and political
commercials, TV reels and street ads, as well as leaders’ tours to regions
with their pre-election program and KPU and PSPU fight against NATO

training exercises.
Regular discussions about “immunity of deputies”:
election periods —–
As a rule, every election campaign in Ukraine is marked by discussions
concerning “cancellation of immunity of deputies”.

For example, at the beginning of the year 1998, just  before the
parliamentary elections, there were some attempts to bring a new public idea
asserting that immunity is injustice as it contradicts the principle of the
equality of the constitutional rights of the citizens.

The justification was the following: “ordinary citizens must be arrested
even for insignificant crimes, but deputies-criminals can walk in a halo of
immunity” (“Independence”, January 14, 1998).

The start of the election campaign of 2006 was marked by the same
discussions and actions. For the first time the then elections were held by
the proportional principle and by the system of closed lists.

On September 2005 the Verkhovna Rada in fact decreed to renew criminal

and administrative immunity of deputies of the local councils.

The paradox was that in October of 2004 this draft bill was initiated by the
Our Ukraine party, and later the draft bill was given its first reading. 234
deputies voted for the bill on immunity of deputies.

Some time later immunity of deputies of the local councils was cancelled,
but the process of formation of the lists could not be stopped. As a result,
a number of Ukrainian citizens with quite complicated past but immense
possibilities and resources won seats in party tickets.

Immunity of deputies is guaranteed by the article 80 of the Basic Law of
Ukraine, which did not get any amendments during the process of introduction
of changes to the Constitution on December 8, 2004.

People’s deputies of Ukraine do not bear legal responsibility for voting
results or for declarations in the parliament and in its departments, except
for responsibility for insult and slander.

Deputies cannot be called to criminal account and cannot be arrested or
detained without the permission of the Verkhovna Rada of Ukraine. To the
point, this resolution was supported by the constitutional majority of the
then Verkhovna Rada at that night.

Vyacheslav Chornovil recalled in his letter published in “Chas/Time” of
March 5-11, 1998: “During the process of adoption of the Constitution, at
first the variant of the coordinating commission was given its second
reading.

It provided for that in some cases a criminal action can be brought against
a deputy and without the permission of the Verkhovna Rada. In fact, it meant
cancellation of immunity of deputies.

However, in 15 minutes after adoption of the resolution the VR speaker
Oleksandr Moroz suddenly proposed to revise the article 80 and to pass an
amendment”, which now is the letter of the present Constitution.

Almost all members of the factions of Communist Party headed by Petro
Symonenko and Socialists Party headed by Oleksandr Moroz voted for that
amendment.

For the whole time of existing of the newest parliament, the Verkhovna Rada
decreed to deprive immunity of five deputies.

Later there were numerous attempts to cancel immunity of deputies for
certain people, but such attempts could have been partly treated as
repressions against political or business rivals in the country, where
politics and business are Siamese twins.

We can also recall those predictable 80 percents of “yeses” for cancellation
of immunity of deputies during the Kuchma’s referendum of 2000, results of
which remained the “expensive public poll” for the country- partly for good.

At present the Ukraine’s Constitution guarantees immunity not only for
parliamentarians, but for judges as well. The Constitution also determines
authorities of the Constitutional Court of Ukraine. It reads that “the
Constitutional Court of Ukraine is the only body of constitutional
jurisdiction in Ukraine.

The Constitutional Court decides conformity of laws and legal acts of the
Constitution of Ukraine and gives official definition of the Constitution
and its laws” (article 147). The President of Ukraine also has immunity.
Feel the difference…
The present situation concerning immunity of deputies differs from the
previous discussion in the idea that real cancellation of immunity of
deputies will lead to the complicated and durable process of introduction of
changes to the Constitution of Ukraine, in case if the politicians will not
be engaged in demagogy, of course.

A regular initiative on introduction of changes to the article 80 was
brought by the President Yushchenko, who assured that he would do his

best “to realize this  initiative at the political level first and then by means
of introduction of changes to the Constitution.”

On June 13 the Our Ukraine party declared that it included the subject
concerning cancellation of immunity of deputies into its party program.

Our Ukraine explained that cancellation of immunity of deputies would be

the first political initiative of the OU faction in the Verkhovna Rada of the
fifth convocation, as according to the logic of this document “deputies’
privileges were often used by dishonest politicians to cover private and
clan interests.” BYuT and other political forces also supported this
initiative.

The key theses provided by Yushchenko concerning cancellation of immunity

of deputies are “clearing of the deputy corps and fight against the political
corruption.”

“I am convinced that it is the way to normalization of the political order
and political life in our country…the parliament must have honest
politicians who do not divide the society into an inviolable caste and
violable one,” he said.

However, the political proposition to make the corresponding decision during
congresses of the party does not have real mechanisms for implementation. We
had many precedents concerning the declaration about voluntary refusal from
the immunity of deputies, but it resulted in political dividends and
populism only.

To the point, if to remind the pre-election campaigns of the winners of the
parliamentary elections-2006 we can see that the majority was talking about
necessity to cancel immunity of deputies. For example, the pre-election
program of BYuT said that they would “immediately cancel legal immunity of
politicians and state officials.”

Before the then elections information was spread about that Yulia Tymoshenko
charged the bloc to prepare amendments to the Constitution of Ukraine as
regards to cancellation of immunity of deputies of the Verkhovna Rada of
Ukraine. The logical question arises: “How forward have such initiatives
moved for the period of work of the VR?”

Our Ukraine was consistent both in its pre-election program of 2006 and
today: “Political grounds of corruption will be liquidated. Deputies will be
deprived of immunity. Officials will report both their incomes and
expenses…” And SPU assured in its program that “the power will be cleared
from corrupted officials, embezzlers of public property and bribetakers,”
which was done immediately after the elections on April 4, 2006.

The official pre-election program of the Party of Regions did not say a word
about immunity of deputies, though on the eve of the presidential election
of 2004 then candidate Victor Yanukovych stood for holding a referendum on
limitation of immunity of deputies.

“…if in the near future the deputies do not make decision concerning
deputy’s ethic, immunity of deputies and compliance with the legislation of
Ukraine we will have to appeal to the nation, to hold a referendum and make
a decision together with the public,” Yanukovych declared at that time.

But holding the post of the Premier of Ukraine, now on June 2007 he
“considers the appeals to cancel immunity of deputies to be populism on the
eve of the election, and if the deputies have dead earnest either they must
solve this issue now or the new parliament will take care of the question in

case the early elections take place.”
The pros and cons: political activity, expediency
and Constitution —–
The main argument against cancellation of immunity of deputies is a
potential possibility to press on deputies with the purpose of paying of old
scores, which may have no connections with the politics. So, it is a
question of the social traditions, ethic and political culture.

The guarantee of immunity of deputies exists in other democratic countries.
For example, a  German deputy may be called to account for violation of the
laws only with the permission of the Bundestag or in case of catching in the
act.

However, such scenario of a “direct arrest” in Ukraine may only look
democratic. There is no guarantee that someone, for example, will not put
drugs or weapon in someone’s pocket as it happened with Grygoryshyn,

though he was not a deputy.

The main argument in support of cancellation of immunity is confirmation of
the principle of equality of all citizens to the law.

According to the article 3 of the Basic Law, a person, his life and health,
his honor and dignity, inviolability and safety are the highest social
values in Ukraine, and according to the article 29, every person has a right
to personal freedom and nobody can be arrested or taken into custody without
a justified decision of a court and only on legal grounds established by the
law.

Another argument in support of cancellation of immunity is to make it
impossible for criminals to use immunity for avoiding punishment, that is to
say the cleaning of the Verkhovna Rada’s ranks.

Though, the fact of cancellation of immunity looks rather doubtful as
regards to the fight against the political corruption, which, as a rule, is
shadow. Owning to the native traditions there always will be “more equal” to
the law.

To sum up we can note that before cancelling immunity of deputies, the
European Union’s countries’ experience should be thoroughly explored as
regards to this question, and not only concerning the procedures but the
political culture and behaviour as well.

The fight against the corruption, first of all the political one, should
envisage complex measures which are initiation of changes to the
Constitution and to the criminal and procedural code, reformation of the
legal system, creation of real conditions for transparency of the power and
for distribution of budget resources, actions aimed at increase of influence
of the public institutions and mass media.

Methods do exist but are not sufficiently effective, unfortunately.

——————————————————————————————–
The Research Update bulletin is published in English and Ukrainian by the
Ukrainian Center for Independent Political Research (UCIPR) in assistance
with the National Endowment for Democracy since December 1995. From
December 2006, the Research Update is published in English in the
framework of the “Increasing Institutional and Program Capacity/2006-
2007″ Project of the Open Society Institute Zug Foundation.
For more details about the Research Update, please contact the UCIPR by
tel.: (38-044) 235-65-05, 230-91-78, 599-42-51; e-mail: ucipr@ucipr.kiev.ua.
Contact persons – Yulia Tyshchenko and Kostyantyn Mykhailychenko.
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7.  AN UNHAPPY BIRTHDAY FOR UKRAINE’S CONSTITUTION

ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Senior Journalist, based in Ukraine.
Eurasian Home, Moscow, Russia, Monday, June 28, 2007

On June 28, Ukraine celebrated its Constitution, with every politician and
his brother demanding that the much abused document be altered yet again.

It was only eleven years ago that lawmakers had worked through the night
to reach a compromise on the creation of a supreme law for the newly
independent state.

Independent Ukraine’s first and only Constitution was hailed as a guarantee
of individual rights for all Ukrainian citizens. But right from the start,
it was clear that lawmakers had borrowed a lot from their Soviet
predecessors.

One by no means unique example is the Ukrainian Constitution’s proud
proclamation that every citizen has the right to free medical treatment. In
practice, this means mostly dirt poor facilities with underpaid doctors who
receive their fees under the table.

The promise of generous rights, unsupported by detailed laws underpinned
by proper financing, only mocks the privilege of citizenship.

Indeed, it takes time to draft, debate and approve legislation.

But few doubt that Ukraine’s lawmakers are more interested in making laws
for the benefit of themselves, as well as the businesses and media that many
control.

The most glaring example of their separation from the rest of society is the
immunity from prosecution that they continue to enjoy. More recently,

the country’s lawmakers have begun attacking the law itself.

It all started in December of 2004, when then opposition leader Viktor
Yushchenko was challenging the fraud-filled victory of his opponent for the
presidency, Viktor Yanukovych.

Yushchenko succeeded in calling a new election, which he won, but the
victory for the rule of law was short lived.

In order to shore up support for his presidential bid, Yushchenko had a
collection of hastily drafted constitutional amendments foisted on him by
opponents and supporters alike.

The essence of the amendments was that the president would have to give up
many of the significant executive power that he had inherited from his
predecessor, Leonid Kuchma. It was Kuchma who had reigned over the
passage of the country’s first Constitution.

But while ordinary Ukrainians eked out a living, and his fellow politicians
gorged themselves on the country’s industrial assets, Kuchma went about
quietly consolidating a king-sized portion of power throughout the late
1990’s.

By the time his second term was coming to an end in late 2004, Kuchma was
in control of the country’s courts, governors, law enforcement, army and a
majority in parliament.

And as the opposition continued to gain momentum toward deposing him and
his supporters, Kuchma unexpectedly announced the idea of constitutionally
transferring presidential powers to the parliament in mid 2002.

It was a hybrid form of the amendments originally proposed by Kuchma that
Yushchenko ended up signing during the peak of the country’s Orange
Revolution.

The amendments came into force in 2006, just in time to see one of
Yushchenko’s key Orange allies, Socialist leader Oleksandr Moroz, defect to
the camp of Viktor Yanukovych. The former became speaker and the latter
returned as prime minister.

Bolstered by a parliamentary coalition they formed with the Communists,
Yushchenko’s opponents went about muscling away his executive authority,
interpreting the poorly drafted constitutional amendments as they liked.

Not only was the country’s highest law crumpled up and shredded in the
ensuing political battle, but the Constitutional Court lost what little
respect it had enjoyed, as justices took sides with the president or
parliament.

If Yanukovych and Moroz couldn’t be president, they were going to assume

all executive and judicial power for the parliament they controlled, regardless
of what the Constitution said.

Last August, the parliament even passed a bill prohibiting the
Constitutional Court from ruling on whether the amendments passed in late
2004 were constitutional.

Now with snap elections scheduled for this fall as a way to break the
political gridlock, the calls for more constitutional reform are again on
the agenda.

This time, Moroz and Yanukovych are trying to steal the wind from
Yushchenko’s sail. It was the president who first tabled the idea of challenging

the amendments that limited his authority, proposing that his countrymen
decide the issue in a referendum.
Now Moroz and Yanukovych have jumped on the band wagon – for a
different purpose. Moroz said on June 28 that he supports changes to the
Constitution to transfer more power from the center to the regions.

“The Constitution of Ukraine will always be an open book, into which
corrections will be made and supplements added by future generations of
Ukrainians,” he announced during a Constitution Day speech.

Members of Yanukovych’s team have echoed similar sentiments. Since taking
their respective positions as premier and speaker last year, Yanukovych and
Moroz have mostly tried to limit presidential power by pushing bills through
the parliament.

Now that a new parliament is soon to be elected, they have again turned
their attention to changing the Constitution.

The empowerment of regional government, which would be beneficial for the
country if conducted without political motives, is one of many initiatives
that Yushchenko’s foes have tabled.

However, members of Yanukovych’s Regions party have often used regional
autonomy as a synonym for separatism in the country’s Russian-speaking south
and east.

European bodies such as the Parliamentary Assembly of the Council of Europe,
of which Ukraine is a member, have attempted to help Ukraine find its way
along the path toward parliamentary democracy and the rule of law.

But although each side has attempted to legitimize its claims through
European approval, Western advice often goes unheeded.

A resolution taken by PACE on April 19, during the latest constitutional
impasse in Ukraine, reads “The Assembly deplores the fact that the judicial
system of Ukraine has been systematically misused by other branches of power
and that top officials do not execute the courts’ decisions, which is a sign
of erosion of this crucial democratic institution.

“Independent and impartial judiciary is a precondition for the existence of
a democratic society governed by the rule of law. Hence the urgent necessity
to carry out a comprehensive judicial reform, including through amendments
to the Constitution.”

But judging by the way Ukrainian officials have used and abused their rather
innocent Constitution in the past, no one in Europe should get their hopes
up about meaningful constitutional change, as the country’s supreme law
turns 11.
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http://www.eurasianhome.org/xml/t/opinion.xml?lang=en&nic=opinion&pid=772
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
NOTE: Send in a letter-to-the-editor today. Let us hear from you.
========================================================
8.  KIEV’S HAND
Moscow and Kiev are interested in each other’s upcoming elections

ANALYSIS & COMMENTARY: By Leonid Petrov
Versiya, No. 32, Moscow, Russia, Mon, August 20, 2007

For the first time in many years, Russia and Ukraine have parliamentary
elections scheduled at almost the same time. But Ukraine’s election will
happen slightly earlier – thus giving Kiev time to interfere in Moscow’s
affairs.

Ukraine is showing strong interest in Russia’s election campaign: hoping to
re-establish contacts with Russia’s political elite.

In Moscow, almost all participants in the campaign process will attempt to
secure support from the Ukrainian parties which are considered pro-Russian.

The Ukrainian factor in Russian politics became particularly significant
after the Independence Square protests in 2004; alarmed by events in Kiev,
the Kremlin launched a desperate battle against the Orange Revolution.

In order to prevent Orange forces from developing in Russia, the Kremlin had
to make every effort to discredit them in Ukraine.

In general, Moscow’s efforts have succeeded. The Orange forces are nothing
more than a small radical sect in Russia these days. Besides, most Russian
citizens are highly skeptical about events in Ukraine and don’t want
anything similar to happen in Russia.

In a poll done by the Levada Center this May, 38% of respondents said that
“the anarchy and chaos that accompany democracy” now reign in Ukraine, and
27% said that the permanent state of crisis is evidence that “Ukraine’s
democracy is immature.”

The political passions raging in Kiev, and power-struggles among Ukraine’s
leaders, have formed a convenient backdrop for Russia’s political democracy;
the endless quarreling among Ukraine’s parties make United Russia’s
dominance look good by comparison.

The Supreme Rada election is unlikely to put an end to Ukraine’s political
crisis; so the ongoing political conflicts in Kiev could become a campaign

advantage for United Russia, especially if the Ukrainian confrontation intensifies.

And that’s why the Kremlin doesn’t really have an interest in seeing either
side – Blue or Orange – achiev an unconditional victory. Moreover,
negotiating with Kiev is much easier when the Ukrainian elite is divided.

But even as Moscow has its own designs on the Ukrainian election, Kiev is
showing significant interest in the election campaign in Russia.

 
There is no hop of a change in the policy course; but Ukrainian politicians
are still hoping for some changes in the composition of Moscow’s negotiation
team.

Contrary to widespread opinion, the Ukrainian elite found it easy to lobby
for its interests in Moscow – until recently. That applied to specific
economic issues (like the pipeline wars or import quotas on Ukrainian
goods), and to big-time politics.

This was partly achieved by tales of great friendship between fellow Slavs
(Lukashenko came to excel at this form of sport), and clever use of
corruption scandals and media techniques; it was also partly due to the
common Soviet background of the Russian and Ukrainian elites.

But after the Orange Revolution won, Kiev’s influence on Moscow weakened.
Aside from the Kremlin’s annoyance with the Orange Revolution’s outcome,

the situation was also influenced by substantial changes within the Russian
elite: those who were at the forefront in the Yeltsin era departed, and
Putin’s closest allies took the lead.

Kiev celebrated the Orange victory, then distributed jobs, and then turned
around to find that its previous contacts in Russia had vanished, but no new
contacts had been established. And this isn’t easy to do in the middle of a
political confrontation. (Translated by Elena Leonova)

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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9.  RUSSIAN LIKES AND DISLIKES IN UKRAINE

ANALYSIS & COMMENTARY: By Vyacheslav Nikonov
President of the Politika Foundation.
RIA Novosti, Moscow, Russia, Thursday, August 16, 2007

MOSCOW –  Today many experts agree that the Russian factor will

not be as influential in the forthcoming parliamentary elections in Ukraine
as it was in 2004 and 2006.

I believe this shows that Ukrainian statehood has become more mature.
Before, Russia found itself in the center of the election race largely
because the main question was why Ukraine was not Russia.

Now that it has been answered, Ukraine will have its own agenda for the
election campaign. But the early elections to the Rada (parliament) are not
likely to change the situation. Domestic political life will most likely
remain unstable.

The system by which the government is formed by the parliamentary

majority, with stable majority lacking, will automatically program instability
into any Ukrainian cabinet of ministers. It is not clear whether the future
government will be Orange or White-and-Blue.

Moreover, strictly speaking, the current political crisis, as well as many
events prior to it, is taking place outside the legal field.

Different political forces are still disputing the legitimacy of the
previous Rada’s dissolution and the announcement of new elections.

The future government’s legitimacy may be also called into doubt.

Last but not the least, a serious cultural split will persist in Ukrainian
society regardless of who is elected. That is more important than any
political differences or financial affiliations.

The main question is what comes next. Will the opposing political forces
come to terms? How long will the new Rada exist, considering that the
dissolution procedures have not been forgotten?

As for the Russian position, I believe that any Russian participation is
somewhat exaggerated and is obviously used against Russia, although
different political forces will not conceal their preferences in Ukraine
this time, either.

The Russian communist party will express solidarity with its Ukrainian soul
mates, Pyotr Simonenko and Mrs. Natalia Vetrenko.

I’m sure that the Kremlin will continue supporting Viktor Yanukovich. Our
Liberals will back Viktor Yushchenko and Yulia Tymoshenko.

In short, the preferences of the Ukrainian electorate and Russian political
forces have long been established. But there are also dislikes.

Tymoshenko’s article in the American journal Foreign Affairs, in which she
suggested an anti-Russian coalition, has not made her more popular in the
Russian corridors of power.

Needless to say, those who want to see Ukraine part of NATO as soon as
possible do not have many admirers behind the Kremlin’s walls.

Likewise, we have reasons to oppose Ukraine’s de-Russification because it
harms local Russians and our national language. But for all that I’m
confident that the Kremlin will deal with any government that the Ukrainians
elect.

This is Russia’s position. In this respect, it is different from the stance
of those Western countries, which prefer dealing with pro-Western
governments that fit their notion of democracy.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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10.  KIEV RESORTS TO TRANSIT BLACKMAIL”
Russian-Ukrainian Relations Remain Difficult; Presidential Meeting Postponed
Meat and dairy trade wars announced by Russia at the beginning of 2006

ANALYSIS & COMMENTARY: By Ilona Zayets
Nezavisimaya Gazeta, Moscow, Russia, Wed, August 15, 2007

The meeting of Presidents of Ukraine and Russia, which had been postponed
since April and announced by Viktor Yushchenko for 15-20 August, may not
take place. This was reported to Nezavisimaya Gazeta by a source in the
Ukrainian government.

Commenting on the results of Wednesday’s blitz-visit to Moscow by head of
the Secretariat of the President of Ukraine Viktor Baloha, high-level
officials noted that Kiev has chosen an aggressive line of behavior. The
Russian side is ignoring the ultimatums.

Sources in Kiev are convinced that the most difficult and current topic for
Ukraine at the upcoming negotiations are the trade wars announced by the
Russian side at the beginning of 2006.

“Since that time, the direct losses of Ukrainian agricultural enterprises
have reached approximately half a billion dollars, and the dairy sector has
been especially hard hit.

After all, around 60 percent of Ukrainian dairy export traditionally went to
the Russian market,” political analyst Konstantin Bondarenko confirmed to
Nezavisimaya Gazeta.

The expert believes that, from the standpoint of the parliamentary elections
in both Ukraine and Russia, politicians are forced to enter the question of
cessation of the trade wars onto the list of immediate issues, because
voters have already felt the negative result of the “political sanctions.”

In Russia, according to official data, prices on dairy products have
increased by 10-20 percent, while in Ukraine the purchase prices on raw

milk have sharply dropped.

In the expert’s opinion, the search for an acceptable way out of the
situation that has arisen was Baloha’s main task in the course of his visit
to Moscow.

Sources in the Presidential Secretariat are commenting on the results of the
negotiations in general terms. However, government officials are
confidentially reporting that the president’s representative torpedoed the
Moscow talks.

“Yushchenko’s inner circle had tried to exert pressure on Moscow, so as to
unblock the deliveries of agricultural products,” says a source in the
government.

In his words, it was with this purpose in mind that the Ukrainian side had
adopted the decision to tie in the topic of the dairy war with the regimen
of gas deliveries and with the question of Ukrainian-Russian cooperation in
the nuclear power industry.

At the moment when Viktor Baloha was meeting with the Russian Federation
President’s Chief of Staff, Sergey Sobyanin, the Security Service of Ukraine
(SBU) was in fact announcing its apprehensions about the protocol on
cooperation between the Ukrainian state concern “Ukratomprom” and the
Russian Federation Federal Atomic Energy Agency, Rosatom, which had been
signed in June.

Parallel with this, a structure subordinate to the president–the Council on
National Security and Defense of Ukraine–had published recommendations on
increasing the cost of transit of Russian gas over Ukrainian territory.

Ukrainian government officials consider the attempt at pressure on Moscow to
be futile. They insist that the Cabinet of Ministers, in preparing
recommendations for the second meeting of the Yushchenko-Putin Interstate
Commission, had placed the emphasis on the fact that the topic of the meat
and dairy war must be viewed separately, and that its soonest possible
resolution is in the interests of both states.

In an interview with our Nezavisimaya Gazeta correspondent, a representative
for the Ukrainian part of the agriculture subcommittee of the interstate
commission complained: “This is an awkward situation: A most important

trade sector is regulated not by legislative standards, but by non-systematic
directives of public officials.”

He explained that, since the beginning of 2006, many Ukrainian enterprises
that had successfully passed inspection of Rosselkhoznadzor (Federal Service
for Veterinary and Phytosanitary Oversight) had formally received the right
to supply products to the Russian Federation.

However, permit documents were issued only to some of them. “A huge

shadow niche has been artificially created in Russian-Ukrainian trade relations,
which may only be compared with the gas affairs of previous years,” noted
the representative of the Ukrainian subcommittee.

The head of the Ukrmolprom Association, Vasiliy Bondarenko, confirmed to
Nezavisimaya Gazeta that the problem should be resolved at the political
level, because the reason for the dairy war that has lasted for a
year-and-a-half is also concealed in politics.

He explained that, in 2006, Rosselkhoznadzor had filed complaints only
against the re-export of meat from Ukrainian territory. “For what reasons

they banned the import of dairy products, no one has ever explained,”
Bondarenko complains.

The problem of repeal of the trade limitations that are disadvantageous to
both sides has been discussed for over a year now, but its resolution was
put off until the moment of the meeting of the Yushchenko-Putin Interstate
Commission.

If the meeting once again does not take place, the most profitable and
promising area of the Ukrainian agrarian sector, which has been farmed out
to sectoral officials, will in fact be destroyed, insist representatives of
the dairy enterprises.

Ukrainian government representatives believe that the situation will
negatively affect the rating of the pro-presidential bloc at the upcoming
parliamentary elections.

They surmise that Prime Minister Viktor Yanukovych, on the other hand, will
increase the popularity of his party if, on the background of Yushchenko’s
ultimatums, he proposes a constructive solution to this problem, which is
painful to both countries.

According to sources in government, Yanukovych, who is on vacation in Russia
this week, may perhaps meet with representatives of Russian authority so as
to find a way out of the situation and return to the homeland as a victor in
the dairy wars.

As we have learned, the meeting of Presidents of the Russian Federation and
Ukraine may take place, but only in the Fall, after the elections in
Ukraine.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================

11.  WHOSE PROMISE IS SWEETER? UKRAINIAN PARTIES
HAVE STARTED PRESENTING THEIR ELECTION PLATFORMS

ANALYSIS & COMMENTARY: Alla Yeremenko, Nataliya Yatsenko
Mirror-Weekly 30 (659), Kyiv, Ukraine 18-24 August 2007
 
A remarkable feature of this snap election campaign is that the leaders of
parties and blocs avoid face-to-face debates. Why is that? On Monday, 13
August, Ukraine Competitiveness Council invited representatives of the Party
of Regions, “Our Ukraine”-“People’s Self-defence” and Yuliya Tymoshenko
Bloc to an open discussion.

Ms Tymoshenko was the only one to turn up. As a result, she presented her
draft National Development Strategy entitled “Ukrainian Breakthrough” for
three hours.

On Tuesday, 14 August, the Party of Regions launched its “public education”
campaign, with Raisa Bohatyriova and Borys Kolesnikov lecturing the press
about the risks and prospects of the current demographic situation in
Ukraine, and the ruling party’s programme “Stability and Wellbeing” which is
geared towards improving it.

On Friday, 17 August, Olexander Kuzmuk presented the Cabinet of Ministers’
anticorruption programme (to enhance its effect, they also included the
Crimean Speaker and Vice Prime Minister Kliuyev in the panel).

All in all, six conferences are to be held to explicate party programmes but
none will eclipse the YTB one in terms of vim and vigour. The Party of
Regions will, presumably, opt for an unhurried campaign with carefully dosed
information.

It is still a question what the “Our Ukraine”-“People’s Self-defence” are
going to promote in their election platform: their presentation is due some
time next week.

However, comments by Volodymyr Lanovy, once well-known economist,
available on the OU-PS website suggest that the measured but realistic
programme “For People, not for Politicians!” and the President’s social
initiatives will be boosted with a couple of exotic economic ideas.

We have made an attempt to describe the political and social programmes of
three campaign leaders – Party of Regions, “Our Ukraine”-“People’s
Self-defence” and Yuliya Tymoshenko Bloc – using all materials accessible so
far. Some could disagree with our analysis, and  we welcome other different
opinions on the matter as we are in no way presenting a final diagnosis.

The YTB National Development strategy “Ukrainian Breakthrough: to a Fair and
Competitive Country” is a 319-page document; its Internet version takes up
four pages. So do the e-versions of the OU-PS programme attractively called
“For people, not for Politicians!” and the Party of Regions’ programme with
a neutral heading “Stability and Wellbeing”.

The difference is that the OU-PS and party of Regions presented their
programmes and election platforms, while the Yuliya Tymoshenko Bloc
positions its strategy as “Ukraine’s road map for the 21st century”, the
presented version being just the first draft.

By election day, and probably after it, the party programmes could be
revised, some of them dramatically. For instance, the Party of Regions’
sweetly unpretentious programme could be replaced with an as of yet
unannounced document prepared by Western experts contracted by the
Rinat Akhmetov Fund.

Those few who read it say it provides for a lot of unpopular measures. Some
skeptics argue the document is a rehash of a policy paper written for
Turkey, but, according to our sources, the “Akhmetov” strategy has been
much-admired by the Prime Minister and commended by the President.

We will not discuss here political aspects of the abovementioned party
platform. For the time being, we will abstract our mind from slogans about
“lawful state accountable to citizens” (OU-PS), about regions as “Ukraine’s
spiritual treasury”    and the second official language (you know whose). We
will focus on several key practical social and economic objectives (again,
leaving alone WTO and EU accession and the like).
We need a breakthrough, In principle, the idea is appealing.
You will remember the total shortage of goods, hyperinflation, massive
salary and pension arrears, in-kind wages at the dawn of independence.
Addressing those challenges prevailed in election platforms of the mid and
late 1990s, together with the reactivation of economic growth.

As the economic situation improves the declarative, middle-of-the-road
nature of “ten steps” and similar projects becomes unbearable. We understand
we have to break through, sweeping away all the squalor and sloth in order
for Ukraine to raise in the world development ratings.
Yet is a breakthrough in 12 directions at a time feasible?
If the pipeline breaks though, the answer is, probably, yes. However, when
it comes to social  transformations, the answer is no.

One does not have to be a management expert to understand that setting five
goals at a time will prevent one from reaching at least one of them
effectively.  Political consultants of the leading parties and blocs do not
seem to be discouraged by this fact.

Their method is to embrace as broad an electorate as possible. Hence two
major sections (“Social Success” and “Ukraine, the country of success”) and
11 items of the Party of Regions’ programme “Stability and Wellbeing”.

Hence eight major tasks found in the OU-PS programme “For People, not for
Politicians!”. The YTB development strategy “Ukrainian Breakthrough: to Fair
and Competitive Ukraine” provides for 12 areas of breakthrough .
Social programmes: who jumps higher?
According to the party platforms, we will be breaking through, first and
foremost, in the social sphere. Social policy objectives in all of them are
so ambitious that even rightist parties look like leftist ones.

The presidential “Social Initiatives” (see ZN #25 of 30 June 2007)
underlying the OU-PS election platform, envisioned allocating about three
quarters of the 2007 budget revenue increment (vs the 2006 budget) for
raising salaries and scholarships, maternity allowance and other purposes of
common good.

Surprisingly, the Party of Regions, which never used to be too
socially-oriented, offers almost the same – only in a 2:1 proportion.

According to Borys Kolesnikov who presented the social-and-demographic
section of the party’s election platform together with Raisa Bohatyriova,
about UAH 20 billion out of UAH 30 billion of the incremental budget revenue
will be spent on social programmes.

We have not found any mentioning of exact ratios in the YTB draft strategy,
but its overall leaning towards solidarism and meeting the needs of various
electoral groups allows us to conclude that the bloc attaches great
importance to social issues.  Suffice it to mention the proposal is to raise
the average pension to 80-90% of an average salary.

It may look pleasing to the laymen’s eye but not to the experts’. In
international practice, 70% (including non-state pension fund money) is
considered a very high replacement rate.  Yet given Ukrainian demographic
situation and one-and-a-half-tier pension system presently in place, 80% or
90% is utopia.

Amazingly, the YTB draft strategy contains a provision on  a gradual
abolition of the pay-as-you-go pension system and a transition to basic
pension funding from the sate budget, with a dynamic development of the
mandatory funded pension system (something like the Kazakh pension
reform model that has, eventually, proved highly problematic).

Well, do not let us be faultfinding: a lot of people must have been involved
in drafting the strategy so nobody must have advised Ms Tymoshenko of
this inconsistency.

Thus retired people, whose pensions increased noticeably before and after
the 2004 presidential elections, should not expect much this time. Perhaps,
the party headquarters have decided the issue is not relevant any more.
Perhaps they have realized how insurmountable the challenge of raising
pensions of 14 million people is.

The new topic of the day is helping families with newborns. The amount
required to fulfill even the most generous promises made by the Party of
Regions (subsidies to families with children up to 18 years of age,
irrespective of the family income) is UAH 2 billion.  Not too much but
rewarding, the party leaders believe.

How far will it take us? In June, commenting on the presidential social
initiatives, ZN reported that, in theory, the state could afford a maternity
allowance of UAH 100,000 per baby, in the long-long run. Now, some forty
days later, it looks like the top limit of UAH 100,000 could be reached by
the launch of the 2009 presidential campaign.

In August 2007, two political forces – the Party of Regions and YTB – have
already overcome the psychological barrier of UAH 50,000 in aid to mothers
upon the birth of their third child.

YTB, though, did it during the presentation of their draft “Ukrainian
Breakthrough”, rather than in their official platform. OU-PS is lagging
behind but, most probably, not for long.

The Party of Regions carried their idea of aiding families with children
farthest of all: they pledge to support today’s newborns throughout
childhood, adolescence, student life up to their first job and first
apartment (sic!).

It does not give any details as to the mechanics of providing those
apartments, it is true; but, after all, the format of election platforms
does not envision any particulars, which voter could remember and hold
politicians accountable for breach of promise later on.

Isn’t it high time to address the root causes of the disease rather than its
symptoms? Can’t the party leaders see that neither UAH 50,000 in maternity
allowance nor UAH 100-200 in monthly child support will do the trick?

Of course, young parents in small depressed towns will be happy to have
those subsidies because there are no job opportunities, modern
infrastructure, schools, hospitals, cultural or other amenities there. Yet a
country where labour remuneration funds are  lower than the amount of
social benefits cannot be regarded as a civilized economy.

What is better – a fishing-rod or fish? Civilized countries choose the
former. Experts call on Ukraine for following suit, as young (and no so
young) parents should be given an opportunity to earn a good living for
their families, rather than children allowances, which corrupt recipients
and create disincentives to pursue successful careers.

Alas! Regretful as it might be, the three most potent election players in
Ukraine have not got  cumulative economic expertise or the creativity to go
beyond minimum salaries/pensions/subsistence levels and restoring wage
grades.

Despite traditional slogans about decent payment for good work, Ms
Tymoshenko’s revolutionary promises to promote the distribution of a part of
corporate profits among employees, no one seems prepared to take practical
steps towards reforming the labour remuneration system and creating
well-paid jobs in Ukraine.

Is it the parties’ idea of responsible politics, or the course towards
common European values?
Will the mafia stay forever?
The issue is complex and multifaceted, aligned with judicial and regulatory
reform, as well as respect of law in general.  Even those who earn good
money (in Ukrainian terms) have to give it away in order to obtain numerous
permits, “oil” controlling authorities, maintain “relations” with firemen,
tax inspectors, sanitary services, etc.

Charges go up, undermining confidence in the future. Some choose to give
up and go abroad leaving their children in their elderly parent’s care.

“Due enforcement of laws will reduce the scope of “shadow” politics and
economy and facilitate the elimination of corruption,” – the Party of
Regions promises reservedly. “We will establish an anticorruption bureau to
investigate if the top officials’ expenditures match their declared
 incomes,” – assure “Our Ukraine” and “People’s Self-Defence”.

The Yuliya Tymoshenko Bloc censures corruption most vehemently and

loudly: “The corruption levels have reached their zenith. According to opinion
polls, corrupt practices permeate all bodies of state power. Not only does
corruption generate poverty, but it also impedes efforts to alleviate
poverty. In the final analysis, corruption endangers the very existence of
the nation.”

Drafters of the “Ukrainian Breakthrough” strategy explain available
anticorruption mechanisms. YTB vows, when elected to Parliament, to spare
no effort in combating this evil. However the question is, why wouldn’t it
start right now, for example, by making public procurement procedures more
transparent?

Why wouldn’t the Party of Regions, Socialists, Communists, “Our Ukraine”
and YTB strike out of their election lists those persons who pushed through
corruption-facilitating amendments to the law on public procurement and who
were engaged in tender schemes inflicting huge losses to the state budget
and enterprises? Their names are known – just read the recent publications
on most popular Ukrainian websites.

Unless the parties do so, their plans to “form political will to fight
corruption” have no chance of being implemented.   The best they can do is
“introduce an effective system of patriotic, moral, psychological, cultural
and aesthetic education of law enforcement personnel” (see Section
“Anticorruption Breakthrough” in the YTB draft strategy).
Pulling in different directions
That Ukrainian politicians cannot and will not listen to one another,
contrive to smear one another not only in talk shows like “Freedom of
 Speech” but also in news programmes, is an established fact. Ukraine has
become internationally known for that.

We will not discuss the country’s tarnished image and foreign direct
investments which, if not dwindle, at least do not grow in such an
environment. Economic policy loses consistency and continuity; business
loses development prospects. In fact, erratic economic policy is more
damaging for the country than no policy at all.

Examples are plenty: the ruling coalition led by the Party of Regions is
finalizing a new draft Tax Code.  However disapproving some experts could
be of the document, it is almost ready and likely to be submitted to the new
Supreme Rada in the autumn. Is there any hope the Party of Regions’ draft
will be adopted?

YTB and its parliamentary faction (which will exist in the Rada) oppose the
idea of preserving VAT – they suggest introducing sale tax instead.

OU-PS stands for simple and clear taxation rules (at present, they are
neither simple nor clear), for sharp reduction in tax benefits, including in
free economic areas, and for corruption-proof VAT levying system. OU-PS
has a trump card in its sleeve – Katerynchuk’s Tax Code, with which a lot of
party members disagree, though.

At this juncture, it is hard to say what the most important national
legislation document on taxation will look like, if it will ever be adopted,
and if it will, if politicians will rewrite it after every election.

They continue to pull Ukraine in different directions like Ivan Krylov’s
fable personages: “Upward strains the swan, towards the skies above; the
crab keeps stepping back; the pike is for the pond”.

A politically concerned citizen could say: “Never mind the Code, at least
for now. The main task is to have a fair and free election and have things
straightened out”. People in the street are sick and tired of this turmoil,
infighting and lack of clarity.

They do not pay their taxes for politicians to toss the national economy
into extremes, setting controversial, sometimes ruinous rules of the game.

Yet the voters can determine neither the election outcome, nor the policy of
the next Rada. The reason is evident – closed election lists and omnipotence
of a handful of party leaders immersed in demagogy and oblivious of the
people’s needs.

Until political parties cleanse themselves of demagogues, dark horses and
dead weight, until their functionaries learn to listen to one another and
cooperate in a meaningful way, no viable long-term social and economic
policy will be developed.

We will continue to rush from innovation-and-investment priorities to social
ones and back; from abolishing free economic areas to restoring and to
abolishing them again; from setting up a non-state pension fund for
employees of state-funded institutions to forgetting all about it.

As for the energy sector, the stance of governments and political forces
changes so rapidly that one can hardly follow it. First we decide to build
an oil pipeline and announce that once it is in place oil will not be a
problem. Then it transpires nobody except us needs the pipeline.

As a result, instead of diversifying oil supplies we get even more dependent
on Russia. We sell our best oil refineries to Russians, and then understand
we have to build a couple of new ones to have at least some influence on the
domestic petrochemical market and fuel prices.

We sell oblast gas and electricity distributing companies for a song, and
then wonder why they, engulfed in cash flows, refuse to settle their debts
to power generating companies and gas suppliers. We “hand in the keys” to
the domestic gas market to strangers and fail to understand why a monopolist
trader dictates its gas prices and supply terms.

Yes, Ivchenko, former RosUkrEnergo lobbyist, is not on the OU-PS election
list but a dozen of its current lobbyists are on the Party of Regions’ list.

Unless the fashion in which state power has been exercised so far changes,
the country will hardly be able to implement the simplest measures that
voters can understand and identify with, such as combating child smoking
and banning massive advertising of alcohol and cigarettes (OU-PS), or
putting an end to the cutting-down of parks in cities.

Will UAH 50,000 of allowance for the third child help to overcome
depopulation if these measures fail? Children need a healthy habitat, in
every meaning of the word. Will we provide them with it?
———————————————————————————————–
NOTE: Article has comparisons of various party platforms at the end.

One can this material at http://www.mw.ua/1000/1550/60185/.
———————————————————————————————–
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12.  PROMINENT WRITER CALLS FOR RECOGNIZING
NICHOLAS II, FAMILY AS VICTIMS OF POLITICAL REPRISALS

Interfax, Moscow, Russia, Saturday, August 11, 2007

MOSCOW – The last Russian Emperor Nicholas II and members of his
family should be recognized as victims of political reprisals, said the
prominent Russian writer and historian Eduard Radzinsky.

The contemporary Russia needs Nicholas II and his family members to be
recognized as victims of political reprisals, and the fact that this has
still not happened cannot be understood or justified, Radzinsky told
Interfax on Saturday.

“Not the Romanovs need this – this no longer matters to them. This is
necessary for those who live now. The Romanovs were not victims of a
judicial error. They were not victims of some bandits. They were victims
of the new authorities, who executed them in line with their new laws,”
Radzinsky said.

“Why should obvious things be subjected to heated debates?” Radzinsky

said.

“Now a court of the country, which is the successor of the USSR, should

rule that either executing them was the right thing to do, or that this was a
result of political repression. This was surely political repression in
relation to the tsar’s family, his doctor, and his servants,” he said.

In Radzinsky’s view, there are enough documents confirming that the tsar’s
family were executed at the new government’s decision.

“Who are those who were executed by the official Soviet authorities? Are
they victims of a judicial error? Or are they victims of bandits? No, they
are victims of the new Soviet authorities. This seems obvious, but at the
same time this looks incredible. It is incredible because we fail to
understand who are those eleven people whom the Soviet power executed
without a trial,” he said.

“It would be very important to declare that the tsar’s family was a victim
of the state. This would be a verdict on decisions of the past,” Radzinsky
said.

The leadership of the international historical, educational, and human
rights protection society Memorial, which, among other things, deals with
the rehabilitation of victims of political reprisals, shares Radzinsky’s
view on the matter.

“We believe that Nicholas Romanov, members of his family, and his retinue,
who were assassinated along with him in Yekaterinburg, are victims of
political reprisals,” Arseny Roginsky, chairman of the Memorial board, told
Interfax on Saturday.

“We don’t see any reasons to deny their rehabilitation. We deem unconvincing
the arguments that some documents are missing. All materials available show
that this was repression based on political motives,” he said.

The Prosecutor General’s office is supposed to make a decision by September
25 regarding a petition from Grand Duchess Maria Vladimirovna seeking to
recognize members of the last Russian tsar’s family as victims of political
reprisals.

German Lukyanov, a lawyer for the grand duchess, told Interfax that
Moscow’s Tverskoi Court had issued corresponding explanations on Friday.

He said that, in line with the law on the rehabilitation of victims of
political reprisals, the Prosecutor General’s Office should complete its
probe, draw conclusions and, in case of a negative decision, send the case
to court by September 25.

The Prosecutor General’s Office earlier refused to rehabilitate the last
Russian emperor and his family. It recognized that they had been victims of
repression but found no legal grounds for seeking their rehabilitation
through the courts.

“The prosecutor’s office does not have the slightest doubt that Emperor
Nicholas II, his family and closest entourage, were repressed. If the
prosecutor’s office had the slightest legal grounds for taking the matter to
court, this would have been done long ago,” a spokesman for the office said
earlier.
———————————————————————————————–
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13.  RUSSIA: GREAT TERROR REMEMBERED

Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, August 10, 2007

August 8 in Moscow marked the conclusion of a two-week religious
procession that began in Solovki to commemorate the 70th anniversary
of the start of one of the most horrific episodes in Russian history — the
mass Stalinist repressions known as the Great Terror.

The 12-meter wooden cross involved in the procession, specially made from
trees native to the Solovetsky Islands in the White Sea, was transported
from the Solovetsky Monastery to Moscow by sea and erected on the Butovo
Polygon, where on August 8, 1937, the first mass executions were carried out
by the NKVD (People’s Commissariat for Internal Affairs, the secret police
organization responsible for Stalinist political oppression).

During these repressions, tens of thousands of people of different ages,
professions, and convictions lost their lives.

Notably, the official Russian leadership did not in any way express its
observance of this event, except in stories on central television stations
typically describing logistics regarding the making of the cross and its
symbolism in the epoch of Russia’s extraordinary rebirth.
BUTOVO
RFE/RL’s Russian Service spoke with Archpriest Kirill Kaleda, deacon of the
Butovo Church, whose grandfather, a priest, was executed here in Butovo in
1937:

“For us, people who have entered the 21st century, it is essential to
preserve the memory of those who suffered in the previous, 20th century.
This is necessary especially for us.

“We need to acknowledge these events now, when our society is divided into
various groups, when very often between people there is no mutual
understanding, we need to remind ourselves of this horrible lesson that our
history brought us, so that we can try to find the path to reconciliation,
the path to harmony.”

Those who came to Butovo are primarily the children and grandchildren of
those executed here 70 years ago. This is Galina Ivanovna Priakina, whose
father Ivan Ivanovich Priakin perished here:

“That night 136 people were shot to death with him. Among them was the
Leningrad Archimandrite Vladimir. Prior to execution, they were
photographed, and before being led to the ditch, undressed. My grandfather
was a priest, and father was just a carpenter at the silicate factory in
Moscow.

“He was accused of spying for Romania, but really he was shot to death
because grandfather was a priest. We looked for father for 60 years, and
only three years passed since we found him. Father is recorded in the fifth
volume of the Book of Memory here. The first time I came and saw this
meadow, I really lost consciousness for a moment. How many of them lie
there!”

The latest list of 20,000 names is considered incomplete; it is said that
hundreds of thousands were shot to death here.

This is the director of the Butovo Memorial Center, Igor Garkavy: “Possibly,
this isn’t all. But investigating this possibility is constrained by certain
difficulties. We don’t know whether the FSB [Federal Security Service]
archives contain documents about executions that may have taken place here
after 1938.”

Behind the cross lie the ruins of the former commandant’s office, even
earlier the office of the manager of the horse-breeding farm of the village
of Drozhzhino stood here. Today, rumor has it that the cottage belonged to
Lavrenty Beria, Stalin’s chief of police, and his descendants won’t let it
be wiped off the face of the Earth.

This isn’t the case, explains Garkavy: “Here stood the commandant’s office
of the Butovo shooting polygon. Prisoners were brought to this building.
They were announced their verdict and were led away from here to have their
sentences carried out.

“And after the end of the ‘Yezhovschina,’ [the period during which NKVD
leader Nikolai Yezhov brought systematic political repression to
unprecedented heights,] here, next to the graves of their brothers — this
is especially ironic — employees of the MGB [Ministry of State Security,
predecessor of the KGB] set up a sanatorium. Maybe Lavrenty Pavlovich
[Beria] vacationed here himself.”
MOURNING CEREMONIES
During these days, mourning ceremonies took place on the Solovetsky Islands.
The center for commemorative events, opened in Medvezhyegorsk and
Sandarmokh, was moved to Solovki, the site of the first Soviet political
concentration camp. Among others, the site was visited by human rights
activist Sergei Kovalyov:

“Never in history since the times of ancient barbarism during the earliest
Middle Ages has there been such absolute contempt, such total disregard for
the value of human life and human freedom, and such deification of the
state. The state in the middle of the 20th century in our country ceased
even to feign public service.

“The state became the metaphysical purpose of the society and of each of its
citizens, the ultimate metaphysical value. We are suffering the traces of
this even now. It’s a very strong legacy.

“We found ourselves in an atmosphere of former officially accepted values.
We are constantly told that we need to remember the heroic triumphs of our
history and to quietly forget the filth and moral depravity of that history.

“This has become the official line, and it’s no accident that our
contemporary sensibility reproduces the basic values of the Stalinist epoch
in a different, somewhat evolved, more sanctimonious form.”

This is a major cause for alarm for many politicians, public
representatives, human rights activists — lessons are not derived from 1937
and other horrible pages of history.

This was discussed in a conversation with Radio Liberty correspondent
Andrei Sharyi by Yabloko party leader Grigory Yavlinsky:

“Many representatives of today’s Russian leadership, to whatever extent,
declare themselves to be the successors of that time and that style of
governing.

“Besides, one can say about the leadership in all levels of government that
in Russia there is a pseudo-democracy: manipulated justice, manipulated mass
media, manipulated interpretation of laws.

“The reproduction of various mechanisms, for example, the execution of some
economic reorganizations or reforms in this manner, so that everyone who
participated in them is subsequently always under the threat of arrest,
deportation, imprisonment, and punishment. This relates to practically all
of our business.

“Polls show that up to 20 percent of the population is ready to vote for
Stalin for the country’s president, and they excuse what happened back then.

“There obviously needs to be a huge, thorough investigative study, but
besides that, there needs to be a clear unequivocal official identification
of everything that happened then as state crimes, and on the basis of that,
we need to determine how to write textbooks, how to explain history to
schoolchildren and in the universities. Otherwise, sooner or later, this
will lead to repetition of those events in some form or other.”

This was discussed by Dmitry Katayev, former deputy of the Moscow City
Duma, with the host of the program “Facets Of Time,” Vladimir Kara-Murza:

“It’s a disgrace, after all, that in Moscow there still aren’t any
memorials. How many of them are there in the world, in Russia, and in the
former Soviet Union! But there aren’t any in Moscow. There is the Donsky
Monastery, the cemetery, there are three graves of unmarked ashes,
unrecorded in the cemetery records. In one of these are the ashes of my
father, Ivan Katayev, shot to death on August 19, 1937.

I found out that my father was executed on this day only after August 19,
1991, thanks to the Memorial. Here is the Donsky Cemetery, and, of course,
Lubyanskaya Square. Where is the memorial plaque on the KGB building?

“How many were spontaneously shot to death in the basements of this
building? Portraits of [Cheka founder Feliks] Dzerzhinsky hang there, I
know, but there’s no memorial plaque.”

The discussion was joined by president of the foundation Holocaust, former
State Duma Deputy Alla Gerber:

“I was in the FRG [Germany] — there is no city there without a museum about
the history of the Nazi party, about repressions, about concentration camps.
Children are taken there.

“But here recently at a convention of historians, [President] Vladimir
Vladimirovich Putin said that we don’t have any complex of guilt. ‘Why are
we feeling so bad about our past?’ he said, ‘we didn’t have any
concentration camps.’ Maybe he forgot about Gulag? Anything can happen
again.

What happened, for example, with [imprisoned oligarch] Mikhail Khodorkovsky
was purely a political process. The fact that scientists are periodically
put behind bars, that many journalists are periodically stripped of their
right to work in their profession. The fact that this is happening now —
it’s already a danger.”
————————————————————————————————-
http://www.rferl.org/featuresarticle/2007/08/9a452730-de6c-483b-8da5-6c50e1f4c14e.html
—————————————————————————————————–
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AUR#860 Aug 22 Parliamentary Election Concerns; Big Orange Wolf; Moscow & Kyiv Elections; Shadow of Russia’s Dairy & Meat War With Ukraine;

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
                        
ACTION UKRAINE REPORT – AUR – Number 860
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., WEDNESDAY, AUGUST 22, 2007
INDEX OF ARTICLES  ——
Clicking on the title of any article takes you directly to the article.               
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National Democratic Institute (NDI), Kyiv, Ukraine, Mon, Aug 20, 2007

2REPORT: COMMITTEE OF VOTERS OF UKRAINE, MONITORING
OF THE EARLY PARLIAMENTARY ELECTION IN UKRAINE
Committee of Voters of Ukraine (CVU), Kyiv, Ukraine, Wed, Aug 15, 2007

3NO ONE IS AFRAID OF THE BIG ORANGE WOLF
OPINION: By Alexei Pankin, The Moscow Times
Moscow, Russia, Tuesday, August 21, 2007. Issue 3725. Page 9.

4UKRAINE: ELECTION SET TO BRING ANOTHER CRISIS
ANALYSIS & COMMENTARY: by Zoltán Dujisin
Inter Press Service (IPS), Rome, Italy, Monday, August 20, 2007

5THE REALITY OF UKRAINE’S REVOLUTION
Three years after the Orange revolution, reform is glacially slow

ANALYSIS & COMMENTARY: By Lawrence A. Uzzell,
President, International Religious Freedom Watch
The Christian Science Monitor, Boston, MA, Tue, Aug 21, 2007

6NEW OLD PROPOSITIONS: CANCELLATION OF IMMUNITY OF
DEPUTIES AS A REGULAR SLOGAN OF THE ELECTION CAMPAIGN
By Anastasia Smagina, UCIPR analyst, Research Update. Vol. 13, No 24/496,
Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Wednesday, 11 July 2007

7AN UNHAPPY BIRTHDAY FOR UKRAINE’S CONSTITUTION
ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Senior Journalist, based in Ukraine.
Eurasian Home, Moscow, Russia, Monday, June 28, 2007

8KIEV’S HAND
Moscow and Kiev are interested in each other’s upcoming elections
ANALYSIS & COMMENTARY: By Leonid Petrov
Versiya, No. 32, Moscow, Russia, Mon, August 20, 2007

9RUSSIAN LIKES AND DISLIKES IN UKRAINE
ANALYSIS & COMMENTARY: By Vyacheslav Nikonov
President of the Politika Foundation.
RIA Novosti, Moscow, Russia, Thursday, August 16, 2007

10“KIEV RESORTS TO TRANSIT BLACKMAIL”
Russian-Ukrainian Relations Remain Difficult; Presidential Meeting Postponed
Meat and dairy trade wars announced by Russia at the beginning of 2006
ANALYSIS & COMMENTARY: By Ilona Zayets
Nezavisimaya Gazeta, Moscow, Russia, Wed, August 15, 2007

11WHOSE PROMISE IS SWEETER? UKRAINIAN PARTIES HAVE
STARTED PRESENTING THEIR ELECTION PLATFORMS
ANALYSIS & COMMENTARY: Alla Yeremenko, Nataliya Yatsenko
Mirror-Weekly 30 (659), Kyiv, Ukraine 18-24 August 2007

12PROMINENT WRITER CALLS FOR RECOGNIZING NICHOLAS
II, FAMILY AS VICTIMS OF POLITICAL REPRISALS
Interfax, Moscow, Russia, Saturday, August 11, 2007

13RUSSIA: GREAT TERROR REMEMBERED
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, August 10, 2007
========================================================
1
NATIONAL DEMOCRATIC INSTITUTE (NDI) DELEGATION
VOICES CONCERNS  IN ADVANCE OF UKRAINE’S ELECTIONS

National Democratic Institute (NDI), Kyiv, Ukraine, Mon, Aug 20, 2007

KYIV – The National Democratic Institute’s pre-election delegation today
concluded that the campaign period is so far free from the most egregious
problems that marred previous Ukrainian elections, but the delegation is
troubled by some election procedures that appear to be a step backward and
could lead to fraud.

The delegation was composed of former Congressman and House Democratic
Caucus Chair Martin Frost, elections consultant and former Deputy Director
of the OSCE’s Office for Democratic Institutions and Human Rights (ODHIR)
Peter Eicher, former United Nations Assistant Secretary General Cedric
Thornberry, and NDI Eurasia Deputy Director Katie Fox.

“This election offers Ukrainians a genuine choice among several political
blocs waging vigorous campaigns that are widely reported to voters by the
media,” said Martin Frost.  He added that, “unfortunately, changes in the
election law represent a real step backward from recent progress towards
more democratic elections.

Changes to the law make it easier to commit fraud, could create confusion,
and may lead to the disenfranchisement of many Ukrainians..   We are
hopeful, however, that these elections will meet international standards for
democratic elections.”

The pre-election delegation was particularly concerned with several changes
to the election law;

Changes to the requirements for voting at home that increase the possibility
this procedure could be abused as it has been in the past.

A new provision that requires border guards to track voters who have left
the country, raising the possibility that large numbers who return shortly
before the election could be disenfranchised.

The abolition of any provision for absentee voting by people who have either
moved or are traveling inside the country  away from their home precincts.

Another concern is the politicization of the Central Election Commission
(CEC), which has led to an erosion of trust among political parties in its
ability to organize the election fairly.

“It is not too late for the CEC to take steps to remedy the problems we’ve
outlined,” said Peter Eicher.  “If CEC members can summon the courage to
overcome political influences, and act in the spirit of cooperation, they
could do a great deal to build confidence in the electoral process.”

Katie Fox concluded, “As election day approaches, all electoral blocs and
election officials must be genuinely committed to democratic practices.”

NDI is a non-profit organization working to strengthen and expand democracy
worldwide. NDI has conducted over 100 impartial pre-election, election day,
and post-election observation delegations around the globe. NDI does not
seek to interfere in Ukraine’s electoral process.
———————————————————————————————–
STATEMENT: BY NATIONAL DEMOCRATIC INSTITUTE’S (NDI)
PRE-ELECTION DELEGATION TO UKRAINE’S SEPTEMBER
30, 2007 PARLIAMENTARY ELECTIONS REGARDING THEIR
OBSERVATIONS, CONCERNS, RECOMMENDATIONS

National Democratic Institute (NDI)
Kyiv, Ukraine, Monday, August 20, 2007

This statement is offered by an international pre-election delegation
organized by the National Democratic Institute (NDI). The delegation
visited Ukraine from August 14 to August 20 to assess preparations for
the September 30, 2007 Parliamentary elections.

This delegation was composed of former Congressman and House
Democratic Caucus Chair Martin Frost, elections consultant and former
Deputy Director of the OSCE.s Office for Democratic Institutions and
Human Rights (ODIHR) Peter Eicher, former United Nations Assistant
Secretary General Cedric Thornberry, and NDI Eurasia Deputy Director
Katie Fox.

The delegation.s purposes were to demonstrate the interest of the
international community in the development of a democratic political process
and democratic governance in Ukraine, and to present an accurate and
impartial assessment  of the political environment and its implications for
democratic development.

In late September, NDI will deploy a 30-person international observer
delegation that will monitor the September 30 elections and the
post-election period. NDI.s programs in Ukraine are funded by a grant
from the U.S. Agency for International Development.

The NDI pre-election delegation met with a diverse group of Ukrainian
political and civic leaders, non-governmental organizations and domestic
election groups, electoral authorities, government officials, and
representatives of the media and the international community in Kyiv.

The delegation conducted its activities in accordance with the laws of
Ukraine and the Declaration of Principles for International Election
Observation.

NDI does not seek to interfere in Ukraine.s election process, and recognizes
that, ultimately, it will be the people of Ukraine who will determine the
credibility of their elections and the country.s democratic development.
SUMMARY OF OBSERVATIONS:
With the September 30 elections, Ukraine is at a crossroads. It can
consolidate progress from the 2006 elections, or risk slipping back to
discredited, fraudulent practices. The delegation noted few problems in the
early campaign period, which is a positive sign.

However, recent changes to the legal framework for elections represent a
step backward. Meeting the challenges posed by these amendments will
require real commitment to democratic processes by all electoral blocs.

Election observation, both foreign and domestic will be important, but not
sufficient to monitor all of Ukraine.s nearly 34,000 polling places.

These elections offer Ukrainians a genuine choice among several political
contestants waging vigorous, but peaceful campaigns that are widely
reported to voters by the media.

The campaign period is so far free of the most egregious problems that
marred previous Ukrainian polls. Fundamental human rights are respected.
State censorship and direct state interference with campaigning are no
longer issues.

The blatant and coercive use of state power to garner votes that has been
documented in past elections does not appear to be a problem. All major
electoral blocs have access to the media, although paid political
advertising is often disguised as news.

New arrangements for voting at home, absentee voting and purging from
the voter rolls Ukrainians who may be out of the country on election day
threaten to disenfranchise some voters, as well as open the door to
significant falsification of votes.

In addition, more strictly partisan composition of election commissions has
already stalled registration of one electoral bloc, and risks further delays
and manipulation of election procedures for political advantage.

The delegation noted a broad lack of confidence in the Central Election
Commission (CEC) to conduct the election free from political influence,
and to an even greater extent the courts to fairly resolve electoral
disputes.

As election day approaches, all of Ukraine.s electoral blocs must
demonstrate the political will to advance the country.s democratic progress.
POLITICAL AND ELECTORAL CONTEXT
The September 30 elections are pre-term elections, resulting from the
political turmoil that has roiled Ukraine since 2004. Ukraine.s next
regularly scheduled parliamentary elections were to be held in 2009.

However, in summer 2007, President Victor Yuschenko dismissed the
parliament and called for new elections, in response to an apparent drive
by Prime Minister Victor Yanukovych.s parliamentary majority coalition
to increase its numbers in parliament to 300 seats.

Three hundred votes are needed to amend the constitution and potentially
impeach the president. Amid allegations of bribery, a number of members
of parliament changed their loyalties.

The Prime Minister.s coalition challenged the dissolution of parliament as
unconstitutional but when the courts failed to rule, early elections were
agreed to through political compromise.

The confrontation between the President and Prime Minister dates to at least
2004. The two faced each other in a presidential election deemed fraudulent
by domestic and international observers and eventually invalidated by
Ukraine.s Supreme Court.

Yuschenko won the resulting re-run election but was never able to hold
together the coalition of parties that supported him.

More significant than the specific electoral outcome, perhaps, was the
dynamics of Ukraine.s Orange Revolution, in which hundreds of thousands of
ordinary Ukrainians peacefully and successfully protested in support of free
and fair elections.

This was an exceptional demonstration of citizen mobilization in support of
political and governmental accountability, through exercising citizens.
right to participate in governmental and public affairs The Prime Minister.s
Party of Regions (PoR), President Yuschenko.s Our Ukraine/ People.s Self
Defense bloc (OU/PSD) and the Bloc of Yulia Tymoshenko, the former Prime
Minister (BYT) are now the three main electoral contenders. Several smaller
parties are also in competition.

The Ukrainian electorate goes into the campaign deeply polarized. The
regional division between the OU/PSD and BYT .orange. Western Ukrainian
voters on one hand and PoR.s Eastern, and Southern citizens on the other is
pronounced. Two and  half years of public squabbling have hardened positions
and bred mistrust on both sides.

Current polls indicate a near tie between the pro-Yanukovych .blue. forces
and the combined supporters of the Yuschenko and Tymoshenko blocs.

This summer Ukraine hastily revised its election law and procedures. The
changes, which were the product of a political compromise to give the
President the early elections he sought, introduce new arrangements for
compiling the voter lists, voting by the homebound, and limitations on
voting by those who have traveled abroad. All of these are problematic,
because they open possibilities for disenfranchisement and illegal voting.

Other new provisions establish a 50 percent minimum turnout requirement
and call for a CEC formed of eight representatives of the Prime Minister.s
parliamentary majority and seven of the opposition faction.

District Election Commissions  (DECs) are composed of equal numbers of
representatives of the parliamentary majority and opposition. Precinct
Election Commissions (PECs) contain representatives of  the five blocs in
the current parliament.
OBSERVATIONS:
[1] Electoral Progress to Date:
[1-A] Freer Media Environment:
The delegation found that the major blocs contesting the election have equal
access to the media, in part because all have the resources to pay for it.

Television is the medium by which Ukrainians overwhelmingly get their news.
On most national channels coverage of candidates is equally available to
all, if – and only if – it has been purchased.

Importantly, this includes time on programs labeled news. This violates
Ukraine.s election law, which prohibits political advertising on news shows
(Article 71.17).

It potentially limits the media access of smaller, poorer parties and
undermines the long term credibility of the media. Despite these
shortcomings, which are serious, the current media environment represents
an improvement over previous elections.

In 2004 and previous elections candidates were denied or limited in their
access to national media leaving voters without the information needed to
make well informed choices.

The delegation found no evidence of state censorship or confirmed reports of
violence against journalists, both of which have figured prominently in past
elections.

[1-B] Freedom to Campaign:
Ukraine.s campaign period officially began August 2. At this early stage, no
significant interference with freedom to campaign was noted. Some of the
delegation.s sources referred to misuse of government resources, so-called
.administrative resources,. for which Ukraine was infamous in 2004.

The delegation heard no specific allegations of severe abuses of state
power, such as coercion of state employees or students, by either side.

In many oblasts, however, state employees, including oblast governors, are
serving as campaign chairs. This does not appear to violate Ukrainian
election law, as long as they do not campaign on state time or using state
resources.

However, the delegation recommends that local officials and national
Cabinet Ministers, many of whom are also candidates, take extra care
to avoid the perception that they are campaigning while performing
government duties.

Abuse of .administrative resources. is a red flag in Ukraine, considered to
be widespread, and at the root of stolen and illegitimate elections.

NDI’s experience worldwide has found that confidence in an electoral
system and a perception of fairness are as important as the letter of the
law.

When serious doubts are raised as to the fairness of an electoral provision,
as with government  officials who are also campaign workers or candidates,
additional safeguards should be introduced even if the law meets an
otherwise acceptable standard.

[2] Matters of Continuing Concern:
[2-A] Potential Abuse of Home Voting:
In 2004, the mobile ballot box became a major instrument of fraud. Under
Ukrainian procedures the mobile box is physically brought to the sick and
disabled at home so they can cast votes.

In the 2004 elections, the number of those allegedly ill and disabled and
requesting home voting was massively and fraudulent inflated, reaching one
third of the total electorate in one oblast.

In response, legislation passed in 2005 required voters wishing to vote at
home to present evidence of their medical conditions. It  also required them
to request home voting at least a week ahead of elections.

Under the 2007 amendments and CEC regulations, home voting is still
intended solely for the sick and disabled.

However, the new rules dilute important safeguards against fraud by allowing
voters to request home voting without any medical documentation, and to do
so up to two days before the election. This re-opens a loophole in the law
that was closed precisely to eliminate fraud. As such, it is very troubling.

[2-B] Voters Traveling Abroad and Absentee Voting:
Ukrainian voter lists are in the process of compilation; most sources
reported they expected some inaccuracies as in 2006. The most serious
problems, however, concern new provisions for Ukrainians traveling abroad
on election day.

The 2007 election law amendments stipulate that three days before the
election, Ukrainian border guards must compile a list of those who have left
the country since August 2 and have not returned. The border authorities
transmit the names to local election commissions which strike them from the
list of eligible voters.

This provision is problematic for several reasons. It could disenfranchise
many voters who return to Ukraine within three days of the election. Some
suggested to the delegation that this system may even be abused through
schemes to conceal  the fact of voters. departure in order to later
fraudulently cast votes in their places.

Even with good intentions this scheme will be difficult to implement. There
is no central registry where departures from Ukraine.s numerous border
crossings are recorded. Border formalities have traditionally been few at
Ukraine.s borders with Russia and Belarus.

The system places a large burden on the border guards, who are not trained
or accustomed to playing this role in elections.

It could also create an administrative nightmare, as hundreds of DECs
scramble to compile and transmit to thousands of PECs accurate accounts
of voters to be stricken from lists, all within the three day period in the
law.

The 2007 amendments also abolished absentee voting procedures for
Ukrainians who are within the country but away from their home precincts.

This effectively disenfranchises the many voters currently resident in a
place different from that of their formal registration. It affects many more
traveling for business or personal reasons.

This provision may also hinder recruitment of election observers to spend
election day in precincts other than their own. In the past, parties have
sent their observers to regions of the country they consider hostile to
their interests, the East and South for BYT and OU and the West for PoR.

This was cited by many as both a deterrent to fraud and an important source
of confidence in voting and counting procedures. There is provision in the
election law for those serving as election commissioners to vote outside
their home precincts.

[2-C] Election Commissions and Courts:
Election commissions at all levels are now more partisan than in previous
elections, with membership on the bodies divided between representatives
of opposing electoral blocs.

In the short time this CEC has existed, both the parliamentary majority and
opposition members of the CEC have boycotted sessions.

The CEC has split along partisan lines on such important issues as documents
needed for home voting. In early August, the CEC voted along partisan lines
to deny BYT registration on technical grounds.

The CEC vote delayed the start of BYT.s campaign. It forced the bloc to get
a court order, after which the CEC voted unanimously to register BYT.

The delegation is concerned about future problems in election administration
if the CEC and other commissions cannot work collegially.

Some of the delegation.s interlocutors raised the possibility that
partisanship might lead to unnecessary obstacles to certifying election
results. This would severely undermine Ukrainians. confidence in those
results.

The delegation was struck by the nearly unanimous lack of confidence in
Ukraine.s judicial system to arbitrate impartially election disputes.
Everyone with whom the delegation spoke described the courts as beholden
to one political force or another.

This is very worrisome given that both the results and the conduct of voting
and counting on election day are likely to be challenged in court.

RECOMMENDATIONS:
The delegation would like to thank all with whom they met. The insights
provided were valuable and the warm welcome provided to the delegation
was greatly appreciated.

In the spirit of international cooperation the delegation respectfully
offers the following recommendations in the hopes of contributing to
those working to improve the election process.

[1] For the Central Election Commission (CEC) and Courts:

[1-A] The Central Election Commission should operate in a spirit of
consensus. Its members should seek solutions and take decisions that bridge
the political divide and build confidence and garner broad support for the
electoral process. Lower level election commissions should operate in the
same spirit.

[1-B] The Central Election Commission should issue regulations requiring
verification that those voting at home are entitled to do so, to ensure
there is no abuse of Article 84 of the Law on Election of Peoples. Deputies.
Article 84, as amended, makes clear that home voting by mobile ballot box is
intended only for voters who cannot move on their own due to age, disability
or health conditions.

Regulations and procedures should ensure that voting at a place of residence
is strictly limited to persons in these categories, as required by the law.

[1-C] The Central Election Commission and the Border Guard Service

should stipulate detailed procedures for the implementation of Article 102-3,
paragraph 9, of the Law on the election of Peoples. Deputies, as amended,
to ensure consistent application of the law throughout the territory of
Ukraine.

The procedures could include publicizing lists of people to be stricken from
the voter lists, in time for them to correct errors, or other measures to
ensure that persons returning to Ukraine within the final three days before
the election are not deprived of their right to vote.

[1-D] Central Election Commission should take steps to ensure the full
transparency of election results by posting immediately at every level of
tabulation and on the CEC website all results . down to the polling station
level . as soon as they are received.

[1-E] The Central Election Commission should develop procedures to ensure
compliance with Articles 71.17 and 102-6.14 of the Law on the Election of
peoples. Deputies, which stipulates that election propaganda placed in the
media shall contain the full title of the party or bloc which has ordered
the propaganda.

Neither media outlets, nor parties, nor election officials should tolerate
the apparently prevalent practice of hidden, paid political advertising.

[1-F] The Central Election Commission should ensure that international and
domestic non-partisan observers are registered through an inclusive, rapid,
simple and effective procedure that ensures the broadest possible presence
of observers on election day, as well as during the pre-election and
post-election periods.

[1-G] The Central Election Commission should issue regulations ensuring
that observers have full access to all aspects of the electoral process,
including observing data entry at the District Election Commission level.

[1-H] The Central Election Commission, the media and non-governmental
organizations should undertake a widespread public information campaign to
encourage every voter to check his or her registration, to ensure the
accuracy of the voter lists and to prevent any eligible voter from being
turned away from the polls on election day.

[1-I] The District Election Commissions should take care to refrain from
appointing to PECs any individuals associated with fraudulent practices in
past elections.

[1-J] All courts adjudicating election cases should take prompt,
well-reasoned decisions that comply fully with the letter and spirit of the
law and with Ukraine.s international obligations to support democratic
practices.

[2] For the Media:

[2-A] The media should devote more effort to, and develop a better

capacity for, analytical reporting on the election campaign.
 
[2-B] The media should sponsor debates among the leaders of the major
parties or blocs standing in the election.

[3] For the Political Parties:

[3-A] Political parties should ensure that they field the largest possible
numbers of party agents to polling stations throughout the country, in order
to help ensure the integrity of the polling process on election day.

[3-B] Political parties should seek gender balance in their nominations of
polling station officials.

[4] For the Voters and NGOs:

[4-A] Since the law does not provide for absentee voting in these early
elections, voters should check to ensure that they are included on lists for
their current places of residence in order not to be disenfranchised on
election day.

The Central  Election Commission and other authorities compiling voter
lists should make a maximum effort to include voters at their current places
of residence.

[4-B] We encourage domestic and international organizations to field the
largest possible numbers of non-partisan short and long term observers as a
means of discouraging malpractice and building public confidence in the
electoral process.

In this regard, NDI will be sending its own team of election day observers,
and has provided funding and support for other international observers.

[5] Although it is too late for these elections, the following
recommendations should be taken into account for future elections:

[5-A] The election law should be thoroughly reviewed and brought fully

into line with international standards and best practices. As part of this
process, Ukraine should fulfill its commitments to implement
recommendations on election reforms set out by the OSCE and the
Council of Europe.

[5-B] Detailed guidelines should be established on the use of so-called
.administrative resources,. making absolutely clear what is and is not
permitted of public officials of all levels during a campaign period.

[5-C] Political parties should adopt more open, transparent and democratic
methods for establishing their candidate lists and party platforms.

[5-D] Parties should place more women on their candidate lists, in positions
that ensure their election to office.

[5-E] The new parliament should develop clearer and more comprehensive
rules governing campaign financing, aimed at enhancing transparency and
accountability.

[5-F] Ukraine should continue to take steps to strengthen the independence
of the judiciary in order to advance the rule of law and to create greater
public confidence that the court system can provide an effective remedy for
complaints.
CONCLUSION:
This election presents Ukrainians of all political stripes with an
opportunity. The parliamentary elections of 2006 were an achievement
following a long history of troubled elections. The September 30 election
provides an opportunity to build on that achievement.

It is a chance to demonstrate to the Ukrainian voters that despite the
fractious, partisan maneuvering that led up to this election, all Ukrainian
political leaders are irrevocably committed to free and fair elections, as
an integral part of democratic development.

This goal is well within reach. The campaign period has so far been
relatively free of problems. As election day approaches, all of Ukraine.s
electoral blocs must  demonstrate the political will to advance Ukraine.s
democratic progress.
———————————————————————————————-
NDI METHODOLOGY:
An accurate and complete assessment of any election must take into account
all aspects of the process, and no election can be viewed in isolation from
the political context in which it takes place.

Among the factors that must be considered are:
[1] the legal framework for the elections set by the constitution,
     including electoral and related laws;
[2] the ability of citizens to seek and receive sufficient and accurate
     information upon which to make political choices;
[3]the ability of political competitors to organize and reach out to
     citizens in order to win their support;
[4] the conduct of the mass media in providing  coverage of parties,
     candidates, and issues;
[5] the freedom that citizens and political competitors have to engage in
     the political and electoral process without fear of intimidation,
     violence, or retribution for their choices; the conduct of the voter
     registration process and integrity of the voter register;
[6] the right to stand for election;
[7] the conduct of the voting, counting, results tabulation, transmission,
     and announcement of results; the handling  of election complaints;

     and      the installation to office of those duly elected.

It should also be noted that no electoral framework is perfect, and all
electoral and political processes experience challenges.

NDI is a nonprofit organization working to strengthen and expand democracy
worldwide. Calling on a global network of volunteer experts, NDI provides
practical assistance to civic and political leaders advancing democratic
values, practices, and institutions. NDI has conducted over 100 impartial
pre-election, election-day, and  post-election observation delegations
around the globe.
————————————————————————————————
CONTACT INFORMATION: in Kyiv, Sam Sager at 38-044-569-8840,

ssager@ndi.org; in Washington, DC: Nelson Ledsky at +1 202 728 5500
————————————————————————————————-
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2.  REPORT: COMMITTEE OF VOTERS OF UKRAINE,
MONITORING OF THE EARLY PARLIAMENTARY
ELECTION IN UKRAINE

Committee of Voters of Ukraine (CVU), Kyiv, Ukraine, Wed, Aug 15, 2007

KYIV – The Committee of Voters of Ukraine is the all-Ukrainian NGO that
has been performing comprehensive monitoring of campaigns in Ukraine in
terms of observance of the national legislation and international standards
of fair and democratic election by all stakeholders since 1994.

 
From the moment when the snap parliamentary election campaign started,
the CVU monitored the election process.
Observations of the CVU based on the campaign monitoring:
1. Political actors nominate their candidates freely and openly; no
obstacles in conduction of party congresses were registered. However, the
procedure of discussion and adoption of election lists is not democratic
enough; “rank and file” party members have no influence upon nomination of
candidates. Also, the CVU has registered minor procedural violations in
nomination and filing documents on registration of candidates.

2. Party members and ordinary voters have no detailed information on
candidates put on election lists. The CVU recommends parties to promulgate
full biographical data of candidates and information on their income in
party periodicals and web-resources.

3. Campaign continued despite on the ban on official agitation. Political
parties and blocs resort to hidden agitation and pay for it from other
sources than election budgets (funds).

4. The CVU is concerned about officials, who take part in the campaign in
their working time; CVU believes that hours spent for agitation should not
be accounting as working hours. Officials should go on leave for the period
of campaign.

5. Yulia Tymoshenkos’ Bloc has initiated campaign for the constitutional
referendum. Given current legal conditions, it is impossible to observe all
procedural requirements for conduction of the referendum on September 30,
2007. Combined voting at the parliamentary election and the referendum might
impede both processes.
Central Election Commission and Pubic Authorities activities —
From the beginning of the election process, the CEC has been operating in
compliance with the current legislation and provides valuable election
campaign organization. At the same time, the CVU points out that CEC’
members are still politicized and there is a risk that they will block
operations of the supreme electoral body.

In particular, the Central Election Commission failed to approve a form of
application for voting at home, while some Commission’ members objected to
the requirement that a voter should present a document confirming his/her
inability to vote at a poling station.

Given experience of prior election campaigns, the CVU warns against
uncontrolled “home voting”, which is often used for falsification of
election results.

Therefore, more detailed regulation of the voting at home is quite
justified, given the current social and political situation. CVU urges CEC’
members to adopt the norm making a voter give grounds for his/her voting
at home.

Also, the CVU expects discussions at formation of constituency election
commissions, as the legislation on nomination of commissioners by factions
of the Our Ukraine and Yulia Tymoshenko’s Bloc is ambiguous. The problem
is that leaders of both factions had resigned prior to formation of
constitution election commissions.

The CVU recommends the former faction leaders to nominate candidates
against their own signatures saying that the given person headed the faction
with the Verkhovna Rada of the 5th convocation.

The CVU also appreciates efforts of the President’s Secretariat facilitating
organization of the snap election. In particular, they have assigned
representatives of the Secretariat to regions for inspection of premises
allocated for election commission, activities of the voter registration
groups and production of posters.
Nomination of candidates for national deputies —–
During the first week of the campaign, all major political forces conducted
their congresses, where candidates for national deputies were nominated. In
the CVU’s opinion, major drawbacks of nomination was lack of open
inter-party discussion on formation of election lists and violations of some
procedural moments of nomination.

First, individuals affiliated with other parties were put on election lists
of some parties and blocs, which is prohibited by the law. In particular,
the Congress of the Party of Regions approved their election list on
August 4.

Among persons nominated for national deputies were Anatolij Kinakh and
Vasyl Hurjev, Head and the Deputy Head of the Party of Industrialists and
Entrepreneurs, respectively. Election list of the Party of Regions was
approved about 2.00 p.m.

At 3.00 p.m. of the same day the Congress of the Party of Industrialists and
Entrepreneurs started its work in the Ukrainian House. Anatolij Kinakh
presided over the Congress, and Vasyl Hurjev participated in its work.

The Congress terminated the party membership of the above persons upon
proposal of the Head of the Party of Industrialists and Entrepreneurs after
5.00 p.m.

Only after that A.Kinakh and V.Hurjev lost their party affiliation.
Therefore, the Party of Regions could not nominate individuals who were
affiliated with other party as of execution and approval of the list.

Similar infringement was committed at approval of the election list of the
Our Ukraine – People’s Self-Defense Bloc. In particular, Oleksandr
Omelchenko, number 13 in the election list, was elected head of the Unity
Party on June 23, 2007. On August 4, 2007, the second stage of the Unity’s
Congress was held.

There, they resolved that the Party should not take part in the snap
election on its own; instead, they decided to support the Our Ukraine –
People’s Self-Defense Bloc. However, the Congress did not consider
replacement of the Head and termination of his affiliation with the party.

Therefore, the Our Ukraine – People’s Self-Defense Bloc should not have put
member of another party on their election list. The same is true for another
candidate from the Our Ukraine – People’s Self-Defense Bloc, Yevhen Hirnyk,
who was the Deputy Head of the Congress of Ukrainian Nationalists as of
conduction of the Bloc’s congress.

It is confirmed with resolution of the Main Board of the CUN, which expelled
Yevhen Hirnyk from the party after the Bloc’s congress.

Another procedural violation was committed by the Yulia Tymoshenko’s Bloc.
On August 2, congresses of individual parties made resolution on creation of
the YTB.

Immediately after execution of the agreement, representatives of Yulia
Tymoshenko’s Bloc informed the Central Election Commission about that
and filed all required papers with the CEC, including notification on the
inter-party congress to be held on August 5.

Subject to paragraphs 8 and 9 of Article 57 of the Law of Ukraine On
Election of National Deputies of Ukraine, heads of parties comprising the
election bloc should inform the CEC on time and venue of the inter-party
congress no later than in five days prior to such congress.

Mass media should be informed on the event no later than in three days prior
to the congress. Therefore, the YTB infringed requirements of the law on
informing the CEC and mass media on convocation of the supreme executive
body of the Bloc, when announced on August 2, that the Congress would be
held on August 5.

In compliance with the law, the Bloc should have conducted the Congress no
earlier than on August 6. Although two members of the Central Election
Commission (elected by quota of the Yulia Tymoshenko’s Bloc) witnessed
the inter-party congress, such minor violation might impede registration of
candidates for deputies.

Subject to sub-paragraph 1 of paragraph 1 of Article 62 o the Law, the
Central Election Commission shall refuse in registration of candidates, if
laws on creation of an election bloc and nomination of candidates are
infringed.
Challenges of the Election Campaign —–
Despite the fact that the election process started on August 2, and
agitation may start upon registration of candidates with the Central
Election Commission, many political parties and block continue their
hidden campaigning.

There are many big boards with slogans of the leading political forces. Such
advertisements do not contain full names of political parties, names of
publishing houses and other details. The CVU believes that such agitation
violates principles of fair election.

Another problem is participation of officials of executive agencies and
local self-government bodies in the election campaign. Although the law
does not contain the explicit requirement that officials should go on leave
during the election campaign, they can not participate in the campaign
during working hours.

The President of Ukraine delivered a speech to the inter-party congress of
the Our Ukraine – People’s Self-Defense Bloc on August 2. In his address,
Viktor Yuschenko touched upon political, personal and other qualities of
candidates, which could be treated as agitation subject to Article 66 of the
Law.

Also, other top officials – Head of the Secretariat of the President of
Ukraine, heads of local state administrations – were present at the congress
during working hours.

Also, address of the President of Ukraine Viktor Yuschenko on cancellation of
deputy immunity, which was broadcasted by private TV channels on September
9, may be regarded as campaigning in favor of the Our Ukraine – People’s
Self-Defense Bloc, because the President mentioned the Bloc’s name in his
address.

At the same time, members of the Cabinet of Ministers and other officials
witnessed the Congress of the Party of Regions on Saturday. However, the
Party of Regions filed documents on registration of candidates with the CEC
on Monday, August 6. Among persons, who handed over documents to the
CEC, was Nestor Shufrych, incumbent Minister of Emergencies.

The CVU urges all officials of governmental agencies and local
self-government bodies, involved in the election campaign, to go on leave.
Other officials should refrain from participation in the campaign during
working hours.
All-Ukrainian referendum on constitutional

Amendments Initiated by Yulia Tymoshenko’s Bloc —–
Yulia Tymoshenko’s Bloc held meetings of steering groups and filed
documents on registration of such groups with local councils in many
regions.

However, the CVU expects problems with registration of some groups,
as in some cases they failed to observe the procedure and did not execute
documents in due course.

At the same time, the CVU believes that the national referendum should not
be conducted simultaneously with the parliamentary election. Organization of
the referendum would complicate the election process. In addition, the
legislation on referenda in Ukraine is ambiguous and controversial.
————————————————————————————————
Milena Zherdiy, International secretary, Committee of Voters of Ukraine,
Kyiv; tel./fax: (044) 492-27-67; E- mail: press@cvu.kiev.ua; Ukrainian
version is available on the CVU web-site http://www.cvu.org.ua.
————————————————————————————————

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.  NO ONE IS AFRAID OF THE BIG ORANGE WOLF

OPINION: By Alexei Pankin, The Moscow Times
Moscow, Russia, Tuesday, August 21, 2007. Issue 3725. Page 9.

I was in Ukraine last week sitting with an old friend in his kitchen. We
were talking about politics, recalling the Moscow barricade of 1991 after
the coup attempt against Soviet leader Mikhail Gorbachev and the 2004
Orange Revolution in Kiev. About 200 meters away from us, a few
thousand supporters of Yulia Tymoshenko were happily picketing the
Central Election Commission building.

Local residents hurried past without showing any particular interest in the
gathering. The bored faces of the few unarmed policemen on the scene
contrasted sharply with the events in Moscow in April, when heavily armed
riot police broke up the Dissenters’ March. At that demonstration, the
police outnumbered the protesters by a margin of at least three to one.

“I think Ukraine is not threatened by disintegration,” my friend said. He
explained that among Ukraine’s nationalist political elite there are
individuals who are willing to let the Russian-speaking eastern half of the
country break away and form their own Donetsk republic.

But for Renat Akhmetov, that isn’t enough. He wants all of Ukraine, and that
is why he will be negotiating with both Viktor Yushchenko and Tymoshenko
regardless of the election’s outcome.

Akhmetov is Ukraine’s top oligarch. He is also the brains and financier
behind the Party of the Regions, also know as the Blues, headed by Prime
Minister Viktor Yanukovych.

Among other things, Akhmetov puts big money into the development of the
largest daily newspaper, Sevodnya, which enjoys a national readership. The
paper supports the Blues, but not so much as to turn readers away to other
parties.

Immediately following the Orange Revolution two years ago, the city’s mayor
and supporter of former President Leonid Kuchma, Ruslan Bodelan, was
ousted from office on charges of falsifying the mayoral election.

The mayor was replaced by his “losing” election opponent, former Odessa
Mayor Eduard Hurvits, who was connected with the Orange movement.

Those with political and business connections to Bodelan were in a panic and
expected to be persecuted. Today, those people are counted among Hurvits’
admirers. Serhiy Kivalov, founder of a law academy in Odessa, especially
benefits from his patronage.

This is the same Kivalov who was chairman of the Central Election Commission
in 2004 and was accused by Orange Revolution leaders to be one of the worst
perpetrators of election fraud.

Nonetheless, prominent members among both the ruling authorities and the
opposition bought land on a Black Sea beach, erected a fence around it, and
built their resort palaces there.

True, townspeople must now make a large detour to visit one of the most
popular beaches, but is that too high a price to pay for peace and harmony
among the elite?

This recent trip to Ukraine has left me with the impression that regardless
of how strongly political passions may have raged there, most of the
political establishment — regardless of its “color” — is basically
peaceful and ready to strike a bargain with anyone as long as its own
interests are honored.

A publisher from the “Orange” city of Rovno in western Ukraine had a huge
desire to do something nice for me because I was a publisher and because I
was from Russia. He first expressed his gratitude to the Western embassies
that supported him in his conflicts with local authorities.

He then went on to praise President Vladimir Putin for his hard political
line with the West, saying that was the only way Putin could get the West to
respect him.

Is this the same Orange Revolution that so frightened Russian authorities?
Kuchma labored so hard to build a power vertical that finally collapsed —
and nobody suffered as a result.

Just the opposite happened: The thieves and the honest folk are all living
much better these days, and they love Ukraine more than they ever did.
What’s so scary about that?
——————————————————————————————-
Alexei Pankin is the editor of Strategii i Praktika Izdatelskogo Biznesa, a
magazine for publishing business professionals.
——————————————————————————————-
LINK: http://www.themoscowtimes.com/stories/2007/08/21/007.html

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4.  UKRAINE: ELECTION SET TO BRING ANOTHER CRISIS

ANALYSIS & COMMENTARY: by Zoltán Dujisin
Inter Press Service (IPS), Rome, Italy, Monday, August 20, 2007

BUDAPEST – The political crisis that has ravaged Ukraine since President
Viktor Yushchenko decided to dissolve parliament is not likely to end with
the early elections scheduled for Sep. 30.

On Apr. 2 President Yushchenko issued a decree dissolving parliament and
calling for fresh parliamentary elections, which was disobeyed by the
pro-governmental majority. The President claimed the government was usurping
power after some opposition parliamentarians moved to the ruling coalition.

The number of pro-government deputies was getting dangerously close to 300,
and that would be enough to make constitutional changes that could weaken
the President’s power and set aside any presidential veto.

With both sides feeling that the slightest concession to the opponent meant
a public admission of guilt, finding a compromise became a daunting task.

Prime Minister Viktor Yanukovich and the President bickered for weeks over
the legality of their actions, and even over the loyalty of Ukraine’s
uniformed agencies, creating widespread fears of a violent escalation of
events.

Unlike on previous occasions, both the West and Russia refrained from
intervening in Ukraine’s domestic affairs, opting to adopt the stance that
the post-Soviet republic should sort out its own problems.

Yushchenko’s decree raised many eyebrows among legal experts, and the
country’s Supreme Court was expected to rule against him.

Repeated dismissals of judges by the President, and what the head of the
Ukrainian Supreme Court Vasyl Onopenko termed as “unprecedented pressure”,
presumably from both sides of the conflict, contributed to paralysing the
court’s procedures.

Nevertheless, Yanukovich was likely to accept the early election anyway,
using it as an extra trump card in negotiations with the opposition.

While the May 27 agreement to hold an early election in September is a
victory for the national-liberal opposition, the date of the election is to
the ruling Party of the Regions’ liking.

The government will have time to increase its support ratings by raising
pensions and the minimum wage.

“The Party of the Regions agreed to the election because they think they can
play this game and win even more votes,” Ivan Presniakov, political analyst
at the Kiev-based International Centre for Policy Studies told IPS.

On Jun. 27 Yushchenko temporarily agreed to suspend his decree dissolving
parliament to allow deputies to approve amendments to the election law which
are needed to conduct the elections.

After the session one-third of the members of parliament gave up their
mandate, giving Yushchenko legal grounds to sign a fourth decree dissolving
parliament on Aug. 1 and legitimising the upcoming election.

Experts have, however, warned that inconsistencies in the law will provide
fertile ground for any losing force to contest the election result,
something which populist opposition leader Yuliya Tymoshenko, leader of

the bloc named after her, has already begun to suggest.

Ukrainian politics remains shady and closed, and the multitude of
behind-the-stage deals and possible alliances are the subject of constant
and often contradictory speculation by Ukrainian journalists and pundits.

The uncertainty over the election outcome and the similar support rates of
both sides gives strength to the idea that more important than a few more
votes will be the coalition-forming negotiations.

The Party of the Regions will run on its own, but leaving open the
possibility of re-enacting the coalition if communists, socialists or both
make it into parliament.

Much of the Ukrainian media has speculated on dissension within the ruling
Party of the Regions, but the recent publication of the Party’s list did not
indicate any significant power loss for Yanukovich, who was also confirmed
as the Prime Minister candidate for the party.

A grand coalition has also not been excluded by Yanukovich’s party, which is
striving to be seen as a mainstream pro-European force, and has to cope with
the socialists loss of popularity and the communists’ radical demand of
eliminating the presidency altogether.

But so far opposition forces are dismissing a joint cabinet with elements of
the current government. The question in the ‘orange’ liberal camp backed by
Yushchenko remains which party will put forward the Prime Minister candidate
in case of victory.

Yuliya Tymoshenko’s bloc is expected to take the biggest chunk of opposition
votes, but Yushchenko’s Our Ukraine Party has strengthened its support base
by joining forces with the People’s Self-Defence bloc, a popular movement
set up by former interior minister Yuriy Lutsenko.

Moreover, pro-presidential forces are hoping that thanks to the President’s
recent bold steps, Tymoshenko can be outplayed by presenting an “image of a
strong President who is struggling against Yanukovich, which is also a good
start for his presidential campaign in 2009,” Presniakov told IPS.

In the meantime, the public continues to grow cynical as the idealism of
past years fades away. Ukrainian media speculates that television channels
might refuse to allow key political figures to debate on television, and
instead expose their populist tendencies.

Some claim that behind the ideological battle lie purely economic interests.
Kost Bondarenko, a Ukrainian political analyst, wrote in the local media
that “it is precisely the economic factor that was definitive in sparking
the crisis” after the government prevented the ‘orange’ side from benefiting
from privatisation deals.

Still, in Presniakov’s view, “there is no single reason for the conflict; on
all sides there are different people with different goals and incentives.
The structural conflict between the Prime Minister and the President is more
important.”

The existence of a structural political problem has been admitted by all
main sides in the political conflict, and there is relative consensus on the
need for a new constitution.

The opposition and the pro-presidential forces want to introduce a binding
mandate in parliament to avoid future desertions, whereas the Party of the
Regions would like to see the new constitution envisaging that only
parliament, and not the President can initiate the legislative branch’s
dissolution. Both sides have also suggested that high-ranking officials
should be stripped of immunity.

There is no unanimity on how and when to approve a new document, but
Tymoshenko is demanding a referendum on the same day as the elections, and
is collecting signatures in support of the idea. Nobody will be surprised if
Ukrainian politicians fail to agree once again. (END/2007)
——————————————————————————————–
LINK: http://www.ipsnews.net/news.asp?idnews=38948
————————————————————————————————

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========================================================
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5.  THE REALITY OF UKRAINE’S REVOLUTION
Three years after the Orange revolution, reform is glacially slow
and may yet prove too painful.

ANALYSIS & COMMENTARY: By Lawrence A. Uzzell,
President, International Religious Freedom Watch
The Christian Science Monitor, Boston, MA, Tue, Aug 21, 2007

FISHERVILLE, Va. – Americans should look at reality rather than
Hollywood-style happy endings when they gauge the progress in Ukraine
and other post-Soviet states.

Many Americans still prefer the memory of Boris Yeltsin’s stirring 1991
speech atop a Moscow tank, but they ignore the aftermath: the suppression
of legislators and journalists.

More than two years since the electrifying “revolutions” in Ukraine,
Georgia, and Kyrgyzstan, it is time to reflect on the results.

The reality is disappointing in contrast with the hopes of Ukraine’s 2004
“Orange Revolution.” The bad news: Ukraine is moving at a glacial pace in
reforms.

The good news: At least Kiev has avoided any major deterioration. Ukrainians
can be grateful that they won secession peacefully in 1991 from
hypercentralized Moscow.

According to a draft report published by Washington-based Freedom House,
the overall “democracy score” in Ukraine became slightly worse from 2006 to
2007.

Ukraine’s current performance in economic freedom is declining, as rated in
the free-market report published annually by The Wall Street Journal and The
Heritage Foundation, a conservative think tank in Washington.

In fact, Ukraine’s economy is seen as slightly less free than Russia’s. The
January report stated, “Ukraine is ranked 40th out of 41 countries in the
European region, and its overall score is much lower than the regional
average.”

However, Ukraine’s freedom in terms of civil society had improved
significantly from the 1990s to 2005. Freedom of the press has clearly
improved since the “Orange Revolution.” Ukraine has far more religious
freedom than Russia.

The Freedom House report concluded that in Ukraine, “nationwide television
channels in most cases provided balanced news coverage; representatives of
the ruling parties as well as the opposition had equal access to the media.”
Nevertheless, many local governments still dominate the local news media.

According to a nongovernmental organization specializing in monitoring the
media, at least 14 journalists were attacked or intimidated in Ukraine in
2006. Last year a Ukrainian court issued a guilty verdict for five murderers
after the 2001 death of a television journalist.

This is in dramatic contrast with post-Soviet Russia, where not one murder
of a high-profile journalist has been solved. Nine Russian journalists were
killed in 2006 alone.

Ukraine’s freedom of the press improved significantly from 2004 to 2005,
then again from 2005 to 2006 – but failed to improve during the 12 months up
to the spring of 2007.

Ukrainians and Russians enjoyed the end of state-enforced atheism in the
late 1980s. However, their paths have diverged since the mid-1990s. Russia’s
1997 law formally reestablished state control over religious life, brazenly
contradicting its own 1993 constitution.

In contrast, Ukraine is essentially observing its own constitutional
guarantees for rights of conscience. Unlike Russian bureaucrats, both in law
and in practice, Ukrainian bureaucrats do not suppress freedom of religious
speech – nor do they expel foreign missionaries.

Nevertheless, during the past decade, Ukrainian leaders of all traditional
religions have complained about the government’s glacial progress in
restoring worship buildings confiscated by the Soviet regime – including
Orthodox Christian, Catholic, Muslim, and Jewish properties.

Also unsatisfactory has been the continuing record of provincial or
municipal bureaucrats harassing religious minorities. For example, the Roman
Catholic Church’s charitable activities have experienced difficulties with
Odessa’s city council. Evangelical Protestants have had difficulties trying
to buy real estate in order to build new churches.

Observing Ukraine’s lack of progress during the past two years, the US State
Department’s annual reports about religious freedom have concluded, “There
was no change in the status of respect for religious freedom during the
period covered by this report.” (The 2006 report repeated those identical
words from the 2005 report.)

Paradoxically, post-Soviet Ukraine’s sluggishness in reforms is linked in
some ways with Ukraine’s lack of Russian-style despotism. Many would-be
reformers instinctively assume that strong, centralized presidencies are
preferable, while legislatures or provincial governors are nuisances.

Washington’s Beltway mentality likes the domestic policies of leaders such
as Lyndon Johnson, producing huge federal programs and detailed regulations.

During the 1990s, the Beltway usually found excuses for the “excesses” of
Moscow’s self-proclaimed “reformer” Boris Yeltsin. Washington looked the
other way when the Kremlin decided in 1993 to crush the legislature by means
of tanks.

Fortunately, Ukraine’s three post-Soviet presidents have not imitated the
Kremlin’s most extreme methods, and Kiev’s legislature now has genuine
powers.

In the real world, the model of “tough-guy” leadership has both advantages
and disadvantages. The principle of the rule of law can obstruct radical
reforms. Constitutional checks and balances can impede a president.

The majority of Ukrainians may decide that reforms seem too painful. With
popular elections, antireform opposition candidates may win against
pro-reform incumbents. Democracy has real tensions with freedom.

A continuing global temptation has been the myth of “revolution” inherited
from 18th-century France. Revolutionaries have often expected their
victories to be swift and unambiguous, but they have usually turned out to
be wrong.

Ukrainians recall all too vividly the past century’s experiences of
revolutionary Marxism. We should understand that Ukrainians may prefer
evolution, not radical upheavals – without Hollywood-style myths.
—————————————————————————————–
LINK: http://www.csmonitor.com/2007/0821/p09s02-coop.html?page=2

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========================================================      
6.  NEW OLD PROPOSITIONS: CANCELLATION OF IMMUNITY OF
DEPUTIES AS A REGULAR SLOGAN OF THE ELECTION CAMPAIGN

By Anastasia Smagina, UCIPR analyst
Research Update. Vol. 13, No 24/496,
Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Wednesday, 11 July 2007

Officially the election campaign is starting in August, though we can
observe all-out false starts of the political actors. One of the many signs
of the impetuous start of the premature election campaign is the process of
formation of the lists of potential deputies of the future parliament.

Besides, we can observe immense increase of social and political
commercials, TV reels and street ads, as well as leaders’ tours to regions
with their pre-election program and KPU and PSPU fight against NATO

training exercises.
Regular discussions about “immunity of deputies”:
election periods —–
As a rule, every election campaign in Ukraine is marked by discussions
concerning “cancellation of immunity of deputies”.

For example, at the beginning of the year 1998, just  before the
parliamentary elections, there were some attempts to bring a new public idea
asserting that immunity is injustice as it contradicts the principle of the
equality of the constitutional rights of the citizens.

The justification was the following: “ordinary citizens must be arrested
even for insignificant crimes, but deputies-criminals can walk in a halo of
immunity” (“Independence”, January 14, 1998).

The start of the election campaign of 2006 was marked by the same
discussions and actions. For the first time the then elections were held by
the proportional principle and by the system of closed lists.

On September 2005 the Verkhovna Rada in fact decreed to renew criminal

and administrative immunity of deputies of the local councils.

The paradox was that in October of 2004 this draft bill was initiated by the
Our Ukraine party, and later the draft bill was given its first reading. 234
deputies voted for the bill on immunity of deputies.

Some time later immunity of deputies of the local councils was cancelled,
but the process of formation of the lists could not be stopped. As a result,
a number of Ukrainian citizens with quite complicated past but immense
possibilities and resources won seats in party tickets.

Immunity of deputies is guaranteed by the article 80 of the Basic Law of
Ukraine, which did not get any amendments during the process of introduction
of changes to the Constitution on December 8, 2004.

People’s deputies of Ukraine do not bear legal responsibility for voting
results or for declarations in the parliament and in its departments, except
for responsibility for insult and slander.

Deputies cannot be called to criminal account and cannot be arrested or
detained without the permission of the Verkhovna Rada of Ukraine. To the
point, this resolution was supported by the constitutional majority of the
then Verkhovna Rada at that night.

Vyacheslav Chornovil recalled in his letter published in “Chas/Time” of
March 5-11, 1998: “During the process of adoption of the Constitution, at
first the variant of the coordinating commission was given its second
reading.

It provided for that in some cases a criminal action can be brought against
a deputy and without the permission of the Verkhovna Rada. In fact, it meant
cancellation of immunity of deputies.

However, in 15 minutes after adoption of the resolution the VR speaker
Oleksandr Moroz suddenly proposed to revise the article 80 and to pass an
amendment”, which now is the letter of the present Constitution.

Almost all members of the factions of Communist Party headed by Petro
Symonenko and Socialists Party headed by Oleksandr Moroz voted for that
amendment.

For the whole time of existing of the newest parliament, the Verkhovna Rada
decreed to deprive immunity of five deputies.

Later there were numerous attempts to cancel immunity of deputies for
certain people, but such attempts could have been partly treated as
repressions against political or business rivals in the country, where
politics and business are Siamese twins.

We can also recall those predictable 80 percents of “yeses” for cancellation
of immunity of deputies during the Kuchma’s referendum of 2000, results of
which remained the “expensive public poll” for the country- partly for good.

At present the Ukraine’s Constitution guarantees immunity not only for
parliamentarians, but for judges as well. The Constitution also determines
authorities of the Constitutional Court of Ukraine. It reads that “the
Constitutional Court of Ukraine is the only body of constitutional
jurisdiction in Ukraine.

The Constitutional Court decides conformity of laws and legal acts of the
Constitution of Ukraine and gives official definition of the Constitution
and its laws” (article 147). The President of Ukraine also has immunity.
Feel the difference…
The present situation concerning immunity of deputies differs from the
previous discussion in the idea that real cancellation of immunity of
deputies will lead to the complicated and durable process of introduction of
changes to the Constitution of Ukraine, in case if the politicians will not
be engaged in demagogy, of course.

A regular initiative on introduction of changes to the article 80 was
brought by the President Yushchenko, who assured that he would do his

best “to realize this  initiative at the political level first and then by means
of introduction of changes to the Constitution.”

On June 13 the Our Ukraine party declared that it included the subject
concerning cancellation of immunity of deputies into its party program.

Our Ukraine explained that cancellation of immunity of deputies would be

the first political initiative of the OU faction in the Verkhovna Rada of the
fifth convocation, as according to the logic of this document “deputies’
privileges were often used by dishonest politicians to cover private and
clan interests.” BYuT and other political forces also supported this
initiative.

The key theses provided by Yushchenko concerning cancellation of immunity

of deputies are “clearing of the deputy corps and fight against the political
corruption.”

“I am convinced that it is the way to normalization of the political order
and political life in our country…the parliament must have honest
politicians who do not divide the society into an inviolable caste and
violable one,” he said.

However, the political proposition to make the corresponding decision during
congresses of the party does not have real mechanisms for implementation. We
had many precedents concerning the declaration about voluntary refusal from
the immunity of deputies, but it resulted in political dividends and
populism only.

To the point, if to remind the pre-election campaigns of the winners of the
parliamentary elections-2006 we can see that the majority was talking about
necessity to cancel immunity of deputies. For example, the pre-election
program of BYuT said that they would “immediately cancel legal immunity of
politicians and state officials.”

Before the then elections information was spread about that Yulia Tymoshenko
charged the bloc to prepare amendments to the Constitution of Ukraine as
regards to cancellation of immunity of deputies of the Verkhovna Rada of
Ukraine. The logical question arises: “How forward have such initiatives
moved for the period of work of the VR?”

Our Ukraine was consistent both in its pre-election program of 2006 and
today: “Political grounds of corruption will be liquidated. Deputies will be
deprived of immunity. Officials will report both their incomes and
expenses…” And SPU assured in its program that “the power will be cleared
from corrupted officials, embezzlers of public property and bribetakers,”
which was done immediately after the elections on April 4, 2006.

The official pre-election program of the Party of Regions did not say a word
about immunity of deputies, though on the eve of the presidential election
of 2004 then candidate Victor Yanukovych stood for holding a referendum on
limitation of immunity of deputies.

“…if in the near future the deputies do not make decision concerning
deputy’s ethic, immunity of deputies and compliance with the legislation of
Ukraine we will have to appeal to the nation, to hold a referendum and make
a decision together with the public,” Yanukovych declared at that time.

But holding the post of the Premier of Ukraine, now on June 2007 he
“considers the appeals to cancel immunity of deputies to be populism on the
eve of the election, and if the deputies have dead earnest either they must
solve this issue now or the new parliament will take care of the question in

case the early elections take place.”
The pros and cons: political activity, expediency
and Constitution —–
The main argument against cancellation of immunity of deputies is a
potential possibility to press on deputies with the purpose of paying of old
scores, which may have no connections with the politics. So, it is a
question of the social traditions, ethic and political culture.

The guarantee of immunity of deputies exists in other democratic countries.
For example, a  German deputy may be called to account for violation of the
laws only with the permission of the Bundestag or in case of catching in the
act.

However, such scenario of a “direct arrest” in Ukraine may only look
democratic. There is no guarantee that someone, for example, will not put
drugs or weapon in someone’s pocket as it happened with Grygoryshyn,

though he was not a deputy.

The main argument in support of cancellation of immunity is confirmation of
the principle of equality of all citizens to the law.

According to the article 3 of the Basic Law, a person, his life and health,
his honor and dignity, inviolability and safety are the highest social
values in Ukraine, and according to the article 29, every person has a right
to personal freedom and nobody can be arrested or taken into custody without
a justified decision of a court and only on legal grounds established by the
law.

Another argument in support of cancellation of immunity is to make it
impossible for criminals to use immunity for avoiding punishment, that is to
say the cleaning of the Verkhovna Rada’s ranks.

Though, the fact of cancellation of immunity looks rather doubtful as
regards to the fight against the political corruption, which, as a rule, is
shadow. Owning to the native traditions there always will be “more equal” to
the law.

To sum up we can note that before cancelling immunity of deputies, the
European Union’s countries’ experience should be thoroughly explored as
regards to this question, and not only concerning the procedures but the
political culture and behaviour as well.

The fight against the corruption, first of all the political one, should
envisage complex measures which are initiation of changes to the
Constitution and to the criminal and procedural code, reformation of the
legal system, creation of real conditions for transparency of the power and
for distribution of budget resources, actions aimed at increase of influence
of the public institutions and mass media.

Methods do exist but are not sufficiently effective, unfortunately.

——————————————————————————————–
The Research Update bulletin is published in English and Ukrainian by the
Ukrainian Center for Independent Political Research (UCIPR) in assistance
with the National Endowment for Democracy since December 1995. From
December 2006, the Research Update is published in English in the
framework of the “Increasing Institutional and Program Capacity/2006-
2007″ Project of the Open Society Institute Zug Foundation.
For more details about the Research Update, please contact the UCIPR by
tel.: (38-044) 235-65-05, 230-91-78, 599-42-51; e-mail: ucipr@ucipr.kiev.ua.
Contact persons – Yulia Tyshchenko and Kostyantyn Mykhailychenko.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7.  AN UNHAPPY BIRTHDAY FOR UKRAINE’S CONSTITUTION

ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Senior Journalist, based in Ukraine.
Eurasian Home, Moscow, Russia, Monday, June 28, 2007

On June 28, Ukraine celebrated its Constitution, with every politician and
his brother demanding that the much abused document be altered yet again.

It was only eleven years ago that lawmakers had worked through the night
to reach a compromise on the creation of a supreme law for the newly
independent state.

Independent Ukraine’s first and only Constitution was hailed as a guarantee
of individual rights for all Ukrainian citizens. But right from the start,
it was clear that lawmakers had borrowed a lot from their Soviet
predecessors.

One by no means unique example is the Ukrainian Constitution’s proud
proclamation that every citizen has the right to free medical treatment. In
practice, this means mostly dirt poor facilities with underpaid doctors who
receive their fees under the table.

The promise of generous rights, unsupported by detailed laws underpinned
by proper financing, only mocks the privilege of citizenship.

Indeed, it takes time to draft, debate and approve legislation.

But few doubt that Ukraine’s lawmakers are more interested in making laws
for the benefit of themselves, as well as the businesses and media that many
control.

The most glaring example of their separation from the rest of society is the
immunity from prosecution that they continue to enjoy. More recently,

the country’s lawmakers have begun attacking the law itself.

It all started in December of 2004, when then opposition leader Viktor
Yushchenko was challenging the fraud-filled victory of his opponent for the
presidency, Viktor Yanukovych.

Yushchenko succeeded in calling a new election, which he won, but the
victory for the rule of law was short lived.

In order to shore up support for his presidential bid, Yushchenko had a
collection of hastily drafted constitutional amendments foisted on him by
opponents and supporters alike.

The essence of the amendments was that the president would have to give up
many of the significant executive power that he had inherited from his
predecessor, Leonid Kuchma. It was Kuchma who had reigned over the
passage of the country’s first Constitution.

But while ordinary Ukrainians eked out a living, and his fellow politicians
gorged themselves on the country’s industrial assets, Kuchma went about
quietly consolidating a king-sized portion of power throughout the late
1990’s.

By the time his second term was coming to an end in late 2004, Kuchma was
in control of the country’s courts, governors, law enforcement, army and a
majority in parliament.

And as the opposition continued to gain momentum toward deposing him and
his supporters, Kuchma unexpectedly announced the idea of constitutionally
transferring presidential powers to the parliament in mid 2002.

It was a hybrid form of the amendments originally proposed by Kuchma that
Yushchenko ended up signing during the peak of the country’s Orange
Revolution.

The amendments came into force in 2006, just in time to see one of
Yushchenko’s key Orange allies, Socialist leader Oleksandr Moroz, defect to
the camp of Viktor Yanukovych. The former became speaker and the latter
returned as prime minister.

Bolstered by a parliamentary coalition they formed with the Communists,
Yushchenko’s opponents went about muscling away his executive authority,
interpreting the poorly drafted constitutional amendments as they liked.

Not only was the country’s highest law crumpled up and shredded in the
ensuing political battle, but the Constitutional Court lost what little
respect it had enjoyed, as justices took sides with the president or
parliament.

If Yanukovych and Moroz couldn’t be president, they were going to assume

all executive and judicial power for the parliament they controlled, regardless
of what the Constitution said.

Last August, the parliament even passed a bill prohibiting the
Constitutional Court from ruling on whether the amendments passed in late
2004 were constitutional.

Now with snap elections scheduled for this fall as a way to break the
political gridlock, the calls for more constitutional reform are again on
the agenda.

This time, Moroz and Yanukovych are trying to steal the wind from
Yushchenko’s sail. It was the president who first tabled the idea of challenging

the amendments that limited his authority, proposing that his countrymen
decide the issue in a referendum.
Now Moroz and Yanukovych have jumped on the band wagon – for a
different purpose. Moroz said on June 28 that he supports changes to the
Constitution to transfer more power from the center to the regions.

“The Constitution of Ukraine will always be an open book, into which
corrections will be made and supplements added by future generations of
Ukrainians,” he announced during a Constitution Day speech.

Members of Yanukovych’s team have echoed similar sentiments. Since taking
their respective positions as premier and speaker last year, Yanukovych and
Moroz have mostly tried to limit presidential power by pushing bills through
the parliament.

Now that a new parliament is soon to be elected, they have again turned
their attention to changing the Constitution.

The empowerment of regional government, which would be beneficial for the
country if conducted without political motives, is one of many initiatives
that Yushchenko’s foes have tabled.

However, members of Yanukovych’s Regions party have often used regional
autonomy as a synonym for separatism in the country’s Russian-speaking south
and east.

European bodies such as the Parliamentary Assembly of the Council of Europe,
of which Ukraine is a member, have attempted to help Ukraine find its way
along the path toward parliamentary democracy and the rule of law.

But although each side has attempted to legitimize its claims through
European approval, Western advice often goes unheeded.

A resolution taken by PACE on April 19, during the latest constitutional
impasse in Ukraine, reads “The Assembly deplores the fact that the judicial
system of Ukraine has been systematically misused by other branches of power
and that top officials do not execute the courts’ decisions, which is a sign
of erosion of this crucial democratic institution.

“Independent and impartial judiciary is a precondition for the existence of
a democratic society governed by the rule of law. Hence the urgent necessity
to carry out a comprehensive judicial reform, including through amendments
to the Constitution.”

But judging by the way Ukrainian officials have used and abused their rather
innocent Constitution in the past, no one in Europe should get their hopes
up about meaningful constitutional change, as the country’s supreme law
turns 11.
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http://www.eurasianhome.org/xml/t/opinion.xml?lang=en&nic=opinion&pid=772
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========================================================
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========================================================
8.  KIEV’S HAND
Moscow and Kiev are interested in each other’s upcoming elections

ANALYSIS & COMMENTARY: By Leonid Petrov
Versiya, No. 32, Moscow, Russia, Mon, August 20, 2007

For the first time in many years, Russia and Ukraine have parliamentary
elections scheduled at almost the same time. But Ukraine’s election will
happen slightly earlier – thus giving Kiev time to interfere in Moscow’s
affairs.

Ukraine is showing strong interest in Russia’s election campaign: hoping to
re-establish contacts with Russia’s political elite.

In Moscow, almost all participants in the campaign process will attempt to
secure support from the Ukrainian parties which are considered pro-Russian.

The Ukrainian factor in Russian politics became particularly significant
after the Independence Square protests in 2004; alarmed by events in Kiev,
the Kremlin launched a desperate battle against the Orange Revolution.

In order to prevent Orange forces from developing in Russia, the Kremlin had
to make every effort to discredit them in Ukraine.

In general, Moscow’s efforts have succeeded. The Orange forces are nothing
more than a small radical sect in Russia these days. Besides, most Russian
citizens are highly skeptical about events in Ukraine and don’t want
anything similar to happen in Russia.

In a poll done by the Levada Center this May, 38% of respondents said that
“the anarchy and chaos that accompany democracy” now reign in Ukraine, and
27% said that the permanent state of crisis is evidence that “Ukraine’s
democracy is immature.”

The political passions raging in Kiev, and power-struggles among Ukraine’s
leaders, have formed a convenient backdrop for Russia’s political democracy;
the endless quarreling among Ukraine’s parties make United Russia’s
dominance look good by comparison.

The Supreme Rada election is unlikely to put an end to Ukraine’s political
crisis; so the ongoing political conflicts in Kiev could become a campaign

advantage for United Russia, especially if the Ukrainian confrontation intensifies.

And that’s why the Kremlin doesn’t really have an interest in seeing either
side – Blue or Orange – achiev an unconditional victory. Moreover,
negotiating with Kiev is much easier when the Ukrainian elite is divided.

But even as Moscow has its own designs on the Ukrainian election, Kiev is
showing significant interest in the election campaign in Russia.

 
There is no hop of a change in the policy course; but Ukrainian politicians
are still hoping for some changes in the composition of Moscow’s negotiation
team.

Contrary to widespread opinion, the Ukrainian elite found it easy to lobby
for its interests in Moscow – until recently. That applied to specific
economic issues (like the pipeline wars or import quotas on Ukrainian
goods), and to big-time politics.

This was partly achieved by tales of great friendship between fellow Slavs
(Lukashenko came to excel at this form of sport), and clever use of
corruption scandals and media techniques; it was also partly due to the
common Soviet background of the Russian and Ukrainian elites.

But after the Orange Revolution won, Kiev’s influence on Moscow weakened.
Aside from the Kremlin’s annoyance with the Orange Revolution’s outcome,

the situation was also influenced by substantial changes within the Russian
elite: those who were at the forefront in the Yeltsin era departed, and
Putin’s closest allies took the lead.

Kiev celebrated the Orange victory, then distributed jobs, and then turned
around to find that its previous contacts in Russia had vanished, but no new
contacts had been established. And this isn’t easy to do in the middle of a
political confrontation. (Translated by Elena Leonova)

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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9.  RUSSIAN LIKES AND DISLIKES IN UKRAINE

ANALYSIS & COMMENTARY: By Vyacheslav Nikonov
President of the Politika Foundation.
RIA Novosti, Moscow, Russia, Thursday, August 16, 2007

MOSCOW –  Today many experts agree that the Russian factor will

not be as influential in the forthcoming parliamentary elections in Ukraine
as it was in 2004 and 2006.

I believe this shows that Ukrainian statehood has become more mature.
Before, Russia found itself in the center of the election race largely
because the main question was why Ukraine was not Russia.

Now that it has been answered, Ukraine will have its own agenda for the
election campaign. But the early elections to the Rada (parliament) are not
likely to change the situation. Domestic political life will most likely
remain unstable.

The system by which the government is formed by the parliamentary

majority, with stable majority lacking, will automatically program instability
into any Ukrainian cabinet of ministers. It is not clear whether the future
government will be Orange or White-and-Blue.

Moreover, strictly speaking, the current political crisis, as well as many
events prior to it, is taking place outside the legal field.

Different political forces are still disputing the legitimacy of the
previous Rada’s dissolution and the announcement of new elections.

The future government’s legitimacy may be also called into doubt.

Last but not the least, a serious cultural split will persist in Ukrainian
society regardless of who is elected. That is more important than any
political differences or financial affiliations.

The main question is what comes next. Will the opposing political forces
come to terms? How long will the new Rada exist, considering that the
dissolution procedures have not been forgotten?

As for the Russian position, I believe that any Russian participation is
somewhat exaggerated and is obviously used against Russia, although
different political forces will not conceal their preferences in Ukraine
this time, either.

The Russian communist party will express solidarity with its Ukrainian soul
mates, Pyotr Simonenko and Mrs. Natalia Vetrenko.

I’m sure that the Kremlin will continue supporting Viktor Yanukovich. Our
Liberals will back Viktor Yushchenko and Yulia Tymoshenko.

In short, the preferences of the Ukrainian electorate and Russian political
forces have long been established. But there are also dislikes.

Tymoshenko’s article in the American journal Foreign Affairs, in which she
suggested an anti-Russian coalition, has not made her more popular in the
Russian corridors of power.

Needless to say, those who want to see Ukraine part of NATO as soon as
possible do not have many admirers behind the Kremlin’s walls.

Likewise, we have reasons to oppose Ukraine’s de-Russification because it
harms local Russians and our national language. But for all that I’m
confident that the Kremlin will deal with any government that the Ukrainians
elect.

This is Russia’s position. In this respect, it is different from the stance
of those Western countries, which prefer dealing with pro-Western
governments that fit their notion of democracy.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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10.  KIEV RESORTS TO TRANSIT BLACKMAIL”
Russian-Ukrainian Relations Remain Difficult; Presidential Meeting Postponed
Meat and dairy trade wars announced by Russia at the beginning of 2006

ANALYSIS & COMMENTARY: By Ilona Zayets
Nezavisimaya Gazeta, Moscow, Russia, Wed, August 15, 2007

The meeting of Presidents of Ukraine and Russia, which had been postponed
since April and announced by Viktor Yushchenko for 15-20 August, may not
take place. This was reported to Nezavisimaya Gazeta by a source in the
Ukrainian government.

Commenting on the results of Wednesday’s blitz-visit to Moscow by head of
the Secretariat of the President of Ukraine Viktor Baloha, high-level
officials noted that Kiev has chosen an aggressive line of behavior. The
Russian side is ignoring the ultimatums.

Sources in Kiev are convinced that the most difficult and current topic for
Ukraine at the upcoming negotiations are the trade wars announced by the
Russian side at the beginning of 2006.

“Since that time, the direct losses of Ukrainian agricultural enterprises
have reached approximately half a billion dollars, and the dairy sector has
been especially hard hit.

After all, around 60 percent of Ukrainian dairy export traditionally went to
the Russian market,” political analyst Konstantin Bondarenko confirmed to
Nezavisimaya Gazeta.

The expert believes that, from the standpoint of the parliamentary elections
in both Ukraine and Russia, politicians are forced to enter the question of
cessation of the trade wars onto the list of immediate issues, because
voters have already felt the negative result of the “political sanctions.”

In Russia, according to official data, prices on dairy products have
increased by 10-20 percent, while in Ukraine the purchase prices on raw

milk have sharply dropped.

In the expert’s opinion, the search for an acceptable way out of the
situation that has arisen was Baloha’s main task in the course of his visit
to Moscow.

Sources in the Presidential Secretariat are commenting on the results of the
negotiations in general terms. However, government officials are
confidentially reporting that the president’s representative torpedoed the
Moscow talks.

“Yushchenko’s inner circle had tried to exert pressure on Moscow, so as to
unblock the deliveries of agricultural products,” says a source in the
government.

In his words, it was with this purpose in mind that the Ukrainian side had
adopted the decision to tie in the topic of the dairy war with the regimen
of gas deliveries and with the question of Ukrainian-Russian cooperation in
the nuclear power industry.

At the moment when Viktor Baloha was meeting with the Russian Federation
President’s Chief of Staff, Sergey Sobyanin, the Security Service of Ukraine
(SBU) was in fact announcing its apprehensions about the protocol on
cooperation between the Ukrainian state concern “Ukratomprom” and the
Russian Federation Federal Atomic Energy Agency, Rosatom, which had been
signed in June.

Parallel with this, a structure subordinate to the president–the Council on
National Security and Defense of Ukraine–had published recommendations on
increasing the cost of transit of Russian gas over Ukrainian territory.

Ukrainian government officials consider the attempt at pressure on Moscow to
be futile. They insist that the Cabinet of Ministers, in preparing
recommendations for the second meeting of the Yushchenko-Putin Interstate
Commission, had placed the emphasis on the fact that the topic of the meat
and dairy war must be viewed separately, and that its soonest possible
resolution is in the interests of both states.

In an interview with our Nezavisimaya Gazeta correspondent, a representative
for the Ukrainian part of the agriculture subcommittee of the interstate
commission complained: “This is an awkward situation: A most important

trade sector is regulated not by legislative standards, but by non-systematic
directives of public officials.”

He explained that, since the beginning of 2006, many Ukrainian enterprises
that had successfully passed inspection of Rosselkhoznadzor (Federal Service
for Veterinary and Phytosanitary Oversight) had formally received the right
to supply products to the Russian Federation.

However, permit documents were issued only to some of them. “A huge

shadow niche has been artificially created in Russian-Ukrainian trade relations,
which may only be compared with the gas affairs of previous years,” noted
the representative of the Ukrainian subcommittee.

The head of the Ukrmolprom Association, Vasiliy Bondarenko, confirmed to
Nezavisimaya Gazeta that the problem should be resolved at the political
level, because the reason for the dairy war that has lasted for a
year-and-a-half is also concealed in politics.

He explained that, in 2006, Rosselkhoznadzor had filed complaints only
against the re-export of meat from Ukrainian territory. “For what reasons

they banned the import of dairy products, no one has ever explained,”
Bondarenko complains.

The problem of repeal of the trade limitations that are disadvantageous to
both sides has been discussed for over a year now, but its resolution was
put off until the moment of the meeting of the Yushchenko-Putin Interstate
Commission.

If the meeting once again does not take place, the most profitable and
promising area of the Ukrainian agrarian sector, which has been farmed out
to sectoral officials, will in fact be destroyed, insist representatives of
the dairy enterprises.

Ukrainian government representatives believe that the situation will
negatively affect the rating of the pro-presidential bloc at the upcoming
parliamentary elections.

They surmise that Prime Minister Viktor Yanukovych, on the other hand, will
increase the popularity of his party if, on the background of Yushchenko’s
ultimatums, he proposes a constructive solution to this problem, which is
painful to both countries.

According to sources in government, Yanukovych, who is on vacation in Russia
this week, may perhaps meet with representatives of Russian authority so as
to find a way out of the situation and return to the homeland as a victor in
the dairy wars.

As we have learned, the meeting of Presidents of the Russian Federation and
Ukraine may take place, but only in the Fall, after the elections in
Ukraine.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================

11.  WHOSE PROMISE IS SWEETER? UKRAINIAN PARTIES
HAVE STARTED PRESENTING THEIR ELECTION PLATFORMS

ANALYSIS & COMMENTARY: Alla Yeremenko, Nataliya Yatsenko
Mirror-Weekly 30 (659), Kyiv, Ukraine 18-24 August 2007
 
A remarkable feature of this snap election campaign is that the leaders of
parties and blocs avoid face-to-face debates. Why is that? On Monday, 13
August, Ukraine Competitiveness Council invited representatives of the Party
of Regions, “Our Ukraine”-“People’s Self-defence” and Yuliya Tymoshenko
Bloc to an open discussion.

Ms Tymoshenko was the only one to turn up. As a result, she presented her
draft National Development Strategy entitled “Ukrainian Breakthrough” for
three hours.

On Tuesday, 14 August, the Party of Regions launched its “public education”
campaign, with Raisa Bohatyriova and Borys Kolesnikov lecturing the press
about the risks and prospects of the current demographic situation in
Ukraine, and the ruling party’s programme “Stability and Wellbeing” which is
geared towards improving it.

On Friday, 17 August, Olexander Kuzmuk presented the Cabinet of Ministers’
anticorruption programme (to enhance its effect, they also included the
Crimean Speaker and Vice Prime Minister Kliuyev in the panel).

All in all, six conferences are to be held to explicate party programmes but
none will eclipse the YTB one in terms of vim and vigour. The Party of
Regions will, presumably, opt for an unhurried campaign with carefully dosed
information.

It is still a question what the “Our Ukraine”-“People’s Self-defence” are
going to promote in their election platform: their presentation is due some
time next week.

However, comments by Volodymyr Lanovy, once well-known economist,
available on the OU-PS website suggest that the measured but realistic
programme “For People, not for Politicians!” and the President’s social
initiatives will be boosted with a couple of exotic economic ideas.

We have made an attempt to describe the political and social programmes of
three campaign leaders – Party of Regions, “Our Ukraine”-“People’s
Self-defence” and Yuliya Tymoshenko Bloc – using all materials accessible so
far. Some could disagree with our analysis, and  we welcome other different
opinions on the matter as we are in no way presenting a final diagnosis.

The YTB National Development strategy “Ukrainian Breakthrough: to a Fair and
Competitive Country” is a 319-page document; its Internet version takes up
four pages. So do the e-versions of the OU-PS programme attractively called
“For people, not for Politicians!” and the Party of Regions’ programme with
a neutral heading “Stability and Wellbeing”.

The difference is that the OU-PS and party of Regions presented their
programmes and election platforms, while the Yuliya Tymoshenko Bloc
positions its strategy as “Ukraine’s road map for the 21st century”, the
presented version being just the first draft.

By election day, and probably after it, the party programmes could be
revised, some of them dramatically. For instance, the Party of Regions’
sweetly unpretentious programme could be replaced with an as of yet
unannounced document prepared by Western experts contracted by the
Rinat Akhmetov Fund.

Those few who read it say it provides for a lot of unpopular measures. Some
skeptics argue the document is a rehash of a policy paper written for
Turkey, but, according to our sources, the “Akhmetov” strategy has been
much-admired by the Prime Minister and commended by the President.

We will not discuss here political aspects of the abovementioned party
platform. For the time being, we will abstract our mind from slogans about
“lawful state accountable to citizens” (OU-PS), about regions as “Ukraine’s
spiritual treasury”    and the second official language (you know whose). We
will focus on several key practical social and economic objectives (again,
leaving alone WTO and EU accession and the like).
We need a breakthrough, In principle, the idea is appealing.
You will remember the total shortage of goods, hyperinflation, massive
salary and pension arrears, in-kind wages at the dawn of independence.
Addressing those challenges prevailed in election platforms of the mid and
late 1990s, together with the reactivation of economic growth.

As the economic situation improves the declarative, middle-of-the-road
nature of “ten steps” and similar projects becomes unbearable. We understand
we have to break through, sweeping away all the squalor and sloth in order
for Ukraine to raise in the world development ratings.
Yet is a breakthrough in 12 directions at a time feasible?
If the pipeline breaks though, the answer is, probably, yes. However, when
it comes to social  transformations, the answer is no.

One does not have to be a management expert to understand that setting five
goals at a time will prevent one from reaching at least one of them
effectively.  Political consultants of the leading parties and blocs do not
seem to be discouraged by this fact.

Their method is to embrace as broad an electorate as possible. Hence two
major sections (“Social Success” and “Ukraine, the country of success”) and
11 items of the Party of Regions’ programme “Stability and Wellbeing”.

Hence eight major tasks found in the OU-PS programme “For People, not for
Politicians!”. The YTB development strategy “Ukrainian Breakthrough: to Fair
and Competitive Ukraine” provides for 12 areas of breakthrough .
Social programmes: who jumps higher?
According to the party platforms, we will be breaking through, first and
foremost, in the social sphere. Social policy objectives in all of them are
so ambitious that even rightist parties look like leftist ones.

The presidential “Social Initiatives” (see ZN #25 of 30 June 2007)
underlying the OU-PS election platform, envisioned allocating about three
quarters of the 2007 budget revenue increment (vs the 2006 budget) for
raising salaries and scholarships, maternity allowance and other purposes of
common good.

Surprisingly, the Party of Regions, which never used to be too
socially-oriented, offers almost the same – only in a 2:1 proportion.

According to Borys Kolesnikov who presented the social-and-demographic
section of the party’s election platform together with Raisa Bohatyriova,
about UAH 20 billion out of UAH 30 billion of the incremental budget revenue
will be spent on social programmes.

We have not found any mentioning of exact ratios in the YTB draft strategy,
but its overall leaning towards solidarism and meeting the needs of various
electoral groups allows us to conclude that the bloc attaches great
importance to social issues.  Suffice it to mention the proposal is to raise
the average pension to 80-90% of an average salary.

It may look pleasing to the laymen’s eye but not to the experts’. In
international practice, 70% (including non-state pension fund money) is
considered a very high replacement rate.  Yet given Ukrainian demographic
situation and one-and-a-half-tier pension system presently in place, 80% or
90% is utopia.

Amazingly, the YTB draft strategy contains a provision on  a gradual
abolition of the pay-as-you-go pension system and a transition to basic
pension funding from the sate budget, with a dynamic development of the
mandatory funded pension system (something like the Kazakh pension
reform model that has, eventually, proved highly problematic).

Well, do not let us be faultfinding: a lot of people must have been involved
in drafting the strategy so nobody must have advised Ms Tymoshenko of
this inconsistency.

Thus retired people, whose pensions increased noticeably before and after
the 2004 presidential elections, should not expect much this time. Perhaps,
the party headquarters have decided the issue is not relevant any more.
Perhaps they have realized how insurmountable the challenge of raising
pensions of 14 million people is.

The new topic of the day is helping families with newborns. The amount
required to fulfill even the most generous promises made by the Party of
Regions (subsidies to families with children up to 18 years of age,
irrespective of the family income) is UAH 2 billion.  Not too much but
rewarding, the party leaders believe.

How far will it take us? In June, commenting on the presidential social
initiatives, ZN reported that, in theory, the state could afford a maternity
allowance of UAH 100,000 per baby, in the long-long run. Now, some forty
days later, it looks like the top limit of UAH 100,000 could be reached by
the launch of the 2009 presidential campaign.

In August 2007, two political forces – the Party of Regions and YTB – have
already overcome the psychological barrier of UAH 50,000 in aid to mothers
upon the birth of their third child.

YTB, though, did it during the presentation of their draft “Ukrainian
Breakthrough”, rather than in their official platform. OU-PS is lagging
behind but, most probably, not for long.

The Party of Regions carried their idea of aiding families with children
farthest of all: they pledge to support today’s newborns throughout
childhood, adolescence, student life up to their first job and first
apartment (sic!).

It does not give any details as to the mechanics of providing those
apartments, it is true; but, after all, the format of election platforms
does not envision any particulars, which voter could remember and hold
politicians accountable for breach of promise later on.

Isn’t it high time to address the root causes of the disease rather than its
symptoms? Can’t the party leaders see that neither UAH 50,000 in maternity
allowance nor UAH 100-200 in monthly child support will do the trick?

Of course, young parents in small depressed towns will be happy to have
those subsidies because there are no job opportunities, modern
infrastructure, schools, hospitals, cultural or other amenities there. Yet a
country where labour remuneration funds are  lower than the amount of
social benefits cannot be regarded as a civilized economy.

What is better – a fishing-rod or fish? Civilized countries choose the
former. Experts call on Ukraine for following suit, as young (and no so
young) parents should be given an opportunity to earn a good living for
their families, rather than children allowances, which corrupt recipients
and create disincentives to pursue successful careers.

Alas! Regretful as it might be, the three most potent election players in
Ukraine have not got  cumulative economic expertise or the creativity to go
beyond minimum salaries/pensions/subsistence levels and restoring wage
grades.

Despite traditional slogans about decent payment for good work, Ms
Tymoshenko’s revolutionary promises to promote the distribution of a part of
corporate profits among employees, no one seems prepared to take practical
steps towards reforming the labour remuneration system and creating
well-paid jobs in Ukraine.

Is it the parties’ idea of responsible politics, or the course towards
common European values?
Will the mafia stay forever?
The issue is complex and multifaceted, aligned with judicial and regulatory
reform, as well as respect of law in general.  Even those who earn good
money (in Ukrainian terms) have to give it away in order to obtain numerous
permits, “oil” controlling authorities, maintain “relations” with firemen,
tax inspectors, sanitary services, etc.

Charges go up, undermining confidence in the future. Some choose to give
up and go abroad leaving their children in their elderly parent’s care.

“Due enforcement of laws will reduce the scope of “shadow” politics and
economy and facilitate the elimination of corruption,” – the Party of
Regions promises reservedly. “We will establish an anticorruption bureau to
investigate if the top officials’ expenditures match their declared
 incomes,” – assure “Our Ukraine” and “People’s Self-Defence”.

The Yuliya Tymoshenko Bloc censures corruption most vehemently and

loudly: “The corruption levels have reached their zenith. According to opinion
polls, corrupt practices permeate all bodies of state power. Not only does
corruption generate poverty, but it also impedes efforts to alleviate
poverty. In the final analysis, corruption endangers the very existence of
the nation.”

Drafters of the “Ukrainian Breakthrough” strategy explain available
anticorruption mechanisms. YTB vows, when elected to Parliament, to spare
no effort in combating this evil. However the question is, why wouldn’t it
start right now, for example, by making public procurement procedures more
transparent?

Why wouldn’t the Party of Regions, Socialists, Communists, “Our Ukraine”
and YTB strike out of their election lists those persons who pushed through
corruption-facilitating amendments to the law on public procurement and who
were engaged in tender schemes inflicting huge losses to the state budget
and enterprises? Their names are known – just read the recent publications
on most popular Ukrainian websites.

Unless the parties do so, their plans to “form political will to fight
corruption” have no chance of being implemented.   The best they can do is
“introduce an effective system of patriotic, moral, psychological, cultural
and aesthetic education of law enforcement personnel” (see Section
“Anticorruption Breakthrough” in the YTB draft strategy).
Pulling in different directions
That Ukrainian politicians cannot and will not listen to one another,
contrive to smear one another not only in talk shows like “Freedom of
 Speech” but also in news programmes, is an established fact. Ukraine has
become internationally known for that.

We will not discuss the country’s tarnished image and foreign direct
investments which, if not dwindle, at least do not grow in such an
environment. Economic policy loses consistency and continuity; business
loses development prospects. In fact, erratic economic policy is more
damaging for the country than no policy at all.

Examples are plenty: the ruling coalition led by the Party of Regions is
finalizing a new draft Tax Code.  However disapproving some experts could
be of the document, it is almost ready and likely to be submitted to the new
Supreme Rada in the autumn. Is there any hope the Party of Regions’ draft
will be adopted?

YTB and its parliamentary faction (which will exist in the Rada) oppose the
idea of preserving VAT – they suggest introducing sale tax instead.

OU-PS stands for simple and clear taxation rules (at present, they are
neither simple nor clear), for sharp reduction in tax benefits, including in
free economic areas, and for corruption-proof VAT levying system. OU-PS
has a trump card in its sleeve – Katerynchuk’s Tax Code, with which a lot of
party members disagree, though.

At this juncture, it is hard to say what the most important national
legislation document on taxation will look like, if it will ever be adopted,
and if it will, if politicians will rewrite it after every election.

They continue to pull Ukraine in different directions like Ivan Krylov’s
fable personages: “Upward strains the swan, towards the skies above; the
crab keeps stepping back; the pike is for the pond”.

A politically concerned citizen could say: “Never mind the Code, at least
for now. The main task is to have a fair and free election and have things
straightened out”. People in the street are sick and tired of this turmoil,
infighting and lack of clarity.

They do not pay their taxes for politicians to toss the national economy
into extremes, setting controversial, sometimes ruinous rules of the game.

Yet the voters can determine neither the election outcome, nor the policy of
the next Rada. The reason is evident – closed election lists and omnipotence
of a handful of party leaders immersed in demagogy and oblivious of the
people’s needs.

Until political parties cleanse themselves of demagogues, dark horses and
dead weight, until their functionaries learn to listen to one another and
cooperate in a meaningful way, no viable long-term social and economic
policy will be developed.

We will continue to rush from innovation-and-investment priorities to social
ones and back; from abolishing free economic areas to restoring and to
abolishing them again; from setting up a non-state pension fund for
employees of state-funded institutions to forgetting all about it.

As for the energy sector, the stance of governments and political forces
changes so rapidly that one can hardly follow it. First we decide to build
an oil pipeline and announce that once it is in place oil will not be a
problem. Then it transpires nobody except us needs the pipeline.

As a result, instead of diversifying oil supplies we get even more dependent
on Russia. We sell our best oil refineries to Russians, and then understand
we have to build a couple of new ones to have at least some influence on the
domestic petrochemical market and fuel prices.

We sell oblast gas and electricity distributing companies for a song, and
then wonder why they, engulfed in cash flows, refuse to settle their debts
to power generating companies and gas suppliers. We “hand in the keys” to
the domestic gas market to strangers and fail to understand why a monopolist
trader dictates its gas prices and supply terms.

Yes, Ivchenko, former RosUkrEnergo lobbyist, is not on the OU-PS election
list but a dozen of its current lobbyists are on the Party of Regions’ list.

Unless the fashion in which state power has been exercised so far changes,
the country will hardly be able to implement the simplest measures that
voters can understand and identify with, such as combating child smoking
and banning massive advertising of alcohol and cigarettes (OU-PS), or
putting an end to the cutting-down of parks in cities.

Will UAH 50,000 of allowance for the third child help to overcome
depopulation if these measures fail? Children need a healthy habitat, in
every meaning of the word. Will we provide them with it?
———————————————————————————————–
NOTE: Article has comparisons of various party platforms at the end.

One can this material at http://www.mw.ua/1000/1550/60185/.
———————————————————————————————–
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========================================================
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12.  PROMINENT WRITER CALLS FOR RECOGNIZING
NICHOLAS II, FAMILY AS VICTIMS OF POLITICAL REPRISALS

Interfax, Moscow, Russia, Saturday, August 11, 2007

MOSCOW – The last Russian Emperor Nicholas II and members of his
family should be recognized as victims of political reprisals, said the
prominent Russian writer and historian Eduard Radzinsky.

The contemporary Russia needs Nicholas II and his family members to be
recognized as victims of political reprisals, and the fact that this has
still not happened cannot be understood or justified, Radzinsky told
Interfax on Saturday.

“Not the Romanovs need this – this no longer matters to them. This is
necessary for those who live now. The Romanovs were not victims of a
judicial error. They were not victims of some bandits. They were victims
of the new authorities, who executed them in line with their new laws,”
Radzinsky said.

“Why should obvious things be subjected to heated debates?” Radzinsky

said.

“Now a court of the country, which is the successor of the USSR, should

rule that either executing them was the right thing to do, or that this was a
result of political repression. This was surely political repression in
relation to the tsar’s family, his doctor, and his servants,” he said.

In Radzinsky’s view, there are enough documents confirming that the tsar’s
family were executed at the new government’s decision.

“Who are those who were executed by the official Soviet authorities? Are
they victims of a judicial error? Or are they victims of bandits? No, they
are victims of the new Soviet authorities. This seems obvious, but at the
same time this looks incredible. It is incredible because we fail to
understand who are those eleven people whom the Soviet power executed
without a trial,” he said.

“It would be very important to declare that the tsar’s family was a victim
of the state. This would be a verdict on decisions of the past,” Radzinsky
said.

The leadership of the international historical, educational, and human
rights protection society Memorial, which, among other things, deals with
the rehabilitation of victims of political reprisals, shares Radzinsky’s
view on the matter.

“We believe that Nicholas Romanov, members of his family, and his retinue,
who were assassinated along with him in Yekaterinburg, are victims of
political reprisals,” Arseny Roginsky, chairman of the Memorial board, told
Interfax on Saturday.

“We don’t see any reasons to deny their rehabilitation. We deem unconvincing
the arguments that some documents are missing. All materials available show
that this was repression based on political motives,” he said.

The Prosecutor General’s office is supposed to make a decision by September
25 regarding a petition from Grand Duchess Maria Vladimirovna seeking to
recognize members of the last Russian tsar’s family as victims of political
reprisals.

German Lukyanov, a lawyer for the grand duchess, told Interfax that
Moscow’s Tverskoi Court had issued corresponding explanations on Friday.

He said that, in line with the law on the rehabilitation of victims of
political reprisals, the Prosecutor General’s Office should complete its
probe, draw conclusions and, in case of a negative decision, send the case
to court by September 25.

The Prosecutor General’s Office earlier refused to rehabilitate the last
Russian emperor and his family. It recognized that they had been victims of
repression but found no legal grounds for seeking their rehabilitation
through the courts.

“The prosecutor’s office does not have the slightest doubt that Emperor
Nicholas II, his family and closest entourage, were repressed. If the
prosecutor’s office had the slightest legal grounds for taking the matter to
court, this would have been done long ago,” a spokesman for the office said
earlier.
———————————————————————————————–
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13.  RUSSIA: GREAT TERROR REMEMBERED

Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, August 10, 2007

August 8 in Moscow marked the conclusion of a two-week religious
procession that began in Solovki to commemorate the 70th anniversary
of the start of one of the most horrific episodes in Russian history — the
mass Stalinist repressions known as the Great Terror.

The 12-meter wooden cross involved in the procession, specially made from
trees native to the Solovetsky Islands in the White Sea, was transported
from the Solovetsky Monastery to Moscow by sea and erected on the Butovo
Polygon, where on August 8, 1937, the first mass executions were carried out
by the NKVD (People’s Commissariat for Internal Affairs, the secret police
organization responsible for Stalinist political oppression).

During these repressions, tens of thousands of people of different ages,
professions, and convictions lost their lives.

Notably, the official Russian leadership did not in any way express its
observance of this event, except in stories on central television stations
typically describing logistics regarding the making of the cross and its
symbolism in the epoch of Russia’s extraordinary rebirth.
BUTOVO
RFE/RL’s Russian Service spoke with Archpriest Kirill Kaleda, deacon of the
Butovo Church, whose grandfather, a priest, was executed here in Butovo in
1937:

“For us, people who have entered the 21st century, it is essential to
preserve the memory of those who suffered in the previous, 20th century.
This is necessary especially for us.

“We need to acknowledge these events now, when our society is divided into
various groups, when very often between people there is no mutual
understanding, we need to remind ourselves of this horrible lesson that our
history brought us, so that we can try to find the path to reconciliation,
the path to harmony.”

Those who came to Butovo are primarily the children and grandchildren of
those executed here 70 years ago. This is Galina Ivanovna Priakina, whose
father Ivan Ivanovich Priakin perished here:

“That night 136 people were shot to death with him. Among them was the
Leningrad Archimandrite Vladimir. Prior to execution, they were
photographed, and before being led to the ditch, undressed. My grandfather
was a priest, and father was just a carpenter at the silicate factory in
Moscow.

“He was accused of spying for Romania, but really he was shot to death
because grandfather was a priest. We looked for father for 60 years, and
only three years passed since we found him. Father is recorded in the fifth
volume of the Book of Memory here. The first time I came and saw this
meadow, I really lost consciousness for a moment. How many of them lie
there!”

The latest list of 20,000 names is considered incomplete; it is said that
hundreds of thousands were shot to death here.

This is the director of the Butovo Memorial Center, Igor Garkavy: “Possibly,
this isn’t all. But investigating this possibility is constrained by certain
difficulties. We don’t know whether the FSB [Federal Security Service]
archives contain documents about executions that may have taken place here
after 1938.”

Behind the cross lie the ruins of the former commandant’s office, even
earlier the office of the manager of the horse-breeding farm of the village
of Drozhzhino stood here. Today, rumor has it that the cottage belonged to
Lavrenty Beria, Stalin’s chief of police, and his descendants won’t let it
be wiped off the face of the Earth.

This isn’t the case, explains Garkavy: “Here stood the commandant’s office
of the Butovo shooting polygon. Prisoners were brought to this building.
They were announced their verdict and were led away from here to have their
sentences carried out.

“And after the end of the ‘Yezhovschina,’ [the period during which NKVD
leader Nikolai Yezhov brought systematic political repression to
unprecedented heights,] here, next to the graves of their brothers — this
is especially ironic — employees of the MGB [Ministry of State Security,
predecessor of the KGB] set up a sanatorium. Maybe Lavrenty Pavlovich
[Beria] vacationed here himself.”
MOURNING CEREMONIES
During these days, mourning ceremonies took place on the Solovetsky Islands.
The center for commemorative events, opened in Medvezhyegorsk and
Sandarmokh, was moved to Solovki, the site of the first Soviet political
concentration camp. Among others, the site was visited by human rights
activist Sergei Kovalyov:

“Never in history since the times of ancient barbarism during the earliest
Middle Ages has there been such absolute contempt, such total disregard for
the value of human life and human freedom, and such deification of the
state. The state in the middle of the 20th century in our country ceased
even to feign public service.

“The state became the metaphysical purpose of the society and of each of its
citizens, the ultimate metaphysical value. We are suffering the traces of
this even now. It’s a very strong legacy.

“We found ourselves in an atmosphere of former officially accepted values.
We are constantly told that we need to remember the heroic triumphs of our
history and to quietly forget the filth and moral depravity of that history.

“This has become the official line, and it’s no accident that our
contemporary sensibility reproduces the basic values of the Stalinist epoch
in a different, somewhat evolved, more sanctimonious form.”

This is a major cause for alarm for many politicians, public
representatives, human rights activists — lessons are not derived from 1937
and other horrible pages of history.

This was discussed in a conversation with Radio Liberty correspondent
Andrei Sharyi by Yabloko party leader Grigory Yavlinsky:

“Many representatives of today’s Russian leadership, to whatever extent,
declare themselves to be the successors of that time and that style of
governing.

“Besides, one can say about the leadership in all levels of government that
in Russia there is a pseudo-democracy: manipulated justice, manipulated mass
media, manipulated interpretation of laws.

“The reproduction of various mechanisms, for example, the execution of some
economic reorganizations or reforms in this manner, so that everyone who
participated in them is subsequently always under the threat of arrest,
deportation, imprisonment, and punishment. This relates to practically all
of our business.

“Polls show that up to 20 percent of the population is ready to vote for
Stalin for the country’s president, and they excuse what happened back then.

“There obviously needs to be a huge, thorough investigative study, but
besides that, there needs to be a clear unequivocal official identification
of everything that happened then as state crimes, and on the basis of that,
we need to determine how to write textbooks, how to explain history to
schoolchildren and in the universities. Otherwise, sooner or later, this
will lead to repetition of those events in some form or other.”

This was discussed by Dmitry Katayev, former deputy of the Moscow City
Duma, with the host of the program “Facets Of Time,” Vladimir Kara-Murza:

“It’s a disgrace, after all, that in Moscow there still aren’t any
memorials. How many of them are there in the world, in Russia, and in the
former Soviet Union! But there aren’t any in Moscow. There is the Donsky
Monastery, the cemetery, there are three graves of unmarked ashes,
unrecorded in the cemetery records. In one of these are the ashes of my
father, Ivan Katayev, shot to death on August 19, 1937.

I found out that my father was executed on this day only after August 19,
1991, thanks to the Memorial. Here is the Donsky Cemetery, and, of course,
Lubyanskaya Square. Where is the memorial plaque on the KGB building?

“How many were spontaneously shot to death in the basements of this
building? Portraits of [Cheka founder Feliks] Dzerzhinsky hang there, I
know, but there’s no memorial plaque.”

The discussion was joined by president of the foundation Holocaust, former
State Duma Deputy Alla Gerber:

“I was in the FRG [Germany] — there is no city there without a museum about
the history of the Nazi party, about repressions, about concentration camps.
Children are taken there.

“But here recently at a convention of historians, [President] Vladimir
Vladimirovich Putin said that we don’t have any complex of guilt. ‘Why are
we feeling so bad about our past?’ he said, ‘we didn’t have any
concentration camps.’ Maybe he forgot about Gulag? Anything can happen
again.

What happened, for example, with [imprisoned oligarch] Mikhail Khodorkovsky
was purely a political process. The fact that scientists are periodically
put behind bars, that many journalists are periodically stripped of their
right to work in their profession. The fact that this is happening now —
it’s already a danger.”
————————————————————————————————-
http://www.rferl.org/featuresarticle/2007/08/9a452730-de6c-483b-8da5-6c50e1f4c14e.html
—————————————————————————————————–
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AUR#859 Aug 20 Macroeconomic Update Report By SigmaBleyzer; Govn’t Energy Policy; Cisco Systems; Real Estate Investors; Euro 2012; Abolish Immunity

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
                        
ACTION UKRAINE REPORT – AUR – Number 859
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., MONDAY, AUGUST 20, 2007
INDEX OF ARTICLES  ——
Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article
1.  UKRAINE MACROECONOMIC SITUATION – AUGUST 2007
“Ukraine – Macroeconomic Situation – August 2007”
Monthly Analytical Report: By Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, August 20, 2007

2CARDINAL RESOURCES SLAMS GOVN’T ENERGY POLICY
By Elisabeth Sewall, Assistant Editor
Kyiv Post, Kyiv, Ukraine, Wednesday, Aug 15 2007

3“YANUKOVYCH AND GAS PRICE CAPPING”
OP-ED: By Taras Kuzio, Kyiv Post, Kyiv, Ukraine, Wed, Aug 15, 2007

4FORWARD GARRISON; UKRAINIAN NATURAL GAS OLIGARCHS
IN VIENNA” Dmytro Firtash uxexpectedly moved company headquarters
Heti Vilaggazdasag website, Budapest, in Hungarian 9 Aug 07
BBC Monitoring Service, United Kingdom, Friday, Aug 17, 2007

 
Joint venture of RosUkrEnergo and Naftohaz Ukrayiny
Kommersant-Ukraina, Kiev, in Russian 16 Aug 07
BBC Monitoring Service, United Kingdom, Sat, Aug 18, 2007
 
6.  KAZKH, CHINESE LEADERS SIGN GAS PIPELINE AGREEMENT
Associated Press (AP), Astana, Kazakhstan, Sat, August 18, 2007
 
7 CISCO SYSTEMS JOINS U.S.-UKRAINE BUSINESS COUNCIL 

Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007

 
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007

14KYIV MUNICIPAL TRANSPORT RECEIVES EBRD FINANCING
Major upgrades of Metro, Bus and Trolleybus Passenger Transport
 
15UKRAINE’S ROAD TO EUROPE NEEDS MORE TRAFFIC RULES
ANALYSIS AND COMMENTARY: By John Marone
Kyiv Post Staff Journalist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, August 13, 2007
 
16POLAND’S MEAT PRODUCER DUBA’S OPERATIONS IN
UKRAINE GAIN MOMENTUM, PLANS DISTRIBUTION CENTRES
Polish News Bulletin, Warsaw, Poland, Friday, Aug 17, 2007

17EURO 2012 SETS UKRAINE TOUGH TEST
By Helen Fawkes, BBC correspondent in Kiev
BBC NEWS, UK, Sunday, August 12, 2007

18CEC REGISTERS TYMOSHENKO BLOC FOR RADA ELECTIONS
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 15, 2007

19UKRAINIAN PARLIAMENT ON “DEFROST”
ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Journalist, based in Ukraine
Eurasian Home, Moscow, Russia, Monday, August 6, 2007

20UKRAINIAN PRESIDENT WANTS NEW PARLIAMENT TO
ABOLISH IMMUNITY, BENEFITS FOR MP’S
5 Kanal TV, Kiev, in Ukrainian 0905 gmt 18 Aug 07
BBC Monitoring Service. United Kingdom, Saturday, Aug 18, 2007

 
ALSO DECIDE UKRAINE’S NEXT PRESIDENT
Yushchenko lays groundwork for re-election
ANALYSIS & COMMENTARY: By Taras Kuzio
Eurasia Daily Monitor, Volume 4, Issue 160
The Jamestown Foundation, Wash D.C., Thu, August 16, 2007
 
22ANNA BESSONOVA SWEEPS FIVE GOLDS FOR UKRAINE
People’s Daily Online, Beijing, China, Sat, August 18, 2007
 
Russia Today, Moscow, Russia, Sunday, August 19, 2007
 
24UKRAINE: HOLOCAUST STORY INSPIRES PRIDE, DOUBT
By Natasha Lisova, Maria Danilova, and Randy Herschaft
Associated Press Writers, Kyiv, Ukraine, Sunday, August 19, 2007
 
25THE  NEW NUCLEAR THREAT
COMMENTARY: By Dick Lugar and Sam Nunn
The Wall Street Journal, New York, NY, Sat, Aug 18, 2007; Page A6
=======================================================
1
UKRAINE MACROECONOMIC SITUATION-AUGUST 2007

“Ukraine – Macroeconomic Situation – August 2007”
Monthly Analytical Report: By Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, August 20, 2007

SUMMARY —–
[1] In January-June, real GDP grew by 7.9% year-overyear (yoy) underpinned
by strong external and domestic demand. On the supply side, the industrial
sector regained its position as the leading driver of economic growth.

[2] Thanks to faster growth of budget revenues and under-execution of
expenditures, the consolidated budget was in surplus of 1.75% of period
GDP over the first half of the year.

[3] Due to a sluggish privatization process, the government resumed issuance
of external and domestic debt. As a result, the stock of public and publicly
guaranteed debt grew by 5% month-over-month (mom) to $15.7 billion at the
end of June. . In June, traditionally a low-inflation month, the consumer
price index (CPI) unexpectedly grew by 2.2% mom, which translated into
13% growth in annual terms.

[4] The growth of forex-denominated loans has been losing speed in the last
two months. However, commercial banks credit portfolios remain biased
towards forex-denominated loans.

[5] Though Ukraine’s export performance has been strong during the first
five months of the year, the FOB/CIF merchandise trade deficit widened
to $3.7 billion at the end of May.

[6] According to Ministry of Economy estimates, the size of the shadow
economy in Ukraine declined to 27% of GDP in 2006.
ECONOMIC GROWTH —–
According to operative data of the State Statistics Committee, the Ukrainian
economy posted robust growth in the first half of 2007 as real GDP grew by
7.9% year-over-year (yoy). In fact, real GDP growth in June accelerated to
7.8% yoy, up from 7.7% yoy in the previous month.

However, due to an increased statistical base, cumulative growth was
slightly lower than in the first quarter of the year (8% yoy). Following an
impressive evolution of Ukraine’s main macroeconomic indicators, most
experts revised their GDP forecast upwards for 2007.

According to the recent Consensus Forecast, GDP is expected to grow
by a real 6.9% yoy in 2007, while the previous forecast was 6.4% yoy.

A more favorable external environment, faster than expected growth of
consumption and investment, and the strong resilience of the Ukrainian
economy to energy price shocks and political instability were among the
main reasons for improved expectations.

GDP growth was supported by robust value added growth in industrial
and service sectors, particularly wholesale and retail trade, as well as by
strong expansion of construction.

Unlike last year, industry was the most important source of economic
expansion in the first half of 2007. Value added generated by this sector
explained almost one third of GDP growth over the period.

However, performance among industries was uneven. Manufacturing, which
accounts for 18% of total value added, reported impressive 15% yoy growth
in 1Q 2007 and a slightly lower but solid 13.7% yoy in the first half of the
year.

High international prices for ores and strong domestic demand stimulated a
4% yoy increase in the mining sector over the first half of the year.

At the same time, production and distribution of electricity, gas and water
reported a 6% yoy decline in value added in 1Q 2007 on the back of weaker
electricity demand due to an unusually warm winter this year.

Though industrial performance improved in the second quarter, it was
insufficient to compensate for the previous quarter decline. As a result,
industry reported a 0.7% decrease in value added over the first half of the
year.

Over January-June, construction demonstrated an 11.8% yoy increase in
value added on the back of a number of infrastructure and repair projects
and strong demand for commercial property and industrial buildings.

At the same time, demand for residential housing weakened due to high real
estate prices and tighter bank requirements on borrower’s financial stance.
This may explain the deceleration in value added growth in
construction in the second quarter from 13.3% yoy in 1Q 2007.

Value added in wholesale and retail trade grew at an accelerating speed.
Expanding by 15.5% yoy in January-June, this sector explained about ¼ of
GDP growth over the period. Sector performance is closely linked to robust
growth in industry, construction, as well as imports on the one hand and the
population’s growing propensity to consume on the other.

Rather unexpectedly, agriculture reported an acceleration of value added
growth in 1H 2007 compared to January-May. Due to May-June’s draught,
the government downgraded its grain harvest forecast. As a result, further
deterioration of agricultural performance was expected.

However, hot weather during these months resulted in the early start of the
harvest campaign, causing a surge in value added growth. At the same time,
this statistical effect is expected to rapidly diminish in the coming
months.

On the expenditure side, real GDP growth was driven by vigorous private
consumption growth, which advanced by 14.7% yoy in 1Q 2007. Though
it is a deceleration from 20.2% yoy growth in 1Q 2006, private consumption
grew at a faster-than-expected rate.

Though real household income growth decelerated to 11.1% in 1Q 2007,
down from 16.1% yoy in 2006, private consumption was fueled by booming
consumer credit.

The continuing credit boom, robust corporate borrowing from abroad, the
need to renovate production capacities and to introduce energy-saving
technologies were among the major reasons of the impressive 24.4% yoy
increase in gross fixed capital formation, up from 19.9% yoy in 1Q 2006.

At the same time, its contribution to total GDP growth was smaller than in
the respective period last year due to a contraction in inventories.

Meager growth in government consumption (up by 0.8% yoy) in 1Q 2007 may
reflect significant under-spending of state budget programs over the period.
Robust growth of consumption triggered rapid growth of imports, which
accelerated to 12.9% yoy from 10.7% yoy in 1Q 2006.

Despite a lower contribution from domestic demand and faster growth of
imports, a higher economic growth rate in 1Q 2007 compared to the
respective quarter last year (8% yoy vs 4.1% yoy respectively) was
achieved thanks to stronger export performance.

Favorable external conditions helped compensate for the harmful effect
of a 36% increase in prices for imported natural gas on energy-intensive
export-oriented metallurgy and chemicals.

At the same time, this impact was less painful than in the previous year as
the price increase in 2007 was lower and, more importantly, was anticipated.

Together with strong investment demand in the main destinations for
Ukraine’s machine-building exports (mainly Russia), this triggered almost
5% yoy real growth of exports of goods and services.

In June, the growth of industrial production accelerated slightly to 10.4%
yoy from 9.9% yoy in May. However, due to statistical base effects, in
cumulative terms it continued to decelerate, expanding by 11.8% yoy in
1H 2007 down from 12.1% yoy in January-May.

Benefiting from strong consumption and favorable external conditions,
machine-building and food processing reported acceleration in output
growth to 23.3% yoy and 13.8% yoy, respectively.

However, output growth in the metallurgy slowed to 13.9% yoy over the
first half of the year compared to 15.8% yoy over January-May. Slower
growth in metallurgy may be attributed to the downward tendency of
international steel prices that resumed in June this year, though the effect
of a growing statistical base was also present.

Together with slower growth in chemicals, mining and other non-metal
minerals, this caused total industrial production to decelerate.

The likely worsening of the external environment in the second half of the
year and political uncertainty in the fall (due to parliamentary elections
and formation of the new government) will result in further moderation of
industrial production and economic growth.

The government forecasts industrial production and GDP growth to
decelerate to 8.5% yoy and 6.5% yoy respectively in 2007.
FISCAL POLICY —–
According to the Ministry of Finance, consolidated budget revenues grew by
a nominal 31.6% yoy over the first half of the year to UAH 95 billion ($18.8
billion), while expenditures grew at a slower rate of 22.6% to UAH 90
billion ($17.8 billion).

Since the execution rate of budget expenditures notably improved in June,
the consolidated budget registered a smaller surplus of 1.72 % of period
GDP, down from 3.5% of GDP in January-May.

At the same time, for the corresponding period last year, there was a
deficit 0.5% of GDP. This year’s favorable fiscal performance was achieved
due to improved tax collections and tight control over expenditures.

In particular, robust domestic consumption (of both domestically produced
and imported goods and services) spurred tax revenues to the state budget
as collections from VAT and excises advanced by about 33% yoy and 23%
yoy in nominal terms.

At the same time, the financial stance of Ukrainian enterprises continued to
improve on the back of rapid economic growth and strong export performance.
This caused corporate profit tax receipts to move up by a nominal 27% yoy.
In sum, tax revenues to the general fund of the state budget were 4.6% above
target for January-June.

In June, expenditures from the general fund of the state budget were
over-fulfilled by 2.1%. However, due to significant under-spending in the
pervious periods, they were still 7.5% below the planned amount. Tight
control over expenditures may be attributed to a sluggish privatization
process.

For the first half of the year, the State Property Fund of Ukraine allocated
UAH 1.3 billion ($250 million) to the state coffers, which represents just
12.5% of the targeted amount for 2007.

Considering the government’s decision to privatize state enterprises by
putting up only minority stakes for auctions and keeping a 50%+1 share of
potentially the most interesting enterprises (such as telecommunication
monopoly Ukrtelecom and Odessa port plant), the forthcoming parliamentary
elections and subsequent formation of the new government, it is unlikely
that the targeted privatization proceeds will be raised.

To secure enough funds to finance all government obligations (the state
budget deficit is targeted to reach 2.5% of GDP in 2007), the government
resumed both external and domestic issuance of public debt.

In June, the government placed $0.5 billion eurobonds. As a result, external
public debt increased to $12.4 billion at the end of June; however, due to
large debt redemption in the previous months, external public and publicly
guaranteed debt was still 1.5% lower than at the beginning of the year.

The placement of UAH 0.8 billion ($160 million) of government domestic
bonds and issuance of state mortgage institution bonds under state
guarantee in the amount of UAH 275 million ($54.5 million) resulted in
accumulation of both domestic public and publicly guaranteed debt (an
accumulation of the latter was not observed for about 10 years).

As a result, the stock of total public and publicly guaranteed debt grew by
5% mom to $15.7 billion. The funds received from the new debt issuances
and still significant consolidated budget surplus funds are accumulated on
the government accounts with the State Treasury.

As of the end of June, cash balances on the government account with the
Treasury amounted to about UAH 22 billion ($4.4 billion), which is
equivalent to more than 7% of the total money supply. If rapidly disbursed,
these funds may create significant inflationary pressures.

However, we believe the government will continue to pursue tight control
over budget expenditures, despite the forthcoming parliamentary elections
in late September, to alleviate financing risks at the end of the year.
MONETARY POLICY —–
In 2006, consumer inflation was primarily driven by a pass-through of energy
prices. The beginning of 2007 saw some downward revision of utility and
housing tariffs. In addition, expectations of a further service tariffs
adjustment this year did not materialize as the authorities decided to
postpone the energy price pass-through to consumers.

Though the annual CPI remained in double digits, these, together with a high
base effect, gave reason to be optimistic that year-end inflation will be
below 10%. Moreover, January-May inflation of just 1.9% year-to-date made
the government forecast of year-end inflation at 7.5% quite realistic.

However, in June (traditionally a low-inflation month), CPI unexpectedly
grew by 2.2% mom, which translated into 13% in annual terms.

June’s acceleration was primarily attributed to faster growth in food prices
(6.7% yoy in June compared to 2.8% yoy in May), the weightiest component
of CPI (about 60%), and the likely spill-over of producer price growth (the
producer price index accelerated to 20.6% yoy in June, up from 20.2% yoy
in May).

The methodological weaknesses of accounting for new-crop-vegetables, a
gradual shift in the consumption structure towards more-expensive products
(due to a steady growth of real household income over the last three
years), and apprehensions concerning lower-than-expected grain harvest due
to droughty weather during May-June were the primary reasons for this
acceleration.

High international prices on crude oil drove up domestic prices for fuel to
12.5% yoy in June compared to 8.2% yoy a month before.

However, due to price growth deceleration for other non-foods (such as
transport vehicles, textiles and apparels, furniture, audio-, video- and
computer equipment), the non-food price index remained unchanged at
1.8% yoy.

On an increasing statistical base, the service price index continued to
decelerate, reporting 48.8% yoy higher service tariffs than last year (down
from 49.5% yoy a month before).

Due to recent acceleration, we expect inflation to be around 10% this year.

Faster growth of monetary aggregates growth in recent months also
contributed to acceleration of consumer inflation. In particular, the growth
of the monetary base sped up to 38.5% yoy in June 2007 from 36.9% yoy in
May and just 17.5% yoy in December 2006.

Considerable expansion of the monetary base is attributable to massive NBU
interventions on the interbank forex market, underpinned by robust export
performance and particularly the inflow of foreign capital in the form of
FDI and external borrowing by private sector.

For the first half of the year, net NBU purchases of foreign currency
reached $3.4 billion. As the NBU kept the unofficial hryvnia peg to US
dollar (and is unlikely to change its foreign exchange policy before the end
of the year), this resulted in accumulation of gross international reserves
to $25.9 billion at the end of June, which is enough to cover 4.8 months
of future imports of goods and services.

The steep upward trend of the monetary base and acceleration of deposit
growth to 45.1% yoy (up from 42.3% yoy in May) were the main reasons
of rising money supply at a high speed (42% yoy in June). At the same time,
the impact of robust growth of monetary aggregates on prices was rather
moderate due to strong money demand.

In June, commercial banks continued to expand credit operations as their
growth accelerated to 75.7% yoy, up from 72.6% yoy a month before.
Strong demand for credit was underpinned by growing real disposable
income, buoyant investment activity and gradually declining credit rates.

Though in June the weighted average credit rate slightly increased to 13%
per annum (up from 12.7% pa in May), it was still lower than the average
rate of 13.7% pa in 2006.

The credit growth was led by corporate loans as they account for about two
thirds of the total credit portfolio of the banking sector and are growing
at an increasing speed (up by 59.4% yoy in June compared to 54.7% yoy a
month before).

At the same time, loans issued to households continued to decelerate, though
their growth rate remains impressive — 119% yoy in June.

By currency, robust growth of forex-denominated loans was underpinned by
aggressive external borrowing of the financial sector and a number of
acquisitions by foreign banks.

However, the growth of forex-denominated loans has been losing speed in the
last two months (the growth rate declined from 100.8% yoy in April to 97.4%
yoy in June) following the NBU tightening of reserve requirements for forex
denominated consumer loans in April and depreciation of hryvnia with respect
to other main world currencies (particularly Euro) (1).

However, this deceleration was insufficient to tangibly effect the
composition of commercial bank credit portfolios. The share of forex
denominated loans remained virtually unchanged at 51.3% at the end of June
(51.2% in April), indicating the high exposure of Ukraine’s banking system
to foreign exchange risk.
INTERNATIONAL TRADE AND CAPITAL —–
According to the State Statistics Committee of Ukraine, exports of goods
grew by 31.6% yoy in May, decelerating from 41.7% yoy a month before.

However, the deceleration is primarily attributed to the increased
statistical base (following a six month decline from November 2005 to
April 2006, the growth of exports rebounded at a strong 11.5% yoy in
May 2006).

Though the growth of imports also slowed to 31.5% yoy in May, down from
47% in April, cumulatively it continued to outpace the growth of exports.
Over January-May, exports grew by 34.4% yoy while imports grew by 35%
yoy.

The growth of exports was underpinned by a 53.5% yoy increase in exports
of machinery and transport equipment, and a 40.4% yoy and 23.6% yoy
increase in export of metals and chemicals respectively.

Robust consumption and investment demand and a price increase on
imported natural gas stimulated the growth of imports. In particular, the
value of imported mineral products grew by 33% yoy in January-May,
chemicals and machinery and transport equipment grew by 35% yoy
and 41.5% yoy respectively. As a result, the merchandise trade deficit
exceeded $3.7 billion at the end of May.

The widening foreign trade deficit is the primary cause of the increasing
current account gap this year. However, thanks to robust FDI inflow
(estimated by the NBU at $2.1 billion over January-May), the issuance
of external and domestic debt securities (with a high external demand for
the latter ones), and aggressive private sector borrowing allowed for
coverage of the CA deficit and replenishment of the NBU’s gross
international reserves.
INTERNATIONAL PROGRAMS —–
According to the Ministry of Finance, on July 20th, Ukraine and the World
Bank agreed on a Power Transmission Project with the overall objective of
improving the security, reliability, efficiency and quality of the energy
supply in Ukraine. The WB will provide a loan of $200 million for 20 years
with a 5 year grace period.

An agreement is expected to be signed by the end of this year. Currently,
Ukraine and the WB are also negotiating a $140 million “Urban Infrastructure
Project”.

At the end of July, Ukraine and the European Investment Bank (EIB) signed
an agreement, according to which the EIB will provide a ^200 million loan to
Ukravtodor, the Ukrainian road administration. The loan is granted for 20
years at EURIBOR+0.55% with a 5 year grace period for principal payments.

The funds will be directed to finance reconstruction of  “Kyiv-Chop”
motorway, which connects Ukraine with the EU countries. According to the
Ministry of Finance, this loan is the first one under a large “Ukraine’s
European Roads” project between Ukraine and EBRD/EIB, envisaging total
financing of about ^648 million for construction and repair of Ukrainian
roads.
OTHER DEVELOPMENTS AND REFORMS —
Affecting the Investment Climate According to “Governance Matters VI:
Aggregate and Individual Governance Indicators, 1996-2006″, released by
the World Bank at the beginning of July, the quality of governance in
Ukraine has notably improved since 2002. According to the report, Ukraine
achieved the most substantial progress in the area of Voice and
Accountability.

In addition, Ukraine showed further significant improvement in this area in
2006. At the same time, perceptions regarding Political Stability and the
Risk of Violence were mixed, but on average demonstrated an improvement
in 2006 compared to the previous year.

In mid-July, the government promulgated the draft of the government program
of economic and social development of Ukraine for 2008. According to the
draft, the government expects real GDP to grow by 7.2% yoy in 2008.

The government defined the main goals of economic policy in 2008 as
improving living standards of  Ukrainian citizens, increasing
competitiveness of Ukrainian goods as a precondition for sustainable
economic growth, and ensuring energy security of the country.

To realize key policy and institutional reforms, the government plans to
attract $300 million as a second development Policy Loan (DPL2) from
the IBRD.

According to the Ministry of Economy of Ukraine, the size of the shadow
economy in Ukraine was estimated at 27% of official GDP in 2006, which
is 2 percentage points lower than in the previous year. By sector, the size
of the shadow economy diminished in agriculture and manufacturing
(particularly, machine-building), while in real estate, insurance, and car
sales it continued to increase.
———————————————————————————————-
FOOTNOTE: (1) US dollar and Euro are the most preferred currencies of
forex borrowing in Ukraine. Though US dollar holds the lion share of all
forex-denominated loans, the share of Euro is also substantial. Since
hryvnia is de facto pegged to US dollar, recent depreciation of the latter
with respect to Euro and other main world currencies on the international
markets caused the respective depreciation of hryvnia.
———————————————————————————————-
Chief Economist, Edilberto Segura; Editor, Rina Bleyzer Rudkin.
———————————————————————————————-
NOTE: To read the entire SigmaBleyzer/The Bleyzer Foundation
Ukraine Macroeconomic Situation Report for August 2007 in a PDF
format, including color charts and graphics see the attachment to
this e-mail or go to the following link and click on Ukraine August 2007.
http://www.sigmableyzer.com/publications/monthly_reports
———————————————————————————————
            BULGARIA, ROMANIA AND KAZAKHSTAN
NOTE: SigmaBleyzer/The Bleyzer Foundation also publishes monthly
Macroeconomic Situation Reports for Bulgaria, Romania and
Kazakhstan. The present and past reports, including those for Ukraine
can be found at http://www.sigmableyzer.com/en/page/532.
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2. CARDINAL RESOURCES SLAMS GOVN’T ENERGY POLICY

By Elisabeth Sewall, Assistant Editor
Kyiv Post, Kyiv, Ukraine, Wednesday, Aug 15 2007

KYIV – Cardinal Resources, a privately-owned hydrocarbon production
company active in Ukraine, has publicly slammed Ukraine’s government,
arguing its energy policies run contrary to the interests of both investors
and attempts to diversify energy dependency away from Moscow.

Robert Bensh, chairman and chief executive officer at Cardinal Resources,
an independent, foreign-based gas and oil exploration and production
company that has been working in Ukraine since 1995, issued strong
criticism of a government decree in an interview released on Aug. 13 by
the US-Ukraine Business Council.

He also appealed to the US government to take measures against the
government of Ukraine if it doesn’t revoke the decree, which forces
companies with joint production-sharing agreements to sell their gas
supplies to the government of Ukraine at far below market prices.

The current rules are not only bad for business, but have adverse
consequences on the country’s efforts to gain energy independence,
contradict Ukrainian laws, and hurt the country’s bid to join the WTO,
Bensh argued.

The decree, adopted by the government in January of this year, has eaten
away at Cardinal’s revenues and other privately-owned hydrocarbon
companies operating in Ukraine.

The controversial rules were intended to boost supplies of gas on the
domestic market in order to keep prices low for cash-strapped citizens, but
they contradict the country’s laws governing foreign direct investment, as
well as global norms, according to Bensh.

In the interview, Bensh said the decree “effectively confiscates” the
natural gas produced by its subsidiary, Carpatsky Petroleum, a US
corporation, thereby harming Cardinal and preventing other Western
companies from entering joint production with state-owned gas companies.

UK-registered Cardinal raised about $20 million through an IPO on the London
Stock Exchange in 2005. It was one of the first listings on a major foreign
market by a company whose operations are based in Ukraine, but the
company’s stock has suffered due to production-right difficulties in
Ukraine.

The decree, part of the Budget Law drafted by Finance Minister Mykola
Azarov, was approved by Prime Minister Viktor Yanukovych and passed in
January 2007.

According to the decree, companies that hold joint agreements with national
gas companies in Ukraine are obligated to sell gas to the state-owned oil
and gas company Naftogaz Ukrainy at a fixed government rate of around $1.50
mcf (1,000 cubic feet) – far below the current market rate of $4.80 mcf.

According to Bensh, the rate is even below the company’s production costs.
“Ideally, we would like to see the Yanukovych government voluntarily
withdraw this law, which is contrary to the long-term interests of Ukraine
and its people,” Bensh said.

However, Bensh added that given the government’s lack of action thus far,
he doubts any changes will be brought about without intervention.

Cardinal, a major stake in which is owned by Syrian-born Ukrainian tycoon
Youssef Hares, has concluded that “much stronger action” must be taken by
those concerned about the issue, Bensh said.

He also said that this is a problem faced by every company involved in a
joint production agreement with Ukraine’s state gas companies.

Bensh said that his company normally sells its gas to industrial end-users
in Ukraine at market prices. To avoid selling gas at “uneconomic” prices,
Cardinal had been injecting its gas into storage facilities.

However, Cardinal recently learned that Ukrgazvydobuvanya, the state-
owned gas production giant, has been selling its gas without the company’s
knowledge or permission.

In Ukraine, the price for gas is established by the National Energy Price
Regulation Authority.

Bensh said that Cardinal has taken several measures to initiate a resolution
to the gas sales problem, including meeting with Energy Minister Yuriy Boyko
twice and writing letters to Yanukovych and other top officials. But none of
their efforts have produced any results.

US Ambassador William Taylor also got involved, sending a letter to Energy
Minister Boyko in March 2007 asking for a resolution, to which Boyko never
responded.

As a result, Cardinal has applied to the US government to issue a formal
demarche to the government of Ukraine.

In April of this year, Europa Oil and Gas Holdings, another private
hydrocarbon company operating in Ukraine, won a court case confirming the
company’s right to sell gas at market prices. However, the government
continues to ignore the ruling.

Ukraine currently relies on imports from Russia and Central Asia to fill the
majority of its gas needs. Most domestic production is controlled by
state-owned companies.

While privately-owned companies produce only a small amount of Ukraine’s
gas needs, their operations are potentially very lucrative and are viewed as
a way of raising investment to boost domestic production and, in turn,

reduce dependence on imports.
————————————————————————————————
LINK: http://www.kyivpost.com/business/general/27239/
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.  “YANUKOVYCH AND GAS PRICE CAPPING”

OP-ED: By Taras Kuzio, Kyiv Post, Kyiv, Ukraine, Wed, Aug 15, 2007

In May 2005, when the Yulia Tymoshenko government introduced limited
and temporary price caps on oil, President Viktor Yushchenko threatened to
remove her from office. Western observers also quickly jumped on the
bandwagon and used price capping and re-privatization as two sticks with
which to beat the Tymoshenko government.

The result has been that in some business circles and among foreign
investors the enduring memory of the 2005 Tymoshenko government is price
capping and support for mass re-privatization. Both memories are taken out
of context and are merely used by the same group of critics of Tymoshenko
who refer to her negatively as ‘populist’ (see “Whose ‘populist’ in
Ukrainian politics,” Kyiv Post, July 5).

Why then the deafening silence over the price capping on a far greater scale
of gas prices by the Viktor Yanukovych government?

Prime Minister Yanukovych told his government on July 18 that ‘his
government would never undertake populism.’ In reality, the bans on export
of grain and gas price controls are two big examples of populist price
controls introduced by the Yanukovych government to win votes.

On Dec. 19 of last year, the Anti-Crisis parliamentary coalition adopted the
2007 state budget. Article 3 of the budget law states that all enterprises
with state ownership of more than 50 percent, as well as joint ventures and
Joint Activity Agreements (JAAs) concluded with these enterprises must sell
their monthly production to a company specified by the government.

In a Jan. 16 government resolution (No. 31), Naftogaz Ukrainy was named as
the company authorized by the government.

Naftogaz became de facto the only company authorized to buy gas from JAAs
and then sell it on to the Ukrainian population. The aim of these policies
introduced by the Yanukovych government is to control the price of gas for
the population on a scale far greater than temporary oil caps in 2005.

The difference between the historic selling price of gas in Ukraine to
industrial end-users at market prices of $4.88 mcf (1,000 cubic feet) and
the fixed government price of $1.63 is more than 300 percent.

Many Western companies have opted to therefore halt all sales of gas rather
than sell at a capped unprofitable price. The new capped price does not
cover the costs of exploration, development and production, leading to lower
production and investment.

Cardinal Resources, a public limited company traded in London with a US
subsidiary, Carpatsky Petroleum, is one of a number of Western companies
which have halted all gas sales and instead placed their gas into storage.

The Yanukovych government policies have two negative outcomes.

[1] Firstly, foreign investors, such as Cardinal, have an adverse cash flow
because they cannot sell gas at market prices. To agree to sell their gas at
the capped price to Naftogaz Ukrainy would be to sell it at a loss.

[2] Secondly, Cardinal, as with other foreign investors, sees the
government’s price capping policy as particularly having a negative effect
on foreign investors. Price capping reduces the incentive for foreign
investors to come to Ukraine at a time when only 28 percent of Ukraine’s
gas demand is met by domestic production.

Government price capping of gas directly contradicts Ukrainian legislation,
such as the Civil Code and the Law on Foreign Investment. In April, Europa
Oil and Gas (Holdings) plc won their case in court of the right to sell gas
at market prices but the government continues to ignore the court ruling.
This is not the only evidence of a non-listening government.

Cardinal Resources sent letters on the gas price capping policy to Prime
Minister Yanukovych last December, to Minister for Fuel and Energy Yuriy
Boyko in March and to the CEO of Naftogaz Ukrainy in May.

Cardinal Resources failed to receive responses to two of the letters and
only a curt and non-committal reply from the Deputy Minister for Fuel and
Energy.

A March letter from US Ambassador William Taylor to Minister Boyko also
failed to receive any response. Two meetings between Boyko and Cardinal
Resources produced no results.

A July paper published by the prestigious Washington think tank, the Center
for Strategic and International Studies (CSIS), described how it was
‘extremely difficult’ for Western energy companies to obtain a foothold in
the Ukrainian market.

Western investors have the potential to make Ukraine independent in its
energy needs, thereby making Ukraine free of Russia’s monopolist and
corrupt energy relationship.

It has long been evident though that a large proportion of the Ukrainian
elites wish to maintain the status quo because they receive large rents from
the existing corrupt energy relationship with Russia. Energy corruption
therefore overrides Ukraine’s national interest and the country’s national
security.

According to Ambassador Keith Smith, author of the CSIS report, a major
factor blocking Western investment in the energy sector is ‘control of
natural resources by groups hostile to Western investors.’ The Yanukovych
government is effectively squeezing Western investors out of Ukraine,
Ambassador Smith concludes.

The two groups which benefit from these price capping policies are the
corrupt intermediary RosUkrEnergo, which, according to a Radio Free
Europe/Radio Liberty report, is the biggest money laundering operation in
Europe, and local oligarchs. Only one political force – the Tymoshenko
bloc – has consistently opposed the use of RosUkrEnergo as a middle man.

The Ukrainian population meanwhile suffers while Western investors pause,
or withdraw. Desperately needed foreign direct investment (FDI) and
technologies are directed toward governments that show themselves
amenable to international standards of economic behavior.

The Yanukovych government’s policy puts into question its stated desire to
join the WTO, establish a free trade zone with the EU and eventually join
the EU.

Price capping also puts into doubt the government’s declared interest in
attracting foreign investors and its stated desire for energy security and
independence. These policies are far more populist than anything
introduced in 2005.

The unwillingness of the Yanukovych government to respond to the concerns
of foreign investor, or to have any common courtesy in responding to the US
Ambassador, necessitates a stronger response from the US government, EU
and WTO.

A demarche should point out that the Ukrainian government’s price capping
policy is inconsistent with international norms on attracting foreign
investment, attaining WTO standards consistent with membership and the
Ukrainian government’s statements on seeking energy self-sufficiency.

A failure to change the price capping policies should warn against returning
the Yanukovych government to office after the Sept. 30 pre-term
parliamentary elections.

Ukraine’s post-election new government should be committed to three
policies: attracting foreign investment, battling corruption and energy
independence.  The Yanukovych government has proven that it has no
commitment to any of these three policies.
——————————————————————————————–
NOTE: Dr. Taras Kuzio is a Research Associate of the Institute for
European, Russian and Eurasian Studies, Elliott School for International
Affairs, George Washington University and President of the consulting
firm Kuzio Associates.
——————————————————————————————–
LINK: http://www.kyivpost.com/opinion/oped/27240/

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4.  FORWARD GARRISON; UKRAINIAN NATURAL GAS OLIGARCHS
IN VIENNA” Dmytro Firtash unexpectedly moved company headquarters

Heti Vilaggazdasag website, Budapest, in Hungarian 9 Aug 07
BBC Monitoring Service, United Kingdom, Friday, Aug 17, 2007

Dmytro Firtash, the Ukrainian owner of the natural gas sales organization
EMFESZ, Ltd doing business in Hungary -but presumably also representing
Russian interests -has moved his firms hiding in Cyprus to Vienna, Austria.

Dmytro Firtash wants to register within a short period of time his group of
firms with an annual sales volume of 4.6 billion euros at the London Stock
Exchange.

At least, this is what the 42 year-old Ukrainian businessman said to explain
why he unexpectedly moved the headquarters of his “Group FD” companies
hidden so far behind offshore corporations mainly located on the island of
Cyprus to downtown Vienna, next door to the headquarters of the Social
Democratic Party, the ruling party in Austria.

The name of Firtash was first noticed throughout the world when it was
revealed that jointly with Ivan Fursin -also a Ukrainian -and 180 other
firms registered at the same address, they own 50 per cent of RosUkrEnergo
AG in the Swiss tax shelter Zug.

This half-Russian, half-Ukrainian firm established in 2004 enjoys exclusive
intermediary rights in selling Turkmen natural gas in Ukraine; nevertheless
its activities and the identity of its owners have been a mystery ever since
the existence of the firm.

Initially, leaders of the velvet revolution led by Viktor Yushchenko found
the firm to be unnecessary; it acquired a special position during President
Leonid Kuchma’s reign and “takes 1 billion euros out of Ukraine’s pocket.”

Later on, however, they acquiesced to its existence, also accepting the fact
that the firm would help resolve the January 2006 Russian-Ukrainian natural
gas dispute. Namely, it was this firm that brought to Ukraine natural gas at
a mixed price, by mixing cheap Turkmen with expensive Russian natural gas.

For a long time it was understood throughout the world that 50 per cent of
RosUkrEnergo belonged to Gazprom, and the other half to Raiffeisen
Investment AG (RIAG).

Last April however, the Russian daily Izvestiya owned by Gazprom revealed
that RIAG, registered in Vienna, represents the Centragas firm backed by
Firtash and Fursin.

Who is Firtash, the owner of 90 per cent of Centragas AG? The FBI in the US
as well as the Ukrainian secret service has already tried to find the answer
to this question.

The primary interests of the Americans pertained to the kinds of common
interests Firtash and Semion Mogilevich have, the latter believed to be a
Russian Mafioso sought by the FBI, and whether Firtash is laundering money.

Kiev was interested mainly in the way Firtash is linked to the Russians and
to the rest of the members of the new Ukrainian elite in the post-Kuchma
era, as well as in the identity of additional owners of the firm.

It was revealed that the names of Mogilevich and Firtash appear together
among the owners of several companies, and that Firtash, the Ukrainian
businessman -who participated in the highest-level Russian-Ukrainian
negotiations during last year’s natural gas crisis and has also negotiated
with Yushchenko -maintains three offices in Moscow, in the real centre of
his economic interests.

Firtash has already played a key role in Eural Trans Gas believed to be the
predecessor of RosUkrEnergo; in 2003 and 2004 Eural pumped natural gas

from Turkmenistan, Uzbekistan and Kazakhstan to Ukraine and to Hungary.

Although on paper Eural was also owned by private persons, the actual owners
were Gazprom and the Ukrainian Naftohaz Ukrayiny, and for tax purposes the
company was registered in Hungary.

RosUkrEnergo receives a 1 billion euro transportation fee each year from
Ukraine for pumping natural gas from Turkmenistan through Gazprom pipelines
not in the form of cash but as 13 billion cubic meters of natural gas.

RosUkrEnergo then sells the natural gas in the framework of an exclusive
agreement expiring in 2015 to EMFESZ First Hungarian Natural Gas and Energy
Trading and Service Ltd., the largest company in the Hungarian natural gas
free market.

RosUkrEnergo is headed exclusively by Russian managers, including from the
beginning by Konstantin Chuychenko who works there. He was employed by the
KGB until 1992. Chuychenko has attended the university in Leningrad with
Aleksandr Medvedev, the present deputy chairman and president of Gazprom.

The Foreign Affairs Committee of the US Congress recently analysed the East
European region’s dependence on Russian natural gas, and in conjunction with
that, threats to democracy.

The Committee concluded that only a few private persons enrich themselves of
the huge profits made by RosUkrEnergo and similar intermediary firms; these
persons maintain constant, close relations with leading Ukrainian and
Russian politicians.

The analyses concludes that the large amount of money is more than enough to
influence Ukrainian politicians and to support Russian interests, as a
result of which countries in the region could abandon the path of democracy.

Well-informed analysts in Vienna suspect that anyone who does business with
Firtash is actually doing business with Gazprom. At this time Firtash gave
an Austrian character to his most important firms, thus to Centragas and to
Mabofi Holding, the company that directed EMFESZ from Cyprus so far, and
further, its chemical industry, gas pipeline construction and real estate
firms.

One cannot tell however, between exactly who EMFESZ is acting as an
intermediary; one cannot tell whether the telephone numbers shown on the
websites of its businesses actually ring in the offices of Raiffeisen
Investment AG?
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5.  MAJOR UKRAINIAN INDUSTRIAL GAS SUPPLIER
UKRGAZENERGO TO EXPLORE BLACK SEA SHELF DEPOSIT
Joint venture of RosUkrEnergo and Naftohaz Ukrayiny

Kommersant-Ukraina, Kiev, in Russian 16 Aug 07
BBC Monitoring Service, United Kingdom, Sat, Aug 18, 2007

KIEV – The main supplier of natural gas to Ukraine’s industrial consumers,
Ukrgazenergo [a joint venture of the Swiss-registered gas trader
RosUkrEnergo and the national oil and gas company Naftohaz Ukrayiny],

is entering the oil and gas mining market.

Kommersant Ukraina has learnt that Naftohaz, the co-owner of the company,
has appointed Ukrgazenergo main investor in the Odessa gas deposit
exploration project.

By doing so, Naftohaz will resolve the problem of distributing
Ukrgazenergo’s income and gain control over the investment in the project.
Experts do not rule out that Ukrgazenergo will try to get involved in
Naftohaz’s other exploration projects, too.

Kommersant Ukraina learnt that on 14 August the board of directors of the
national oil and gas company Naftohaz Ukrayiny decided to appoint
Ukrgazenergo partner of the Chornomornaftohaz company [which is

Naftohaz’s subsidiary] in the Odessa gas deposit exploration project.

“A join venture will be formed on parity basis which will allow Naftohaz to
control a 75-per-cent stake in the venture,” the head of the Naftohaz’s
press centre, Oleksiy Fedorov, told Kommersant Ukraina.

Let us recall that Naftohaz Ukrayiny owns 100 per cent in Chornomornaftohaz
and a 50-per-cent stake in Ukrgazenergo.

According to Chornomornaftohaz, the amount of gas in the Odessa deposit is
forecast at around 20-30bn cu.m. The total amount of gas in the Black Sea
shelf amounts to 1,700bn cu.m. The company started drilling the deposit for
gas in August 2006.

There were plans to begin gas mining by the end of 2007 and to complete the
exploration of the deposit, having increased gas mining to 1bn cu.m. a year,
by the end of 2008. The investment in the project is estimated at 5.8bn
hryvnyas [around 1.15bn dollars].

Mr Fedorov said that Naftohaz’s daughter company, Ukrhazdobycha [Ukrainian
gas mining], was Chornomornaftohaz’s partner in the project.

“The Naftohaz’s management decided, however, to have Ukrhazdobycha

involved in the exploration and mining of inland deposits of hydrocarbons,
and Chornomornaftohaz – in the continental shelf,” he said.

Ukrgazenergo’s management offered a cautious comment regarding cooperation
with Chornomornaftohaz. “This matter is yet to be approved at a meeting of
the company’s supervisory board,” the press secretary of Ukrgazenergo,
Vitaliy Kysil, said. The company’s management, however, have repeatedly
expressed interest in mining hydrocarbons on the territory of Ukraine and
abroad.

Experts say that, by appointing Ukrgazenergo main investor in the Odessa gas
deposit exploration project, Naftohaz is seeking to gain control over the
company’s income.

“Last year, Ukrgazenergo earned a significant income. The Ukrainian Fuel and
Energy Ministry proposed that it is transferred to Naftohaz’s account as a
dividend, while RosUkrEnergo wanted to invest it in development. The sides
failed to agree on the distribution of income,” the paper’s high-ranking
source in the cabinet said. “The current variant offers a compromise: income
will be invested in gas exploration but Naftohaz will, in fact, control it.”

Ukrgazenergo was formed by Naftohaz Ukrayiny and RosUkrEnergo on parity
basis. It is the main supplier of natural gas to Ukraine’s industrial
consumers. In 2006, its proceeds from gas sale amounted to 16.75bn hryvnyas
(3.3bn dollars) and gross income – to 1.014bn hryvnyas (200.79m dollars).

Players in the market do not rule out that the formation of a joint venture
might have been caused by Chornomornaftohaz’s growing tax burden in the

end of 2006. [Passage omitted: repetition]

Experts expect Ukrgazenergo to be involved in other projects. “If the
company was invited to take part in one project, it is likely that
Ukrgazenergo will replace Ukrhazdobycha in other joint projects with
Chornomornaftohaz,” the member of the parliamentary committee for fuel

and energy matters, MP Mykhaylo Volynets, said.

“The exploration of the Hordiyevych gas deposit [in the western part of

the Black Sea shelf] could be one of such projects, as it also requires
significant investment, too”.                              -30-
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6. KAZKH, CHINESE LEADERS SIGN GAS PIPELINE AGREEMENT

Associated Press (AP), Astana, Kazakhstan, Sat, August 18, 2007

ASTANA, Kazakhstan – The leaders of China and Kazakhstan on Saturday
signed an agreement on building a pipeline that is to ship natural gas from
Turkmenistan to China.

The agreement signed by Chinese leader Hu Jintao and Kazakh President
Nursultan Nazarbayev followed last month’s agreement between China and
Turkmenistan on a 30-year gas contract. China and Turkmenistan had already
agreed to build the pipeline, but gas prices hadn’t been determined.

The agreement on the section of the pipeline crossing Kazakhstan underlines
that country’s strategic importance for energy-hungry China. A pipeline
pumping Kazakh oil to China went into operation last year. Details of the
agreement on the gas pipeline weren’t immediately available.

Turkmenistan’s natural gas reserves of 2.8 trillion cubic meters, the
second-biggest among all ex-Soviet republics after Russia, are a major prize
in the region.

But Turkmenistan has been forced to export its gas through Russia and
Ukraine, which have their own gas companies that have squeezed out their
smaller rival. Turkmenistan is eager to break free from Russia’s influence
and sees exports to China as one solution.

Beijing has been trying to shift reliance to cleaner gas in order to reduce
reliance on its abundant but dirty coal reserves.
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7.  CISCO SYSTEMS JOINS U.S.-UKRAINE BUSINESS COUNCIL 

 
Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007
 
WASHINGTON – The Executive Committee of the Board of Directors
of the U.S.- Ukraine Business Council (USUBC) has just approved
Cisco Systems as the 41st member of the Council.

Scott Blacklin, Vice President, Emerging Markets – Public Sector,
who works out of the Washington office informed the Council
that Cisco Systems was ready to join the U.S.-Ukraine Business
Council. Scott will represent Cisco on the board.

Another contact in Washington would be Ned Cabot, Business
Development Manager, Strategic Initiatives. Richard Mach,
Manager, Business Development, located in the California office
will also work with the Council. In Kyiv the Council will be working
with Oleg Bodnar, head of the Cisco office, and Valeriy Fischuk,
government relations representative.

Cisco (CSCO) is the leading supplier of networking equipment
& network management for the Internet (www.cisco.com).

Cisco Systems is the 19th new member for the U.S.-Ukraine
Business Council in the last eight months. The Council’s goal is
to double its membership in 2007. 
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8. INVESTORS YIELD TO PROFIT POTENTIAL OF UKRAINE
Buyers Look Past Risk And Snap Up Offices; Retail on the Horizon

By Sara Seddon Kilbinger, The Wall Street Journal
New York, New York, Wednesday, August 15, 2007

Ukraine has caught the eye of real-estate investors chasing higher returns.
Roughly $293.75 million in commercial real-estate deals were transacted in
the country in the first half of 2007.

Almost all — $231.25 million — were office sales, with retail accounting
for the rest. This compares with $497.2 million in deals for all of last
year and $22 million in 2005, according to real-estate advisory firm Jones
Lang LaSalle. More than 90% of this year’s deals were in the capital, Kiev.

One of the most active buyers is London & Regional Properties. The
London-based real-estate investor and developer has acquired three
properties in Kiev — an office, a shopping center and a warehouse — since
entering the market in March. It also intends to develop real estate there.

“Central Europe has got very expensive, which is why we started looking at
Russia last year. Our presence in Ukraine is an extension of that strategy,”
says Max Fowles-Pazdro, head of Central and Eastern European acquisitions at
London & Regional, based in London. “We’ve invested $2 billion in Russia in
the past 18 months and would like to do the same in Ukraine.”

London-based real-estate asset manager Invesco Real Estate is also looking
to invest in Kiev, says Paul Kennedy, head of European real-estate research
at Invesco.

The firm would like to buy two or three Kiev properties in the next 18
months for its Central European Fund II. Invesco will also consider buying
developments before they are completed as well as joint ventures with local
partners, says Dr. Kennedy.

The yields are tempting. Good-quality office and retail properties can
generate as much as 10%, says Jones Lang LaSalle, compared with less than

5% in many Western European markets. (The yield is the annual percentage
return, expressed as the ratio of annual net income to the capital value of
a property.)

But the high yields in Ukraine reflect the higher risk, due to political
instability and continuing problems with corruption. Last year, former Prime
Minister Pavlo Lazarenko was sentenced to nine years in prison by a U.S.
court for extortion, fraud and money laundering through U.S. banks.

According to Mykola Orlov, a partner in Kiev-based law firm Sayenko
Kharenko, foreign investors are often better off working with a local
consultant than joining forces with a local partner. A local partner can
take advantage of a foreign investor in a number of ways, he says, including
by siphoning off funds.

Another obstacle for investors is the market’s opacity, with many deals
completed off market for undisclosed sums, says Nick Cotton, managing
director of real-estate advisory firm DTZ Holdings PLC in Kiev.

Such challenges aren’t deterring many would-be investors. Asset-management
firm Catalyst Capital LLP intends to enter the Ukraine market this year in
conjunction with a local partner whose interests range from brick making to
insurance, says Kean Hird, managing partner of Catalyst Capital’s
emerging-markets arm in London.

The firm’s push into Ukraine is “a natural extension” of its activities in
Central Europe, he says. Catalyst Capital will focus initially on Lviv —
because it is near the Polish border — before moving onto Kiev, he says.
“It’s a very good time to go into the market as it is still very
undersupplied,” says Mr. Herd.

“While we don’t have a target in terms of how much we plan to invest there,
we will initially develop industrial stock, such as sheds near the airport
or major roads. We are also interested in developing supermarkets, ideally
with international anchors. While consumer spending is still quite low, it
is increasing all the time.”

Private consumption — the main driver of economic growth — rose 18% last
year, up from 12% in 2005, according to DTZ. As a result, international
retailers are starting to consider Ukraine. German retail giant Metro AG
opened five cash & carry stores last year, according to spokesman Martin
Brüning.

“What we see is a growing middle class with more disposable income, which is
the driving force behind our expansion into Central and Eastern Europe,” he
says.

Metro has opened 13 stores in Ukraine since it entered the market in 2003
and intends to open more this year, he says. Turnover in its Ukraine stores
reached Euro615 million ($837 million) last year, almost twice the Euro338
million of 2005. The company is also considering launching its Real
supermarket chain in Ukraine next year, he adds.

Retail space is still thin on the ground, making the market ripe for
development: Kiev has just 290,000 square meters, similar to Warsaw in 1999.
There are a number of plans in the pipeline, according to DTZ, including a
130,000-square-meter store that will mark Ikea AB’s foray into Ukraine.

The hotel sector, while fledgling, is also growing. Hilton Hotels Corp. will
arrive in Kiev in 2009 and is exploring opportunities in several other
cities according to Nicola McShane, Hilton’s European communications
director.
——————————————————————————————
Write to Sara Seddon Kilbinger at sara.seddon-kilbinger@dowjones.com

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9. WILLIAM KLEIN, NEW DEPUTY COUNSELOR FOR ECONOMICS
AT THE U.S. EMBASSY IN KYIV, ASSUMES HIS POSITION TODAY

 
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007
 
WASHINGTON – William (Bill) Klein, is the new Deputy Counselor
for Economics at the U.S. Embassy in Kyiv. He is assuming his new
position at the U.S. Embassy in Kyiv today. Bill is taking the position
previously held by J. P. Schutte.             
 
The U.S.-Ukraine Business Council (USUBC) held a briefing with
Deputy Counselor Klein at their offices in Washington on Thursday
evening of this week.  A wide range of business and economic topics
of interest to U.S. businesses active in Ukraine were discussed.
 
William (Bill) Klein is a career member of the U.S. Foreign Service. 
Bill’s first tour in the Foreign Service took him to Embassy Kyiv in
2000, where he worked on trade and intellectual property issues in the
Economic Section and subsequently in the Consular Section.

Most recently, Bill served as Chief of the Political/Economic Section

at the U.S. Embassy in Mumbai, India, where he worked on U.S./Indian
civil nuclear cooperation, market access for U.S. financial services
companies and other issues.

Prior to arriving in Mumbai in 2004, Bill was assigned to the U.S.
Embassy in Tel Aviv, Israel, as an Economic Officer.   While there,
he also served temporary tours of duty at the U.S. Embassy in Doha,
Qatar, during Operation Iraqi Freedom and later as Acting Economic
Chief at the U.S. Consulate in Jerusalem.  

Prior to joining the Foreign Service, Bill worked as an investment banker
in Germany for 13 years.  From 1987 to 2002 he was head of derivative
products at Schroeder Muenchmeyer Hengst & Co, a Frankfurt-based
private bank that is now part of the UBS Group. 

From 1993 to the year 2000 he was managing director and head of capital
markets at the Landesbank of Saxony in Leipzig, a new bank that was
founded in former East Germany after German reunification.  In Leipzig,
Bill was responsible for the bank’s bond and equity underwriting, funding
and trading activities.

A native of North Ogden, Utah, Bill holds a Bachelor’s Degree in History
and Mass Communication from the University of Utah and the equivalent
of Bachelor’s and Master’s Degrees from the Freie Universitaet in Berlin,
Germany. 

He speaks German, Russian and Hebrew.  He is married to Celine d’Cruz, 
a native of Mumbai, India, who works as co-coordinator for Slum and
Shack Dwellers International, an NGO that works with the urban poor in
many countries in Asia, Africa and Latin America.

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10. UKRAINE WINS $118M CONTRACT TO SUPPLY 96
ARMOURED PERSONNEL CARRIERS (APC) TO THAILAND

Associated Press (AP), Kiev, Ukraine, Thursday, August 16, 2007 

KIEV – Ukraine has won a US$118 million contract to supply 96 armored
personnel carriers to Thailand, Prime Minister Viktor Yanukovych said
Thursday.

Yanukovych told reporters that eight other countries, including Canada,
China and Russia, had put in bids to supply the Thai armored forces,
according to his press service.  He did not say when the vehicles -called
BTR-3E1s- would be shipped.

Thai Defense Minister Boonrawd Somtas said last week that the army favored
the Ukrainian vehicles because the bid was the cheapest of the nine bidders.

“The Canadian vehicles are excellent, but we would get only half of the 96
vehicles we will get from Ukraine. It’s like buying Japanese cars over
European cars,” Somtas was quoted as saying by the Bangkok Post

newspaper.

After the 1991 Soviet breakup, Ukraine inherited a sizable weapons industry
and it remains a major producer of arms including missiles, aircraft and
tanks.

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11. U.S. FEDERAL RESERVE BOARD APPROVES STATE EXPORT-
IMPORT BANK OF UKRAINE TO ESTABLISH REP OFFICE IN NY

Federal Reserve Board, Washington, D.C., Friday, August 17, 2007

WASHINGTON – The Federal Reserve Board on Friday announced the
approval of an application by The State Export-Import Bank of Ukraine,
Kiev, Ukraine, to establish a representative office in New York, New York.

Attached is the Order relating to this action. Attachment (27 KB PDF):
http://www.federalreserve.gov/BoardDocs/Press/orders/2007/20070817/attachment.pdf
———————————————————————————————–
http://www.federalreserve.gov/BoardDocs/Press/orders/2007/20070817/default.htm
———————————————————————————————–
AUR FOOTNOTE:  The State Export-Import Bank of Ukraine, with total
consolidated assets of approximately $3.7 billion, is the sixth largest
commercial bank in Ukraine and provides wholesale and retail banking
services through a network of domestic branches. The bank is wholly
owned by the government of Ukraine and operates as a commercial bank
in addition to promoting trade by and with Ukrainian companies.
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12. FAST TRACK TO EASTERN EUROPE’S FUTURE

Nick Thorpe, BBC NEWS, UK, Saturday, August 18, 2007

The railways of Eastern Europe are going through a period of great
upheaval including sudden privatisation and modernisation, following
years of neglect. Nick Thorpe took a rail trip through the region to see for
himself.

The lady in the brown dress held up the Tihany express. “Please wait!” she
called, as she scuttled down the platform, plastic bottle in hand. “The
children are thirsty.”

The pot-bellied signalman breathed the sigh of a man used to taking orders
from women all his life, and sat down heavily on a bench, his red cap
catching the late afternoon sun like a Balkan woodpecker.

The lady filled the bottle from a tap on the platform, hurried back to the
train, handed the water in through the window and waved to the signalman.
He blew his whistle and the train continued, hooting round Lake Balaton,
like an ancient iron goose.

I have witnessed many such scenes this summer on the railways of
Eastern Europe: the solidarity of passengers with one another, the
leniency of ticket collectors and railwaymen.

Despite the general poverty of the railways, the decay and delay, there
is what I can only describe as an old-fashioned socialism on the
railways of Eastern Europe, which the roads have never had.

People feel the train is genuinely theirs. You notice it most in summer,
beside the Baltic Sea in Poland, Lake Balaton in Hungary or anywhere
where the train is part of the people’s holiday.

Children still wave at strangers and strangers cannot resist waving back.
Perhaps that is also why urban youth spend so much effort spraying their
strange designs on the carriages.
SEARCHING FOR A NEW MODEL
But this is a time of great change on the tracks of Eastern Europe.

The rolling stock is 25 years old on average – the locomotives and carriages
and freight wagons – and companies are competing to replace them.

The cargo arms of the big state rail companies are being sold off and, in
some countries at least, are already flexing new, private muscles.

This year the rail freight market was liberalised throughout the European
Union and in 2010 passenger traffic will follow. Each country is trying to
avoid the mistakes made by others.

EU money is providing an important boost and so is the increasing
congestion on the roads. The number of lorries on Polish roads alone
has tripled in the past three years.

“Europe has shifted its centre of gravity eastwards,” says Janusz
Piechocinski, director of the Transport Consultants Group in Warsaw,
“and we can all gain from the pool of experience here”.

To open the vast markets of the former Soviet Union and Asia, he offers a
model: British finance, German logistics and Polish experience in crossing
the eastern borders.

For now, those borders present a major headache to freight companies.
There are two different kinds of documentation, even two different widths
of track (the Russian is wider).

Now President Putin has signalled his intention to privatise the vast
Russian railways.
EU FUNDING
“Will EU players be allowed to participate or only the Germans?”
Piechocinski asks. He is full of questions.

“In a globalised world is there any sense in keeping Hungarian, Czech and
Polish railway companies or would it make sense to put together an alliance
of them to cut costs and restructure?

“Why concentrate so much EU money on high-speed trains and trans-
European railway corridors, when it might be better spent on modernising
trains and tracks used by most of the population?

“Why is privatisation stagnating in western Europe, but moving ahead so
fast in the east?”

The Poles began privatising their freight transport three years ago and the
first private passenger train will run this autumn. They have also been the
most successful of the East Europeans in tapping EU funds so far.

Above all, Piechocinski believes in the future. “We’ve entered a period of
20 years of prosperity and growth,” he says.
‘SLOW BUT SAFE ‘
And in Prague, Ales Ondruj, the marketing director of Czech Railways, is
also optimistic. “Last year we had three million more passengers than in
2005,” he says.

The new super-city Pendolino express has shaved hours off the route from
Prague to Ostrava in the east. But he laments the years of neglect.

“The age of the trains is not the main problem, but the absence in eastern
Europe of the kind of constant upgrading and modernisation you see in the
west.”

“We may be slow, but we’re safe,” says Zbigniew Szafranski of the Polish
rail company, PKP, when I ask about the ponderous progress of my
intercity train from Warsaw to Gdansk.

He explains that the wooden sleepers under the first 40 miles (64km) of
that line are almost destroyed.

In places, the train is only allowed to travel at 30 miles an hour (50kmph).
While the modernisation of north-south routes would be more important
for Poles, EU money is focused more on east-west routes.

He dreams of 180-mile-per-hour trains between Warsaw and Gdansk,
cutting the journey time from five to three hours.

On the train two teenage lads make room for me in an already crowded
carriage. They are on their way to a wind-surfing camp in Hel – don’t
laugh – it is a rather pretty spit of sand, stretching out into the Baltic
Sea.

Will East European railway hospitality survive privatisation?

One can only hope.
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http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/6951746.stm
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13.  BRITISH COMPANY TO MANAGE GEORGIAN RAILWAYS

RIA Novosti, Moscow, Russia, Thu, August 16, 2007 

MOSCOW – Georgia will transfer the management of its railway network
to U.K.-based Parkfield Investment Funds for 89 years, the country’s
Economic Development Minister Giorgi Arveladze said Thursday.

The Georgian Cabinet approved draft government instructions earlier in the
day on transferring the government’s 100% share in the Georgian Railway
company to attract investment.

Arveladze said at least $1 billon would be invested in the project in the
first decade, the bulk in the next three to four years. The minister said
the project could help enhance the capacity of the railway network.

“The government would be unable to invest such large sums in the sector

in such a short period,” the official said. Arveladze said an agreement with
the investor was nearing completion and would be signed within the next
two weeks.

Georgia’s railway network stretches over 1,575 kilometers (1,000 miles)

and includes 45 tunnels and 1,714 bridges.
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LINK: http://en.rian.ru/world/20070816/71938790.html
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14.  KYIV MUNICIPAL TRANSPORT RECEIVES EBRD FINANCING
Major upgrades of Metro, Bus and Trolleybus Passenger Transport

European Bank for Reconstruction and Development (EBRD)
London, United Kingdom, Friday, August 17, 2007

LONDON – In its first long-term financing for municipal transport in
Ukraine, the European Bank for Reconstruction and Development is
providing Euro100 million to municipal transport companies Kyiv
Metropolitan (metro) and Kyiv Pastrans (buses and trolleybuses).

A Euro40 million loan to Kyiv Metropolitan will finance up to 15 new metro
trains, which will operate on the Syretsko-Pecherska Line, while a Euro60
million loan to Kyiv Pastrans will finance up to 225 new trolley-buses and
up to 125 diesel buses and associated infrastructure.

40 per cent of each loan will be syndicated to commercial banks DEPFA
Investment Bank Ltd, Dexia Crédit Local Dublin Branch and HYPO
Investmentbank AG.

In the rapidly growing Ukrainian capital with 2.7 million residents, the
financing should significantly improve efficiency and overall quality of
local transport, stressed Kamen Zahariev, EBRD Director for Ukraine.

According to him, with this transaction EBRD continues to support
environmentally clean and sustainable public transport alternatives to
increased private car usage.

“The project builds on the EBRD’s expertise in structuring new
infrastructure projects in partnership with municipalities, providing an
example that other financially sound transport companies and municipalities
in Ukraine and the region can follow”, said Oxana Selska, EBRD Senior
Banker,.

Technical co-operation funds, provided by the governments of France and
Italy, have been used to help the companies to prepare technical-feasibility
studies, develop long-term business plans, conduct financial audits and
develop pilot public service contracts between the city and the companies.

Such contracts will be instrumental in helping to establish a transparent
structure and in fostering the development of new standards for the
provision of public transport. Additional technical co-operation advice will
be provided to the City on electronic ticketing system.

Leonid Chernovetsky, Mayor of Kyiv, said the city’s strong economy is a
result of good local businesses and growing foreign investment, and to boost
this further, the City needs to improve local transport infrastructure.

“The EBRD has a good reputation for working with local municipalities in
Central and Eastern Europe, and we want to build on that to achieve our
objectives”, he added.

The European Bank for Reconstruction and Development is the biggest
financial investor in Ukraine. As of the end June 2007 it had committed over
EURO2.9 billion through more than 140 projects.
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15.  UKRAINE’S ROAD TO EUROPE NEEDS MORE TRAFFIC RULES

ANALYSIS AND COMMENTARY: By John Marone
Kyiv Post Staff Journalist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, August 13, 2007

The city of Kyiv is planning to expand its Metropolitan, or system of
underground and surface trains, before the year 2012, when Ukraine will
host the European football championship together with Poland.

What a relief for pedestrians and motorists alike!

The estimated cost has been set at 3 billion dollars. This is a lot of money
for a country that can barely afford to pay its soldiers and teachers, but
the capital wants to be ready for all the football fans expected to arrive
with their pockets full of money.

As it stands now, traffic jams and road rage are the number one turn-off for
foreign visitors.

Along with the significantly expanded public transportation, there are also
plans to launch lots of brand new hotels across the country. Private
investors should get a nice return, as a lack of hotel space is one of the
main obstacles to the country’s great tourist potential.

But first and foremost, the hosting of the European championship is
Ukraine’s chance to show the world that it’s not a post-Soviet backwater.

 
The Orange Revolution put the country on the map a few years back.
The positive PR continued when Ukraine hosted the Eurovision song
contest in 2005.

Canceling visa requirements for wealthy countries has also helped. All this
is good news for a country that increasingly wants to be known as a
full-fledged part of Europe, rather than the site of the world’s nuclear
accident.

Accidents, however, are still a very grim part of the Ukrainian reality, and
the most serious are related to transportation. For example, the country has
been plagued most recently by a series of high-profile train wrecks, but
thankfully the casualties have been small.

A much higher death toll is attributable to car accidents, which is why
expanded public transportation in the capital is highly welcome. Car crashes
claims thousands of lives every year in Kyiv Region alone.

Most Westerners are used to frightening figures on auto-related deaths, but
the situation in Ukraine merits closer study.

There aren’t many places in Europe or North America where you can be hit by
a speeding sedan while strolling down a central street. These aren’t bank
robbers or rambunctious teenagers but everyday citizens who believe that
pedestrians should move or be hit.

The Ukrainian capital is not only plagued by traffic jams on the roads but
double parking on the sidewalk. Sure, more parking structures need to be
built, but it’s far from certain that people won’t continue to park where
they feel like anyway.

And the police, who are otherwise infamous for finding a reason to fine
law-abiding motorists, do nothing to maintain order. It’s as if they prey on

the innocent and fear anyone in an expensive car.

It used to be that people would complain about the obnoxious drivers of
luxury vehicles with special license plates or blue sirens on their roofs.
But as the number of cars on Ukrainian roads increases exponentially along
with disposable wealth, so does the number of negligent drivers.

It’s nice to see Ukrainians enjoying a little freedom. Freedom, however,
comes with responsibility. One of the biggest surprises for analysts of the
eastern bloc was how quickly people here seemed to go from being
communist robots to cutthroat capitalists.

Clearly, the cold war created some pretty inaccurate stereotypes. Society

in Ukraine and other East-bloc countries is indeed changing, but cultural
values are more persistent than one might think.

Judging from the last 15 odd years of independence, it appears that many
people in former Communist societies don’t want to make the rules of the
game more fair, but rather to enjoy the unbridled privileges of the elite.

The shifting scene of Ukraine’s roads nicely reflects transformations in the
nation as a whole. Ukrainians appear to see car ownership as a release from
all the rules of public transportation without considering the new
obligations involved.

Public transportation is for pensioners, alcoholics and those who are still
trying to find a way to finance a Western lifestyle.

Private cars are for those intent on expressing their identities long
suppressed by Soviet society. Not all drivers in Kyiv are obnoxious, but
road bullies are the single negative impression that almost every visitor
complains about.

The same analogy of unleashed individualism could be made about housing

in Kyiv as well – the rich snatch up pristine reserves to build their mansions,
the poor remain in slumping blocs of flats, and the slowly emerging middle
class takes out bank loans to afford new apartments.

It’s precisely this rising middle class that offers the most hope. They work
hard and raise families, whom they don’t want to see run down at an
intersection. Once someone owns property he is more likely to respect the
property of others. Insurance companies will also become more common,
offering compensation for loss and lobbying better legislation.

But this transformation in ownership and attitude is going to take time.
More importantly, it’s going to have to be anchored in law.

As it stands now, Ukraine’s lawmakers are often the biggest offenders. The
absence of respect for the law, or rules in general, is in fact the heart of
the problem.

The way people drive is just a reflection of their overall attitudes toward
rules. Sure, there are plenty of obnoxious drivers in America, and the
country’s love affair with the car is symptomatic of questionable
individualism and consumerism in itself, but violators are caught and
punished.

As Ukrainians buy and use more cars, the laws in the country are going to
have to change and be enforced. In the mean time, what a great idea to
develop more public transportation.

Besides the environmental concerns, Kyiv’s infrastructure was just not
designed for so many autos. Many European countries have already started
investing in more trains and trolleys.

As Ukrainians continue to embrace greater integration with Europe, they
might reflect on how important civil society and legislators were in
creating modern European society. My feeling is that many younger
Ukrainians are already beginning to change their attitudes.

On the other hand, some features of Soviet society, such as reliance on
public transportation, are proving to be more progressive than many still
believe.

If Kyiv really wants to show off in 2012, a good start would be more decent
public transportation and a little more courtesy on the part of drivers of
private cars.
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http://www.eurasianhome.org/xml/t/opinion.xml?lang=en&nic=opinion&pid=817

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16.  POLAND’S MEAT PRODUCER DUBA’S OPERATIONS IN
UKRAINE GAIN MOMENTUM, PLANS DISTRIBUTION CENTRES

Polish News Bulletin, Warsaw, Poland, Friday, Aug 17, 2007

WARSAW – The meat producer PKM Duda’s Ukrainian operations are

gathering momentum, the Puls Biznesu daily reports. Having just taken over
yet another slaughter house, the company will now build distribution centres.

Duda’s latest purchase is the Ekspres slaughter house, for which the Polish
company paid ZL6.6m, while the potential value is estimated at ZL20-25m.
“This was a good deal. The factory will become our main slaughter facility
in Ukraine, with processing capacity of 250,000 carcasses,” said the
company’s president Maciej Duda, who has ambitious plans for Ukraine.

He wants to create an enterprise resembling PKM. Already owning [most

likely leasing – AUR] 15,000 hectares of land, a fodder mixing plant, a
slaughter house and a meat processing plant, Duda is now thinking about
distribution. The Polish company plans to lease distribution centres from
its Ukrainian partners. The first one will be set up in L’viv, and the second
in Kiev. 
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17.  EURO 2012 SETS UKRAINE TOUGH TEST

By Helen Fawkes, BBC correspondent in Kiev
BBC NEWS, UK, Sunday, August 12, 2007

The industrial heart of eastern Ukraine was glowing in a beautiful
sunset as local heroes Shakhtar Donetsk took on their arch-rivals
Dinamo Kiev.

Yet the Soviet-era stadium looked small and a bit too old-fashioned
for Shakhtar Donetsk, one of the country’s top teams.

There are concerns that Ukraine may not be ready in time for the
Uefa European Football Championships in 2012, which it will co-
host with Poland.

It will be the most prestigious project that Ukraine has ever
co-hosted, and it is expected to attract thousands of fans. But there

are fears that the politicians here do not have their eye on the ball.

Donetsk is one of four host cities in Ukraine. All of the venues were
built by the communists, and they are well past their best, needing to
be replaced or renovated.

Ukraine has faced one political crisis after another and now the
country is preparing for a general election.

“The most difficult thing will be to change the attitude, to make the
authorities look in the direction of football and start paying
attention to the country’s infrastructure,” says Dmitriy Chigrinsky,
a player for Shakhtar Donetsk and Ukraine. “It’s no secret that our

country needs serious modernisation,” Dmitriy adds.
INFRASTRUCTURE WOES
Ukraine is one of the poorest places in Europe. Now it has to spend
billions of dollars preparing for the championships.

With vast distances between the Euro 2012 venues, transport is a
top priority. Ukraine’s trains are cheap but not exactly fast, as the
network has not changed much since Soviet times.

A journey from Gdansk, one of the Polish venues, to Donetsk can
take more than 40 hours.

And the alternatives are not much better. Ukraine only has one
motorway and many roads are in desperate need of repair. The
country’s airports are all due to be modernised, and there is also a
real shortage of hotels.

As if all that was not bad enough, there is a row over the venue for
the final. It is supposed to be held in the centre of Kiev, but a half-

built shopping centre looms right next to the stadium gates – and the
developers are refusing to knock it down. If it stays, the final will
have to be played elsewhere.
OPTIMISM
Despite all these problems there is a confident mood at the
headquarters of Ukraine’s Football Federation in the capital. “If I
wasn’t an optimist I would never have dared to start such a project.

“Some people called it naive, they were sure it would be impossible
for us to win the right to co-host the event. But we did win,” says
Hryhoriy Surkis, the president of Ukraine’s Football Federation.
“We are now working hard to turn the fairy tale into reality,” he says.

There are some positive signs. Two brand-new stadiums are starting to
take shape in eastern Ukraine. One of the venues is being funded by
Ukraine’s richest man, the football-mad billionaire Rinat Akhmetov,
for his team Shakhtar Donetsk.

Designed by a British architect, it will have a glass roof and
promises to be one of the best stadiums in Europe.

The Ukrainian President, Viktor Yushchenko, has said that a
co-ordination council will be set up with Poland.

It is due to meet in September to discuss a range of issues including
joint infrastructure projects, and it will apply for support from the
European Union.

Even so this former Soviet republic still faces a massive task to
prepare for Euro 2012. It will be a race against time to complete all
the work needed.

“Ukrainians are very proud to be co-hosting the championships. I
am certain we can do it and we can do it well.

“This is about more than just football. If the tournament goes well
then it could well boost our chances of becoming part of the EU,”
says a Ukrainian football fan, Maxim Simoroz.

With so much at stake the country cannot afford to fail.
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LINK: http://news.bbc.co.uk/go/pr/fr/-/2/hi/europe/6938922.stm
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18.  CEC REGISTERS TYMOSHENKO BLOC FOR RADA ELECTIONS

Ukrainian News Agency, Kyiv, Ukraine, Wed, August 15, 2007

KYIV – The Central Election Commission has registered the Bloc of Yulia

Tymoshenko  for the Verkhovna Rada elections. All 14 members of the
commission voted for the decision.

Before the vote, the CEC had put the issue of bloc registration on the
agenda to meet the proposal of CEC member Mykhailo Okhnedovskyi. All

450 candidates nominated by the bloc are now registered for the parliament
race.

As Ukrainian News earlier reported, the District Administrative Court of
Kyiv ordered the CEC on August 14 to register the BYT for the early
elections. CEC representatives had two days to appeal the court decision.

The commission said on the August 10 night that the bloc had had to submit
correct registration documents by 23:59 on that day.

The commission postponed its registration on August 9 because the
documents did not state addresses of candidates correctly (house number,
street name, apartment).

The election campaign started on August 2, and the vote is scheduled for
September 30.
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19.  UKRAINIAN PARLIAMENT ON “DEFROST”

ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Journalist, based in Ukraine
Eurasian Home, Moscow, Russia, Monday, August 6, 2007

Ukraine’s parliament has long been characterized by frozen deadlocks.
Lawmakers who opposed former President Leonid Kuchma were always
in a cold war with his supporters, while under President Viktor Yushchenko,
the legislature became divided between the Orange and the Blue.

These stalemates have occasionally burst into fiery rhetoric and even heated
tussles in the session hall, but the usual atmosphere in the nation’s
legislature has been one of icy relations between opposing sides, and thus
few laws being passed.

When bills did get approved, you could be sure that a backroom deal had
been cut, with the two agreeing parties dividing up some spoil only to
immediately resume their hostility thereafter.

More recently a somewhat different climate has taken hold in the Verkhovna
Rada, a defrosting of traditional blocs and possibly another chance at the
formation of a grand coalition on the horizon. The politician most
immediately to be affected by the thaw is parliamentary speaker Oleksandr
Moroz, whose surname translates as ‘frost’.

Together with his Socialist Party, Mr. Frost, or Moroz, looks destined to be
the country’s next spent political force. This isn’t the first time that a
powerful Ukrainian politician has melted from the scene.

For example, Viktor Medvedchuk, who rose to head the influential
administration of President Kuchma, was reduced to obscurity after failing
to get into parliament last year.

Like Medvedchuk, Moroz developed a party with a limited voter base into a
pivotal power broker. Through shrewd maneuvering, Moroz ended up with
the deciding share between the eastern or Blue bloc of Prime Minister Viktor
Yanukovych and the Communists, and the more Western-oriented Orange
parties represented by President Yushchenko’s Our Ukraine and Yulia
Tymoshenko’s ByuT faction.

Moroz had sided with Yushchenko and Tymoshenko during the country’s
pro-Western Orange Revolution, which unseated Kuchma and demonized
Yanukovych.

But following the March 2006 parliamentary elections, Moroz joined a
parliamentary coalition with Yanukovych’s Regions Party and the Communists,
which then went about assuming much of Yushchenko’s executive authority.

Now, however, the Socialists could end up out in the cold. The snap
elections called by Yushchenko earlier this year are almost certain to take
place, and polls consistently show that the Socialists won’t make it over
the three-percent hurdle.

Oleksandr Moroz has done everything in his power to derail the elections,
but the fact is that he doesn’t have much power left. For one thing,
Yushchenko, with the help of Tymoshenko, managed to dismiss the current
parliament, leaving Moroz without a job.

During a Socialist Party Congress held in Kyiv on Saturday, Moroz called the
snap elections a ‘criminal sham’, for which the opposition – i.e. Yushchenko
and Tymoshenko – will have to answer.

But Moroz’s position is weakened by the fact that his coalition partner the
Regions Party, which controls the most seats in the legislature, has already
agreed to take part in the elections.

And when Moroz tried to show that he still wielded some power by calling for
an emergency session of the parliament late last month, the Regions didn’t
support him.

In short, the Socialists’ dismal showing in opinion polls make them useless
as political partners.

And the president’s team has been busy putting the last nails in the
Socialists’ coffin by hitting top party member where it hurts. Socialist
Interior Minister Vasyl Tsushko fled to Germany, supposedly for health
reasons, after his misguided raid on the Prosecutor-General’s Office in May.

Tsushko’s attempt to keep Yushchenko from firing the prosecutor-general
did nothing but making him liable to criminal charges. He’s since returned
to Ukraine, but his political future looks grim.

Then there is Socialist Transport Minister Stanislav Nikolaenko, who is
under a barrage of fire from the Orange camp following a string of rail
accidents this year.

Socialist privatisation chief Valentina Semenyuk looks likely to take the
blame for the country’s poor privatisation record, which may cause Ukraine
to be downgraded by international rating agencies.

All of these politicians, together with Moroz, will feature prominently on
the Socialists’ election list – for better or worse. Moroz tried to bolster
party morale on Saturday by denying that the Socialists had betrayed their
values when they joined a coalition with Regions.

But clearly the party has seen better days.

Socialist heavyweights like former Interior Minister Yury Lutsenko and Yosef
Vinsky, who left the party last summer, have already realigned themselves
with Yushchenko and Tymoshenko respectively. Others may follow, joining
either the Regions or the Communists to stay in power.

Once considered a rare example of political integrity for his unswerving
opposition to President Kuchma, Moroz has been labelled a traitor and
political opportunist by his former Orange allies. As a leftist, he also
enjoys little support among business interests.

Only last summer, analysts were predicting that Moroz, having ditched
Yushchenko, would go about empowering the parliament to eventually
sideline Yanukovych. It was Moroz, after all, who had most vehemently
supported the constitutional reforms that made Yushchenko vulnerable
to grabs for his authority.

As parliamentary speaker, he was well positioned to play the president off
against the premier, while beefing up his legal authorities along the way.

However, now Moroz’s political power has begun to melt, possibly signaling
a warming of relations between Ukraine’s main two political blocs.

Regions has traditionally enjoyed support in Ukraine’s Russian-speaking
east, where attitudes toward Moscow, the Russian language, the Russian
Orthodox Church, etc, are markedly different than in western Ukraine. But
the east also represents heavy industry and the tycoons who have built their
fortunes on it.

Regions Party moneybags Rinat Akhmetov, Ukraine’s richest man, has led
his peers in seeking better relations with western financiers to obtain
badly needed investment.

Metalinvest, a steel and mining holding owned by Akhmetov recently landed
a $1.5 billion loan, the biggest credit ever received by a private Ukrainian
company, from a group of European banks.

More recently, the tycoon has taken steps to clean up the image of the party
he belongs to. During its party congress on Saturday, the Regions
unanimously refused to include lawmaker Oleg Kalashnikov, who last year
roughed up a television journalist at a Regions rally, on its ballot list.

Analysts say Akhmetov and more moderate members of the Regions have taken
charge in the party and are improving relations with the Yushchenko camp.

Ever since the Orange Revolution, the country’s politics have been shaped by
the standoff between west and east, between Viktor Yushchenko and Viktor
Yanukovych. Now the ice blocks may be melting.

It’s too early to tell, as Yushchenko is still smarting from the last time
he tried to cut a deal with the Regions. After agreeing to endorse
Yanukovych as premier last summer, the president saw his ratings plummet
and watched helplessly as Yanukovych challenged his every authority.

Much will depend on the September 30 election results. But for Oleksandr
Moroz and his Socialists, the writing is already on the refrigerator door,
right near the dial that reads ‘defrost.’
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20. UKRAINIAN PRESIDENT WANTS NEW PARLIAMENT
TO ABOLISH IMMUNITY, BENEFITS FOR MP’S

5 Kanal TV, Kiev, in Ukrainian 0905 gmt 18 Aug 07
BBC Monitoring Service. United Kingdom, Saturday, Aug 18, 2007

Ukrainian President Viktor Yushchenko has said that he welcomes the Party

of Regions’ initiative to abolish immunity from criminal prosecution and
significant benefits not only for MPs, but also for the president and the
prime minister.

He added, however, that Prime Minister Viktor Yanukovych’s proposal to call
an emergency sitting of the dissolved parliament to pass a relevant law is
nothing but a campaign “show”.  Yushchenko stressed that the matter should
be the first thing to be addressed by a new parliament.

Yushchenko was speaking at a briefing in Velyki Sorochyntsi in Poltava
Region on 18 August where he is attending the traditional Sorochyntsi fair.
The briefing was broadcast live by the private 5 Kanal TV channel.

Asked whether the president is prepared to get stripped of his own immunity
and to limit his benefits, Yushchenko said that he views this process as “a
form of cleansing the powers that be” and that no state official should be
exempt from this.

“I do believe that we should give a clear explanation as to who should enjoy
what benefits. There should not be a single state official in the country
who is exempt from public scrutiny or public control as to expediency of
such benefits, including the president of course, including a representative
of any profession,” he said.

Yushchenko warned his political opponents against reducing his initiatives
to a farce. He criticized the Party of Regions and Prime Minister Viktor
Yanukovych for calls to hold an emergency sitting of the dissolved
parliament to abolish benefits and immunity for state officials ahead of the
30 September election.

“At the height of public discussion regarding the benefits, they are
proposing that an illegitimate sitting of the Supreme Council [parliament]
be held, making a show of this. So I would like to make it very clear to the
prime minister and other people behind this: I am serious about abolishing
the benefits, for me, this is not a show. I am not campaigning today,” he
said.

Yushchenko believes that this issue should be addressed by a new parliament
and called on representatives of all political forces to join efforts and
implement his proposals.

“I need partners, I need allies for pushing this issue through the Ukrainian
parliament. This is why I am calling on everyone, regardless of colour,
regardless of election hype with which the political arena is obsessed
today, colleagues, let’s show respect for our society, let’s behave as
respected politicians and let’s say that, if the issue of MP immunity has
completely preoccupied our minds.

We should express our joint stance that after the month of September the
Ukrainian parliament will hold a meeting exclusively dedicated to the issue
of benefits for whoever is involved and MP immunity, as the second issue.
This is the first thing we should do,” he said.
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21.  UKRAINE’S 2007 PARLIAMENTARY ELECTIONS WILL
ALSO DECIDE UKRAINE’S NEXT PRESIDENT
President Yushchenko lays groundwork for re-election

ANALYSIS & COMMENTARY: By Taras Kuzio
Eurasia Daily Monitor, Volume 4, Issue 160
The Jamestown Foundation, Wash D.C., Thu, August 16, 2007

Ukraine’s September 30 parliamentary elections will decide the country’s
next government and most likely determine the outcome of the presidential
elections two years later.

As seasoned Zerkalo nedeli commentator Serhiy Rakhmanin pointed out, the
“pre-term parliamentary campaign gives [President Viktor] Yushchenko a great
opportunity to launch the presidential campaign ahead of time.”

The conflated election campaigns have led to electoral populism. Yushchenko
and his Our Ukraine-Self Defense (NUNS) coalition have launched a campaign
to remove parliamentary immunity, a campaign issue last raised by President
Leonid Kuchma in an April 2000 referendum.

The Party of Regions, which now dominates parliament, replied by calling for
the end of immunity for all officials – president, prime minister, judges,
and deputies.

These moves should discourage corrupt oligarchs and businessmen from

running for parliament and help separate business and politics. But the
anti-oligarch election rhetoric does not square with the continued presence
of oligarchs in both the Party of Regions and NUNS.

Yuriy Lutsenko’s People’s Self Defense, Our Ukraine’s ally in the 2007
elections, was established by an oligarch, Davyd Zvannia. The Privat
oligarchic group, allied to former senior Yushchenko adviser Oleksandr
Tretyakov, has eight representatives in the NUNS list.

The leaders of Self-Defense claim to have reformed. Lutsenko admitted, “Yes.
We are the only political force that publicly accepted its mistakes,
including the choice of personnel, and cleaned out and renewed ourselves.”
The party removed businessman Petro Poroshenko, whose name is associated
with the corruption charges that led to the September 2005 political crisis.

According to Zerkalo nedeli, the NUNS election list was heavily influenced
by Lutsenko and Ihor Kolomoysky, the controversial head of Privat. Thus the
changes look more like musical chairs than cleaning house.

NUNS needs to regroup after Our Ukraine’s poor performance in the 2006
elections, when it obtained fewer seats than in 2002. The coalition also
needs reinforcement to compete with the Yulia Tymoshenko bloc (BYuT),
another veteran of the Orange Revolution.

Finally, NUNS needs nation-wide support. Anti-oligarch and anti-corruption
sentiment mobilized many western-central Ukrainians to participate in the
Orange Revolution.

These sentiments are not popular among voters in eastern Ukraine, who have
had no qualms about voting for a convicted felon supported by oligarchs — 
Prime Minister Viktor Yanukovych.

Yanukovych’s Party of Regions has always included corrupt and discredited
former Kuchma officials and oligarchs, such as Renat Akhmetov, who has
ignored calls by the president to not run for parliament. Akhmetov ranks
seventh on the Party of Regions election list.

NUNS has unequivocally stated that its election and future coalition partner
is the BYuT. Senior NUNS leaders have publicly refuted suggestions that they
may enter a coalition with the Party of Regions. Lutsenko has stated that
NUNS would only enter a grand coalition if BYuT also agreed.

Yushchenko has been less clear in his intentions. Following the 2006
elections Yushchenko sent two close allies to separately negotiate with BYuT
and the Party of Regions, a strategy that he may repeat this year.

The parliamentary coalition established after the 2007 elections will
heavily influence the outcome of the 2009 elections. With the prime minister’s
position strengthened following constitutional reforms in 2006, the office
is an even better launching pad for the presidency.

However, Yushchenko has proven unable to work with two of his three prime
ministers, Yulia Tymoshenko and Yanukovych, because he sees both as
potential competitors for the presidency. Ideally, Yushchenko would prefer
that neither of them become Ukraine’s next prime minister.

The Party of Regions is leading the polls, so the Orange camp is battling
for second place. If NUNS places second, Yushchenko would likely chose a
non-threatening technocrat, such as former prime minister Yuriy Yekhanurov,
for the job.

If BYuT finishes second, as seems likely, Yushchenko could again be tempted
to negotiate a grand coalition with the Party of Regions. His only condition
would be that Yanukovych not be prime minister.

Yushchenko has reportedly reached such an agreement through Yekhanurov,

who has always been close to the Party of Regions, and presidential secretariat
head Viktor Baloga.

This scenario poses three risks for Yushchenko.

[1] First, forcing NUNS into a grand coalition with the Party of Regions
might be more palatable than in 2006, as it would not include the Communists
and Yanukovych would not be prime minister.

However, it would split NUNS and prevent the planned post-election
unification of its constituent members into a pro-presidential party and
vehicle for Yushchenko’s re-election in 2009.

[2] Second, it would push BYuT into opposition, where it has always felt
rather comfortable. Tymoshenko was the only one of four opposition leaders
who did not stand in the 2004 elections.

If Tymoshenko was in opposition in 2007-2009, during which time Yushchenko
supported a grand coalition, the president could lose orange voters.

[3] Third, the Party of Regions could renege on any agreement to stand aside
in 2009, and members could submit their own presidential candidate.
Alternatively, they might find it difficult to persuade their voters to back
Yushchenko, after seven years of hostile propaganda against him.

Yushchenko is convinced that the 2007 elections are the key to his
re-election in 2009. But not repeating the same strategic mistakes made
against Tymoshenko and Yanukovych in 2005-2006 will also play an

important part in deciding Ukraine’s future.
—————————————————————————————-
(Zerkalo nedeli, August 11-17; Inter TV, August 6; Ukrayinska pravda,
August 2, 13) (LINK: http://www.jamestown.org)
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22. ANNA BESSONOVA SWEEPS FIVE GOLDS FOR UKRAINE

People’s Daily Online, Beijing, China, Sat, August 18, 2007

BANGKOK – Ukranian beauty Anna Bessonova shone in the rhythmic

gymnastics finals in Bangkok on Friday by sweeping rope, hoop, ribbon,
clubs and group competition (ropes 5) titles at Bangkok Universiade.

Russia took the other gold in the group competition (hoops 3 plus clubs 2).

Chinese divers also showed their superpower by winning all the three events
they competed on Friday.

Olympic champion Peng Bo started the day with the victory in the men’s 3m
springboard, with teammate and world champion Luo Yutong pocketing the
silver.

Hours later, Peng paired Zhang Xinhua, the overnight winner of the men’s 1m
springboard, to nail down the men’s 3m springboard synchronized gold.

Olympic silver-medalist on women’s 10m platform Lao Lishi had a steady
performance to take the gold medal of the event in Bangkok…………

———————————————————————————————–
LINK: http://english.people.com.cn/90001/90779/6242707.html
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
23. SOROCHINSKAYA YARMARKA (FAIR) HELD IN UKRAINE 
Russia Today, Moscow, Russia, Sunday, August 19, 2007

Sorochinskaya yarmarka, or fair, has been the subject of an opera by famous
Russian composer Modest Mussorgsky and immortalised in literature by
Nikolay Gogol.

Vendors from all over Eastern Europe go there for five days to mingle
and sell goods – Georgian wines, Ukrainian shirts, Russian dolls, and even
African ostriches.

The fair is rich on haggling, arguing and definitely politics, especially on
the eve of another election campaign.

President Yushchenko, the country’s most famous beekeeper, looks down at
the bustling crowds from numerous billboards, while supporters of the Prime
Minister are promoting their party right next to a dummy bear, a popular
photo opportunity.

It seems that it hasn’t changed much since the 19th century.

Sheep, pots, wedding pies, kitchenware, and no map of where exactly these
things are – vendors may have done it on purpose to restore the original
atmosphere. They were a mess but apparently so vibrant and colourful that
famous writer Nikolay Gogol glorified them in his novel.

Living in Russia, he was writing about Ukraine, the village where he was
born and the fair held there.

Actor Bogdan Chernavsky plays the part of the great Russian writer at the
fair. “I think we should drop the discussions if he was a Russian or a

Ukrainian writer. Of course he was Russian, he was writing in Russian
language and is known to the world as a Russian writer. But of course he
has Ukrainian roots, this is his village,” explained Bogdan Chernavsky.

And it remains a melting pot of Slavic cultures.

Natalya came from Russia to visit the fair when she was 13 years old.
Impressed by the fair back then, her family moved to Poltava for good.
Now she’s singing in Ukrainian to an audience from all over the world.

“When we came here for the first time, we tried to get as close to the stage
as possible. The culture fair was amazing, the costumes so bright and
beautiful that I thought I want to be a part of it too. And my dreams came
true,” said Natalya Dyachenko, singer at the Sorochinskaya fair.
——————————————————————————————–
LINK: http://www.russiatoday.ru/news/news/12655
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
24. UKRAINE: HOLOCAUST STORY INSPIRES PRIDE, DOUBT

By Natasha Lisova, Maria Danilova, and Randy Herschaft
Associated Press Writers, Kyiv, Ukraine, Sunday, August 19, 2007

ISPAS, Ukraine  – It is a story of courage and kindness during the first
tragic days of the Holocaust in Ukraine – the tale of how a village rose up
against an anti-Semitic gang of killers to save its Jewish neighbors.

A researcher stumbled on the inspiring story this year. Now some of
Ukraine’s Jewish leaders plan to raise a monument, host a delegation of
students from Israel and stage a ceremony Wednesday honoring this small
farming community in western Ukraine.

But 66 years later there are conflicting accounts of what happened in Ispas
during that terrible summer of 1941, when the Nazi invasion of the Soviet
Union triggered an outbreak of anti-Semitic violence.

Residents and one survivor say the 2,000 villagers risked their lives for
the sake of about 100 Jews, an account supported by some leaders of
Ukraine’s Jewish community and the scholar who uncovered the tale.

But another survivor says there were no heroes in Ispas. And a leading
Holocaust expert says that most of the Jews of Ispas were killed by fellow
villagers.

At the start of World War II, Ukraine had a history of anti-Semitism, from
the pogroms of the czarist era to the silent discrimination of Soviet times.

As Nazi troops and their Romanian allies began occupying western territories
under Soviet rule, the ancient bigotry boiled over into cases of local
residents robbing and killing their Jewish neighbors.

It was an early outburst of the savagery that became the Holocaust.

More than 2,100 Ukrainians have been cited by Israel’s Yad Vashem Holocaust
Memorial for rescuing Jews during the Holocaust, but these were mostly
individual acts of heroism. The Ispas story – if it could be confirmed –
would be a unique case of an entire community in Ukraine defending its Jews.

A leader of Ukraine’s Jewish community has led a drive to honor the village,
including celebrations in which Israeli students are expected to
participate.

“We are very proud that our village didn’t allow bloodshed, didn’t allow
Jews to be killed,” Vasylyna Kulyuk, a frail 80-year-old from Ispas, said in
an interview. She described two of her former Jewish classmates – Geyntsya
Rozenberg and Rifka Gerstel – with tears in her eyes.

“We were at the same class and we shared bread, “she said. “I would like so
much at least to exchange letters with those girls. Only let them be alive.”

Rozenberg apparently perished during the war. But Rifka Gerstel survived.
And she does not recall Ispas fondly.

Gerstel, now 79 and living outside Tel Aviv, told the AP that her neighbors
did stop a gang of anti-Semites from killing the village’s Jews – but then
some villagers turned around and robbed the Jews and drove them out of
their homes.

“They came into the house and took everything,” Gerstel said in a telephone
interview. “We had such a beautiful house. We had a cow. We didn’t say
anything, because we were afraid for our lives. We knew that the Ukrainians
slaughtered all the Jews in one of the villages nearby.”

The next day, she said, the villagers marched the Jews away. Gerstel said
she spent the rest of the war in a ghetto in central Ukraine. Her father,
brother, grandfather and a baby nephew all died. “I suffered, I suffered
very much,” she said, her voice choking.

Told that Ispas was being honored for the treatment of its Jews, she said:
“They don’t deserve any monuments or any prizes.”

There is no dispute over what happened in most of that area – now western
Ukraine – that summer. Thousands of Jews were murdered and their houses
looted.

Those still alive were rounded up by Romanian troops and deported eastward
to camps and ghettos. Some of them survived the war, but many were executed
or died of starvation and disease, according to Radu Ioanid, director for
International Archival Programs at the U.S. Holocaust Memorial Museum.

Israel Minster, another member of Ispas’ long lost Jewish community, has a
different recollection.

Minster, now 86 and living near Haifa, was staying in a neighboring village
at the time of the attack, but other survivors later told him that the
ethnic Ukrainians had rallied to the defense of the village Jews.

“In the neighboring village … they cut everybody into pieces, they killed
everyone,” Minster said by telephone. “I was told that when they (the thugs)
came to Ispas, our village, the elder – I know him, he is a decent (man) –
he didn’t allow it.”

Minster said he was unaware of looting in Ispas, but heard through friends
and neighbors that some residents of nearby areas had pillaged Jewish homes.
“Not everybody helped: some helped and some looted,” he said.

Mykhailo Andryuk, head of the Ispas village council, said residents of his
small community did not loot their neighbors’ homes. Gerstel’s house, he
speculated, might have been on the outskirts of the village and attacked by
the retreating anti-Semitic gang.

Several Ukrainian villagers who were children in 1941 said they vividly
recollect that day.

Tanas Shtefyuk was 15 when he heard that the killers were approaching and
hurried home to spread the news. Shtefyuk recalled that his crippled father,
Ivan, summoned the village elders.

They made a difficult and dangerous choice, Shtefyuk said, to stand together
against the marauders and protect the Jews who lived among them.

Nadiya Vinnytska’s father, Volodymyr, was the village priest. He ran from
his house to confront the attackers barefoot, Vinnytska said, because he
didn’t have time to put on his shoes.

“Calm down. I will not allow you to kill Jews,” the priest said, according
to Vinnytska, now 83. “They are the same people as us.”

Alexei Shtrai, the independent Israeli scholar who uncovered the story,
regards Ispas as an inspirational tale. “I believe the fact of saving Jews
took place; we just have to prove it,” Shtrai said.

The database of victims’ names at Israel’s Yad Vashem, based mainly on
testimony given by survivors and relatives, often years after the event,
lists four people as having died in Ispas. Between 17 and 46 villagers
perished elsewhere, the records show, suggesting – perhaps – that some
Ispas Jews survived the initial pogroms.

Yad Vashem’s encyclopedia of Jewish communities of that area, says most of
Ispas’ Jews were killed by the local population while the rest were deported
eastward.

“The fact that the priest tried (to save the Jews) – I can believe it,” says
Jean Ancel, a leading scholar on Holocaust in the area who co-edited the
encyclopedia.

“But the main question is – were the Jews of Ispas saved or not? The answer
is clear and without any doubt: they were murdered by their neighbors, by
the local population,” he said in an interview.

Scholars say some 1.4 million of Soviet Ukraine’s 2.4 million Jews died in
Holocaust. Today about 400,000 live in Ukraine. No Jews remain in Ispas,
residents say.

Oleksandr Feldman, head of the Kiev-based International Center for
Tolerance, has urged President Viktor Yushchenko to honor Ispas for its
actions during the Holocaust. The center plans to lay a stone in Ispas to
commemorate the event.

Estee Yaari, spokeswoman for Yad Vashem said the story of Ispas needs
to be investigated further.

“These are complex issues and events that took place and in the absence of
conclusive documentary evidence or conclusive testimonies it is difficult to
know exactly what happened,” she said.
————————————————————————————————
Maria Danilova reported from Kiev and Randy Herschaft from New York.
Associated Press Writer Matti Friedman in Jerusalem contributed to report.
————————————————————————————————
LINK: http://www.wtopnews.com/index.php?nid=105&sid=1225048
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
25. THE  NEW NUCLEAR THREAT

COMMENTARY: By Dick Lugar and Sam Nunn
The Wall Street Journal, New York, NY, Sat, Aug 18, 2007; Page A6

Next week, we will travel to Moscow to mark the 15th anniversary of the
Nunn-Lugar Cooperative Threat Reduction Program, a piece of legislation that
has been the foundation of a decade and a half of U.S.-Russian cooperation
to reduce and secure the Soviet Union’s Cold War-era nuclear arsenal.

As the U.S. continues to adjust to a dangerous new era — in which the
greatest security threat is the possibility of a terrorist nuclear attack —
expanding and replicating this model of international partnership is
essential to our national defense.

Back in 1991, when we first proposed working with the Russians to secure and
reduce their weapons, the skeptics were incredulous. Some detractors called
it “aid to the Soviet military.” Our response was clear and direct. The
nuclear threat was changing, and our defense strategies had to change along
with it.

As the curtain was falling on the Cold War, the possibility of an accident
or a nuclear attack by a rogue state or terrorist group was rising. The new
nations of Ukraine, Kazakhstan and Belarus claimed possession of Soviet
nuclear weapons stationed on their soil:
One nuclear power was becoming four.

In Russia, 30,000 nuclear warheads, tons of nuclear, biological and chemical
materials and thousands of unemployed weapons scientists were scattered
across 11 time zones.

The closed society that had sheltered the Soviet Union’s nuclear secrets had
now been ripped wide open — leaving an arsenal of the deadliest weapons on
earth without adequate protection.

The premise of Nunn-Lugar was simple: The security of nuclear weapons

and materials in the former Soviet Union was directly related to our own
security, and we could not act unilaterally. We had to cooperate with the
former Soviet states.

Russia saw cooperation as in its interest as well — to ensure a secure
nuclear stockpile, to help meet arms control treaty obligations and to
return Soviet warheads to Russian soil. Out of these new mutual interests, a
partnership was born. We believe the partnership’s results speak for
themselves.

Ukraine, Kazakhstan and Belarus — for a time, the world’s third, fourth,
and eighth largest nuclear powers — have voluntarily given up their nuclear
weapons. In doing so, they have set a powerful and courageous example for
the rest of the world.

Moreover, today thousands of ex-Soviet weapons scientists are working in
civilian jobs. In addition to the weapons that have been secured, 7,000
nuclear warheads have been deactivated — more than the combined arsenals

of Britain, France and China — along with hundreds of nuclear submarines,
missiles and bombers.

Today, Russia is assuming more responsibility for sustaining the work we
have done together, contributing millions of dollars to major projects such
as the elimination of its massive chemical weapons stockpile.

The Nunn Lugar Program has been recognized, especially in the wake of Sept.
11, 2001, as one of the most essential elements in preventing terrorists
from acquiring weapons of mass destruction.

In light of the accumulated experience of 15 years of successful joint work,
Presidents Bush and Putin should expand Nunn-Lugar and extend it outside the
boundaries of the former Soviet Union to help other countries dispose of
dangerous weapons and materials.

We have already begun: In 2002 the American and Russian governments,

working with the Nuclear Threat Initiative, a private U.S. organization, spirited
more than 100 pounds of nuclear weapons-grade material out of Serbia.

Since 2004, our two countries have been working together to remove
stockpiles of highly enriched uranium from other unsecured facilities around
the world.

Many governments are now quietly inquiring about Nunn-Lugar assistance with
dangerous weapons issues. Through Nunn-Lugar, Albania recently got U.S. help
to destroy a secret Cold War-era stockpile of chemical weapons.

Nunn-Lugar expertise could also be used in North Korea, should Pyongyang
agree to give up its nuclear weapons, or in Southeast Asia, if help is
requested there to secure pathogens and viruses. Joint U.S.-Russian efforts
would confer international legitimacy on these often sensitive missions.

By demonstrating that Russians and Americans are willing to work together
and go anywhere in the world at any time to eliminate a threat, the two
sides can help avert new disasters and add a powerful international tool for
keeping weapons of mass destruction out of terrorist hands.

The former Soviet Union was the starting point for this program, but it must
not be the endpoint. Terrorists seeking nuclear weapons or weapons material
will not necessarily go to where there is the most material, but to where
the material is most vulnerable.

We must expand and extend the Nunn-Lugar concept to help secure and
eliminate dangerous weapons and materials wherever they are in the world.
———————————————————————————————–
Mr. Lugar is a member of the Senate Foreign Relations Committee and Mr.
Nunn, a former senator, is co-chairman and chief executive officer of the
Nuclear Threat Initiative.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================

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AUR#859 Aug 20 Macroeconomic Update Report By SigmaBleyzer; Govn’t Energy Policy; Cisco Systems; Real Estate Investors; Euro 2012; Abolish Immunity

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
                        
ACTION UKRAINE REPORT – AUR – Number 859
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., MONDAY, AUGUST 20, 2007
INDEX OF ARTICLES  ——
Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article
1.  UKRAINE MACROECONOMIC SITUATION – AUGUST 2007
“Ukraine – Macroeconomic Situation – August 2007”
Monthly Analytical Report: By Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, August 20, 2007

2CARDINAL RESOURCES SLAMS GOVN’T ENERGY POLICY
By Elisabeth Sewall, Assistant Editor
Kyiv Post, Kyiv, Ukraine, Wednesday, Aug 15 2007

3“YANUKOVYCH AND GAS PRICE CAPPING”
OP-ED: By Taras Kuzio, Kyiv Post, Kyiv, Ukraine, Wed, Aug 15, 2007

4FORWARD GARRISON; UKRAINIAN NATURAL GAS OLIGARCHS
IN VIENNA” Dmytro Firtash uxexpectedly moved company headquarters
Heti Vilaggazdasag website, Budapest, in Hungarian 9 Aug 07
BBC Monitoring Service, United Kingdom, Friday, Aug 17, 2007

 
Joint venture of RosUkrEnergo and Naftohaz Ukrayiny
Kommersant-Ukraina, Kiev, in Russian 16 Aug 07
BBC Monitoring Service, United Kingdom, Sat, Aug 18, 2007
 
6.  KAZKH, CHINESE LEADERS SIGN GAS PIPELINE AGREEMENT
Associated Press (AP), Astana, Kazakhstan, Sat, August 18, 2007
 
7 CISCO SYSTEMS JOINS U.S.-UKRAINE BUSINESS COUNCIL 

Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007

 
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007

14KYIV MUNICIPAL TRANSPORT RECEIVES EBRD FINANCING
Major upgrades of Metro, Bus and Trolleybus Passenger Transport
 
15UKRAINE’S ROAD TO EUROPE NEEDS MORE TRAFFIC RULES
ANALYSIS AND COMMENTARY: By John Marone
Kyiv Post Staff Journalist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, August 13, 2007
 
16POLAND’S MEAT PRODUCER DUBA’S OPERATIONS IN
UKRAINE GAIN MOMENTUM, PLANS DISTRIBUTION CENTRES
Polish News Bulletin, Warsaw, Poland, Friday, Aug 17, 2007

17EURO 2012 SETS UKRAINE TOUGH TEST
By Helen Fawkes, BBC correspondent in Kiev
BBC NEWS, UK, Sunday, August 12, 2007

18CEC REGISTERS TYMOSHENKO BLOC FOR RADA ELECTIONS
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 15, 2007

19UKRAINIAN PARLIAMENT ON “DEFROST”
ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Journalist, based in Ukraine
Eurasian Home, Moscow, Russia, Monday, August 6, 2007

20UKRAINIAN PRESIDENT WANTS NEW PARLIAMENT TO
ABOLISH IMMUNITY, BENEFITS FOR MP’S
5 Kanal TV, Kiev, in Ukrainian 0905 gmt 18 Aug 07
BBC Monitoring Service. United Kingdom, Saturday, Aug 18, 2007

 
ALSO DECIDE UKRAINE’S NEXT PRESIDENT
Yushchenko lays groundwork for re-election
ANALYSIS & COMMENTARY: By Taras Kuzio
Eurasia Daily Monitor, Volume 4, Issue 160
The Jamestown Foundation, Wash D.C., Thu, August 16, 2007
 
22ANNA BESSONOVA SWEEPS FIVE GOLDS FOR UKRAINE
People’s Daily Online, Beijing, China, Sat, August 18, 2007
 
Russia Today, Moscow, Russia, Sunday, August 19, 2007
 
24UKRAINE: HOLOCAUST STORY INSPIRES PRIDE, DOUBT
By Natasha Lisova, Maria Danilova, and Randy Herschaft
Associated Press Writers, Kyiv, Ukraine, Sunday, August 19, 2007
 
25THE  NEW NUCLEAR THREAT
COMMENTARY: By Dick Lugar and Sam Nunn
The Wall Street Journal, New York, NY, Sat, Aug 18, 2007; Page A6
=======================================================
1
UKRAINE MACROECONOMIC SITUATION-AUGUST 2007

“Ukraine – Macroeconomic Situation – August 2007”
Monthly Analytical Report: By Olga Pogarska, Edilberto L. Segura
SigmaBleyzer Emerging Markets Private Equity Investment Group,
The Bleyzer Foundation, Kyiv, Ukraine, Monday, August 20, 2007

SUMMARY —–
[1] In January-June, real GDP grew by 7.9% year-overyear (yoy) underpinned
by strong external and domestic demand. On the supply side, the industrial
sector regained its position as the leading driver of economic growth.

[2] Thanks to faster growth of budget revenues and under-execution of
expenditures, the consolidated budget was in surplus of 1.75% of period
GDP over the first half of the year.

[3] Due to a sluggish privatization process, the government resumed issuance
of external and domestic debt. As a result, the stock of public and publicly
guaranteed debt grew by 5% month-over-month (mom) to $15.7 billion at the
end of June. . In June, traditionally a low-inflation month, the consumer
price index (CPI) unexpectedly grew by 2.2% mom, which translated into
13% growth in annual terms.

[4] The growth of forex-denominated loans has been losing speed in the last
two months. However, commercial banks credit portfolios remain biased
towards forex-denominated loans.

[5] Though Ukraine’s export performance has been strong during the first
five months of the year, the FOB/CIF merchandise trade deficit widened
to $3.7 billion at the end of May.

[6] According to Ministry of Economy estimates, the size of the shadow
economy in Ukraine declined to 27% of GDP in 2006.
ECONOMIC GROWTH —–
According to operative data of the State Statistics Committee, the Ukrainian
economy posted robust growth in the first half of 2007 as real GDP grew by
7.9% year-over-year (yoy). In fact, real GDP growth in June accelerated to
7.8% yoy, up from 7.7% yoy in the previous month.

However, due to an increased statistical base, cumulative growth was
slightly lower than in the first quarter of the year (8% yoy). Following an
impressive evolution of Ukraine’s main macroeconomic indicators, most
experts revised their GDP forecast upwards for 2007.

According to the recent Consensus Forecast, GDP is expected to grow
by a real 6.9% yoy in 2007, while the previous forecast was 6.4% yoy.

A more favorable external environment, faster than expected growth of
consumption and investment, and the strong resilience of the Ukrainian
economy to energy price shocks and political instability were among the
main reasons for improved expectations.

GDP growth was supported by robust value added growth in industrial
and service sectors, particularly wholesale and retail trade, as well as by
strong expansion of construction.

Unlike last year, industry was the most important source of economic
expansion in the first half of 2007. Value added generated by this sector
explained almost one third of GDP growth over the period.

However, performance among industries was uneven. Manufacturing, which
accounts for 18% of total value added, reported impressive 15% yoy growth
in 1Q 2007 and a slightly lower but solid 13.7% yoy in the first half of the
year.

High international prices for ores and strong domestic demand stimulated a
4% yoy increase in the mining sector over the first half of the year.

At the same time, production and distribution of electricity, gas and water
reported a 6% yoy decline in value added in 1Q 2007 on the back of weaker
electricity demand due to an unusually warm winter this year.

Though industrial performance improved in the second quarter, it was
insufficient to compensate for the previous quarter decline. As a result,
industry reported a 0.7% decrease in value added over the first half of the
year.

Over January-June, construction demonstrated an 11.8% yoy increase in
value added on the back of a number of infrastructure and repair projects
and strong demand for commercial property and industrial buildings.

At the same time, demand for residential housing weakened due to high real
estate prices and tighter bank requirements on borrower’s financial stance.
This may explain the deceleration in value added growth in
construction in the second quarter from 13.3% yoy in 1Q 2007.

Value added in wholesale and retail trade grew at an accelerating speed.
Expanding by 15.5% yoy in January-June, this sector explained about ¼ of
GDP growth over the period. Sector performance is closely linked to robust
growth in industry, construction, as well as imports on the one hand and the
population’s growing propensity to consume on the other.

Rather unexpectedly, agriculture reported an acceleration of value added
growth in 1H 2007 compared to January-May. Due to May-June’s draught,
the government downgraded its grain harvest forecast. As a result, further
deterioration of agricultural performance was expected.

However, hot weather during these months resulted in the early start of the
harvest campaign, causing a surge in value added growth. At the same time,
this statistical effect is expected to rapidly diminish in the coming
months.

On the expenditure side, real GDP growth was driven by vigorous private
consumption growth, which advanced by 14.7% yoy in 1Q 2007. Though
it is a deceleration from 20.2% yoy growth in 1Q 2006, private consumption
grew at a faster-than-expected rate.

Though real household income growth decelerated to 11.1% in 1Q 2007,
down from 16.1% yoy in 2006, private consumption was fueled by booming
consumer credit.

The continuing credit boom, robust corporate borrowing from abroad, the
need to renovate production capacities and to introduce energy-saving
technologies were among the major reasons of the impressive 24.4% yoy
increase in gross fixed capital formation, up from 19.9% yoy in 1Q 2006.

At the same time, its contribution to total GDP growth was smaller than in
the respective period last year due to a contraction in inventories.

Meager growth in government consumption (up by 0.8% yoy) in 1Q 2007 may
reflect significant under-spending of state budget programs over the period.
Robust growth of consumption triggered rapid growth of imports, which
accelerated to 12.9% yoy from 10.7% yoy in 1Q 2006.

Despite a lower contribution from domestic demand and faster growth of
imports, a higher economic growth rate in 1Q 2007 compared to the
respective quarter last year (8% yoy vs 4.1% yoy respectively) was
achieved thanks to stronger export performance.

Favorable external conditions helped compensate for the harmful effect
of a 36% increase in prices for imported natural gas on energy-intensive
export-oriented metallurgy and chemicals.

At the same time, this impact was less painful than in the previous year as
the price increase in 2007 was lower and, more importantly, was anticipated.

Together with strong investment demand in the main destinations for
Ukraine’s machine-building exports (mainly Russia), this triggered almost
5% yoy real growth of exports of goods and services.

In June, the growth of industrial production accelerated slightly to 10.4%
yoy from 9.9% yoy in May. However, due to statistical base effects, in
cumulative terms it continued to decelerate, expanding by 11.8% yoy in
1H 2007 down from 12.1% yoy in January-May.

Benefiting from strong consumption and favorable external conditions,
machine-building and food processing reported acceleration in output
growth to 23.3% yoy and 13.8% yoy, respectively.

However, output growth in the metallurgy slowed to 13.9% yoy over the
first half of the year compared to 15.8% yoy over January-May. Slower
growth in metallurgy may be attributed to the downward tendency of
international steel prices that resumed in June this year, though the effect
of a growing statistical base was also present.

Together with slower growth in chemicals, mining and other non-metal
minerals, this caused total industrial production to decelerate.

The likely worsening of the external environment in the second half of the
year and political uncertainty in the fall (due to parliamentary elections
and formation of the new government) will result in further moderation of
industrial production and economic growth.

The government forecasts industrial production and GDP growth to
decelerate to 8.5% yoy and 6.5% yoy respectively in 2007.
FISCAL POLICY —–
According to the Ministry of Finance, consolidated budget revenues grew by
a nominal 31.6% yoy over the first half of the year to UAH 95 billion ($18.8
billion), while expenditures grew at a slower rate of 22.6% to UAH 90
billion ($17.8 billion).

Since the execution rate of budget expenditures notably improved in June,
the consolidated budget registered a smaller surplus of 1.72 % of period
GDP, down from 3.5% of GDP in January-May.

At the same time, for the corresponding period last year, there was a
deficit 0.5% of GDP. This year’s favorable fiscal performance was achieved
due to improved tax collections and tight control over expenditures.

In particular, robust domestic consumption (of both domestically produced
and imported goods and services) spurred tax revenues to the state budget
as collections from VAT and excises advanced by about 33% yoy and 23%
yoy in nominal terms.

At the same time, the financial stance of Ukrainian enterprises continued to
improve on the back of rapid economic growth and strong export performance.
This caused corporate profit tax receipts to move up by a nominal 27% yoy.
In sum, tax revenues to the general fund of the state budget were 4.6% above
target for January-June.

In June, expenditures from the general fund of the state budget were
over-fulfilled by 2.1%. However, due to significant under-spending in the
pervious periods, they were still 7.5% below the planned amount. Tight
control over expenditures may be attributed to a sluggish privatization
process.

For the first half of the year, the State Property Fund of Ukraine allocated
UAH 1.3 billion ($250 million) to the state coffers, which represents just
12.5% of the targeted amount for 2007.

Considering the government’s decision to privatize state enterprises by
putting up only minority stakes for auctions and keeping a 50%+1 share of
potentially the most interesting enterprises (such as telecommunication
monopoly Ukrtelecom and Odessa port plant), the forthcoming parliamentary
elections and subsequent formation of the new government, it is unlikely
that the targeted privatization proceeds will be raised.

To secure enough funds to finance all government obligations (the state
budget deficit is targeted to reach 2.5% of GDP in 2007), the government
resumed both external and domestic issuance of public debt.

In June, the government placed $0.5 billion eurobonds. As a result, external
public debt increased to $12.4 billion at the end of June; however, due to
large debt redemption in the previous months, external public and publicly
guaranteed debt was still 1.5% lower than at the beginning of the year.

The placement of UAH 0.8 billion ($160 million) of government domestic
bonds and issuance of state mortgage institution bonds under state
guarantee in the amount of UAH 275 million ($54.5 million) resulted in
accumulation of both domestic public and publicly guaranteed debt (an
accumulation of the latter was not observed for about 10 years).

As a result, the stock of total public and publicly guaranteed debt grew by
5% mom to $15.7 billion. The funds received from the new debt issuances
and still significant consolidated budget surplus funds are accumulated on
the government accounts with the State Treasury.

As of the end of June, cash balances on the government account with the
Treasury amounted to about UAH 22 billion ($4.4 billion), which is
equivalent to more than 7% of the total money supply. If rapidly disbursed,
these funds may create significant inflationary pressures.

However, we believe the government will continue to pursue tight control
over budget expenditures, despite the forthcoming parliamentary elections
in late September, to alleviate financing risks at the end of the year.
MONETARY POLICY —–
In 2006, consumer inflation was primarily driven by a pass-through of energy
prices. The beginning of 2007 saw some downward revision of utility and
housing tariffs. In addition, expectations of a further service tariffs
adjustment this year did not materialize as the authorities decided to
postpone the energy price pass-through to consumers.

Though the annual CPI remained in double digits, these, together with a high
base effect, gave reason to be optimistic that year-end inflation will be
below 10%. Moreover, January-May inflation of just 1.9% year-to-date made
the government forecast of year-end inflation at 7.5% quite realistic.

However, in June (traditionally a low-inflation month), CPI unexpectedly
grew by 2.2% mom, which translated into 13% in annual terms.

June’s acceleration was primarily attributed to faster growth in food prices
(6.7% yoy in June compared to 2.8% yoy in May), the weightiest component
of CPI (about 60%), and the likely spill-over of producer price growth (the
producer price index accelerated to 20.6% yoy in June, up from 20.2% yoy
in May).

The methodological weaknesses of accounting for new-crop-vegetables, a
gradual shift in the consumption structure towards more-expensive products
(due to a steady growth of real household income over the last three
years), and apprehensions concerning lower-than-expected grain harvest due
to droughty weather during May-June were the primary reasons for this
acceleration.

High international prices on crude oil drove up domestic prices for fuel to
12.5% yoy in June compared to 8.2% yoy a month before.

However, due to price growth deceleration for other non-foods (such as
transport vehicles, textiles and apparels, furniture, audio-, video- and
computer equipment), the non-food price index remained unchanged at
1.8% yoy.

On an increasing statistical base, the service price index continued to
decelerate, reporting 48.8% yoy higher service tariffs than last year (down
from 49.5% yoy a month before).

Due to recent acceleration, we expect inflation to be around 10% this year.

Faster growth of monetary aggregates growth in recent months also
contributed to acceleration of consumer inflation. In particular, the growth
of the monetary base sped up to 38.5% yoy in June 2007 from 36.9% yoy in
May and just 17.5% yoy in December 2006.

Considerable expansion of the monetary base is attributable to massive NBU
interventions on the interbank forex market, underpinned by robust export
performance and particularly the inflow of foreign capital in the form of
FDI and external borrowing by private sector.

For the first half of the year, net NBU purchases of foreign currency
reached $3.4 billion. As the NBU kept the unofficial hryvnia peg to US
dollar (and is unlikely to change its foreign exchange policy before the end
of the year), this resulted in accumulation of gross international reserves
to $25.9 billion at the end of June, which is enough to cover 4.8 months
of future imports of goods and services.

The steep upward trend of the monetary base and acceleration of deposit
growth to 45.1% yoy (up from 42.3% yoy in May) were the main reasons
of rising money supply at a high speed (42% yoy in June). At the same time,
the impact of robust growth of monetary aggregates on prices was rather
moderate due to strong money demand.

In June, commercial banks continued to expand credit operations as their
growth accelerated to 75.7% yoy, up from 72.6% yoy a month before.
Strong demand for credit was underpinned by growing real disposable
income, buoyant investment activity and gradually declining credit rates.

Though in June the weighted average credit rate slightly increased to 13%
per annum (up from 12.7% pa in May), it was still lower than the average
rate of 13.7% pa in 2006.

The credit growth was led by corporate loans as they account for about two
thirds of the total credit portfolio of the banking sector and are growing
at an increasing speed (up by 59.4% yoy in June compared to 54.7% yoy a
month before).

At the same time, loans issued to households continued to decelerate, though
their growth rate remains impressive — 119% yoy in June.

By currency, robust growth of forex-denominated loans was underpinned by
aggressive external borrowing of the financial sector and a number of
acquisitions by foreign banks.

However, the growth of forex-denominated loans has been losing speed in the
last two months (the growth rate declined from 100.8% yoy in April to 97.4%
yoy in June) following the NBU tightening of reserve requirements for forex
denominated consumer loans in April and depreciation of hryvnia with respect
to other main world currencies (particularly Euro) (1).

However, this deceleration was insufficient to tangibly effect the
composition of commercial bank credit portfolios. The share of forex
denominated loans remained virtually unchanged at 51.3% at the end of June
(51.2% in April), indicating the high exposure of Ukraine’s banking system
to foreign exchange risk.
INTERNATIONAL TRADE AND CAPITAL —–
According to the State Statistics Committee of Ukraine, exports of goods
grew by 31.6% yoy in May, decelerating from 41.7% yoy a month before.

However, the deceleration is primarily attributed to the increased
statistical base (following a six month decline from November 2005 to
April 2006, the growth of exports rebounded at a strong 11.5% yoy in
May 2006).

Though the growth of imports also slowed to 31.5% yoy in May, down from
47% in April, cumulatively it continued to outpace the growth of exports.
Over January-May, exports grew by 34.4% yoy while imports grew by 35%
yoy.

The growth of exports was underpinned by a 53.5% yoy increase in exports
of machinery and transport equipment, and a 40.4% yoy and 23.6% yoy
increase in export of metals and chemicals respectively.

Robust consumption and investment demand and a price increase on
imported natural gas stimulated the growth of imports. In particular, the
value of imported mineral products grew by 33% yoy in January-May,
chemicals and machinery and transport equipment grew by 35% yoy
and 41.5% yoy respectively. As a result, the merchandise trade deficit
exceeded $3.7 billion at the end of May.

The widening foreign trade deficit is the primary cause of the increasing
current account gap this year. However, thanks to robust FDI inflow
(estimated by the NBU at $2.1 billion over January-May), the issuance
of external and domestic debt securities (with a high external demand for
the latter ones), and aggressive private sector borrowing allowed for
coverage of the CA deficit and replenishment of the NBU’s gross
international reserves.
INTERNATIONAL PROGRAMS —–
According to the Ministry of Finance, on July 20th, Ukraine and the World
Bank agreed on a Power Transmission Project with the overall objective of
improving the security, reliability, efficiency and quality of the energy
supply in Ukraine. The WB will provide a loan of $200 million for 20 years
with a 5 year grace period.

An agreement is expected to be signed by the end of this year. Currently,
Ukraine and the WB are also negotiating a $140 million “Urban Infrastructure
Project”.

At the end of July, Ukraine and the European Investment Bank (EIB) signed
an agreement, according to which the EIB will provide a ^200 million loan to
Ukravtodor, the Ukrainian road administration. The loan is granted for 20
years at EURIBOR+0.55% with a 5 year grace period for principal payments.

The funds will be directed to finance reconstruction of  “Kyiv-Chop”
motorway, which connects Ukraine with the EU countries. According to the
Ministry of Finance, this loan is the first one under a large “Ukraine’s
European Roads” project between Ukraine and EBRD/EIB, envisaging total
financing of about ^648 million for construction and repair of Ukrainian
roads.
OTHER DEVELOPMENTS AND REFORMS —
Affecting the Investment Climate According to “Governance Matters VI:
Aggregate and Individual Governance Indicators, 1996-2006″, released by
the World Bank at the beginning of July, the quality of governance in
Ukraine has notably improved since 2002. According to the report, Ukraine
achieved the most substantial progress in the area of Voice and
Accountability.

In addition, Ukraine showed further significant improvement in this area in
2006. At the same time, perceptions regarding Political Stability and the
Risk of Violence were mixed, but on average demonstrated an improvement
in 2006 compared to the previous year.

In mid-July, the government promulgated the draft of the government program
of economic and social development of Ukraine for 2008. According to the
draft, the government expects real GDP to grow by 7.2% yoy in 2008.

The government defined the main goals of economic policy in 2008 as
improving living standards of  Ukrainian citizens, increasing
competitiveness of Ukrainian goods as a precondition for sustainable
economic growth, and ensuring energy security of the country.

To realize key policy and institutional reforms, the government plans to
attract $300 million as a second development Policy Loan (DPL2) from
the IBRD.

According to the Ministry of Economy of Ukraine, the size of the shadow
economy in Ukraine was estimated at 27% of official GDP in 2006, which
is 2 percentage points lower than in the previous year. By sector, the size
of the shadow economy diminished in agriculture and manufacturing
(particularly, machine-building), while in real estate, insurance, and car
sales it continued to increase.
———————————————————————————————-
FOOTNOTE: (1) US dollar and Euro are the most preferred currencies of
forex borrowing in Ukraine. Though US dollar holds the lion share of all
forex-denominated loans, the share of Euro is also substantial. Since
hryvnia is de facto pegged to US dollar, recent depreciation of the latter
with respect to Euro and other main world currencies on the international
markets caused the respective depreciation of hryvnia.
———————————————————————————————-
Chief Economist, Edilberto Segura; Editor, Rina Bleyzer Rudkin.
———————————————————————————————-
NOTE: To read the entire SigmaBleyzer/The Bleyzer Foundation
Ukraine Macroeconomic Situation Report for August 2007 in a PDF
format, including color charts and graphics see the attachment to
this e-mail or go to the following link and click on Ukraine August 2007.
http://www.sigmableyzer.com/publications/monthly_reports
———————————————————————————————
            BULGARIA, ROMANIA AND KAZAKHSTAN
NOTE: SigmaBleyzer/The Bleyzer Foundation also publishes monthly
Macroeconomic Situation Reports for Bulgaria, Romania and
Kazakhstan. The present and past reports, including those for Ukraine
can be found at http://www.sigmableyzer.com/en/page/532.
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2. CARDINAL RESOURCES SLAMS GOVN’T ENERGY POLICY

By Elisabeth Sewall, Assistant Editor
Kyiv Post, Kyiv, Ukraine, Wednesday, Aug 15 2007

KYIV – Cardinal Resources, a privately-owned hydrocarbon production
company active in Ukraine, has publicly slammed Ukraine’s government,
arguing its energy policies run contrary to the interests of both investors
and attempts to diversify energy dependency away from Moscow.

Robert Bensh, chairman and chief executive officer at Cardinal Resources,
an independent, foreign-based gas and oil exploration and production
company that has been working in Ukraine since 1995, issued strong
criticism of a government decree in an interview released on Aug. 13 by
the US-Ukraine Business Council.

He also appealed to the US government to take measures against the
government of Ukraine if it doesn’t revoke the decree, which forces
companies with joint production-sharing agreements to sell their gas
supplies to the government of Ukraine at far below market prices.

The current rules are not only bad for business, but have adverse
consequences on the country’s efforts to gain energy independence,
contradict Ukrainian laws, and hurt the country’s bid to join the WTO,
Bensh argued.

The decree, adopted by the government in January of this year, has eaten
away at Cardinal’s revenues and other privately-owned hydrocarbon
companies operating in Ukraine.

The controversial rules were intended to boost supplies of gas on the
domestic market in order to keep prices low for cash-strapped citizens, but
they contradict the country’s laws governing foreign direct investment, as
well as global norms, according to Bensh.

In the interview, Bensh said the decree “effectively confiscates” the
natural gas produced by its subsidiary, Carpatsky Petroleum, a US
corporation, thereby harming Cardinal and preventing other Western
companies from entering joint production with state-owned gas companies.

UK-registered Cardinal raised about $20 million through an IPO on the London
Stock Exchange in 2005. It was one of the first listings on a major foreign
market by a company whose operations are based in Ukraine, but the
company’s stock has suffered due to production-right difficulties in
Ukraine.

The decree, part of the Budget Law drafted by Finance Minister Mykola
Azarov, was approved by Prime Minister Viktor Yanukovych and passed in
January 2007.

According to the decree, companies that hold joint agreements with national
gas companies in Ukraine are obligated to sell gas to the state-owned oil
and gas company Naftogaz Ukrainy at a fixed government rate of around $1.50
mcf (1,000 cubic feet) – far below the current market rate of $4.80 mcf.

According to Bensh, the rate is even below the company’s production costs.
“Ideally, we would like to see the Yanukovych government voluntarily
withdraw this law, which is contrary to the long-term interests of Ukraine
and its people,” Bensh said.

However, Bensh added that given the government’s lack of action thus far,
he doubts any changes will be brought about without intervention.

Cardinal, a major stake in which is owned by Syrian-born Ukrainian tycoon
Youssef Hares, has concluded that “much stronger action” must be taken by
those concerned about the issue, Bensh said.

He also said that this is a problem faced by every company involved in a
joint production agreement with Ukraine’s state gas companies.

Bensh said that his company normally sells its gas to industrial end-users
in Ukraine at market prices. To avoid selling gas at “uneconomic” prices,
Cardinal had been injecting its gas into storage facilities.

However, Cardinal recently learned that Ukrgazvydobuvanya, the state-
owned gas production giant, has been selling its gas without the company’s
knowledge or permission.

In Ukraine, the price for gas is established by the National Energy Price
Regulation Authority.

Bensh said that Cardinal has taken several measures to initiate a resolution
to the gas sales problem, including meeting with Energy Minister Yuriy Boyko
twice and writing letters to Yanukovych and other top officials. But none of
their efforts have produced any results.

US Ambassador William Taylor also got involved, sending a letter to Energy
Minister Boyko in March 2007 asking for a resolution, to which Boyko never
responded.

As a result, Cardinal has applied to the US government to issue a formal
demarche to the government of Ukraine.

In April of this year, Europa Oil and Gas Holdings, another private
hydrocarbon company operating in Ukraine, won a court case confirming the
company’s right to sell gas at market prices. However, the government
continues to ignore the ruling.

Ukraine currently relies on imports from Russia and Central Asia to fill the
majority of its gas needs. Most domestic production is controlled by
state-owned companies.

While privately-owned companies produce only a small amount of Ukraine’s
gas needs, their operations are potentially very lucrative and are viewed as
a way of raising investment to boost domestic production and, in turn,

reduce dependence on imports.
————————————————————————————————
LINK: http://www.kyivpost.com/business/general/27239/
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.  “YANUKOVYCH AND GAS PRICE CAPPING”

OP-ED: By Taras Kuzio, Kyiv Post, Kyiv, Ukraine, Wed, Aug 15, 2007

In May 2005, when the Yulia Tymoshenko government introduced limited
and temporary price caps on oil, President Viktor Yushchenko threatened to
remove her from office. Western observers also quickly jumped on the
bandwagon and used price capping and re-privatization as two sticks with
which to beat the Tymoshenko government.

The result has been that in some business circles and among foreign
investors the enduring memory of the 2005 Tymoshenko government is price
capping and support for mass re-privatization. Both memories are taken out
of context and are merely used by the same group of critics of Tymoshenko
who refer to her negatively as ‘populist’ (see “Whose ‘populist’ in
Ukrainian politics,” Kyiv Post, July 5).

Why then the deafening silence over the price capping on a far greater scale
of gas prices by the Viktor Yanukovych government?

Prime Minister Yanukovych told his government on July 18 that ‘his
government would never undertake populism.’ In reality, the bans on export
of grain and gas price controls are two big examples of populist price
controls introduced by the Yanukovych government to win votes.

On Dec. 19 of last year, the Anti-Crisis parliamentary coalition adopted the
2007 state budget. Article 3 of the budget law states that all enterprises
with state ownership of more than 50 percent, as well as joint ventures and
Joint Activity Agreements (JAAs) concluded with these enterprises must sell
their monthly production to a company specified by the government.

In a Jan. 16 government resolution (No. 31), Naftogaz Ukrainy was named as
the company authorized by the government.

Naftogaz became de facto the only company authorized to buy gas from JAAs
and then sell it on to the Ukrainian population. The aim of these policies
introduced by the Yanukovych government is to control the price of gas for
the population on a scale far greater than temporary oil caps in 2005.

The difference between the historic selling price of gas in Ukraine to
industrial end-users at market prices of $4.88 mcf (1,000 cubic feet) and
the fixed government price of $1.63 is more than 300 percent.

Many Western companies have opted to therefore halt all sales of gas rather
than sell at a capped unprofitable price. The new capped price does not
cover the costs of exploration, development and production, leading to lower
production and investment.

Cardinal Resources, a public limited company traded in London with a US
subsidiary, Carpatsky Petroleum, is one of a number of Western companies
which have halted all gas sales and instead placed their gas into storage.

The Yanukovych government policies have two negative outcomes.

[1] Firstly, foreign investors, such as Cardinal, have an adverse cash flow
because they cannot sell gas at market prices. To agree to sell their gas at
the capped price to Naftogaz Ukrainy would be to sell it at a loss.

[2] Secondly, Cardinal, as with other foreign investors, sees the
government’s price capping policy as particularly having a negative effect
on foreign investors. Price capping reduces the incentive for foreign
investors to come to Ukraine at a time when only 28 percent of Ukraine’s
gas demand is met by domestic production.

Government price capping of gas directly contradicts Ukrainian legislation,
such as the Civil Code and the Law on Foreign Investment. In April, Europa
Oil and Gas (Holdings) plc won their case in court of the right to sell gas
at market prices but the government continues to ignore the court ruling.
This is not the only evidence of a non-listening government.

Cardinal Resources sent letters on the gas price capping policy to Prime
Minister Yanukovych last December, to Minister for Fuel and Energy Yuriy
Boyko in March and to the CEO of Naftogaz Ukrainy in May.

Cardinal Resources failed to receive responses to two of the letters and
only a curt and non-committal reply from the Deputy Minister for Fuel and
Energy.

A March letter from US Ambassador William Taylor to Minister Boyko also
failed to receive any response. Two meetings between Boyko and Cardinal
Resources produced no results.

A July paper published by the prestigious Washington think tank, the Center
for Strategic and International Studies (CSIS), described how it was
‘extremely difficult’ for Western energy companies to obtain a foothold in
the Ukrainian market.

Western investors have the potential to make Ukraine independent in its
energy needs, thereby making Ukraine free of Russia’s monopolist and
corrupt energy relationship.

It has long been evident though that a large proportion of the Ukrainian
elites wish to maintain the status quo because they receive large rents from
the existing corrupt energy relationship with Russia. Energy corruption
therefore overrides Ukraine’s national interest and the country’s national
security.

According to Ambassador Keith Smith, author of the CSIS report, a major
factor blocking Western investment in the energy sector is ‘control of
natural resources by groups hostile to Western investors.’ The Yanukovych
government is effectively squeezing Western investors out of Ukraine,
Ambassador Smith concludes.

The two groups which benefit from these price capping policies are the
corrupt intermediary RosUkrEnergo, which, according to a Radio Free
Europe/Radio Liberty report, is the biggest money laundering operation in
Europe, and local oligarchs. Only one political force – the Tymoshenko
bloc – has consistently opposed the use of RosUkrEnergo as a middle man.

The Ukrainian population meanwhile suffers while Western investors pause,
or withdraw. Desperately needed foreign direct investment (FDI) and
technologies are directed toward governments that show themselves
amenable to international standards of economic behavior.

The Yanukovych government’s policy puts into question its stated desire to
join the WTO, establish a free trade zone with the EU and eventually join
the EU.

Price capping also puts into doubt the government’s declared interest in
attracting foreign investors and its stated desire for energy security and
independence. These policies are far more populist than anything
introduced in 2005.

The unwillingness of the Yanukovych government to respond to the concerns
of foreign investor, or to have any common courtesy in responding to the US
Ambassador, necessitates a stronger response from the US government, EU
and WTO.

A demarche should point out that the Ukrainian government’s price capping
policy is inconsistent with international norms on attracting foreign
investment, attaining WTO standards consistent with membership and the
Ukrainian government’s statements on seeking energy self-sufficiency.

A failure to change the price capping policies should warn against returning
the Yanukovych government to office after the Sept. 30 pre-term
parliamentary elections.

Ukraine’s post-election new government should be committed to three
policies: attracting foreign investment, battling corruption and energy
independence.  The Yanukovych government has proven that it has no
commitment to any of these three policies.
——————————————————————————————–
NOTE: Dr. Taras Kuzio is a Research Associate of the Institute for
European, Russian and Eurasian Studies, Elliott School for International
Affairs, George Washington University and President of the consulting
firm Kuzio Associates.
——————————————————————————————–
LINK: http://www.kyivpost.com/opinion/oped/27240/

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4.  FORWARD GARRISON; UKRAINIAN NATURAL GAS OLIGARCHS
IN VIENNA” Dmytro Firtash unexpectedly moved company headquarters

Heti Vilaggazdasag website, Budapest, in Hungarian 9 Aug 07
BBC Monitoring Service, United Kingdom, Friday, Aug 17, 2007

Dmytro Firtash, the Ukrainian owner of the natural gas sales organization
EMFESZ, Ltd doing business in Hungary -but presumably also representing
Russian interests -has moved his firms hiding in Cyprus to Vienna, Austria.

Dmytro Firtash wants to register within a short period of time his group of
firms with an annual sales volume of 4.6 billion euros at the London Stock
Exchange.

At least, this is what the 42 year-old Ukrainian businessman said to explain
why he unexpectedly moved the headquarters of his “Group FD” companies
hidden so far behind offshore corporations mainly located on the island of
Cyprus to downtown Vienna, next door to the headquarters of the Social
Democratic Party, the ruling party in Austria.

The name of Firtash was first noticed throughout the world when it was
revealed that jointly with Ivan Fursin -also a Ukrainian -and 180 other
firms registered at the same address, they own 50 per cent of RosUkrEnergo
AG in the Swiss tax shelter Zug.

This half-Russian, half-Ukrainian firm established in 2004 enjoys exclusive
intermediary rights in selling Turkmen natural gas in Ukraine; nevertheless
its activities and the identity of its owners have been a mystery ever since
the existence of the firm.

Initially, leaders of the velvet revolution led by Viktor Yushchenko found
the firm to be unnecessary; it acquired a special position during President
Leonid Kuchma’s reign and “takes 1 billion euros out of Ukraine’s pocket.”

Later on, however, they acquiesced to its existence, also accepting the fact
that the firm would help resolve the January 2006 Russian-Ukrainian natural
gas dispute. Namely, it was this firm that brought to Ukraine natural gas at
a mixed price, by mixing cheap Turkmen with expensive Russian natural gas.

For a long time it was understood throughout the world that 50 per cent of
RosUkrEnergo belonged to Gazprom, and the other half to Raiffeisen
Investment AG (RIAG).

Last April however, the Russian daily Izvestiya owned by Gazprom revealed
that RIAG, registered in Vienna, represents the Centragas firm backed by
Firtash and Fursin.

Who is Firtash, the owner of 90 per cent of Centragas AG? The FBI in the US
as well as the Ukrainian secret service has already tried to find the answer
to this question.

The primary interests of the Americans pertained to the kinds of common
interests Firtash and Semion Mogilevich have, the latter believed to be a
Russian Mafioso sought by the FBI, and whether Firtash is laundering money.

Kiev was interested mainly in the way Firtash is linked to the Russians and
to the rest of the members of the new Ukrainian elite in the post-Kuchma
era, as well as in the identity of additional owners of the firm.

It was revealed that the names of Mogilevich and Firtash appear together
among the owners of several companies, and that Firtash, the Ukrainian
businessman -who participated in the highest-level Russian-Ukrainian
negotiations during last year’s natural gas crisis and has also negotiated
with Yushchenko -maintains three offices in Moscow, in the real centre of
his economic interests.

Firtash has already played a key role in Eural Trans Gas believed to be the
predecessor of RosUkrEnergo; in 2003 and 2004 Eural pumped natural gas

from Turkmenistan, Uzbekistan and Kazakhstan to Ukraine and to Hungary.

Although on paper Eural was also owned by private persons, the actual owners
were Gazprom and the Ukrainian Naftohaz Ukrayiny, and for tax purposes the
company was registered in Hungary.

RosUkrEnergo receives a 1 billion euro transportation fee each year from
Ukraine for pumping natural gas from Turkmenistan through Gazprom pipelines
not in the form of cash but as 13 billion cubic meters of natural gas.

RosUkrEnergo then sells the natural gas in the framework of an exclusive
agreement expiring in 2015 to EMFESZ First Hungarian Natural Gas and Energy
Trading and Service Ltd., the largest company in the Hungarian natural gas
free market.

RosUkrEnergo is headed exclusively by Russian managers, including from the
beginning by Konstantin Chuychenko who works there. He was employed by the
KGB until 1992. Chuychenko has attended the university in Leningrad with
Aleksandr Medvedev, the present deputy chairman and president of Gazprom.

The Foreign Affairs Committee of the US Congress recently analysed the East
European region’s dependence on Russian natural gas, and in conjunction with
that, threats to democracy.

The Committee concluded that only a few private persons enrich themselves of
the huge profits made by RosUkrEnergo and similar intermediary firms; these
persons maintain constant, close relations with leading Ukrainian and
Russian politicians.

The analyses concludes that the large amount of money is more than enough to
influence Ukrainian politicians and to support Russian interests, as a
result of which countries in the region could abandon the path of democracy.

Well-informed analysts in Vienna suspect that anyone who does business with
Firtash is actually doing business with Gazprom. At this time Firtash gave
an Austrian character to his most important firms, thus to Centragas and to
Mabofi Holding, the company that directed EMFESZ from Cyprus so far, and
further, its chemical industry, gas pipeline construction and real estate
firms.

One cannot tell however, between exactly who EMFESZ is acting as an
intermediary; one cannot tell whether the telephone numbers shown on the
websites of its businesses actually ring in the offices of Raiffeisen
Investment AG?
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5.  MAJOR UKRAINIAN INDUSTRIAL GAS SUPPLIER
UKRGAZENERGO TO EXPLORE BLACK SEA SHELF DEPOSIT
Joint venture of RosUkrEnergo and Naftohaz Ukrayiny

Kommersant-Ukraina, Kiev, in Russian 16 Aug 07
BBC Monitoring Service, United Kingdom, Sat, Aug 18, 2007

KIEV – The main supplier of natural gas to Ukraine’s industrial consumers,
Ukrgazenergo [a joint venture of the Swiss-registered gas trader
RosUkrEnergo and the national oil and gas company Naftohaz Ukrayiny],

is entering the oil and gas mining market.

Kommersant Ukraina has learnt that Naftohaz, the co-owner of the company,
has appointed Ukrgazenergo main investor in the Odessa gas deposit
exploration project.

By doing so, Naftohaz will resolve the problem of distributing
Ukrgazenergo’s income and gain control over the investment in the project.
Experts do not rule out that Ukrgazenergo will try to get involved in
Naftohaz’s other exploration projects, too.

Kommersant Ukraina learnt that on 14 August the board of directors of the
national oil and gas company Naftohaz Ukrayiny decided to appoint
Ukrgazenergo partner of the Chornomornaftohaz company [which is

Naftohaz’s subsidiary] in the Odessa gas deposit exploration project.

“A join venture will be formed on parity basis which will allow Naftohaz to
control a 75-per-cent stake in the venture,” the head of the Naftohaz’s
press centre, Oleksiy Fedorov, told Kommersant Ukraina.

Let us recall that Naftohaz Ukrayiny owns 100 per cent in Chornomornaftohaz
and a 50-per-cent stake in Ukrgazenergo.

According to Chornomornaftohaz, the amount of gas in the Odessa deposit is
forecast at around 20-30bn cu.m. The total amount of gas in the Black Sea
shelf amounts to 1,700bn cu.m. The company started drilling the deposit for
gas in August 2006.

There were plans to begin gas mining by the end of 2007 and to complete the
exploration of the deposit, having increased gas mining to 1bn cu.m. a year,
by the end of 2008. The investment in the project is estimated at 5.8bn
hryvnyas [around 1.15bn dollars].

Mr Fedorov said that Naftohaz’s daughter company, Ukrhazdobycha [Ukrainian
gas mining], was Chornomornaftohaz’s partner in the project.

“The Naftohaz’s management decided, however, to have Ukrhazdobycha

involved in the exploration and mining of inland deposits of hydrocarbons,
and Chornomornaftohaz – in the continental shelf,” he said.

Ukrgazenergo’s management offered a cautious comment regarding cooperation
with Chornomornaftohaz. “This matter is yet to be approved at a meeting of
the company’s supervisory board,” the press secretary of Ukrgazenergo,
Vitaliy Kysil, said. The company’s management, however, have repeatedly
expressed interest in mining hydrocarbons on the territory of Ukraine and
abroad.

Experts say that, by appointing Ukrgazenergo main investor in the Odessa gas
deposit exploration project, Naftohaz is seeking to gain control over the
company’s income.

“Last year, Ukrgazenergo earned a significant income. The Ukrainian Fuel and
Energy Ministry proposed that it is transferred to Naftohaz’s account as a
dividend, while RosUkrEnergo wanted to invest it in development. The sides
failed to agree on the distribution of income,” the paper’s high-ranking
source in the cabinet said. “The current variant offers a compromise: income
will be invested in gas exploration but Naftohaz will, in fact, control it.”

Ukrgazenergo was formed by Naftohaz Ukrayiny and RosUkrEnergo on parity
basis. It is the main supplier of natural gas to Ukraine’s industrial
consumers. In 2006, its proceeds from gas sale amounted to 16.75bn hryvnyas
(3.3bn dollars) and gross income – to 1.014bn hryvnyas (200.79m dollars).

Players in the market do not rule out that the formation of a joint venture
might have been caused by Chornomornaftohaz’s growing tax burden in the

end of 2006. [Passage omitted: repetition]

Experts expect Ukrgazenergo to be involved in other projects. “If the
company was invited to take part in one project, it is likely that
Ukrgazenergo will replace Ukrhazdobycha in other joint projects with
Chornomornaftohaz,” the member of the parliamentary committee for fuel

and energy matters, MP Mykhaylo Volynets, said.

“The exploration of the Hordiyevych gas deposit [in the western part of

the Black Sea shelf] could be one of such projects, as it also requires
significant investment, too”.                              -30-
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6. KAZKH, CHINESE LEADERS SIGN GAS PIPELINE AGREEMENT

Associated Press (AP), Astana, Kazakhstan, Sat, August 18, 2007

ASTANA, Kazakhstan – The leaders of China and Kazakhstan on Saturday
signed an agreement on building a pipeline that is to ship natural gas from
Turkmenistan to China.

The agreement signed by Chinese leader Hu Jintao and Kazakh President
Nursultan Nazarbayev followed last month’s agreement between China and
Turkmenistan on a 30-year gas contract. China and Turkmenistan had already
agreed to build the pipeline, but gas prices hadn’t been determined.

The agreement on the section of the pipeline crossing Kazakhstan underlines
that country’s strategic importance for energy-hungry China. A pipeline
pumping Kazakh oil to China went into operation last year. Details of the
agreement on the gas pipeline weren’t immediately available.

Turkmenistan’s natural gas reserves of 2.8 trillion cubic meters, the
second-biggest among all ex-Soviet republics after Russia, are a major prize
in the region.

But Turkmenistan has been forced to export its gas through Russia and
Ukraine, which have their own gas companies that have squeezed out their
smaller rival. Turkmenistan is eager to break free from Russia’s influence
and sees exports to China as one solution.

Beijing has been trying to shift reliance to cleaner gas in order to reduce
reliance on its abundant but dirty coal reserves.
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7.  CISCO SYSTEMS JOINS U.S.-UKRAINE BUSINESS COUNCIL 

 
Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007
 
WASHINGTON – The Executive Committee of the Board of Directors
of the U.S.- Ukraine Business Council (USUBC) has just approved
Cisco Systems as the 41st member of the Council.

Scott Blacklin, Vice President, Emerging Markets – Public Sector,
who works out of the Washington office informed the Council
that Cisco Systems was ready to join the U.S.-Ukraine Business
Council. Scott will represent Cisco on the board.

Another contact in Washington would be Ned Cabot, Business
Development Manager, Strategic Initiatives. Richard Mach,
Manager, Business Development, located in the California office
will also work with the Council. In Kyiv the Council will be working
with Oleg Bodnar, head of the Cisco office, and Valeriy Fischuk,
government relations representative.

Cisco (CSCO) is the leading supplier of networking equipment
& network management for the Internet (www.cisco.com).

Cisco Systems is the 19th new member for the U.S.-Ukraine
Business Council in the last eight months. The Council’s goal is
to double its membership in 2007. 
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8. INVESTORS YIELD TO PROFIT POTENTIAL OF UKRAINE
Buyers Look Past Risk And Snap Up Offices; Retail on the Horizon

By Sara Seddon Kilbinger, The Wall Street Journal
New York, New York, Wednesday, August 15, 2007

Ukraine has caught the eye of real-estate investors chasing higher returns.
Roughly $293.75 million in commercial real-estate deals were transacted in
the country in the first half of 2007.

Almost all — $231.25 million — were office sales, with retail accounting
for the rest. This compares with $497.2 million in deals for all of last
year and $22 million in 2005, according to real-estate advisory firm Jones
Lang LaSalle. More than 90% of this year’s deals were in the capital, Kiev.

One of the most active buyers is London & Regional Properties. The
London-based real-estate investor and developer has acquired three
properties in Kiev — an office, a shopping center and a warehouse — since
entering the market in March. It also intends to develop real estate there.

“Central Europe has got very expensive, which is why we started looking at
Russia last year. Our presence in Ukraine is an extension of that strategy,”
says Max Fowles-Pazdro, head of Central and Eastern European acquisitions at
London & Regional, based in London. “We’ve invested $2 billion in Russia in
the past 18 months and would like to do the same in Ukraine.”

London-based real-estate asset manager Invesco Real Estate is also looking
to invest in Kiev, says Paul Kennedy, head of European real-estate research
at Invesco.

The firm would like to buy two or three Kiev properties in the next 18
months for its Central European Fund II. Invesco will also consider buying
developments before they are completed as well as joint ventures with local
partners, says Dr. Kennedy.

The yields are tempting. Good-quality office and retail properties can
generate as much as 10%, says Jones Lang LaSalle, compared with less than

5% in many Western European markets. (The yield is the annual percentage
return, expressed as the ratio of annual net income to the capital value of
a property.)

But the high yields in Ukraine reflect the higher risk, due to political
instability and continuing problems with corruption. Last year, former Prime
Minister Pavlo Lazarenko was sentenced to nine years in prison by a U.S.
court for extortion, fraud and money laundering through U.S. banks.

According to Mykola Orlov, a partner in Kiev-based law firm Sayenko
Kharenko, foreign investors are often better off working with a local
consultant than joining forces with a local partner. A local partner can
take advantage of a foreign investor in a number of ways, he says, including
by siphoning off funds.

Another obstacle for investors is the market’s opacity, with many deals
completed off market for undisclosed sums, says Nick Cotton, managing
director of real-estate advisory firm DTZ Holdings PLC in Kiev.

Such challenges aren’t deterring many would-be investors. Asset-management
firm Catalyst Capital LLP intends to enter the Ukraine market this year in
conjunction with a local partner whose interests range from brick making to
insurance, says Kean Hird, managing partner of Catalyst Capital’s
emerging-markets arm in London.

The firm’s push into Ukraine is “a natural extension” of its activities in
Central Europe, he says. Catalyst Capital will focus initially on Lviv —
because it is near the Polish border — before moving onto Kiev, he says.
“It’s a very good time to go into the market as it is still very
undersupplied,” says Mr. Herd.

“While we don’t have a target in terms of how much we plan to invest there,
we will initially develop industrial stock, such as sheds near the airport
or major roads. We are also interested in developing supermarkets, ideally
with international anchors. While consumer spending is still quite low, it
is increasing all the time.”

Private consumption — the main driver of economic growth — rose 18% last
year, up from 12% in 2005, according to DTZ. As a result, international
retailers are starting to consider Ukraine. German retail giant Metro AG
opened five cash & carry stores last year, according to spokesman Martin
Brüning.

“What we see is a growing middle class with more disposable income, which is
the driving force behind our expansion into Central and Eastern Europe,” he
says.

Metro has opened 13 stores in Ukraine since it entered the market in 2003
and intends to open more this year, he says. Turnover in its Ukraine stores
reached Euro615 million ($837 million) last year, almost twice the Euro338
million of 2005. The company is also considering launching its Real
supermarket chain in Ukraine next year, he adds.

Retail space is still thin on the ground, making the market ripe for
development: Kiev has just 290,000 square meters, similar to Warsaw in 1999.
There are a number of plans in the pipeline, according to DTZ, including a
130,000-square-meter store that will mark Ikea AB’s foray into Ukraine.

The hotel sector, while fledgling, is also growing. Hilton Hotels Corp. will
arrive in Kiev in 2009 and is exploring opportunities in several other
cities according to Nicola McShane, Hilton’s European communications
director.
——————————————————————————————
Write to Sara Seddon Kilbinger at sara.seddon-kilbinger@dowjones.com

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9. WILLIAM KLEIN, NEW DEPUTY COUNSELOR FOR ECONOMICS
AT THE U.S. EMBASSY IN KYIV, ASSUMES HIS POSITION TODAY

 
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 20, 2007
 
WASHINGTON – William (Bill) Klein, is the new Deputy Counselor
for Economics at the U.S. Embassy in Kyiv. He is assuming his new
position at the U.S. Embassy in Kyiv today. Bill is taking the position
previously held by J. P. Schutte.             
 
The U.S.-Ukraine Business Council (USUBC) held a briefing with
Deputy Counselor Klein at their offices in Washington on Thursday
evening of this week.  A wide range of business and economic topics
of interest to U.S. businesses active in Ukraine were discussed.
 
William (Bill) Klein is a career member of the U.S. Foreign Service. 
Bill’s first tour in the Foreign Service took him to Embassy Kyiv in
2000, where he worked on trade and intellectual property issues in the
Economic Section and subsequently in the Consular Section.

Most recently, Bill served as Chief of the Political/Economic Section

at the U.S. Embassy in Mumbai, India, where he worked on U.S./Indian
civil nuclear cooperation, market access for U.S. financial services
companies and other issues.

Prior to arriving in Mumbai in 2004, Bill was assigned to the U.S.
Embassy in Tel Aviv, Israel, as an Economic Officer.   While there,
he also served temporary tours of duty at the U.S. Embassy in Doha,
Qatar, during Operation Iraqi Freedom and later as Acting Economic
Chief at the U.S. Consulate in Jerusalem.  

Prior to joining the Foreign Service, Bill worked as an investment banker
in Germany for 13 years.  From 1987 to 2002 he was head of derivative
products at Schroeder Muenchmeyer Hengst & Co, a Frankfurt-based
private bank that is now part of the UBS Group. 

From 1993 to the year 2000 he was managing director and head of capital
markets at the Landesbank of Saxony in Leipzig, a new bank that was
founded in former East Germany after German reunification.  In Leipzig,
Bill was responsible for the bank’s bond and equity underwriting, funding
and trading activities.

A native of North Ogden, Utah, Bill holds a Bachelor’s Degree in History
and Mass Communication from the University of Utah and the equivalent
of Bachelor’s and Master’s Degrees from the Freie Universitaet in Berlin,
Germany. 

He speaks German, Russian and Hebrew.  He is married to Celine d’Cruz, 
a native of Mumbai, India, who works as co-coordinator for Slum and
Shack Dwellers International, an NGO that works with the urban poor in
many countries in Asia, Africa and Latin America.

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10. UKRAINE WINS $118M CONTRACT TO SUPPLY 96
ARMOURED PERSONNEL CARRIERS (APC) TO THAILAND

Associated Press (AP), Kiev, Ukraine, Thursday, August 16, 2007 

KIEV – Ukraine has won a US$118 million contract to supply 96 armored
personnel carriers to Thailand, Prime Minister Viktor Yanukovych said
Thursday.

Yanukovych told reporters that eight other countries, including Canada,
China and Russia, had put in bids to supply the Thai armored forces,
according to his press service.  He did not say when the vehicles -called
BTR-3E1s- would be shipped.

Thai Defense Minister Boonrawd Somtas said last week that the army favored
the Ukrainian vehicles because the bid was the cheapest of the nine bidders.

“The Canadian vehicles are excellent, but we would get only half of the 96
vehicles we will get from Ukraine. It’s like buying Japanese cars over
European cars,” Somtas was quoted as saying by the Bangkok Post

newspaper.

After the 1991 Soviet breakup, Ukraine inherited a sizable weapons industry
and it remains a major producer of arms including missiles, aircraft and
tanks.

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11. U.S. FEDERAL RESERVE BOARD APPROVES STATE EXPORT-
IMPORT BANK OF UKRAINE TO ESTABLISH REP OFFICE IN NY

Federal Reserve Board, Washington, D.C., Friday, August 17, 2007

WASHINGTON – The Federal Reserve Board on Friday announced the
approval of an application by The State Export-Import Bank of Ukraine,
Kiev, Ukraine, to establish a representative office in New York, New York.

Attached is the Order relating to this action. Attachment (27 KB PDF):
http://www.federalreserve.gov/BoardDocs/Press/orders/2007/20070817/attachment.pdf
———————————————————————————————–
http://www.federalreserve.gov/BoardDocs/Press/orders/2007/20070817/default.htm
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AUR FOOTNOTE:  The State Export-Import Bank of Ukraine, with total
consolidated assets of approximately $3.7 billion, is the sixth largest
commercial bank in Ukraine and provides wholesale and retail banking
services through a network of domestic branches. The bank is wholly
owned by the government of Ukraine and operates as a commercial bank
in addition to promoting trade by and with Ukrainian companies.
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12. FAST TRACK TO EASTERN EUROPE’S FUTURE

Nick Thorpe, BBC NEWS, UK, Saturday, August 18, 2007

The railways of Eastern Europe are going through a period of great
upheaval including sudden privatisation and modernisation, following
years of neglect. Nick Thorpe took a rail trip through the region to see for
himself.

The lady in the brown dress held up the Tihany express. “Please wait!” she
called, as she scuttled down the platform, plastic bottle in hand. “The
children are thirsty.”

The pot-bellied signalman breathed the sigh of a man used to taking orders
from women all his life, and sat down heavily on a bench, his red cap
catching the late afternoon sun like a Balkan woodpecker.

The lady filled the bottle from a tap on the platform, hurried back to the
train, handed the water in through the window and waved to the signalman.
He blew his whistle and the train continued, hooting round Lake Balaton,
like an ancient iron goose.

I have witnessed many such scenes this summer on the railways of
Eastern Europe: the solidarity of passengers with one another, the
leniency of ticket collectors and railwaymen.

Despite the general poverty of the railways, the decay and delay, there
is what I can only describe as an old-fashioned socialism on the
railways of Eastern Europe, which the roads have never had.

People feel the train is genuinely theirs. You notice it most in summer,
beside the Baltic Sea in Poland, Lake Balaton in Hungary or anywhere
where the train is part of the people’s holiday.

Children still wave at strangers and strangers cannot resist waving back.
Perhaps that is also why urban youth spend so much effort spraying their
strange designs on the carriages.
SEARCHING FOR A NEW MODEL
But this is a time of great change on the tracks of Eastern Europe.

The rolling stock is 25 years old on average – the locomotives and carriages
and freight wagons – and companies are competing to replace them.

The cargo arms of the big state rail companies are being sold off and, in
some countries at least, are already flexing new, private muscles.

This year the rail freight market was liberalised throughout the European
Union and in 2010 passenger traffic will follow. Each country is trying to
avoid the mistakes made by others.

EU money is providing an important boost and so is the increasing
congestion on the roads. The number of lorries on Polish roads alone
has tripled in the past three years.

“Europe has shifted its centre of gravity eastwards,” says Janusz
Piechocinski, director of the Transport Consultants Group in Warsaw,
“and we can all gain from the pool of experience here”.

To open the vast markets of the former Soviet Union and Asia, he offers a
model: British finance, German logistics and Polish experience in crossing
the eastern borders.

For now, those borders present a major headache to freight companies.
There are two different kinds of documentation, even two different widths
of track (the Russian is wider).

Now President Putin has signalled his intention to privatise the vast
Russian railways.
EU FUNDING
“Will EU players be allowed to participate or only the Germans?”
Piechocinski asks. He is full of questions.

“In a globalised world is there any sense in keeping Hungarian, Czech and
Polish railway companies or would it make sense to put together an alliance
of them to cut costs and restructure?

“Why concentrate so much EU money on high-speed trains and trans-
European railway corridors, when it might be better spent on modernising
trains and tracks used by most of the population?

“Why is privatisation stagnating in western Europe, but moving ahead so
fast in the east?”

The Poles began privatising their freight transport three years ago and the
first private passenger train will run this autumn. They have also been the
most successful of the East Europeans in tapping EU funds so far.

Above all, Piechocinski believes in the future. “We’ve entered a period of
20 years of prosperity and growth,” he says.
‘SLOW BUT SAFE ‘
And in Prague, Ales Ondruj, the marketing director of Czech Railways, is
also optimistic. “Last year we had three million more passengers than in
2005,” he says.

The new super-city Pendolino express has shaved hours off the route from
Prague to Ostrava in the east. But he laments the years of neglect.

“The age of the trains is not the main problem, but the absence in eastern
Europe of the kind of constant upgrading and modernisation you see in the
west.”

“We may be slow, but we’re safe,” says Zbigniew Szafranski of the Polish
rail company, PKP, when I ask about the ponderous progress of my
intercity train from Warsaw to Gdansk.

He explains that the wooden sleepers under the first 40 miles (64km) of
that line are almost destroyed.

In places, the train is only allowed to travel at 30 miles an hour (50kmph).
While the modernisation of north-south routes would be more important
for Poles, EU money is focused more on east-west routes.

He dreams of 180-mile-per-hour trains between Warsaw and Gdansk,
cutting the journey time from five to three hours.

On the train two teenage lads make room for me in an already crowded
carriage. They are on their way to a wind-surfing camp in Hel – don’t
laugh – it is a rather pretty spit of sand, stretching out into the Baltic
Sea.

Will East European railway hospitality survive privatisation?

One can only hope.
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http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/6951746.stm
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13.  BRITISH COMPANY TO MANAGE GEORGIAN RAILWAYS

RIA Novosti, Moscow, Russia, Thu, August 16, 2007 

MOSCOW – Georgia will transfer the management of its railway network
to U.K.-based Parkfield Investment Funds for 89 years, the country’s
Economic Development Minister Giorgi Arveladze said Thursday.

The Georgian Cabinet approved draft government instructions earlier in the
day on transferring the government’s 100% share in the Georgian Railway
company to attract investment.

Arveladze said at least $1 billon would be invested in the project in the
first decade, the bulk in the next three to four years. The minister said
the project could help enhance the capacity of the railway network.

“The government would be unable to invest such large sums in the sector

in such a short period,” the official said. Arveladze said an agreement with
the investor was nearing completion and would be signed within the next
two weeks.

Georgia’s railway network stretches over 1,575 kilometers (1,000 miles)

and includes 45 tunnels and 1,714 bridges.
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LINK: http://en.rian.ru/world/20070816/71938790.html
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14.  KYIV MUNICIPAL TRANSPORT RECEIVES EBRD FINANCING
Major upgrades of Metro, Bus and Trolleybus Passenger Transport

European Bank for Reconstruction and Development (EBRD)
London, United Kingdom, Friday, August 17, 2007

LONDON – In its first long-term financing for municipal transport in
Ukraine, the European Bank for Reconstruction and Development is
providing Euro100 million to municipal transport companies Kyiv
Metropolitan (metro) and Kyiv Pastrans (buses and trolleybuses).

A Euro40 million loan to Kyiv Metropolitan will finance up to 15 new metro
trains, which will operate on the Syretsko-Pecherska Line, while a Euro60
million loan to Kyiv Pastrans will finance up to 225 new trolley-buses and
up to 125 diesel buses and associated infrastructure.

40 per cent of each loan will be syndicated to commercial banks DEPFA
Investment Bank Ltd, Dexia Crédit Local Dublin Branch and HYPO
Investmentbank AG.

In the rapidly growing Ukrainian capital with 2.7 million residents, the
financing should significantly improve efficiency and overall quality of
local transport, stressed Kamen Zahariev, EBRD Director for Ukraine.

According to him, with this transaction EBRD continues to support
environmentally clean and sustainable public transport alternatives to
increased private car usage.

“The project builds on the EBRD’s expertise in structuring new
infrastructure projects in partnership with municipalities, providing an
example that other financially sound transport companies and municipalities
in Ukraine and the region can follow”, said Oxana Selska, EBRD Senior
Banker,.

Technical co-operation funds, provided by the governments of France and
Italy, have been used to help the companies to prepare technical-feasibility
studies, develop long-term business plans, conduct financial audits and
develop pilot public service contracts between the city and the companies.

Such contracts will be instrumental in helping to establish a transparent
structure and in fostering the development of new standards for the
provision of public transport. Additional technical co-operation advice will
be provided to the City on electronic ticketing system.

Leonid Chernovetsky, Mayor of Kyiv, said the city’s strong economy is a
result of good local businesses and growing foreign investment, and to boost
this further, the City needs to improve local transport infrastructure.

“The EBRD has a good reputation for working with local municipalities in
Central and Eastern Europe, and we want to build on that to achieve our
objectives”, he added.

The European Bank for Reconstruction and Development is the biggest
financial investor in Ukraine. As of the end June 2007 it had committed over
EURO2.9 billion through more than 140 projects.
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15.  UKRAINE’S ROAD TO EUROPE NEEDS MORE TRAFFIC RULES

ANALYSIS AND COMMENTARY: By John Marone
Kyiv Post Staff Journalist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, August 13, 2007

The city of Kyiv is planning to expand its Metropolitan, or system of
underground and surface trains, before the year 2012, when Ukraine will
host the European football championship together with Poland.

What a relief for pedestrians and motorists alike!

The estimated cost has been set at 3 billion dollars. This is a lot of money
for a country that can barely afford to pay its soldiers and teachers, but
the capital wants to be ready for all the football fans expected to arrive
with their pockets full of money.

As it stands now, traffic jams and road rage are the number one turn-off for
foreign visitors.

Along with the significantly expanded public transportation, there are also
plans to launch lots of brand new hotels across the country. Private
investors should get a nice return, as a lack of hotel space is one of the
main obstacles to the country’s great tourist potential.

But first and foremost, the hosting of the European championship is
Ukraine’s chance to show the world that it’s not a post-Soviet backwater.

 
The Orange Revolution put the country on the map a few years back.
The positive PR continued when Ukraine hosted the Eurovision song
contest in 2005.

Canceling visa requirements for wealthy countries has also helped. All this
is good news for a country that increasingly wants to be known as a
full-fledged part of Europe, rather than the site of the world’s nuclear
accident.

Accidents, however, are still a very grim part of the Ukrainian reality, and
the most serious are related to transportation. For example, the country has
been plagued most recently by a series of high-profile train wrecks, but
thankfully the casualties have been small.

A much higher death toll is attributable to car accidents, which is why
expanded public transportation in the capital is highly welcome. Car crashes
claims thousands of lives every year in Kyiv Region alone.

Most Westerners are used to frightening figures on auto-related deaths, but
the situation in Ukraine merits closer study.

There aren’t many places in Europe or North America where you can be hit by
a speeding sedan while strolling down a central street. These aren’t bank
robbers or rambunctious teenagers but everyday citizens who believe that
pedestrians should move or be hit.

The Ukrainian capital is not only plagued by traffic jams on the roads but
double parking on the sidewalk. Sure, more parking structures need to be
built, but it’s far from certain that people won’t continue to park where
they feel like anyway.

And the police, who are otherwise infamous for finding a reason to fine
law-abiding motorists, do nothing to maintain order. It’s as if they prey on

the innocent and fear anyone in an expensive car.

It used to be that people would complain about the obnoxious drivers of
luxury vehicles with special license plates or blue sirens on their roofs.
But as the number of cars on Ukrainian roads increases exponentially along
with disposable wealth, so does the number of negligent drivers.

It’s nice to see Ukrainians enjoying a little freedom. Freedom, however,
comes with responsibility. One of the biggest surprises for analysts of the
eastern bloc was how quickly people here seemed to go from being
communist robots to cutthroat capitalists.

Clearly, the cold war created some pretty inaccurate stereotypes. Society

in Ukraine and other East-bloc countries is indeed changing, but cultural
values are more persistent than one might think.

Judging from the last 15 odd years of independence, it appears that many
people in former Communist societies don’t want to make the rules of the
game more fair, but rather to enjoy the unbridled privileges of the elite.

The shifting scene of Ukraine’s roads nicely reflects transformations in the
nation as a whole. Ukrainians appear to see car ownership as a release from
all the rules of public transportation without considering the new
obligations involved.

Public transportation is for pensioners, alcoholics and those who are still
trying to find a way to finance a Western lifestyle.

Private cars are for those intent on expressing their identities long
suppressed by Soviet society. Not all drivers in Kyiv are obnoxious, but
road bullies are the single negative impression that almost every visitor
complains about.

The same analogy of unleashed individualism could be made about housing

in Kyiv as well – the rich snatch up pristine reserves to build their mansions,
the poor remain in slumping blocs of flats, and the slowly emerging middle
class takes out bank loans to afford new apartments.

It’s precisely this rising middle class that offers the most hope. They work
hard and raise families, whom they don’t want to see run down at an
intersection. Once someone owns property he is more likely to respect the
property of others. Insurance companies will also become more common,
offering compensation for loss and lobbying better legislation.

But this transformation in ownership and attitude is going to take time.
More importantly, it’s going to have to be anchored in law.

As it stands now, Ukraine’s lawmakers are often the biggest offenders. The
absence of respect for the law, or rules in general, is in fact the heart of
the problem.

The way people drive is just a reflection of their overall attitudes toward
rules. Sure, there are plenty of obnoxious drivers in America, and the
country’s love affair with the car is symptomatic of questionable
individualism and consumerism in itself, but violators are caught and
punished.

As Ukrainians buy and use more cars, the laws in the country are going to
have to change and be enforced. In the mean time, what a great idea to
develop more public transportation.

Besides the environmental concerns, Kyiv’s infrastructure was just not
designed for so many autos. Many European countries have already started
investing in more trains and trolleys.

As Ukrainians continue to embrace greater integration with Europe, they
might reflect on how important civil society and legislators were in
creating modern European society. My feeling is that many younger
Ukrainians are already beginning to change their attitudes.

On the other hand, some features of Soviet society, such as reliance on
public transportation, are proving to be more progressive than many still
believe.

If Kyiv really wants to show off in 2012, a good start would be more decent
public transportation and a little more courtesy on the part of drivers of
private cars.
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16.  POLAND’S MEAT PRODUCER DUBA’S OPERATIONS IN
UKRAINE GAIN MOMENTUM, PLANS DISTRIBUTION CENTRES

Polish News Bulletin, Warsaw, Poland, Friday, Aug 17, 2007

WARSAW – The meat producer PKM Duda’s Ukrainian operations are

gathering momentum, the Puls Biznesu daily reports. Having just taken over
yet another slaughter house, the company will now build distribution centres.

Duda’s latest purchase is the Ekspres slaughter house, for which the Polish
company paid ZL6.6m, while the potential value is estimated at ZL20-25m.
“This was a good deal. The factory will become our main slaughter facility
in Ukraine, with processing capacity of 250,000 carcasses,” said the
company’s president Maciej Duda, who has ambitious plans for Ukraine.

He wants to create an enterprise resembling PKM. Already owning [most

likely leasing – AUR] 15,000 hectares of land, a fodder mixing plant, a
slaughter house and a meat processing plant, Duda is now thinking about
distribution. The Polish company plans to lease distribution centres from
its Ukrainian partners. The first one will be set up in L’viv, and the second
in Kiev. 
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17.  EURO 2012 SETS UKRAINE TOUGH TEST

By Helen Fawkes, BBC correspondent in Kiev
BBC NEWS, UK, Sunday, August 12, 2007

The industrial heart of eastern Ukraine was glowing in a beautiful
sunset as local heroes Shakhtar Donetsk took on their arch-rivals
Dinamo Kiev.

Yet the Soviet-era stadium looked small and a bit too old-fashioned
for Shakhtar Donetsk, one of the country’s top teams.

There are concerns that Ukraine may not be ready in time for the
Uefa European Football Championships in 2012, which it will co-
host with Poland.

It will be the most prestigious project that Ukraine has ever
co-hosted, and it is expected to attract thousands of fans. But there

are fears that the politicians here do not have their eye on the ball.

Donetsk is one of four host cities in Ukraine. All of the venues were
built by the communists, and they are well past their best, needing to
be replaced or renovated.

Ukraine has faced one political crisis after another and now the
country is preparing for a general election.

“The most difficult thing will be to change the attitude, to make the
authorities look in the direction of football and start paying
attention to the country’s infrastructure,” says Dmitriy Chigrinsky,
a player for Shakhtar Donetsk and Ukraine. “It’s no secret that our

country needs serious modernisation,” Dmitriy adds.
INFRASTRUCTURE WOES
Ukraine is one of the poorest places in Europe. Now it has to spend
billions of dollars preparing for the championships.

With vast distances between the Euro 2012 venues, transport is a
top priority. Ukraine’s trains are cheap but not exactly fast, as the
network has not changed much since Soviet times.

A journey from Gdansk, one of the Polish venues, to Donetsk can
take more than 40 hours.

And the alternatives are not much better. Ukraine only has one
motorway and many roads are in desperate need of repair. The
country’s airports are all due to be modernised, and there is also a
real shortage of hotels.

As if all that was not bad enough, there is a row over the venue for
the final. It is supposed to be held in the centre of Kiev, but a half-

built shopping centre looms right next to the stadium gates – and the
developers are refusing to knock it down. If it stays, the final will
have to be played elsewhere.
OPTIMISM
Despite all these problems there is a confident mood at the
headquarters of Ukraine’s Football Federation in the capital. “If I
wasn’t an optimist I would never have dared to start such a project.

“Some people called it naive, they were sure it would be impossible
for us to win the right to co-host the event. But we did win,” says
Hryhoriy Surkis, the president of Ukraine’s Football Federation.
“We are now working hard to turn the fairy tale into reality,” he says.

There are some positive signs. Two brand-new stadiums are starting to
take shape in eastern Ukraine. One of the venues is being funded by
Ukraine’s richest man, the football-mad billionaire Rinat Akhmetov,
for his team Shakhtar Donetsk.

Designed by a British architect, it will have a glass roof and
promises to be one of the best stadiums in Europe.

The Ukrainian President, Viktor Yushchenko, has said that a
co-ordination council will be set up with Poland.

It is due to meet in September to discuss a range of issues including
joint infrastructure projects, and it will apply for support from the
European Union.

Even so this former Soviet republic still faces a massive task to
prepare for Euro 2012. It will be a race against time to complete all
the work needed.

“Ukrainians are very proud to be co-hosting the championships. I
am certain we can do it and we can do it well.

“This is about more than just football. If the tournament goes well
then it could well boost our chances of becoming part of the EU,”
says a Ukrainian football fan, Maxim Simoroz.

With so much at stake the country cannot afford to fail.
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LINK: http://news.bbc.co.uk/go/pr/fr/-/2/hi/europe/6938922.stm
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18.  CEC REGISTERS TYMOSHENKO BLOC FOR RADA ELECTIONS

Ukrainian News Agency, Kyiv, Ukraine, Wed, August 15, 2007

KYIV – The Central Election Commission has registered the Bloc of Yulia

Tymoshenko  for the Verkhovna Rada elections. All 14 members of the
commission voted for the decision.

Before the vote, the CEC had put the issue of bloc registration on the
agenda to meet the proposal of CEC member Mykhailo Okhnedovskyi. All

450 candidates nominated by the bloc are now registered for the parliament
race.

As Ukrainian News earlier reported, the District Administrative Court of
Kyiv ordered the CEC on August 14 to register the BYT for the early
elections. CEC representatives had two days to appeal the court decision.

The commission said on the August 10 night that the bloc had had to submit
correct registration documents by 23:59 on that day.

The commission postponed its registration on August 9 because the
documents did not state addresses of candidates correctly (house number,
street name, apartment).

The election campaign started on August 2, and the vote is scheduled for
September 30.
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19.  UKRAINIAN PARLIAMENT ON “DEFROST”

ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Journalist, based in Ukraine
Eurasian Home, Moscow, Russia, Monday, August 6, 2007

Ukraine’s parliament has long been characterized by frozen deadlocks.
Lawmakers who opposed former President Leonid Kuchma were always
in a cold war with his supporters, while under President Viktor Yushchenko,
the legislature became divided between the Orange and the Blue.

These stalemates have occasionally burst into fiery rhetoric and even heated
tussles in the session hall, but the usual atmosphere in the nation’s
legislature has been one of icy relations between opposing sides, and thus
few laws being passed.

When bills did get approved, you could be sure that a backroom deal had
been cut, with the two agreeing parties dividing up some spoil only to
immediately resume their hostility thereafter.

More recently a somewhat different climate has taken hold in the Verkhovna
Rada, a defrosting of traditional blocs and possibly another chance at the
formation of a grand coalition on the horizon. The politician most
immediately to be affected by the thaw is parliamentary speaker Oleksandr
Moroz, whose surname translates as ‘frost’.

Together with his Socialist Party, Mr. Frost, or Moroz, looks destined to be
the country’s next spent political force. This isn’t the first time that a
powerful Ukrainian politician has melted from the scene.

For example, Viktor Medvedchuk, who rose to head the influential
administration of President Kuchma, was reduced to obscurity after failing
to get into parliament last year.

Like Medvedchuk, Moroz developed a party with a limited voter base into a
pivotal power broker. Through shrewd maneuvering, Moroz ended up with
the deciding share between the eastern or Blue bloc of Prime Minister Viktor
Yanukovych and the Communists, and the more Western-oriented Orange
parties represented by President Yushchenko’s Our Ukraine and Yulia
Tymoshenko’s ByuT faction.

Moroz had sided with Yushchenko and Tymoshenko during the country’s
pro-Western Orange Revolution, which unseated Kuchma and demonized
Yanukovych.

But following the March 2006 parliamentary elections, Moroz joined a
parliamentary coalition with Yanukovych’s Regions Party and the Communists,
which then went about assuming much of Yushchenko’s executive authority.

Now, however, the Socialists could end up out in the cold. The snap
elections called by Yushchenko earlier this year are almost certain to take
place, and polls consistently show that the Socialists won’t make it over
the three-percent hurdle.

Oleksandr Moroz has done everything in his power to derail the elections,
but the fact is that he doesn’t have much power left. For one thing,
Yushchenko, with the help of Tymoshenko, managed to dismiss the current
parliament, leaving Moroz without a job.

During a Socialist Party Congress held in Kyiv on Saturday, Moroz called the
snap elections a ‘criminal sham’, for which the opposition – i.e. Yushchenko
and Tymoshenko – will have to answer.

But Moroz’s position is weakened by the fact that his coalition partner the
Regions Party, which controls the most seats in the legislature, has already
agreed to take part in the elections.

And when Moroz tried to show that he still wielded some power by calling for
an emergency session of the parliament late last month, the Regions didn’t
support him.

In short, the Socialists’ dismal showing in opinion polls make them useless
as political partners.

And the president’s team has been busy putting the last nails in the
Socialists’ coffin by hitting top party member where it hurts. Socialist
Interior Minister Vasyl Tsushko fled to Germany, supposedly for health
reasons, after his misguided raid on the Prosecutor-General’s Office in May.

Tsushko’s attempt to keep Yushchenko from firing the prosecutor-general
did nothing but making him liable to criminal charges. He’s since returned
to Ukraine, but his political future looks grim.

Then there is Socialist Transport Minister Stanislav Nikolaenko, who is
under a barrage of fire from the Orange camp following a string of rail
accidents this year.

Socialist privatisation chief Valentina Semenyuk looks likely to take the
blame for the country’s poor privatisation record, which may cause Ukraine
to be downgraded by international rating agencies.

All of these politicians, together with Moroz, will feature prominently on
the Socialists’ election list – for better or worse. Moroz tried to bolster
party morale on Saturday by denying that the Socialists had betrayed their
values when they joined a coalition with Regions.

But clearly the party has seen better days.

Socialist heavyweights like former Interior Minister Yury Lutsenko and Yosef
Vinsky, who left the party last summer, have already realigned themselves
with Yushchenko and Tymoshenko respectively. Others may follow, joining
either the Regions or the Communists to stay in power.

Once considered a rare example of political integrity for his unswerving
opposition to President Kuchma, Moroz has been labelled a traitor and
political opportunist by his former Orange allies. As a leftist, he also
enjoys little support among business interests.

Only last summer, analysts were predicting that Moroz, having ditched
Yushchenko, would go about empowering the parliament to eventually
sideline Yanukovych. It was Moroz, after all, who had most vehemently
supported the constitutional reforms that made Yushchenko vulnerable
to grabs for his authority.

As parliamentary speaker, he was well positioned to play the president off
against the premier, while beefing up his legal authorities along the way.

However, now Moroz’s political power has begun to melt, possibly signaling
a warming of relations between Ukraine’s main two political blocs.

Regions has traditionally enjoyed support in Ukraine’s Russian-speaking
east, where attitudes toward Moscow, the Russian language, the Russian
Orthodox Church, etc, are markedly different than in western Ukraine. But
the east also represents heavy industry and the tycoons who have built their
fortunes on it.

Regions Party moneybags Rinat Akhmetov, Ukraine’s richest man, has led
his peers in seeking better relations with western financiers to obtain
badly needed investment.

Metalinvest, a steel and mining holding owned by Akhmetov recently landed
a $1.5 billion loan, the biggest credit ever received by a private Ukrainian
company, from a group of European banks.

More recently, the tycoon has taken steps to clean up the image of the party
he belongs to. During its party congress on Saturday, the Regions
unanimously refused to include lawmaker Oleg Kalashnikov, who last year
roughed up a television journalist at a Regions rally, on its ballot list.

Analysts say Akhmetov and more moderate members of the Regions have taken
charge in the party and are improving relations with the Yushchenko camp.

Ever since the Orange Revolution, the country’s politics have been shaped by
the standoff between west and east, between Viktor Yushchenko and Viktor
Yanukovych. Now the ice blocks may be melting.

It’s too early to tell, as Yushchenko is still smarting from the last time
he tried to cut a deal with the Regions. After agreeing to endorse
Yanukovych as premier last summer, the president saw his ratings plummet
and watched helplessly as Yanukovych challenged his every authority.

Much will depend on the September 30 election results. But for Oleksandr
Moroz and his Socialists, the writing is already on the refrigerator door,
right near the dial that reads ‘defrost.’
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20. UKRAINIAN PRESIDENT WANTS NEW PARLIAMENT
TO ABOLISH IMMUNITY, BENEFITS FOR MP’S

5 Kanal TV, Kiev, in Ukrainian 0905 gmt 18 Aug 07
BBC Monitoring Service. United Kingdom, Saturday, Aug 18, 2007

Ukrainian President Viktor Yushchenko has said that he welcomes the Party

of Regions’ initiative to abolish immunity from criminal prosecution and
significant benefits not only for MPs, but also for the president and the
prime minister.

He added, however, that Prime Minister Viktor Yanukovych’s proposal to call
an emergency sitting of the dissolved parliament to pass a relevant law is
nothing but a campaign “show”.  Yushchenko stressed that the matter should
be the first thing to be addressed by a new parliament.

Yushchenko was speaking at a briefing in Velyki Sorochyntsi in Poltava
Region on 18 August where he is attending the traditional Sorochyntsi fair.
The briefing was broadcast live by the private 5 Kanal TV channel.

Asked whether the president is prepared to get stripped of his own immunity
and to limit his benefits, Yushchenko said that he views this process as “a
form of cleansing the powers that be” and that no state official should be
exempt from this.

“I do believe that we should give a clear explanation as to who should enjoy
what benefits. There should not be a single state official in the country
who is exempt from public scrutiny or public control as to expediency of
such benefits, including the president of course, including a representative
of any profession,” he said.

Yushchenko warned his political opponents against reducing his initiatives
to a farce. He criticized the Party of Regions and Prime Minister Viktor
Yanukovych for calls to hold an emergency sitting of the dissolved
parliament to abolish benefits and immunity for state officials ahead of the
30 September election.

“At the height of public discussion regarding the benefits, they are
proposing that an illegitimate sitting of the Supreme Council [parliament]
be held, making a show of this. So I would like to make it very clear to the
prime minister and other people behind this: I am serious about abolishing
the benefits, for me, this is not a show. I am not campaigning today,” he
said.

Yushchenko believes that this issue should be addressed by a new parliament
and called on representatives of all political forces to join efforts and
implement his proposals.

“I need partners, I need allies for pushing this issue through the Ukrainian
parliament. This is why I am calling on everyone, regardless of colour,
regardless of election hype with which the political arena is obsessed
today, colleagues, let’s show respect for our society, let’s behave as
respected politicians and let’s say that, if the issue of MP immunity has
completely preoccupied our minds.

We should express our joint stance that after the month of September the
Ukrainian parliament will hold a meeting exclusively dedicated to the issue
of benefits for whoever is involved and MP immunity, as the second issue.
This is the first thing we should do,” he said.
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21.  UKRAINE’S 2007 PARLIAMENTARY ELECTIONS WILL
ALSO DECIDE UKRAINE’S NEXT PRESIDENT
President Yushchenko lays groundwork for re-election

ANALYSIS & COMMENTARY: By Taras Kuzio
Eurasia Daily Monitor, Volume 4, Issue 160
The Jamestown Foundation, Wash D.C., Thu, August 16, 2007

Ukraine’s September 30 parliamentary elections will decide the country’s
next government and most likely determine the outcome of the presidential
elections two years later.

As seasoned Zerkalo nedeli commentator Serhiy Rakhmanin pointed out, the
“pre-term parliamentary campaign gives [President Viktor] Yushchenko a great
opportunity to launch the presidential campaign ahead of time.”

The conflated election campaigns have led to electoral populism. Yushchenko
and his Our Ukraine-Self Defense (NUNS) coalition have launched a campaign
to remove parliamentary immunity, a campaign issue last raised by President
Leonid Kuchma in an April 2000 referendum.

The Party of Regions, which now dominates parliament, replied by calling for
the end of immunity for all officials – president, prime minister, judges,
and deputies.

These moves should discourage corrupt oligarchs and businessmen from

running for parliament and help separate business and politics. But the
anti-oligarch election rhetoric does not square with the continued presence
of oligarchs in both the Party of Regions and NUNS.

Yuriy Lutsenko’s People’s Self Defense, Our Ukraine’s ally in the 2007
elections, was established by an oligarch, Davyd Zvannia. The Privat
oligarchic group, allied to former senior Yushchenko adviser Oleksandr
Tretyakov, has eight representatives in the NUNS list.

The leaders of Self-Defense claim to have reformed. Lutsenko admitted, “Yes.
We are the only political force that publicly accepted its mistakes,
including the choice of personnel, and cleaned out and renewed ourselves.”
The party removed businessman Petro Poroshenko, whose name is associated
with the corruption charges that led to the September 2005 political crisis.

According to Zerkalo nedeli, the NUNS election list was heavily influenced
by Lutsenko and Ihor Kolomoysky, the controversial head of Privat. Thus the
changes look more like musical chairs than cleaning house.

NUNS needs to regroup after Our Ukraine’s poor performance in the 2006
elections, when it obtained fewer seats than in 2002. The coalition also
needs reinforcement to compete with the Yulia Tymoshenko bloc (BYuT),
another veteran of the Orange Revolution.

Finally, NUNS needs nation-wide support. Anti-oligarch and anti-corruption
sentiment mobilized many western-central Ukrainians to participate in the
Orange Revolution.

These sentiments are not popular among voters in eastern Ukraine, who have
had no qualms about voting for a convicted felon supported by oligarchs — 
Prime Minister Viktor Yanukovych.

Yanukovych’s Party of Regions has always included corrupt and discredited
former Kuchma officials and oligarchs, such as Renat Akhmetov, who has
ignored calls by the president to not run for parliament. Akhmetov ranks
seventh on the Party of Regions election list.

NUNS has unequivocally stated that its election and future coalition partner
is the BYuT. Senior NUNS leaders have publicly refuted suggestions that they
may enter a coalition with the Party of Regions. Lutsenko has stated that
NUNS would only enter a grand coalition if BYuT also agreed.

Yushchenko has been less clear in his intentions. Following the 2006
elections Yushchenko sent two close allies to separately negotiate with BYuT
and the Party of Regions, a strategy that he may repeat this year.

The parliamentary coalition established after the 2007 elections will
heavily influence the outcome of the 2009 elections. With the prime minister’s
position strengthened following constitutional reforms in 2006, the office
is an even better launching pad for the presidency.

However, Yushchenko has proven unable to work with two of his three prime
ministers, Yulia Tymoshenko and Yanukovych, because he sees both as
potential competitors for the presidency. Ideally, Yushchenko would prefer
that neither of them become Ukraine’s next prime minister.

The Party of Regions is leading the polls, so the Orange camp is battling
for second place. If NUNS places second, Yushchenko would likely chose a
non-threatening technocrat, such as former prime minister Yuriy Yekhanurov,
for the job.

If BYuT finishes second, as seems likely, Yushchenko could again be tempted
to negotiate a grand coalition with the Party of Regions. His only condition
would be that Yanukovych not be prime minister.

Yushchenko has reportedly reached such an agreement through Yekhanurov,

who has always been close to the Party of Regions, and presidential secretariat
head Viktor Baloga.

This scenario poses three risks for Yushchenko.

[1] First, forcing NUNS into a grand coalition with the Party of Regions
might be more palatable than in 2006, as it would not include the Communists
and Yanukovych would not be prime minister.

However, it would split NUNS and prevent the planned post-election
unification of its constituent members into a pro-presidential party and
vehicle for Yushchenko’s re-election in 2009.

[2] Second, it would push BYuT into opposition, where it has always felt
rather comfortable. Tymoshenko was the only one of four opposition leaders
who did not stand in the 2004 elections.

If Tymoshenko was in opposition in 2007-2009, during which time Yushchenko
supported a grand coalition, the president could lose orange voters.

[3] Third, the Party of Regions could renege on any agreement to stand aside
in 2009, and members could submit their own presidential candidate.
Alternatively, they might find it difficult to persuade their voters to back
Yushchenko, after seven years of hostile propaganda against him.

Yushchenko is convinced that the 2007 elections are the key to his
re-election in 2009. But not repeating the same strategic mistakes made
against Tymoshenko and Yanukovych in 2005-2006 will also play an

important part in deciding Ukraine’s future.
—————————————————————————————-
(Zerkalo nedeli, August 11-17; Inter TV, August 6; Ukrayinska pravda,
August 2, 13) (LINK: http://www.jamestown.org)
————————————————————————————————
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========================================================
22. ANNA BESSONOVA SWEEPS FIVE GOLDS FOR UKRAINE

People’s Daily Online, Beijing, China, Sat, August 18, 2007

BANGKOK – Ukranian beauty Anna Bessonova shone in the rhythmic

gymnastics finals in Bangkok on Friday by sweeping rope, hoop, ribbon,
clubs and group competition (ropes 5) titles at Bangkok Universiade.

Russia took the other gold in the group competition (hoops 3 plus clubs 2).

Chinese divers also showed their superpower by winning all the three events
they competed on Friday.

Olympic champion Peng Bo started the day with the victory in the men’s 3m
springboard, with teammate and world champion Luo Yutong pocketing the
silver.

Hours later, Peng paired Zhang Xinhua, the overnight winner of the men’s 1m
springboard, to nail down the men’s 3m springboard synchronized gold.

Olympic silver-medalist on women’s 10m platform Lao Lishi had a steady
performance to take the gold medal of the event in Bangkok…………

———————————————————————————————–
LINK: http://english.people.com.cn/90001/90779/6242707.html
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
23. SOROCHINSKAYA YARMARKA (FAIR) HELD IN UKRAINE 
Russia Today, Moscow, Russia, Sunday, August 19, 2007

Sorochinskaya yarmarka, or fair, has been the subject of an opera by famous
Russian composer Modest Mussorgsky and immortalised in literature by
Nikolay Gogol.

Vendors from all over Eastern Europe go there for five days to mingle
and sell goods – Georgian wines, Ukrainian shirts, Russian dolls, and even
African ostriches.

The fair is rich on haggling, arguing and definitely politics, especially on
the eve of another election campaign.

President Yushchenko, the country’s most famous beekeeper, looks down at
the bustling crowds from numerous billboards, while supporters of the Prime
Minister are promoting their party right next to a dummy bear, a popular
photo opportunity.

It seems that it hasn’t changed much since the 19th century.

Sheep, pots, wedding pies, kitchenware, and no map of where exactly these
things are – vendors may have done it on purpose to restore the original
atmosphere. They were a mess but apparently so vibrant and colourful that
famous writer Nikolay Gogol glorified them in his novel.

Living in Russia, he was writing about Ukraine, the village where he was
born and the fair held there.

Actor Bogdan Chernavsky plays the part of the great Russian writer at the
fair. “I think we should drop the discussions if he was a Russian or a

Ukrainian writer. Of course he was Russian, he was writing in Russian
language and is known to the world as a Russian writer. But of course he
has Ukrainian roots, this is his village,” explained Bogdan Chernavsky.

And it remains a melting pot of Slavic cultures.

Natalya came from Russia to visit the fair when she was 13 years old.
Impressed by the fair back then, her family moved to Poltava for good.
Now she’s singing in Ukrainian to an audience from all over the world.

“When we came here for the first time, we tried to get as close to the stage
as possible. The culture fair was amazing, the costumes so bright and
beautiful that I thought I want to be a part of it too. And my dreams came
true,” said Natalya Dyachenko, singer at the Sorochinskaya fair.
——————————————————————————————–
LINK: http://www.russiatoday.ru/news/news/12655
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
24. UKRAINE: HOLOCAUST STORY INSPIRES PRIDE, DOUBT

By Natasha Lisova, Maria Danilova, and Randy Herschaft
Associated Press Writers, Kyiv, Ukraine, Sunday, August 19, 2007

ISPAS, Ukraine  – It is a story of courage and kindness during the first
tragic days of the Holocaust in Ukraine – the tale of how a village rose up
against an anti-Semitic gang of killers to save its Jewish neighbors.

A researcher stumbled on the inspiring story this year. Now some of
Ukraine’s Jewish leaders plan to raise a monument, host a delegation of
students from Israel and stage a ceremony Wednesday honoring this small
farming community in western Ukraine.

But 66 years later there are conflicting accounts of what happened in Ispas
during that terrible summer of 1941, when the Nazi invasion of the Soviet
Union triggered an outbreak of anti-Semitic violence.

Residents and one survivor say the 2,000 villagers risked their lives for
the sake of about 100 Jews, an account supported by some leaders of
Ukraine’s Jewish community and the scholar who uncovered the tale.

But another survivor says there were no heroes in Ispas. And a leading
Holocaust expert says that most of the Jews of Ispas were killed by fellow
villagers.

At the start of World War II, Ukraine had a history of anti-Semitism, from
the pogroms of the czarist era to the silent discrimination of Soviet times.

As Nazi troops and their Romanian allies began occupying western territories
under Soviet rule, the ancient bigotry boiled over into cases of local
residents robbing and killing their Jewish neighbors.

It was an early outburst of the savagery that became the Holocaust.

More than 2,100 Ukrainians have been cited by Israel’s Yad Vashem Holocaust
Memorial for rescuing Jews during the Holocaust, but these were mostly
individual acts of heroism. The Ispas story – if it could be confirmed –
would be a unique case of an entire community in Ukraine defending its Jews.

A leader of Ukraine’s Jewish community has led a drive to honor the village,
including celebrations in which Israeli students are expected to
participate.

“We are very proud that our village didn’t allow bloodshed, didn’t allow
Jews to be killed,” Vasylyna Kulyuk, a frail 80-year-old from Ispas, said in
an interview. She described two of her former Jewish classmates – Geyntsya
Rozenberg and Rifka Gerstel – with tears in her eyes.

“We were at the same class and we shared bread, “she said. “I would like so
much at least to exchange letters with those girls. Only let them be alive.”

Rozenberg apparently perished during the war. But Rifka Gerstel survived.
And she does not recall Ispas fondly.

Gerstel, now 79 and living outside Tel Aviv, told the AP that her neighbors
did stop a gang of anti-Semites from killing the village’s Jews – but then
some villagers turned around and robbed the Jews and drove them out of
their homes.

“They came into the house and took everything,” Gerstel said in a telephone
interview. “We had such a beautiful house. We had a cow. We didn’t say
anything, because we were afraid for our lives. We knew that the Ukrainians
slaughtered all the Jews in one of the villages nearby.”

The next day, she said, the villagers marched the Jews away. Gerstel said
she spent the rest of the war in a ghetto in central Ukraine. Her father,
brother, grandfather and a baby nephew all died. “I suffered, I suffered
very much,” she said, her voice choking.

Told that Ispas was being honored for the treatment of its Jews, she said:
“They don’t deserve any monuments or any prizes.”

There is no dispute over what happened in most of that area – now western
Ukraine – that summer. Thousands of Jews were murdered and their houses
looted.

Those still alive were rounded up by Romanian troops and deported eastward
to camps and ghettos. Some of them survived the war, but many were executed
or died of starvation and disease, according to Radu Ioanid, director for
International Archival Programs at the U.S. Holocaust Memorial Museum.

Israel Minster, another member of Ispas’ long lost Jewish community, has a
different recollection.

Minster, now 86 and living near Haifa, was staying in a neighboring village
at the time of the attack, but other survivors later told him that the
ethnic Ukrainians had rallied to the defense of the village Jews.

“In the neighboring village … they cut everybody into pieces, they killed
everyone,” Minster said by telephone. “I was told that when they (the thugs)
came to Ispas, our village, the elder – I know him, he is a decent (man) –
he didn’t allow it.”

Minster said he was unaware of looting in Ispas, but heard through friends
and neighbors that some residents of nearby areas had pillaged Jewish homes.
“Not everybody helped: some helped and some looted,” he said.

Mykhailo Andryuk, head of the Ispas village council, said residents of his
small community did not loot their neighbors’ homes. Gerstel’s house, he
speculated, might have been on the outskirts of the village and attacked by
the retreating anti-Semitic gang.

Several Ukrainian villagers who were children in 1941 said they vividly
recollect that day.

Tanas Shtefyuk was 15 when he heard that the killers were approaching and
hurried home to spread the news. Shtefyuk recalled that his crippled father,
Ivan, summoned the village elders.

They made a difficult and dangerous choice, Shtefyuk said, to stand together
against the marauders and protect the Jews who lived among them.

Nadiya Vinnytska’s father, Volodymyr, was the village priest. He ran from
his house to confront the attackers barefoot, Vinnytska said, because he
didn’t have time to put on his shoes.

“Calm down. I will not allow you to kill Jews,” the priest said, according
to Vinnytska, now 83. “They are the same people as us.”

Alexei Shtrai, the independent Israeli scholar who uncovered the story,
regards Ispas as an inspirational tale. “I believe the fact of saving Jews
took place; we just have to prove it,” Shtrai said.

The database of victims’ names at Israel’s Yad Vashem, based mainly on
testimony given by survivors and relatives, often years after the event,
lists four people as having died in Ispas. Between 17 and 46 villagers
perished elsewhere, the records show, suggesting – perhaps – that some
Ispas Jews survived the initial pogroms.

Yad Vashem’s encyclopedia of Jewish communities of that area, says most of
Ispas’ Jews were killed by the local population while the rest were deported
eastward.

“The fact that the priest tried (to save the Jews) – I can believe it,” says
Jean Ancel, a leading scholar on Holocaust in the area who co-edited the
encyclopedia.

“But the main question is – were the Jews of Ispas saved or not? The answer
is clear and without any doubt: they were murdered by their neighbors, by
the local population,” he said in an interview.

Scholars say some 1.4 million of Soviet Ukraine’s 2.4 million Jews died in
Holocaust. Today about 400,000 live in Ukraine. No Jews remain in Ispas,
residents say.

Oleksandr Feldman, head of the Kiev-based International Center for
Tolerance, has urged President Viktor Yushchenko to honor Ispas for its
actions during the Holocaust. The center plans to lay a stone in Ispas to
commemorate the event.

Estee Yaari, spokeswoman for Yad Vashem said the story of Ispas needs
to be investigated further.

“These are complex issues and events that took place and in the absence of
conclusive documentary evidence or conclusive testimonies it is difficult to
know exactly what happened,” she said.
————————————————————————————————
Maria Danilova reported from Kiev and Randy Herschaft from New York.
Associated Press Writer Matti Friedman in Jerusalem contributed to report.
————————————————————————————————
LINK: http://www.wtopnews.com/index.php?nid=105&sid=1225048
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
25. THE  NEW NUCLEAR THREAT

COMMENTARY: By Dick Lugar and Sam Nunn
The Wall Street Journal, New York, NY, Sat, Aug 18, 2007; Page A6

Next week, we will travel to Moscow to mark the 15th anniversary of the
Nunn-Lugar Cooperative Threat Reduction Program, a piece of legislation that
has been the foundation of a decade and a half of U.S.-Russian cooperation
to reduce and secure the Soviet Union’s Cold War-era nuclear arsenal.

As the U.S. continues to adjust to a dangerous new era — in which the
greatest security threat is the possibility of a terrorist nuclear attack —
expanding and replicating this model of international partnership is
essential to our national defense.

Back in 1991, when we first proposed working with the Russians to secure and
reduce their weapons, the skeptics were incredulous. Some detractors called
it “aid to the Soviet military.” Our response was clear and direct. The
nuclear threat was changing, and our defense strategies had to change along
with it.

As the curtain was falling on the Cold War, the possibility of an accident
or a nuclear attack by a rogue state or terrorist group was rising. The new
nations of Ukraine, Kazakhstan and Belarus claimed possession of Soviet
nuclear weapons stationed on their soil:
One nuclear power was becoming four.

In Russia, 30,000 nuclear warheads, tons of nuclear, biological and chemical
materials and thousands of unemployed weapons scientists were scattered
across 11 time zones.

The closed society that had sheltered the Soviet Union’s nuclear secrets had
now been ripped wide open — leaving an arsenal of the deadliest weapons on
earth without adequate protection.

The premise of Nunn-Lugar was simple: The security of nuclear weapons

and materials in the former Soviet Union was directly related to our own
security, and we could not act unilaterally. We had to cooperate with the
former Soviet states.

Russia saw cooperation as in its interest as well — to ensure a secure
nuclear stockpile, to help meet arms control treaty obligations and to
return Soviet warheads to Russian soil. Out of these new mutual interests, a
partnership was born. We believe the partnership’s results speak for
themselves.

Ukraine, Kazakhstan and Belarus — for a time, the world’s third, fourth,
and eighth largest nuclear powers — have voluntarily given up their nuclear
weapons. In doing so, they have set a powerful and courageous example for
the rest of the world.

Moreover, today thousands of ex-Soviet weapons scientists are working in
civilian jobs. In addition to the weapons that have been secured, 7,000
nuclear warheads have been deactivated — more than the combined arsenals

of Britain, France and China — along with hundreds of nuclear submarines,
missiles and bombers.

Today, Russia is assuming more responsibility for sustaining the work we
have done together, contributing millions of dollars to major projects such
as the elimination of its massive chemical weapons stockpile.

The Nunn Lugar Program has been recognized, especially in the wake of Sept.
11, 2001, as one of the most essential elements in preventing terrorists
from acquiring weapons of mass destruction.

In light of the accumulated experience of 15 years of successful joint work,
Presidents Bush and Putin should expand Nunn-Lugar and extend it outside the
boundaries of the former Soviet Union to help other countries dispose of
dangerous weapons and materials.

We have already begun: In 2002 the American and Russian governments,

working with the Nuclear Threat Initiative, a private U.S. organization, spirited
more than 100 pounds of nuclear weapons-grade material out of Serbia.

Since 2004, our two countries have been working together to remove
stockpiles of highly enriched uranium from other unsecured facilities around
the world.

Many governments are now quietly inquiring about Nunn-Lugar assistance with
dangerous weapons issues. Through Nunn-Lugar, Albania recently got U.S. help
to destroy a secret Cold War-era stockpile of chemical weapons.

Nunn-Lugar expertise could also be used in North Korea, should Pyongyang
agree to give up its nuclear weapons, or in Southeast Asia, if help is
requested there to secure pathogens and viruses. Joint U.S.-Russian efforts
would confer international legitimacy on these often sensitive missions.

By demonstrating that Russians and Americans are willing to work together
and go anywhere in the world at any time to eliminate a threat, the two
sides can help avert new disasters and add a powerful international tool for
keeping weapons of mass destruction out of terrorist hands.

The former Soviet Union was the starting point for this program, but it must
not be the endpoint. Terrorists seeking nuclear weapons or weapons material
will not necessarily go to where there is the most material, but to where
the material is most vulnerable.

We must expand and extend the Nunn-Lugar concept to help secure and
eliminate dangerous weapons and materials wherever they are in the world.
———————————————————————————————–
Mr. Lugar is a member of the Senate Foreign Relations Committee and Mr.
Nunn, a former senator, is co-chairman and chief executive officer of the
Nuclear Threat Initiative.
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================

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AUR#858 Aug 15 Democracy Under Threat Again; Tymoshenko Has To Delay Campaign; Putin/Yushchenko Cancel; Russia: Was Stalin So Bad?

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
                        
ACTION UKRAINE REPORT – AUR – Number 858
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., WEDNESDAY, AUGUST 15, 2007
INDEX OF ARTICLES  ——–
Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article

1.  DEMOCRACY IS ONCE AGAIN UNDER THREAT IN UKRAINE
ANALYSIS & COMMENTARY: By Nina Khrushcheva
The Daily Star, Beirut, Lebanon, Tuesday, August 14, 2007

2WEST-LEANING OPPOSITION DEMANDS CANDIDATES
By David R. Sands, The Washington Times
Washington, D.C., Tuesday, August 14, 2007

3UKRAINIAN COURT RULES CEC MUST ACCEPT OPPOSITION
CANDIDATES FOR SEPTEMBER ELECTIONS: BYuT LEADER

YULIA TYMOSHENKO FORCED TO DELAY CAMPAIGN
Bloc Yulia Tymoshenko (BYuT), Kyiv, Ukraine, Tue, Aug 14, 2007

4UKRAINE COURT ORDERS ELECTION OFFICIALS TO REVIEW
REFUSAL TO REGISTER OPPOSITION POLITICAL CANDIDATES
Associated Press (AP), Kiev, Ukraine, Tuesday, August 14, 2007

5UKRAINIAN PRESIDENT URGES ELECTORAL BODY TO
REVIEW DECISION AND NOT WAIT FOR COURT INTERVENTION

ITAR-TASS news agency, Moscow, in English 13 Aug 07
BBC Monitoring Service, United Kingdom, Mon, Aug 13, 2007

6IN UKRAINE, FOUR STEPS TO DEMOCRACY
By Taras Kuzio and F. Stephen Larrabee
Special to WashingtonPost.com’s Think Tank Town
Washington, D.C., Thursday, June 28, 2007

7NEW POLITICAL ALLIANCES EMERGE IN UKRAINE
Ukraine’s parties prepare for September elections
COMMENTARY & ANALYSIS: By Taras Kuzio
Eurasia Daily Monitor, Volume 4, Issue 130
The Jamestown Foundation, Wash, D.C., Thu, July 5, 2007

8YUSHCHENKO, YANUKOVYCH, TYMOSHENKO CONTESTING

ELECTION AGAIN, FAMILIAR PARTY PLATFORMS
ANALYSIS & COMMENTARY: By Pavel Korduban
Eurasia Daily Monitor, Volume 4, Issue 154
The Jamestown Foundation, Wash, D.C., Wed, August 8, 2007

9WHAT SHOULD MOSCOW EXPECT FROM KIEV?
OPINION & ANALYSIS: By Viktor Kuvaldin
RIA Novosti, Moscow, Russia, Monday, August 13, 2007

10 UKRAINE: AND THEY’RE OFF! Early parliamentary elections on.

COMMENTARY & ANALYSIS: By Ivan Lozowy
THE UKRAINE INSIDER, Kyiv, Ukraine, Vol. 7, No. 3, Aug 8, 2007
 
11. UKRAINIAN, RUSSIAN PRESIDENTS CANCEL AUGUST MEETING
BACKGROUND: BBC Monitoring research in English 14 Aug 07
BBC Monitoring Service, United Kingdom, Tuesday, Aug 14, 2007

12BRACEWELL & GIULIANI INTERNATIONAL LAW FIRM

By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Wednesday, August 15, 2007

13UKRAINE: TURNING CHALLENGES INTO OPPORTUNITIES
BRIEFING: Oxford Business Group, UK, 19 June 2007

14UKRAINIAN PRESIDENT TURNS CHERNOBYL EXCLUSION
ZONE, 48,870 HECTARES, INTO GAME RESERVE
Interfax-Ukraine news agency, Kiev, in Russian 13 Aug 07
BBC Monitoring Service, United Kingdom, Mon, Aug 13, 2007

15TENNIS SUPERSTAR, MARIA SHARAPOVA, PLANS FIRST TRIP
BACK TO CHERNOBYL SINCE FAMILY FLED 21 YEARS AGO
Beth Harris, AP Worldstream, Monday, Aug 13, 2007

16 HARD LIFE AND ISOLATION FOR WORLD’S TALLEST MAN
By Sabina Zawadzki, Reuters, Podolyantsi, Ukraine, Sat, Aug 11, 2007

17YUSHCHENKO SENT LETTER TO RUSSIA TO HONOR

HUNDREDS OF PROMINENT UKRAINIANS
Interfax Ukraine, Kyiv, Ukraine, Friday, August 3, 2007

18UKRAINIAN PRES YUSHCHENKO CALLS FOR CONDEMNING
ALL TOTALITARIANISM CRIMES, 1937-1938 TERROR VICTIMS
Olha Volkovetska, Ukrainian News Agency, Kyiv, Ukraine, Fri, Aug 3, 2007

19.  UKRAINE: NO “MANAGED TRUTH”
On one personal hiccup in critical thinking, the temptation to adjust
the truth and growing concern over a squalid historical remake
emerging from the recesses of the Kremlin.
ANALYSIS & COMMENTARY: By Halya Coynash
Kharkiv Human Rights Protection Group

Kharkiv, Ukraine, Wednesday, July 11, 2007

20BACK TO THE U.S.S.R. WAS STALIN SO BAD?
By pushing a patriotic view of history and the humanities,

the Kremlin is reshaping the Russian mind.
By Owen Matthews, Newsweek International
New York, New York, Aug. 20-27, 2007 Issue
 

21WORD FOR WORD/NEW RUSSIAN HISTORY
Yes, a Lot of People Died, but …
By Andrew E. Kramer, The New York Times
New York, New York, Sunday, August 12, 2007
 
22RUSSIAN CHURCH, BUT NOT THE KREMLIN, HONORS
THOUSANDS OF STALIN’S VICTIMS, GIANT CROSS ERECTED 
By Michael Schwirtz, International Herald Tribune
Paris, France, Wednesday, August 8, 2007
 
23HUGE CROSS MARKS STALIN PURGES
The cross honours the memory of tens of thousands of Stalin’s victims
BBC News, United Kingdom, Wednesday, August 8, 2007
========================================================
1
DEMOCRACY IS ONCE AGAIN UNDER THREAT IN UKRAINE

ANALYSIS & COMMENTARY: By Nina Khrushcheva
The Daily Star, Beirut, Lebanon, Tuesday, August 14, 2007

The campaign for Ukraine’s parliamentary election of September 30th is
scarcely under way and yet Prime Minister Viktor Yanukovich is already
trying to steal it. Yanukovich was the man who sought to falsify the result
of the presidential election of 2004, inciting the Orange Revolution.

Back then, a peaceful and honest result was reached in the end because
Ukraine’s President Leonid Kuchma refused to heed Yanukovich’s call to
use violence to defend his rigged election. This time it appears that
Yanukovich is prepared to do anything to remain in power.

The dirty tricks began in the midnight hours of August 11th, when Ukraine’s
Central Election Commission (which is packed with Yanukovich placemen)
refused to certify the largest opposition party, the bloc of former Prime
Minister Yuliya Tymoshenko, to participate in the election.

The technicality the commission cited would be absurdly funny if its
potential results were not so incendiary: the CEC objected to the fact that
the Tymoshenko bloc candidates listed only their home towns on the party
list, not their precise street address.

But Tymoshenko’s party successfully submitted its list in the very same
format at the March 2006 election, which demonstrates the glaringly
partisan nature of the election commission’s ruling.

By seeking to cling to power by hook or by crook, Yanukovich is likely to
bring on the deluge. In Ukraine that means not only violent unrest, but
economic decline and renewed repression.

At the end of the day it could lead to the sort of huge street protests that
marked the Orange Revolution, and their attempted violent suppression.

Recent history is replete with alarming examples of dictators and would-be
dictators who refuse to recognize when their time has run out. But for the
past 20 years their blatant political chicanery has been met with a potent
new force: the massed voices of ordinary people who refuse to be cowed.

From the “People Power” revolution that toppled Ferdinand Marcos in the
Philippines in 1986 to Boris Yeltsin’s defiance of the attempted coup
against Mikhail Gorbachev in August 1991, to the Rose, Orange, and Cedar
Revolutions of recent years, dictators have been forced to admit defeat
when enough people stand up to them.

Will it really be necessary for Ukrainians to repeat the Orange Revolution
by again gathering in their millions to shame Yanukovich (a twice convicted
violent felon before he entered politics) to change course?

There is a person who might compel Yanukovich to retreat to democratic
norms and thus hold off such protests: Russia’s President Vladimir Putin.

It is certainly in Russia’s national interest to prevent chaos in the
country’s big next door neighbor. But Putin’s idea of what constitutes
Russia’s national interest makes that type of intervention unlikely.

Weak neighbors are states that the Kremlin can control, so why not expand
Russian power by letting Ukraine slide into protest and anarchy if by doing
so it brings that country back under Putin’s thumb?

Moreover, Putin himself is in the business of sterilizing Russia’s
democratic processes by handpicking his successor and having his courts
and electoral commissions block his opponents from political participation,
often tarring them as traitors. Someone with such contempt for the
democratic rights of his own people is unlikely to champion them abroad.

As is usual with this ex-KGB man, Putin is being cunning about Ukraine, but
he is deluding himself if he thinks that siding with Yanukovich will bring
back effective Russian overlordship of Ukraine.

The days of empire are over, no matter how much wealth oil and gas is
bringing to Russia. Only if Ukraine maintains its independence will the
imperial nostalgia of Russia’s elites be shattered.

So other pressure will need to be applied, primarily by the European Union
and the United States. In 2004, both the EU and the US were tardy in
speaking in defense of Ukraine’s democrats.

Only when the courage of millions of ordinary Ukrainians gathered in central
Kiev galvanized world opinion did the US and EU marshal the courage to
stand up for an honest election result.

And the one state that did stand with Ukraine from the start back then,
Poland, has now antagonized much of EU opinion, particularly in Germany,
because of the paranoid behavior of its current leaders. So Polish influence
in EU councils is at rock bottom.

Luckily, the leaders of Europe’s three biggest states are different people
than in 2004. Angela Merkel, Nicolas Sarkozy, and Gordon Brown appear
to have a clearer appreciation of the union’s security problems to its east,
and so may find the will to act decisively now, rather than dither as their
predecessors did when Ukraine moved into crisis in 2004.

Unless Ukraine’s democratic opposition is allowed to take part in the
election, a new crisis is certain. Tymoshenko, who has survived three
assassination attempts, is not the type of woman to surrender her campaign
on a technicality.

While the Orange Revolution made ordinary Ukrainians more conscious of
their rights than ever before, this alone cannot guarantee that they are
certain to see those rights vindicated in the coming weeks.

However, it will make the job of repressing them much harder. And isn’t
that what the battle for democracy is all about?
——————————————————————————————-
NOTE: Nina Khrushcheva, who teaches at the New School University
in New York, is the author of “Imagining Nabokov: Russia Between Art
and Politics.” THE DAILY STAR publishes this commentary in
collaboration with Project Syndicate (c) (www.project-syndicate.org).
http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=5&article_id=84503
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2. WEST-LEANING OPPOSITION DEMANDS CANDIDATES

By David R. Sands, The Washington Times
Washington, D.C., Tuesday, August 14, 2007

WASHINGTON – Leaders of Ukraine’s largest pro-Western opposition

party – with hundreds of its candidates banned from running for parliament –
demanded yesterday that the ban be reversed and accused the country’s
pro-Russian prime minister of trying to provoke a political crisis.

Supporters of the bloc led by former Prime Minister Yulia Tymoshenko

have appealed to a Kiev court to reverse the election commission’s decision
Friday night for the Sept. 30 vote.

An estimated 1,000 Tymoshenko supporters rallied in the center of the
capital for a second straight day yesterday to protest the ruling.

“They are trying to provoke us to commit illegal actions because of the
ruling, when they can tie us up in court,” said Hryhoriy Nemyria,
foreign-policy adviser to Mrs. Tymoshenko. “It’s really an attempt to
disrupt the entire political process,” he said in a telephone interview from
Kiev.

The snap parliamentary vote is seen as critical to ending a long political
stalemate between pro-Western forces led by Mrs. Tymoshenko and

President Viktor Yushchenko and the pro-Moscow Party of Regions,
led by Prime Minister Viktor Yanukovych.

Mr. Nemyria said his party had been unable to campaign because of the
disqualifications, which he blamed squarely on Mr. Yanukovych.

“There is only a very limited time to campaign, and the other parties are
already out among the voters,” Mr. Nemyria said.

The election commission rejected about 450 candidates supporting Mrs.
Tymoshenko, reportedly for failing to provide complete addresses on their
applications.

The eight Yanukovych appointees on the commission were either absent or
abstained from the ruling, and the applications were rejected because they
did not receive a majority of votes from the 15-member commission.

Mr. Nemyria said his party provided exactly the same information as it filed
for the 2006 vote, and that the rejections were based on more sinister
motives.

Mr. Yanukovych was vacationing in Russia when the electoral commission
issued its ruling, but his aides said the mass rejections were a technical
issue that would be resolved.

“This conflict should soon be over,” Marina Stavnichuk, deputy head of

the prime minister’s office, told reporters in Kiev yesterday. “At issue here
are some shortcomings in the commission’s work and technical matters.”

The Ukrainian Embassy in Washington, saying the election commission is
independent of the government, declined to comment on the ruling.

Several commissioners defended their action in a joint statement issued
Sunday.

“No one will ever manage to force us into making an illegal decision, even
if such indecent and unacceptable methods as threats and intimidation are
used,” the commissioners said, according to the Interfax-Ukraine news
agency.

Mrs. Tymoshenko and Mr. Yushchenko were leading figures in Ukraine’s

2004-05 Orange Revolution, which overturned a fraud-ridden presidential
election originally won by Mr. Yanukovych. The pro-Western reformers
received strong support from the United States and the European Union.

Feuding and infighting among Ukraine’s Western-oriented parties allowed Mr.
Yanukovych to stage a political comeback last year, reclaiming the prime
minister’s post last August. But the government has faltered in recent
months, with neither side enjoying a clear majority.

Polls suggest that the Sept. 30 vote may not solve the crisis, with Mrs.
Tymoshenko and Mr. Yanukovych claiming about a third of the vote and

Mr. Yushchenko and other smaller parties sharing the rest.

Mr. Nemyria said Mr. Yanukovych’s party also could be trying to delay the
parliamentary vote until later in the fall, moving them closer to the
Russian State Duma elections scheduled for December.
————————————————————————————————–
http://www.washingtontimes.com/article/20070814/FOREIGN/108140031/1003
————————————————————————————————–

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3. UKRAINIAN COURT RULES CEC MUST ACCEPT OPPOSITION
CANDIDATES FOR SEPTEMBER ELECTIONS: BYuT LEADER

YULIA TYMOSHENKO FORCED TO DELAY CAMPAIGN

Bloc Yulia Tymoshenko (BYuT), Kyiv, Ukraine, Tue, Aug 14, 2007

KYIV – On Tuesday, August 14, a Ukrainian court ruled that the Central
Election Committee (CEC) must, by tomorrow, act to register the major
opposition party, Bloc Yulia Tymoshenko (BYuT), for the September 2007
parliamentary elections. The court found that BYuT was in compliance with
all laws and gave the CEC two days to appeal the verdict.

This court ruling came after the CEC refused to register BYuT for a second
time on Monday.

Last Friday, the CEC, which is dominated by representatives from Prime
Minister Viktor Yanukovich’s Party of Regions, first refused to certify Bloc
Yulia Tymoshenko (BYuT) for the upcoming parliamentary elections, to the
consternation of Ukrainians and many Western observers and government
officials.

Supporters of BYuT have begun to set up tents and demonstrate in front of
the CEC headquarters.

Not only did the CEC again vote Monday against BYuT’s participation in the
campaign, it also voted to pass a measure stating that BYuT supporters who
had rallied at CEC headquarters had no right to publicly protest the CEC
decision to disqualify BYuT.

“This is a brazen, and quite frankly, politically crude attempt to disrupt
the development of a democratic and civil society in Ukraine” said Ms.
Tymoshenko.

On the court ruling, Ms. Tymoshenko added that “despite efforts at electoral
manipulation, our democracy has progressed to the point where these issues
may be addressed in our courts. Now we must see if the CEC and its

governing party leadership will respect the decisions of Ukrainian courts and
the rule of law.”

“We must remain vigilant that democracy is not overrun by manipulation”,

she concluded.

BYuT considers the CEC ruling to be an illegal, politically-motivated
attempt designed to delay and disrupt BYuT’s ability to enter the political
campaign, which has already begun.

Because these are early elections, the entire campaign is limited to
approximately 60 days, so every day is vital.

Indeed, Ms. Tymoshenko was scheduled to launch her campaign in her

hometown Dnipropetrovsk today, Tuesday, August 14th.

However, if she had done so, she would have been in violation of the CEC
ruling, which was based upon interpretation of the rules governing how
election candidates filled in their electoral qualification forms.  -30-
———————————————————————————————-
NOTE: TD International, Washington, is the FARA registered

representative of BYuT. (202)-872-9595
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4. UKRAINE COURT ORDERS ELECTION OFFICIALS TO REVIEW
REFUSAL TO REGISTER OPPOSITION POLITICAL CANDIDATES

Associated Press (AP), Kiev, Ukraine, Tuesday, August 14, 2007

KIEV – A Ukrainian court has ordered election officials to review their
refusal to register hundreds of opposition party candidates running in next
month’s parliamentary vote, the party said Tuesday.

The Central Election Commission declined Saturday to register members of
Bloc Yulia Tymoshenko, casting doubt on the Sept. 30 election called to
defuse a months-long power struggle between the country’s president and
prime minister.

Kiev’s District Administrative Court Tuesday ordered the commission, which
said the candidates had failed to provide their exact street addresses, to
consider the applications again, the opposition said. Court officials,
however, couldn’t immediately confirm the order.

Tymoshenko, a former prime minister, has called the commission’s move
politically motivated and hundreds of her supporters have been holding
rallies outside its building.

Ukrainian politics has been riven by a power struggle between President
Viktor Yushchenko, who has pledged to bring the former Soviet republic
closer to the West, and Prime Minister Viktor Yanukovych, who is seen as
more friendly to Russia.

The two were bitter rivals in the 2004 presidential election. Yanukovych was
initially declared the winner, but Yushchenko won a court-ordered revote
after weeks of mass protests against electoral fraud, which became known as
the Orange Revolution.

Yanukovych staged a remarkable political comeback last year when his party
received the most votes in parliamentary elections and formed the ruling
coalition.
————————————————————————————————

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========================================================
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========================================================
5. UKRAINIAN PRESIDENT URGES ELECTORAL BODY TO
REVIEW DECISION AND NOT WAIT FOR COURT INTERVENTION

ITAR-TASS news agency, Moscow, in English 13 Aug 07
BBC Monitoring Service, United Kingdom, Mon, Aug 13, 2007

KIEV – Ukrainian President Viktor Yushchenko asked the Central Electoral
Commission “to consider voluntarily again”, without waiting for court
intervention, the documents of the Yuliya Tymoshenko bloc for candidates’
registration for the early parliamentary election scheduled for 30
September, Maryna Stavniychuk, the deputy head of the presidential
secretariat, Yushchenko’s representative in the Central Electoral Commission
and the Constitutional Court, told a briefing on Monday [13 August].

“The Central Electoral Commission will thus resolve the problems in the
election process that has arisen now and remove questions about the
organization of the early parliamentary elections regarded as
technicalities,” Stavniychuk said.

She said Yushchenko on Monday received Tymoshenko’s letter calling for
“every measure to ensure citizens’ rights and freedoms”. After that the
president turned to the Central Electoral Commission. “The president’s
request is quite justifiable and is based on provisions of Ukraine’s
existing legislation and is in keeping with the provisions of the
Constitution,” Stavniychuk said.

On the night to Saturday, the Central Electoral Commission refused to
register the list of parliamentary candidates from the Yuliya Tymoshenko
Bloc, as, in violation of the law for candidates’ registration, it did not
supply their addresses.

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6. IN UKRAINE, FOUR STEPS TO DEMOCRACY

By Taras Kuzio and F. Stephen Larrabee
Special to WashingtonPost.com’s Think Tank Town
Washington, D.C., Thursday, June 28, 2007

The Ukrainian parliament has wound up its life and set the stage for early
parliamentary elections on Sept. 30, four years ahead of schedule. The
elections could give Ukraine’s revolution — recently mired in crisis — new
momentum and have an impact elsewhere in the post-Soviet space.

President Viktor Yushchenko and Prime Minister Viktor Yanukovych agreed

to hold early elections after a tense two month stand-off, caused by Prime
Minister Yanukovych’s attempt to diminish the powers of the president and
reverse many of Yushchenko’s pro-reform and pro-Western policies.

Yanukovych and his allies removed checks and balances by seeking a
constitutional majority that threatened to sideline the president and create
a powerful prime minister.

Yushchenko’s decision to dissolve parliament and call for new elections
demonstrated a resolve and decisiveness that had been often lacking in the
past. Yushchenko had little choice. He had to reshuffle the deck or watch
his authority — and Ukraine’s hopes for democratic reform and integration
into Euro-Atlantic structures — become progressively emasculated and
diminished by Yanukovych.

Four steps are crucial if the crisis is to contribute to democratic
consolidation in Ukraine:

[1] First, all sides need to adhere to the compromise agreements that have
been reached. These compromises should ensure that the checks and balances
of the reformed parliamentary constitution are not again threatened by the
pro-government coalition attempting to forcefully usurp monopoly power by
seeking to establish a constitutional majority.

Ukraine cannot continue to have periodic breakdowns and crises every six
months. The nation’s four crises since the Orange Revolution threaten to
bring on Ukraine fatigue by Western governments giving up hope in
Yushchenko’s ability to promote democratic change in Ukraine.

[2] Second, if Ukraine’s 2007 elections are recognized as having been held
in a “free and fair” manner by international organizations, as last year’s
elections were, the outcome should be accepted by all sides. Early elections
will permit a new parliament to begin office with a democratic mandate built
on a consensus on domestic and foreign policy goals enshrined in law.

Yushchenko needs to act decisively following the elections by ensuring a
coalition and government is in place, thereby not repeating last year’s
six-month post-election crisis.

[3] Third, all sides in Ukraine need to adhere to the June 2005
recommendations of the Council of Europe’s legal advisory board, the

Venice Commission, and to join the president’s constitutional commission.

The Venice Commission recommended a range of improvements to the

reforms in imperative mandates, inter-institutional relations, human rights and
the constitutional court. These reforms, the Venice Commission said, would
“improve the state of democracy and rule of law in their country.”

[4] Fourth, active Western support will be important. The crisis in Ukraine
provides an opportunity to consolidate the democratic gains of the Orange
Revolution through building democracy at home and integrating Ukraine into
the Euro-Atlantic community of democratic nations.

If fair and free elections are carried out, the European Union should
quickly move to negotiate a free trade agreement with Ukraine following its
entry into the World Trade Organization. NATO should continue to hold out
the offer of a membership action plan that Ukraine may find appealing.

The West has a strong political stake in Ukraine’s success. Ukraine’s
evolution will have a significant impact on the Western regions of the
post-Soviet space.

If democracy can be consolidated in Ukraine, the pro-Western orientation of
Georgia and Moldova will be strengthened, while Alyaksandr Lukashenko’s
autocratic rule in Belarus will be weakened.

But if Ukraine’s democratic reforms fail, the prospects for reform and
closer ties to Euro-Atlantic structures in all three countries will be set
back, perhaps irrevocably.

Russia’s political evolution could also be affected. If Ukraine’s Orange
Revolution gains new momentum, it will be harder for Russian President
Vladimir Putin’s successor to continue the progressive backsliding on
democratic reform that has been a hallmark of Putin’s rule.
——————————————————————————————
NOTE: Taras Kuzio is a research associate at the Institute for European,
Russian and Eurasian Studies, Elliott School of International Affairs,
George Washington University. Stephen Larrabee holds the Corporate

Chair in European Security at the RAND Corporation, a nonprofit
research organization.
————————————————————————————————
http://www.washingtonpost.com/wp-dyn/content/article/2007/06/27/AR2007062702303.html?sub=AR
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7. NEW POLITICAL ALLIANCES EMERGE IN UKRAINE
Ukraine’s parties prepare for September elections

COMMENTARY & ANALYSIS: By Taras Kuzio
Eurasia Daily Monitor, Volume 4, Issue 130
The Jamestown Foundation, Wash, D.C., Thu, July 5, 2007

As Ukraine prepares for the September 30 parliamentary elections, the
balance of power among political forces is markedly shifting.  The
pre-democratic “Orange” camp is reconfiguring while the long-dominant
Dnipropetrovsk camp is dwindling in influence.

On Thursday, June 28, President Viktor Yushchenko’s Our Ukraine party,
headed by Vyacheslav Kyrylenko, and Yuriy Lutsenko’s People’s Self Defense
signed an agreement to create an election bloc for the September 30
parliamentary elections. The election bloc still must decide who will head
the bloc and who will take the first 10 places.

The Our Ukraine-People’s Self Defense alliance has three advantages:
First, it likely will add another 6-7% to Our Ukraine’s expected 14% vote
level, returning the party to its 2002 level.

Second, it will attract voters in central Ukraine, the traditional
stronghold of the Yulia Tymoshenko Bloc (BYuT), the Socialists, and the
Agrarians. Although Yushchenko swept central Ukraine in the 2004
presidential election, Our Ukraine fared poorly in the region in the 2006
parliamentary races.

Third, the alliance rehabilitates Our Ukraine, as Lutsenko is popular among
Socialist and Pora voters and NGO activists. Our Ukraine’s popularity fell
following “corruption” charges against its senior business leaders in
September 2005.

The new Our Ukraine-Lutsenko alliance called upon other “democratic” forces
to join them. The Pora party has agreed to merge with the new bloc.

Other national democrats, including the Reform and Order party) joined

BYuT earlier, while the Ukrainian Rightists are unwilling to give up their
independence.  The Ukrainian Rightists have balked at plans to merge Our
Ukraine and People’s Self Defense following the elections.

However, including the Ukrainian Rightists will not help the Orange alliance
much. With returns of only 1-2% expected, the Ukrainian Rightists would add
few votes. In addition, their main base of support, five oblasts of Galicia
and Volhynia in western Ukraine, are already strongholds of Our Ukraine.

The Ukrainian Rightists include several discredited politicians, such as the
Congress of Ukrainian Nationalists, led by sacked Naftohaz Ukrainy chairman
Oleksiy Ivchenko.

Our Ukraine refused to include Ivchenko in its list. The Ukrainian Rightists
may also include the extreme right All Ukrainian “Svoboda” (Liberty) party
led by Oleh Tiahnybok, who was expelled from Our Ukraine’s parliamentary
faction in 2004 following a scandalous anti-Russian and anti-Semitic speech.

Despite these shifting alliances, Ukrainian politics are become more
predictable. Most observers agree that the winning party will take 45-55% of
the total, and no party is likely to win a landslide. This result mirrors
the pattern of the Ukrainian presidential elections in 1994 and 2004, where
the winner similarly took about 52%.

Only four of the five political forces now in parliament are likely to win
seats for a 2007-2012 term. Parliament will feature two Blue forces (Party
of Regions, Communists) and two Orange forces (Our Ukraine bloc, BYuT).

These two camps are likely to have similar vote tallies and a similar number
of parliamentary deputies. The Socialist Party, which won four parliamentary
elections between 1994-2006, is now polling barely 1%.

This configuration makes Viktor Yanukovych and Tymoshenko the leading
candidates for the more powerful prime minister’s position. While President
Yushchenko was willing to accept Yanukovych as prime minister in 2006, he no
longer trusts Yanukovych in this position.

A three-party system appears to be emerging, composed of two Orange parties
(center-left BYuT and center-right Our Ukraine-Lutsenko) and the centrist
Party of Regions. Since the 2004 presidential and 2006 parliamentary
elections, the Communist Party has lost support to the Party of Regions, and
it is unlikely to survive as a serious political force.

One major development is the marginalization of the Dnipropetrovsk clan.
Ukraine’s regionalism means that no political force has nation-wide appeal.
Two Orange political forces dominate western and central Ukraine, while the
Party of Regions controls the other half of Ukraine.

This is the first time in Ukraine’s history that the Donetsk clan has
controlled Ukraine. In the Soviet era, Ukrainian politics were dominated by
the famous Dnipropetrovsk clan (which included Soviet leaders Leonid
Brezhnev and Nikita Khrushchev), Kyiv, and Kharkiv.

Although its influence dipped immediately following independence, the
Dnipropetrovsk clan re-entered Ukrainian politics after Leonid Kuchma was
elected president in July 1994.

After three years of political crises, the upcoming parliamentary elections
give Ukraine a chance over the following five-year parliament to consolidate
the democratic gains of the Orange Revolution.

The three keys to this consolidation will be repairing the rule of law,
which was badly damaged during the spring crisis, settling constitutional
questions, and quickly establishing a parliamentary coalition and government
following the elections. (http://www.jamestown.org)
———————————————————————————————–
(Washington Post, November 19, 2004, www.samooborona.in.ua,
www.razom.org.ua, Ukrayinska pravda, June 25-28)

————————————————————————————————
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========================================================
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========================================================
8. YUSHCHENKO, YANUKOVYCH, TYMOSHENKO CONTESTING
ELECTION AGAIN, FAMILIAR PARTY PLATFORMS

ANALYSIS & COMMENTARY: By Pavel Korduban
Eurasia Daily Monitor, Volume 4, Issue 154
The Jamestown Foundation, Wash, D.C., Wed, August 8, 2007

The campaign for the September 30 parliamentary elections officially kicked
off in Ukraine on August 2.

This campaign will see the same contenders as in the March 2006 election:
President Viktor Yushchenko’s Our Ukraine-People’s Self-Defense bloc

(NUNS), except last year it was just Our Ukraine, without Yuriy Lutsenko’s
Self-Defense; the Party of Regions (PRU) of Prime Minister Viktor
Yanukovych, which represents Eastern Ukraine’s big businesses; and the
populists from the Yulia Tymoshenko Bloc (BYuT).

The Communists and the Socialists, which barely made it into parliament in
2006, again will be fighting for their survival. The Communists have better
chances than the Socialists, who apparently lost much of their electorate
because of their largely unexpected coalition with the PRU. Both are set to
enter a coalition with the PRU again, once in parliament.

So far, the campaign is focused on domestic problems, such as corruption,
the cancellation of the deputy immunity from prosecution (a top issue with
both NUNS and BYuT), amending the constitution, the demographic problem (all
three main players promise more money for one-time payments for childbirth)
and, to a lesser extent, the official language issue.

Foreign political issues are not high on the agenda, and none of the main
players have positioned themselves as pro-Russian or decidedly pro-Western.
NUNS is pro-NATO; the PRU reluctantly concedes that NATO membership

may be on the agenda in the future; and this issue is not among BYuT’s top
priorities.

Rumors persist about PRU infighting. Several newspapers have speculated that
Yanukovych may be replaced as prime minister by either Ukraine’s richest
man, Renat Akhmetov, who is viewed as the PRU’s main financier, or

Akhmetov’s right-hand man, Borys Kolesnikov. Both have denied this.

Akhmetov said he is not planning to work in the executive at all, and
Kolesnikov repeated in several interviews that there is no need to replace
Yanukovych as head of the cabinet.

The PRU, confident of its strength, has been the only force among the three
main players to not form a bloc. Instead, several small parties ceased to
exist to enable their leaders to join the PRU’s list for the election.

The list, adopted at the party’s pre-election convention on August 4,
includes a record number of government officials: five deputy prime
ministers and 11 cabinet ministers.

The head of Yushchenko’s office, Viktor Baloha, has suggested that the PRU
will not resist the temptation of using “administrative resources,” meaning
the government’s illegal participation in the campaign in favor of one
party, a frequent charge against former president Leonid Kuchma.

NUNS has ostentatiously crossed Yushchenko’s aides, including Baloha,

from its list, in order to preclude accusations against Yushchenko of
interference in the election process. Furthermore, Yushchenko in August 6
dismissed six advisers who had decided to run for parliament on the NUNS
list.

There are, however, two key ministers among the top 10 on the NUNS list:
Foreign Minister Arseny Yatsenyuk and Defense Minister Anatoly Hrytsenko.

The PRU has already accused Hrytsenko of having recourse to administrative
resource, claiming that military servicemen were spotted distributing NUNS
campaign materials.

One of the main questions that the election should resolve is whether the
current opposition will remain united. Tymoshenko and Our Ukraine (NU)
leader Vyacheslav Kyrylenko have pledged that their parties would be
together, and never form a coalition with the PRU.

Lutsenko, who tops the NUNS list, however, has not ruled out his party’s
cooperation with the PRU in a new parliament on specific issues like
constitutional amendments or new electoral legislation.

“We have to take into account that about one in three Ukrainians backs the
PRU,” he told Inter TV, urging “dialogue” with the PRU. Yanukovych,
addressing the PRU convention on August 4, urged a broad coalition, but he
did not mention either NUNS or BYuT specifically.

Tymoshenko, addressing her convention on August 5, said that corrupt
officials should be imprisoned for life, and that judges should be elected
by popular vote. BYuT also seeks a new constitution in order to strengthen
the presidency.

Tymoshenko also promised to do her utmost to revise gas agreements with
Russia. She wants to remove intermediaries in the natural gas trade, and she
also pledged to return to cheaper gas prices for Ukraine.

Recent opinion polls show that not much should change in parliament after
the election, so Yushchenko and Tymoshenko’s hopes for a parliament
dominated by their coalition will hardly come true. The PRU is the confident
leader of popular sympathies.

Some 30-33% of Ukrainians are ready to vote for it, according to the polls
conducted independently by SOCIS and the Public Opinion Foundation in

June and July.

NUNS and BYuT will contest the second position. They should score
respectively 13-15% and 14-17.5%, according to the pollsters. The Communists
should score 3.5-5%. The Socialists may fail to clear the 3% barrier, as
public support for them hovers around 1.1-2.5%. (http://www.jamestown.org)
———————————————————————————————–
(Glavred.info, July 30; UNIAN, July 28, August 1, 4; Segodnya, August 2;
Interfax-Ukraine, Channel 5, August 4; Inter, August 5; Ukrayinska pravda,
August 6)
———————————————————————————————–
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9.  WHAT SHOULD MOSCOW EXPECT FROM KIEV?

OPINION & ANALYSIS: By Viktor Kuvaldin
RIA Novosti, Moscow, Russia, Monday, August 13, 2007

MOSCOW – A short summer recess is coming to a close. Before long,

Ukraine and Russia will be in for a hot fall – parliamentary elections.

For Ukraine, this is the moment of truth, a hope to come out of a deep
political crisis, which has been tormenting the country with periodic
aggravations for months. For Russia, this is no more than a training session
before the main event of the political year – presidential elections next
March.

Coincidence in time is largely reducing bilateral interest in each other’s
political cycles. Each neighbor is primarily concerned with its own

domestic affairs.

No matter how we treat the powers that be, our life depends on them,
especially in former Soviet republics. Only professionals can afford the
luxury of closely following both election campaigns at once.

But the political calendars are not all-important. In the past 16 years, we
have moved away from each other so much that our interest in bilateral
affairs has become much less emotional than it used to be – sometimes

over the top.

We have come to realize that we are no longer bound by one and the same
chain, and can choose where to go without paying much attention to a
neighbor. This is particularly true of our part of the world, where one
group makes a choice and another pays for it through the nose.

But no matter what importance we attach to elections, correlation of forces
in parliament, political reforms, and foreign policy alliances and
misalliances, they do not determine the future of our countries or their
relations. The emergence of Russia and Ukraine on the political map
coincided with belated, wild return of our nations to the primordial
bourgeois civilization.

The owner’s instinct, big money and gold rush are bossing the show on the
post-Soviet space without any regard for law, morality or supreme national
considerations.

Private ownership has enabled individualism to make a historic revenge – in
the Soviet times public interests prevailed over any individual
manifestations, whereas now the reverse is true – individualism is ousting
public values all along the line, reaching unparalleled cynicism at the top.

Many members of our so-called elites are thinking much more about their own
pockets than destinies of their countries. The civil society in Ukraine and
especially in Russia is still too weak to make them forget this bad habit.

This is why they enjoy more freedom of action than is normal for Europe.
This is also why our nations have to pay so dearly for the wrong choice of
rulers.

All this is true, but nonetheless, for Moscow, Ukrainian elections are not a
routine event, and not because good guys are fighting bad guys or because
pro-Russian leaders are battling against their enemies. We don’t have
supporters there, except for the heroic Natalia Vitrenko (a curious opposite
of the Iron Yulia Tymoshenko).

This is normal. There are no pro-Ukrainian politicians in Russia, either,
and nobody is surprised that they are none. Why should we apply a different
yardstick to Ukraine?

Any pro-Russian politician is bound to become a marginal with the
consolidation of Ukraine’s independence and we should not expect

Yanukovich and his entourage to be happy to play this role.

A sensible approach lies elsewhere. In principle, it does not differ from
what is accepted universally. I mean the willingness of certain political
forces in Ukraine to take into account Russia’s legitimate interests in
building their strategy on many issues of mutual interest. In other words,
develop partner relations to mutual benefit.

Our nations have truly unique potentialities in this sphere, given goodwill
and a sober approach. The benefits of cooperation and the costs of conflicts
are equally great for both sides. The problem is that not infrequently the
national interests are being replaced with the opportunistic considerations
of the clans, self-centered calculations and personal considerations.

The Ukrainian elections’ political agenda consists of numerous and diverse
issues. It is up to the Ukrainians how to resolve them. We must respect
their choice whether we like it or not (reciprocity would be welcomed).

But there is one urgent problem, which affects Russia’s vital interests. It
cannot and will not passively watch the increasingly overt attempts of
certain Western circles to draw Ukraine into NATO.

Probably, Kiev, just as many other European capitals, does not fully
understand why Moscow is so sensitive to NATO’s continued eastward
expansion. The Cold War is over; the likelihood of an armed conflict between
NATO and Russia is close to zero; and they have established good working
relations.

It would seem that there are no grounds for concern and that Moscow’s

morbid reaction may be treated as a leftover syndrome of the past era. But in
reality, the Kremlin’s approach is quite rational. The world’s most powerful
military-political alliance is being deployed at Russia’s borders.

This is a bloc, which does not invite Russia to become a member, where
Russia is not welcome. NATO does not even consider Russia’s interests too
much, thereby compelling it to take adequate measures.

This is all irritating by itself, but the main point is that the
NATO-offered semi-decorative partnership is increasingly revealing what is
for Russia an alarming reality – NATO has become a quite effective
instrument for ousting Russia from the European space. As Europe’s biggest
country, Russia cannot accept this turn of events under any circumstances.

To sum up, Ukraine’s European choice is logical and understandable. Russia
is striving to move in the same direction. Ukraine and Russia should help,
or at least not obstruct each other’s way forward.

Together, they will find a befitting place in the European family easier and
quicker. Divided, they will not fulfill their historic mission in the world.
———————————————————————————————–
Ph. D. Viktor Kuvaldin (History) heads a chair at the Moscow School of
Economics of Moscow State University. The opinions expressed in this

article are the author’s and do not necessarily represent those of RIA
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
10. UKRAINE: AND THEY’RE OFF! Early parliamentary elections are on.
 
COMMENTARY & ANALYSIS: By Ivan Lozowy
THE UKRAINE INSIDER, Kyiv, Ukraine, Vol. 7, No. 3, Aug 8, 2007

Despite early misgivings and some desperate flailing from Socialist Party
Chairman Oleksandr Moroz, both Viktor Yanukovych and Viktor

Yushchenko are going ahead with the September 30, 2007 election date.
The new electionsare supposed to settle the long-running struggle for
power between President and Prime Minister.

They are unlikely to do anything of the sort.

Yanukovych’s Party of Regions are in the ascendant. In elections held only
a year and a half ago, the Party of Regions won a convincing first place.
Now, thanks to Yushchenko, they dominate the government and are sure to
bring into play “administrative resource,” a euphemism for government power
in the service of narrow, political interests. The power of the purse,
budgetary and a myriad of other financial allocations present powerful
weapons to use in convincing local government and business leaders to
support the Party of Regions.

The Party of Regions is well disciplined. They have also been flexible
enough to take on board representatives from two other, smaller, but still
important clans. Inna Bohoslovska, a protege of the oligarch Viktor
Pinchuk, and Nestor Shufrych, of the Social Democratic Party (united) —
the SDPU(o) — are in the top five of the corresponding election list.

Given that these elections should, from the Party of Regions’ view,
entrench them in power, the party’s informal head and Ukraine’s richest
man, Renat Akhmetov, will not be stingy in spending party funds. Through
Yanukovych’s government, Akhmetov and his party have had ample time to
gobble up resources from “The Trough,” as the State Budget is sardonically
referred to.

Thus Yanukovych and company look set to significantly increase their 2006
results of 32%, a result on the order of 36-40% is entirely possible.

Yulia Tymoshenko will also doubtless improve on her result of 22% in 2006.

But Tymoshenko is also on a collision course with herself. Her consistently
very high negative ratings create a relatively low ceiling for her
ambitions. Her passivity before the pre-election period contributed to the
rise of an alternative “leader of the opposition” in the form of former
Interior Minister Yuriy Lutsenko.  Lutsenko is allied with the Our Ukraine
coalition and some of his poll ratings reach a respectable 6%.

Yushchenko’s “Our Ukraine – People’s Self-Defense” coalition, on the other
hand, has an uphill climb ahead of it.

Shut out from executive power by the very people their informal head, the
President, put in office, Our Ukraine has little financing available and a
serious image problem.

A much touted reunion of nine political parties in the “Our Ukraine”
coalition is no more than an empty space within a shell, since most of the
parties are miserly groupings with no grass-roots organizations or impact
on society. After the elections, many of the nine signatories to a pact to
form one, united party will not stay the course, preferring their small,
separate “ant-hills.”

Recent polls have generously given the Our Ukraine coalition 12-16%. In
reality, the pent-up anger at Yushchenko’s failed promises bodes a severe
disappointment for adherents of the Orange Revolution. Just the dismay at
Yushchenko’s appointment of Yanukovych following a campaign slogan of
“Prison for the bandits!” will cost his coalition dearly two months from
now.

If Our Ukraine has troubles, then Moroz’ Socialist Party is deader than
dead. His betrayal of the Orange Coalition and switch to Yanukovych’s ally
has decimated his electoral support. Now Moroz has been outed by
Yushchenko’s decrees dissolving parliament.

Although Yushchenko has seemed to act forcefully the last several months,
this is not to his own credit. The reason for Yushchenko’s recently
uncovered backbone is his head of the presidential Secretariat, Viktor
Baloha. Consequently, the Party of Regions have taken to referring to
“certain bureaucrats” or “the President’s office” as the source of their
woes in the conflict with Yushchenko.

Baloha is a small-time Mafiosi from the deep Western region of Zakarpatya.
He gained prominence as Yushchenko’s ally in a vicious local conflict with
the SDPU(o) in the spring of 2004, known as the “Mukachevo” affair.

Knowing full well that Yanukovych’s principal strength lies in his grip on
the government, Baloha personally opened an early front on the panoply of
ministers the Party of Regions are mustering to garner votes, but this use
of “adminresurs” simply cannot realistically be countered.

The big question is who will form an absolute majority coalition after the
elections. If, as seems likely, the three principal groups divide
parliament’s seats so that no single one of them can form a coalition, a
“grand coalition” between the Party of Regions and Our Ukraine is entirely
possible.

The major problem with a revival of the Orange coalition is that Tymoshenko
repels strong personalities as much as she attracts public attention. As a
weak politician, Yushchenko has been one of the few with whom Tymoshenko
has been able to work. Baloha, on the other hand, is rumored to harbor
ambitions of replacing Yanukovych as Prime Minister. He is unlikely to
calmly contemplate Tymoshenko’s return to this post.

Baloha recently publicly lauded new Tymoshenko’s political program,
“Ukraine’s Breakthrough.” In the Byzantine world of Ukrainian politics,
this is as good as declaring that he is preparing to stab Tymoshenko in the
back.

————————————————————————————————
THE UKRAINE INSIDER – is distributed via the Internet free of charge to
all interested parties as a source of in-depth information on political events
in Ukraine, including behind-the-scenes coverage of significant current
issues, the positions of policy-makers, tactics and strategy information on
Ukraine’s ongoing struggle toward a free and democratic society.
Correspondence should be addressed via the Internet to: lozowy@i.com.ua
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
11. UKRAINIAN, RUSSIAN PRESIDENTS CANCEL AUGUST MEETING

BACKGROUND: BBC Monitoring research in English 14 Aug 07
BBC Monitoring Service, United Kingdom, Tuesday, Aug 14, 2007

Ukrainian President Viktor Yushchenko’s visit to Russia, tentatively
scheduled for 15-20 August 2007, has been postponed until late October-

early November, the Ukrainian president’s press service has said.

Yushchenko was to meet Russian President Vladimir Putin at a meeting of the
Yushchenko-Putin interstate commission. The two presidents were to sign the
Ukrainian-Russian action plan for 2007-08. Yushchenko dubbed the plan as a
“road map” that would deal with all key problems between the two countries.

August meeting put off reportedly due to coming election in Ukraine

The first official indication of plans for the August visit came at a news
conference Yushchenko gave after meeting Putin in St Petersburg on 10 June.

According to an official version quoted by the Ukrainian edition of the
Russian newspaper Izvestiya, Izvestiya v Ukraine, the visit was delayed to
make additional preparations for the commission meeting.

Media reports suggest that the meeting between the presidents was postponed
as Moscow wants to see the outcome of an early parliamentary election in
Ukraine scheduled for 30 September before deciding on whether to raise the
price of gas for Ukraine.

The director of the Ukrainian Sofiya centre for social studies, Andriy
Yermolayev, speculated that the Kremlin was mostly interested in postponing
the meeting until after the 30 September election as the opposition is
gaining support in Ukraine and its slogans on revising relations with Russia
are becoming increasingly popular.

Ukraine currently pays 130 dollars per 1,000 cubic metres of gas but Putin
and other Russian leaders threatened to raise the price of gas, especially
if Ukraine chooses an unfriendly course after the election.

Putin warned on 4 June, “We have been subsidizing Ukraine for 15 years with
a low price for gas amounting to 3bn-5bn dollars annually. We do not intend
to do this further.”

Other Russian politicians said that Gazprom should raise its price from 130
dollars to the European levels of 230 dollars as early as the fourth quarter
of 2007 if the Orange forces gain power in the coming election.

Yushchenko said in a 4 July interview with four Moscow newspapers that he
would bring up the question of gas imports in an August meeting with Putin,
proposing a formula for setting gas prices to avoid sharp, unpredictable
hikes.

“The upward trend in pricing is obvious, but I want this trend to have a
predictable nature,” Yushchenko said. He explained that based on this
formula – calculated on comparable rises for other forms of energy such as
coal and uranium – the annual price of gas can rise 10-20 per cent but not
to 235 dollars per 1,000 cu.m.

“Prices go up 10-20 per cent every year. Even if we had factored in a
100-per-cent increase in the uranium price in 2005, we would have never
arrived at 235 dollars per 1,000 cubic metres, which was the price we were
offered,” Yushchenko told the Russian newspaper Novaya Gazeta on 9 July.

Ukrainian political analyst and MP Dmytro Vydrin suggested that Yushchenko
wants to wait for a reformatting of Ukraine’s political elite and of that
part of it which will be in charge of Ukrainian foreign policy following the
election before he gets down to preparations for his Russian visit.

Vydrin believes that Yushchenko sees no point in involving in talks
officials who may lose their seats after the general election.

History of Previous Visits
[1] Yushchenko’s first visit to Moscow on 24 January 2005:
Yushchenko’s first meeting with Putin after election as president was in
Moscow on 24 January 2005 right after his inauguration on 23 January.
Opposition leader Yuliya Tymoshenko’s appointment as Ukraine’s acting prime
minister was announced when Yushchenko’s plane landed in Moscow.

The appointment looked fairly provocative ahead of Yushchenko’s Moscow

visit because criminal proceedings against her continued in Russia.

The Russian daily Kommersant reported on 25 January that Yushchenko “showed
himself during the negotiations as a worthy son of the Ukrainian people”.

Initially, he looked excited after Putin said that Yushchenko should know
that Russia never acted behind the scenes in the post-Soviet area including
in relations with the opposition, that Russia always supports the de facto
government and that they expect to have trusty relations with Yushchenko.

“Viktor Yushchenko listened to this statement very attentively. He was
obviously excited: changed his pose every now and then, took his hands off
the table and put them on the table again, and often nodded – at times it
seemed that his nods were absolutely out of place,” Kommersant wrote.

Yushchenko said he wanted to shake Putin’s hand as a symbol of the
development of their relations but he did not reach out his hand. He did not
even half-rise in his seat.

The talks continued for more than two hours. When the presidents walked out
to meet the press, Yushchenko looked a completely self-assured person,
Kommersant wrote.

Speaking at a final press conference, Putin said they discussed the creation
of a gas transport consortium to manage and develop Ukraine’s gas pipelines.
He said that Germany planned to join the consortium. He did not rule out
that other West European countries may take part in the project.

The two presidents also discussed political and military-technical
cooperation between the two countries and the Single Economic Space (a
common market of Russia, Ukraine, Kazakhstan and Belarus, SES). Yushchenko
told Putin that Ukraine would move towards the SES solely provided that this
did not hamper its movement towards the EU.

Putin expressed satisfaction with his first meeting with Yushchenko. He told
journalists, “There is not a single problem that we did not discuss. We met
understanding in that we should move forward from the achieved level of
cooperation.”

Yushchenko said that Russia is an eternal and strategic partner of Ukraine
and that he is prepared to deal with all existing problems in relations.
Putin said they would instruct their governments shortly to prepare new
documents on cooperation.

[2] Putin’s visit to Ukraine on 19 March 2005:
Putin visited Ukraine on 21 March for the first time since the Orange
Revolution. Kommersant said that Yushchenko waited for Putin on the porch
outside his office. They embraced and created the impression of old friends
who had not seen each other for a long time.

The Russian and Ukrainian presidents told a news conference they discussed a
joint gas consortium to operate Ukrainian pipelines. Yushchenko said that
Ukraine’s existing gas transport system would remain the country’s property.

Putin stated that Russia was interested in attracting new participants to
ensure stable gas supply to Europe. He mentioned Germany as a potential
partner.

Yushchenko and Putin agreed to adopt a bilateral action plan to be drawn up
by the governments for 2005 and to set up the Putin-Yushchenko interstate
commission.

Yushchenko said Ukraine proposed a compromise on Sea of Azov border
delimitation and also suggested that Russia recognize the Soviet-time border
between Russia and Ukraine in the Kerch Strait as a state border now.

The presidents said they discussed the continuing deployment of the Russian
Black Sea Fleet in Ukraine. “There’s no question of the Black Sea fleet base
being liquidated,” Yushchenko said amid concerns in Moscow that if Ukraine
eventually joins NATO, it could revoke Russia’s lease on the naval base
which runs until 2017.

The presidents discussed arms trade, the separatist Dniester region in
Moldova and the issues of citizenship, language and religion. Yushchenko
urged a free-trade agreement to close Ukraine’s deficit in bilateral trade,
while Putin urged Ukraine not to leave the SES.

Yushchenko did not give a final answer on whether Kiev would pull out of the
Kremlin-promoted SES, which would forge closer economic and trade links
between Russia, Ukraine, Belarus and Kazakhstan. He noted only that the
first step should focus on creating a free-trade zone.

[3] Putin, Yushchenko met in Russia on 29 August 2005:
Yushchenko and Putin’s next meeting took place in Russia’s Kazan on 29
August 2005 to discuss the SES. The two presidents also met other heads of
CIS member states and visited a horse race, Kommersant reported.

Yushchenko said that Ukraine was prepared to sign only 15 of the 29
documents to be signed on 1 December 2005 by Russia, Kazakhstan and

Belarus.

The documents concerned the rules of the free economic zone, which is
primarily of interest to Ukraine in the SES, while the other 14 documents
deal with supranational bodies. Putin insisted that the 29 documents “may be
signed and take effect only as a package”.

[4] Yushchenko, Putin’s meeting in Kazakhstan’s Astana on 11 January 2006:
Putin and Yushchenko met again in the Kazakh capital Astana on 11 January
2006. They arrived to attend the inauguration ceremony of re-elected
Kazakhstani President Nursultan Nazarbayev.

The meeting took place just days after Russia cut gas supplies to Ukraine in
a price dispute and two months ahead of the parliamentary election in
Ukraine. Kiev was amid an acute political crisis as parliament expressed no
confidence in Ukrainian government head Yuriy Yekhanurov.

The pretext was the 4 January gas agreement. But in reality Yekhanurov fell
victim to the fight for power between branches of authority as part of
political reform that entered into force on 1 January 2006.

The talks continued for more than an hour. Yushchenko told journalists after
the talks that the gas war with Russia was over. He said that the new gas
deal with Russia raising the price of gas for Ukraine was written “in a
professional manner”.

Yushchenko promised to abide by the new deal. He said Russia and Ukraine
were close to signing an agreement on readmission. The sides also reached
agreement for a joint commission to start work on demarcating the land
section of the Russian-Ukrainian border.

For his part, Putin promised stable gas supply to Ukraine. Putin called the
talks with Yushchenko “a thorough and fruitful discussion”, Russia’s
Nezavisimaya Gazeta wrote on 12 January.

[5] Putin’s October 2006 visit to Ukraine cancelled:
Putin intended to visit Ukraine in the second half of October, Russian
ambassador to Ukraine Viktor Chernomyrdin said on 12 September. Putin
discussed the preparations with Ukrainian Prime Minister Viktor Yanukovych
in Moscow on 22 September 2006, Russian presidential press secretary Aleksey
Gromov told ITAR-TASS.

The Ukrainian newspaper Segodnya on 28 October said unnamed officials from
the Russian presidential press service confirmed that a visit to Ukraine was
not listed in Putin’s official travel plans.

The Ukrainian and Russian political pundits polled by the paper offered a
whole range of possible reasons for the apparent postponement, from failure
to agree the visit’s agenda and the outcome of the resale of Ukraine’s
Kryvorizhstal steelworks to problems in the oil and gas sector.

Political scientist Mykhaylo Pohrebynskyy said that the visit was the
Ukrainian government’s wishful thinking, as no-one had any intention of
going anywhere, and politicians were simply spreading rumours about Putin’s
visit to make people believe that our relations with Russia are in good
shape.

Russian pundit, Sergey Markov suggested that the main reason for cancelling
the visit was poor preparation for the two presidents’ meeting. He put the
blame on Ukraine for this. He suggested that they probably failed to agree
on the agenda.

Segodnya’s source in the Ukrainian Foreign Ministry almost confirmed
Markov’s opinion, saying that the Ukrainian side did not come up with
concrete proposals to the Russians yet, therefore, the visit has been
postponed until later time.

Yushchenko’s adviser and Russian politician Boris Nemtsov speculated that
Putin could have become upset about the repeat sale of Kryvorizhstal to
Mittal Steel Germany on 24 October and decided not to go to Ukraine.

“Maybe, he would be ashamed to come to Ukraine to face its privatization
successes, while in Russia the authorities audaciously take away Yukos
facilities,” Nemtsov told Segodnya.

[6] Putin visited to Kiev on 22 December 2006:
Putin arrived in Ukraine on 22 December 2006 for a one-day visit to meet
Yushchenko and attend the meeting of the Yushchenko-Putin commission. This
was Putin’s second visit to Ukraine since the 2004 election of pro-Western
Yushchenko following a bitter campaign in which the Russian leader publicly
backed Yushchenko’s opponent, Viktor Yanukovych.

Yanukovych returned to the prime minister’s post in August 2006 after his
party won the most votes in the March 2006 parliamentary election. In
November, Russia announced that Kiev would see the price for gas imports
increase less than its neighbours.

In turn, Russian Prime Minister Mikhail Fradkov said the Kremlin would like
Kiev to “synchronize” its entry to the WTO with Moscow. Yanukovych put on
hold Ukraine’s drive for NATO membership that had irritated Russia.

The two presidents spoke tete-a-tete much longer than planned, for nearly
two hours.

The presidents agreed to step up talks about the delimitation and
demarcation of the border. They noted progress in resolving the conflict in
Moldova’s Dniester region. Putin said their agenda included the stationing
of the Russian Black Sea Fleet in Ukraine’s Crimea and the settlement of the
Azov-Kerch issue. Speaking about gas, Putin said that market prices will
ensure stable gas supplies to Ukraine and gas transit to Europe.

Putin defended the price of gas which Russia supplies to Ukraine. He said
the main factor was the price of gas which Russia buys from Turkmenistan and
then exports to Ukraine. He promised stable gas supplies to Ukraine.

“As regards the price of 135 dollars, this is not our price, this is the
Turkmen price. Turkmenistan sold all gas to Russia at 100 dollars per 1,000
cu.m. Add transport and overheads, and you get this price,” Putin said.

The two presidents told a news conference after the talks that they were
pleased both with the outcome and the atmosphere of the talks.

In the evening, Putin met Yanukovych in his residence. Afterwards,
Yanukovych went to see Putin off in the airport.

[7] Yushchenko’s late February-early March 2007 visit delayed:
Yushchenko’s visit to Russia was tentatively scheduled for late
February-early March 2007.

Preparations for the visit were discussed on 31 January at the Moscow
meeting between Ukrainian presidential chief of staff Viktor Baloha, his
Russian counterpart Sergey Sobyanin, Russian Security Council Secretary Igor
Ivanov and Russian State Secretary and Deputy Foreign Minister Grigoriy
Karasin. The two presidents were expected to sign a bilateral action plan
for 2007-08.

But the preparations were marred by the on-going controversy involving the
head of the Ukrainian Foreign Ministry. Ukraine’s pro-Western Foreign
Minister Borys Tarasyuk was sacked by parliament on 1 December at the
cabinet’s suggestion, which said Tarasyuk couldn’t be foreign minister and
leader of an opposition party at the same time.

Yushchenko reinstated Tarasyuk, but the latter was forced to resign on 30
January following a lengthy and controversial litigation process.

Tarasyuk told a news conference on 30 January that he resigned to put an end
to the uncertainty produced by the protracted litigation damaging Ukraine’s
international image. He said another reason was that the Finance Ministry
blocked the Foreign Ministry’s operations by freezing its accounts and
cutting budget allocations.

Ukrainian analysts suggest that Tarasyuk fell victim to the fight for power
between Yushchenko and Yanukovych, which had been triggered by the flawed
constitutional reform trimming the president’s powers in favour of the prime
minister and parliament since 1 January 2006.

Career diplomat Volodymyr Ohryzko, known for his pro-Western views,

became acting foreign minister following Tarasyuk’s resignation. Yushchenko
nominated Ohryzko for foreign minister twice but the ruling pro-government
coalition in parliament rejected him on both occasions on 22 February and 20
March.

The Russian ambassador to Ukraine, Viktor Chernomyrdin, said on 8 February
that the personality of a new Ukrainian foreign minister was not a matter of
principle for Russia. On 20 March Yushchenko nominated deputy head of the
presidential secretariat Arseniy Yatsenyuk for foreign minister and
parliament confirmed his nomination on 21 March.

Ohryzko was appointed Yatsenyuk’s first deputy. The Russian daily Kommersant
reported on 21 March that Yushchenko sacrificed Ohryzko, who irritated
Moscow, following a phone conversation with Putin on 20 March.

Tension rose following Putin’s unexpected statement at a news conference for
Russian and foreign journalists in the Kremlin on 1 February that Ukraine
may get access to Russian gas deposits in exchange for a share in the
Ukrainian gas transport system. Putin said that the proposal was forwarded
to Russia by its “Ukrainian friends”, adding that he was willing to discuss
the matter with Yushchenko.

Putin’s statement caused quite a stir in Ukraine. Yushchenko said on 2
February that it was too early to launch talks on the matter as any change
to Ukraine’s monopoly on its gas transport system “requires an extremely
cautious approach”. The opposition said it believes that the cabinet wants
to hand over Ukrainian gas pipelines to Russians.

Ukrainian opposition leader Yuliya Tymoshenko immediately launched a bill to
forbid Russian ownership of Ukraine’s pipelines, and parliament passed the
bill with no one daring to vote against it. Yanukovych defended the proposal
but later denied any intention of giving Russia control over Ukraine’s
pipelines.

The Ukrainian daily Kommersant Ukraina said on 2 February that the Ukrainian
constitution must be amended in order to sell a share in the pipelines. This
requires at least 300 votes in parliament, so the ruling coalition will have
to get the support of the opposition for this to happen.

[8] Yushchenko’s 21 March 2007 visit put off:
On 20 March Yushchenko asked Putin to agree on a new date for his visit to
Russia, which was originally scheduled for 21 March, due to the tragic
events in Russia – a mine blast killing more than 100 miners in Kemerovo
Region and a fire in an old people’s home in Krasnodar Territory claiming
the lives of 62 people, Yushchenko’s press service said.

Kommersant wrote on 21 March that Yushchenko’s visit was cancelled at the
last minute by Moscow, as the Kremlin had no desire to give Yushchenko a
boost in his struggle with Yanukovych. According to Kommersant, another
reason was that acting Ukrainian Foreign Minister Volodymyr Ohryzko,
regarded in Moscow as an anti-Russian politician, was included in the
Ukrainian delegation.

Furthermore, Kommersant said, “A week before his scheduled trip to Moscow,
Yushchenko showed ostentatious support for US plans to locate elements of an
antimissile system in the Czech Republic and Poland. He also made an
important statement on the role of NATO in Kiev’s foreign policy, without
saying a word about the role of Russia in it.”

Russian Foreign Minister Sergey Lavrov told Russia’s State Duma on 21 March
that the Ukrainian president’s visit to Russia was not thwarted but put off
as time was still needed to duly prepare the visit, Russia’s Ekho Moskvy
radio station reported on the same day.

[9] Yushchenko’s 3 April 2007 visit cancelled over political crisis in
Ukraine:
Yushchenko phoned Putin on 2 April to say he could not come to Moscow

on 3 April because of the political crisis in Ukraine following his 2 April
decree dissolving parliament and calling an early election. The crisis began
when parliament refused to comply with Yushchenko’s dissolution decree.

[10] Yushchenko met Putin at informal CIS summit in Russia on 10 June 2007:
Yushchenko met Putin at the informal CIS summit in Russia’s St Petersburg on
10 June. The meeting took place just days after the Russian president said
in an interview that Ukraine is heading towards tyranny.

In response, Yushchenko on 6 June warned Moscow that it should not interfere
in Ukrainian affairs, suggesting that Russia was in no position to lecture
Ukraine on democracy.

The meeting was preceded by yet another row over alleged “black lists” of
personae non gratae between Ukraine and Russia that erupted in early June.

Yushchenko’s adviser Mykola Zhulynskyy was banned entry into Russia on 5
June, which Russian ambassador Viktor Chernomyrdin described as Moscow’s
response to the deportation of Russian nationalist politician Aleksandr
Dugin from Ukraine.

The situation was further aggravated by Moscow’s refusal to recognize
Ukrainian court rulings ordering Russia to transfer to Ukraine the
lighthouses that the Russian Black Sea Fleet is using in Ukraine’s Crimea.

This was voiced by Russian State Secretary and Deputy Foreign Minister
Grigoriy Karasin at his meeting with Ukrainian First Deputy Foreign Minister
Volodymyr Ohryzko in Kiev on 5 June after a session of the subcommission for
the Black Sea Fleet, which is part of the Yushchenko-Putin commission.

Yushchenko told a news conference in St Petersburg following his 10 June
meeting with Putin that he was pleased with the atmosphere at the talks. He
noted progress on issues of demarcation and delimitation of joint borders,
entry bans, conflict settlement in Moldova’s rebel Dniester region and the
CIS.

[11] No reports on Yushchenko’s likely 30 June 2007 informal visit to
Russia:
The Ukrainian One Plus One TV channel quoted the Ukrainian ambassador to
Russia, Oleh Dyomin, as saying that Yushchenko and Putin were to meet in
Rostov-na-Donu on 30 June for the annual horse race for the cup of the
Russian president, at which CIS leaders traditionally meet.

But no reports on whether or not the meeting took place were observed. In
all likelihood, Yushchenko cancelled the visit.

———————————————————————————————–
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12. BRACEWELL & GIULIANI INTERNATIONAL LAW FIRM

JOINS THE U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
 
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Wednesday, August 15, 2007

WASHINGTON, D.C. – The Executive Committee of the Board of

Directors of the U.S.-Ukraine Business Council (USUBC) has just
approved the Bracewell & Giuliani LLP law firm as the 41st member
of the Council.

Martin J. Hunt, Partner, Bracewell & Giuliani LLP, who works out of

their London and New York offices and is in charge of their business
in Eastern Europe and the FSU, informed the Council about the law
firms interest in membership in the Council. 
 
The UAUBC is acquainted with Bracewell & Giuliani as they perform
legal services for SigmaBleyzer, a member of the U.S.-Ukraine Business
Council.

Bracewell & Giuliani LLP is a prominent international law firm. With

400+ lawyers in New York, Connecticut, Texas, Washington, D.C.,
Dubai, Kazakhstan and London, they serve clients concentrated in
the energy and financial services sectors worldwide.

In 2005, former New York City mayor Rudolph W. Giuliani
joined the firm as a senior partner. His international reputation for
leadership and problem solving is a unique asset for their clients, which
include Fortune 500 companies, major financial institutions, leading
private investment funds, governmental entities and individuals.

Bracewell & Giuliani (www.bracewellgiuliani.com) is the 18th new

member for the U.S.-Ukraine Business Council in the last seven months.
The Council’s goal is to double its membership in 2007.              
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13. UKRAINE: TURNING CHALLENGES INTO OPPORTUNITIES

BRIEFING: Oxford Business Group, UK, 19 June 2007

Ukraine has long enjoyed a reputation as potentially one of the most
productive agricultural production areas of the world.

When Ukraine declared independence in 1991, the country was saddled with
badly organised and poorly managed collective farms – with no farmers
skilled in private farming or decision-making.

Since then, it has suffered many of the vagaries common to post-Soviet
states – unstable economic policies, endemic corruption and political
upheaval.

Collective farms have given way to a hodgepodge of giant corporate-type
farms, a collection of hardscrabble private farmers and a large number of
small subsistence farms.

One problem they all face is an insufficient supply of reliable, efficient
and affordable farm equipment.

In the mid-1990s, an effort was made to solve the problem, with significant
programmes jointly financed by the US and the Ukrainian Export-Import bank.

Through these, a large amount of American-made farm equipment was provided
to Ukrainian farmers. However, because of poor management, many combines

and tractors went to farms that could not pay for the equipment.

Today, debts in the millions of dollars have been written off and a large
amount of expensive, imported equipment has found its way to the scrap heap
because of inadequate maintenance.

Later, other large agricultural equipment companies made years-long efforts
to develop the Ukrainian market with straightforward sales operations
underwritten by credit on commercial terms from European banks.

Ultimately, this too proved largely unsuccessful. One of the best-known farm
equipment companies, UK-based Massey-Ferguson, downsized and eventually
closed its operations in Ukraine, although it continues to operate through
importer-dealers.

More recently, programmes underwritten by the Ukrainian government have had
some success, but in a country where as many as 10,000 replacement combines
for worn-out equipment should enter the market each year, probably not more
than 10% of the need is fully met.

In addition, much of the Ukrainian government effort has been directed
towards the financing of equipment made in Ukraine that is not as efficient
nor as durable as combines and tractors made in Europe or the US.

In the last few years, a small group of entrepreneurs has developed a niche
business that is actively filling a small part of this market. One of these,
Jim Asher, is a 76-year old American who grew up in the wheat fields of
Kansas.

In 1993, he found himself in Kiev as country manager for the Citizens
Network for Foreign Affairs (CNFA), an American non-governmental
organisation that was for many years the largest agricultural development
group working in Ukraine, with funding almost entirely supplied by the US
Agency for International Development.

When he left CNFA in 1997, Asher spent some time working on agricultural
assistance projects with Massey-Ferguson as it tried to develop the sales
and service of its equipment line in the country.

Asher’s life-long agriculture and farm banking experience and his
hard-earned lessons learned in Ukraine, eventually led him to see what he
thought was a real market opportunity.

More often than not, Asher does not have to find private farmers in need of
farm equipment. They usually find him, thanks to his developing reputation.
They are usually looking for tractors and combines, but cannot, or will not,
pay the $400,000 or so asked for new equipment.

With that in mind, the appeal is obvious for used and reconditioned foreign
farm machinery that, properly maintained, could operate efficiently for
another 10 to 20 years.

The cost difference between buying used European or American equipment
rather than something new differs from deal to deal, but in almost every
case, the Ukrainian farmer saves as much as 50% or more.

Once a deal is made, Asher’s uses his experience and contacts, usually
somewhere in America’s farmland of Kansas, Colorado, Missouri or

Nebraska, to locate several options.

He then usually gets visas for the farm owners to visit the US to see the
options and make their choices. The trip also allows the Ukrainian buyers to
get a feel for Western-style farming, something most have never really
understood.

Asher also takes care of the rest of the details, getting the equipment to a
port city for shipment to Ukraine. Returning from these trips, he usually
brings back hundreds of pounds of parts and other needs for customers who
use his services on a continuing basis.

As Asher told OBG, Ukrainian agriculture has been in a state of flux for all
of the 15 years that I’ve been involved, and I can see the time when what
I’m doing may have outlived its usefulness.

However, for these last few years, it has been good business, and quite
large business for someone who operates with only one or two associates.

It has been a relatively profitable business that now amounts to well into
seven figures.

He added, For the person who wants to be involved in business in Ukraine,
the opportunities are great, but then so are the problems.

The learning curve here is long and can be very painful. However, those with
good ideas and great tenacity will find Ukraine an interesting place to be.
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cmartin@oxfordbusinessgroup.com
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14. UKRAINIAN PRESIDENT TURNS CHERNOBYL EXCLUSION
ZONE, 48,870 HECTARES, INTO GAME RESERVE

Interfax-Ukraine news agency, Kiev, in Russian 13 Aug 07
BBC Monitoring Service, United Kingdom, Mon, Aug 13, 2007

KIEV – The Chernobyl exclusion zone and zone of absolute resettlement
(48,870 hectares – Interfax-Ukraine) have been declared a general zoological
game reserve of national importance “Chernobyl Special”.

Ukrainian President Viktor Yushchenko signed the decree to this effect on 13
August, the presidential press service has said.

The decree was signed to preserve the unique features of the forests in the
exclusion zone within the Kiev Polisya region, Ukraine’s largest reservation
of wild life that needs protection and regulation of population of animals.

According to the decree, the Cabinet of Ministers should approve a
regulation on the general zoological game reserve of national importance
“Chernobyl Special” within three months.

Also, the cabinet was instructed to transfer the area under protection of
the state department for administration of the exclusion zone and zone of
absolute resettlement.
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15. TENNIS SUPERSTAR, MARIA SHARAPOVA, PLANS FIRST TRIP
BACK TO CHERNOBYL SINCE FAMILY FLED 21 YEARS AGO

Beth Harris, AP Worldstream, Monday, Aug 13, 2007

Maria Sharapova travels the world as the highest-paid female athlete,
cocooning in fancy hotels, dining at swanky restaurants and indulging her
love of shoes.

Yet there’s one place the 20-year-old tennis superstar’s journeys have never
taken her – the region devastated 21 years ago by the Chernobyl nuclear
reactor disaster.

Sharapova’s mother, Yelena, was pregnant with her only child when the plant
in Ukraine exploded and spewed radioactive clouds over the western Soviet
Union and northern Europe.

“A lot of families were moving, but not a lot of them could because they
didn’t really know where to go,” Sharapova told The Associated Press. “My
mom’s dad happened to be working in Siberia, so that’s why we had a sense of
direction.”

Sharapova’s father, Yuri, and her mother fled the city of Gomel in Belarus –
about 80 miles (130 kilometers) north of Chernobyl – shortly before she was
born in Nyagan, Siberia, exactly a year and a week after the explosion.

Gomel was one of the areas most affected by radiation. Sharapova said she
still has family there, including grandparents.

Sharapova plans to visit Chernobyl as a United Nations goodwill ambassador,
perhaps after Wimbledon next July.

“It’s in the beginning stages of what exactly I’m going to be doing,” she
said. “But I want to visit the facilities that they’re building right now
for the children – computer labs and hospitals.”

Sharapova started hitting tennis balls at age 4. Two years later, she was
discovered by Martina Navratilova at a Moscow exhibition. At 9, Sharapova
and her father moved to Florida, beginning a two-year separation from her
mother because of visa restrictions and limited finances.

She’s never forgotten her roots.

In 2004, Sharapova won the season-ending WTA Championships and received

a car worth more than $56,000 (A41,000). She donated the money to those
affected by the Russian school hostage crisis in Beslan in which 334 people
died, more than half of them children.

In February, when Sharapova was appointed an ambassador for the U.N.
Development Program, she donated $100,000 (A73,000) to help recovery in

the Chernobyl region.

Goodwill ambassadors try to draw attention to the plight of some of the
world’s poorest spots. Sharapova, who has earned more than $9 million (A6.6
million) in career prize money, has a two-year contract with the UNDP that
pays her a symbolic salary of $1 a year. Goodwill ambassadors pay their own
way on trips.

“They wanted me to work with them because they felt like people in those
areas didn’t really feel like they had a chance to survive,” Sharapova said.
“They wanted me to help raise the awareness that by building schools,
hospitals, cleaning the air that there is pride and a side they can head
towards instead of thinking all those negative things.”

Her trip to Chernobyl will last just a few days. “Unfortunately, I have

about 28 days a year for the work that I do and for the sponsors, for the
photo shoots and the visits,” she said. “Time is very, very limited.”

Sharapova won her first title of the season a week ago near San Diego.
During the tournament, she met with a group of Russian children visiting the
United States.

Their trip was sponsored by The Children of Chernobyl, a nonprofit group
that brings healthy children from Belarus from ages 8 to 12 to America for a
six-to-eight week visit. They are placed with host families and the children
receive free medical, dental and eye care treatment.

Upon meeting Sharapova, some of the families asked what advice she could
give the children.

“It’s tough because most of them don’t have any parents, and what’s really
helped me in my life was having my mom and dad be so supportive and around
me,” she said.

Despite her Wimbledon and U.S. Open titles and No. 2 world ranking,
Sharapova didn’t expect the children to know who she was.

“They had all these questions lined up for me. The kids are pretty young and
the questions they were asking me were so mature and so beyond their years,”
she said. “This young kid asked me how I wanted to raise my children. I was
like, ‘Geez, you’re a kid yourself.’ It was very strange.'”

The children knew only rudimentary English phrases, like ‘How are you?’ so
they questioned her in Russian and Sharapova responded in her native
language.

Hearing the kids squeal about their trip to Sea World brought back memories.
As sophisticated as Sharapova comes off in photo spreads and on red carpets,
she says she acts like a kid away from the court and cameras.

“I still love things that you don’t even need to pay for,” she said. “Going
to the beach and being around five of your friends and having a good time
means so much more than going out and spending hundreds of dollars. It did
make me realize that, ‘Wow, all these small things are making them happy.'”

Sharapova is to begin her U.S. Open title defense on Aug. 27. She withdrew
from the semifinals of last week’s tournament in Carson because of a leg
injury. She said she plans to compete for another seven years.

“I have so many other things in my life that I want to try and do,” she
said, ticking off marriage and children among her goals. “I’d love to open a
tennis school for children in my hometown of Sochi.”

Sharapova said she recently read a book about Africa, and it, along with her
charity work, has helped expand her world of forehands and backhands.

“If you’re able to help some people and make them smile and make them
realize that life is good,” she said, “then that’s worth so much more than
buying a pair of shoes.”

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16. HARD LIFE AND ISOLATION FOR WORLD’S TALLEST MAN

By Sabina Zawadzki, Reuters, Podolyantsi, Ukraine, Sat, Aug 11, 2007

PODOLYANTSI, Ukraine – Being named the world’s tallest man has meant

very little for Leonid Stadnyk, scraping together a living with his mother in a
tiny village in central Ukraine.

Guinness World Records gave the accolade to him last week. But Stadnyk is
prouder of the present from local authorities on his 37th birthday — a
bathroom with a shower tall enough to fit his 2.53-metre (8-foot, four-inch)
frame.

“I don’t need glory. I just want a normal life under normal conditions,”
Stadnyk told Reuters, dwarfing an armchair outside his modest bungalow.

“I want to say to people — everyone is different, just as there are no two
identical apples in a barrel. But the world is built for medium-sized
people.” The Ukrainian’s extraordinary height has been a heavy burden,

rather than a blessing.

His spectacular growth began at about age 10 or 12. He is reluctant to
discuss the details, though local media say a brain operation set off
hormonal problems that kept him growing.

He was, nonetheless, gifted at school and became a veterinarian after
travelling 50 km (30 miles) every day to the town of Zhytomyr, where student
dormitories were unable to find a bed big enough to accommodate him.

But he had to quit the job as he just kept on growing. His size ruled out
using normal transport and he resorted to a horse and cart, hardly suitable
for a job entailing speedy travel.

Unable to find shoes that fit, Stadnyk’s feet suffered from frostbite in
winter. His hands became too big to use some of the equipment, and his
health deteriorated as his organs worked overtime to support such a towering
build.
SMALL PENSION, FARMYARD
He and his mother live off a pension equivalent to $100 a month and whatever
else they earn from growing tomatoes and cucumbers and raising chickens,
cows and pigs.

Barely a village, Podolyantsi is a collection of ramshackle, yet tidy,
houses 200 km (120 miles) west of the capital Kiev in a region traditionally
considered “the breadbasket of Europe”.

The glitter of consumer-oriented Kiev fades into a region dotted by forests
and sky-blue lakes. Flashy foreign vehicles are replaced by Ladas and
Soviet-era trucks, which swerve to avoid the occasional horse-drawn cart.

For Stadnyk, the simplest of things poses problems. His mobile phone
disappears into the grasp of one of his hands and the small keys make it
difficult to use. But most frustrating is lack of mobility and dependence on
others.

“There is nothing here. No schools, no library, no cultural centre,” he
said. A bus, he said, might solve the problem.

His mother now walks on crutches. Stadnyk also finds walking difficult: his
feet simply cannot take the weight of his body.

Present during the discussion is regional doctor Leonid Pavlyuk, who said
Stadnyk had complained of heart problems the night before. The doctor said
his health was “stable”.

Andriy Danylov, head of the local authority which built the oversize shower,
says Stadnyk is also provided with hormonal medication, produced abroad

and requiring government permission.

“He needs not just the status of a handicapped person, but government
protection, a special status,” Danylov said.

Stadnyk hopes for practical things, like transport, farm machinery and maybe
something more. “I dream of (marriage) but I have problems and I don’t want
to pass my burdens onto the shoulders of a wife,” he said.

“Doctors tell me I will live for a long time. I hope it will be in happiness.”

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17.YUSHCHENKO SENT LETTER TO RUSSIA TO HONOR
VICTIMS OF STALIN’S GREAT TERROR INCLUDING
HUNDREDS OF PROMINENT UKRAINIANS

Interfax Ukraine, Kyiv, Ukraine, Friday, August 3, 2007

KYIV – Ukrainian President Viktor Yuschenko on Friday sent a letter to the
participants of memorial events to honor the victims of the Great Terror of
1937-1938 in Sandomorokh in the Republic of Karelia (Russia).

“We share the pain of each nation whose sons and daughters were the

victims of the totalitarian regime,” the president said.
Yuschenko said that the tragedy had affected not only Ukraine but also
Belarus, Georgia, Azerbaijan and other Soviet republics.

“In the history of Ukraine, the memory of the Solovki is sacred.” The
president said hundreds of prominent Ukrainian scholars, artists and
religious leaders had been “tortured to death” in Sandomorokh.

“We must spare no effort to ensure that future generations never forget
these tragic pages of our shared history. The totalitarian crimes must be
condemned.”

In the 1930s Sandomorokh was used as a site of and burial of convicts of
Soviet labor camps and prisons located in Karelia and the Solovki prison
camp.

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18. UKRAINIAN PRES YUSHCHENKO CALLS FOR CONDEMNING
ALL TOTALITARIANISM CRIMES, 1937-1938 TERROR VICTIMS

Olha Volkovetska, Ukrainian News Agency, Kyiv, Ukraine, Fri, Aug 3, 2007

KYIV – President Viktor Yuschenko believes it is necessary to condemn all
crimes of the totalitarian regime. This follows from the president’s address
to participants of the convention in memory of the 1937-1938 terror victims
in Sandomory of Karelia (Russia).

“On behalf of the Ukrainian state, I pay homage to all innocent victims of
the great terror of 1937-1938 who are buried in Karelia’s land,” Yuschenko
said.

He noted that Ukraine shares pain of each people that suffered from the
totalitarian regime since it was a common tragedy.

“On behalf of Ukraine, I express gratitude to all partial states and public
figures of the Russian Federation and the Republic of Karelia, all people of
kind and fair will, owing to whom we’re observing the process of restoration
of historical justice and tributes to the memory of the Solovki victims,”
Yuschenko said.

The president noted that it is necessary to do everything possible for the
future generations to remember the tragic pages of the common history.

As Ukrainian News earlier reported, President Viktor Yuschenko has plans to
establish the day in memory of victims of communist repressions.
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19. UKRAINE: NO “MANAGED TRUTH”
On one personal hiccup in critical thinking, the temptation to adjust
the truth and growing concern over a squalid historical remake
emerging from the recesses of the Kremlin.

ANALYSIS & COMMENTARY: By Halya Coynash
Kharkiv Human Rights Protection Group
Kharkiv, Ukraine, Wednesday, July 11, 2007

Collisions between beliefs and reality are rarely painless and the
temptation to stay with untried, untested, but painless assumptions is
strong. The bruises can, however, on occasion protect from worse
mistakes.

All my critical reflexes, encapsulated in one warning bell “Not so simple!”
were temporarily suspended when I heard of the opening (in fact,
renaming) of a Museum of Soviet Occupation in Kyiv.

On top of the unifying force of shared rejection of a totalitarian
monstrosity, there was the comfort of straightforward goodies and
baddies, with us in the right roles.

I owe a thank you to historian Yury Shapoval for a therapeutic mental
shake-up.  Binary systems – occupier and occupied simply leave too
many questions unanswered. A debate would seem to be gathering
force in Ukraine on this issue (1) which can only be welcomed.

An opposite trend can be seen rising in full force in today’s Russia.  Of
particular concern is the interest which the Kremlin is paying to the
teaching of History and Social Studies.

Two manuals for teaching these subjects have recently received Putin’s
personal stamp of approval presenting a picture of Soviet history entirely
in accord with that of the ex-KGB agent.

Stalin is presented as the “most successful Soviet leader”, and Putin
himself speaking before teachers in June, acknowledged the Terror only to
state that “other countries had done much worse things”.

This, ironically, was virtually verbatim what I heard two years ago from a
Ukrainian SBU [Ukrainian Security Service] official waiting while I read my
grandfather’s NKVD file.

I was certainly not in a fit state for political argument, the woman seemed
harmless enough, and I suppose I was aware that from her position some kind
of justification felt needed.

Two years later, seeing where such “justification” has led Russia, I feel
less certain that even in such circumstances one should remain silent.

We all hate feeling that we were wrong.  Presumably the greater the mistake
and the more irreversible its consequences, the greater too becomes the urge
to turn to easy “readjustment” of the camera lens.

The louder, I would suggest, should sound that warning bell within us.

None of us is immune, and few are not implicated in the wish to provide
historical truth in comfortable doses.

One problem which did not, unfortunately, end with the collapse of the
Soviet Union was the tendency to tolerate ideas and behaviour from those who
shared our aversion of a totalitarian regime seeped in bombastic propaganda,
hyperbole and lies. The truth was seen as all too quiet and modest without
counter-embellishments.

On certain subjects, most particularly that of the resistance from the
Ukrainian Resistance Army [UPA] and Organization of Ukrainian Nationalists
[OUN] during the Second World War and in the first post-War years it was
next to impossible either in Ukraine or within the Diaspora to read
historical studies not coloured by the author’s own ideology.

It is cheering, therefore, to find historians unwilling to be imprisoned in
ideological constraints.  It is at the same time galling to see how easy it
is to slip into such straightjackets.

In this, I believe, we are all implicated.  Yes, those who actively suggest
concealing the truth, as recently and outrageously we heard from the Head of
the State Archive Committee (2) are, I believe, especially culpable, and I
would suggest that a review of Ms Ginsburg’s right to hold her present
position be made as a matter of urgency.

The malaise unfortunately leaves few uninfected. How many of us, knowing how
ready the world was to ignore Holodomor, do not stay with higher figures for
the number of victims even though we suspect the numbers were lower?  As
though such “bookkeeping” had anything to add to the general judgment of
that monstrous evil!

It is easy to understand the automatic habit of trusting those who opposed
the Soviet regime, of seeing their resistance the fight of good against
evil.

I am not for a moment suggesting any particular group or individual could
not be trust, yet such simplistic oppositions leave, whether consciously or
not, far too much out of the picture.

If we assume that it was Russians against Ukrainians, then we either rewrite
the history books or we relegate the many Ukrainians who supported the
Soviet regime to the category of “bad” or “the wrong” Ukrainians. .

Similarly, if the UPA were heroes, then those resistance fighters who
behaved less than nobly are quietly expunged from the history books, as
were, albeit for different motives,  “enemies of the people” during the
Terror.  And those who fought against the Nazi occupier in the Soviet Army
also become “”the wrong” Ukrainians.

Add religious conflict, “the wrong church”, the “wrong political views”, the
“wrong” language, and numbers of “bad” or “wrong” Ukrainians should sound
alarm bells.

The need to distinguish between “us” and “others”, with only you know who
recognized as being right, may have advantages for survival as a species,
but it remains, in my view, one of human beings’ most dangerous instincts.

It becomes acutely threatening in a historical context as tragically complex
as that of Ukraine over the last hundred years.

Warning bells must ring every time any answer blurs this complexity, every
time the camera’s focus is aimed at either concealing spots or highlighting
them.  Ukrainian history books, especially those for educational
institutions need to spurn any narrow ideology and any totems, too sacred or
frightening to mention aloud

This, I believe, is imperative in the light of certain trends among
Ukraine’s neighbours. We cannot speak of honouring the memory of all

innocent victims if we allow the return of lies.
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FOOTNOTES: (1) Yury Shapoval’s article Reproducing a real tragedy or
politicizing history? is found in English at http://www.day.kiev.ua/183199/.
See historian Stanislav Kulchytsky’s Was Ukraine under Soviet occupation?
http://www.day.kiev.ua/184204/
(2) So who doesn’t want the truth?
http://khpg.org/en/index.php?id=1181941303
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20.  BACK TO THE U.S.S.R. WAS STALIN SO BAD?
By pushing a patriotic view of history and the humanities,
the Kremlin is reshaping the Russian mind.

By Owen Matthews, Newsweek International
New York, New York, Aug. 20-27, 2007 Issue

In Russia, the ghosts of the past refuse to die. This month, several hundred
mourners gathered in the Moscow suburb of Butovo at a mass grave of
20,000 victims of Joseph Stalin’s purges.

As priests chanted a liturgy for the dead, mourners hauled up a giant pine
cross cut from trees on the Solovetsky Islands, a notorious gulag.

“Russia must never forget what happened here,” says 81-year-old Olga
Vasiliyeva, whose engineer father was shot in 1937 as an “enemy of the
people.” “We cannot gloss over the crimes of Stalin; otherwise we will end
up repeating them.”

The Kremlin, it seems, doesn’t agree. Russian President Vladimir Putin told
a group of history teachers last month that though Russia’s past had
“problematic pages,” they are fewer and “not as terrible as those of some
others.” Regardless, he said, it was the teacher’s duty to make
schoolchildren “proud of their motherland.”

To that end, the government has embarked on a campaign to change the way
history is taught to Russian schoolchildren. Earlier this year, the Russian
Academy of Education commissioned a major review of key history
textbooks.

But historians complain that new guidelines issued by the academy are
designed to whitewash the atrocities committed by Stalin and downplay the
Soviet Union’s loss of the cold war.

“The Kremlin thinks it would be much easier to consolidate the society
around pleasant memories of history, rather than around negative facts,”
complains one of the editors, historian Isaak Rozental. “Their approach is
not to study history but to use it.”

One new state-approved text, “A Book for Teachers: The Modern History of
Russia, 1945-2006,” describes Stalin as “the most successful leader of the
U.S.S.R.”

Of the estimated 25 million killed in the purges and in collectivization, it
notes, with chilling blandness, “political repression was used to mobilize
not only rank-and-file citizens but also the ruling elite.”

The new history is much tougher on Boris Yeltsin-who led Russia’s chaotic
post-communist transition in the 1990s-denouncing his “weak” and
“pro-Western” policies.

This effort to rewrite Russian history comes on the heels of Kremlin
attempts to push its views of a great resurgent Russia into every sphere of
science and the humanities.

Russia’s most high-profile scientific venture of recent years used its
famous research submarines to plant a Russian flag on the seabed under the
North Pole last month as part of an effort to claim the potentially
resource-rich area for Russia. And the Kremlin’s best-funded humanities
program creates a new Russian Institute to promote spoken Russian and
Russian culture around the world, and particularly in former Soviet states.

Could this new wave of state-sponsored patriotism lead to a closing of the
Russian mind-with intellectual debate going the same way as free speech and
opposition politics?

Gleb Pavlovsky, director of Moscow’s Center for Effective Politics and one
of the Kremlin’s chief ideologists, scoffs at the idea. He argues that any
controversy generated by the new history textbooks shows that “intellectual
life in Russia is alive and well.”

“It is impossible to create a state ideology in an information society,” he
says. “But what the authorities do want is to define the debate-to shape
what is considered politically correct and what is not.”

Indeed, authors of the new teachers’ handbook appear to have the explicit
aim of reversing what one of its editors, Alexander Filippov, calls a
“propaganda offensive” directed from both inside Russia and abroad.

The old, Yeltsin-era books dwelt too much on the evils of Soviet rule, he
argues, which implied “Russia has no place in the company of the so-called
civilized nations,” and also that Russia, “as a successor of a totalitarian
regime, is doomed forever to repent for this regime’s real or invented
crimes.”

For Russians, free historical debate is often a bellwether of freedom
itself. When Nikita Khrushchev denounced the crimes of Stalin (in secret) to
the 1956 Party Congress, he began a brief thaw that allowed Russians to
speak, travel and work more freely.

The thaw would end under Khrushchev’s successors, and it was not until
Mikhail Gorbachev’s policy of glasnost in the 1980s that Russian historians
were allowed to explore the full horrors of previous Soviet rulers.

Today, Russian bookstores are full of books that expose everything from the
private life of Catherine the Great to the memoirs of Leonid Brezhnev’s
interpreter. “Modern Russian society is unbelievably hungry for history,”
says Eduard Radzinsky, Russia’s most popular historian.

Now, says Radzinsky, Putin’s chief ideologue, Kremlin deputy chief of staff
Vladislav Surkov, is “demanding that historians create a new ideology for
them, fitting their regime.”

While some older members of the Russian intelligentsia have resisted such
calls, Soviet nostalgia has taken root in a younger generation that has been
encouraged to believe efforts to promote Western-style democracy in Russian
are Trojan-horse attempts to weaken the country.

In short, the Kremlin campaign is working. According to a poll last month by
the Moscow-based Levada Center, 54 percent of Russians between 16 and 19
believe Stalin was “a wise leader,” and a similar number thought the
collapse of the Soviet Union was “a tragedy.” (Two thirds also thought that
America was a “rival and enemy” and 62 percent believed that the government
should “deport most immigrants.”)

“Many of my classmates believe that some kind of Soviet golden era existed
before the West came in and destroyed everything,” says Fillip Kuznetsov, an
international-relations student at Moscow University. “They also believe the
state is justified in doing anything it likes to its citizens in the name of
some great cause.”

Putin himself has begun to rehabilitate Soviet history. He told a conference
of history teachers earlier this year that Russia “has nothing to be ashamed
of” and that it was time to “stop apologizing.”

He added it was America that dropped an atom bomb on Hiroshima and
napalmed Vietnamese jungles. Lyudmila Alexeyeva of the Moscow Helsinki
Group sees the new glorification of the Soviet past as both a danger and a
missed opportunity.

“The Kremlin has a perfect example in Germany of how a nation actually
grew powerful by thinking through its mistakes,” she says. “Instead, they
are going to stuff kids’ minds with lies again.”

If that means steeping a new generation of children in the great-power myths
of the Soviet world, where dissent was equated with “treachery” and
political repression with “strength,” then the ghosts of Russia will
continue to lie uneasy.
———————————————————————————————–
With Anna Nemtsova in Moscow
LINK: http://www.msnbc.msn.com/id/20226567/site/newsweek/
———————————————————————————————–
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========================================================
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21. WORD FOR WORD/NEW RUSSIAN HISTORY
Yes, a Lot of People Died, but …

By Andrew E. Kramer, The New York Times
New York, New York, Sunday, August 12, 2007

MOSCOW – STALIN has undergone a number of transformations of
his historical image in Russia, interpretations that say as much about
the country’s current leaders as about the dictator himself.

In the West, Stalin is remembered for the numbers of his victims, about 20
million, largely his own citizens, executed or allowed to die in famines or
the gulag.
A GENERATION OF PEASANT FARMERS IN UKRAINE
They included a generation of peasant farmers in Ukraine, former Bolsheviks
and other political figures who were purged in the show trials of the 1930s,
Polish officers executed at Katyn Forest, and Russians who died in the slave
labor economy. Stalin’s crimes have been tied to his personality, cruelty
and paranoia as well as to the circumstances of Russian and Soviet history.

While not denying that Stalin committed the crimes, a new study guide in
Russia for high school teachers views his cruelty through a particular, if
familiar, lens.

It portrays Stalin not as an extraordinary monster who came to power because
of the unique evil of Communism, but as a strong ruler in a long line of
autocrats going back to the czars. Russian history, in this view, at times
demands tyranny to build a great nation.

The text reinforces this idea by comparing Stalin to Bismarck, who united
Germany, and comparing Russia in the 1930s under the threat of Nazism to
the United States after 9/11 in attitudes toward liberties.

The history guide – titled “A Modern History of Russia: 1945-2006” – was
presented at a conference for high school teachers where President Vladimir
V. Putin spoke; the author, Aleksandr Filippov, is a deputy director of a
Kremlin-connected think tank. Excerpts from the guide follow. The text was
translated by Nikolai Khalip and Michael Schwirtz in Moscow.
JUST LIKE BISMARCK AND PETER
As a result of the “Big Purge” of late 1930s, practically all members and
candidates to become Politburo members elected after the 17th Party Congress
suffered from reprisals to a certain degree. Postwar reprisals were quite
similarly addressed.

The number of victims of the Leningrad case reached about two thousand
people. Many of them faced firing squads. Studies by Soviet and foreign
historians confirmed that the ruling class was the priority victim of the
repressions in 1930-1950.

Stalin followed Peter the Great’s logic: demand the impossible from the
people in order to get the maximum possible. The result of Stalin’s purges
was a new class of managers capable of solving the task of modernization in
conditions of shortages of resources, loyal to the supreme power and
immaculate from the point of view of executive discipline….

Thus, just like Chancellor Bismarck who united German lands into a single
state by “iron and blood,” Stalin was reinforcing his state by cruelty and
mercilessness. Strengthening the state, including its industrial and
defensive might, he considered one of the main principles of his policy.

Indirect evidence of this can be found in the memoirs of his daughter
Svetlana Alliluyeva. Every time he looked at her dress he always asked the
same question, making a wry mouth: “Is this foreign-made?” and always
cracked a smile when I answered, ‘No, it was made here, locally.”
A STRONG IF CRUEL LEADER
A chapter ends with a brief broadening of the interpretation that hints at
ways to discuss Stalin’s personal flaws, and the fate of the millions of
Soviet citizens who suffered and perished under his rule. But little detail
is supplied on that last point, nor does the guide suggest how teachers
might conduct more research on it.

It is common knowledge that power corrupts. Absolute power corrupts
absolutely. It is well known from Russian history how corrupting a long term
in power is. Biographies of such outstanding rulers as Peter the First and
Catherine the Second prove it.

The leader’s closest associate, V. M. Molotov, admitted that at the
beginning Stalin struggled with his cult, but later on he developed a liking
for it: “He was very reserved in the first years, and then he put on airs.”

As to what people think of Stalin, we can judge by an opinion poll conducted
in February 2006 by Public Opinion Fund: If we speak as a whole of the role
of Stalin in Russian history, was he positive or negative? Positive: 47
percent; negative: 29 percent; did not answer: 24 percent.

Thus, there are grounds for controversial assessments of Stalin’s role. On
the one hand, he is considered one of the most successful leaders of the
U.S.S.R. During his leadership the territory of the country was expanded and
reached the boundaries of the former Russian Empire (in some areas even
surpassed it).

A victory in one of the greatest wars was won; industrialization of the
economy and cultural revolution were carried out successfully, resulting not
only in the great number of educated people but also in creating the best
educational system in the world. The U.S.S.R. joined the leading countries
in the field of science; unemployment was practically defeated.

But there was a different side to Stalin’s rule. The successes – many Stalin
opponents point it out – were achieved through cruel exploitation of the
population. The country lived through several waves of major repressions
during his rule.

Stalin himself was the initiator and theoretician of such “aggravation of
class struggle.” Entire social groups were eliminated: well-off peasantry,
urban middle class, clergy and old intelligentsia. In addition, masses of
people quite loyal to the authorities suffered from the severe laws.
ECHOES OF 9/11
The study guide pointedly refers to what it says are recent restrictions on
American liberties undertaken to fight terrorism.

Political and historical studies show that when they come under similarly
serious threats, even “soft” and “flexible” political systems, as a rule,
turn more rigid and limit individual rights, as happened in the United
States after September 11, 2001.
——————————————————————————————-
http://www.nytimes.com/2007/08/12/weekinreview/12kramer.html?_r=1&ref=world&oref=slogin

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
22. RUSSIAN CHURCH, BUT NOT THE KREMLIN, HONORS
THOUSANDS OF STALIN’S VICTIMS, GIANT CROSS ERECTED
 
By Michael Schwirtz, International Herald Tribune
Paris, France, Wednesday, August 8, 2007

MOSCOW: A giant cross now commands the field where the first shots of
Stalin’s Great Terror sounded 70 years ago. It was erected Wednesday with
religious pomp, but little recognition from a government prone to gloss over
one of Russia’s darkest eras.

The cross was ferried 1,300 kilometers, or 800 miles, by boat to Moscow from
a former Soviet prison camp on the White Sea through the Belomor Canal,
which was built in the 1930s by slave labor. Thus began a commemoration of a
rampage of state-sanctioned violence.

The procession and the ceremony marked a rare attempt to address Soviet
brutality during Stalin’s reign. President Vladimir Putin acknowledged only
in June that the purge was one of the worst episodes of the Stalin era. At
the same time, Putin said that “in other countries even worse things
happened.”

Millions died from wars, famine, and government cruelty in the nearly 30
years of Stalin’s rule. During the purges from August 1937 to October 1938,
the systematic slaughter reached its apogee. During this time the Soviet
secret police, or NKVD, arrested more than a million people and executed
more than 700,000.

About 20,000 of those were killed on the former Butovo shooting range in
southern Russia, where the cross now stands.

The 12-meter, or 41-foot, Siberian cedar cross began its journey with the
blessing of the Russian Orthodox Church on July 25, departing the Solovetsky
Monastery, once a brutal prison camp described by Alexander Solzhenitsyn as
the first link in the gulag archipelago.

The procession reached Moscow on Tuesday. There, strapped to a truck, the
cross was driven around the capital’s outer ring road, mimicking
circumambulations of the church on Orthodox Easter.

It was then taken to the Butovo range for a small ceremony on Wednesday
morning attended by a few thousand people, including journalists from
state-run television, but largely ignored by political officials.

The government’s response to the anniversary “was absolutely inadequate in
terms of scale and historical importance,” Grigory Yavlinsky, head of the
opposition Yabloko Party, said in a telephone interview.

“The authorities should speak openly on these issues at schools and in
public,” he said.

He said that official statements glorifying the Soviet past were at least
partly to blame for Russians’ ambivalence to Stalin’s reign.
Despite the violence of the Stalin years, many Russians – 38 percent,
according to a 2006 poll – consider Stalin in positive terms, as the man who
brought stability to the Soviet Union and fought off the Nazis in World War
II.

“The authorities need to tell the people that the victory in the war, the
achievements of the Soviet Union came despite the totalitarian regime,”
Yavlinksy said.

Instead, the Kremlin has created a myth of Soviet greatness meant to bolster
the credibility of Putin’s strong, centralized government, said Yan
Rachinsky, the co-director of the Moscow human rights center, Memorial.

The Kremlin tends to disregard Soviet era repressions because they cast a
shadow on Soviet successes, Rachinsky said.

Putin has recognized Stalin as a dictator but has played down the crimes
committed under his leadership.

In rare comments on the Stalin era delivered at a conference of Russian
teachers in June, Putin acknowledged the “awful pages” in Russia’s history.
“Let us not forget the year 1937,” he said, before mitigating the Russian
experience in comparison to other countries.
——————————————————————————————-
LINK: http://www.iht.com/articles/2007/08/08/europe/russia.php
————————————————————————————————

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========================================================
23. HUGE CROSS MARKS STALIN PURGES
The cross honours the memory of tens of thousands of Stalin’s victims

BBC News, United Kingdom, Wednesday, August 8, 2007

A giant cross commemorating the victims of Stalinist purges in the 1930s
has been erected at a ceremony near Moscow. The wooden cross –

12.5m high (41 ft) and 7.6m wide (25 ft) – was placed in Butovo, at the
site of a former execution ground.

At least 20,000 people were killed there by Stalin’s secret police, the
NKVD. The first killings occurred exactly 70 years ago.

Hundreds of people attended the ceremony south of the capital. Events
marking the 70th anniversary of Stalin’s drive to purge opponents of
his regime have been held throughout Russia.

The relatively small-scale ceremonies have been organised by religious
or human rights groups rather than the government.

The BBC’s James Rodgers in Butovo says the execution ground had
previously been a firing range. It did not seem necessary to change its
name after 8 August, 1937, he adds.

Yulia Shcherbakova – now in her 70s – wanted to explain her personal tie
to Stalin’s terror. “It’s terrifying to think back. I remember people in our
small house being arrested – people who lived below and above,” she
told the BBC.

“I was seven when my neighbour, a priest, was taken away – he disappeared
without a trace. And everyone was afraid to mention his name.”
ACTIVISTS’ FEARS
The Siberian pine cross was erected as a centrepiece to a new memorial to
Stalin’s victims in Butovo.

Those executed there in 1937 and 1938 included about 1,000 priests, monks
and nuns. No-one knows precisely how many are buried at the site.

The cross was constructed at the Solovetsky Monastery in northern Russia,
which was itself turned into a notorious prison camp by the Soviet
authorities in the 1920s.

The cross was delivered by boat, and part of its route followed the White
Sea Canal, a Stalinist construction project which claimed the lives of
thousands of convicts.

Seventy years after what is known as “the great purge”, only a few
thousand survivors remain. Human rights groups say they have never

been properly compensated, and most struggle to get by on a small state
pension.
JOSEPH STALIN’S PURGES
Orchestrated by Stalin in 1930s to cement his rule ; 5 Aug 1937 – order
N00447 for mass executions of “anti-Soviet elements” issued
Targeted Communist Party opponents, but also the army, the
intelligentsia and peasants
Hundreds of thousands of people executed by NKVD by 1938
Millions arrested and sent to labour camps
Mass executions end in Nov 1938, but arrests continue until Stalin’s death
————————————————————————————————
http://news.bbc.co.uk/2/hi/europe/6936478.stm
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AUR#857 Aug 13 Low Price For Gas, Sale To Government, Destructive For Dev Of Energy Resources; Election Problems; Repeal Legislative Immunity

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
                        
ACTION UKRAINE REPORT – AUR – Number 857
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., MONDAY, AUGUST 13, 2007
INDEX OF ARTICLES  ——–
Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article
INTERVIEW: With Rob Bensh, Chairman &
Chief Executive Officer, Cardinal Resources
By: Morgan Williams, President
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 13, 2007

2.  THE WORLD BIOFUEL BOOM AND UKRAINE –
HOW TO REAP THE BENFITS, Policy Paper No. 7
Letter-to-the-Editor: By Dr. Heinz-W. Strubenhoff
Institute for Economic Research and Policy Consulting
German-Ukrainian Policy Dialogue in Agriculture
Kyiv, Ukraine, Thursday, August 9, 2007

3. EBRD PROJECT SUMMARY WITH UKRAINE’S UKRTRANSNAFTA
Ukrtransnafta Project Summary Document (PSD)
European Bank for Reconstruction and Development (EBRD)
London, United Kingdom, Friday, August 10, 2007

4. NAFTOHAZ SPOILT BY PETROLEUM PRODUCTS
Ukrainian cabinet said to prepare oil company for privatization
By Oleh Havrysh, Vitaliy Selik and Ivan Hech
Kommersant-Ukraina, Kiev, in Russian 9 Aug 07 p 5
BBC Monitoring Service, United Kingdom, Sat Aug 11, 2007

5. HOLTEC TO START COMPLETION OF NUCLEAR WASTE

Interfax Ukraine Energy Weekly, Kyiv, Ukraine, Sunday, Aug 12, 2007

6. UKRAINIAN ELECTION COMMISSION REFUSES OPPOSITION
PARTICIPATION IN ELECTIONS; TYMOSHENKO CALLS FOR

SUPPORT FOR DEMOCRATIC PROCESS IN UKRAINE
Press Release, BYuT, Kyiv, Ukraine, Saturday, Aug. 11, 2007
 
7 BYuT PARTY BARRED FROM UKRAINE POLL
By Roman Olearchyk in Kiev
Financial Times, London, United Kingdom, Monday, August 13 2007

8 UKRAINE ELECTION PANEL REFUSES TO REGISTER MAIN
OPPOSITION CANDIDATES 

Associated Press (AP), Kiev, Ukraine, Saturday, August 11, 2007 

 
9.  OPPOSITION ERECTS TENTS IN UKRAINIAN CAPITAL TO
PROTEST DENIAL OF ELECTION REGISTRATION 
Maria Danilova, AP Worldstream, Kiev, Ukraine, Sunday, Aug 12, 2007

10THE PARTY OF REGIONS’ CONGRESS: STRENGTHENING THE
YANUKOVYCH-AZAROV-KLYUYEV AXIS – THE LIST AND

PROGRAMME OF THE ‘REGIONALS’- A CORRECTION OF
THE STATUS QUO, Writer analyzes electoral list of ruling party
ANALYSIS & COMMENTARY: By Oleksiy Popov
Source: 2000, Kiev, in Russian 10 Aug 07
BBC Monitoring Service, United Kingdom, Sun, Aug 12, 2007

11PRESIDENT’S DEMAND TO REPEAL LEGISLATIVE IMMUNITY
Television Address: Official Website of President of Ukraine
Kyiv, Ukraine, Thursday, August 9, 2007

12. EARLY PARLIAMENTARY ELECTIONS IN UKRAINE:

FIRST SALVOS
ANALYSIS & COMMENTARY: Dr. Volodymyr Hrytsutenko,
Franko National University (Lviv)
Action Ukraine Report (AUR) #857, Article 12
Washington, D.C., Monday, August 13, 2007

13. MARATHON OIL COMPANY JOINS THE U.S.-UKRAINE
BUSINESS COUNCIL (USUBC) IN WASHINGTON                  

By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 13, 2007
14. EASTERN EUROPE’S UNTAPPED MASS MARKET
Disposable income concentrated mainly in just
three countries – Poland, Ukraine and Russia.
By Stefan Wagstyl, Financial Times, London, UK, Monday, August 6 2007

15. U.S. PRODUCERS TAKE ON STEEL IMPORTS
Should existing duties on imported steel from China, India,
Ukraine and nine other countries should be continued.
By Robert Guy Matthews, The Wall Street Journal
New York, NY, Saturday, July 28, 2007; Page A2

16. ING BANKING SEES INVESTMENTS IN UKRAINE AROUND

50 MILLION OVER NEXT TWO YEARS
Stefan Kloet, Dow Jones Newswires, Amsterdam, Holland, Wed, Aug 8, 2007 .

17. BRYAN MARCUS, NEW UKRAINE DESK OFFICER FOR ECONOMIC
AND BUSINESS AFFAIRS AT US STATE DEPT IN WASHINGTON
By Morgan Williams, SigmaBleyzer
President, U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 13, 2007

18. PM YANUKOVYCH, US DEPUTY ASSISTANT SECRETARY OF
STATE DAVID KRAMER DISCUSS THE ECONOMY, WTO

David Kramer makes his third trip to Ukraine this year
Ukrainian News Agency, Kyiv, Ukraine, Thursday, August 2, 2007

19. SUNFLOWER B&B HOTEL IN KYIV
“Who needs ads when you’re this good?”
Lonely Planet website, August 2007

20. FOURTH OF JULY SPEECH: BY WILLIAM TAYLOR, U.S.
AMBASSADOR TO UKRAINE
U.S. Embassy, Kyiv, Ukraine, July 4, 2007

 
21MOLDOVA – A RETURN TO RUSSIAN INFLUENCE?
ANALYSIS: George Ballantine, Margareta Mocreac and Olga Khromova
BBC Monitoring research, BBC Monitoring Service
United Kingdom, Tuesday, August 7, 2007
 
22. KILLERS WITH IDEOLOGIES, Was Lenin as bad as Stalin and Hitler?
Book Reviewed by Simon Sebag Montefiore
The Washington Post, Washington, D.C.
Sunday, August 12, 2007; Page BW06
 
23. THE CRIMEAN MOUNTAINS AND CRIMEAN RIVIERA
INTERNET ENCYCLOPEDIA OF UKRAINE
Dr. Marko R. Stech, Managing Director, CIUS Press
Project Manager, Internet Encyclopedia of Ukraine
Canadian Institute of Ukrainian Studies
University of Toronto, Toronto, Ontario, August 2007
========================================================
1
UKRAINE DECREE 31 SETS LOW PRICE FOR GAS, FORCES
ITS SALE TO THE GOVERNMENT AND IS DESTRUCTIVE
TO THE DEVELOPMENT OF ENERGY RESOURCES SAYS
ROB BENSH, PRESIDENT OF CARDINAL RESOURCES
 
INTERVIEW: With Rob Bensh, Chairman &
Chief Executive Officer, Cardinal Resources
By: Morgan Williams, President
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, August 13, 2007

WASHINGTON, D.C. – Rob Bensh, Chairman and Chief Executive
Officer, Cardinal Resources, a member of the U.S.-Ukraine Business
Council (USUBC) in Washington, contacted the USUBC about a major
problem that has developed concerning the sale of gas by companies
involved in Joint Activity Agreements (JAA) in Ukraine.

A new Cabinet of Minister’s Decree (Decree 31) forces such companies as
Cardinal to sell gas only to the government of Ukraine and at prices far
below the competitive market price.

The decree, which is part of the Budget Law drafted by Finance Minister
Azarov and approved by Prime Minister Yanukovich, is very destructive
to the private development of energy resources and to private international
investors in Ukraine.

Cardinal has been operating in Ukraine for 10 years conducting E&P
(Exploration and Production) for oil and gas in Ukraine for resale into
Ukraine.

Cardinal is a UK plc with a U.S. Corporation (Delaware Corp) 100%
subsidiary (Carpatsky Petroleum) that owns 100% of the oil and gas rights
in question.

The management team is comprised entirely of American oil and gas
executives. A majority of Cardinal’s equity held in the U.S. while 75% of
Cardinal financing is from U.S. investors. Cardinal conducted an IPO last
year on the London Stock Exchange.

Cardinal has been an active supporter of democratic development in Ukraine
and for international engagement in reform issues associated with developing
a strong, positive Foreign Direct Investment (FDI) environment.

USUBC:  Rob, thanks for contacting the USUBC about the problem of private
gas sales in Ukraine. Tell us about the major issue that has developed
concerning Cardinal’s right to sell its gas in Ukraine to private buyers at
competitive market prices.

ROB BENSH: Cardinal historically sells its gas in Ukraine to Industrial End
Users at market prices (currently about $4.80 mcf).

The Government of Ukraine passed a new budget act in January 2007 which
obligates any JAA (Joint Activity Agreement) to sell its gas to NAFTA GAZ
at a fixed government rate of about $1.50 mcf, which, indeed, is below
production costs of about $$1.70 mcf.

Cardinal had been injecting its gas into storage to avoid selling it at
uneconomic prices.  It has recently been learned that UkrGas Production has
been selling Cardinal gas to the Government of Ukraine without Cardinal
knowledge or permission.

Decree 31 of the budget act is specifically designed to benefit the
Government of Ukraine in this year’s current budget as written by Mr.
Azarov, Minister of Finance, and it effectively confiscates the natural gas
production of Cardinal’s subsidiary, Carpatsky Petroleum, a U.S.
corporation.

This harms Cardinal and will also prevent other western companies who would
like to operate in the sector from working with Ukrainian State oil and gas
companies as they can not sell joint production.

USUBC:  Please tell us about the situation with gas prices in Ukraine today.

ROB BENSH: The price for the gas for the population is established by the
special National Energy Price Regulation Authority is fixed:

265.00 UAH (excluding VAT) = 52.48 USD per 1000 m3 = $1.52/mcf
318.78 UAH (including VAT) = 63.12 USD per 1000 m3 = $1.83/mcf

The market price is to a great extent regulated by the price for gas
provided by Ukrgasenergo, the monopolist gas provider in the Ukrainian
market. The current price for gas in Ukraine is:

     708,00 UAH per 1000 m3 (excluding VAT) = 140,20 USD

     per 1000 m3 = $4,07/mcf
     850,00 UAH per 1000 m3 (including VAT) = 168,30 USD
     per 1000 m3 = $4,88/mcf

This price can be slightly more or less, when the gas is sold to the gas
trader and not to the end buyer directly, but it can’t be higher at this
moment, though there’s a good chance and a clear tendency for the future
increase.

USUBC:  What actions has Cardinal taken to try and resolve this important
issue?

ROB BENSH: Cardinal has taken the following actions:

1. Letters requesting a resolution of  the gas sales situation were sent to
the Prime Minister Yanukovich (December 19th, 2006), Energy Minister Boiko
(March 23, 2007), and the Head of NAK Naftogas Bakulin (May 20, 2007).

Only once have we receiving a response, and that was from the Deputy Energy
Minister, which gave us false hope that the situation with the gas sales
could be resolved. This was the response to our letter sent to the Prime
Minister. We’ve never received any responses to the other letters.

2. U.S. Ambassador William Taylor sent a letter to Energy Minister Boiko
(March20, 2007), asking for resolution of this issue for Cardinal. The
Minister never responded to that letter.

3. Cardinal has met with the Energy Minister Boiko twice in his office,
discussing this issue. Both times the Minister promised to consider the
problem and help to resolve it. There was never anything beyond the
promises.

USUBC:  Based on your experience so far trying to resolve this critical
issue what conclusions have you drawn about the matter:

ROB BENSH: After several months of working on this problem we have
drawn the following conclusions:

1. Much stronger action must taken by all those who are concerned about the
very negative actions taken by the Ukraine government.  Cardinal will not be
able to change the current situation alone.

2. We realize that this is not exclusively Cardinal’s problem, but the
problem of every JAA or JV, formed with NAK Naftogas, Ukrnafta or
NAK Nadra.

Every declaration of any JAA or JV of their potential possibility to sell
gas at market price, when they have production, is a bluff.  All existing
JAAs and JVs with production either sell the gas to NAK at below

production costs or put it into storage.

3. We have regularly made the point in our letters to the Government, that
the Laws, which created the current situation, directly contradict other
Laws of Ukraine, including the Civil Code, The Law “On Foreign Investment”,
etc., which are still in effect.

Indeed, in April, Europa Oil and Gas (Holdings) plc won their case in court
of the right to sell gas at market prices but the government continues to
ignore the court ruling.

Cardinal assumes the verdict regarding the priority of the laws can be given
by the Constitutional Court. But considering the political situation in the
country, the fact that the mentioned court is not able to issue the decision
on one Presidential Decree for more than two months, we can hardly count
on this option.

4.  Given the non-responsive nature of Minister Boiko to the Ambassador’s
first letter, Cardinal has asked the U.S. Government to communicate via a
formal demarche to the Government of Ukraine that Decree 31 is inconsistent
with:

     (a) global norms for encouraging foreign direct investment
     (b) WTO standards and
     (c) Government of Ukraine statements regarding “energy
          self-sufficiency”
     (d) Laws Governing Foreign Investment in Ukraine.

Ideally we would like to see the Yanukovich government voluntarily withdraw
this law which is contrary to the long term interests of Ukraine and its
people.  Given their lack of response so far to our requests and to those of
the U.S. Ambassador, we doubt they are willing to do the right thing.

At this point, for the sake of future foreign direct investment in Ukraine
and for Ukraine’s efforts in the direction of energy independence, we can
only hope that the September 30 elections bring about a change in the
direction of welcoming investment from the West.

In the interim, we will continue to ask the U.S. government for its
intervention in the form of a demarche to Prime Minister Yanukovich.
————————————————————————————————-

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2. THE WORLD BIOFUEL BOOM AND UKRAINE –
HOW TO REAP THE BENEFITS, Policy Paper No. 7

Letter-to-the-Editor: By Dr. Heinz-W. Strubenhoff
Institute for Economic Research and Policy Consulting
German-Ukrainian Policy Dialogue in Agriculture
Kyiv, Ukraine, Thursday, August 9, 2007

RE: Article 14. Introducing Biofuel
How to launch this alternative mechanism?
By Natalia BILOUSOVA, The Day Weekly Digest #20
Kyiv, Ukraine, Tuesday, July 10, 2007
Action Ukraine Report (AUR) #856, August 9, 2007

Dear Sir,

Thank you very much for keeping us on your mailing list.

Article 14 deals with biofuels in Ukraine. It is interesting to read but
strongly biased by lobby interests. Our view differs.

See attached two policy papers on biofuels in Ukraine [The World
Biofuel Boom and Ukraine – How To Reap The Benefits, Policy
Paper No. 7 and Comments on the Draft Law of Ukraine No. 3158,
“On biological fuels production and consumption development].

The Executive Summary of No. 7 gives an overview on our reasoning
and findings. You may use it for publishing if you wish.

Best Regards

Dr. Heinz-W. Strubenhoff
Institute for Economic Research and Policy Consulting
German-Ukrainian Policy Dialogue in Agriculture
——————————————————————————————
THE WORLD BIOFUEL BOOM AND UKRAINE –
HOW TO REAP THE BENEFITS, Policy Paper No. 7
Institute for Economic Research and Policy Consulting
German-Ukrainian Agricultural Policy Dialogue
Kyiv, Ukraine, 2007

EXECUTIVE SUMMARY
High world energy prices, the dependency of many countries on energy
imports and the increasing awareness of the effects of global warming have
put biofuels high on the political agenda.

This paper is aimed at analysing the economics of biofuel production, and
the impact it has on world energy markets on the one hand and on world
agricultural markets on the other. Furthermore, three policy options on
how Ukraine can best benefit from this biofuel boom are discussed.

This paper focuses on biodiesel and bioethanol, which are produced mainly
from vegetable oil and grain or sugar, respectively. These biofuels are
already established and referred to as the first generation of biofuels.
This compares to second generation biofuels like ethanol from straw or
BTL (Biomass to liquid), which are not established.

The competitiveness of biodiesel compared to diesel produced from crude oil
depends on a number of factors, of which the price of crude oil is the most
important one. Net of any subsidies or tax breaks, biodiesel competes
directly with fossil diesel. Given a certain level of production costs, a
maximum bidding price can be calculated for rapeseed. This is the maximum
price a biodiesel producer can bid for rapeseed without running a loss.

Assuming, for example, a crude oil price of 60 US$/barrel (bbl) and a price
for rapeseed meal of 160 US$/t, the maximum price a biodiesel producer
could pay for rapeseed is approx. 200 US$/t, which is well below the current
market price in Ukraine.

In the period between 2001 and 2006 the maximum price that biodiesel
producers were able to pay for rapeseed never reached the market price, even
at crude oil prices of almost 80 US$/bbl. Thus, biodiesel production has
never been competitive without subsidies.

The same calculation can be applied to ethanol production by calculating the
maximum bidding price for grain. At crude oil prices of 60 US$/bbl and a
price for the protein-rich by-product DDGS of 80 US$/t, the maximum bidding
price for corn in Ukraine would be approx. 70 US$/t. This is again well
below the current market price.

Looking back into the 2001 to 2006 period bioethanol production from grain
would have been competitive in Ukraine only in summer 2005. At that time
high crude oil prices were accompanied by very low grain prices in Ukraine.
However, bioethanol would not have been competitive without subsidies
most of the time.

Biofuels can substitute only a small share of the world’s energy use. Even
if all vegetable oils produced in the world were converted into biodiesel,
they would substitute less than 3 % of world crude oil use. Their current
market share is estimated to be even much lower at 0.2 to 0.3 % of world
crude oil consumption, or approx. 0.5 % of all transport fuels used in the
world.

If all grain in the world were converted into bioethanol it could
substitute approx. 11 to 13 % of crude oil in the world or approx. 25 % of
the crude oil used for transport, but would leave nothing for food or feed.
Currently, ethanol produced from grain and sugar together substitutes
approx. 0.8 % of the world’s crude oil use.

These figures show that the world crude oil market is very big and that any
amount of biodiesel or bioethanol produced can hardly substitute a
significant share of crude oil demand. The impact of first generation
biofuels on the world crude oil markets is therefore limited. Biofuels of
the second generation will add to this potential. Its is rather unclear,
however, how competitive they will be.

In contrast, the impact that world energy markets have on the grain and
oilseed markets is substantial. Although a limited amount of the world
vegetable oil supply of less than 8 % is used for biodiesel production, this
additional demand is difficult to meet. This is why prices for vegetable
oils and oilseeds have been skyrocketing recently. The same holds true for
the grain market.

In the current 2006/07 marketing year the world grain use will exceed the
world grain production by almost 75 mln t, thus leading to a depletion of
stocks of this magnitude. Exactly this amount of grain, i.e. 75 mln t, is
used for ethanol production. As world ending stocks will fall to a very
low level, prices for grain have risen to a ten-year high.

The record prices paid for agricultural products on the world market are
very good news for Ukraine, a country with a big agricultural sector and an
even bigger untapped agricultural potential. Ukraine is in the excellent
situation to benefit from the world biofuel boom without paying any subsidy
for it. In a way, Ukrainian farmers benefit to a great extent from the
subsidies paid in the EU, the US and other countries to produce and

consume biofuels via record high prices.

This could provide the necessary incentives for farmers in Ukraine to
increase their productivity and production and to overcome the deep crises
it experienced.

 
For this to happen it is absolutely necessary that the Ukrainian government
does not interfere in the market, letting farmers profit from high world
market prices.

In the end, the Ukrainian government will benefit, too, via higher income
taxes and the reduced pressure to subsidise the agricultural sector.

A biofuel strategy for Ukraine needs to take this into account. Basically,
Ukraine has three options:

     a. to follow a free market approach.
     b. to foster biofuel production in Ukraine for exporting.
     c. to foster domestic production and the use of biofuels.

The free market approach would mean that biofuel production and consumption
would not be subsidised. Instead, the government would provide a good
investment climate, promote the development of internationally consistent
standards and fund technical and socioeconomic research. It would be up to
each investor to decide whether it is profitable to produce and/or to sell
biofuels in Ukraine.

It remains to be seen whether Ukrainian ethanol would be competitive on
the world and domestic market. It competes directly with ethanol produced
from sugarcane in Brazil and elsewhere in the world, and productions costs
of ethanol from sugarcane are generally much lower than ethanol from grain.

The biofuel production and export strategy would entail direct subsidies for
the production of biofuels to reduce the cost of production. It is also
being debated in Ukraine whether even more export restrictions, for rapeseed
for example, should be established. This is discussed to reduce the price
biofuel producers would need to pay for rapeseed as a feedstock for
biodiesel production.

The domestic production and consumption approach would mean active
subsidisation of biofuel production and consumption via tax exemptions,
mandatory blending rules or direct subsidies to biofuel producers. Thus,
Ukraine would use the German policy as a guideline.

As biofuels are currently not competitive with fossil fuels, their
production and use needs to be subsidised in one way or another to bridge
the gap between crude oil prices and biofuel prices. This subsidy will
either be paid by the taxpayer, the consumer or the farmers, and the costs
are high. In Germany, for example, the mandatory blending of biodiesel into
fossil diesel of only 5 % leads to higher fuel prices.

Additional expenses incurred by the consumers, i.e. the car drivers, amount
to 800 mln to 1 bln Euro a year. Plans in Ukraine to impose an export tax
on rapeseed would reduce the selling price achieved by farmers, thus
reducing the incentive to improve productivity and increase production.

The cost of any support for the biofuel industry needs to be weighed against
its benefits. Biofuel production may reduce Ukraine’s energy dependency.
However, the costs are relatively high and it needs to be carefully
investigated whether biofuel production is the cheapest way to reach this
goal.

It is well known that Ukraine’s energy intensity, i.e. the amount of
energy used for a unit of GDP, is among the highest in the world. Thus,
producing expensive biofuels just to use them very inefficiently in outdated
technology is not a very clever strategy. Furthermore, biofuels can reduce
CO2 emissions. But again, they are a rather expensive way to achieve this
goal.

Biofuels can also create jobs. Indeed, this is why they seem to be so
attractive for many policy makers in the EU. However, the number of jobs
created is often rather small and exaggerated by the proponents of biofuel.

Biofuel production is capital intensive, not labour intensive. Additional
jobs created in the agricultural sector will also be created if Ukraine
follows a free market approach. And, not least, any subsidy can destroy
jobs, as it represents additional costs in other parts of the economy.

Therefore, a macroeconomic cost-benefit analysis is needed to assess
properly the impact biofuels would have on the economy in general, on jobs,
energy dependency and, not at least, on the environment.

Thus, biofuel production and use is feasible in Ukraine, but the economic
cost would be very high. On the other hand, Ukraine is in a very comfortable
position. It could be one of the major beneficiaries of the world biofuel
boom by doing nothing but helping farmers to benefit from the high world
agricultural prices and exporting agricultural products.

Ukrainian academics have long debated the problems created by the price
scissor, i.e. low prices for agricultural products but high prices for
agricultural inputs. This problem could simply vanish, thanks to the biofuel
boom elsewhere in the world.
————————————————————————————————–
Disclaimer: This paper was prepared by the authors using publicly available
information and data from various Ukrainian, EU and WTO sources. All
conclusions and recommendations included in this article in no circumstances
should be taken as the reflection of policy and views of the German Federal
Ministry of Food, Agriculture and Consumer Protection.
————————————————————————————————-
NOTE:  To read the entire Policy Paper No. 7, World Biofuel Boom and
Ukarine or the paper Comments on the Draft Law of Ukraine No. 3058,
“On Biological Fuels Production and Consumption Development” go to
http://www.ier.kiev.ua/English/papers/papers_eng.phtml or write to your
editor, Morgan Williams, morganw@patriot.net, and I will send you a copy.
————————————————————————————————-
Dr. Heinz-W. Strubenhoff, Institute for Economic Research and Policy
Consulting, German-Ukrainian Policy Dialogue in Agriculture
Reyterska 8/5 A, 01034 Kyiv
Tel. office  (+38044)235-7502, 278-6360
Tel. mobile (+3)8-0955 211 625
strubenhoff@ier.kiev.ua; www.ier.kiev.ua

————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3. EBRD PROJECT SUMMARY WITH UKRAINE’S UKRTRANSNAFTA

Ukrtransnafta Project Summary Document (PSD)
European Bank for Reconstruction and Development (EBRD)
London, United Kingdom, Friday, August 10, 2007

LONDON – Ukrtransnafta project description and objectives: The proposed
project consists of USD 65 million in modernization improvements for
Ukrtransnafta, the Ukrainian State oil transportation company. The main
components are fourfold:

1) Installation of oil metering units to implement oil quality testing in
    accordance with international standards;
2) Optimization and expansion of the existing oil storage terminal at
    Pivdenny for greater efficiency and security of supply;
3) Installation of a microprocessor system for automating oil pipeline
    network management to ensure accident free operation and
    environmental protection and;
4) Communications network modernisation to improve system reliability.
    All procurement will be carried out according to EBRD public sector
    procedures.

Transition impact: The project will be the first International Financial
Institution facility for Ukrtransnafta and is designed to modernise and
improve the efficiency and reliability of the oil transportation system of
Ukraine.

The improvements also impact positively on security of supply and transit.
The project will also introduce international procurement standards and
requirements.

The client: Ukrtransnafta is a Joint Stock Company 100% owned by the
State oil and gas company, National Joint Stock Company Naftogaz
Ukraine. Ukrtransnafta is charged with the operation, maintenance and
development of the State oil pipeline network which remains State property.

EBRD finance: USD 65 million Senior Corporate Loan.

Total project cost: The project is part of Ukrtransnafta’s overall capital
expenditure programme projected to be USD 200 million during the
disbursement period.

Environmental impact: The project was screened B/1. Environmental due
diligence is still underway. Nevertheless the results of all the independent
investigations, including a site visit by the Bank’s Environment and
Sustainability Department, confirm that the Pivdenny Tank Farm has been
constructed and is operated to a very high standard, in line with best
international environmental, health and safety requirements.

The tanks are all relatively new, double skinned with floating roofs to
minimise vapour losses. The location is remote from other buildings and fire
and spill protection is of a high standard. The planned new storage tank
will be built to the same high standard of environmental, health and safety.

Technical cooperation: A feasibility study was financed by the EU under the
INOGATE IFI Due Diligence Support Facility Framework Agreement.

Project Summary Documents are created before consideration by the EBRD
Board of Directors. Details of a project may change following disclosure of
a Project Summary Document. Project Summary Documents cannot be
considered to represent official EBRD policy.
———————————————————————————————
LINK: http://www.ebrd.com/projects/psd/psd2007/37476.htm
———————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

========================================================
4. NAFTOHAZ SPOILT BY PETROLEUM PRODUCTS
Ukrainian cabinet said to prepare oil company for privatization

By Oleh Havrysh, Vitaliy Selik and Ivan Hech
Kommersant-Ukraina, Kiev, in Russian 9 Aug 07 p 5
BBC Monitoring Service, United Kingdom, Sat Aug 11, 2007

The Cabinet of Ministers of Ukraine has transferred the state shares in the
Ukrtatnafta oil company from the Naftohaz Ukrayiny state oil and gas

company to the State Property Fund. Experts see this as a move to privatize
the company next year.

The following is the text of the article by Oleh Havrysh, Vitaliy Selik and
Ivan Hech entitled “Naftohaz spoilt by petroleum products” published in the
Kommersant-Ukraina daily on 9 August:

Yesterday the Cabinet of Ministers passed a resolution transferring the
state’s stake in Ukrtatnafta [Ukrainian-Tatarstan Oil] to be managed by the
State Property Fund [SPF].

This is extremely advantageous to the Tatar shareholders in the enterprise,
since it deprives their basic opponent – the NJC [National Joint-stock
Company] Naftohaz Ukrayiny [Ukrainian state oil and gas company] – of the
possibility of fighting to re-establish control of Ukrtatnafta.

Experts believe that by obtaining control of the enterprise, as early as
next year the Cabinet of Ministers will put up its stake for privatization.

Ukrtatnafta controls about 35 per cent of the Ukrainian petroleum market.
Its turnover in 2006 was 700m dollars and net profit 5m dollars. Ukraine
owns 43 per cent of the stock in the plant, which, up to now, was run by the
NJC Naftohaz Ukrayiny, the government of Tatarstan (28.8 per cent) and
Tatneft [Tatar oil] (8,6 per cent). There is a dispute between Ukrainian and
Tatarstan shareholders over another 18.3 per cent of the stock.

The draft resolution on the transfer of 43 per cent of the stock in
Ukrtatnafta from Naftohaz to the SPF at yesterday’s sitting of the
government was tabled by the first deputy minister of the Cabinet of
Ministers, Volodymyr Pavlenko.

Fuel and Energy Minister Yuriy Boyko spoke against the resolution in its
current form. He said that with the transfer of 43 per cent of the stock of
Ukrtatnafta, the government was recognizing the loss of control over 18 per
cent of the enterprise’s stock.

As a result, the cabinet took a decision to transfer shares in Ukrtatnafta
to the SPF without indicating the size of the stake. The number of shares
will be determined by a working group in the next two weeks, Economics
Minister Anatoliy Kinakh specified.

The head of the SPF, Valentyna Semenyuk, explained the government decision
by the need to settle a conflict with Tatarstan. One needs to be a bit more
precise with foreign investors, and that is why the plant was handed over to
us, Semenyuk explained. People in Tatneft said that they considered the
transfer of the Naftohaz shares to the SPF as a favourable sign.

Naftohaz was surprised by the government decision. We will carry it out,
even though we consider it illogical. Our company has great experience in
working on the petroleum market. By controlling Ukrtatnafta, we could have
exerted influence on market prices with the help of commercial
interventions, the company’s press service says.

The general director of the Halychyna oil company, Oleksandr Lazorko,
believes that the decision to transfer the stake in the enterprise
essentially removes Naftohaz Ukrayiny from the struggle for control of
Ukrtatnafta and thereby is advantageous to the Tatarstan shareholders.
Naftohaz has capacities for oil extraction in the form of Ukrnafta
[Ukrainian Oil] as well as a network of filling stations.

The company’s fight for control of Ukrtatnafta was explained by the desire
to unite all those capacities and create a vertically integrated oil company
on the basis of Naftohaz, Mr Lazorko says.

Now Naftohaz will not be able to take part in the struggle for the stake in
Ukrtatnafta. And the SPF, judging by its experience of running state stakes
in oil refineries, will also not intervene in the work of the enterprise.

A deputy of the Supreme Council [parliament] of the 5th convocation,
Mykhaylo Volynets, who is a member of the fuel and energy committee,
believes that the transfer of the stake in Ukrtatnafta to the SPF
essentially means the start of preparation for privatization of the
enterprise.

By having prepared the transfer of the stake to the SPF, the cabinet has
made it possible to sell the stake in Ukrtatnafta as early as next year,
Volynets says.

There are no longer any other major facilities for privatization in the area
of oil refining. In the opinion of Volynets, the majority of the country’s
oil companies may take part in the privatization of Ukrtatnafta if, of
course, it is a matter of 61 rather than 43 per cent. In the assessment of
market participants polled by Kommersant, the value of a 61 per cent

stake in Ukrtatnafta may amount to 500-600m dollars.         -30-
————————————————————————————————
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========================================================
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========================================================
5. HOLTEC TO START COMPLETION OF NUCLEAR WASTE
STORAGE FACILITY AT CHORNOBYL NPP IN AUGUST
 
Interfax Ukraine Energy Weekly
Kyiv, Ukraine, Sunday, Aug 12, 2007

KYIV – U.S. Holtec International in August is to start the completion of the

building the second nuclear waste storage facility at the Chornobyl NPP,
which is needed for the decommissioning of the plant, the informational
and analytical group of the state Chornobyl NPP company has reported,
referring to the head of the group for managing projects on
decommissioning of the Chornobyl NPP, Andriy Chatsman.

The group said that on August 3, 2007 the documents, which allow Holtec to
start preparation works, were signed.

“Of course, we’re interested in resuming works at the object, which is very
important for decommissioning of the Chornobyl NPP, as soon as possible,

as well as the second nuclear waste storage facility, and with the approval of
the European Bank for the Reconstruction and Development, we signed the
documents before the basic contract is signed,” the group said, citing
Chatsman.                          
————————————————————————————————
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================      
6. UKRAINIAN ELECTION COMMISSION REFUSES OPPOSITION
PARTICIPATION IN ELECTIONS; TYMOSHENKO CALLS FOR
SUPPORT FOR DEMOCRATIC PROCESS IN UKRAINE

Press Release, BYuT, Kyiv, Ukraine, Saturday, Aug. 11, 2007

KYIV – The Ukrainian Central Election Commission (CEC), which is
responsible for overseeing the electoral process associated with the
Ukrainian parliamentary elections scheduled for September 30th , has
refused to register the main opposition coalition led by former Prime
Minister Yulia Tymoshenko.

Early Saturday morning the CEC members who represent Prime Minister
Viktor Yanukovych, along with his communist and socialist allies, refused
to give their vote acknowledging the candidacy of all 450 nominees of the
opposition coalition of Bloc Yulia Tymoshenko (BYuT).

Ms. Tymoshenko said the decision by the CEC to reject all BYuT candidates
was a politically motivated attempt to disrupt the upcoming elections.

The official reason given by the CEC was that the candidates of Tymoshenko’s
party did not state their full address (house number, street name) in the
registration documents.

Citing a Constitutional Court ruling in 2000, Tymoshenko said the place of
the residence is defined as a name of a village, city or region, but not a
specific street address. She added that the BYuT candidacy documents were
completed in exactly the same manner during the 2006 parliamentary elections
without any question.

“This is a blatant and rather desperate attempt to undermine the electoral
process by eliminating a political party that represents one-third of the
country’s population. ” said the opposition leader.

Tymoshenko pledged to appeal to the courts on Saturday and requested
immediate reaction from her political partners – President Viktor Yushchenko
and his coalition Our Ukraine-People’s Self Defence.

She also said that her coalition would seek support from the European Union,
the Council of Europe, PACE and OSCE.

The Ukrainian parliamentary election campaign started on August 2; the vote
is scheduled for September 30.
——————————————————————————————-
BYuT FOOTNOTE: The Central Election Commission – where majority
belongs to the representatives of the ruling coalition – at its dramatic
midnight voting refused to register the BYuT list for the elections. Formal
reason was “discrepancies in the list and bios of all 450 candidates”.

It means that while in the list there were only “place of living” i.e. city,
town or village, in the bios there were exact address. BYuT’s documents
were presented according to the same standards as in the last parliamentary
elections. There were no differences this time.

But politically biased members of the CEC “interpreted” the norm in a new
and very specific way. Deadline for the registration expired at the
midnight. Effectively it means that the BYuT has been excluded from the
campaign.
Separately, to understand the sequence of events:
On Friday, August 11, 2007, the Central Election Commission (CEC), the
state body responsible for administering the elections in Ukraine, refused
to register the major opposition coalition in Ukraine, Bloc Yulia Tymoshenko
(BYuT), for the parliamentary elections scheduled for September 30th.

Specifically, the CEC members who were elected under a quota system to
represent the current governing coalition of Prime Minister Yanukovich’s
Party of Regions, the Socialists and the Communists, refused to recognize
the legitimacy of any of the 450 BYuT candidates.  This is, from the point
of view of Yulia Tymoshenko and BYuT, a violation of the laws of
Ukraine and the universal principles of democracy.
SUMMATION OF EVENTS:
On August 7, 2007, according to part 1, article 58 of  Ukraine’s law “On
The Election of People’s Deputies of Ukraine “, BYuT applied to the
CEC for registration of its candidates for the parliamentary elections
scheduled on September 30.

All required documents were completed and submitted according to the
law and were consistent with the precedent followed in the parliamentary
elections of 2006.

According to part 3, article 102-4