AUR#883 Oct 26 Court Validates Election; WTO & GMO’S; Corruption; Energy; Leasing; Mystery Art Buyer; Mushrooms, A Ukraine Love Affair

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
 
ENERGY EFFICIENCY
“It is technically and economically feasible for Ukraine to achieve
independence from energy imports within a timeframe far shorter
than that envisioned by [Ukraine’s] National Energy Strategy.  [In
fact,] if Ukraine brought its levels of energy consumption per unit
of GDP just down to the world average, it could eliminate most
and possibly all of its energy imports.” (Article 10)
                        
ACTION UKRAINE REPORT – AUR – Number 883
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., FRIDAY, OCTOBER 26, 2007
 
INDEX OF ARTICLES  ——
Clicking on the title of any article takes you directly to the article.               
Return to Index by clicking on Return to Index at the end of each article
1.  UKRAINE COURT VALIDATES ELECTION RESULTS
By Maria Danilova, Associated Press Writer
Kiev, Ukraine, Thursday, October 25, 2007
 
Genetic Engineering May Obstruct Ukraine’s Way to WTO

By Yuri Tarasovsky, LIGA Inform News Agency
Liga.net, Kyiv, Ukraine, Wednesday, October 24, 2007

4UKRAINIAN-OWNED INDUSTRIAL UNION OF DONBAS
WILL TAKE OVER FAMOUS POLISH SHIPYARD GDANSK
PAP news agency, Warsaw, Poland, Tuesday, 16 Oct 07

5UKRAINIAN MIGRANT LABOR BRINGS IN $8.4 BILLION 

By Stephen Bandera, Kyiv Post, Kyiv, Ukraine, Thu, Oct 25, 2007

6UKRTATNAFTA REFINERY FACES ‘FINANCIAL CRISIS’ 
By Greg Walters, Moscow and Daryna Krasnolutska, Kyiv 
Bloomberg News, Moscow/Kyiv, Wednesday, October 24, 2007

7BATTLE OVER POLTAVA OIL REFINERY HEATS UP 

John Marone, Kyiv Post, Kyiv Post Kyiv, Ukraine, Wed, Oct 24, 2007
 
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Friday, October 26, 2007

9AFRICAN AIR CRASHES THREATEN A GREAT AVIATION

NAME, THE PROUD UKRAINIAN ANTONOV AIRCRAFT
The Ear: By Jim Davis, The Ukrainian Observer
The Willard Group, Kyiv, Ukraine, October, 2007

10NEW UKRAINIAN PARLIAMENT URGED TO PURSUE ENERGY

NATIONAL SECURITY & ACHIEVE ENERGY INDEPENDENCE
Ukrainian-American Environmental Association (UAEA)
Rivne, Ukraine/Washington, D.C., Thursday, October 25, 2007

11PHILLY LAW FIRM LAUNCHES BRANCH OFFICE IN UKRAINE
By Dariya Orlova, Kyiv Post, Kyiv, Ukraine, Thu, Oct 25 2007

12A GLIMMER OF HOPE IN THE RUBBLE
Analysis & Commentary: By John Marone
Kyiv Post Staff Journalist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, October 15, 2007

13 INVESTING IN UKRAINE’S BLACK EARTH
Analysis: By Uliya Shevchenko, Kreditprombank
Business Ukraine magazine, Kyiv, Ukraine, Monday, Oct 8, 2007

14NEW UKRAINIAN GOVERNMENT MUST GET SERIOUS

ABOUT CORRUPTION STATES NEW REPORT
The Atlantic Council, Washington DC, Wed, Oct 23, 2007

15UKRAINE: STIMULATING GROWTH THROUGH LEASING
Analysis: By Anna Melnichuk, Business Ukraine magazine
Kyiv, Ukraine, Monday, October 8, 2007

16UKRAINE’S BILLIONAIRE PINCHUK IS ART’S MYSTERY BUYER
By John Varoli, Bloomberg News, Kiev, Ukraine, Thu, Oct 25, 2007

17.  VOTERS IN UKRAINE GO TO POLLS, EXPRESS FRUSTRATIONS
WITH DEMOCRACY, DOUBT ANYTHING WILL CHANGE
By Peter Fedynsky, Correspondent, Voice of America (VOA)
Kyiv, Ukraine, Tuesday, 23 October 2007

18UKRAINE – COALITION LATEST: DELAYS AND DEALS
By Paul Johnson, Business Ukraine, Kyiv, Ukraine, Mon, Oct 22, 2007

19BATTLEFIELD UKRAINE: THE GEOPOLITICAL CLASH
OVER VALUE SYSTEMS CONTINUES
Analysis & Commentary: By Alexander Iosseliani
Kyiv Post, Kyiv, Ukraine, Thursday, October 25, 2007

20THOUGHTS ON COALITION: EXPLOSIVE PACK
Commentary & Analysis: By Serhiy Rakhmanin
ZN, Mirror Weekly # 39 (668), Kyiv, Ukraine Sat, 20-26 October 2007

 
21THREE PROMINENT KYIVAN RUS REFORMERS
By Volodymyr Kharchenko, The Ukrainian Observer
The Willard Group, Kyiv, Ukraine, Fall, 2007
 
22MUSHROOMS: A UKRAINE LOVE AFFAIR
By Ralph H. Kurtzman, The Ukrainian Observer
The Willard Group, Kyiv, Ukraine, Fall, 2007
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1
UKRAINE COURT VALIDATES ELECTION RESULTS

By Maria Danilova, Associated Press Writer
Kiev, Ukraine, Thursday, October 25, 2007

KIEV, Ukraine-A court validated the results of parliamentary elections
Thursday, opening the way for the formation of a government in this
ex-Soviet republic struggling to emerge from prolonged political turmoil.

The move was likely to be welcomed by the two pro-Western Orange

Revolution parties led by President Viktor Yushchenko and the charismatic
opposition leader Yulia Tymoshenko.

Their main rival, the more Russia-friendly Prime Minister Viktor Yanukovych,
was the top vote winner, but fell short of the Orange parties’ combined
total.

Ukraine’s High Administrative Court threw out a lawsuit filed by five
parties contesting the vote based on alleged violations. The decision
allowed the official publication of the election results and enabled the new
parliament to convene.

Yushchenko and Tymoshenko led the 2004 Orange Revolution protests

that swept Yushchenko to the presidency. But the alliance fell apart when
Yushchenko fired Tymoshenko as prime minister after seven months.

This time, the two have promised to work closely together to bring the
country on a solid pro-Western course, conduct anti-corruption reform and
raise living standards. An agreement reached between the parties last week
would have Tymoshenko return as premier.

Ukrainian politics have been riven by a bitter power struggle between
Yushchenko and Yanukovych since the tumultuous 2004 presidential race.

Yanukovych was initially declared the winner, but courts later judged that
vote fraudulent and Yushchenko won a repeat election. Their standoff reached
its peak earlier this year, when Yushchenko ordered parliament dissolved and
called a new vote.

A majority coalition can be officially formed once parliament convenes. The
legislature has about a month to convene after the official publication of
the election results.

The parties of Yushchenko and Tymoshenko won 228 seats in the 450-member
Verkhovna Rada, two seats more than a bare majority. Yanukovych’s Party of
Regions had 175 seats.
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2.  PRESIDENT CALLS FOR NEW GOV’T TO SWIFTLY ADOPT
BUSINESS RELIEF LAWS TO IMPROVE BUSINESS CONDITIONS

By Zenon Zawada, Kyiv Post, Kyiv, Ukraine, Thu, Oct 25 2007

Whatever coalition emerges, Ukrainian President Viktor Yushchenko made
improving business conditions and further adapting government standards to
those of the World Trade Organization and European Union among the top
priorities of parliament once it convenes.

The president will submit six bills to improve business standards and
regulations for the parliament’s urgent approval, said Oleksandr Shlapak,
the first assistant chair of the Presidential Secretariat, on Oct. 23.

The bills are the president’s direct response to initiatives proposed by
small and medium-sized businessmen at a Sept. 17 meeting of the Government
and Business – Partners Forum in Kyiv, Secretariat officials said.

The measures are necessary on the legal and legislative levels to “radically
change the situation at the start of 2008 and win next year economically,”
Yushchenko told the meeting, which was attended by more than 500 small and
medium-sized entrepreneurs.

The most far-reaching of the proposals would remove a wide spectrum of
technical regulations on business and reduce the number of products
requiring mandatory certification.

Removing the litany of technical and certification barriers would bring
Ukraine closer to WTO and EU standards, according to an informative
memorandum prepared by the Secretariat.

“The experience of other EU member-states testifies that mandatory
certification is not necessary to ensure production safety and defending
consumer rights,” the memorandum stated.

“Mandatory certification of food products is absent in EU countries, but
that doesn’t mean that more than 450 million EU residents use low-quality or
unsafe products.”

Another measure on market oversight, particularly in the food products
sector, would introduce EU standards in regulating and systematizing
production.

Clear and well-defined oversight procedures, and defining of the products
subject to review, are among the measure’s key proposals. The other bills
will attempt to reduce licensing requirements, simplify and streamline the
licensing process and create official lists of requited permits to prevent
unreasonable demands from authorities.

“They are geared toward improving conditions of small and medium-sized
businesses,” said Yevhen Kapinus, assistant director of the main service of
socio-economic development at the Presidential Secretariat.

“Reducing the number of licenses and certification will help large companies
as well. But if large companies faced problems with these issues, they were
even more challenging for middle and small businesses.”

The measures were drafted by a working group of more than 20 small and
middle-sized Ukrainian entrepreneurs, including Our Ukraine politician
Kseniya Liapina.

The earliest parliament can convene to approve the president’s proposals is
a few days following a ruling by the Higher Administrative Court on the
election’s legitimacy. A decision is widely expected this week, though
delays occurred last year.

The newly elected deputies have a deadline of approximately a month to
pledge their oaths after government newspapers officially publish the
ruling, so parliament may not convene until late November.

This week, Yushchenko ordered Yulia Tymoshenko, leader of the eponymous
bloc, and Viacheslav Kyrylenko, a leader of the Our Ukraine-People’s
Self-Defense bloc, to form the Democratic Forces coalition as soon as
possible, the president told an Oct. 23 press conference in Kharkiv.

The president said he hopes parliament will meet and a coalition will emerge
during the first 10 days of November.

After deputies pledge their oaths and the first session of parliament
convenes, they will have approximately another 30 days to form a coalition
government. Parliament can elect its chairman and pass laws without forming
a coalition government, said Yuriy Syrotiuk, a political analyst at the
Kyiv-based Open Society Foundation, which is financed by American, British
and Polish government and private grants.

Therefore, the president’s pro-business initiatives become law in case the
parliament has trouble forming a government.

The likelihood of trouble increased after former Prime Minister Yuriy
Yekhanurov, a close presidential ally, said on Oct. 23 he would abandon the
Our Ukraine-People’s Self-Defense Bloc if a coalition agreement with the
Tymoshenko Bloc doesn’t take into account his proposals.

These proposals regard legislation to cancel the moratorium on agricultural
land sales, new laws on stock companies, changes in government procurement
laws and to the January Cabinet of Ministers law that significantly limited
the president’s authority.
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LINK: http://www.kyivpost.com/business/general/27664/

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3.  UKRAINE’S ACCESSION TO WTO COULD BE A GENETIC
ENGINEERING ISSUE, LABELING GENETICALLY MODIFIED FOODS
Genetic Engineering May Obstruct Ukraine’s Way to WTO

By Yuri Tarasovsky, LIGA Inform News Agency

Liga.net, Kyiv, Ukraine, Wednesday, October 24, 2007

On 25 October in Geneva there was held a decisive round of negotiations
for the entry of Ukraine into the World Trade Organization (WTO).

We want to note the strong desire of our nation to enter the WTO, Ukraine
held a mammoth job to become a member of that organization. However,
the process is still unresolved questions.

In particular, the issue raises concerns labeling of food that contains
genetically engineered impurities. It would seem, the Ukrainian government
will put all dot the “i”, imposing labeling of genetically modified foods.
This rule Cabinet of Ministers of Ukraine wants to introduce on 1 November

2007.

Nevertheless, the American side WTO opposes such action. It is no secret
that the United States is a major exporter of such foods. So, obviously,
their actions can be interpreted as unwillingness to lose markets for their
products.

Why such products are of concern in society? To date, this remains an
open question. Physicians note that genetically modified products distort
immunity rights, and the consequences could be irreversible.

In the words of Dr. Catherine Kartavoy life sciences, health do not know
what the disease may suffer after human consumption of products of genetic
engineering. Following the use of such products will change antigen of the

body tissues, in consequence of which the immune system will destroy the
body’s own,” said the expert.

What are the so-called genetically modified products, and how they are
created? Genetically modified organisms (GMOs) are those in which genetic
material (DNA) which is not changed as a result of replication, and/or
natural recombination, and through the addition of a modified gene or
another gene type or variety of biological organisms. For example, the
normal greens secretions gene rats.

Rat Liver contains vitamin C, as a result of increases in vegetable content
of vitamins. For the same reason, added to soybean Dumplings, sausage,
sausage, chocolate. Today, no one is surprised that exotic fruits are sold
year-round at the individual impacts of the miracle of genetic engineering.

Regarding the solution to the problem at the state level, the Minister of
Economy of Ukraine Anatoly Kinakh noted that to address the issue of
genetically modified products need to act in accordance with the priorities
of the health of our citizens and rigid quality control of food products,
which today come to Ukraine.

Meanwhile Gospotrebstandart Ukraine insists on compulsory marking at least
baby food products. According to the Minister, in all the countries of the
European Union this is a mandatory rule.

 I would like to emphasize that the Community legislation on GMOs in
operation since 1998. Today, there are laws on the use, distribution,
marketing and identifying GMOs in their food.

Furthermore, the EU has held activities to implement the provisions of
Cartagena Protocol on Biosafety on the Transboundary dissemination of
GMOs. After a five-year moratorium Commission again permit the use of
GMOs in May 2004.

Before you go to the EU market, a genetically modified product is subjected
to harsh inspection. There is such verification in laboratories, which are
owned by the Common European network research center at the European
Commission.

Moreover, the law clearly regulates the principles of the EU labeling of GMO
products with the contents. In September 2004, the Commission authorized
the first sale and cultivation of genetically modified seeds, registering 17
new varieties of maize in the EU Catalog of species diversity of crops.

Nevertheless, we can not say that all genetically modified products are
harmful. For example, British scientists have created a genetically modified
chicken, which can carry eggs containing proteins required for drugs against
cancer.

Based on the above uncertainties, can be safely argued that the world
community and, in particular, Ukraine is required to establish the rules
that would not allow such things to speculate, because in that case it is a
human health.

P.S. According to the Environmental League All-Ukrainian, 90% of
Ukrainian foods do not contain GMOs. (LINK: www.liga.net)
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4.  UKRAINIAN-OWNED INDUSTRIAL UNION OF DONBAS
WILL TAKE OVER FAMOUS POLISH SHIPYARD GDANSK

PAP news agency, Warsaw, Poland, Tuesday, 16 Oct 07

GDANSK, Poland – ISD Polska company, belonging chiefly to Ukrainian

Donbas [Industrial Union of Donbas], will take over 75 per cent of shares
in Gdansk shipyard worth 400m zloty (152.1m dollars) and will become the
owner of Gdansk shipyard by the end of the year, shipyard CEO Andrzej
Jaworski said Tuesday [16 October].

The ISD authorities plant to turn the shipyard into Europe’s leading ship
building and repair plant. Poland holds 18 per cent of shares in the
shipyard. The Ukrainian company was the only one which presented the

binding offer for the purchase of a new package of shares.

ISD board CEO Kostantyn Lytvynov told a news conference in Gdansk

on Tuesday that his firm plans to invest 500m zloty in the shipyard.
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5.  UKRAINIAN MIGRANT LABOR BRINGS IN $8.4 BILLION 
 
By Stephen Bandera, Kyiv Post, Kyiv, Ukraine, Thu, Oct 25, 2007
Ukrainians working abroad sent home $8.4 billion last year, equivalent to 8
percent of the country’s GDP, according to a study released Oct. 17 by the
International Fund for Agricultural Development. By contrast, Ukraine has
attracted around $24 billion in foreign direct investments in its 16 years
of independence.

Of all CIS countries, Ukraine was second only to Russia, whose migrant
workers wired nearly $14 billion back to their home country last year.

Ukraine ranked sixth in the world, ahead of Bangladesh ($8.1 billion) and
Turkey ($7.4 billion). India, Mexico and China led the list with more than
$20 billion each in migrant funds. Worldwide, 150 million migrants sent

more than $300 billion to their families last year, the study found.

Various estimates have put the number of Ukrainians working outside their
homeland as low as 3 million and as high as 7 million migrant workers.

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LINK: http://www.kyivpost.com/nation/27665/
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6. UKRTATNAFTA REFINERY FACES ‘FINANCIAL
CRISIS’ TATNEFT SAYS

By Greg Walters (Moscow) and Daryna Krasnolutska (Kyiv) 
Bloomberg News, Moscow/Kyiv, Wednesday, October 24, 2007

AT UkrTatNafta, Ukraine’s second- biggest oil refinery, is facing a
“technical and financial crisis” in the wake of an armed seizure of the
facility on Oct. 19, Russian oil producer OAO Tatneft said.

The refinery has come under the de facto control of its former chief
executive officer, Pavel Ovcharenko, Tatneft said in a statement posted on

its Web site. The oil producer, which owns shares in the refinery, said it
would consider all of Ovcharenko’s management decisions illegitimate and
invalid.

“These events can only be characterized as a forcible and illegal seizure
because they were carried out on the basis of forged court documents and

in the company of armed men,” Tatneft said in a joint statement with the
government of Tatarstan, the oil-rich Russian region where it’s based.

UkrTatNafta was seized last week by more than 50 men, Tatneft Chairman
Rustam Minnikhanov, who is also prime minister of Tatarstan, said in a

statement on the government’s Web site on Oct 20. Tatneft, the region’s 
government-controlled oil producer, cut off oil supplies to the refinery
pending clarification of  the situation, the company said yesterday.

UkrTatNafta purchased domestic oil yesterday and has enough reserves for

the next 15 days, Konstantin Borodin, a spokesman for Ukraine’s Fuel and
Energy Ministry, said in a phone interview today.

He said the refinery bought about 1.25 million barrels of crude from VAT
Ukrnafta, Ukraine’s biggest oil producer. The plant refines about 300,000
tons of oil, or 2.2 million barrels, a month, Borodin said.

Tatneft has been fighting for control of the refinery with Ukraine for
years. Ukraine regained control in July after state- run NAK Naftogaz
Ukrayny won a court ruling over a disputed 18 percent stake.
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http://www.bloomberg.com/apps/news\?pid=newsarchive&sid=aOoQGGK_GvnY
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7.  BATTLE OVER POLTAVA OIL REFINERY HEATS UP 

 
John Marone, Kyiv Post, Kyiv Post Kyiv, Ukraine, Wed, Oct 24, 2007
 
A fight for control of Ukraine’s largest oil refinery threatens the country’s
oil supplies from Russia while igniting intra-governmental rivalries at home.
 
Poltava Region’s Kremenchuk oil refinery, the centerpiece of a joint venture
called Ukrtatnafta, which includes interests connected to Russia’s Tatarstan
republic and Ukraine’s state oil and gas company Naftogaz Ukrainy, had its
oil supplies shut off this week and is now being guarded by armed men
following the replacement of its CEO on Oct. 19.
 
Tatar-supported CEO Serhiy Hlushko was replaced following a decision by
a regional Ukrainian court.
 
The government of Tatarstan and the Tatneft oil company, both principal
shareholders in Ukrtatnafta, responded by cutting off oil supplies to the
refinery and accusing Ukraine’s Fuel and Energy Minister of engineering
the takeover.
 
“The events of Oct. 19 are the culmination of a conflict that has been
going on for several months at the enterprise. It was started by the
current head of the Fuel and Energy Ministry Yuriy Boyko,” Tatarstan’s
trade representative to Ukraine Rostislav Vakhitov told a press
conference this week.
 
Vakhitov also accused newly instated CEO Pavlo Ovcharenko, who had
headed Ukrtatnafta in 2003-2004, of siphoning $130 million in company
funds since returning to his position.
 
Deputy Prime Minister Andriy Klyuyev, considered a rival of Boyko in
Ukraine’s energy sector, called Ovcharenko’s return a “raider’s attack”.
Boyko has dismissed the accusations and called for a legal study of
the matter.
 
Russian Minister of Industry and Energy Viktor Khristenko told a press
conference on Oct. 24 that his government would support Tatneft in
the dispute. Economy Minister Anatoly Kinakh said the conflict could
lead to an oil shortage in Ukraine, as Kremenchuk is a major refinery
in the country.
 
Ovcharenko said his company was already getting oil from Ukraine’s
leading oil producer, Ukrnafta, and was holding talks to get supplies
from other oil companies in Russia.
 
He added that Ukrtatnafta was expected to report losses of Hr 400
million (around $80 million) due to the purchase of oil by the former
management at inflated prices.
 
Volodymyr Saprykin, an energy analyst at Ukraine’s Razumkov Center,
said the Kremenchuk refinery provides around a third of the country’s
oil needs,  but that importers from the Baltics, for example, could fill
the gap in the short term.
 
“Theoretically this is a threat. The issue will probably continue to be
hashed out in the courts,” he said.
 
The Ukrtatnafta joint venture was created by Ukrainian and Tatarstan
presidential orders in the mid-90s. Tatarstan agreed to supply oil;
Ukraine contributed the Kremenchuk oil refinery to the joint venture.
 
Shareholders with roots in Tatarstan include the republic’s property
fund, with a 28.7 share; Tatneft, with 8.6 percent; US-registered
Seagroup International with 9.9 percent; and Switzerland’s Amruz
Trading, with 8.6 percent.
 
The US and Swiss-registered companies were added to the country’s
list of shareholders in the late 90s, effectively giving the Tatar
side 55 percent control of the refinery.
 
Over the years, the Ukrainian government has tried to overturn
the sales of the shares to the US and Swiss registered companies.
This May, Naftogaz took control of the 18 percent share package
belonging to US and Swiss companies, giving it a  61 percent
majority and reducing the Tatar stake.
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LINK: http://www.kyivpost.com/business/general/27663/
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8.  THE STATE EXPORT-IMPORT BANK OF UKRAINE, U.S. REP

OFFICE, JOINS THE U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
 
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Friday, October 26, 2007

WASHINGTON – The Executive Committee of the U.S.-Ukraine

Business Council (USUBC) has just approved The State Export-
Import Bank of Ukraine, U.S. representative office, as the forty-eighth
member of the USUBC according to Morgan Williams, SigmaBleyzer,
president of the USUBC.

The State Export-Import Bank of Ukraine (JSC Ukreximbank) was
approved in August of 2007, by the U.S. Federal Reserve Board, to
establish a representative office in New York. Victor Kapustin serves
as Chairman of the Board of the bank.

The USUBC met recently in New York with Igor Obozintsev,
Advisor to the Chairman of the Board, The State Export-Import Bank
of Ukraine, who will be operating the New York representative office.

Nickolay N. Oudovichenko, Deputy Chairman of the Board, met
with USUBC members last week in Washington. He was a member of
Ukraine’s economic and business team attending the meetings of the
World Bank and the IMF.

Joint-stock company “The State Export-Import Bank of Ukraine” is
the state-owned bank with the Cabinet of Ministers of Ukraine owning
100% of its shares, thus being its sole founder and shareholder.

In treating shareholders’ rights and issues of control, transparency and
enhanced efficiency, the bank adheres to the corporate governance
principles.

Adherence to the above principles enables the bank management, its
Supervisory Council and the Cabinet of Ministers of Ukraine to jointly
define and tackle the pressing tasks in ensuring dynamic development
of the bank as well as in enhancing its significance as one of the key
forces supporting foreign trade activities of the Ukrainian industries.
Today JSC “The State Export-Import Bank of Ukraine” is:
1] a bank with 100% state-owned shares, one of the major and most
     profitable operators in the Ukrainian banking market;
[2] a financial institution servicing a considerable proportion of export
     and import activities effected by Ukrainian enterprises;
[3] the sole agent of the Government of Ukraine in handling
     intergovernment credit lines;
[4] a partner of the World Bank under the largest Export Development
     Project in Ukraine and a partner of KfW under Small and Medium
     Enterprises Program;
[5] a bank recognised by about 30 primary Export Credit Agencies as
     a direct borrower/guarantor on medium and long term financing;
[6] a bank with the widest amidst the Ukrainian banks foreign network
     of correspondent and counterpart banks;
[7] a bank possessing the most long-standing experience in the Ukrainian
     market in documentary business and trade finance, having about 80
     clear credit lines available from major foreign banks;
[8] a bank with a well developed branch network embracing all main
     regions and industrial centers of Ukraine;
[9] recognized by JP Morgan Chase bank for the fifth consecutive year as
     one of the best amongst its correspondent banks worldwide in quality
     of the USD settlements in 2004, and acknowledged respectively by
     Deutsche Bank AG with regard to EURO-denominated settlements in
     Ukraine;
[10] a clearing bank for the MASTER CARD INTERNATIONAL INC.
     payment system in Ukraine;
[11] the first Ukrainian bank to have performed successfully in the
international syndicated loan market since 1997.

The bank can work with U.S. companies operating in Ukraine in terms
of trade finance, loans and equity investments.  For further information
check: http://www.eximb.com.
26TH NEW MEMBER FOR THE USUBC IN 2007
The State Export-Import Bank of Ukraine is the 26th new member for the
U.S.-Ukraine Business Council (USUBC) in the last ten months and
brings the Council’s total membership to forty-eight.
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9.  AFRICAN AIR CRASHES THREATEN A GREAT AVIATION

NAME, THE PROUD UKRAINIAN ANTONOV AIRCRAFT

THE EAR: By Jim Davis, The Ukrainian Observer
The Willard Group, Kyiv, Ukraine, October, 2007

KYIV – A BBC News headline today reads, “DR Congo plane crash
‘kills many.'”

Unfortunately such headlines are all too common today in several parts
of Africa, particularly the Democratic Republic of Congo (DRC).

Before we proceed, it is probably best that I make it clear that this
commentary is not criticism of the thousands of people who have for
decades turned out aircraft under the proud Antonov name.

Neither is it criticism of the people of Africa who must continue to travel
for whatever purpose on aircraft that have been allowed to deteriorate due
to poor maintenance and a lack of government regulation.

It is fairly easy to describe the problem, which I will try to do here.
Finding a solution is an immensely more complex and difficult task.
THOUSANDS OF ANTONOV AIRCRAFT SOLD
The marketing of Antonov aircraft was a part of the foreign policy of the
former Soviet Union. Thousands of Antonov aircraft were sold, usually under
special conditions that under girded the diplomatic relations between the
country purchasing the aircraft and the USSR.

With the end of the Soviet Union and a turn to more capitalist-oriented
operations of old state enterprises, many African countries found the cost
of replacement aircraft too high to be afforded, and the cost of replacement
parts, even if available, an invitation to attempt local, poorly made
analogues – or just to ignore maintenance completely, so long as the
aircraft could lumber into the air with paying passengers.

Add to that the instability that has been pandemic in Africa since the old
colonial system ended, and you have a recipe for disaster.

Many of the Antonov aircraft that were sold in government-to-government
deals have been sold on in privatizations that led to the demise of many
national airlines and the establishment of under funded and lightly
regulated successor enterprises.
POOR MAINTENANCE, TRAINING, PILOT FATIGUE
These negative factors have led to a long list of air crashes, many of them
with the name Antonov attached. After any one of these crashes is
investigated, the cause of the crash is almost always found to be poor
maintenance, or pilot error based on poor training or pilot fatigue after
flying an abnormal number of hours without adequate rest.

By the time that the crash report is published, most people will have
forgotten, or at best have a hazy recollection of the crash. Unfortunately,
what they will remember is that there was a crash with fatalities and that
the aircraft was an Antonov.
LOOKING AT THE RECORD
[1] Oct. 4, 2007: An Antonov 26 cargo plane crashes into a Kinshasa
     neighborhood shortly after takeoff, killing at least 25 people.
[2] Aug. 26, 2007: An Antonov 12 plane loaded with 3 tons over the
     recommended capacity crashes in the eastern region of Katanga,
     killing 14 people.
[3] Aug. 3, 2006: An Antonov 28 crashes into a mountain and then
     tumbles into a valley in eastern Congo, killing 17 people.
[4] May 25, 2005: An Antonov 12 crashes shortly after takeoff in
     eastern Congo, killing all 26 people on board.
[5] May 5, 2005: An Antonov 26 hits a treetop as it lands near the central
     city of Kisangani and slams into the ground, killing 10 people.
[6] Nov. 29, 2003: An Antonov 26 plows into a crowded market after
     failing to take off from the central city of Boende, killing 20 people
     on the plane and 13 on the ground.
[7] Aug. 12, 2000: An Antonov 26 crashes after experiencing technical
     problems trying to land in the city of Tshikapa. Thirteen bodies are
     found; another 14 people are presumed dead.
WHAT TO DO?
When these aircraft left the Antonov assembly line, they were well-designed,
well-made and – properly operated and maintained – should have given
reliable service for many years, even decades.

Under the current conditions in Africa, most do not wonder if another
Antonov will crash, but how soon it might happen.

Without adequate funding to purchase new aircraft, companies keep the old
aircraft flying as best they can, hoping for good luck when what is really
needed is either aircraft replacement or government regulation with real
teeth to assure that factory manufactured or certified replacement parts are
used.

I do not claim to be an aircraft or airline expert. But I do have a certain
amount of understanding of just how hard it is to operate commercial air
service in isolated areas.

In the 1980s, I was a small stockholder in a regional Part 135 (scheduled
air taxi) local airline in the Caribbean. It is not easy, but those who
attempt it should either shoulder the responsibility to provide safe
service – or get out of the business.
ANTONOV REPUTATION
It is unclear just what could be done to improve the situation in Africa in
the short run. However, it is inevitable that continued crashes of Antonov
aircraft does no good for the Antonov reputation and must ultimately affect
the sale of new Antonov aircraft.

One can only hope that some of those within the Antonov organization and
some of those in government are giving some serious thought to how they
might interact with the current owners of these aircraft to protect the good
name of the Antonov company and the thousands of Antonov personnel who
have given their lives to help design, manufacture and maintain Antonov
products.
———————————————————————————————
NOTE If you have comments on the above, or would like to submit an

op-ed in response, please write to jim.davis@twg.com.ua.
———————————————————————————————
LINK: http://www.ukraine-observer.com/index.php?p=114&c=11
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
10.  NEW UKRAINIAN PARLIAMENT URGED TO PURSUE ENERGY
EFFICIENCY/SUSTAINABLE ENERGY DEVELOPMENT TO PROTECT
NATIONAL SECURITY & ACHIEVE ENERGY INDEPENDENCE

Ukrainian-American Environmental Association (UAEA)
Rivne, Ukraine/Washington, D.C., Thursday, October 25, 2007
 
RIVNE, Ukraine/WASHINGTON, DC – In a letter delivered today to
the leaders of the five political parties expected to constitute the next
Ukrainian Parliament, the Ukrainian-American Environmental Association
(UAEA) urged that “energy security and sustainable energy development
[be made] top priorities.”

UAEA suggested that “it is technically and economically feasible for
Ukraine to achieve independence from energy imports within a timeframe
far shorter than that envisioned by [Ukraine’s] National Energy
Strategy.  [In fact,] if Ukraine brought its levels of energy
consumption per unit of GDP just down to the world average, it could
eliminate most and possibly all of its energy imports.”

The letter further noted that “Ukraine could be meeting a significant
share of its supply needs in the relatively near future from the mix of
renewable energy technologies.  Ukraine may have the best biomass
resources in all of Europe as well as one of the best offshore wind
regimes on the continent.  It also has significant, but largely
untapped, geothermal and small hydropower resources as well as

modest solar energy potential.”

The letter concluded that “a national energy strategy based on vastly
improved energy efficiency, substantial increases in renewable energy
development, and a shift to domestic supplies of fossil fuels could
make Ukraine energy self-sufficient in a relatively short time.

Moreover, such an approach would enable Ukraine to re-evaluate its
current emphasis on nuclear power expansion, which we believe to be an
unnecessarily expensive and environmentally dangerous course of
action.” The complete text of the letter follows:
October 25, 2007
Leader – Block of Yulia Timoshenko, Y. V. Timoshenko
Leader – Block of Peoples Self-Defense, Y. V. Lytsenko
Leader – Party of Regions, Prime Minister of Ukraine V. F. Yanukovich
Leader – Block of Lytvyn, V. M. Lytvyn
Leader – Communist Party of Ukraine, P. M. Symonenko

Dear Sirs/Madam:

As you prepare to convene the newly-reconstituted Rada and government,
we are writing to urge that you stress energy security and sustainable
energy development as top priorities.  The importance of these issues
was once again made apparent by Gazprom’s threat to reduce natural gas
supplies the day after Ukraine’s elections.

We believe that it is technically and economically feasible for Ukraine
to achieve independence from energy imports within a timeframe far
shorter than that envisioned by the National Energy Strategy.  And we
believe that a national energy program that emphasizes improved energy
efficiency and renewable energy development could yield major economic
as well as national security benefits for Ukraine.

Inasmuch as the Ukrainian economy is among the most energy-intensive –
but also the most energy wasteful – in the world, we believe that a far
more aggressive campaign to improve energy efficiency in industry,
transportation, agriculture, buildings, and government should be the
top priority. 

 
In theory, at least, if Ukraine brought its levels of energy consumption
per unit of GDP just down to the world average, it could eliminate most
and possibly all of its energy imports.  If Ukraine further improved its
energy efficiency to the levels of either the United States or the European
Union, it could actually become a net energy producer.

We also believe that Ukraine could be meeting a significant share of
its supply needs in the relatively near future from the mix of
renewable energy technologies.  Ukraine may have the best biomass
resources in all of Europe as well as one of the best offshore wind
regimes on the continent. 

 
It also has significant, but largely untapped, geothermal and small
hydropower resources as well as modest solar energy potential.  The
European Union is striving to meet 20 percent of its energy needs
from renewables by 2020; there is no reason why Ukraine could not
be striving for a comparable goal rather than be satisfied with the 2-3
percent it now derives from these sources.

Finally, we believe that supply needs that cannot be offset by energy
efficiency improvements or met with renewable energy sources can be
largely satisfied by increased domestic production of natural gas, oil,
and coal.  While concerns about climate change and greenhouse gas
emissions from fossil fuels suggest that total energy consumption from
these sources should be reduced from current levels, it is possible to
displace natural gas and oil imports with domestic sources to meet
legitimate needs.

In total, a national energy strategy based on vastly improved energy
efficiency, substantial increases in renewable energy development, and
a shift to domestic supplies of fossil fuels could make Ukraine energy
self-sufficient in a relatively short time.  Moreover, such an approach
would enable Ukraine to re-evaluate its current emphasis on nuclear
power expansion, which we believe to be an unnecessarily expensive and
environmentally dangerous course of action.

During the coming year, the Ukrainian-American Environmental
Association is planning to issue a series of a dozen or more short
studies (perhaps one per month beginning in early 2008) that will
assess the status and potential of energy efficiency and renewable
energy options in Ukraine.  The papers will also draw upon the
experience of the United States and the European Union for particularly
effective policy strategies that may be transferable to Ukraine.

We will be happy to share these materials with you and work with you to
develop effective policies to promote a sustainable energy future for
Ukraine and to meet its energy, environmental, economic, and national
security needs.

Sincerely, Taras Lychuk, Ken Bossong
Co-Directors, Ukrainian-American Environmental Association
——————————————————————————————–
NOTE: The Ukrainian-American Environmental Association is a private,
non-governmental organization founded in 2004 and chartered in both the
United States and Ukraine.  The UAEA is a member of the U.S.-Ukraine

Business Council (USUBC) in Washington.
——————————————————————————————–
UKRAINIAN-AMERICAN  ENVIRONMENTAL  ASSOCIATION
Ukraine Address: 11 Strutynska Street, #18; Rivne, Ukraine 33003;
+38 068 569-5137; U.S.A. Address: 8606 Greenwood Avenue, #2;
Takoma Park, MD 20912; +1 (301) 588-4741
e-mail:  ua_ea@yahoo.com; URL:  http://www.ua-ea.org
———————————————————————————————–
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
11.  PHILLY LAW FIRM LAUNCHES BRANCH OFFICE IN UKRAINE

By Dariya Orlova, Kyiv Post, Kyiv, Ukraine, Thu, Oct 25 2007

The Philadelphia-based law firm of Marks & Sokolov has teamed with a
Ukrainian-born US lawyer to open an office in Kyiv. Marks, Sokolov &

Burd is the firm’s second foreign office following one in Moscow. The
firm began working with Ukrainian clients in 2004.

“We have represented Ukrainian interests in purchasing major metal plants in
the US, and Western companies, in substantial, worldwide litigation arising
from their Ukrainian business dealings. We look forward to doing more,” said
Bruce Marks, the firm’s founder and managing director, who has also served
as a Republican state senator from Pennsylvania.

“With the economic growth and political changes in Ukraine, we just felt
it’s quite appropriate for us to extend to Ukraine as well,” said Ukrainian-born,
US-trained attorney Gene M. Burd, managing director of the Kyiv office.

“We are distinct from many law firms that work here in that one of our
specialties is international litigation and arbitration. Our firm has been
involved in major litigation relating to privatization and shareholder
conflicts both in Russia and Ukraine,” Burd said.

“There are views that the Ukrainian legal market is saturated, but when you
come here and start speaking with people, potential clients, you find that
many of them are unsatisfied with the services lawyers provide,” explained
Burd. The lawyer noted that many local companies lack client-handling
skills, while services of Western firms are frequently overpriced.
———————————————————————————————-
LINK: http://www.kyivpost.com/business/general/27660/
———————————————————————————————–
NOTE:  The Philadelphia-based law firm of Marks & Sokolov is a member

of the U.S.-Ukraine Business Council (USUBC) in Washington, D.C.
———————————————————————————————–
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========================================================
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========================================================
12.  A GLIMMER OF HOPE IN THE RUBBLE

ANALYSIS & COMMENTARY: By John Marone
Kyiv Post Staff Journalist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, October 15, 2007

On Saturday morning, a gas explosion rocked a block of flats in eastern
Dnipropetrovsk Region, claiming at least 13 lives as of Sunday evening. Many
more were injured or left homeless, while rescuers continue to search the
rubble for survivors. [Death toll is now 21. AUR EDITOR]

Ukrainian political leaders responded immediately with the usual public
promises to punish the guilty and help the victims. And although the
election season has already ended, the president, prime minister and top
opposition candidate are jostling with each other to show everyone that they
really are doing something.

Ukraine is no stranger to man-made catastrophes, holding world records to
date in at least two categories – nuclear energy and air shows. Some
scholars have argued that independent Ukraine was born of tragedy – the
1986 Chornobyl disaster.

By revealing the Soviet authorities’ technical incompetence and disregard
for individual lives, the world’s worst atomic accident set into motion the
centrifugal forces of national determination.

It was only after the country’s 2004 Orange Revolution, that the country
took on another reputation as a colorful arena for east-west political mud
wrestling.

In between, Chornobyl and the Orange Revolution, there were other tragedies,
such as the grisly murder of journalists who dared to report on official
corruption, and a string of military accidents that caused well over a
hundred civilian deaths.

But when tens of thousands of peaceful protesters filled the streets of Kyiv
in the Orange Revolution to oppose abusive authority, the world saw a happy
ending to all Ukraine’s former tragedies.

The country’s Orange politicians, President Viktor Yushchenko and his first
prime minister, Yulia Tymoshenko, represented a chance that something would
be done to break the cynical cycle of corruption and disaster.

The democratic euphoria, however, soon wore off, as the Orange team fell
prey to infighting. As the anti-Orange faction led by Viktor Yanukovych
returned to power, together with its leftist allies, some saw this as the
country’s latest tragedy.

The fact that the resulting power struggle between Ukraine’s politicians
sometimes looked more comical than tragic was not a complete break with
the country’s dark recent past.

One could almost laugh recalling the time back in 2000, under former
President Leonid Kuchma, when the Ukrainian military let a training missile
level a block of flats outside Kyiv – if it hadn’t been for the three people
killed.

Saturday’s gas blast in Dnipropetrovsk was more mundane. It was a tragedy,
nonetheless, albeit with a possible glimmer of hope. In a clear break with

Soviet tradition, the authorities have not played down the damage or withheld
the details.

Emergency Minister Nestor Shufrych rushed to the scene of the blast to
provide meaningful information to the public on what had actually happened.

Only months earlier, when a cargo train carrying yellow phosphorus derailed
in Lviv Region, emitting a cloud of noxious gas over the surrounding
countryside, Deputy Prime Minister Oleksandr Kuzmuk appeared on television
to first invoke the Chornobyl disaster and then, a day later, tell locals
that they could feel free to graze their livestock in the affected area. The
result was confusion and fear.

Under Leonid Kuchma, the typical response of the authorities to disaster was
immediately to announce threatening criminal cases and promise generous
compensation to victims.

Unfortunately, no one, at least at the top of the food chain, was ever
charged, much less punished. If someone was fired, he was reappointed; while
the average Ukrainian has enough trouble trying to get his state salary or
pension, much less disaster compensation.

This time, Shufrych promised to determine the cause of the blast within a
specific time frame and offered victims realistic temporary relief – Hr 500
($100) in cash for food, shelter, etc. The sum is pathetic by Western
standards, considering that many victims lost everything they had in the
explosion, but its small size increases the likelihood that it will be paid
and soon.

Prime Minister Viktor Yanukovych has additionally promised Hr 9 million in
disaster relief. Considering that Yanukovych is not expected to be a part of
the next coalition government, his arrival on the scene of the accident was
also encouraging.

Ukrainian politicians appear to be getting the message that their electorate
is increasingly demanding accountability. The last elections were a good
example of a protest vote, which cost Yanukovych’s coalition its majority,
while suggesting that Yushchenko may not be re-elected in 2009.

President Yushchenko picked up on the political value of disasters in the
summer, when he used a forest fire in southern Kherson Region as a pretext
to play the hands-on hero.

Diverting his aircraft to the scene of the blaze, Yushchenko took shovel in
hand to show the people that he wasn’t as indecisive and passive as they
might think. Afterwards, the president blamed Shufrych for mishandling the
firefighting and tried to pressure him into resigning in the run up to the
snap elections.

The political benefits of this stunt for the president, however, were mixed,
with the media suggesting that he should have shown more management skills
than his ability to shovel dirt. So this time around, Yushchenko limited
himself to ordering Yanukovych to determine the cause of the Dnipropetrovsk
blast and come up with a relief plan.

As with the recent elections, in which she came out on top, opposition
leader Tymoshenko seems to have measured the pulse of the nation the most
accurately. Always the populist, she also came to meet with the victims of
Ukraine’s latest tragedy in her home region of Dnipropetrovsk.

Outdoing a pretty good performance by the outgoing Yanukovych government,
Tymoshenko offered victims an even clearer solution: The homeless would be
put up in new blocs of flats, either immediately or after temporary
residence somewhere else.

Around 400 people live in the house that was most directly affected by the
blast. Tymoshenko’s ByuT faction has already set up an aid center in
Dnipropetrovsk. Election season or not, Ukrainian politicians appear keener

than ever to win the hearts of their voters.

With four general elections having been held in the country in the last
three years, and at least one major one – the presidential elections – less
than two years away, the country’s leaders cannot afford to ignore their
increasingly demanding electorates.

The Orange Revolution raised public hopes, and every election since then
has been decided on just a few percentage points.

The people have grown tired of the usual campaign promises – all the more
since the frequency of elections has increased. Besides real policy issues,
on which most of the country’s politicians already agree – European
integration, higher social benefits and end to lawmakers’ privileges –
disasters are an excellent way for politicians to strut their stuff, as well
as criticize their opponents.

Ukrainians already enjoy more freedoms and wealth than at any other time of
their nation’s independence. But the country is a long way from the European
ideal put to voters during the Orange Revolution.

As political leaders continue to jostle for power in the legal nihilism that
has emerged since 2004, public support becomes more important than ever,
giving the average Ukrainian more leverage over the authorities.

Compelling reforms of the country’s tax system, judiciary and constitution
may still be a long way off, but apparently so are the days of official
indifference to public suffering.

Justice and real compensation still have to be achieved, for example, in the
2002 Sknyliv air show disaster, the world’s worst ever; and Ukrainian coal
miners continue to live a precarious existence.

But at least now, Ukrainian politicians jump to their feet to show concern,
when tragedy strikes. Even if the concern is temporary and for show, it
represents a glimmer of hope amidst another tragedy.
—————————————————————————————–
http://www.eurasianhome.org/xml/t/opinion.xml?lang=en&nic=opinion&pid=884

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========================================================
Send in a letter-to-the-editor today. Let us hear from you.
========================================================
13.  INVESTING IN UKRAINE’S BLACK EARTH

ANALYSIS: By Uliya Shevchenko, Kreditprombank
Business Ukraine magazine, Kyiv, Ukraine, Monday, Oct 8, 2007

Ukraine is famed for its agricultural wealth, but many smaller farms
currently operating suffer from a lack of access to the financial tools
required to make them truly efficient. The banking community is

increasingly taking notice of this discrepancy

The legendary black earth of Ukraine is celebrated as some of the most
fertile land in the world, and over the centuries it has been known as the
bread basket of both Europe and the Russian empire.

However, since independence the agricultural sector has underperformed,
with outdated Soviet concerns taking up the lion’s share of the land and
small-scale entrepreneurs fighting it out to break into the market.

To a certain extent, Ukraine’s current agricultural industry remains under
the influence of former collective-farm managers, who continue to make

up a significant portion of the market.

The majority of these farmers are highly qualified and possess
administrative skills in the agricultural field, but their techniques are
often dated.

They have been joined by specialists who gained experience at the massive
agricultural concerns of the Soviet era and who now apply their skills in
the private sector on a smaller scale. Alongside the former specialists are

the simple farmers who work smaller plots of land in time honoured style.

It is interesting to note that some of the biggest success stories in modern
Ukrainian agriculture were recorded by farmers without the technical
qualifications of the collective farm rivals but with the savvy business
sense to respond to market needs and the determination to make a success

of their small-scale operations.

However, it is also noteworthy that the vast majority of smaller scale
farmers have struggled to gain access to the kind of financial support that
can turn their local operations into more serious farming industries.
SLOW BUT STEADY SUCCESS
Anyone who has ever invested money into the agriculture business will
confirm that it does not offer speedy returns, but on the contrary requires
a slow, methodical approach if your initial investment is to pay dividends.
The purchase of new agricultural equipment or a new herd will not be even
nearly covered within the first year.

As a direct result of this long term approach to the industry, Ukraine’s
most financially stable farmers tend to be those who have been operating the
longest, despite the fact that relatively speaking, they are by no means the
most efficient.

Nevertheless, farmers whose private ventures date back as far as 1992 remain
the country’s most financially stable. Many of these early entrepreneurs of
the independence era began their business from desolate premises and small
pieces of land which were often little more than a former cow-shed or a
simple, abandoned plot.

In most cases, such owners sought to meet their financial demands via their
own resources, but in the course of time they came to the conclusion that
their own means were often insufficient to meet the expenses of a modern
agricultural concern, which led directly to the rise in demand for
agricultural loans.
THE NEED FOR FINANCIAL TOOLS
Today the Ukrainian agricultural sector ranks way down on the list of
industries with easy access to banks, credit unions and other financial
organisations.

This deficit is not the product of higher than usual risks, nor is it a
result of prohibitively high costs, as the average private farmer generally
requires as little as UAH 50,000-200,000 in order to make a significant
impact on productivity.

This lack of sufficient funding has forced many small scale farmers to be
increasingly inventive in their work, introducing new crops and services.
While this is in itself commendable, it represents a loss in the potential
that the Ukrainian agricultural market could yield for the country.
TRENDS IN THE FARMING INDUSTRY
The most popular agricultural trend in Ukraine remains plant cultivation.
Owners tend to grow a variety of different crops, most often focusing on
winter wheat, sugar-beet, sunflowers and vegetables, but also including
maize, wheat and melons.

The largest fields (more than 300 hectares) are generally sowed with winter
wheat and sunflower, while vegetables are usually grown on fields of 2-25
hectares.

But simply growing crops in the field is only one aspect of the farmer’s
job, and factors such as field cultivation and climate conditions can wreak
havoc with advance planning.

This is where easy access to loans and financial support could make all the
difference, allowing private farmers the opportunities to overcome
short-term obstacles and produce a rich crop when their own resources would
leave them struggling to make ends meet and perpetually stuck in a state of
under-production.

Cattle breeders also face similar problems, with the day-to-day expenses of
maintaining a herd just the tip of the agricultural iceberg. Hidden costs
also able to force farmers into quick culls and undesirable sales if they do
not have access to short term financial relief.
TRADITION MEETS INNOVATION
To meet these financial challenges many farmers are developing an
innovative, entrepreneurial streak that is rarely associated with this most
traditional of professions.

Some seek to diversify, continuing to grow crops while also providing their
fellow villagers with a range of different services such as grain grinding,
micro-managing small plots of land, performing carpentry tasks, or engaging
in fish breeding and mushroom growing. Some also operate their own stores
and cafes.

Others have sought to move into specialised areas such as pedigree cattle
breeding. But whatever their personal solutions, all private farmers face
the same broad threats and obstacles.

Almost all farmers suffer from a shortage of assets with which to secure a
long-term loan, coupled with an absence of credit history or the necessary
deposit that financing companies require.

The industry is also subject to highly volatile pricing variations, and
these unpredictable price decreases tend to make potential creditors
nervous, as they can be influenced by a wide variety of factors ranging from
price increases on fuel and lubricant materials to fertiliser.

The complexity and instability of the existing taxation system also strangle
the agriculture industry in red tape and force farmers to spend inordinate
time dealing with endless forms, time that could be spent on the farm
itself.

Climate instability is also a threat to the industry, with poor ecological
protection laws and soil erosion adding to the cycle of frosts, droughts and
other natural influences.

The Ukrainian banking and financial services sector is slowly waking up to
the untapped potential of the agricultural sector. Kreditprombank is one of
the most active in supporting the development of agricultural infrastructure
in the regions.

In 2005, the bank introduced a specifically targeted agricultural crediting
programme, and in the past three years a total of approximately USD 4
million has been issued in loans to Ukrainian farmers.

The terms of these credits take the specifics of the agricultural sector
into consideration. They are designed to incorporate all the quirks and
peculiarities of the farming sector, while deposits are based on a
calculation of realistic figures for clients in this sector. Long-term
financing is offered, with payback delays of up to nine months.
(www.kreditprombank)

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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14.  NEW UKRAINIAN GOVERNMENT MUST GET SERIOUS
ABOUT CORRUPTION STATES NEW REPORT

The Atlantic Council, Washington DC, Wednesday, October 23, 2007

WASHINGTON – An Atlantic Council task force of international experts

has appealed to Ukraine’s newly elected political leaders to launch a
comprehensive fight against rampant political and business corruption.

A report released today by the Atlantic Council, Corruption, Democracy, and
Investment in Ukraine, finds that corruption is so widespread that it has
the potential to threaten the country’s economic prosperity and national
security.

Although Ukraine has made significant progress in developing democratic
institutions and in holding clean elections, Ukraine’s political leaders
have thus far lacked the political will and cohesiveness to seriously combat
corruption.

“While the recent parliamentary elections were certified as free and fair
by international observers, the trends aren’t as positive with regard to
corruption,” said Steven Pifer, former U.S. ambassador to Ukraine and

member of the Council task force.

“The new Ukrainian government — with the full support of the parliament —
needs to make rooting out corruption an immediate priority. This includes
cleaning up the judicial system, breaking corrupt linkages between business
and government, and working with the parliament to improve outdated anti-
corruption legislation.” Frederick Kempe, president of the Atlantic Council,
said,

“We consider the corrosive nature of corruption one of the top challenges to
young democracies wishing to integrate into the European Union and Atlantic
Community. This report, endorsed by a group of outstanding experts, offers
an unbiased perspective of the many different levels of corruption that exist
in Ukraine and offers policy prescriptions on how to cure this disease.”

The report outlines specific steps that Ukraine’s political leaders should
take against “grand corruption” among senior government officials and “petty
corruption” which plagues Ukrainians in many aspects of their lives.

RECOMMENDATIONS
The report recommends that the president and the new government and
prime minister should use their new mandate to immediately begin:

[1] coordinating and consolidating outdated anti-corruption legislation
     and amend Ukrainian law where necessary;
[2] reforming the corrupt judiciary by establishing a new judicial chamber,
     staffed by a new generation of judges;
[3] creating an independent national investigative bureau to uncover and
     root out corruption grand corruption;
[4] eliminating or reducing the scope of parliamentary immunity which in
     the past has been used by politicians to hide from persecution
[5] increasing transparency by publishing annual declarations of assets
     and incomes of senior public officials and politicians.

This project was generously supported by the RJI Capital Corporation.
Jan Neutze, assistant director of the transatlantic relations program at the
Atlantic Council, served as project director and co-author along with Adrian
Karatnycky, a senior fellow at the Atlantic Council.

Copies are available on-line at http://www.acus.org or by contacting Yulia
Kosiw at 202-778-4956 or at info@acus.org.
———————————————————————————————–
LINK: http://www.acus.org/docs/Press%20Release/071023-Atlantic%20Council%20Press%20Release%20-%20Corruption%20in%20Ukraine.pdf
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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15.  UKRAINE: STIMULATING GROWTH THROUGH LEASING

ANALYSIS: Anna Melnichuk, Business Ukraine magazine
Kyiv, Ukraine, Monday, October 8, 2007

Leasing has played a crucial role in stimulating investment in productive
assets all over the world. UniCredit Leasing CEO Jaroslaw Konczewski
predicts a key role for the fast-emerging Ukrainian leasing market. The
Ukrainian leasing market is experiencing massive growth.

Over the past three years, the market has experienced rapid expansion due to
the entry of a range of foreign banks – a move that helped increase access
to finance and the availability of financial instruments like leasing. This
trend should continue and should allow the industry to maintain its current
impressive growth rate over the coming years.

“Although leasing in Ukraine is currently in the growth phase, lots of
companies are viewing the market as very promising. Based on the experience
of our group in other countries in central and eastern Europe, we remain
very much convinced that leasing will demonstrate impressive growth rates
for years to come. Annual growth rates will overrun the country’s GDP and we
expect to see annual growth of around 40-50%,” says Konczewski.
MORE MULTINATIONAL COMPANIES, BETTER LEASING
Last year, the number of companies that conducted leasing transactions in
the country on a regular basis shot up by some 30% compared to 2005, rising
from 50 to 65 companies, the International Finance Corporation state in its
Ukrainian Leasing Market 2007 Survey.

The IFC stress that this trend is expected to continue as more banks set up
leasing companies and awareness of leasing as an alternative financial
instrument grows in Ukraine.

“Multinational companies want to be present on all markets, including and
especially in CEE countries. Besides, the leasing market in Western
countries is already well developed with stable margins, so as a result it’s
very difficult for a leasing company to increase its market share there.

“In the early years after the 1998 default, many companies and banks began
focusing on the Russian market. After establishing a foothold there, the
next natural step for multinationals was to expand their operations into the
Ukrainian market, which is characterised by great potential and offers up
many business niches to be filled,” says Konczewski.

In terms of funding sources for leasing companies, Konczewski explains that
before any multinational financial institution such as the EBRD or IFC
grants a credit line to a leasing company, it usually conducts an in-depth
feasibility study.

“Leasing companies are expected to be organised in a proper way. They

should have adequate procedures in place similar to those of Western leasing
companies. Transparency in leasing activities is crucial for any evaluation
of a leasing company. Sound development strategy, a qualified team and
management also play an important role when evaluating a leasing company.

“Only when all these factors are in place will a prospective leasing company
have a good chance of receiving attractive funding terms for its leasing
activities, which in turn can be passed on to customers,” he explains.
THE UKRAINIAN EXPERIENCE
The portfolio of companies currently engaged in leasing on the Ukrainian
market is diverse and covers a wide range of services including everything
from car rental, freight and municipal transport, aircraft, manufacturing,
agricultural machinery and printing equipment to food processing, computer
hardware, medical equipment and telecommunications tools.

UniCredit Leasing’s strategy, as a universal leasing company, is to become a
key player on Ukrainian market, providing wide range of products and
services for local customers.

“Unicredit Leasing already offers financing for a wide range of products,
but in particular we finance equipment (including entire production lines) ,
industrial equipment, construction equipment, transportation equipment,
printing facilities and so forth.

Vehicle financing leasing is targeted for significant expansion next year.
UniCredit Leasing sees also great potential for financing Real Estate
projects in Ukraine within the leasing formula,” Konczewski says.
THE IMPORTANCE OF COMPETITION
As more local and foreign leasing companies enter the leasing industry in
Ukraine, the competitiveness between players in the near future will become
much fiercer, but UniCredit Leasing is used to working in such an
environment wherever it operates.

“Our competitive advantage is not only the attractive terms we offer, but
the quality of service provided as well as the response time; therefore we
are very optimistic for the future,” says Konczewski.

“We are happy to work in a competitive market – the more competition on the
market, the more attractive the terms and the higher the level of services
is offered to the Ukrainian customers,” he stresses.

“Leasing companies will be forced to offer more and more complimentary
services in the fields of insurance, transport, and the development of new
products. Competition will also shorten the period of time needed to secure
lease approval, because customers expect quick approval decision process.

“Companies with properly set up procedures that can offer a faster service
will find themselves in a favourable position on the market,” he says,
adding also that the margins charged on leasing and the amount of advance
payment required are already decreasing.
STABILITY IS BETTER
Konczewski believes that a stabilisation of the political situation will
allow a new government to pass the necessary updates in leasing legislation.
There is plenty of room for improvement, as Ukraine does not currently offer
any tax incentives or other allowances to encourage companies to lease.

A draft law introducing a variety of tax rules that are more beneficial to
leasing, including accelerated depreciation for leased production equipment,
has been submitted to parliament and is expected to be considered in the
near future.

“Stability is always better for business,” says Konczewski, who also
confesses that business people primarily concentrates on business topics not
politics. “We don’t pay much attention to politics, as we are engaged in
developing our business.

We see the economical climate in Ukraine is favourable for business, and
believe that the leasing business in Ukraine will develop regardless of any
political changes. It is obvious that the country has set its course for
development, particularly in the economic sphere.” he says.
BANKS, M&A AND LEASING
The intensive merger and acquisition process which the Ukrainian banking
system is experiencing could also have knock-on benefits for the leasing
business.

“Any consolidation of the banking industry will lead to the consolidation of
the refinancing resources for leasing companies. It is also important that
bigger banks have a larger customer base.

“As a consequence of the mergers currently underway in the banking industry,
leasing companies owned by banks will also be consolidated, allowing them to
serve the higher demands of their customers.

“The leasing business will therefore become more stable and respectable, as
it will effectively become merged into a single entity with much more
potential for development,” says Konczewski.
AN IFC PERSPECTIVE
Ernst Mehrengs, Project Manager, Ukraine Leasing Development Project,
International Finance Corporation: “Leasing has truly gained momentum in

Ukraine. Leasing companies tell us that they have started to identify
competition in the last year, which is a good indication that businesspeople
are learning more about the advantages of leasing.

In the last two years the overall leasing portfolio for Ukraine has grown
almost 200% from USD 344 million in 2005 to an estimated USD 1 billion by
the end of 2007.

This growth is expected to continue, with a market of USD 2-3 billion
expected within the next few years. Today there are now more than 70 leasing
companies active on the Ukrainian market, up from 34 in 2005, and 1400
people are working in the leasing industry, which is up from 750 in 2005.

It is also worth noting that the Ukrainian government is very much
interested in leasing: in fact, the Ministry of Finance recently announced
that it will allocate UAH 1 billion for procuring leased medical equipment
valued at UAH 7 billion.”
———————————————————————————————–
LINK: http://www.businessukraine.com.ua/stimulating-growth-through
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16.  UKRAINE’S BILLIONAIRE VICTOR PINCHUK IS

CONTEMPORARY ART’S MYSTERY BUYER

By John Varoli, Bloomberg News, Kiev, Ukraine, Thu, Oct 25, 2007

KIEV –  Victor Pinchuk, a steel billionaire, has provided the answer to one
of the biggest mysteries in the art market.

There has been much speculation about the buyers of contemporary
masterpieces snapped up over the last two years amid suspicion that the
anonymous spenders might be Russian. Now it can be revealed: One of

the biggest is Pinchuk, a 46-year-old Ukrainian.

His collection includes some of the most expensive living artists: seven
works by Briton Damien Hirst, two by American Jeff Koons, and six by
German photographer Andreas Gursky.

All three men attended the opening of an exhibition in Kiev this month
displaying the works — showing Pinchuk’s strength of contacts and
determination to put the city on the art map.

“Pinchuk is probably the top player from the former Soviet Union on the
international contemporary art market,” said Oxana Bondarenko, head of the
Victoria Art Foundation, owned by Leonid Mikhelson, the billionaire chief
executive of OAO Novatek, Russia’s second-largest natural-gas producer.

Behind the scenes, Pinchuk let Bloomberg television into his country house
in Kiev’s Koncha-Zaspa suburb to show even more paintings that art watchers
did not know he possessed.

Among them was Ilya Mashkov’s 1912 painting “Still Life With Flowers,” sold
on Dec. 1, 2005, for 2.14 million pounds ($4.39 million) — seven times its
top estimate, and at that point the most expensive painting sold at a
Russian auction.
SURPRISE PRESENT
This was a spur-of-the-moment present for Pinchuk’s wife Elena, who said she
was “very surprised” at her birthday two days later.

“I still love Russian and Ukrainian impressionism and modernism, but my main
focus now is contemporary art,” Pinchuk said in an interview. Well groomed,
wearing a suit minus a tie, he speaks fluent English.

 His passion for art collecting began in the early 1990s with pre-World War
II Russian and Ukrainian paintings. He began collecting contemporary art in
2002.

Pinchuk, son-in-law of former Ukraine President Leonid Kuchma, owns
Interpipe, Ukraine’s biggest producer of steel pipes for oil and gas
companies, as well as TV stations, and steelmaker VAT Dniprospetsstal.

Forbes estimates Pinchuk’s fortune at $2.8 billion, while he said “the chief
executive officer of my company estimates my fortune at $10 billion.”

“Pinchuk knows what he’s doing and has a sincere and strong passion for
contemporary art,” said Bondarenko. “At the same time he understands that
collecting contemporary art will improve his international image.”
GROWING COLLECTION
The new show is at the Pinchuk Art Center, which opened in September 2006
as the first private museum of contemporary art in the former Soviet Union.
Admission is free and it had 150,000 visitors in its first year.

Pinchuk said he spent as much as $15 million to acquire and renovate the
six-floor Czarist-era building, though it is already too small. Next year,
he starts work on a larger museum near the Dnieper River. He hopes it will
be completed by 2012.
KIEV CENTER FOR CONTEMPORARY ART
We plan to make Kiev a really important international destination for
contemporary art,” he said. “Contemporary art will help modernize society,
especially the young generation.”

Pinchuk would not comment on how much he spent on the newest acquisitions
that include Gursky’s 7-by-11 foot photograph “99 Cent II,” which is a wide
shot of the inside of an American supermarket where items cost no more than
99 cents.

“I bought some pieces through Sotheby’s and Christie’s,” said Pinchuk. “But
I mainly buy directly from the artists and through their dealers.”
SMELLY HIRST
The two paintings by Koons now in Pinchuk’s collection are “Girl (Dots),”
and “Landscape Waterfall II.” Both are dated 2007.

Among Hirst’s works are “The Cancer Chronicles/ Jesus and the Disciples”
dated from 1994-2004. This work stirred the most emotions at the Kiev
opening. It consists of 13 large canvases covered with flies and resin, as

well as 12 cow heads in glass cases of formaldehyde. Many people
complained the room smelled.

Other artworks were by Britons Antony Gormley and Peter Doig, Japan’s
Takashi Murakami, Ukrainian-born Russian artist, Oleg Kulik, and Ukrainian
artists, Serhiy Bratkov, and Vasyl Tsagalov.

“I was surprised by how focused the Pinchuk collection is, and by how much
all the art makes sense,” Koons said in an interview. “The space itself is
very intimate and modern.”

Pinchuk now owns works by leading early-20th-century artists such as
Nicholas Roerich, Konstantin Korovin and Pyotr Konchalovsky.

He has about 500 to 600 contemporary works, acquired with the help of
Western and Ukrainian curators. About 50 percent are Ukrainian, and 50
percent are international.
UKRAINE BOOM
Amid talk that “the Russians are coming” at art fairs, and as New York
dealer Larry Gagosian opens a Moscow gallery to tap demand, Pinchuk is
leading rich collectors from the former Soviet Union in snapping up
contemporary art. He is riding economic growth in Ukraine which has
averaged 8.4 percent annually since 2002.

Pinchuk has two daughters — one aged 24, from his first marriage, and
another aged four with Elena. He holds parties at his Kiev apartment next to
the gold-domed St. Sophia Cathedral.

He says he likes red wine, especially Burgundy, and is fascinated by nature.
He has a Japanese garden several acres in size, with lakes and tea houses.
He claims it is the largest in Europe, self-designed with the help of
Japanese architects.

He also financed a film about Ukrainian jews and the Babi Yar massacre,
“Spell Your Name,” which had Steven Spielberg as executive producer.
———————————————————————————————
Bloomberg TV presents a report about Pinchuk as part of this weekend’s
Muse program. Check your local cable listings or see
http://www.bloomberg.com/tvradio/tv/schedule_us.html . John Varoli

writes for Bloomberg News. The opinions expressed are his own.
Contact John Varoli in Kiev at jvaroli@gmail.com.
———————————————————————————————–
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17.  VOTERS IN UKRAINE GO TO POLLS, EXPRESS FRUSTRATIONS
WITH DEMOCRACY, DOUBT ANYTHING WILL CHANGE

By Peter Fedynsky, Correspondent, Voice of America (VOA)
Kyiv, Ukraine, Tuesday, 23 October 2007

KYIV – Voters in Ukraine went to the polls on September 30th in a special
parliamentary election, but many cast ballots only to express doubt that
anything will change.

They complain of Ukrainian political gridlock and pin the blame on false
promises, too many political parties, and personality-driven campaigns.
VOA Correspondent Peter Fedynsky examined these issues during a
recent visit to Kyiv.

The September 30th parliamentary election was Ukraine’s third general
election in as many years.  Voters note that the elections not only cost
tens of millions of dollars, but have also resulted in series of failed
parliamentary coalitions.

Many voters said the most recent election would not change anything, among
them, Alyona Kucherenko, who is raising her first child in Kyiv. She says,
“Because all of the politicians promise the same things in every campaign,
but they are not going to change anything.”

Kucherenko may be surprised to learn that behind the scenes, some
politicians recognize the need for change but also realize reforms will not
be easy.  So instead, politicians seemingly compete for Kucherenko’s vote
the easy way: Populism!  In Ukraine that often means:  Promise voters
simple, often regional, solutions to complex national problems.
OLEKSIY HARAN
Oleksiy Haran, political science professor at the Kyiv-Mohyla Academy, one
of Ukraine’s leading universities, says populism is a feature of democratic
societies, as opposed to authoritarian regimes, where rulers are not
accountable to the needs and feelings of people.

“When we have these elections and election cycles, the government cannot
concentrate on economic reforms over a four to five year period; this limits
the possibilities for reform.

“So I think Ukraine, in the political realm, faces many difficulties,
perhaps some unforeseen events.  Nonetheless, I think the democratic
process in Ukraine is on the move,” Haran said.

Two of the political forces that won seats in the Ukrainian parliament are
named after individuals, BYuT, or the Bloc of Yulia Tymoshenko, and the
Lytvyn Bloc led by former speaker Volodymyr Lytvyn.

Two other major parties are also closely identified with personalities —
President Viktor Yushchenko’s Our Ukraine Party and the Regions Party
of Prime Minister Viktor Yanukovych.

Ukraine’s three leading politicians, the two Viktors and Yulia, inspired a
recent magazine poster, which suggests voter discontent with an election
that seemed to last forever, and with individuals who could dominate
Ukrainian politics for many years to come.
HRYHORIY NEMIRYA
Hryhoriy Nemirya, deputy for international affairs in the Tymoshenko Bloc,
comments on Ukraine’s personality-driven politics. Nemirya says, “There is
a problem here.  But if you look carefully, there is also potential
advantage.

“Because we hear of a leadership deficit in the United States and Europe
that can be filled by politicians who are sufficiently strong and confident,
and have personal visions of their country that can inspire the support of
many people.”

Nemirya says the next step in Ukraine’s democratic process is to fill the
personal visions of politicians with political and strategic substance.

After the Soviet collapse in 1991, about 150 Ukrainian political
organizations took the place of the Communist Party, the only legal
political organization in the USSR.

Many have since disintegrated, and on September 30th only five crossed the
minimum three percent threshold to win seats in parliament.  Among the
losers was the Socialist Party.

Representative Mykhailo Koropatnyk says small parties should join forces
with larger ones. “A sense of responsibility and patriotism should prompt
these parties to unite; unite around those parties that have authority and
those with whom they share similar programs and ideologies.  And then,
through political convergence, they will not be lost, but rather they will
gain the ability to realize their potential,” he says.

Public opinion polls indicate that Ukrainian voters do not consider divisive
populist issues rose during election campaigns to be top priorities.  These
include Ukraine’s official language, the country’s association with NATO,
and church politics.

Ukrainians, however, tend to agree on such problems as corruption,
education, and health care, and want their newly elected parliament to
address them.
——————————————————————————————
LINK: http://www.voanews.com/english/2007-10-23-voa44.cfm
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18.  UKRAINE – COALITION LATEST: DELAYS AND DEALS

By Paul Johnson, Business Ukraine, Kyiv, Ukraine, Mon, Oct 22, 2007

Official elections results released last week appeared to confirm
the victory of the country’s Orange coalition, but a court challenge
from the Communist Party is delaying the final publication of the vote
count.

Ukrainians are almost as used to coalition horse-trading as they are to
electioneering. Last year saw a marathon four months of backroom talks
before the so-called Anti-Crisis Coalition was eventually announced,

paving the way for an unlikely return to power for Viktor Yanukovych.
NO NEED FOR PROLONGED NEGOTIATION
In light of last year’s delays it was considered crucial that a coalition
was announced and confirmed as quickly as possible following the
September 30 vote, and the leaders of the winning BYUT and Our
Ukraine-People’s Self-Defence blocs rushed to announce a coalition
agreement last week.

With 228 seats in the new parliament, they would have the slimmest of
majorities, but at the unveiling of the new coalition Our Ukraine leader
Vyacheslav Kyrylenko was at pains to stress that the internal divides that
previously dogged the Orange government of 2005 would no longer be an

issue, stating that “100% of deputies” in his bloc would be supporting the
candidacy and policy direction of Yulia Tymoshenko, who is expected to
be named prime minister of the new administration.
TYMOSHENKO POISED FOR PM RETURN
According to the pre-election pact signed by both parties BYUT now has
the right to appoint the prime minister, while OU/PSD will name the new
parliamentary speaker, who is expected to be Kyrylenko himself.

The ministries, meanwhile, will be split 50/50 between the two winning
blocs, with further possible divisions should Volodymyr Lytvyn and his

eponymous bloc reach agreement to join the coalition and add their 20
seats to the overall majority.

Lytvyn is seen as the middle man in Ukrainian politics, showing no
particular inclination to back either side of the country’s political factions,

but it is thought that the bloc leader’s demands are out of step with Orange
officials’ estimations of his true worth to the coalition.

European Commission officials last week welcomed the apparent victory of the
Orange coalition and the boost this gives to the country’s reform and Euro
integration efforts. External relations commissioner Benita Ferrero-Waldner
reflected, “The future government has important challenges ahead as Ukraine
continues down the path of constitutional, political and economic reforms.
COURT BATTLE DELAYS RESULTS
As the Orange coalition prepared to take power they were thwarted by a court
challenge which prevents the election results being published. Delays now
seem inevitable, and it is not clear whether the court case could eventually call
into question the overall results of the election.

The challenge has been registered at the High Administrative Court and comes
from Ukraine’s Communist Party, which has questioned the election results
due to alleged irregularities concerning voting by Ukrainians abroad.

It is not clear how long the court case could take to reach a conclusion,
nor is it apparent whether the findings of their investigation could have
serious implications for the Ukrainian election results, but whatever the

outcome, nothing will now be decided officially until the court proceedings
conclude.
———————————————————————————————
LINK: http://www.businessukraine.com.ua/coalition-latest-delays-and
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19.  BATTLEFIELD UKRAINE: THE GEOPOLITICAL
CLASH OVER VALUE SYSTEMS CONTINUES

ANALYSIS & COMMENTARY: By Alexander Iosseliani
Kyiv Post, Kyiv, Ukraine, Thursday, October 25, 2007

The international spotlight is on Ukraine again. This is not related to the
aftermath of the Chornobyl nuclear accident, natural gas shortages in
Europe due to inefficient transit from Russia, or a power struggle
manifested in revolutionary activities. This time, the early parliamentary
elections recently held in Ukraine drew the attention.

The elections were confirmed to be legitimate, sufficiently free and
democratic. The Western-oriented political powers who gained a slight
majority in parliament have announced the formation of a democratic
coalition.

This parliamentary coalition, which most likely will form the new Cabinet of
Ministers, promises to promote Western-style freedoms, bring Ukraine closer
to the EU and reduce Russian political influence.

Ukraine’s partners in the West are pleased but are not showing it; its
Russian neighbors are disappointed and measure their level of disappointment
in increments of gas price increases. The world is waiting for Ukraine to
clarify its geopolitical direction. Don’t hold your breath just yet.

At closer look, a much deeper and more significant process is taking place
in this vast territory squeezed between Russia and Western Europe. Ukraine
has unconsciously become a battlefield of civilizations, at least in the
Eurasian context. The latest electoral exercise in Ukraine reconfirmed a
longstanding conclusion – the country is split.

This is not a division along geographic, economic or ethnic lines. This is
not a simple struggle between pro-Western and pro-Russian powers, as
many local politicians present it. This is not even a fight for freedom and
democracy.

We are witnessing a collision of value systems. Two opposing views of the
world are clashing in Ukraine, sending ripples all the way to Brussels,
Moscow and even Washington.

Some feel them, while some prefer to ignore the sensation, notwithstanding
the usual calls for politicians to put behind all disagreements, promote
economic and political stability and unite the country.

At this point there is no ground for unification in Ukraine. We have seen
coalitions before, but as long as they are based on individual political
players agreeing to share the spoils of power, nothing sustainable will come
out of it. Unification of the country is not possible without unity of its
society.

This unity can only exist on the basis of shared predominant values, and it
is much less dependent on the willingness of marginal political leaders to
work together. The triumph of democracy in a society not united on basic
values creates political instability, social apathy and lack of direction.

The infant Ukrainian society is just taking its first steps in determining
its key priorities and defining its core beliefs. As the elections showed,
too many people in Ukraine believe in different things.

A large number of the aging, low income population, who see no real future
in the Western order of things and much less in American-style capitalism,
still value the principles of a Soviet-style predictable society.

They tend to rely on the state or huge corporations to take care of their
basic needs. They value stability over freedom and authoritarian leadership
over self governance. They are pessimistic about Ukraine’s prospects of
integrating into the global community and prefer to lean on a big shoulder,
which modern Russia still represents.

On another spectrum of Ukrainian society we have a proactive, self-reliant,
younger population seeking opportunities, education and integration in the
international community, holding beliefs that are more consistent with the
Western set of values. They cherish freedom, seek prosperity and have an
optimistic view of their chances of entering the global arena.

Regardless on political preference, all of these people voted based on their
values and not the color of a party banner. They are no longer a population;
they are citizens of their country casting their vote based on individual
beliefs, which are sometimes drastically different.

The problem is that none of these value systems are Ukrainian-born, which
creates tension in society and pits Western and Eastern views of life
against each other. In this collision, an authentic Ukrainian value system
has to take root, and should become the backbone of a civic value-based
society in this country.

A uniform Ukrainian value system will eventually emerge in this clash,
bringing people together based on a common set of beliefs and life
priorities, regardless of ethnic background, linguistic preferences and
outdated stereotypes. Only Ukrainian society formed around core values
can elect a unifying political leadership.

Only a political camp, which takes on the enormous task of defining
universal Ukrainian values, including constitutional changes, can claim a
true victory in representing the hopes and beliefs of the majority of
Ukrainian people.

The United States and European partners can participate in the
materialization of this value system in Ukraine, or later deal with their
estranged neighbor stuck in the energy-dependent Russian geopolitical orbit.

Besides supporting “progressive” politicians, sending observers and
promising direct investments, interested partners have to export values. The
period when the main tool of Western civilization was sharing prosperity is
over.

The Ukrainian economy and the standard of living of Ukrainians are growing
despite a lack of reforms and unstable government. The Western carrot does
not work anymore, nor does the Russian whip. The country requires a new
quality of support.

Acceptance is the cornerstone of support for Ukrainian society. So far,
Western countries have provided a false sense of acceptance by declaring
their willingness to cooperate with any democratically elected government,
but failed to address the values of the people.

At this point it seems like foreign partners are constantly testing
Ukrainians, assigning pass or fail grades to words and actions. It’s time to
stop testing and judging; it’s time to show and share.

The basis of the Ukrainian value system can be Western by nature and allow
for smooth political integration in the future. But first Western society
needs to demonstrate the benefits of its core principles, show the value of
free speech, freedom of movement, free markets and respect for property
rights. Democracy has arrived in Ukraine, but this is not the only Western
value.

Sharing a full set of values with Ukrainians will allow them to overcome
Soviet stereotypes, which support Russian ideological dominance and freely
define their true priorities.

This can be achieved by simplifying travel, access to education, supporting
the flow of capital, transfer of knowledge and cultural exchange.

The first geopolitical camp that manages to shape the value system of the
emerging Ukrainian society will benefit the most from cooperation with this
developing European nation on the front lines of the most significant
ideological confrontation on the continent.

The expatriate community in Ukraine can play a very important role in this
process by taking upon itself the important task of sharing the fundamental
values of Western civilization, while respecting the uniqueness of Ukrainian
society. Nothing brings people closer that believing in the same “truths.”
———————————————————————————————–
Alexander Iosseliani is the managing partner of Ukrainian Business Solutions
(UBS), a business development and investment consultancy in Kyiv.
———————————————————————————————–
LINK: http://www.kyivpost.com/opinion/oped/27655/

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20.  THOUGHTS ON COALITION: EXPLOSIVE PACK

COMMENTARY AND ANALYSIS: By Serhiy Rakhmanin
ZN, Mirror Weekly # 39 (668), Kyiv, Ukraine Sat, 20-26 October 2007

The first act of the democratic majority should be to adopt a dozen of
laws. This is what the BYuT and OUPS leaders declared right after signing
their Coalition Agreement.

They also told the media about an addendum to the Coalition Agreement
consisting of 12 draft laws, which the coalition undertakes to adopt
immediately and unanimously.

Having interviewed a number of future coalition members, we understood

that it will not be that easy. For one thing, the number of laws, as well as
the decision on forming a coalition, is relative. The election results have
not been officially published.

Elected MPs have not been sworn in. The Supreme Rada of the VI convocation
has not been legitimized. As matters stand, the “Tymoshenko-Kyrylenko” Pact
is a protocol of intentions, and will remain so for at least for a month.

In the meantime a lot can change, including the list of draft laws selected
for the new parliamentary majority’s “debut”.

Furthermore, the would-be coalition members do not seem to see eye to eye on
the proposed legislative innovations. They do not even tell the same story
about the negotiations progress.

Some say six draft laws have been initialed; others speak about a principal
agreement upon two of them; others doubt the parties concurred on any drafts
at all. Most of our interviewees confess they have not seen the drafts and
have a fairly vague idea of their contents.

Finally, nobody can guarantee that the adoption of the draft laws will go
smoothly and painlessly. According to our sources, the initial plan was to
pass all twelve documents:

[1] without any prior debate; [2] in a package;
[3] prior to electing the speaker, appointing the prime minister,

     forming the government and parliamentary committees.

If this is so, the plan raises a lot of doubts.

[1] First, according to Articles 88 and 94 of the Constitution, only the Supreme
Rada chair is entitled to sign laws passed by Parliament. Where there is no
speaker – there is no passing of laws.

[2] Second, the Supreme Rada Rules of Procedure do not allow the adoption laws
without preliminary consideration or the opinion of specialized committees’.
Moreover, the prompt “package” voting infringes on the rights of the
oppositional MPs.

According to the Rules of Procedure, any proposed document should be
withdrawn  from the agenda if at least 150 MPs regard it as unacceptable.
This accelerated “package” voting excludes such a possibility, and the
non-coalition MPs will hardly put up with this discrimination.

In principle, Parliament can use the so-called “ad hoc” procedure whereby it
can deviate from the rules just once. Yet it cannot be done until the Rada
presidium and committees are formed: the Rules of Procedure preclude MPs
from starting their law making activities before resolving organizational issues.

Supposing the speaker and his two deputies are elected, the Supreme Rada
Committee chairs approved and committees manned with MPs. The question as
to whether the majority has the right to apply an “ad hoc” procedure for
hearing draft laws and voting for them in a “package” remains. In theory, it will.

With great reserve, one could view such a decision legitimate. Yet it will,
undoubtedly, be immoral: the draft laws in question (e.g. on the Cabinet of
Ministers) are critical for the state. Thus, even if the “ad hoc” procedure
is allowable, it is hardly appropriate in this case.

One could object with a legitimate complaint that the 2004 constitutional
amendments were also part of a “package” decision. Yet it was a mistake the
new Rada should not commit gain.

Additionally, three years ago it was the constitutional majority that voted
for the “package” whereas this time it would be the narrow majority.
Therefore the legal, political and moral underpinnings of the “package”
voting will be questionable. To further complicate matters, representatives
of the Party of Regions claim they will not let BYuT and OUPS pass a single
law until:

[1] the coalition is formed;
[2] the Supreme Rada presidium is elected;
[3] parliamentary committees are established;
[4] the prime minister is approved;
[5] ministers of the Cabinet are appointed.

If need be, the potential opposition is ready to block parliamentary
sessions.

Now, let us look at the draft laws – what are the future coalition members
going to change in the current legislation?

[1] Novelty one is the abolition of parliamentary immunity. Numerous MPs
believe the parliamentary immunity should be limited rather than abolished. After
all, elected representatives should, indeed, have guarantees of unimpeded and
free performance of their duties. It is a common international practice.

Yet politicians have to fulfill their election promises, or at least pretend
to fulfill them. What we mean is that the parliamentary immunity is laid
down in Article 80 of the Constitution. In order to abolish it, the new Supreme
Rada will have to amend the Fundamental Law. We all know the procedure:

Step one: Parliament adopts the constitutional amendment in the first
reading with 226 votes) and forwards it to the Constitutional Court for validation.
Step two: the CC passes its judgment and sends the draft back to the Supreme
Rada.
Step three: the Rada adopts the amendment with a constitutional majority
(300) of votes.

It is a long story. Its introductory part is simple: the draft law, purportedly,
agreed between the BYuT and OUPS, provides for the deletion of Article 80 of
the Constitution. However quite a few MPs in both blocs admit that the
parliamentary immunity will, eventually, be restored, albeit in a reduced scope.

They think that, as before, the people’s deputies of Ukraine:

– will not be held legally liable for expressing their opinion and voting as
they see fit;
– will not be apprehended and placed in custody without Supreme Rada
consent; the only exception being made for cases when MPs are caught

in the act.

[2] Novelty two is the law on opposition. The draft prepared by BYuT and
supported by the Party of Regions passed the first reading in the previous Rada.

 
Will it finally be adopted? Some politicians think the new parliament should
continue working on the BYuT draft that provides for handing over numerous
positions of power to the opposition. Others argue this should not be done.

We agree with the latter: to mix the ruling administration and the
opposition, to dilute political responsibility means to legalize political corruption.
Isn’t it a form of bribery to offer not only parliamentarian but also
ministerial posts to the opposition?

Some MPs suggest a working group, chaired by the opposition representative,
should be set up to revise and improve the draft law. We will wait and see
whose opinion prevails.

[3] Novelty three is the endorsement of the imperative mandate. According to
the Constitution, an MP should stay with the political force that brought
him or her to Parliament. Bolting to another faction is punished with
expulsion from the Rada. Practicalities of the imperative mandate operation
should be laid down in the law on the status of people’s deputies.

BYuT and OUPS are ready to initiate the necessary amendments but the nature
of amendments is a contentious issue. On one hand, the imperative mandate
(particularly given the closed party election lists) is sheer serfdom, not
to be found in a civilized world.

On the other, it is a way of disciplining MPs, an anti-corruption,
preventive measure against the recurrence of abnormal migrations in the
previous Rada. MPs may or may not like the imperative mandate, but they
will have to legalize it with a law as required by the Constitution.

The question is what the respective law will look like. According to our
sources, the BYuT draft will be chosen as a basic one. Its authors propose
to expel MPs from the Rada for failure to discharge their duties properly
and honestly, for refusal to obey faction discipline, in particular, for
nonparticipation in voting or for voting contrary to the faction’s position.

One could understand the reasoning behind these draconian measures but one
should also bear in mind that they run counter to the Constitution.

A lot of OUPS members disagree with the above interpretation of the
imperative mandate, but they will, most probably, have to back down because
of the threat to the existence of the coalition without the passage of this
law.

It is a matter of principle for Tymoshenko, and her partners will have to
abide by this requirement. Nevertheless, some of the pro-presidential bloc
members hope to revise the Constitution again in six months or so, and
remove any mention of the imperative mandate from it.

[4] Novelty four is a new version of the law on the Cabinet of Ministers.

The future coalition is expected to adopt the version of the draft law
proposed by Viktor Yushchenko last year when he tried to win back some of the
executive powers that he lost because of the constitutional reform. A number of
provisions in that draft did not harmonize with the Constitution.

The majority in the previous Supreme Rada preferred another draft, submitted
by the Viktor Yanukovych government, which did not get along well with the
Constitution, either. Viktor Yushchenko vetoed the pro-governmental law
passed in December 2006.

Parliament overcame the presidential veto as BYuT voted together with the
ruling coalition (121 out of 366 votes in favor belonged to the Yuliya
Tymoshenko Bloc) in exchange for the latter’s support of the law on the
imperative mandate for local councils (which she needed badly at that time).

In addition, the “anti-crisis” coalition passed the abovementioned draft law
on the opposition in the first reading.

The BYuT leader justified the backing of the controversial law by her
faction with the “need to resolve the conflict between the two branches of power”
that was “ruinous for the country”. Olexander Turchynov acknowledged: “We

adopted this law for ourselves; we will use it to form our government and work in
it.”

At that juncture, nobody believed that Tymoshenko would return to the office
of prime minister. Now the return is very likely but, quite unexpectedly,
Yuliya Tymoshenko, Turchynov and their colleagues say they are ready to
relinquish the powers they “approved for themselves”. Why?

In all probability, Tymoshenko is not happy with the new version of the
draft law on the Cabinet of Ministers. Yet the President is said to have
conditioned her nomination as the prime minister with her faction’s voting for this
draft. Yuliya Tymoshenko, supposedly, accepted the ultimatum. In fact, she could
later use it as an excuse for not delivering on her election pledges: she
tried but could not because of restricted powers.

ZN managed to get hold of the draft law on the Cabinet of Ministers,
reportedly, initialed by representatives of the two political forces.

All provisions that experts previously deemed as unconstitutional (or at
least dubious in terms of compliance with the Constitution) have been
deleted. In particular, the coalition will have no right to appoint the prime
minister and ministers of foreign affairs and defense by itself, i.e. without their
previous nomination by the President.

The government will not be allowed to apply disciplinary sanctions to heads
of district and oblast administrations or to disaffirm decisions of local
administrations.

On the other hand, the constitutionality of some proposed provisions is also
open to question. The draft law we have at our disposal suggests that the
President wants to get the right to turn down the prime ministerial
candidate nominated by the coalition. Furthermore, Yushchenko still believes

he should be empowered to include members of the Cabinet into consultative
and supportive bodies operating under his aegis.

For one thing, it is unethical. For another, it can be perceived as the
President’s attempt to bring pressure to bear on the central executive power
body. The head of state still insists that his representative should be
entitled to take part in the Cabinet sessions, and still regards countersigning

as a right, rather than a duty of the Cabinet members.

More than that, the drafters have narrowed the premier’s powers. Should this
draft be adopted as a law, the prime minister’s right to direct, coordinate,
manage and control the ministers’ activities and to give them instructions
will be curtailed.

There are other strange provisions in the draft. The requirement that the
prime ministerial candidate should immediately present to Parliament an
action programme of the Cabinet that is still to be formed looks unnatural.

Even more deviant is the proposal to nominate the government members for a
blanket ballot. This proposal is in clear conflict with the Constitution,
which requires that the Rada votes for every minister individually.

Proposed amendments to Article 7 of the law on the Cabinet of Ministers are
stranger still. According to Article 7 currently in effect, a person is not
eligible for the nomination as a member of the Cabinet of Ministers if his
or her former conviction has not been removed from records in the order
established by law.

The new draft proposes to keep any “person with the former conviction” away
from the government. This provision is discriminative as it disqualifies
persons like Viktor Yanukovych and Vyacheslav Chornovil alike. Besides,
experts explain that a person whose previous conviction has been removed
from records is deemed to have no previous convictions.

In summary, even if this draft law is adopted, it will soon be revised.
According to our sources, representatives of the Party of Regions are
already writing a petition to the Constitution Court challenging the
compliance of this law with the Constitution.

Novelty five is the cancellation or, more precisely, monetization of MPs’
benefits to be stipulated by the law on the status of people’s deputy.

MPs are to be deprived of numerous privileges, including their right to get
services free of charge. Instead, they will receive an amount of money,
equal to their monthly salary, which they could use to pay for goods and

services necessary for their professional activities.

In other words, MPs will no longer enjoy the right to free traveling, free
accommodation (of those who do not permanently reside in Kyiv), etc. This
monetary compensation will enable MPs to do their job properly and will save
substantial amounts of the budget money. According to expert estimates, this
approach will allow cut the state budget expenses for the Supreme Rada by
30%-50%.

Changes relating to the abolition of parliamentary immunity and privileges
should be introduced into the Supreme Rada Rules of Procedure. However,
contrary to expectations and to the Constitutional requirements, BYuT and
OUPS did not even discuss upgrading the status of the Rules of Procedure to
that of law.

Later, we are planning to discuss other draft laws from the package.
However, even the above analysis suffices to conclude that the parties will have
difficulty reaching an agreement. Varying opinions and approaches to the
aforementioned issues exist not only between BYuT and OUPS but also within
the two forces.

The package of draft laws initiated by the Presidential Secretariat
threatens to turn into an explosive package capable of blasting the coalition to
pieces before it has even come to life.
————————————————————————————————
LINK: http://www.mw.ua/1000/1550/60874/
———————————————————————————————–
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21.  THREE PROMINENT KYIVAN RUS REFORMERS

By Volodymyr Kharchenko, The Ukrainian Observer
The Willard Group, Kyiv, Ukraine, Fall, 2007

A short period in Ukraine’s medieval history was full of humanism,
Christian love and justice. It is associated in our memory with three
prominent statesmen.

Unlike Kyivan Rus’s other grand princes, who were crafty fratricides, greedy
tax collectors and vulgar robbers and challenged their huge state, lying
from the Baltic Sea to the Black Sea, with feuding and civil wars for
centuries, these three are remembered for their positive achievements.

However, they were also the offspring of their cruel time and had to
struggle violently for power with their relatives. They later justified
themselves by claiming they had not sought personal wealth but prosperity
for their state.
[1] VOLODYMYR THE BAPTIST (Circa 958 – 1015)
The church canonized this secular leader for baptizing Kyivan Rus in 988.

Saint Volodymyr was the son of Grand Prince Svyatoslav and his concubine.
This extraordinary fact explains why no one knows  exactly when he was born.
When Volodymyr was young, he eliminated his rivals and also led his army
against Poles, Lithuanians and Pechenigs.

Having tamed Kyivan Rus and its neighbors with his warriors and terror,
Volodymyr, influenced by European monarchs, decided to strengthen his
empire with a state religion. His choice was Byzantium’s Orthodox faith.

When baptizing Rus, Volodymyr demonstrated his stamina and firmness, just
like in wartime. He ordered his soldiers to bring the people to the Dnipro,
where Byzantine priests were waiting for them. They also tore down the
statues of pagan gods. The wooden idols were floating along the wide

Dnipro, complaining of their fate to the deceased Slavic chieftains.
Kyivan Rus stepped irreversibly on the path of Christianity, slowly
forgetting its barbaric traditions.

This was a long evolutionary process. Polygamy was repealed and serfdom
abolished. Volodymyr the Baptist also changed. He was kind and friendly to
everybody: he freed his slaves and let his heathen wives go; he called on
his people to love one another and made generous donations, he even thought
it was sinful to sentence criminals to death.

Chroniclers metaphorically wrote that Volodymyr was “clothes for the poor,
food for the hungry, a helper to widows, a shelter for the homeless and a
defender of those without hope.”
[2] YAROSLAV THE WISE (978 – 1054)
Volodymyr was called by his people Volodymyr, the Red Sun. His son Yaroslav
is known in history as Yaroslav, the Wise. His contemporaries must have had
reasons for that.

Yaroslav ruled the state for forty years after eliminating his untalented
rivals. Kyivan Rus was very powerful during his reign. To celebrate his
victory over the nomadic tribe of Pechenigs, Yaroslav built a magnificent
cathedral, whose golden domes are still among Kyiv’s most beautiful
adornments, and founded an academy for scholars in it.

Diplomats said Yaroslav was Europe’s father-in-law, as his daughters were
queens in several European states. The most famous of them all was Anne, the
queen of France and wife of King Henry I.

Yaroslav’s greatest achievement was his code, The Truth of Yaroslav, which
was a revised collection of the Old Russian laws.

Not only did Yaroslav systematize the existing laws and traditions but he
also adapted them to his time. The code included a list of punishments for
every crime and wrongdoing, such as murder, arson, theft, rape and many
others.

The state guaranteed the inevitability of punishment and criminals paid
fines, a part of which were given to the state. The life of a rich resident
of Kyiv cost 80 hryvnias, while the murder of a slave cost only six. This
was a huge sum, however, as one could buy twenty sheep or one ox for one
hryvnia.
[3] VOLODYMYR MONOMAKH* (1053-1125)
Yaroslav’s grandson Volodymyr was named Monomakh in Byzantium, as
he was also the grandson of Byzantine Emperor Konstantin IX Monomakh.
However, he became famous not because of his great ancestors but because
of his remarkable talents.

Monomakh was an outstandingly skillful commander. He was respected by

all social classes as statesman. This did not happen instantly. Once he
suppressed a revolt staged by Kyiv’s desperate beggars but did not punish
them too cruelly. He reduced taxes twofold, which appeased society.

He soon realized that his country’s main enemy was not its neighbors but its
own rulers. Traditionally, Kyivan Rus’s grand princes allowed only their
sons or close relatives to rule its provinces. All these princes were locked
in a relentless power struggle.

Monomakh used his talents to help the provinces compromise. He invented a
method of “reasonable rotation” for those seeking the coveted throne in
Kyiv.

In his Instructions for the Children, one of the most famous literary
monuments of the Middle Ages, Monomakh called on his sons and the whole
elite to be fair, honest and live in the “fear of God.”

He managed to convene all the princes in one hall twice, making them kiss a
cross and swear to never encroach on their neighbors’ land. Unfortunately,
as soon as the princes returned to their provinces, they unsheathed their
swords.

. Andriy Bogolyubsky, the grandson of Kyivan Rus’s grand princes and the
ruler of the Moscow Suzdal Principality, committed a terribly blasphemous
act after Monomakh’s death and before Mongolian Khan Batyy’s birth. In
1169, he suddenly invaded Kyiv. The capital never fully recovered after that
barbaric intrusion.

Before Batyy’s army approached the eastern border of the Kyiv principality,
the state changed rulers nine times within five years. Kyiv had no ruler
during Batyy’s siege. Commander Dmitriy was in charge of defense
operations. No other prince offered his help to the capital. Their cities
died alone after Kyiv.
CONCLUSION
It is now 2007 but little has changed since that turbulent period. We love
our brothers verbally but almost never cordially.

Rus’s noble raiders are succeeded by modern raiders who were not raised in
palaces but grew up in Soviet slums. Even in the twenty-first century we
break oaths and are often disloyal to our allies.
———————————————————————————————-
*The Encyclopedia of Ukraine, vol. 5 (1993) reported: “Volodymyr married
Gytha, the daughter of the English king Harold II, and founded the Kyivan,
Smolensk, and Suzdal lines of the Riurykide dynasty. In 1966 Debrett’s
Peerage, Baronage, Knightage, and Companionage published the statement

that Queen Elizabeth II was descended from Volodymyr Monomakh. He
was the last prince of Rus’ to preside over a unified state. He is buried in
the Saint Sophia Cathedral in Kyiv.
————————————————————————————————
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========================================================
22.  MUSHROOMS: A UKRAINE LOVE AFFAIR

By Ralph H. Kurtzman, The Ukrainian Observer,
The Willard Group, Kyiv, Ukraine, Fall, 2007

The English speaking nations and even most of Western Europe are often
referred to as “mycophobes.” If you dissect that word and apply the literal
meaning, at best it is an exaggeration.

“Myco” refers to fungi, but more specifically to mushrooms. It is not true
that we fear all mushrooms, but most of us are afraid to eat any mushroom
that did not come from a grocery store.

Many still have doubts about mushrooms that were not seen on produce shelves
when they were children, even though they are there today. Western people
eat green vegetables, but few seem to understand that many, if not most
green plants are poisonous. We love tomatoes and potatoes, but the parts of
those plants that we do not eat are very poisonous.

Eastern Europeans, however, are justly called “mycophiles.” They love
mushrooms, but the mushrooms that have been eaten for years by western
Europeans have not been available to eastern Europeans until very recent
years.

In the autumn, in Finland, most open-air market food stands have a bucket of
parboiled Lactarius mushrooms. A few species of Lactarius are considered
edible in western European mushroom hunters’ books.

Those seen in the Finnish markets will all be mushrooms that the western
books say are poisonous. The Finns eat those “poison” mushrooms and never
get sick.

However, the western books are not wrong, but simply parboiling Lactarius,
removes the poison. That poison only gives indigestion, if the mushrooms are
not parboiled.

Eating only parboiled Lactarius is a little like eating only potato tubers
and not potato berries. In both cases the poison part is separated from the
edible.

My first trip to a CIS country was to Belarus in the month of September.
Ukraine and Belarus have shared many events in their histories and so have
much in common.

Making that trip even more like a Ukraine adventure, my interpreter, Roman,
was Ukrainian. On my second day in Belarus as we drove southwest from Minsk
to Lida, Roman stopped the car next to some people with baskets at the side
of the road.

Just as he expected, the baskets were filled with mushrooms that had been
picked in the nearby forests. Many of those, in the baskets, were boletes,
also known as ceps. Roman purchased all that he saw.

That evening, we sliced up his purchase and dried them over the kitchen
stove in our apartment. As they dried, mushroom fly larvae dropped out of
the mushrooms and onto the stove.

Neither of us were at all alarmed, possibly it is the outstanding flavor or
the high nutritional value of the boletes that draws the flies to deposit
their eggs in these delicious mushrooms.

I didn’t get a chance to taste those; Roman packed them up and took them
home. There may have been some dead larvae remaining in the dried mushrooms.
Even larvae are not a reason for concern. Mushroom flies eat nothing but
mushrooms, so unlike other flies they are clean.

I did eat plenty of mushrooms while I was in Lida. The reason for my visit
was to help a grower of veshenka or oyster mushrooms. It was nice to see the
wild mushrooms, but it was not good for the grower.

Cultivated mushrooms are new crops in Eastern Europe, so the people will
hunt or buy the wild mushrooms in preference, if only out of habit. As a
result, business in September is slow for mushroom growers.  The grower’s
production kept our dinner table well supplied.

Roman insisted upon being my cook; I could only watch and learn about what
he was fixing. He never measured, so I could not write down his recipe. Both
my visual and taste memory are quite good, so I did try to duplicate his
cooking when I got home, and I wrote down what I did. I call my recipe
“Mushrooms Minsk.”

It is likely that the name veshenka is much older than the name oyster
mushrooms. Eastern Europeans have long enjoyed veshenka that they found in
the woods.

While western people think of mushrooms as a delicacy, eastern Europeans
think of them as good ordinary food that even the poorest serf could eat if
he was free enough to be able to hunt nearby forests. So common names for
mushrooms in Slavic and other eastern languages are often very old.

The contrast of attitude is quite apparent. When one visits a produce market
in western countries, the mushrooms will be found in packages of about 100g
(4 oz); in Kyiv markets you will see packages of as much as 1kg (39 oz).
Prices will also be less than in the west.

The price for veshenka is less in Ukraine than in western countries,
partially because of the price of labor, partially because of attitude,
partially because veshenka is easier to grow than the common commercial
mushroom, and Ukrainians are ready to learn how to grow it with no
preconceived ideas, since few have experience growing other mushrooms.

When I am in a foreign country, one of the joys is to eat the local food.
Usually, I gain a real love for at least some local dishes.

One Ukrainian friend, Dr. Andriy Gryganski of the National Agrarian
University of Ukraine, has given me recipes that I want to pass on to you.
Dr. Gryganski’s  (AG) are authentic Ukrainian, but I am also including two
of my own recipes (RHK), that I think are very much to Ukrainian taste.
There are additional recipes at www.oystermushrooms.net.
CHAMPIGNONS FRIED/BOILED IN THEIR OWN JUICE
300-400 g (10-14 oz) fresh champignons
15 ml (1 Tbs.) sunflower oil (or other vegetable oil)
One big onion; Black pepper; Salt
Wash and slice champignons into pieces 3-4 mm (1/8 inch) thick. Put
sunflower oil in the frying pan and heat it. Peal onion, and slice 2-3 mm
(1/16 inch) thick. Fry to a golden color.

Then turn the onion aside, put sliced champignons into the frying pan and
rake the onions on the champignons (champignons on the bottom, onions
on the top, otherwise the onions will be burnt). Sprinkle with black pepper.

Cover pan with a lid and wait some minutes until the champignons excrete
their juice. In a few minutes, they will be boiled in this liquid. Mix the
champignons until they are equally brown. Sprinkle with salt. The liquid
should not be evaporated. Good to put over mashed potatoes, pasta, etc.
– AG
CHOPPED SHIITAKE
 10 big, flat shiitake; 1 egg; flour
 15 ml (1 Tbs.) Sunflower oil (or other vegetable oil)
Take shiitake; cut the stems near the caps. Break the egg in a small bowl;
mix the white with yolk and with black pepper. Put flour on a plate.

Wet the caps on both sides with the egg, then roll each cap in flour and put
in previously heated frying pan, fry from the both sides until the flour is
golden color. Before finishing, sprinkle with salt. Good for any garnish
[buckwheat, potatoes, especially fried, pasta, rice] or vegetables. -AG
POT-VESHENKA OR OYST-POT
 300-400 g (10-14 oz) oyster mushrooms (veshenka)
 15 ml (1 Tbs.) sunflower oil (or other vegetable oil)
 One big onion; 100 ml (½ cup) 10% fresh cream (heavy whipping cream)
 1 kg (2 lbs.) potatoes (note: in spring time they are more likely to burn)

Wash and slice veshenka into pieces 3-4 mm (1/8 inch) thick. Peal and cut
the onion into 2-3 mm (1/16 inch) thick slices.  Put sunflower oil in the
frying pan and heat it; fry the onions to golden brown. Turn onions aside,
then cook mushrooms adding cream during cooking. Stop cooking when
cream begins to evaporate.

Peal and cut potatoes into small pieces, put them into pot, flood with
boiled water to the surface, salt. Cover with oyster mushrooms and begin to
boil. When the potatoes are ready, mix all together and eat!!! The potatoes
at the bottom are often slightly burned, but the major part is
excellent. –AG
KALAMPETSYA
10-14 oz (300-400 g) fresh shiitake
15 ml (1 Tbs.) sunflower oil (or other vegetable oil)
One big onion; 10-14 oz (300-400 g) potatoes
7-10 oz (200-300 g) Brussels sprouts
7-10 oz (200-300 g) broccoli (or cauliflower)
3-½ oz (100 g) smoked bacon; hazelnuts
mild cheese (e.g. jack, mozzarella) sliced

All ingredients are cooked separately. Wash and slice shiitake into pieces
3-4 mm (1/8 inch) thick. Peal and cut the onion into 2-3 mm (1/16 inch)
thick slices.  Put sunflower oil in the frying pan and heat it; fry the
onions to golden brown.

Turn onions aside, the cook mushrooms adding cream during cooking. Stop
cooking when cream begins to evaporate. Cook in different pots: potatoes,
Brussels sprouts, broccoli (or cauliflower).

Prepare shiitake as in #1. Put in warm Roman (ceramic) pot a little bit of
butter, than a layer of potatoes, cover it with slices of smoked bacon, then
a layer of Brussels sprouts, then cover it with shiitake, then a layer of
broccoli, sprinkle it with pounded hazelnuts, cover all this with cheese and
put the Roman pot without lid into oven, heated previously to 180ºC (350ºF).
Wait until the cheese begins to melt and obtains a golden color, and then
serve. -AG
MUSHROOM MINSK
1-½ oz (45 g) dry oyster mushrooms, or 10 oz (300g) fresh oyster mushrooms
½ cups (120 ml) Water, Plus 1 cup (250 ml) cold water for dry mushrooms
¼ tsb (2 g) baking soda; ¼ cup (60 ml) Vinegar; ¼ tsp (1 g) Salt;

1 cup (200g) Chopped onions; 1 small Eggplant, sliced;
1 Tbs (15 g) Butter; 2 Tbs (20 g) Flour; ¼ Yellow bell (sweet) pepper
¼ Red bell (sweet) pepper; ¼ Green bell (sweet) pepper
1 cup (250 g) Sour cream

Soak dry mushrooms in water, allow 1 hour before cooking. After the dry
mushrooms have soaked 10 minutes or immediately after washing the fresh
mushrooms, cut off all stems, and chop them very fine. Place the stems in a
small pan, add ¼ cup water and baking soda; cover and simmer.

Cut the peppers into strips. Sauté the onions and eggplant; add salt,
mushrooms and stems, including all liquid (much should have been absorbed).
Continue heating; sift flour in slowly, while stirring. As soon as the
liquid is smooth and thickened, add sour cream. Garnish with peppers.
Serves 6. Variation: cooked carrots may be substituted for some of the
peppers. -RHK
VESHENKA OMELET
A great omelet needs a recipe, but skill is also a big part of it. In our
experience, a properly seasoned cast iron frying pan is the only acceptable
cooking utensil. They are much more reliably non-stick than Teflon and there
is no organic halogen (as in Teflon and DDT).

Omelets are cooked one at a time and I prefer several one-egg omelets to one
large omelet. The following is for one omelet, multiply the mushrooms,
lemon, onions and peppers times the number of omelets – of course you will
want to do all of the chopping and marinating first.

1 Heaping Tbs. (10 g) Oyster mushrooms, chopped
¼ tsp. (2 ml) Lemon juice; 1 Heaping Tbs. (10 g) Onions, chopped
1 Heaping Tbs. (10 g) Bell peppers, ripe (red, yellow or orange) chopped
1 Egg; 1 Tbs. (15 ml) Water; salt and fresh-ground black pepper to taste
¾ Tbs. (10 g) Butter

Marinade the mushrooms in the lemon juice for 10 to 20 minutes. Put the egg
in a small bowl, add the water, salt and black pepper, beat until smooth
with a whisk. Heat an 8-inch (20 cm) frying pan; add the butter. When it
begins to bubble, pour in the whisked egg, so that the bottom of the skillet
is covered.

Sprinkle the onions and the marinated mushrooms on one half of the egg.
After a short time, the bottom of the omelet will be firm, fold the half
with no mushrooms and onions over the side with them.

Continue to cook until the entire omelet is firm. Place on a warm plate,
cover with the bell peppers and serve with catsup, or your favorite
sauce. RHK    Bon appétit!
——————————————————————————————-
The author, Ralph H. Kurtzman, Jr., Ph.D., is a retired US Department of
Agriculture biochemist and plant pathologist. Since retirement, he accepts
volunteer assignments as a mushroom cultivation consultant for CNFA,
ACDI/VOCA, CARE and other US Agency for International Development
(USAID) contractors. He also serves as co-editor of Micologia Aplicada
International, a small scientific journal of applied mycology. You may reach
Dr. Kurtzman at: kurtzmanr@earthlink.net
——————————————————————————————-
LINK: http://www.ukraine-observer.com/index.php?c=221
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If you would like to read the ACTION UKRAINE REPORT- AUR,
around three times a week, please send your name, country of residence,
and e-mail contact information to morganw@patriot.net. Information about
your occupation and your interest in Ukraine is also appreciated.
 
If you do not wish to read the ACTION UKRAINE REPORT please
contact us immediately by e-mail to morganw@patriot.net.  If you are
receiving more than one copy please let us know so this can be corrected. 
========================================================
PUBLISHER AND EDITOR – AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation
Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council, Washington;
1701 K Street, NW, Suite 903, Washington, D.C. 20006
Tel: 202 437 4707; Fax 202 223 1224
mwilliams@SigmaBleyzer.com; www.SigmaBleyzer.com
========================================================
Power Corrupts and Absolute Power Corrupts Absolutely.
========================================================
return to index [Action Ukraine Report (AUR) Monitoring Service]
========================================================
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