Daily Archives: October 12, 2007

AUR#877 Oct 12 Energy Transit Guaranteed; Mysterious Gazprom Debt; Vanco Deal; Dollarisation Over?; Kateryna Yushchenko; Tom Dine; Quest Roundtable

An International Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
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
Reuters, Vilnius, Lithuania, Thursday, October 11, 2007

Reuters, Brussels, Belgium, Wed Oct 10, 2007

Associated Press (AP), Kiev, Ukraine, Thursday, October 11, 2007

Why was Ukraine caught off guard by the $2.2 billion gas debt?
Analysis: By Roman Kupchinsky, Radio Free Europe/Radio Liberty
Prague, Czech Republic, Thursday, Oct 11, 2007


Interview: with Margarita M. Balmaceda, School of Diplomacy & Int
Relations, Seton Hall University, & Harvard Ukrainian Research Institute
Alexander Timoshik, Pravda.Ru, Moscow, Russia, Thu, Oct 11, 2007

Associated Press, Vilnius, Lithuania, Thursday, October 11, 2007

Ukraine finally allows a serious Western energy player to explore and develop

what could be billions of barrels of oil buried beneath its Black Sea shelf.
John Marone, Staff Writer, Kyiv Post, Kyiv, Ukraine, Thu, Oct 11, 2007

Property Xpress, Sofia, Bulgaria, Wednesday, October 10, 2007


By Jesse Riseborough, Bloomberg, Melbourne, Australia, Wed, Oct 10, 2007 

By Oleksii Savytsky for The Day Weekly Digest
Kyiv, Ukraine, Thursday, October 11, 2007


By Nataliya Yatsenko for Mirror Weekly #37
Kyiv, Ukraine, Saturday, October 6-12, 2007

Briefing: Oxford Briefing Group, London/Kyiv, Wed, 10 Oct 2007

Reuters, Tbilisi, Georgia, Wednesday, October 10, 2007

Yushchenko backed an orange government in the campaign, to be
led by ex-premier Yulia Tymoshenko, his newly reconciled ally.
Reuters, Bratislava, Slovakia, Thursday, October 11, 2007

President’s call for a broad political compromise to Ukrainians who have

placed their faith in the democratic process it is little short of a kick in the teeth.
COMMENTARY: Peter Dickinson, Business Ukraine magazine
Kyiv, Ukraine, Monday, October 8, 2007
By Stephen Bandera, Kyiv Post Editor, Kyiv Ukraine, Thu, Oct 11, 2007
Commentary: by Pavel Korduban, Eurasia Daily Monitor
Jamestown Foundation, Wash, DC, Wednesday, October 10, 2007

By Zenon Zawada, Kyiv Post Editor, Kyiv, Ukraine, Thu, Oct 11 2007

Commentary: By Markus Salzmann
World Socialist Web Site, UK, Thursday, 11 October 2007

Ukraine 3000 Foundation, Tuesday, October 9. 2007
Published by the Action Ukraine Report (AUR) #877, Article 21
Kyiv, Ukraine, Friday, October 12, 2007
Interview: with Thomas Dine
By: Irene Jarosewich for The Ukrainian Weekly
Ukrainian National Association (UNA)
Parsippany, New Jersey, Sunday, September 23, 2007
INVITE: Roundtable VIII, Ukraine-EU Relations, October 16-17, 2007
Ronald Reagan Building & International Trade Center, Wash, DC
By Elizabeth Williamson, Washington Post Staff Writer
The Washington Post, Washington, D.C., Thu, Oct 11, 2007; Page A03
A congressional resolution about massacres in Turkey 90 years
ago endangers present-day U.S. security.
EDITORIAL: The Washington Post, Wash, D.C., Wed, Oct 10, 2007

Reuters, Vilnius, Lithuania, Thursday, Oct 11, 2007 

VILNIUS – Ukraine’s President Viktor Yushchenko assured Europe on

Thursday his government would meet its obligations to ensure Russian oil
and gas exports flow across its soil on schedule and in full.

Yushchenko gave the assurance days after Kiev resolved a dispute with
Russia’s Gazprom (GAZP.MM: Quote, Profile, Research) over the payment

of  debts worth $1.2 billion.

The Russian gas export monopoly had threatened to reduce supplies to Ukraine
in a move many analysts saw as putting pressure on the country, as election
votes were being counted, to form a government willing to work with Moscow.

The threat caused unease that Russian gas supplies to Europe might also be

“Our government guarantees the timely and total fulfilment of all our
obligations to transport oil and gas through our own territory,” Yushchenko
told a regional energy conference in the Lithuanian capital Vilnius.

Yushchenko has given politicians until the end of the week to agree a
framework for a new government and on a prime minister after a parliamentary
election intended to end months of political deadlock between him and
Ukraine’s prime minister.

Parties behind the 2004 “Orange Revolution” that swept Yushchenko to power
in 2004 won a very narrow majority of seats.

But Yushchenko has said “orange” parties must also reach an understanding
with his adversaries from the Regions Party of his longstanding rival, Prime
Minister Viktor Yanukovich.

Yanukovich is seen as more sympathetic to Moscow, while relations with
Russia fell to a low point when the leader of the pro-Western camp, Yulia
Tymoshenko, was prime minister in 2005.

Russia and Ukraine are yet to agree on gas import prices for 2008, which are
expected to rise from the current $130 per 1,000 cubic metres.

A price dispute between Moscow and Kiev led to cuts in Russian gas supplies
to Europe in January 2006. Europe gets the majority of its Russian energy
supplies — a quarter of the EU’s needs — through Ukraine.

The EU said on Wednesday the dispute’s timely resolution had strengthened
the credibility of Russia and Ukraine as supplier and transit countries.


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

Reuters, Brussels, Belgium, Wed Oct 10, 2007

BRUSSELS – An agreement between Russia and Ukraine on payment for

natural gas strengthens their credibility as supplier and transit countries, the
European Union’s top energy official said on Wednesday.

“The rapid solution of this bilateral commercial issue and the level of
transparency shown … during the affair strengthens the reputation of
Russia and Ukraine as reliable supply and transit countries to EU markets,”
Energy Commissioner Andris Piebalgs said in a statement.

Following a week-long dispute, Russian gas export monopoly Gazprom on
Tuesday reached an agreement with Ukraine that set out a repayment schedule
for $1.2 billion.

A similar pricing dispute between Gazprom and Ukraine had led to cuts in gas
supplies to Europe in January 2006, putting a question mark in the eyes of
some EU governments over Russia’s reliability as an energy supplier.

Gazprom, the world’s largest gas producer, supplies a quarter of Europe’s
gas and ships 80 percent of it via Ukraine.

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

Associated Press (AP), Kiev, Ukraine, Thursday, October 11, 2007

KIEV, Ukraine: President Viktor Yushchenko’s administration accused Russia
on Thursday of seeking to use a recent dispute over natural gas to influence
Ukrainian politics following parliamentary elections.

Russia’s state-controlled natural gas monopoly, OAO Gazprom, said last
week Ukraine owed more than US$1.3 billion (euro920 million) for gas and
threatened to decrease supplies if it was not paid this month. Russian Prime
Minister Viktor Zubkov later put the figure at US$2 billion (euro1.4

The move raised concerns of decreased deliveries to Europe and added to
political uncertainty in Ukraine, where parties were in tense talks on
forming a coalition and Cabinet following the Sep. 30 parliamentary

“We regard it as a certain political pressure on Ukraine in this complicated
moment of forming a new government in our state,” said deputy presidential
administration chief Oleksandr Shlapak, according to the president’s Web

Gazprom made the announcement shortly after it became clear that opposition
leader Yulia Tymoshenko, who has tense relations with Moscow, could become
prime minister. Tymoshenko has criticized the use of an intermediary in
supplying gas to Ukraine and has promised to get rid of it.

This week Ukraine agreed to settle the debt, partly by paying cash and
partly by handing some of its gas reserves back to Gazprom.

Shlapak suggested Moscow was also eager to weaken Ukraine’s position before
talks on the gas price for next year, which Ukrainians fear could rise from
the current US$130 (euro92) per 1,000 cubic meters.

“In my view, the very timing and tone of the statement shows that Gazprom
wants to see something more behind these negotiations than simply problems
between companies,” Shlapak said.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Why was Ukraine caught off guard by the $2.2 billion gas debt?

ANALYSIS: By Roman Kupchinsky, Radio Free Europe/Radio Liberty
Prague, Czech Republic, Thursday, Oct 11, 2007

Ukraine has reached an agreement on its outstanding debt to Gazprom,
clearing the air ahead of negotiations on gas supplies for 2008 and
mollifying wary European consumers.

But behind the turbid deal stands one outstanding question — how was
such a large debt accrued in the first place?

After the Russian energy giant Gazprom threatened earlier this month to cut
off natural gas to Ukraine unless it received $1.3 billion for past
supplies, Russian President Putin remarked that “the large debt was totally

An astonished Ukrainian Deputy Prime Minister Mykola Azarov told reporters
in Kyiv, “It can’t be true that the debt is as high as [Gazprom] says it

And Ukrainian Deputy Energy Minister Vadym Chuprun did did his best to
describe a complicated situation in which Ukraine is not responsible for the
debts, saying that the many suppliers, owners, and operators involved in
supplying Russian-controlled gas to Ukraine had to “settle their accounts
first, and when the amount drops we’ll see whose debt it is and whose fault
it is.”

The lack of awareness was difficult to fathom, considering that one of the
companies deemed responsible for accruing the debt, the Swiss company
RosUkrEnergo, has three powerful members of Gazprom’s management
committee on its board.

Even more befuddling was the fact that when the smoke cleared and the
numbers of the debt-payment agreement were crunched, the combined debt
by all debtors was $2.2 billion.
The debt was purportedly incurred by two companies — RosUkrEnergo and
UkrGasEnergo (UGE), a Ukrainian-registered joint venture between
RosUkrEnergo and Ukraine’s state-owned Naftohaz Ukrayiny.

Much of the disagreement centered on ownership of natural gas stored in
underground facilities in Ukraine.

When Ukrainian Energy Minister Yuriy Boyko on October 9 signed an agreement
with Gazprom CEO Aleksei Miller to pay off the debt by November 1, it was
decided that 8.5 billion cubic meters of gas belonging to RosUkrEnergo,
worth $1.2 billion, would be turned over to GazpromEksport.

The remainder of the debt, $929 million, would be paid by UkrGazEnergo
and Naftohaz Ukrayiny from their own funds, in cash.

The full text of the signed agreement has not been published and has yet
even to be seen by Ukrainian President Viktor Yushchenko, raising fears that
it will forever remain hidden from public scrutiny.

Perhaps this should not be surprising, considering the opaqueness of the
system under which Ukraine receives Russian-controlled gas.

The middleman Swiss company RosUkrEnergo was created in July 2004 by
Russian President Putin along with former Ukrainian President Leonid Kuchma.

Other key players in the deal were [1] Yuriy Boyko, the current Ukrainian
energy minister who in 2004 headed Naftohaz Ukrayiny; [2] Dmytro Firtash, a
Ukrainian businessman with no affiliation to the Ukrainian government; and
[3] Gazprom CEO Miller.

RosUkrEnergo was essentially formed to replace the discredited Budapest-
based EuralTransGas, which was later exposed in the Western press as
being a creation of Gazprom and Firtash.

Gazprom presently owns 50 percent of RosUkrEnergo while Firtash and his
partner, Ivan Fursin, a banker from Odessa, own the rest through a company
called Centragas, which in turn is owned by the secretive Mabofi Holdings in

Medvedev, the deputy head of Gazprom’s management committee, sits on
RosUkrEnergo’s board, as does Valeriy Golubev, who is in charge of Gazprom’s
sales to CIS countries. And Konstantin Chuichenko, the head of Gazprom’s
legal division, serves as co-director of RosUkrEnergo.
According to the January 2006 agreement signed between Ukraine and Russia,
RosUkrEnergo — at Gazprom’s insistence — was brought in to be the monopoly
supplier of Central Asian and Russian gas to Ukraine.

The agreement stipulated that RosUkrEnergo would purchase a “basket” of
Central Asian and Russian gas from GazpromEksport at $95 per 1,000 cubic

The total volume of gas purchased by RosUkrEnergo, according to the
agreement, was 73 billion cubic meters (bcm) — about 20 bcm more than
Ukraine consumed when Ukrainian production of 20 bcm is taken into account.

The extra 20 bcm was the commission Naftohaz Ukrayiny paid to RosUkrEnergo
for its services. RosUkrEnergo in turn sold this gas in Europe to, among
others, Emfesz KFT, a Hungarian-based company controlled by Firtash.

Emfesz then resold part of the gas to Poland — undercutting Gazprom’s
price — and sold the rest on the Hungarian domestic market.

However, in mid 2007, sources in the Russian gas industry reported that
Firtash’s companies had accrued a debt to RosUkrEnergo of more than $2
It appears Gazprom become wary of Firtash’s ability to repay the debt and
decided to rein him in, but had little leverage over the maverick
businessman who seemingly maintained a close working relationship with
Ukrainian Prime Minister Viktor Yanukovych’s administration in Kyiv and,
above all, with Boyko and Yanukovych’s chief of staff, Serhiy Levochkin.

Considering the complexity of the gas-transit arrangement and the internal
dealings, it appears that the October 9 debt deal is just a temporary
solution to a recurring problem.

And one can expect that the 8 bcm of gas returned to GazpromEksport will be
used as leverage over the new Ukrainian government as negotiations for
Gazprom supplies to Ukraine in 2008 kick off this month.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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INTERVIEW: With Margarita M. Balmaceda, School of Diplomacy & Int
Relations, Seton Hall University, & Harvard Ukrainian Research Institute
Alexander Timoshik, Pravda.Ru, Moscow, Russia, Thu, Oct 11, 2007

Russia ‘s state-controlled gas monopoly Gazprom said Tuesday it agreed to
settle Ukraine’s debt for gas supplies, seeming to resolve a dispute that
has raised concerns of a supply cut to Europe and added to the political
uncertainty in Ukraine.

OAO Gazprom said earlier this month that Ukraine owed $1.3 billion (920
million euros), but Russian Prime Minister Viktor Zubkov said Tuesday that
Ukraine’s debt had climbed to more than $2 billion (1.4 billion euros).

Ukraine would repay $1.2 billion (850 million euros) of the debt by
transferring gas from underground storage facilities in Ukraine to Gazprom
for further export, Zubkov said during a televised meeting with Ukraine’s
Prime Minister Viktor Yanukovych in Moscow.

The remaining $929 million (659 million euros) is to be paid by the
companies that supply gas on the Ukrainian market, he said.

To find out more about the present-day relations between Russia and Ukraine
Pravda.Ru has interviewed an expert in the Ukrainian policy Margarita M.
Balmaceda, School of Diplomacy and International Relations, Seton Hall
University, and Harvard Ukrainian Research Institute, Harvard University.

Pravda.Ru: Russian gas monopoly Gazprom threatened Ukraine to cut gas
supplies because of debs. Ukraine’s orange bloc said that Moscow tries to
put pressure on Ukraine willing Yanukovychto become Prime minister. Do
you think that Russia uses gas as a tool to influence Ukraine’s policy?

Margarita Balmaceda :Yes, I believe the Russian government uses gas as a
tool to influence both Ukrainian domestic politics, and Ukraine’s
international policy. The recent crisis involving “Ukraine’s $1.3 billion
debt to Gazprom” is a good example of this.

Although the Russian side knew for months already that the debt was
accumulating and would reach a critical point in late September, the issue
was not “made” into a crisis until it was politically expedient to do so.

First, the Russian side avoided making a “big deal” of the issue while the
election campaign was going on, presumably in order not to diminish
Yanukovich’s chances of winning by giving the Bloc Yulia Timoshenko
more ammunition against the current PM and Government.

At the same time, bringing the issue up exactly at the time when
coalition-formation negotiations are going on is a way to seek to affect,
indirectly, the outcome of these negations.

Not to speak of the fact that it is exactly this month that negotiations on
Ukraine’s gas supply for 2008 have to take place, and highlighting this
crisis exactly at this moment is a way to put pressure on the Ukrainian

So, indeed, the Russian government uses energy as a tool of political
influence in Ukraine, as it has been doing since at least 1994.

But what we should not forget is that, in addition to political goals, there
are also many economic interest involved, including some related to
corruption, and that certain players in the Ukrainian side have benefited as
much from then as actors on the Russian side.

(I discuss this issue in length in my book, Energy Dependency, Politics and
Corruption in the Former Soviet Union: Russia’s Power, Oligarch’s Profits
and Ukraine’s Missing Energy Policy, 1995-2006 (RoutledgeCurzon, 2007),
which should be coming out later this month.)

I must add that the whole way in which this latest gas crisis has played out
is very worrisome. It is very clear to me as well to Ukrainian energy
experts that this is not Ukraine’s state debt, but RosUkrEnergo’s private
debt, so it is very worrying that the Ukrainian government has decided to
treat it, basically, as state debt.

Moreover, the sudden increase in the debt from $1.3 billion to $2 billion
tells me some non-transparent business may be going on. It is exactly on
this question that the Yulia Tymoshenko bloc has asked the RNBO
(Natsionalnii Soviet po Bezpeki I Oborony) to look into in an urgent manner.

Pravda.Ru: Do you think that the victory of Ukraine’s Orange bloc in the
elections is a step towards democracy in Ukraine? Why?

Margarita Balmaceda : It is a step towards democracy in the sense that the
population has delivered a clear “no” to two parties, that, whether we like
it or not, has been involved in non-transparent dealings in Ukraine,
including in energy relations.

In particular, the success of the Yulia Timoshenko bloc, which campaigned
calling for a repudiation of the January, 2006 gas agreements with Russia,
represents a clear popular “no” to that way of doing business.

More broadly, the increase in support for Tymoshenko in some of the central
parts of the country speaks of a broader trend in which some of the regional
divides in politics may be softening, and that is a very positive
development for Ukraine.

Pravda.Ru: How could the election results change Ukrainian-Russian and
US-Ukrainian relations ?

Margarita Balmaceda : If a Tymoshenko government comes to power, it is

very likely that the January, 2006 gas agreements with Russia, involving the
intermediary company RosUkrEnergo, will be repudiated.

In that case, the energy relationship with Russia, intermediaries and
Central Asian producing states will need to be renegotiated. This could
touch important economic and political interests on both sides of the

Concerning relations with the US, I would expect them to improve somehow
should an “orange” coalition come to power, but I do not think the effect
will be so drastic.

With the exception of the question of NATO, Yanukovich has tried to present
himself – and to act-as someone who understands Ukraine’s interests lay, in
the final analysis, in closer integration with Western (in his view, mainly
Western European) institutions.

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

Associated Press, Vilnius, Lithuania, Thursday, October 11, 2007

VILNIUS, Lithuania — Ministers from five Eastern European countries signed
a deal for construction of an oil pipeline linking the Black and Baltic
seas — a project aimed at improving regional energy security and reducing
dependence on Russian crude oil.

The agreement, signed by Azerbaijan, Georgia, Ukraine, Poland and Lithuania,
calls for building a 500-kilometer extension to a pipeline in western
Ukraine northward to the Polish port of Gdansk on the Baltic Sea and
securing supplies of Azerbaijan’s crude from the Caspian Sea.

Presidents of the countries involved praised the deal, saying it would help
bring predictability and stability to oil supplies. “This deal will have
great impact not only for signatory countries, but for all of Europe,”
Poland’s president, Lech Kaczynski, said.

The estimated euro500 million ($700 million) project is considered to be a
victory for Eastern European governments, which are increasingly wary of
Russia’s energy policy and are searching for both alternative energy sources
and supply routes.

Mr. Kaczynski stressed that the agreement wasn’t made against any country, a
reference to Russia.

In the last three years, European countries have complained that Russia has
wielded its energy resources as a diplomatic weapon, punishing former Soviet
satellite states for not toeing the Kremlin line. Russia has temporarily cut
off natural-gas supplies to Ukraine and Belarus and ceased oil deliveries to
Lithuania and Latvia.

Europe receives 25% of its natural gas and a third of its crude from Russia,
according to Eurostat, and its dependency on Russia has increased in recent
years. Several Eastern European states receive nearly all of their
hydrocarbons from Russia.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukraine has finally allowed a serious Western energy player to explore and
develop what could be billions of barrels of oil buried beneath its Black Sea shelf.

John Marone, Staff Writer, Kyiv Post, Kyiv, Ukraine, Thu, Oct 11, 2007

Ukraine has finally allowed a serious Western energy player to explore and
develop what could be billions of barrels of oil buried beneath its Black
Sea shelf.

The outgoing government of Prime Minister Viktor Yanukovych approved a
Production Sharing Agreement (PSA) with US Vanco Energy on Oct. 3,
ending more than a year-and-a-half of tough negotiations.

Although the PSA still has to be signed by Deputy Prime Minister Andriy
Kluyev, it marks the latest in a recent series of breakthroughs by Western
oil companies onto Ukraine’s promising production market, and the first onto
the country’s Black Sea shelf.

If significant hydrocarbon deposits are found in Ukraine’s so-called
Prykerchenska field, a 12,900-square-kilometer swathe of territory that
comprises about 17 percent of all expected reserves in the Black and Azov
Sea shelves, the country could ease Russia’s stranglehold on its energy

Due to the technical difficulty of the deep-water drilling involved, Ukraine
has been unable to develop the Black Sea shelf on its own.

“Vanco is very pleased to have concluded successfully with the government of
Ukraine the negotiations on the Prykerchenska Production Sharing Agreement.
Although the discussions were long and intensive, they were always conducted
in a positive and constructive atmosphere,” reads a statement released by
Vanco on Oct. 9.

Vanco International Ltd., a subsidiary of Houston-based Vanco Energy
Company, won the exclusive right to present a PSA agreement to the Ukrainian
government in a tender held on April 19 of last year.

Vanco competed in the tender on a 50-50 basis with UK-based JNR Eastern
Investments Limited, part of the JNR group of companies, which represent the
interests of Nathaniel Rothschild and his family in the former Soviet Union
and Eastern Europe.

Also taking part in the tender were multinational heavyweights like Shell
and ExxonMobile, which submitted a joint bid; Ukrnafta, Ukraine’s largest
oil producer; Turkish state-owned oil company TPAO; and US company
Hunt Oil.

Vanco, whose profile of operations has focused on deepwater offshore
projects in West Africa, first submitted its PSA proposal to the Ukrainian
government in July 2006.

But the government rejected the proposal and started compiling a
counterproposal in October, leading some observers to question whether
other proposals might be considered.

In April of this year, just weeks before the signing deadline, the
government submitted its counterproposal to Vanco, which requested a
six-month deferral to consider the new terms.

The government explained the delays in finalizing a deal by the scope of the
PSA, which is for 30 years, and the fact that Ukraine had never signed such
a deal before.

Another major hitch was determining which side would get what percentage of
the oil produced and at which stage of production.

Vanco representatives told the Post that their company came to an agreement
with the government last month, but declined to disclose the breakdown of
the production sharing.

“The agreement approved by the Cabinet of Ministers satisfies Vanco’s three
key criteria of fairness, openness and durability, and provides an effective
framework for the major investments needed to complete what is undoubtedly
a very risky deep water exploration and production project.

“The PSA also ensures that the state of Ukraine will receive the major share
of the benefits arising from any hydrocarbon discoveries within the
Prykerchenska area,” Vanco’s Oct. 9 statement reads.

The government did not respond to the Post’s requests for further
information in time for the publication of this article.

Dr. Jim Bown, Vanco’s Representative in Ukraine said, “Vanco looks forward
now to the completion of formalities and the signing of the agreement within
the next seven to ten days so that work can begin immediately on the
implementation of the exploration program.”

Vanco has said it is prepared to invest “a minimum” of $100 million for the
first three years of exploration, and has already spent well over $6 million
in preparation for receiving the PSA.

“If there are hydrocarbons in the Prykerchenska area the geology even at
this early stage suggests that the resources could be very large indeed. So
Vanco’s job now is to find the hydrocarbons and produce them.

The Government’s approval of the Production Sharing Agreement is the first
step on the road that we all hope will lead towards Ukraine’s energy
independence,” Bown said.

Ukraine currently imports the lion’s share of its hydrocarbon needs from
Russia. But developing the field will take several years, leaving Ukraine
reliant on Russia for most of its energy needs in the near term.

Ivan Poltavets, a Ukrainian energy analyst, said the Vanco deal would not be
a radical breakthrough in solving Ukraine’s energy needs, but it could help
the country fulfill its goal of producing 25 percent more gas within the
next 20 years.

Having unexpectedly doubled the price Ukraine pays for gas at the border in
2006 and then raising it again by a third this year, the Kremlin looks
prepared to keep putting pressure on Kyiv to pay more for its energy needs.

Poltavets said that by bringing in a Western company, the government will
get the necessary technical expertise needed to develop the shelf and send a
positive signal to other international energy investors.

Critics of Vanco’s development of the shelf have argued that more than one
company should have been selected, given the size of the shelf zone and the
fact that Vanco is expected to contract out the exploration and drilling

But Ukraine has in recent years opened the gates to large hydrocarbon
exploration and production rights to Western companies, hoping their
expertise and financial muscle could help tap into deep or hard-to-reach

Ukraine’s state-owned oil and gas company Naftogaz Ukrainy and a subsidiary
of the US-based Marathon Oil Corporation inked a cooperation agreement in
June 5 to explore for hydrocarbon deposits in the country’s Dnipro-Donets
Basin, which supplies Ukraine with 80 percent of its hydrocarbons and is
believed to contain natural gas deposits deep below those being exploited.

The Marathon deal follows on the heels of a 2005 cooperation agreement
between Ukraine and Anglo-Dutch energy giant Shell, which has committed to
invest $100 million into the country.

Shell has already obtained development licenses in the Dnipro-Donets Basin
and recently landed an interest in a Ukrainian filling station network
through a joint venture with Moscow-based Alliance Group.
LINK: http://www.kyivpost.com/business/general/27538/

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Property Xpress, Sofia, Bulgaria, Wednesday, October 10, 2007

SOFIA – The Estonian billionaire Hilar Teder has sold his stake in the
Russian supermarket chain OK to focus on Ukraine where he hopes to

develop the domestic hypermarket operator OK.

Teder said he is looking to Ukraine because of a lack of big business in
Estonia. The main strategy of the hypermarket is to attract people through
low prices, focusing on a big turnover.

Over the next four years, the company intends to allocate USD 800 mln for
its development. According to the plan, commercial space totalling 200,000
sq. m will be in place within a year.

The expected value of the usable area amounts to USD 1,000 per sq. m. This
year, three hypermarkets are scheduled for opening, the first of which will
appear in Kiev on November 14, on the Dnepr Riverside Street.

The Estonian billionaire has established his own operator, as it was
difficult to find an operator which would take on the lease of his

Former Director at Carrefour for Poland has been selected to create the
concept of the Ukrainian chain. Estonian experts with experience in Finnish
retail chains have been appointed as consultants. Project finance will be
secured by their own funds.

OK Ukraine was established in Luxembourg, where one of Teder’s companies
is headquartered. The Ukrainian OK chain is not related to the Russian chain,

except the name, Rynok.biz reports. Russian newspaper Komersant reports
that the Russian chain OK is already controlled by Russian businessmen.
LINK: http://www.propertyxpress.com/getnews/0000003409
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
By Jesse Riseborough, Bloomberg, Melbourne, Australia, Wed, Oct 10, 2007 

MELBOURNE –  Ukrainian billionaire Gennadiy Bogolyubov won Australian

regulatory approval for his company’s A$1.03 billion ($927 million) bid to
buy the country’s largest manganese producer, Consolidated Minerals Ltd.

The Foreign Investment Review Board approved the offer and a bidder’s
statement for Perth-based Consolidated will be lodged by Oct. 17,
Palmary Enterprises Ltd., controlled by Bogolyubov, said today in a
statement to the Australian Stock Exchange.

Bogolyubov’s company is competing with proposals from Pallinghurst
Resources Australia Ltd., chaired by former BHP Billiton Ltd. Chief
Executive Officer Brian Gilbertson, and Territory Resources Ltd.
Consolidated has had no indication offers superior to Palmary’s will
be forthcoming, it said today in a separate statement.

Unless extended further, Territory’s offer closes Oct. 14 and
Pallinghurst’s offer closes Oct. 15, Consolidated said in the
statement. The board of Consolidated continues to recommend the
Palmary offer, it said.

Consolidated fell 3 cents, or 0.6 percent, to A$4.97 at the 4:10 p.m.
close of the Australian Stock Exchange in Sydney. The stock has more
than doubled this year compared with the 19 percent gain for the
benchmark index.
To contact the reporter on this story: Jesse Riseborough in

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

By Oleksii Savytsky for The Day Weekly Digest
Kyiv, Ukraine, Thursday, October 11, 2007

The socialist Valentyna Semeniuk, head of the State Property Fund, sees
no reason for her agency to panic. She recently spoke at a hotline talk
and a press conference in the Cabinet of Ministers’ club, where she put
in an appearance not so much as Ukraine’s privatization boss as
a representative of her party.

Semeniuk also offered an analysis of the elections and reached the
conclusion that falsifications during the voting were directed primarily

against the Socialist Party of Ukraine.

Semeniuk said she hopes to remain in her position a lot longer but did not
exclude a different scenario: “The specialists in the fund are sufficiently
experienced. Any representative may be appointed head of the fund.”
At the same time, she emphasized that both appointments and removals from
office require a majority vote in the Verkhovna Rada.

“I would like to see another person walk into the session room and garner
as many votes as I did – 313,” she said with a trace of nostalgia in
her voice.

Ms. Semeniuk said that there is “too much work for her to do” at the fund
because the schedule for budget receipts from privatization has been
disrupted due to protracted court trials. In her opinion, this is
the cause behind the continuing deterioration of Ukraine’s investment
attractiveness and losses to the budget.

She says this is advantageous primarily for Ukrainian big shots that
are deliberately scaring off foreign investors, thus beating down
the price of enterprises slated for privatization. “If they want
to bring the price down, they go to court, and halt the competition.
Then the Special Control Commission passes a resolution or the president
issues an edict to cancel the auction.

This causes a significant drop in the price because potential buyers
abandon the purchases,” said Semeniuk, describing current schemes.
At the same time, she believes that Ukraine’s oligarchs will have
no trouble issuing an Initial Public Offering (IPO) even now.

“Today the dozen or so of Ukraine’s wealthiest oligarchs can easily
reach the IPO level. They can all issue it,” said the head of the State
Property Fund.

Ukrtelekom is also entangled in a similar legal imbroglio: for some time
now it has been subjected to the privatization procedure but to no avail.

Naturally, the State Property Fund is interested in obtaining as much as
possible from the auction. However, it has yet to hear a desirable figure
from potential buyers.

“Ukrtelekom is worth $800 million. But before privatizing it, we need
to study the situation in the market. If its shares are listed, we take
the listed figure as the starting point for the auction,” Semeniuk says.
However, “some players are not interested in this.

They stop the fund’s initiatives, thus scaring off foreign investors…
If the price of one share is 1.15 UAH, then Ukrtelekom’s starting price
is 4.7 billion UAH. Why are they so afraid of transparency and an honest
estimate of Ukrtelekom’s assets?

Because they want to get it for a song,” Semeniuk said in response to
her own question. “I met potential buyers, and in response to my question
they said that they cannot buy Ukrtelekom before the parliamentary elections
because the situation in Ukraine is unstable now. Another thing: why were
all private companies given the right to do business in the cellular phone
sector whereas the state-owned company wasn’t?

This was to prevent this company’s capitalization level from going up.
So we put five percent of Ukrtelekom’s shares to sell on the stock exchange
in order to gauge the company’s real value.”

The fund is facing even more serious challenges, such as the Kryvy Rih
Oxidized Ore-Dressing Complex. President Yushchenko asked the Security
Service of Ukraine and the Prosecutor General’s Office to investigate
the fund’s actions in connection with this enterprise.

On Sept. 20 the State Property Fund was planning to sign a contract
to set up a joint venture to complete the construction of the complex.

The other party to the contract was going to be the Ukrainian Ore
Metallurgy Company, owned by the Russian holding company Metaloinvest
on parity principles with Ukrainian Smart-Holding. The contract was
not signed.

The president believes that the fund violated the law. “I request that an
investigation be launched within your respective jurisdictions into whether
the State Property Fund abided by current legislation when it decided
to create a joint venture attached to this complex. In the event of a
violation, I request that necessary measures be taken,” Yushchenko’s decree


In response, Semeniuk claims that through his decree the president was
lobbying in the interests of the owners of Mittal Steel. “It’s simple:
Mittal Steel’s lobbying interests won. Mittal Steel wants to gain control of
everything, after which Ukraine’s metallurgy will come to a halt,” Semeniuk
told journalists on Wednesday, before the start of the Cabinet of Ministers’
meeting in Kyiv. (LINK: http://www.day.kiev.ua/189283/)
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


By Nataliya Yatsenko for Mirror Weekly #37
Kyiv, Ukraine, Saturday, October 6-12, 2007

There are different ways to assess poverty. One can compare living
standards in Ukraine with those in some African or Latin American country
or the income of an average Ukrainian and his neighbor that is buying
a modest two-room flat in Kyiv for $100,000 or a ten-day tour to Vietnam
for $2,500.

Internationally, Ukraine rates decently, but in terms of income levels
within the country, the situation is going from bad to worse each year.

According to the latest survey of Ukrainian households, absolute poverty
has been practically overcome (by UN criteria for Central and Eastern
Europe). At the same time, 84.5 percent of Ukrainians consider themselves


The UN has several reference points, considering the unique situations of
different countries. It sets the absolute poverty threshold (by solvency)
until 2013 at $1.07 per day for Sub-Sahara countries, $2.15 for Caribbean
countries, $4.30 for Central and East-European and CIS countries, and
$14.76 for developed countries.

Thanks to the dollar’s inflation, Ukraine’s standing looks more or less
agreeable (in Euro terms it is doing much worse, but standard calculations
are normally made in USD). Ukrainian officials can proudly report that
“their” $4.30 nearly equals UAH 5.00 [$1 = UAH 5.05 – A.B.] in terms of

And after the promised pension increase up to UAH 415 per month
on October 1, even the poorest pensioner may not appear to be that poor
with his UAH 13.8 per day. In 2006 a mere one percent of Ukrainians lived
below the poverty line. Since then, the government has raised pensions
and salaries several times.

Thus, in absolute figures this country is moving closer and closer
to the poverty threshold for developed countries and is likely to reach
it sooner than 2013.

According to the latest survey of households, last year the maximum
individual annual income in Ukraine was UAH 32,000. The State Tax
Administration reported about 185 people with income between UAH 500,000
and UAH 1,000,000 and 75 people with income exceeding UAH 1,000,000.

However, a survey of households normally left out such people. It is
hard to imagine a millionaire’s wife keeping a spending diary and
recording her expenses on manicures or carrots.

There are two conclusions: a) the actual level of absolute poverty
in Ukraine is even lower than officially reported; b) economic disparity
is becoming deeper and graver. Both factors have a serious influence
on relative poverty indices.

According to Ella Libanova, director of the Institute of Demographics
and Social Research, since 1999 the gap between the five-percent wealthiest
and the rest of the population has widened, despite the latter’s increasing

It was only in 2005 when the income of 50 percent of the poorest grew
faster than 50 percent of the richest. The actual state of affairs differs
with the widely advertised high rate of GDP growth.

GDP is growing, indeed, but different groups of the Ukrainian population
receive different dividends from this growth. 20 percent – the poorest –
have seen their incomes grow 3.37 times since 2000; the figures for each
next 20-percent group (up to the richest) are 3.40, 3.46, 3.47, and 3.78
respectively. As for the millionaires, the approximate size of their
income could only be known from the Polish magazine Wprost.

Who are those “poor citizens”? What can they afford? How do their children
live and what are their chances to get a good education and competitive
job with a decent salary?

Judging from the latest survey of households, families with children
under 16 and single old people over 80 are still in the risk group.
27.8 percent of families with children, two employed parents, and no
disabled adults, are poor. If they also have old pensioners,
the figure is 39.3 percent.

Even though salaries and pensions keep growing, the risk of poverty
in Ukraine remains directly proportional to the number of children
in a family and inversely proportional to the size of the locality
where the family lives.

Minimum income is growing, but medium-size income is growing faster.
The man that cannot afford enough fruit and juice-s for his child
does not care a bean that in 2000 every seventh Ukrainian family
lived like this and now only every fortieth does.

One of the best remedies for poverty is higher education: one university
graduate in a family reduces its poverty risk. Paradoxically enough,
employment status is far from decisive: 78.1 percent of poor families
have at least one employed member and practically every third household
in the 10-percent group of rich families has at least one unemployed member.

Experts distinguish two categories of poverty – objective and subjective,
i.e. self-assessed. Since the 1970, when Dutch scientists introduced this
approach, it has become very popular as a barometer of public awareness and

The Ukrainian “barometer” is going off the scale: almost 85 percent
of Ukrainians consider themselves to be poor. Interestingly, two-thirds
in the 20-percent group of the richest also list themselves in this

Are their pearls too small or cars not prestigious enough?

“The self-determined poverty line has risen immensely,’ says Ella
Libanova. ‘Several years ago it was nearly on par with the line set
by the government. Now about half the population link it with the average
wage and about 20 percent set it at the level of two and a half average

That must be some psychological abnormality. In my view, it’s our political
and economic elite that should be blamed for such erratic evaluations.

“The economic elite vaunt their wealth in every way they can. They don’t
understand that their behavior provokes and pressures the average citizen.
What do I mean? Ukraine ranks third last in Europe by GDP per capita
followed only by Albania and Moldova) but is in the top five by the number
of expensive cars sold.

“Trying to buy popularity, the political elite raise bonuses and social
allowances instead of trying to raise salaries.

“The number of births in Ukraine as well as the rest of Europe has been
on the rise since 2002. Now it’s problematic to place a child into school.
30-35 first-graders have to sit in one classroom. It would be logical
to build more schools, but it’s a big problem.

The preschool system (especially for kids under three) is practically
ruined, and our political leaders offer generous childbirth allowances.
UAH 50,000 is more than three annual salaries! Without knowing it,
they cultivate a sense of inferiority in the rest of their compatriots.”

There is one more alarming tendency: growing expectations of help
from authorities. 24 percent of households with young people believe
that their welfare is the exclusive or partial responsibility of
the government. That is the result of the “socially-oriented policy”!
Regrettably enough, such parasitic attitudes are growing.

“This problem needs special attention,’ concludes Ella Libanova.
‘It may be one of the most serious negative phenomena. I am sure
that subjective poverty is more dangerous than objective.
It is very responsive to leaders’ calls for putting up or
storming barricades…”
LINK: http://www.mw.ua/2000/2020/60668/
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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BRIEFING: Oxford Briefing Group, London/Kyiv, Wed, 10 Oct 2007

As the dollar reaches new historical lows against pretty much all other
global currencies, Ukrainian monetary policymakers must be wondering how
much longer they should defend a narrow exchange rate corridor against the

Ukraine’s currency, the hryvnia (UAH), has been de facto pegged to the
dollar since the 1998 financial crisis. Since a currency revaluation in
April 2005, the hryvnia has been trading at UAH5.05:$1, which places it
comfortably within a declared band for movement of UAH 4.95-5.25:$1.

As such, it has been very successful in stabilising the economy by giving
people faith in the local currency. This in turn has helped bring down
inflation and facilitate economic growth.

Ukraine is not unique in this respect. A number of countries in emerging
markets use hard dollar pegs to fix their exchange rate frameworks. The
difference is that in their case, such as in the Gulf, the US is their
biggest trading partner.

Thus, the weakening dollar is not having a substantial impact on those
countries’ principle export commodities. In Ukraine’s case, its main trading
partners are EU member states, with a substantial part of those transactions
nominated in euros.

As a result, the dropping value of the dollar is having a direct impact on
Ukraine’s external competitiveness vis-à-vis Europe. There is both a
positive and a negative effect.

On the one hand euro strength against the dollar means that Ukrainian
principle export commodities, such as steel, chemical products and machinery
are more competitive in terms of price.

However, to become more competitive and increase productivity, Ukraine needs
to import capital goods – factory equipment, technology, materials – a lot
of which comes from Europe and is nominated in euros.

Consumer goods like cars, washing machines and mobile phones are also
getting more expensive because of a stronger euro. This in turn results in
inflationary pressure – a monetary evil policy makers are at pains to

Another possible negative effect that could be generated by weakening dollar
is that majority of people traditionally held their savings in dollars. It
made sense, because the prices for housing, cars and even salaries were all
referenced in dollars.

However, there is a risk that a weaker US currency could result in a switch
from dollar prices to euro prices, which would be equivalent to a 40% price

This took place in other East European countries such as Bulgaria and
Romania as well as the Baltic states that used to have dollar-based
economies, but now use the euro as their reference currency.

In the case of these countries, the transition was relatively slow and
smooth and the gap between the dollar and the euro was much smaller. A
sudden switch at this point would be very expensive for consumers and

would effectively erode a substantial part of people’s savings.

“A stable hryvnia-dollar exchange rate remains an important psychological
anchor among Ukrainians and therefore the key monetary tool in stabilising
the currency,” said Adomas Navickas, a partner at KBC Securities Baltic

A more gradual transition through relaxation of the exchange rate mechanism
and widening of the dollar-hryvnia corridor may be the best solution It
would allow the market to determine the value of the Ukrainian currency with
the central bank intervening to offset sudden external shocks.

Volodymyr Stelmakh, governor of the National Bank of Ukraine, suggested back
in May that a shift in monetary policy may be imminent. However, nothing has
yet taken place, in the absence of a functioning parliament and clear
political vision.

Indeed, given the political situation it is probably best no major monetary
policy changes are implemented until there is a stable government.

The peg was introduced precisely because there was no faith in policy
making. The fear is that short-term political tampering with the exchange
rate would only undermine faith in the local currency, as politicians are
often accused of fixing the exchange rate to suit their own business goals.

Seen from that perspective, the recent election has hopefully served as an
important milestone in creating a political consensus on future monetary

It is clear that Ukraine cannot retain a hard dollar peg indefinitely and
policy makers need to project a clear vision of where to go next. As in its
geo-political choice, the answer is probably either closer to the euro or
the ruble.
CONTACT US: General Enquiries mail@oxfordbusinessgroup.com
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Send in a letter-to-the-editor today. Let us hear from you.

Reuters, Tbilisi, Georgia, Wednesday, October 10, 2007

TBILISI – The Bank of Georgia, the country’s biggest bank by assets
said on Wednesday it has acquired a bank in Ukraine for $81.7 million.

The Georgian bank said in a statement that it had bought Ukraine’s
Universal Bank of Development and Partnership, which has about
0.22 percent of the local market by total assets.

Bank of Georgia is the most liquid stock on the Georgian Stock
Exchange and the first Georgian company to float in London.

The bank is more than 80 percent owned by institutional investors,
including funds such as Firebird and East Capital The bank issued
Eurobonds worth $200 million at the start of 2007.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Yushchenko backed an orange government in the campaign, to be
led by ex-premier Yulia Tymoshenko, his newly reconciled ally.

Reuters, Bratislava, Slovakia, Thursday, October 11, 2007

President Viktor Yushchenko said on Thursday he knew the identity of the
prime minister to be appointed after parties form a viable post-election
parliamentary coalition, but gave no details.

Groups linked to the “Orange Revolution” that swept the president to power
in 2004 won a tiny majority in the poll, aimed at ending months of deadlock.
But the party of his rival, Prime Minister Viktor Yanukovich, is the largest
single group.

Yushchenko backed an “orange” government in the campaign, to be led by
ex-premier Yulia Tymoshenko, his newly reconciled ally. But he has since
said she could become prime minister only if a political deal was reached
with Yanukovich’s Regions Party.

Speaking during a visit to Slovakia, the president said he hoped a coalition
agreement could be signed sometime next week.

“I already know the name of the future prime minister,” he told a news
conference alongside Slovak President Ivan Gasparovic.

He said the combined tally of two “orange” groups — Tymoshenko’s bloc

and the pro-presidential Our Ukraine party “is the winner of the election, it
has a majority, and obviously it has the right to nominate its prime
minister.” But he repeated that creating a coalition required “a
constructive dialogue” between its parties and the opposition.”

Yushchenko on Monday summoned all parties that won seats in the Sept. 30
election and gave them until the end of the week to produce a blueprint for
a working coalition. Leaders have since made few statements.

Tymoshenko said she would be willing to offer some of the current prime
minister’s allies top government jobs. And Yanukovich said his party was
prepared to go into opposition if, after the talks, he was not kept on as

Yanukovich backs the creation of a “broad coalition” bringing together his
Regions Party and Our Ukraine, touted by some analysts as a way of bridging
the longstanding gap between Ukraine’s Russian-speaking east and the
nationalist west.

Yushchenko has never called for such a pairing, but says his rivals must get
some top jobs to build trust. Tymoshenko says she will go into opposition if
a “broad coalition” takes shape.

Yushchenko defeated Yanukovich in the re-run of a rigged election in the
aftermath of weeks of “orange” rallies.

But Yanukovich made a comeback last year and became prime minister after
“orange” groups proved unable to form a government. He has since chipped
away at Yushchenko’s powers.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
The President’s call for a broad political compromise among the country’s
leading parties may sound admirable to outsiders, but to Ukrainians who
have placed their faith in the democratic process it is little short of a
kick in the teeth.

COMMENTARY: Peter Dickinson, Business Ukraine magazine
Kyiv, Ukraine, Monday, October 8, 2007

There was an almost audible rumble at around 5pm on October 3 as the

entire nation collectively let out a hearty groan. It was reacting to President
Yushchenko’s surprise TV address, in which he called on all political
parties to unite and work together.

Both seasoned analysts and partisan politicians were taken off guard by the
news, but to the proverbial man in the street it must have seemed like just
one more example of Yushchenko’s apparent passion for party political
machinations masquerading as statesmanship.
The immediate result of the president’s address was to throw the seemingly
straightforward coalition talks into chaos, which, presumably, was
Yushchenko’s intention.

His appeal certainly succeeded in throwing a temporary spanner into the
wheels of the Tymoshenko victory parade just as her progress to the prime
minister’s office was beginning to seem all but assured.

Such turns of fate are routine events in Kyiv, but this attempt to undermine
the self-proclaimed democratic opposition in their moment of glory was in
particularly bad taste, and flew in the face of much that Yushchenko has
stood for as a politician over the past nine years.

Supporters of a broad coalition would no doubt point to the over 50% of the
electorate who didn’t vote for an Orange coalition, and argue that by
including the likes of the Party of Regions in some way it would be possible
to bring everyone onto the same team.

This at least seems to be what Yushchenko was getting at, but if that is the
sum total of his thoughts on the subject then he obviously holds to some
fairly odd interpretations as to what democracy is all about.
It is far likelier that he was driven by a desire to demonstrate to Yulia
Tymoshenko that he is still the ultimate arbiter of the Ukrainian political
scene. There is little to suggest at this stage that Yushchenko has any hope
whatsoever of re-election in 2009, but he is nevertheless widely thought to
harbour dreams of a second term.

As such he must be acutely aware that his biggest rival is not Viktor
Yanukovych but Tymoshenko, who now has an unprecedented national support
base and would surely thrash any candidate who dared go head to head with
her in a race for the presidency.

The idea that he would sacrifice the ideals of democratic Ukraine for the
sake of his own political career may seem fanciful, but this is not the
first time he has performed ideological contortions to suit a shifting
political climate and protect his own tenuous grip on power.

Few will forget the deal struck with his erstwhile arch-enemy Yanukovych in
autumn 2005, or the way he handled simultaneous negotiations with rival
blocs following last year’s parliamentary vote.

This time he has surpassed even himself, and the damage this time could be
terminal. It is hard to imagine any voter demographic that would support
this call for a mixed administration and regardless of the outcome of
ongoing coalition talks, Yushchenko’s hard won reputation as the defender
of Ukraine’s young democracy is tarnished forever.
As all this was going on, Russia entered the fray in the form of a threat to
cut gas supplies if huge and previously hushed-up debts were not promptly
paid in full. This is fairly standard posturing from the Putin regime, and
is to be expected.

The real question now is how long Ukraine’s politicians will allow the
albatross of addiction to cheap Russian gas to hang round their necks and
obstruct the country’s progress.

Dealing with the energy issue will inevitably be a painful process for any
Ukrainian government brave enough to take it on, but not doing so will leave
Ukraine stuck in the limbo of dependency and unable to implement the
far-reaching reforms that the electorate has given Tymoshenko and her

Orange coalition colleagues a mandate to pursue.

Talk of European integration and a brave new Ukraine will remain empty

words until the country is in a position to act independently.

In the long term Ukraine could look to utilise Western sympathy for its
democratic transition in order to secure the kind of major funding that
would soften the economic blow of any energy policy revolution.

For the time being Kyiv could at least look to disarm Russia’s energy
arsenal by inviting EU member states to deal directly with the Kremlin for
the gas Ukraine currently transits, and stop getting caught in the middle.
Letters to the editor are welcomed at peter.dickinson@nfmg.co.uk.

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

By Stephen Bandera, Kyiv Post Editor, Kyiv Ukraine, Thu, Oct 11, 2007

The parliament that Ukrainians elected on Sept. 30 may not convene
until the end of November.

The Constitution states that a newly-elected parliament should hold
its first meeting within 30 days after the official publication of
election results by the Central Election Commission (CEC). But the
process can be stalled if the CEC is prohibited from publishing election
results by the country’s administrative court system.

According to law, the CEC has until Oct. 15 to establish the official
final vote tally. CEC deputy head Andriy Mahera indicated that the
commission is likely to announce the official final results on Oct. 14
or Oct. 15.

“Legal challenges of the results can be filed with the Higher Administrative
Court (HAC) within five days after the establishment [of results] by the
CEC, in this case until Oct. 20,” explained electoral law expert Serhii
Kalchenko, attorney at the Moor & Krosondovych law firm in Kyiv.

“The courts have another five days to make rulings, but that deadline
can also be extended if the courts so rule.”

“It is possible that ‘traditional’ juridical mechanisms will be used after
the CEC establishes election results. A claim could be filed with the HAC
together with a claim to prohibit the CEC from publishing official results
until the case is considered. If this happens, then the CEC will have to
wait for the court’s decision,” Kalchenko explained.

Kalchenko said that if legal challenges proceed and the Higher
Administrative Court ultimately rules that the CEC’s actions were perfectly

legal, then official final election results will be announced on Oct. 26. If
events unfold according to this scenario, then the new Rada should convene
no later than Nov. 25.

“It will be interesting to see how this works out in practice, as Nov. 25
is a Sunday,” Kalchenko said.

Maksym Kopeychykov, a partner of the Kyiv-based Ilyashev & Partners law
firm, said that he does not think any legal challenges will be heard by the HAC.
Neither Kalchenko nor Kopeychykov were aware of any legal challenges to the
election results.

“It depends more on the results of negotiations between the winners of
the elections,” Kopeychykov said.

“If there is no agreement with the Regions Party, then, probably, those
CEC members who were appointed by the previous governing coalition will
become too ill to be present at the CEC’s meetings,” Kopeychykov explained.

The governing coalition of the Regions, Socialists and Communists enjoy
a one-vote majority on the 15-member CEC. Despite failing to qualify for
seats in the parliament, Socialist leader Oleksandr Moroz said Oct. 5 that
his party will not challenge the results of the “unconstitutional”

The Communists, who gained more than 300,000 votes in the latest poll, have
demanded a total recount of all votes cast, but have not said they will not
challenge the results of the Sept. 30 elections in the courts. Prior to the vote,

the CPU said it would legally challenge the results of last month’s vote.

On Oct. 5 the Party of the Regions’ representative in the CEC Vladislav
Zapansky said his political force was not planning to challenge the results
of elections – that have not been falsified – in the courts.
LINK: http://www.kyivpost.com/nation/27524/

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

COMMENTARY: By Pavel Korduban, Eurasia Daily Monitor
Jamestown Foundation, Wash, DC, Wednesday, October 10, 2007

Opposition leader Yulia Tymoshenko’s hopes to become prime minister
may be dashed. President Viktor Yushchenko wants to invite the Party
of Regions (PRU), led by her archrival, Prime Minister Viktor Yanukovych,
to join a new Cabinet of Ministers.

If the PRU, which will have more seats in parliament than the
Yulia Tymoshenko Bloc (BYuT) as a result of the September 30
parliamentary election, joins the cabinet, it may elbow out Tymoshenko.

Yushchenko explains that he wants unity in Ukraine, which is impossible
without cooperation with the most popular party. However, a weakened
Tymoshenko may be his real goal, as she is expected to be his rival
in the next presidential election.

On October 3 Yushchenko called on the PRU, the BYuT, and his
Our Ukraine-People’s Self-Defense Bloc (NUNS) to launch talks to form
a majority in parliament and the next cabinet. Yanukovych, who has never
objected to a grand coalition, hailed Yushchenko’s statement.

Tymoshenko suggested that Yushchenko did not mean coalition talks,
but consultations with the PRU about its role as a party that should
become the major opposition force. Yuriy Lutsenko, who topped NUNS’s
list for the election, said that NUNS would not join a coalition with the

The constitution stipulates that the cabinet is formed by a majority
in parliament, which Tymoshenko planned to build with NUNS. Before
the election, the BYuT and NUNS agreed that, if they form a majority,
posts in the cabinet would be evenly divided between the two, but
the prime minister’s post would go to the more popular party.

The BYuT scored more than twice as many votes as NUNS — 31% against
14% — so Tymoshenko should be prime minister under that formula.

The constitution does not authorize Yushchenko to decide on
a majority in parliament. But he can dictate his conditions, because
the format of a future coalition depends on the position of his NUNS.

While a coalition between the BYuT and the PRU is hard to imagine,
neither BYuT nor PRU can form a coalition without NUNS. Tymoshenko
knows that there are people in NUNS who are skeptical of her leadership
and who are not against cooperation with the PRU. Because of this,
she has to make concessions to Yushchenko.

A NUNS-BYuT coalition would have 228 votes in the 450-seat parliament,
just two more than the simple majority required to appoint the prime

This may be not a wide enough margin, given Ukraine’s recent
political volatility. “A parliament in which the majority has an
insignificant advantage over the minority is not acceptable for
the president,” Vadym Karasyov, an analyst close to Yushchenko’s team,
explained to Interfax-Ukraine.

In contrast, a NUNS-PRU coalition would control almost 250 seats.
Segodnya, a newspaper close to the PRU, reported that it was
“100% settled” that the majority would consist of the PRU, NUNS,
and the Lytvyn Bloc – a small party that barely cleared the 3%
barrier to enter parliament.

Analyst Volodymyr Fesenko told the newspaper that businessmen in NUNS,
such as Petro Poroshenko, as well as Foreign Minister Arseny Yatsenyuk
and former prime minister Yuriy Yekhanurov would not reject a coalition
with the PRU.

The head of Yushchenko’s administration, Viktor Baloha, apparently
is also in favor of a broader coalition. “I cannot imagine any
decisions made by NUNS, including those on the formation of the
coalition and the cabinet, that would run counter to the vision
of the president,” he warned in a statement on October 5.

A day earlier, Lutsenko had said that his People’s Self-Defense
group within NUNS was categorically against any alliance with the PRU.
Segodnya said Baloha may replace Yanukovych as prime minister
if NUNS and the PRU form an alliance.

“I would like to ask all politicians who are saying that they
will never talk to anyone else to withdraw their statements
and to meet for talks,” Yushchenko said in Paris on October 5,
apparently having in mind Tymoshenko and Lutsenko. They did so,
meeting at Yushchenko’s office with Yanukovych, the Communists,
and Lytvyn’s people on Monday, October 8.

Yushchenko continued to dictate conditions. He said he would like
to appoint law-enforcement chiefs such as the interior minister,
and he demanded the cancellation of the law on the Cabinet of Ministers.

The law, which diminished his authority, was drafted by Yanukovych’s
party and passed by parliament in early 2007 with Tymoshenko’s backing.
Yushchenko also urged the parties to come up with a candidate for
prime minister within five days.

After the meeting, Yanukovych insisted that the PRU reserves
the right to nominate the prime minister as the election winner.
Tymoshenko signaled some readiness for concessions.

She said that her coalition with NUNS would be ready to give
the PRU the posts of deputy ministers, deputy regional governors,
the chairmanship of key standing committees in parliament, and one
deputy prime minister’s post. Whether Yanukovych accepts or not
is yet to be determined.
LINK: www.jamestown.org/edm/article.php?article_id=2372490

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By Zenon Zawada, Kyiv Post Editor, Kyiv, Ukraine, Thu, Oct 11 2007

The pro-Western Orange political forces gained a slight majority in the
Sept. 30 parliamentary elections, but that hasn’t guaranteed them anything
in the square dance of Ukrainian politics.

In forming the next government, President Viktor Yushchenko and Presidential
Secretariat Chair Viktor Baloha will play the role of “kingmaker,” deciding
whether Yulia Tymoshenko or Russian-oriented Prime Minister Viktor
Yanukovych will take power.

Their steps following the election demonstrated the Secretariat isn’t eager
to reunite with the Tymoshenko bloc (Byut), partly because Yushchenko needs
to find concessions with the Party of Regions, political observers said.

“There needs to be an adequate distribution of power,” said Yuriy Syrotiuk,
a political analyst with the Kyiv-based Open Society Foundation, which is
financed by the British and American governments.”President Yushchenko
understands this, so he has proposed that everyone be in government and be

Unfortunately for the president, Tymoshenko has repeatedly stated she will
not join a government with the Yanukovych-led Party of Regions.

In her compromise bid proposed Oct. 8, Tymoshenko offered her adversaries
the chairmanship of the government’s Accounting Chamber, assistant minister
positions and assistant chairs of regional state administrations, which is
the president’s governing arm in the regions.

Regions’ leaders have dismissed her offer, stating that Tymoshenko hasn’t
even secured power to begin making such proposals, and that it was nonsense
for the opposition to be in government.

“It makes no sense to bear the responsibility for an Orange coalition’s
collapse,” said Mykhailo Chechetov, a Party of Regions parliament member.

Its responses revealed that the Party of Regions is also taking an
all-or-nothing approach to forming the coalition government – either being
in absolute control or in opposition.
As a result, President Yushchenko, who has called for compromise among the
election’s three major winners – Byut, Byut’s coalition partner by prior
agreement, the pro-presidential Our Ukraine-People’s Self-Defense (OUPSD),
and the Party of Regions – is caught between a political rock and a hard

If Yushchenko returns Yanukovych and the Party of Regions to power, the
OUPSD bloc could splinter and lose a significant part of its electorate,
observers said.

At least 40 of 73 qualifying Our Ukraine lawmakers signed a letter to
Yushchenko opposing his decision to conduct coalition-forming talks with the
Party of Regions.

“An Our Ukraine-Party of Regions coalition is impossible, because 90 percent
of Our Ukraine is against it,” said Taras Kuzio, president of Kuzio
Associates, a Washington consulting firm. “It would mark the end of Our

In the event of an Orange coalition, Tymoshenko will characteristically
dominate the coalition’s agenda, and the government will likely face an
aggressive opposition in the Party of Regions, which represents Ukraine’s
biggest business interests.

Moreover, the parliamentary majority captured by the Orange forces in the
elections, giving them a paper-thin two-seat majority of 228
parliamentarians in the 450-seat chamber, coupled with their turbulent
history, has led observers to doubt their cohesiveness and effectiveness
within their potential government.

“Tymoshenko will do things her way, which won’t sit well with [Viktor]
Baloha, who controls the levers in the Secretariat,” said Ivan Lozowy, a
Kyiv political insider.

Overall, President Yushchenko succeeded in shaking up the political
landscape with his command to hold pre-term elections, but not by much.
Voters dismissed the president’s archenemy, parliament speaker and Socialist
Party leader Oleksandr Moroz, after Moroz and his Socialists switched
allegiances in parliament from Orange to Blue (Party of Regions) following
the March 2006 parliamentary elections, and gaining the speaker’s seat as a

Voters kept the two pro-Western OUPSD and Byut parties and the two
Russian-oriented Party of Regions and Communist parties, and replaced the
Socialists with the Volodymyr Lytvyn Bloc, a force with close links to
former President Leonid Kuchma that casts itself as multi-vectored and

Although incapable of tipping the scales in coalition-forming, the Lytvyn
Bloc would prove valuable in any government.

Were Lytvyn to join his bloc to the Tymoshenko and OUPSD blocs, that

would create a so-called “democratic coalition” with a comfortable
parliamentary majority of 22 votes.

A coalition between the Party of Regions, OUPSD and the Lytvyn Bloc would
create a pro-business government that may take a multi-vectored approach,
instead of being divided along pro-Western and pro-Russian lines.

Former Ukrainian President Leonid Kravchuk said the Lytvyn Bloc’s best
option would be to remain neutral, but it might not have that luxury.

“For businessmen, the parliament is a publicly-traded stock company,”
Syrotiuk said. “They feel with their investment, they should obtain
dividends. Moreover, if he remains neutral, he could hurt the career of his
influential relatives. Lytvyn will be forced to take sides.”

Lytvyn has better relations with Yanukovych and the Party of Regions than
Tymoshenko, observers said, but may end up going Orange anyway.
Throughout the election campaign, OUPSD leaders assured the Ukrainian
electorate that it would only form a coalition with its stalwart Orange
Revolution partner, the Tymoshenko bloc.

After the vote, Orange leaders repeated their vows, promising that a
democratic coalition agreement would emerge within a day or two of the final
election results, which are expected on Oct. 15.

They said they would base the coalition on a pact signed between the two
forces in February, in which they distributed key government posts, giving
the prime minister post to the bloc with the most votes.

However, President Yushchenko’s vague Oct. 3 announcement, hinting at
inviting the Party of Regions into a broad coalition, sent shivers down the
spines of Orange supporters.

Concern immediately spread after the president’s remarks that Our Ukraine
would once again court the Party of Regions and play hard-to-get with the
Tymoshenko bloc, as it had done last year.

Tymoshenko declared she would rather enter the opposition than form a
government with the Party of Regions. Days later, she offered her
concessions, which drew derision from the Party of Regions. Few political
observers believed the Party of Regions would quietly agree to go into the

Leading up to the election, the Party of Regions set up two stages at Kyiv’s
central Independence Square, with its leaders threatening protests and
demonstrations to defend their election results if necessary.

Quite mysteriously, the Party of Regions took down one stage, sent its
camped-out supporters back home and didn’t rattle its swords, except for a
threat that it could have 150 parliament members surrender their mandates
and liquidate the next parliamentary convocation, just as the Orange forces
had done.

On Oct. 5, the party announced that it would accept the election results
without any protest. Days later, Yanukovych announced the Party of Regions
would not work with Tymoshenko as prime minister.

Yanukovych’s Oct. 8 statement that the Party of Regions was willing to go
into opposition reveals that it doesn’t feel threatened by an Orange
government with a slim majority, Syrotiuk said. “The Regions might be able
to attract Our Ukraine votes,” Syrotiuk said.

“They are most interested in economic votes, for which they can find
partners in Our Ukraine, but will lose support from the Communists. To pass
laws, the Regions will have to find support not only within Our Ukraine and
the Tymoshenko blocs, but also the president, who has veto power.”

Regardless of whether she becomes prime minister, Tymoshenko gained the

most from the election and demonstrated she is the most relevant and dynamic
politician on the Ukrainian political scene, observers said. “Yulia
Tymoshenko saved the Orange Revolution and Yushchenko’s presidency,”
Kuzio said.

Tymoshenko earned more than 7.1 million votes, gaining more than 1.5 million
supporters since the March 2006 election – more than anyone else. Her
popularity grew in every region, except for the pro-Russian Autonomous
Republic of Crimea.

“Everyone is shocked by the election results, particularly the Party of
Regions,” Lozowy said. “They thought they would get the majority with

the Communists. But they aren’t taking any radical steps because they are
waiting for the president’s next moves.”
LINK: http://www.kyivpost.com/nation/27525/
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: By Markus Salzmann
World Socialist Web Site (USWS), UK, Thursday, 11 October 2007

A third election within three years has proved incapable of resolving the
deep political crisis in Ukraine. Once again, it has become clear that the
struggle between rival political cliques, carried out at the expense of the
broad population, has nothing in common with democracy.

In the early parliamentary election of September 30, Our Ukraine led by
Viktor Yushchenko won around 14 percent of the vote, while the Bloc
Yulia Tymoshenko (BJT) received well over 30 percent.

Together, the two parties, which three years ago led the so-called Orange
Revolution, picked up 44.8 percent of the vote. This means they have a
razor-thin majority of 228 seats out of 450 in the new parliament (Rada).

According to the electoral committee, all other parties standing won
approximately 44 percent. The “blue” Party of the Regions led by Prime
Minister Viktor Yanukovich won 34 percent, and its ally, the Communist
Party, received 5 percent and also entered the Ukrainian parliament. The
Socialist Party, which had previously been part of the government coalition,
failed to win enough support to re-enter parliament.

The Litwin Bloc led by former parliamentary president, Vladimir Litwin,
received 3.9 percent for the first time, and therefore crossed the 3 percent
level necessary to enter parliament.

Litwin has refrained from making clear his real political intentions and, in
light of the close outcome of the election, is now being courted by the
Orange parties.

The election turnout was low, at 63 percent, reflecting widespread hostility
in the population to all of the competing camps.

Yushchenko had dissolved parliament at the beginning of April hoping that
fresh elections would favourably resolve his longstanding struggle for power
with Yanukovich.

Following Yanukovich’s victory in parliamentary elections last year,
Yushchenko had felt compelled to appoint his rival as prime minister.

Then last spring, a number of deputies from the Orange opposition switched
over to the government coalition. Yushchenko described this as a
falsification of the 2006 election result and dissolved the parliament.

Yanukovich and his coalition partners opposed the move, and only after long
negotiations was an agreement reached for a new election.

Two years after the Orange Revolution, the differences within the Ukrainian
elite expressed through the two rival camps-Yushchenko and Tymoshenko on the
one side, and the oligarchs led by Yanukovich on the other-have narrowed

The latter camp had previously maintained a strong orientation to Russia,
but are now looking increasingly towards the West to secure their economic
interests. Day by day, it is becoming ever clearer that there are no
principled political differences between the two political camps.

In the meantime, Yushchenko has called upon all the political forces
entering the new parliament to develop a model for cooperation between the
government and that opposition, as well as to take measures aimed at
consolidating the powers of the state.

He offered government ministries to Yanukovich’s party-“from vice-prime
minister down to ministerial positions.” Everything was possible-this was
the only way to secure stability in the parliament and government,
Yushchenko explained.

Yanukovich reacted positively to this offer made by the president and
expressed his own support for the construction of a “broad coalition.”

Tymoshenko, however, has so far rejected any cooperation with Yanukovich’s
party and announced she is only prepared to participate in a coalition with
“democratic” forces. If Yushchenko and Yanukovich form a coalition,
Tymoshenko has announced she will go into opposition.

Yushchenko’s proposal is an attempt to prevent the political division of the
country. While the west and the centre of the country mainly support the
parties involved in the Orange Revolution, voters in the south and east have
voted in the past in the majority for Yanukovich. At the same time, it is
clear that the Orange camp itself is deeply split.

A coalition of the BJT and Our Ukraine would be anything but stable, and
such an alliance would have only a very narrow majority. It still remains
unclear which position the Litwin Bloc will take.

But in the main, the individual parties are driven by economic and personal
interests rather than politics or programme, and the widespread corruption
of deputies is an established fact. “Two or three votes are always up for
sale,” political commentator Vadim Karasyov wrote in the Kyiv Post.

At the same time, the relatively high vote for Tymoshenko represents a
danger to Yushchenko’s political future. Yushchenko’s miserable showing in
the election (14 percent) was his punishment by the electorate for the
catastrophic social consequences of the government’s policies in recent

Tymoshenko was able to pick up votes for the opposition on the basis of her
populist election campaign. It is unlikely that Yushchenko would play
important role in the long-term role should he enter an alliance with the

Meanwhile, there are doubts in the pro-West camp over Tymoshenko’s politics.
Analysts expressed the concern of investors, who referred to Tymoshenko’s
role as prime minister in 2005.

At that time, she announced she wanted to investigate the legal status of
the privatisations previously carried in the era of President Leonid Kuchma.
She declared that the privatisation of up to 3,000 formerly nationally owned
companies could be reversed.

Since the collapse of the Soviet Union and independence for Ukraine in 1991,
the layer around Kuchma had sold off the country’s assets and in the process
shamelessly enriched themselves. The enterprises were sold for low prices on
the basis of political and regional criteria.

At the back of Tymoshenko’s reversal of the privatisations lies a scheme for
the future re-division of what is nothing other than stolen national

Following renewed nationalisation, Tymoshenko plans to sell off the
enterprises once again-this time at a better price-to those oligarchs close
to the Orange alliance, or to Western companies.

Alarm bells rang amongst financial analysts following Tymoshenko’s
declaration last Sunday that the privatisation procedures would be subject
to court scrutiny. They fear that the whole procedure could lead to
irresolvable economic and political conflicts involving broad layers of the

One example of the privatisations policy was the fate of the steel plant
Krivorijstal, the country’s largest steel exporter. The Donetz oligarchs
Rinat Akhmetov and Viktor Pinchuk acquired the company in 2004 at a
rock-bottom price. At the time, there are said to have been a number of much
higher offers, including a bid by the American company, US Steel.

At the beginning of 2005, the sell-off was then waived following a court
order issued after pressure from Tymoshenko, and at the end of the year,
Krivorijstal was finally sold off to the Mittal concern.

The affair caused such a scandal that even the World Bank felt compelled to
intervene in the “Krivorijstal case” in order to prevent damage to the
general investment climate. At the time, economist Oleksij Plotnikov
detected a “serious blow for the investment climate. The effect is a shock.”

The increasingly sceptical attitude taken by the Ukrainian elite towards
Tymoshenko was revealed in an interview given by the director of the
International Institute for Political Studies in Kiev, Vladimir Malinkowich,
to the Viennese Standard.

When asked what the election result means for Ukraine, he answered: “nothing
good.” Tymoshenko “promises the impossible and thereby ruins our economy.
But what is most dangerous is that she does not want to strengthen
democratic institutions.”

When asked about her relationship with Yushchenko, Malinkowich explained,
“She will have even more power over him. When he opposes her now she will
stand against him in the next presidential election and is likely to win.
The most probable variant of an Orange coalition will therefore prove to be
quite unstable.

Two persons will continue to fight one another at least until the
presidential election in 2009, and it will continue to remain unclear who is
in charge and represents the country in the west, he or she.”
A coalition of Our Ukraine and the Party of the Regions would be just as
incapable of solving the fundamental political problems confronting the
country as any new version of an Orange bloc government. In the final
analysis all three-Yushchenko, Tymoshenko and Yanukovich-represent the
interests of different clans of oligarchs.

Those in the east of the country, who primarily back Yanukovich, have closer
links to Russia and the former Soviet economy, while those in the west have
closer bonds to the US and western Europe.

In 2004, Yanukovich was condemned as an electoral fraud and hunted out of
office. He was regarded as the natural successor to president Kuchma by the
Kremlin and by Kuchma himself.

The US and western Europe had bankrolled the “democratic” opposition, and
financed and backed Yushchenko, the former head of the central bank and
prime minister under Kuchma.

His advocacy of “market reforms” aimed at privatisation and the deregulation
of the economy, together with his promise to distance the country from
Russia and move closer to the European Union and NATO, made him the favoured
candidate of the West.

The American government and Western media supported Yushchenko and Yulia
Tymoshenko-the richest woman in Ukraine, who had accumulated her fortune as
an energy minister under Kuchma-at a time when both politicians attacked
Yanukovich’s election as president as fraudulent.

Yushchenko and Tymoshenko base themselves on pro-capitalist, anti-communist
layers, which were formerly opposed to Kuchma. Their opposition, however,
was based less on their rejection of growing repression and pervasive
corruption in the country than on their abiding desire to enrich themselves.
The sincere opponents of Kuchma were cynically manipulated by the pair.

Nine months later, the new Orange leadership collapsed under charges of
mutual corruption. In September, Yushchenko dismissed the government of his
former ally Tymoshenko and then formed a pact with his former opponent
Yanukovich, in order to ensure the nomination of Yuri Yekhanurov as
Tymoshenko’s successor in the office of prime minister.

It was also agreed that a candidate from the Party of the Regions would
occupy the post of deputy prime minister, while Tymoshenko and her allies
were denied any important posts.

In so doing, Yushchenko had recalled representatives of the two most
important clans of Ukrainian oligarchs-from Dnjepropetrowsk and Donetz-into
government in the same tradition as his predecessor in office, Leonid

In less than three years, the true character of the Orange Revolution-widely
praised in the West as a breakthrough for democracy and liberty-has been
revealed. In 2004, many Ukrainians still believed that such a movement could
improve their political and social situation.

Now, broad swathes of the population have learnt that the entire ruling
elite has completely detached itself from the masses and is only interested
in its own enrichment.

According to a current poll, all Ukrainian politicians receive a negative
rating when it comes to the issue of trust. According to the Ukrainska
Pravda in February 2005, over 50 percent of all Ukrainians thought the
country was headed in the right direction, while 20 percent thought the new
government and the new president were worse than their predecessors.

Six months later, the same polling institute registered more than 60 percent
who regarded the government and the president to be taking a false course.
An investigation by the institute showed that in October 2005, support for
the government had fallen by half-to just 20 percent-and this process is

While the ruling political caste seeks to sing the praises of economic
successes in the country, the reality for the majority of the population is
very different. Price increases in basic goods and energy have outstripped
any wage increase for workers in some industries and public service during
the past two years.

Foodstuffs and clothes have increased in price, and in particular, there
have been sharp increases in the price of electricity and fuel. Inflation
just for the month of September topped 6 percent.

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

Ukraine 3000 Foundation, Kyiv, Ukraine, Tue, Oct 9, 2007

KYIV – October 9, 2007, the Ivan Honchar Museum hosted an informative
meeting, dedicated to the Holodomor Manmade Famine of 1932-1933, for
foreign states and international organizations representatives.

The event was organized by the Ukraine 3000 International Charitable Fund as
a part of its History Lessons: Holodomor of 1932-1933 program jointly with
the Ministry of Foreign Affairs.

The goal of the meeting was providing representatives of the global
community with comprehensive information on the Holodomor to ensure
recognizing this tragedy an act of genocide on the bilateral and
international level.

Among the participants in this event were Head of the Supervisory Board of
the Ukraine 3000 International Charitable Fund Kateryna Yushchenko, First
Deputy Minister of Foreign Affairs Volodymyr Ohryzko, Acting Head of the
Security Service of Ukraine Valentyn Nalyvaychenko, Head of the National
Memory Institute Ihor Yukhnovsky, Department Head with the Institute for
Political and Ethno-National Research at the National Academy of Sciences of
Ukraine and Ph. D. in History Yuri Shapoval, heads of the diplomatic
missions of over 50 states and foreign organizations representatives, and
members of the Ukraine 3000 Fund.

Addressing the audience, Mrs. Yushchenko said, “Ukraine survived a tragedy
of world proportions.  We have looked it in the eyes and have made
conclusions. We hope that our knowledge will help humanity to avoid similar
tragedy in the future.  We do not want the Holodomor to ever be repeated
anywhere in any form.

To achieve this, it is necessary that the world learns the truth about the
Holodomor, and that it recognizes it as an act of genocide. I am certain
that if the world community reacted adequately to the Holodomor 75 years
ago, humanity would have been able to avoid this catastrophe that took the
lives of tens of millions of people on various continents.”

Mrs. Yushchenko described the project carried out by the Ukraine 3000 Fund
as a part of its History Lessons: Holodomor of 1932-1933 program, and voiced
her hope that the meeting would help those present to learn more about the
1932-1933 events and draw their conclusions.

Speeches were also delivered by renowned scholars, politicians, community
leaders, and witnesses of the tragedy. The guests could also visit the
Destroyed by the Famine: the Unknown Genocide of the Ukrainians exhibition
prepared by the Ukraine 3000 Fund. The exhibition was premiered in March
2007 in Brussels, at the European Parliament.

Besides, the audience was invited to taste the “bread of the famine,” cooked
from the ingredients which were used in the years of Holodomor.

All diplomats received from the Ukraine 3000 International Charitable Fund
sets of books on the Manmade Famine, published with the Fund’s support.

The set includes The Declassified Memory: The Manmade Famine of 1932-1933
through GPU-NKVD Documents compiled by Valentyna Borysenko and Manmade
Famine of 1932-1933 in Ukraine: Documents and Materials compiled by Ruslan
Pyrih, a CD with materials form the Declassified Memory exhibition of SSU
materials, and the Holodomor: the Technology of Genocide film (2005),
directed by Viktor Deriuhin.
LINK: http://ukraine3000.org.ua/eng/news/6117.html
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Ukraine 3000 Foundation, Tuesday, October 9. 2007
Published by the Action Ukraine Report (AUR) #877, Article 21
Kyiv, Ukraine, Friday, October 12, 2007

Dear Friends,

I am happy to see you in this hall. I would like to thank everyone who has
come to today’s event.  The issue we are discussing today is very
significant for Ukraine and for the world community.

75 years ago a horrible tragedy took place on our land.  Millions of
Ukrainians were murdered in a famine which was intentionally organized by
Stalin’s regime.

All food was confiscated, people were denied all means of existence and
survival.  Starving regions of Ukraine and the Kuban were surrounded by
armed forces, the borders of Ukraine were closed so that no one could escape
and so no assistance could enter.  This was a true war of the communist
regime against the Ukrainian nation; a terror famine was the chief weapon.

Most experts confirm that more than 7.5 million people died during the
Holodomor.  Some use even higher figures.  But all researchers agree that
millions were murdered during this 1930s crime.

Imagine this figure – it is the population of an entire country that ceased
its existence in less than a year.Each Ukrainian family lost relatives,
loved ones, friends.

We intentionally chose the wonderful Ivan Honchar Museum to hold this
event, so that you could see the faces of those people who were physically
annihilated, the rich and unique culture that they tried to destroy.

The truth about this crime, its extent and its reasons were hidden for more
than 50 years from people, and from the world community.  During Soviet
times, even mention of the Holodomor could mean being put behind bars.

But the Ukrainian people preserved their historical memory.  Only after the
declaration of our independence did we have the opportunity to appropriately
honor the victims of the Holodomor.

In thousands of cities and villages throughout Ukraine memorials were
created.  Every month there more are established.

Experts have researched a huge amount of information.  We are constantly
opening up and making public new facts that prove that the Holodomor was
part of a criminal policy of the Soviet leadership to destroy the Ukrainian
nation.  Thanks to a great deal of research and educational work over the
last five years, attitudes in Ukraine toward the Holodomor have change

When the Verhovna Rada in 2006 approved a law recognizing the Holodomor as
an act of genocide, more than 70% of the population of Ukraine supported the
decision.  This was a very positive signal, since despite regional, language
and political differences, the Ukrainian people reached an internal
consensus.  East, west, south and north united together around a common
emotion of pain.

Today we wish once again to address the world community.

Ukraine survived a tragedy of world proportions.  We have looked it in the
eyes and have made conclusions.  The Bible says “Know the truth and the
truth will set you free.”  We hope that our knowledge will help humanity to
avoid similar tragedy in the future.  We do not want the Holodomor to ever
be repeated anywhere in any form.

To achieve this, it is necessary that the world learns the truth about the
Holodomor, and that it recognizes it as an act of genocide.

I am certain that if the world community reacted adequately to the Holodomor
75 years ago, humanity would have been able to avoid this catastrophe that
took the lives of tens of millions of people on various continents.

The Ukraine 3000 Foundation has been working on the issue of the Famine
since 2003.  We initiated today’s meeting and invited our colleagues who
have done a great deal to learn the truth about the Holodomor.  I hope that
today’s presentations will help you to know more about the events of 1932-33
and make your own conclusions.

For me, this is rather personal, since both my parents have survived in the
Holodomor. They have survived, but they have lost their families, friends,
and fellow villagers. They told me a lot about their experience. My father
was born in Kharkiv oblast, and mother – in Kyiv oblast.

They told me about their villages being desolated, people driving along in
carriages to collect the dead. Sometimes, if a man was still alive but going
to die in the next few days, they would suggest to take him with them at
once, because they weren’t coming back for another week or so.

Almost every Ukrainian has heard similar stories from his or her parents. I
remember all these years when I was afraid to speak about this. I am glad
that now we can speak about this, and I’m deeply grateful to you for
speaking about this.

Thank you for your attention.

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

INTERVIEW: with Thomas Dine
BY: Irene Jarosewich for The Ukrainian Weekly
Ukrainian National Association (UNA)
Parsippany, New Jersey, Sunday, September 23, 2007

Despite numerous imposed and self-inflicted problems, Ukraine has been
fortunate in the number of good friends and the amount of goodwill the
nation has been able to attract since independence 16 years ago.

Foreign governments, global institutions and countless of influential
individuals have set their sights on Ukraine, pushing and prodding, cheering
and coaching the young country towards a stable future.

Among Ukraine’s strong supporters is Thomas A. Dine, a former president of
Radio Free Europe/Radio Liberty, who also served as assistant administrator
of Europe and Eurasia at the U.S. Agency for International Development

Mr. Dine’s  Washington and international experience includes a 13-year
tenure as the executive director of the American Israel Public Affairs
Committee (AIPAC), 10 years in the Senate as a former policy specialist,
fellowships at the Brookings Institute and the Kennedy Institute of Politics
at Harvard University, as well as service with the U.S. Embassy in New Delhi
and as a Peace Corps volunteer in the Philippines.

Recently Mr. Dine joined forces with another good friend of Ukraine, Nadia
McConnell, president of the Washington-based US-Ukraine Foundation. Mr.
Dine has agreed to help direct the foundation’s program to expand democracy
in Ukraine at the local, the national level as well as in the region.

In August, Irene Jarosewich interviewed Mr. Dine in Washington DC about
his vision for Ukraine and the role of the United States in shaping Ukraine’s

IJ: Mr. Dine, with your extensive experience and with numerous opportunities
available to you, the first question has to be: why Ukraine and why now?

TD: The essence of the answer lies in my outlook towards the world, which
includes a strong, a strong and robust Ukraine. I come at this after having
been involved in Eastern Europe and Eurasia for more than 15 years.

I’ve been to Ukraine many times, first as a high-ranking official of the
Clinton Administration, with regard to our foreign economic assistance, and
then as the head of Radio Free Europe/Radio Liberty and its important
Ukrainian-language service.

In terms of foreign policy, there are people who view Ukraine simply as a
counterweight to Russia. That’s not good enough, however.

A democratic and independent Ukraine is absolutely essential to our values,
our principles, our standing in the world.  Ukraine has a great deal to
offer its citizens and its neighbors. Ukraine’s heritage is worthy. Ukraine
has a beautiful history of the classical arts, for instance, its music.

I’ve seen the human capital, its enormous potential for Ukraine, potential
in agricultural development, in new areas such as information technology,
the potential to develop a robust market economy, potential for Ukraine to
become a valuable partner in the European arena.

However, in order for this to happen, Ukrainians need to develop the direct
connection between the market economy of capitalism and the civic and
political infrastructures and institutions of democracy.

It won’t serve Ukraine’s interest, or the interests of the U.S., or anyone’s
interests, if Ukraine goes the way of Russia, that is Kremlin-controlled
economics and politics.

Therefore, the building of civil society is absolutely essential to Ukraine’s
future, which in part answers the question “why now?”. It is essential to
dramatically restructure and reform civil society today to be in a better
place 20 years from now. The 20th century was a rough century, but the 21st
is our chance to change that.

Again and again I have seen that for the United States the best bilateral
relationships are a result of shared democratic values, of mutual security
interests and of person-to-person relationships and partnerships. This is my
personal philosophy and approach; I hope to have an opportunity to play a
role today and tomorrow.

IJ: There seems to be a strong meeting of the minds since this is the
philosophy that drives Nadia McConnell and the efforts of U.S.-Ukraine.
How is it that you came to the foundation?

TD: I’ve known the U.S.-Ukraine Foundation since my early days at USAID,
and I’ve known Nadia even longer. I’ve always been struck by her mind, her
savvy, her passion, her purpose. USUF has been and is an  effective
organization that is helping Ukraine become a genuinely open and free

I remember the foundation’s work with one of the first delegations of
Ukrainian mayors to visit the U.S. – this was in November 1994.  I am aware
of the relationships that have developed subsequently, relationships that
could only have resulted from long-term, consistent involvement and serious
commitment.  I’ve seen this with my own eyes and at this stage of my life, I
want to be a part of such an effort.

IJ: Yes, but there are numerous individuals, in the U.S. and in Ukraine,
that view these bilateral delegation visits simply as nice travel
opportunities, since, after all, how much useful experience can be gained in
just a few weeks?

These delegation visits are only one of the numerous venues that we have at
our disposal for strengthening bilateral relations.  They are not conducted
in isolation.  Each delegation visit is done in conjunction with a broader
program. The U.S. must continue with programs in Ukraine that teach and
train citizens in democratic procedures.

Furthermore, even though it is important for Ukrainians to see how U.S.
cities are governed, for instance, it is no less important for Americans to
be aware of Ukraine.  We have 435 congressional districts.

In each one of them people should hear that Ukraine is important to the
United States. This requires Americans to study and appreciate Ukrainian
society, to learn about opportunities in Ukraine, and in turn, Ukraine
should open up its’ economy and entice American investors, study groups
and tourists.

Another objective of these visits is to simply offer a new perspective.
Delegations from Ukraine frequently describe  their efforts from the
perspective of “top-down”  – which is still the form of government
infrastructure in Ukraine.  America, in turn, can be described as
grassroots, the opposite.

Ukrainians are often surprised at how much can get done without government
involvement. Ukrainians still seek to understand the balance – that
government is important, but not the predominant factor in their lives.
Activities at the local level is  the essence of civil society. And working
at and with the local level has been the focus of the U.S.-Ukraine
Foundation from its inception.

IJ: The United States, however, has been shifting focus away from evolving
democracies in Eastern Europe, particularly in terms of providing funding
for long-range development. There seems to be a “sink or swim” attitude,
that it’s time only for the strong to survive.

TD: There is some of that attitude, no doubt.  But today, the U.S. genuinely
has a large budget deficit and Congress needs to develop a plan to reduce

Nonetheless, it would not be in the interest of the U.S. to drastically cut
funding to evolving democracies in Eastern Europe, in particular not for
Ukraine, one of the largest countries in Europe and overall, an emerging
partner, even an ally, of the United States.

Despite some tortuous setbacks, Ukraine is making genuine progress towards
integration with the West, and it would be unwise for the U.S. to eliminate
funding for Ukraine.

With regard to Ukraine, Congress needs to invest money strategically and
focus on organizations that have demonstrated institutional interest and
expertise working in Ukraine, those that have evident results, not just
those that are in it for the contract money, which, bluntly, are the
so-called “Beltway bandits”.

IJ: Apparently several times in the past the U.S.-Ukraine Foundation has had
Congressional support to receive funding, but USAID has not approved
USUF to receive these funds. Why is that?

TD: The USAID bureaucracy is predisposed to deal only with large contracting
organizations, often ones that include alumni of USAID. Over my 45-year
career,  I know this first-hand. This bureaucratic approach is a bit of a
perverse view of how work really gets done.

Look at poor efforts by Halliburton and other big USAID contractors in Iraq.
On this read the award-winning book “Imperial Life in the Emerald City” by
Washington Post editor Rajiv Chandrasekaran.

USAID, for example, does not have a good track record with in Afghanistan
creating a modern economic and social system.  I believe this is in part
because we relied too much on large abstract organizations that were not
working at the grassroots level.  Of course, there are exceptions.

With regard to Ukraine, the small, hands-on USUF has proven itself effective
on the ground – for 15 years. U.S. citizens are getting their money’s worth.

I challenge USAID to find anyone else with this track record in Ukraine.
U.S.-Ukraine is creative and more efficient than most other organizations
and in this way the USUF is valuable in our bilateral relationship with
Ukraine.  Many members of Congress have a favorable view of the foundation
and its work.

 Members of Senate and House are on record saying that they want the USUF to
receive USAID funds. The Executive Branch is wrong for not providing these

IJ: The USUF has recently completed a multi-year project in Ukraine working
with local mayors, local governments.  And in the spring, the foundation
submitted a proposal for direct funding from Congress for their new project,
the one that you have agreed to manage.  Can you tell us a bit about this
new project?

TD: This proposal is the result of a success story.  Because of the
U.S.-Ukraine Foundation’s work with local governments, the head of Ukraine’s
Civil Service Administration has formally corresponded with members of
Congress and Administration officials requesting that the U.S.-Ukraine
Foundation be the principal organization to train and improve Ukraine’s
civil service operations and to deal with issues such as corruption, public
health and energy efficiency.

The head has designated 300 top civil servants to be retrained by
U.S.-Ukraine, along with our government’s Office of Personal Management.

As the Soviet past fades, more work needs to be done with Ukraine’s
parliament in order for it to become a fully functioning institution.

There is a lesson for us in the U.S. to learn here: we went into Ukraine and
from the beginning tried to set up capital markets.  However, the imperative
in Ukraine, the key issue is building civil society – including an honest,
transparent civil service.

Without this infrastructure, there can be little chance of the civil,
political and commercial sectors working fluidly and effectively. The USUF
also wants to engage Ukraine regionally, with its neighbors along a Black
Sea and Baltic Sea corridor.

The goal is to create a common regional block of democratic countries that
are physically close to Ukraine, which include Lithuania, Poland, Belarus,
Moldova, Rumania, Bulgaria and Georgia. The success stories in Ukraine are
many with potential for many more.

The Ukrainian Weekly, Editor-in-chief: Roma Hadzewycz, Parsippany,
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
INVITE: Roundtable VIII, Ukraine-EU Relations, October 16-17, 2007
Ronald Reagan Building and International Trade Center
Washington, DC

Registration & Coffee (Day One & Two): 8:00 – 9:00am
Opening Remarks (Day One): 9:00am; Last Session: 5:30pm (Day One)
Roundtable Continuation (Day Two): 9:00am;
Concluding Remarks (Day Two): 5:30pm
Conference Reception 7:00pm (Day One);
Patrons Reception 7:00pm (Day Two)

Dear Friend of the UA Quest RT Series,

You are respectfully invited to be a participant in the eighth annual
roundtable of the Ukraine’s Quest for Mature Nation Statehood series, to be
held at the Ronald Reagan International Trade Center in Washington, DC on
Oct 16-17, 2007. This year, the forum will be entitled “Ukraine-EU
Relations” .

The two day conference will bring together government and key non-government
representatives of Ukraine, the EU and the US as well as experts from the
world of academia to examine and evaluate Ukraine’s capacity to “thrive
alongside” its great Western neighbor as well as its readiness, if asked to
join, to eventually “thrive inside ” the European Union.

To facilitate the said examination, the event will run four regular sessions
featuring eight panels, six highlight focus sessions, two working lunches
and two conference receptions. In total, nearly seventy speakers are
expected to address the conference proceedings.

Former participants of the UA Quest Roundtable series include:

UA:  B. Tarasyuk, O. Rybachuk, Y. Yekhanurov, A. Kinakh, V. Yanukovych, I.
Plyushch, A. Yatseniuk, V. Pustovojtenko, A. Hrytsenko, I. Mitiukov, Y.
Pavlenko , Y. Chervonenko, H. Nemyria, Y. Lutsenko, R. Shpek

EU & RU:  P. Naimski, G. Jeszensky, J. Sherr, E. Koelsch, G. Burghardt, A.
Gross, C. Hartzell, J. Steinoff, R. Kacer, Y. Liuk , H. Wujec, V. Usackas,
M. Riekstins, P. Zurawski vel Grajewski, V. Igrunov, A. Lebedev

US: M. McConnell, C. Levin, P. Wolfowitz, J. McCain, R. Lugar, Z.
Bzrezinski, R. Holbrooke, P. Dobriansky, D. Fried, A. Wayne, D. Kramer, C.
Weldon, S. Levin, M. Hinchey, B. Taylor, C. Pascual, S. Pifer, W. Miller, J.
Herbst , K. Smith, W. Courtney, B. Futey, M. Kaptur, N. Lowey, C. Smith, A.
Cohen, C. Wallander, A. Aslund

This year’s event will feature Deputy Foreign Minister of Ukraine Andrii
Veselovsky, Ukraine’s Head of Delegation to the European Union Roman Shpek,
Former UA Foreign Minister Borys Tarasyuk, Former Foreign Minister
Kostyantyn Hryshchenko, Julia Tymoshenko Bloc Senior Foreign Policy Advisor
Hryhoriy Nemyria, Foreign Policy Advisor to the State Secretariat of the
President of Ukraine Bohdan Sokolovsky, Ambassador of Ukraine to the US Oleh
Shamshur, and the Ambassador of Poland to the United States Janusz Reiter.

Also featured will be the Ambassador of Germany to the United States Klaus
Scharioth, Ambassador of Portugal to the United States Joao de Vallera,
Ambassador of Slovakia to the United States Rastislav Kacer, Ambassador of
Lithuania to the United States Audrius Bruzga, Deputy Head of the Delegation
of the EU to the United States Angelos Pangratis, Former US National
Security Advisor Zbigniew Brzezinski, Deputy Secretary of State for European
and Eurasian Affairs David Kramer, Former Ambassador of the US to Ukraine
Steven Pifer and Former Ambassador of the US to Ukraine William Miller.

A Conference Reception will be held on the evening of the conference’s first
day at the Ukrainian Embassy in Washington, hosted by Ambassador Shamshur.

The UA Quest RT Steering Committee, representing the American Foreign Policy
Council, the Atlantic Council of the United States, the Center for
US-Ukrainian Relations, Columbia University’s East Central European Center,
the Embassy of Ukraine to the United States, the International Republican
Institute, Johns Hopkins University’s School of Advanced International
Studies Foreign Policy Institute, the Konrad Adenauer Stiftung in Ukraine,
the National Democratic Institute, the Polish American Ukrainian Cooperative
Initiative, U.S.-Ukraine Business Council and the US-Ukraine Foundation ,

will host the RT Patrons Reception, the traditional final event of the symposium.

Ultimately, in providing the contemplated assessment, the forum should help
clarify a larger issue to which the Roundtable Series has dedicated its time
and resources, namely the pace of Ukraine’s endeavor to achieve “mature
nation statehood”.

Due to the time constraints involved with organizing such a large forum, we
kindly ask that you respond immediately concerning your acceptance
to participate.  For further information, kindly contact Marta Kostyk , UA
Quest RTS Technical Coordinator, by phone: (212) 473 0839, fax: (212) 473
2180, or e-mail: cusur1014@gmail.com

SUGGESTED DONATIONS: There is no registration fee for the
Roundtable this year but donations of 50 US dollars per day are
encouraged to help cover the considerable expenses necessary for
such a Roundtable. If donating, please make out your check to:
“CUSUR-UA Quest RTVIII” or use the system online when you
register to make a donation.
If you wish to register online do so immediately, click on the following link:
or go directly to: www.usukrainianrelations.org

William Miller, Co-Chair
Bob Schaffer, Co-Chair
Oleh Shamshur, Co-Chair

Walter Zaryckyj
Program Coordinator

William Miller
Bob Schaffer
Oleh Shamshur
Olexandr Aleksandrovich
Ilan Berman
Peter Borisow
Nadia Diuk
Olga Fishel
Katie Fox
Nadia Komarnycky McConnell
Elizabeth Knight
Ilko Kucheriv
Nico Lange
Orysia Lutsewych
Lewis Madanick
Marta Matselioukh
John Micgiel
Jan Neutze
Steven Nix
Ulana Panchishin
Jan Pieklo
Herman Pirchner
Jeff Smith
Morgan Williams
Walter Zaryckyj

Day I – October 16, 2007
VENUE: Ronald Reagan International Trade Center

9:00 AM – 9:30 AM Roundtable Focus Session IV
Suggested Theme: Ukraine-EU Relations – From the Vantage Point of the EU

10:00 AM – 12:30 PM
I. Has Ukraine Met the “External Political Requirements” for EU Membership?
[Two Panels]

1. The “Democratic Governance” Standard
Suggested Topics: Guaranteed Personal & Political Rights; Free and Fair
Elections; Accountable Governance; Developed Civil Society/Independent Press

2. The “Common Vision” Standard
Suggested Topics: Sense of Shared Values; Sense of Shared History; Strong
Ties in Trade; Respect for Borders

12:30 PM – 2:30 PM Working Lunch
Theme: Ukraine and the EU – Contemplating a Common Strategy for Energy
Viewpoint from Kyiv
Viewpoint from Warsaw
Viewpoint from Berlin
Viewpoint from Washington
Viewpoint from Houston

2:30 PM – 3:00 PM Roundtable Focus Session II
Suggested Theme: Ukraine-EU Relations – A Viewpoint from Eastern Europe

3:00 PM – 5:30 PM
II. Has Ukraine Met the “Economic & Social Requirements” for EU Membership?
[Two Panels]

1 The “Developed Market Economy” Standard
Suggested Topics: Stable Growth of Annual GDP; Low Inflation & Limited
Budget Deficit; Steady Rise in Real Income; Transparent Economic Activit y

2. The “Equitable Playing Field” Standard
Suggested Topics: End to Discrimination; Access to Proper Education; Access
to Decent Health Care & Housing; Strong Local Community Interaction

5:30 PM – 6:00 PM Roundtable Focus Session III
Suggested Theme: Ukraine-EU Relations – A Viewpoint from Western Europe

7:00 PM – 9:00 PM Conference Reception
Hosted by the Ukrainian Embassy to the United States

Day II – October 17, 2007
VENUE: Ronald Reagan International Trade Center

9:00 AM – 9:30 AM Roundtable Focus Session IV
Suggested Theme: Ukraine-EU Relations – From the Vantage Point of the EU

9:30 AM – 12:00 PM
III. How Might Ukraine Fare as a Member of the EU? [Two Panels]

1. Pondering the Pluses & Minuses of UA Membership in the EU for UA
Suggested Topics: Substantial Rewards; Few Rewards; Few Burdens; Substantial

2. Pondering the Pluses & Minuses of UA Membership in the EU for the EU
Suggested Topics: Substantial Rewards; Few Rewards; Few Burdens; Substantial

12:00 PM – 12:30 PM Roundtable Focus Session V
Suggested Theme: Ukraine-EU Relations – A Viewpoint from the United States

12:30 PM – 2:30 PM Working Lunch
Suggested Theme: Ukraine & the EU – Contemplating Cooperation on Issues of
Regional Concern
General Overview
Baltic Vector [Belarus]
Black Sea Vector [Transdnistria]
Adriatic Vector [Kosovo]
Caspian Vector [Abkhazia]

2:30 PM – 5:00 PM
IV. What Alternative Relationships Might the EU Offer Ukraine? [Two Panels]

1. Contemplating the Status of “EU Privileged Partner” for Ukraine
Suggested Topics: Diplomatic Benefits; Political Benefits; Economic
Benefits; Social Benefits

2. Contemplating the Status of “EU Neighbor” for Ukraine
Suggested Topics: Diplomatic Benefits; Political Benefits; Economic
Benefits; Social Benefits

5:00 PM – 5:30 PM Roundtable Focus Session VI
Ukraine-EU Relations -Divining the Import of a Potential “EU-US-UA Triangle”

5:30 PM – 6:00 PM Concluding Remarks
7:00 PM – 9:00 PM Patron’s Reception
Hosted by the Ukraine’s Quest for Mature Nation Statehood Roundtable Series
Steering Committee

ENTIRE PROGRAM OUTLINE: The entire Ukraine’s Quest
for Mature Nation Statehood, Roundtable VIII, Ukraine-EU Relations
program outline can found at the following link:

Bob Schaffer (AFMC)
Rep. Alcee L. Hastings (D-FL/Chairman of the US Helsinki Commission)
Oleh Shamshur (UA Ambassador to the United States)
Andrii Veselovski  (Dep. Minister of Foreign Affairs of Ukraine)
Orest Deychakivsky (CSCE)
Hryhoriy Nemyria (BUT)
Ellen Bos (Andrassy University)
Bohdan Futey (US Court of Federal Claims)
Steven Nix (IRI)
Fred Kempe (Atlantic Council)
Kostyantyn Hryshchenko (RPU/APM)
Borys Tarasyuk (OU/IEAC)
Rastislav Kacer (Slovak Ambassador to the US)
David Kramer (DAS/EEA/DOS)
Adrian Karatnyckyj (Orange Circle)
Oleksandr Todiychuk (MOU/UA-EC)
Igor Chalupec (PKN-Orlen/Fmr. Pres.)
Friedemann Muller (Inst. for Int’l & Sec. Affairs)
Keith Smith (CSIS)
Tom Spellman (Halliburton)
John Micgiel (Columbia University)
Janusz Reiter (PL Ambassador to the US)
Morgan Williams (SigmaBleyzer, US-UA Business Council)
Yuri Yekhanurov (Fmr. UA Prime Minister)
David Sweere (Kyiv-Atlantic Farms)
Ihor Burakowsky (IER & PC)
Anders Aslund (Peterson Institute)
Nadia McConnell (USUF)
Mykhajlo Volynets (CITU/UA)
Bob Fielding (AFL-CIO/UA)
Yevhen Zakharov (Kharkiv Human Rights Group)
Marek Matraszek (CEC)
Keith Crane (RAND)
Jan Bugajski (CSIS)
Klaus Scharioth (DE Ambassador to the US)
Vitkor Nikityuk  (UA DCM to the US)
Ron Slimp (TD International)
William Pomeranz (Kennan Institute)
Joao De Vallera (Ambassador of Portugal to the United States)
Jan Pieklo (PAUCI)
Yuri Sergeyev (UA Ambassador to the UN)
Yevhen Bystrysky (International Renaissance Foundation)
Audrius Bruzga (Lithuanian Amb. to the US)
Steve Pifer (CSIS)
Nico Lange (Konrad Adenauer Stiftung)
Roman Shpek (UA Delegation to EU)
Oleksandr Biletsky (European Movement/UA)
Michael Gahler (FRC/Euro-Parliament)
Ariel Cohen (Heritage Foundation)
Herman Pirchner (AFPC)
Zbigniew Brzezinski (Senior Counselor/CSIS)
Ilko Kucheriv (Democratic Initiatives)
F. Steven Larrabee (RAND)
Oleksandr Sushko (CPCFPU)
Vooldymyr Dubovyk (CIS/ONU)
Yuri Scherbak (Kyiv Mohylian University)
Hryhoriy Perepylytysa (Dipl. Academy/UA)
Lewis Madanick (Open World/LOC)
Bohdan Sokolovski (State Secretariat)
Valeriy Chaliy (Razumkov Center)
Bohdan Klich (Euro-Parliament)
Steven Sestanovich (Columbia University)
Ilan Berman (AFPC)
Yevhen Kaminsky (IWE/NASU)
Ihor Koliushko (Presidential Advisor/UA)
James Sherr (Sandhurst)
Celeste Wallander (Georgetown Univ.)
William Courtney (CSC/Dyncorp.)
Angelos Pangratis (Dep. Head of the EC Delegation to the US)
William Miller (WWIC)
Senator Joseph Biden (D-DE/Chairman of the US Senate Foreign Relations
Robert Bensh (Cardinal Resources)

If you wish to register online, click on the following link:
or go directly to: www.usukrainianrelations.org

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

By Elizabeth Williamson, Washington Post Staff Writer
The Washington Post, Washington, D.C., Thu, Oct 11, 2007; Page A03

A House panel voted yesterday to approve calling the mass killings of
Armenians that began in 1915 genocide, defying the White House, which
warned that the measure could damage U.S.-Turkey relations.

The Foreign Affairs Committee passed the nonbinding resolution on a 27 to 21
bipartisan vote. Speaker Nancy Pelosi (D-Calif.) has promised she will bring
the resolution to the full House for a vote.

A proposed House resolution that would label as “genocide” the deaths of
Armenians more than 90 years ago during the Ottoman Empire has won the
support of a majority of House members, unleashing a lobbying blitz by the
Bush administration and other opponents who say it would greatly harm
relations with Turkey, a key ally in the Iraq war.

Turkey, one of Washington’s most staunch Islamic allies, lobbied hard to
kill the measure, launching a multimillion dollar campaign and threatening
to curtail its cooperation in the Iraq war. President Bush, Secretary of
State Condoleezza Rice and Defense Secretary Robert M. Gates were joined
by eight former secretaries of state and three former defense secretaries in
condemning the proposal.

“This resolution is not the right response to these historic mass killings,
and its passage would do great harm to our relations with a key ally in NATO
and in the global war on terror,” Bush told reporters in the White House
Rose Garden yesterday.

But the committee’s chairman, Rep. Tom Lantos (D-Calif.), said, “We have
to weigh the desire to express our solidarity with the Armenian people . . .
against the risk that it could cause young men and women in the uniform of
the United States armed services to pay an even heavier price.” Lantos
supported the measure, as did most lawmakers from California, whose large
and influential Armenian American community has pursued similar proposals
for decades.

The tally was far closer than the last vote to support the resolution, in
2005. But committee members that year knew the resolution would probably
not reach the floor, and it did not. This time, Pelosi’s support makes a
full House vote much more likely, causing committee members under heavy
pressure by Turkey to think twice about their positions.

Pelosi did not lobbying colleagues yesterday, viewing it as a “matter of
conscience,” an aide said.

Several lawmakers have abandoned their support for the measure since it was
introduced by Rep. Adam B. Schiff (D-Calif.) in January, including
co-sponsors Reps. Phil English (R-Pa.), Dan Boren (D-Okla.), Roger Wicker
(R-Miss.), John Yarmuth (D-Ky.), Bobby Jindal (R-La.), John Shimkus (R-Ill.)
and Dennis Moore (D-Kan.).

Two former sponsors who serve on the Foreign Affairs Committee, Reps.
David Scott (D-Ga.) and Tom Tancredo (R-Colo.), voted against the
resolution yesterday.

Scott said he is concerned that Turkey will scale back its role as an ally
in the Middle East. “Are we willing to take that gamble to say, ‘Oh, they’re
not going to do anything,’ when they clearly have stated that they will,” he

Nabi Sensoy, Turkey’s ambassador to the United States, sat in the second row
of the hearing room, flanked by a delegation of Turkish parliamentarians. He
said Ankara would continue its fight against the resolution, believing it
would lead to requests for massive monetary compensation by Armenian

“Why is Armenia not taking this to an international court? They are trying
to win this on political grounds, and they will never let go,” he said.
“It’s very disappointing. I’m hoping they will assume responsibility for the
consequences,” he said of House supporters.

Armenian Americans erupted in applause after the vote, while attendees of
Turkish descent sat in stony silence.

Outside the hearing room, the Rev. Sarkis Aktavoukian, who leads an Armenian
church in Bethesda, wept. “America has shown its justice today,” he said.

The vote drew swift condemnation from the Bush administration. “We are
deeply disappointed,” said R. Nicholas Burns, undersecretary of state of
political affairs. “Turkey is one of our most important allies globally.”
Staff writers Glenn Kessler and Peter Baker contributed to this report.

NOTE: The White House and the State Department continue their long
running battle not to have the U.S. Congress label the Armenian
Genocide 1915 or the Ukrainian Genocide 1932-1933 a genocide.  Editor
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
A congressional resolution about massacres in Turkey 90 years
ago endangers present-day U.S. security.

EDITORIAL: The Washington Post, Wash, D.C., Wed, Oct 10, 2007

IT’S EASY to dismiss a nonbinding congressional resolution accusing Turkey
of “genocide” against Armenians during World War I as frivolous.

Though the subject is a serious one — more than 1 million Armenians may
have died at the hands of the Young Turk regime between 1915 and the early
1920s — House Democrats pushing for a declaration on the subject have petty
and parochial interests.

Rep. Adam B. Schiff (D-Calif.), the chief sponsor, says he has more than
70,000 ethnic Armenians in his Los Angeles district.

Speaker Nancy Pelosi (D-Calif.), who has promised to bring the measure to a
vote on the House floor, has important Armenian American campaign
contributors. How many House members can be expected to carefully weigh Mr.
Schiff’s one-sided “findings” about long-ago events in Anatolia?

The problem is that any congressional action will be taken in deadly earnest
by Turkey’s powerful nationalist politicians and therefore by its
government, which is already struggling to resist a tidal wave of
anti-Americanism in the country. Turkey’s prime minister, Recep Tayyip
Erdogan, called President Bush on Friday to warn against the resolution.

Turkish politicians are predicting that responses to passage by the House
could include denial of U.S. access to Turkey’s Incirlik air base, a key
staging point for military operations in Iraq and Afghanistan.

The Turkish parliament could also throw off longstanding U.S. constraints
and mandate an invasion of northern Iraq to attack Kurdish separatists
there, something that could destabilize the only region of Iraq that is
currently peaceful.

Comments that include profanity or personal attacks or other inappropriate
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author will be removed.

Finally, we will take steps to block users who violate any of our posting
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discussions. You are fully responsible for the content that you post.

No wonder eight former secretaries of state, including Henry A. Kissinger,
James A. Baker III, George P. Shultz and Madeleine K. Albright, have urged
Ms. Pelosi to drop the resolution, saying it “could endanger our national
security interests in the region, including our troops in Iraq and
Afghanistan, and damage efforts to promote reconciliation between Armenia
and Turkey.” Yet the measure is proceeding: It is due to be voted on today
by the House Foreign Affairs Committee.

Supporters say congressional action is justified by the refusal of the
Turkish government to accept the truth of the crimes against Armenians, and
its criminalization of statements describing those events as genocide.

It’s true that Turkey’s military and political class has been inexcusably
slow to come to terms with that history, and virulent nationalism — not
Islamism — may be the country’s most dangerous political force.

But Turkish writers and intellectuals are pushing for a change in attitude,
and formal and informal talks between Turks and Armenians are making slow
progress. A resolution by Congress would probably torpedo rather than help
such efforts.

Given that reality, and the high risk to vital U.S. security interests, the
Armenian genocide resolution cannot be called frivolous. In fact, its
passage would be dangerous and grossly irresponsible.

NOTE: Turkey does not think the resolution is irrelevant for sure so why
should the U.S. Geoncides whenever and wherever they happened are
never irrelevant.  Editor
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation
Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council, Washington;
1701 K Street, NW, Suite 903, Washington, D.C. 20006
Tel: 202 437 4707
mwilliams@SigmaBleyzer.com; www.SigmaBleyzer.com
Power Corrupts and Absolute Power Corrupts Absolutely.
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