Monthly Archives: March 2008

AUR#893 Mar 31 Ukraine’s Nuclear Future, Westinghouse & Holtec Expand Roles; Pres Bush Heads To Ukraine; NATO MAP: Ukraine & Georgia? Russia Screams

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

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       
                        
ACTION UKRAINE REPORT – AUR – Number 893
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., MONDAY, MARCH 31, 2008
 
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
US.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, March 31, 2008
 
SUPPLY NUCLEAR FUEL FOR UKRAINE’S NUCLEAR POWER PLANTS
Enerhoatom, Kyiv, Ukraine, Sunday, March 30, 2008 (in Ukrainian)

3UKRAINE: ENERHOATOM AND HOLTEC STRIKE DEAL ON
KNOW-HOW TO HANDLE SPENT NUCLEAR FUEL

Enerhoatom, Kyiv, Ukraine, Sunday, March 30, 2008 (in Ukrainian)

4BUSH TO MEET WITH ORANGE REVOLUTION LEADERS 
Deutsche Presse-Agentur (DPA), Kiev, Ukraine, Mon, Mar 31, 2008

5BUSH HEADS TO EASTERN EUROPE AS MOOD SHIFTS
By John D. McKinnon, The Wall Street Journal
New York, New York, Monday, March 31, 2008; Page A2

6NATO MUST EMBRACE UKRAINE AND GEORGIA
OP-ED: By Lech Kaczynski, President of Poland
Financial Times, London, UK, Sunday, March 30 2008

7UKRAINE’S HOPES TO JOIN NATO SOURED BY FIERCE
OPPOSITION FROM RUSSIA, INTERNAL PROBLEMS 
Associated Press (AP), Kyiv, Ukraine, Monday, Mar 31 2008

8NATO FACES TOUGH TALKS ON GEORGIA, UKRAINE
Deutsche Presse-Agentur (DPA), Brussels, Belgium, Mon, Mar 31, 2008

9NATO CAN WAIT, BUT NOT FOR EVER
Editorial, Financial Times, London, UK, Sunday, March 30 2008

10NATO EXPANSION SHOULD CONTINUE
OP-ED: By Donald Rumsfeld, The Wall Street Journal
New York, New York, Friday, March 28, 2008; Page A13

11GEORGIA IN WARNING OVER ‘VETO’ FOR RUSSIA 

By Stephen Fidler in London and Stefan Wagstyl in Tallinn
Financial Times, London, UK, Monday, March 31 2008

12FOREIGN MINISTER SAYS 2008 BEST TIME FOR UKRAINE

Ukrinform, Kyiv, Ukraine, Monday, March 31, 2008
13KEEP CLOSE CONTACT
EDITORIAL, Kyiv Post, Kyiv, Ukraine, Thursday, March 27, 2008

14IT IS TOO EARLY TO CALM DOWN ABOUT UKRAINE’S
INDEPENDENCE SAYS PRESIDENT YUSHECHNKO
UNIAN, Kyiv, Ukraine, Thursday, March 27, 2008

15WHERE EUROPE DRAWS THE LINE
OP-ED: By Jackson Diehl, The Washington Post
Washington, D.C., Monday, March 24, 2008; Page A13

16BUSH SEEKS TO SALVAGE LEGACY AT NATO & PUTIN SUMMITS
By Matt Spetalnick, Reuters, Washington, D.C. Monday, March 31, 2008

17UKRAINE’S PM TYMOSHENKO CITES ACHIEVEMENT IN FIRST

100 DAYS; OBSERVERS GIVE MIXED ASSESSMENT 
Associated Press (AP), Kyiv, Ukraine, Monday, Mar 31 2008

18100 DAYS FOR TYMOSHENKO’S CABINET
OP-ED: By Vitaly Bala, Director of Situations Modeling Agency, Kyiv
Eurasian Home, Moscow, Russia, Friday, March 28, 2008

19YUSHCHENKO OF UKRAINE
The hollowing of a hero
OP-ED: By Nina L. Khrushcheva, International Herald Tribune
Paris, France, Thursday, March 27, 2008

20THE GONGADZE TRIAL: A LOT TOO LITTLE, A LOT TOO LATE
OP-ED: By John Maorone, columnist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, March 17, 2008

 
21LONDON STOCK EXCHANGE BOOSTS MARKETING IN UKRAINE
Exchange is seeking listings as 80 firms plan to float shares
By Dawn Cowie, The Wall Street Journal Europe
Europe, Thursday, March 27, 2008
 
Interfax-Ukraine, Kyiv, Ukraine, Thursday, March 20, 2008
 
By Jim Davis, Business Ukraine magazine
Monday, March 3, 2008, Kyiv, Ukraine
 
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Dec 2007
 
Ukrainian News Agency, Kyiv, Ukraine, Sunday, March 30, 2008
 
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Dec 2007
 
Ukrainian News Agency, Kyiv, Ukraine, March 30, 2008
 
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Jan 2008
 
TRADE AND INVESTMENT COOPERATION THIS WEEK
To Set Up Ukrainian-U.S. Council for Trade and Investment
Ukrainian News Agency, Kyiv, Ukraine, Monday, March 31, 2008
 
30CROWNE PLAZA HOTEL TO BE CONSTRUCTED IN KYIV
Ukrainian News Agency, Kyiv, Ukraine, Monday, March 31, 2008
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1 TWO USA COMPANIES, WESTINGHOUSE AND HOLTEC,
EXPAND THEIR ROLES IN UKRAINE’S NUCLEAR FUTURE
 
FOR IMMEDIATE RELEASE:
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Monday, March 31, 2008

KYIV – Westinghouse Electric Company and Holtec International, two
of the most respected names in the nuclear energy field, Sunday signed
contracts with Ukraine to provide support in the country’s efforts to
develop new sources of nuclear fuel and to provide safe and secure
storage for nuclear waste.

The two contracts were signed by Yuriy Kovrizhkin, president of Ukraine’s
national nuclear energy generation company Enerhoatom. The Westinghouse
contact was signed by Andres Jackson, Vice President, European LWR
Fuel Business and the Holtec International contract by President/CEO Dr.
Kris Singh.

Among those attending the signing ceremonies were William H Taylor, Jr.,
U.S. Ambassador to Ukraine, officials of the Ministry of Fuel and Energy
of Ukraine, and officials of the United States Department of Energy. The
contracts were signed just before George Bush, president of the United
States, pay his first official visit to Ukraine, March 31st and April 1st.

MEMBERS OF U.S.-UKRAINE BUSINESS COUNCIL (USUBC)

Both of the nuclear firms, Westinghouse and Holtec, are members of the
U.S.-Ukraine Business Council (USUBC). “Today is one of the most
important days since Ukraine’s independence as the efforts of these two
internationally known companies will go a long way to assuring that Ukraine
has greater energy independence,” said Morgan Williams, SigmaBleyzer,

who serves as USUBC president.

“This is made more important by the fact that for Ukraine, energy and
political independence are closely interdependent. I join all of the USUBC
members in toasting the success of these two great member companies, as
we all work to assist Ukraine on its path to Euro-Atlantic integration and
a strong democratic, private market driven nationhood,” Williams stated.

Michael Kirst, a member of the USUBC executive committee, who serves
as Vice President, Central and Eastern European Fuel, for Westinghouse,
has been working has been working on the Ukraine project for many years
with the long-run goal to finally sign a real commercial contact with
Ukraine.

Williams said, “Michael Kirst is to be congratulated for his outstanding work
to keep all the parties at the table for so long and for the key role he played

in the final successful outcome. USUBC also congratulates the officials
of the Ukraine government and the U.S. government who also have worked
on this program for several years.”

“Holtec’s International President/CEO Dr. Kris Singh, William Woodward.
Vice President Nuclear Projects and Kevin Cuthill, head of Holtec Ukraine are

also to be congratulated for their work in expanding Holtec’s operation in
Ukraine.”

Nuclear power occupies one of the most prominent places in the Ukrainian
economy with more than 38,000 employed in the industry.  For recent years,
with only 22.8 percent of the installed capacity, nuclear power plants
during autumn and winter maximum loads generated about 53 percent of the
country’s electricity.

At the same time, shares of nuclear electricity generation are stable: in
1996 it was 43.8  percent, in 2000 – 45.3 percent, in 2004 – 53.2 percent,
in 2005 – 52.3 percent, in 2006 – 46.4 percent, in 2007 – 47.4. Currently
there are 15 operating power units at Ukrainian NPPs, including 13 units
with VVER 1000 and 2 units with VVER 440 new generation). Ukraine’s
Zaporizha NPP is the largest nuclear generating facility in Europe.

Russia’s TVEL corporation is now the monopoly provider of nuclear fuel
for Ukraine’s four nuclear power plants and Ukraine now ships all of their
nuclear waste to Russia and pays Russia over $100 million a year for
storage costs.

STATEMENT BY WESTINGHOUSE ELECTRIC
PITTSBURGH, PA, March 30, 2008 — Westinghouse Electric Company
today announced it has won a five-year contract to provide nuclear fuel
supplies to three Ukrainian reactors beginning in 2011. Ukraine relies on
nuclear power generation for nearly 50 percent of its energy requirements.

The genesis of Westinghouse’s introduction into the Ukrainian nuclear
fuel marketplace was an award in 2000 by the U.S. Government for the
development of an alternative nuclear fuel supply which successive
Ukrainian governments have supported.

This contract represents a major commitment from both Westinghouse
and Ukraine in ensuring that alternative and competitive nuclear fuel
supplies are available to the benefit of Ukraine’s nuclear energy provider
and, ultimately, its citizens.

Aris Candris, Westinghouse Senior Vice President, Nuclear Fuel, said
this contract is significant because it represents one of the largest
energy supply diversification commitments in the history of Ukraine,
greatly increasing the country’s overall energy security.

“Westinghouse is extremely pleased to receive this landmark award that
represents nearly one-quarter of Ukraine’s annual nuclear fuel needs. The
high confidence in Westinghouse’s capabilities and competitiveness by the
nuclear utility, Energoatom, through this contract marks an important
milestone in the development of a competitive marketplace in Ukraine and
throughout Central and Eastern Europe for nuclear fuel.”

Westinghouse, a group company of Toshiba Corporation, is the world’s
pioneering nuclear power company and is a leading supplier of nuclear plant
products and technologies to utilities throughout the world. Westinghouse
technology today is the basis for approximately one-half of the world’s
operating nuclear plants.

STATEMENT BY HOLTEC INTERNATIONAL

KYIV – March 30, 2008 – The National Nuclear Energy Generating Company

of Ukraine “Energoatom” and the New Jersey-based company “Holtec
International” signed an amendment to their 2005 contract for the certification,
manufacturing, and testing of the Holtec International Dual Purpose Canister
Spent Fuel Management System (HI-STORM 190) in Ukraine.

The deployment of HI-STORM 190 in Ukraine will store used fuel from the
Khmelnytsky, Rivne and South Ukraine Nuclear Power Plants.

The contract amendment was signed at a ceremony on March 30, 2008 in
Kyiv by Energoatom President Yuriy Kovrizhkin and Holtec International
President/CEO Dr. Kris Singh. Attending the signing ceremony were United
States Ambassador to Ukraine William Taylor, officials of the Ministry of
Fuel and Energy of Ukraine, and representatives of the United States
Department of Energy.

Today’s contract signing accomplishes a major milestone in advancing the
commercial relationship between Energoatom and the United States nuclear
industry.

Furthermore, it will provide commercial opportunities to Ukrainian firms to
establish long-term export business relationships with the American nuclear
industry, send a positive signal to the Western nuclear industry for
investment in Ukraine, create high-skilled employment opportunities for
Ukrainian workers, and transfer sophisticated technology to the country.

This contract amendment, which is based on the contract signed on December
26, 2005, for design, licensing and construction of the Ukrainian Central
Spent Nuclear Fuel Storage Facility, will enable Ukraine to implement its
strategic decision for an effective management of the backend of its fuel
cycle on an expedited schedule.

The amendment will facilitate an accelerated realization of Ukraine’s goal
to enhance its energy security through the establishment of a domestic spent
fuel storage infrastructure in Ukraine.

“With the successful  completion of work on this Amendment, Holtec and
Ukraine will together insure that Ukraine’s used fuel management is second
to none in terms of the quality of technology and its inherent safety”,
asserted Holtec’s President and CEO during his brief remarks at the signing
ceremony.

The cost of commissioning such systems can be recovered in about two years
of shipping fees that Ukraine currently pays to export its spent fuel.

This contract amendment will enable Holtec to carry out safety evaluations
and to manufacture critical use equipment for the packaging, handling and
transporting of used fuel.  Such work will be engineered to exceed all IAEA
requirements.

A significant portion of the capital equipment will be manufactured in
Ukraine under a technology transfer program to a qualified factory in
Ukraine. Holtec plans to expand the company’s operation center in Kyiv to
accelerate localization of the used fuel management technology know-how.

Holtec International was selected in 2004 to assist Ukraine in managing its
spent fuel.  This selection was conducted through a comprehensive, open and
transparent international tender conducted by Energoatom and based on the
overall merit of Holtec’s commercial proposal and technology.

Holtec International, founded in 1986, is a global technology company that
has supplied equipment to over 150 power plants worldwide.  Its products

are licensed by the U.S. Nuclear Regulatory Commission and by competent
authorities in Brazil, China, Korea, Mexico, Spain, Switzerland, Taiwan,
United Kingdom, and the United States.

Based on its technology and experience, Holtec International was also
selected to complete construction of the donor-funded Chornobyl Interim
Spent Nuclear Fuel Storage Facility to store approximately 22,000 fuel
assemblies from the Chornobyl reactors.
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2. ENERHOATOM, US WESTINGHOUSE TO SIGN CONTRACT ON
COMMERCIAL SUPPLIES OF NUCLEAR FUEL ON MARCH 30

Ukrainian News Agency, Kyiv, Ukraine, Wed, March 26, 2008

KYIV – Ukraine’s national nuclear energy generation company Enerhoatom
intends to sign a contract with Westinghouse Electric Company (US) on
commercial supplies of nuclear fuel for Ukrainian nuclear power plants for
2010 on March 30. Fuel and Energy Minister Yurii Prodan has announced
this at an expanded session of the Cabinet of Ministers.

“March 30 we are signing a contract with Westinghouse for delivery of
alternative nuclear fuel to Ukraine,” said the minister.

The deliveries will start after qualification of nuclear fuel by relevant
supervisory agencies and its licensing by the State Nuclear Regulatory
Committee.

The volume of supplies will be determined by the Ukrainian side prior to
shipment, according to the ministry’s press secretary.

Prodan during a telephone conversation on February 19 announced, the
US company may supply over 100 fuel assemblies for nuclear reactors
VVER-1000 in 2010 (the first batch can include 120 – 144 fuel assemblies.

As Ukrainian News reported, the nuclear fuel qualification program was
implemented in Ukraine with United States government grants from 1996 to
2003, after which the United States suspended it because it determined that
it should be implemented as a commercial project.

The nuclear fuel qualification project gives a chance to bring US fuel to
Ukrainian standards, after which it would be able to use it at Ukrainian
nuclear power plants.

In 2005, Enerhoatom installed six fuel assemblies manufactured by
Westinghouse at the 3rd reactor of Southern Ukrainian NPP.

The next move in the project implementation will be loading into the reactor
in 2009 of 42 US-made assemblies more.

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3. WASTE NUCLEAR FUEL STORAGE FACILITY TWO AT CHONOBYL 
NPP COULD BE LAUNCHED IN 2010, SAYS EMERGENCIES MINISTER
 
Interfax Ukraine, Kyiv, Ukraine, Thursday, February 26, 2008

KYIV – Waste nuclear fuel storage facility two at the Chonobyl NPP could

be launched in 2010, according to Emergencies Minister, Volodymyr Shandra.

“Holtec company met our requirements and halved the terms for the
realization of the project,” he told the press in Kyiv on Monday after a
meeting with CEO Holtec International (the United States) Kris Singh. Holtec
International has been a general constructor of the facility since September
2007.

Ihor Hramotkin, the director general of the Chornobyl NPP, which ordered

the construction of the waste nuclear fuel storage facility two, told the press
on Monday that Holtec International gave a concept for modification of the
waste nuclear fuel storage facility, using U.S. technologies, to the state
company.

“This is a technical document, which stipulates principles, according to
which decisions on storing dry fuel will be made,” he said, adding that if
the state company and the State Committee for Nuclear Regulation of

Ukraine approves them, the principles will be a basis for the project for the
building of the new storage facility at the Chornobyl NPP.

He said that the old constructions are being inspected, and later decisions
on whether to use them will be made.

Singh said at the briefing that Holtec International would use the existing
objects as much as possible if the State Committee for Nuclear Regulation

of Ukraine confirms the possibility of using them safely.

He said that the company plans by the end of 2008 to complete inspection of
constructions and build a large-scale copy of a penal, where fuel assemblies
will be stored.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2.  ENERHOATOM & WESTINGHOUSE REACH AGREEMENT
TO SUPPLY NUCLEAR FUEL FOR UKRAINE’S NUCLEAR
POWER PLANTS

Enerhoatom, Kyiv, Ukraine, Sunday, March 30, 2008 (in Ukrainian)

KYIV – The President of the national nuclear power-generating company
Enerhoatom Yury Kovryzhkin and Vice President of Westinghouse Electric
Sweden AB for fuel in Europe Anders Jackson signed a contract to supply
fuel assemblies for VVER-1000-type reactors in Ukraine.

Under the contract, Westinghouse will supply in 2011-2015 fuel needed for
scheduled reload of not fewer than three VVER-1000 nuclear reactors.

In total, 630 fuels assemblies are to be delivered. If need be, the
deliveries can be enlarged to additional three reload batches annually.

The parties have agreed on the essential terms of the contract: the scope of
commitments of the buyer and seller, demands for fuel quality and
documentation, the buyer’s rights to supervise the fuel quality and conduct
checks procedures at Westinghouse, warranty on fuel and procedures for
compensations, the cost and payment procedures, liabilities of parties for
failures to meet contractual commitments, etc.

In addition, if Enerhoatom, in the wake of the pilot use of fuel and for
reasons beyond its control, fails to obtain a Derzhatomrehuliuvannya permit
for the industrial use of Westinghouse fuel, the company can rescind the
contract without any additional costs on its part.

Enerhoatom has also the right to rescind the contract ahead of time in case
of a massive failure of the Westinghouse fuel.

Enerhoatom views this contract as a logical extenuation since 2000 of the
project for the qualification of nuclear fuel for Ukraine and as the
implementation of the state policy aimed at diversifying energy supplies to
Ukraine.
REFERENCE:
The Ukraine-USA agreement to implement a project for the qualification of
nuclear fuel for Ukrainian NPPs was signed in 2000. In Aug. 2005, a pilot
operation of Westinghouse nuclear fuel was launched at the
Pivdenno-Ukrayinska NPP, involving 6 fuel assemblies, with 42 to be
delivered in 2009.

At present, Russia’s TVEL corporation holds a monopoly on nuclear fuel
supplies to Ukraine.

In line with the state energy strategy till 2030, there must be not fewer
than three nuclear fuel suppliers for Ukrainian NPPs.

Ukraine made its first steps to diversify fuel supplies when the pilot
project to use the US-made nuclear fuel was launched at the
Pivdenno-Ukrayinska NPP in Aug. 2005.
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http://www.energoatom.kiev.ua/ua/news/nngc?_m=pubs&_t=rec&id=19104
Translated into English for the U.S.-Ukraine Business Council (USUBC).
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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3.  UKRAINE: ENERHOATOM AND HOLTEC STRIKE DEAL
ON KNOW-HOW TO HANDLE SPENT NUCLEAR FUEL

Enerhoatom, Kyiv, Ukraine, Sunday, March 30, 2008 (in Ukrainian)

KYIV – The President of the national nuclear power-generating company
Enerhoatom Yury Kovryzhkin and President and CEO of Holtec International
(USA) Kris Singh signed an agreement on the implementation in Ukraine of
technologies to handle spent nuclear fuel at the country’s three NPPs.

The contract envisages construction of infrastructure required for the
implementation of the American technology to handle spent fuel at NPPs
Rinvenska, Pivdenno-Ukrayinska and Khmelnytska.

This construction is not part of a project to build the Centralized dumpsite
for spent nuclear fuel. The signing of the project indicates the Ukrainian
government strong commitment to continue cooperation with Holtec
International.
REFERENCE:
In December 2005, Enerhoatom signed a contract with Holtec International,
the winner of a tender to build a centralized dumpsite for spent nuclear
fuel in Ukraine.

According to preliminary assessments, the construction of the dumpsite will
take three years, following a decision by the government on its location.
Initially the dumpsite will include 94 containers in which 2,500 fuel
assemblies for VVER-1000 and 1,080 assemblies for VVER-440 reactors

can be stored.

This is almost 20 percent of the total amount of spent nuclear fuel at the
three NPPs, Khmelnytska, Rivnenska and Pivdenno-Ukrayinska, including the
assemblies currently in use.

Public hearings are held all over Ukraine on the construction of the
Centralized dumpsite for these three NPPs.
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http://www.energoatom.kiev.ua/ua/news/nngc?_m=pubs&_t=rec&id=19103
Translated into English for the U.S.-Ukraine Business Council (USUBC).
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]

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4.  BUSH TO MEET WITH ORANGE REVOLUTION LEADERS
IN UKRAINE

Deutsche Presse-Agentur (DPA), Kiev, Ukraine, Monday, March 31, 2008

KIEV – US President George Bush on Monday was scheduled to meet with
the leaders of Ukraine’s Orange Revolution during a state visit.

The US leader was set to spend some 16 hours in the former Soviet republic,
arriving late Monday evening and flying on to a NATO summit in Bucharest,
Romania on Tuesday afternoon.

Ukrainian President Viktor Yushchenko, leader of the country’s pro-democracy
Orange Revolution movement in 2004-5, was planning to meet Bush only on
Tuesday morning, first for one-on-one discussions, and later in the day
during talks between the two countries’ delegations.

NATO consideration of a Ukrainian application to join the Atlantic alliance,
and a “road map” of future US-Ukraine relations, were the top topics on the
two presidents’ discussion agenda, according to Yushchenko’s press office.

Bush also was planning to meet with Yulia Tymoshenko, Ukraine’s prime
minister and an ally with Yushchenko during the Orange Revolution, but now
widely considered Yushchenko’s probable opponent in the country’s next
presidential contest.

Yushchenko and Tymoshenko both support an early entrance of Ukraine into
NATO, though nationwide two out of every three Ukrainians oppose the idea,
according to polls.

Protocol events and photo opportunities were priorities as well for Bush and
his accompanying wife Laura. Bush’s six-hour Tuesday programme included a
“social lunch” with Yushchenko and his US wife Katerina Chumachenko, a

tour of the 11th century St Sofia church, and a visit to an English-language
middle school.

Security preparations for the Bush visit were unprecedented for the
Ukrainian capital, with local officials warning traffic would be banned from
much of the city’s central district for much of Tuesday, and near-total
gridlock throughout the day.

A critical highway needed by commuters to travel to and from work would

be shut down for a full three hours each way, during the Bush motorcade’s
travel to and from Kiev’s Borispyl airport, officials in the national DAI
traffic police said.

Major Ukrainian newspapers and television news reports on Monday were
reporting a real risk of getting shot by a US sniper, should a Kievite
choose to climb on the roof of his apartment building as Bush was moving
through the city.

As many as a million Kievites would be delayed or inconvenienced by the
Bush visit, Sehodnia newspaper editorialised.

Some Ukrainian leftist fringe parties declared an intention to demonstrate
against Bush’s presence in Kiev, but major political groups opposing closer
US relations with Ukraine – the Communists and the pro-Russia Regions
Ukraine party – planned to stay off the streets, the Interfax news agency
reported.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
========================================================
5.  BUSH HEADS TO EASTERN EUROPE AS MOOD SHIFTS

By John D. McKinnon, The Wall Street Journal
New York, New York, Monday, March 31, 2008; Page A2

WASHINGTON — President Bush starts a weeklong trip to Eastern Europe
Monday, still popular in the region but under pressure because of Russia’s
efforts to regain influence and a U.S. failure to deliver on some
commitments.

Georgian President Mikhail Saakashvili summed up the attitude of many
Eastern Europeans at an Oval Office meeting this month when he gushed
over Mr. Bush’s support for their political and economic development.

.  The News: As President Bush embarks on a weeklong trip to eastern
Europe, the pro-U.S. mood among many leaders is growing less enthusiastic.

.  The Context: Russia is reasserting its influence over former Soviet
satellites, and the U.S. has failed to deliver on some promises.

.  Balancing Act: Mr. Bush is scheduled to meet with Russian President
Vladimir Putin at the end of the trip.”What you’ve done for all over the
region will be remembered greatly, and will be remembered as absolutely
revolutionary change…giving chances to a people who never thought about
having those opportunities and chances before,” he said.

But in reality, the mood among many Eastern European leaders toward the
U.S. president is growing less enthusiastic, even as they continue to pour
outsized numbers of troops into the conflicts in Afghanistan and Iraq,
compared with their Western European counterparts.

One big source of disappointment has been the U.S. failure to lift visa
requirements for many Eastern European travelers despite all the help the
region is providing on the military front. Another is the continuing U.S.
pressure for revisions, and particularly costly military upgrades, when
those countries already are spending money on troop deployments.

The U.S. is pressing again for new troop commitments in advance of a North
Atlantic Treaty Organization summit in Bucharest, where Mr. Bush travels
Tuesday after a brief stopover in Ukraine. Eastern European countries are
expected to come through with a small number of troops, and France has
indicated it will dispatch additional forces — a commitment of 1,000 or
more troops is expected.

After Romania, Mr. Bush goes to Croatia and the Russian resort of Sochi
on the Black Sea, where he will meet with Russian President Vladimir Putin.

“There’s starting to be a little disillusionment with this relationship,”
says Julianne Smith, an expert on Europe at the Center for Strategic and
International Studies. “We’re starting to see these accusations: ‘Here’s a
country that takes and takes and takes, and never gives.'”

At the same time, Russia has begun pushing harder to reassert its influence
on many of its former satellites. Russia has threatened to retarget some of
its missiles at Ukraine and Georgia if they are successful in getting onto a
fast track for NATO membership at this week’s summit meeting.

Mr. Bush strongly advocates for NATO membership for the two countries,
and scheduled his first stop in Kiev as a way of symbolizing U.S. support.

But some Western European countries, particularly Germany — eager to avoid
upsetting Russia, which supplies much of Europe’s energy — have made it
clear they oppose the move. Ukraine’s own leaders have dallied over their
NATO application, suggesting they might be getting cold feet.

“I think there’s too much disagreement within NATO right now…for Georgia
and Ukraine to be offered membership action plans at this summit,” said
James Goldgeier, a fellow at the Council on Foreign Relations. “The Germans
have been very clear that they don’t want to see this happen at the summit.
They are eager not to anger the Russians.”

Some leaders have raised their demands for U.S. assistance. Poland, for
example, has sought special security commitments from the U.S. in exchange
for its participation in a missile-shield system that Washington wants, but
that Russia is resisting. The U.S. says the small system is intended only to
protect Europe from a possible long-range attack from Iran, not from any
Russian missiles.

Early in his presidency, in a speech at Warsaw University in mid-2001, Mr.
Bush dramatically proclaimed that “I believe in NATO membership for all of
Europe’s democracies that seek it and are ready to share the
responsibilities that NATO brings.”

He added, “As we plan to enlarge NATO, no nation should be used as a pawn
in the agendas of others. We will not trade away the fate of free European
peoples. No more Munichs. No more Yaltas….From now on, what you build,
you keep. No one can take away your freedom or your country.”

Now, though, in the waning months of his presidency, Mr. Bush himself might
be easing up, at least on his short-term pressure for NATO applications for
Ukraine and Georgia. Notably, the White House isn’t predicting that NATO
countries will agree on the requests, which require a consensus.

Late last week, Mr. Bush surprised many analysts by accepting Mr. Putin’s
invitation to visit him in Russia at the end of his trip — and at Sochi,
practically in the backyards of eastern European leaders.
———————————————————————————————–
Write to John D. McKinnon at john.mckinnon@wsj.com
LINK: http://online.wsj.com/article/SB120692312427575613.html
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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6.  NATO MUST EMBRACE UKRAINE AND GEORGIA

OP-ED: By Lech Kaczynski, President of Poland
Financial Times, London, UK, Sunday, March 30 2008

In 1999, three central European states that had been behind the “iron
curtain” for half a century were accepted into the North Atlantic Treaty
Organisation: Poland, the Czech Republic and Hungary. That decision
implied the beginning of the end of the cold war division of Europe.

That enlargement and the next one in 2004 have significantly contributed to
the creation of a zone of stability, peace and security in Europe. Enlarged
by the inclusion of new member states, adapted to the challenges of the 21st
century, Nato strengthens democracy in Europe. For many new members it is
also a bridge to the European Union.

An open-door policy is the condition for the effective functioning of Nato
and the EU. The goal of democratic countries in Europe must be to continue
to enlarge the area of freedom. This task is particularly significant for
Nato in the context of the Balkan countries, as well as Ukraine and Georgia.

Peace and democratic stabilisation of these regions is in the interest of
all European countries, not only of the members of the alliance. Nato has
also, regardless of strategic reasons, a moral obligation to eliminate the
relics of post-Yalta division of Europe.

Ukraine and Georgia, having regained their independence, have undertaken
the huge effort of reform, the objective of which is for their nations to
rejoin the European family. Of course, the implementation of reforms does

not proceed without problems.

The costs of systemic transformation cannot be avoided. The Polish ­people
know this well – we remember the way, full of sacrifices and hardships, that
led us to Nato and the EU. We are grateful for the support we received from
our partners.

Such support is needed today by Georgia and Ukraine. Nato cannot ignore the
request of the leaders of both these countries to tighten their co-operation
with the alliance beyond the existing forms of co-operation. These states
want to become part of Nato’s membership action plan. It is the obligation
of Nato member states to provide a positive response. We should not delay.

Sceptics say joining the action plan creates an obligation to grant
membership of Nato. This is a misleading over-simplification.
The action plan is a process with an indefinite time perspective and it does
not oblige the alliance or the country concerned to conclude the process
with membership.

The action plan creates a new category of relations, which does not impose
any automatic progression to any higher level of co-operation, but gives a
chance to reinvigorate positive political and economic transformations.

Such transformations offer a chance for stabilisation in the region and, in
consequence, for the enhancement of security and stability in Europe. Today
Ukraine and Georgia are still not ready enough to join the circle of Nato
members, but they co-operate extensively with the alliance, including in
operational terms. Making them part of the action plan will enable further
implementation of the process of political and military reform of their
states.

European leaders must be aware that the process of integration with Nato
runs in parallel with enlargement of the EU. Failure at this week’s Nato
Bucharest summit to bring Ukraine and Georgia into the membership action
plan would be bad news not only for Nato, but also for the EU and might
put at risk the construction of a stable European security system.

If Nato fails to settle the issue of membership of the next three states
(Albania, Croatia, Macedonia), fails to open up co-operation with Serbia,
Bosnia-Herzegovina and Montenegro, and refrains from extending the
membership action plan to Ukraine and Georgia, the political mission of
the alliance will suffer painful defeat. It would signal the loss of Nato’s
political purpose and significance on the security map of Europe and the
world. It would irreversibly lose its stabilising role.

I have written to the leaders of Nato member states, stressing that the
moral obligation and historical duty to bring back to Europe the states that
were separated from it still remains unfulfilled. The summit is the most
appropriate moment to decide to extend the membership action plan to
Ukraine and Georgia.

We cannot refuse these states their right to Euro-Atlantic integration. We
cannot leave them in solitude in the face of enormous internal and external
pressures.

We have the chance for April 2-4 2008 to be positively recorded in the
history of the alliance and of Europe. I believe that the right decisions
will be made in Bucharest, serving the enlargement of the area of freedom
and stability.
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http://www.ft.com/cms/s/0/bff0fd5e-fe57-11dc-9e04-000077b07658.html
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7.  UKRAINE’S HOPES TO JOIN NATO SOURED BY FIERCE
OPPOSITION FROM RUSSIA, INTERNAL PROBLEMS 

Associated Press (AP), Kyiv, Ukraine, Monday, Mar 31 2008

KYIV, Ukraine – If it weren’t for Ukraine’s drive to join NATO, army
conscripts here might still be peeling potatoes and wrapping their feet in
cloth instead of socks, as their predecessors had done for centuries.

Ukrainian officials will showcase these and other reforms at the NATO summit
in Bucharest, Romania, this week, in hopes the Western military alliance
will risk angering Moscow and invite this former Soviet republic to start
the process of membership.

Ukraine’s bid to join NATO has strong backing from Washington and US
President George W. Bush is expected to visit Kyiv on Monday and Tuesday in
a show of support on the eve of the summit. Membership would help cement
Ukraine’s place in the European community.

But key Western European powers, including Germany and France, have spoken
out against giving Ukraine a so-called Membership Action Plan just yet,
fearing upsetting already strained ties with Russia, a major supplier of
energy to Europe. The plan is a precursor to the granting of full
membership, which usually takes several years to obtain.

Russia sees the alliance’s eastward expansion as a direct threat to its
status as a regional power. Russian President Vladimir Putin has warned that
his country could aim its warheads at Ukraine if it joins NATO and deploys
anti-missile defenses on its territory.

Ukrainian leaders have been invited to the April 2-4 summit to discuss
cooperation. They hope to use the opportunity to boost their case for
getting a road map to membership, but the prospects appear slim.

“If MAP is granted, especially if Putin comes there, it will be an outright
scandal,” said Fyodor Lukyanov, editor of the journal Russia in Global
Affairs.

Together with Ukraine, Georgia has also requested a MAP, hoping joining NATO
would reduce Moscow’s centuries-old influence over the country and put it on
a solid Westward track.

But Georgia is riven by two separatist conflicts and Moscow has warned it
could support the breakaway provinces’ claims to independence if Georgia
enters NATO. Despite Washington’s support its chances are even smaller,
experts say.

Ukraine’s bid, meanwhile, is complicated by the country’s internal
divisions. More than half of the population, most in the Russian-speaking
east and south, is deeply suspicious of the West and opposes membership,
polls show.

The Ukrainian leaders’ January request led to weeks of embarrassing protests
in the parliament by opposition lawmakers friendly to Russia that involved
fist-fights and locking the speaker in his office so that he couldn’t start
a session.

The country still has a lot of problems, ranging from rampant corruption to
constant political turmoil, which has caused a stream of government
shake-ups and early elections over the past years.

Ukraine had long flirted with NATO, but it started taking real steps toward
meeting the alliance’s military and political standards only after Viktor
Yushchenko became president in the wake of the 2004 street protests, called
the Orange Revolution.

Since then, Ukraine has gained a vibrant opposition, a robust media and has
held a series of clean elections. It has also set out to modernize its
Soviet-style military, including creating an all-volunteer army.

Kyiv has abandoned customs and practices that date to Soviet and even
Czarist Russia times, such as equipping soldiers with cumbersome footwear
and using them for kitchen duty.

Instead, the cooking is now left to catering firms, while soldiers
concentrate on professional training. The military has embarked on
structural reforms, such as planning and managing troop deployments,
military drills and response tactics according to NATO standards.

Ukraine has also sought to prove itself by deploying troops to Iraq in
2003-2005 and sending peacekeepers to Kosovo and Lebanon.

“The carrot of membership has been very useful,” said Andrew Kuchins, head
of the Russia and Eurasia program with the Washington-based Center for
Strategic and International Studies.
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8.  NATO FACES TOUGH TALKS ON GEORGIA, UKRAINE

Deutsche Presse-Agentur (DPA), Brussels, Belgium, Mon, Mar 31, 2008

BRUSSELS – What do you do when your two keenest admirers want to join

your party, but your biggest and most difficult neighbour wants to keep them
out?That is the dilemma which NATO’s 26 political leaders are set to tackle
in Bucharest this week, when they plan to discuss whether to offer Georgia
and Ukraine a membership plan despite Russian opposition.

“It would underpin NATO’s collective security to bring Georgia and Ukraine
in, (but) the argument with Russia over US missile-defence plans and the
generally sour relationship are a very unpleasant new factor,” Giles
Merritt, head of the Security and Defence Agenda think-tank in Brussels,
told Deutsche Presse-Agentur dpa.

Ever since popular uprisings in Georgia (2003) and Ukraine (2004-05) swept
pro-Western leaders to power, the former Soviet republics have been lobbying
hard to receive a NATO Membership Action Plan (MAP) setting out what they
must do in order to join the alliance.

Many of NATO’s new members from Central and Eastern Europe, together with
Canada, firmly back them, arguing that giving the two countries a MAP would
reinforce their fledgling democratic institutions and give them extra
stability and security.

A MAP is a “tremendous instrument for the de-Sovietization of society in the
military (and) fighting corruption,” Atis Lejins, head of the Latvian
Foreign Policy Institute, said. Receiving one boosted democracy in Latvia,
and could do so for Ukraine and Georgia, he added.

But older Western members such as Germany oppose any hasty gestures, saying
that while they support the idea of NATO membership for Ukraine and Georgia,
neither state is yet ready for a MAP.

And that opposition is echoed in Russia, where president-elect Dmitry
Medvedev said on Tuesday that Russia was “not happy” with the “extremely
troublesome” idea.

Georgia’s bid is greatly complicated by the “frozen conflicts” in its
separatist territories of Abkhazia and South Ossetia. Many NATO members say
that they would be very reluctant to invite Georgia into their alliance of
mutual defence until those conflicts are resolved.

That is an issue of real concern across NATO, with one senior diplomat from
a normally pro-Georgia state calling it “the toughest enlargement problem
NATO has ever faced”, and another warning: “If we give Georgia a MAP, we’d
import those conflicts into NATO.”

But opinion is also divided over Ukraine, with German and French diplomats
noting that popular support for joining NATO there is simply too low,
standing at between 20 and 30 per cent.

That argument has met with scepticism in the pro-Ukraine camp, where
diplomats point out that public support for NATO membership in Croatia –
widely tipped to be invited into the alliance in Bucharest – was also below
30 per cent when it received its MAP.

Some analysts conclude that the reference to popular support in Ukraine is
simply a pretext, and that the countries which use it are mainly concerned
with not provoking Russia – a state which has long opposed NATO enlargement
around its borders.

Those suspicions appeared strengthened at a meeting of NATO diplomats on
March 6, when Luxembourg’s Foreign Minister Jean Asselborn said, “We have

to take the interests of others, not only the members of NATO, into account”
when talking about enlargement.

Germany and France insist that they are not giving in to Kremlin pressure,
but that it would be foolish to brazenly ignore Moscow, given the enormous
strategic influence that Russia now wields.

“It helps nobody if relations with Russia get worse … With the new
president not yet in office, if you made (the offer of a MAP) now, it could
be taken as confrontational,” said Frank Kupferschmidt, expert on NATO
policy issues at the SWP German Institute for International and Security
Affairs.

With at least 10 NATO members pushing for an early MAP for Georgia and
Ukraine, Germany and France strongly opposed, and key states such as the
United States and Britain not yet officially committed, no analyst is
willing to predict which way the debate will go in Bucharest.

And with the diplomatic divide still gaping, observers say the likeliest
move could well be to offer the two countries a political statement of
friendship, and put off deciding about a MAP at all.

“When a summit can put something off to next year, that’s what they do. The
real feeling is that Georgia and Ukraine are now on the menu, and they are
not going to slip back off it,” Merritt said.

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9.  NATO CAN WAIT, BUT NOT FOR EVER

EDITORIAL, Financial Times, London, UK, Sunday, March 30 2008

Leaders of Nato gathering in Bucharest this week face a momentous decision:
whether, in the face of fierce Russian opposition, to move Ukraine and
Georgia closer towards membership of the alliance. At issue is whether to
offer the two countries so-called membership action plans, the recognised
final step before becoming an ally.

This question is of enormous geo-strategic importance and has divided the
alliance right down the middle. The US strongly favours extending the
invitation, hoping it could burnish George W. Bush’s tarnished legacy. It is
supported by Nato’s newer members in eastern and central Europe.
Meanwhile, much of western Europe, led by Germany, opposes making
the offer.
GEORGIA’s TWO INTERNAL “FROZEN” CONFLICTS
NATO’S UNPOPULARITY WITHIN UKRAINE
The western Europeans doubt the wisdom of extending Nato’s pledge of
mutual self-defence to countries it cannot in practice defend. They question
whether Georgia, with two internal “frozen” conflicts, is fit for membership
and argue that Nato’s unpopularity within Ukraine raises questions about its
commitment to the alliance. Most of all they worry about provoking Moscow
and guaranteeing its implacable hostility to Nato for the foreseeable
future.

Washington argues that alliance membership is not being discussed this week,
and it may not be for some years. It says extending the promise of future
membership will cement Georgia and Ukraine into the community of democratic
nations, as it has for others in the former Soviet bloc. It argues that this
desirable step will not be any easier, or face a less hostile Russian
reaction, if delayed.

It is clear that Russia cannot be allowed a veto over alliance membership or
to make choices for other states. But Nato must, in its own interests, avoid
cornering Russia, turning it unnecessarily into an enemy. And to avoid this,
it should better prepare the way with Moscow before decisions of strategic
moment are taken.

For this reason, the best approach this week would be to delay the
invitations to Georgia and Ukraine. Doing this would allow strategic talks
with Russia over its concerns, including discussions involving the
prospective Nato members. At the same time, the allies must make it clear to
the two countries that future membership of Nato is theirs if they continue
to desire it.

Moscow then has a choice: constructive engagement in response to a positive
gesture or continuing its efforts to threaten and sow insecurity among its
neighbours. The decision then about whether Russia wants to be a friend or a
foe, or something in between, will lie with Moscow.
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http://www.ft.com/cms/s/0/b818ab46-fe79-11dc-9e04-000077b07658.html
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10.  NATO EXPANSION SHOULD CONTINUE

OP-ED: By Donald Rumsfeld, The Wall Street Journal
New York, New York, Friday, March 28, 2008; Page A13

Next week Romania’s capital of Bucharest will host representatives from the
North Atlantic Treaty Organization’s 26 member nations. There the alliance
will make critical choices about its mission in Afghanistan and expanding to
several former Soviet-bloc nations. These decisions need not and should not
be further delayed for yet more “meetings” and “consultations” in capitals
across Europe.

Today NATO needs clarity of purpose. A display of timidity in Bucharest
could derail its recent progress in adjusting to the demands of the still
new 21st century. Moving decisively beyond NATO’s traditional mindset is
a strategic imperative if the alliance is to remain relevant to the
challenges it is likely to face.

There is no better way for NATO to move forward than by extending full
membership invitations to Albania, Croatia and Macedonia and by beginning
the process to bring Georgia and Ukraine into the alliance in the future
through membership action plans (MAPs).

At a time when European commitments to the NATO mission in Afghanistan
are being questioned, the determination of Albania, Croatia and Macedonia to
contribute to tough missions is clear. Collectively, the three Balkan
nations have more than 650 troops currently serving in Afghanistan and Iraq.

At the moment Croatia has more than 200 troops training the Afghan National
Army and serving in Provincial Reconstruction Teams. A company of
Macedonian troops leads the mission of defending NATO’s International
Security Assistance Force headquarters in Kabul, Afghanistan.

In addition to its continuous troop presence in Afghanistan since 2002,
Albania was among the first nations to deploy to Iraq in 2003. Five years
later, Albania intends to be among the last to leave. As the Albanian
military commander in Mosul, Iraq, recently said, “We’ll be here as long as
the Americans are.”

As was the case with NATO invitations to other former Soviet-bloc nations
in 1999 and 2004, this year’s expansion would consolidate democratic and
economic gains in Southeast Europe. The region’s trajectory toward free
political institutions and free markets is unmistakable.

For the past several years under membership action plans, the governments
of Albania, Croatia and Macedonia have been preparing to join the ranks of
NATO. They now meet the necessary criteria for membership. They have
shown their commitment to human rights and regional stability by protecting
the rights of ethnic minorities.

They have allocated a greater percentage of their GDP to defense
expenditures than most NATO countries in Western Europe, and they have
built sound defense capabilities in intelligence, medical support, and
special operations.

Perhaps most important in light of NATO’s demonstrated shortcomings,
Albania, Croatia and Macedonia have made use of those capabilities in
Afghanistan and Iraq by taking on the tough missions that several current
NATO members have been unwilling to carry out. Albania, Croatia and
Macedonia are certainly not large geographically, but the operational — and
attitudinal — contributions they bring to NATO will far outstrip their
size.

With respect to Georgia and Ukraine, both nations are democratic,
politically mature, relatively stable and committed to the international
community after the Orange and Rose revolutions in 2003 and 2004.

Neighboring Russia recently suggested it might turn its nuclear arsenal on
Ukraine or incite civil disorder in Georgia if either takes steps to join
NATO. Undeterred, the Georgian and Ukrainian governments have expressed
their clear desire to initiate membership action plan proceedings.

Silence on the issue of Georgia and Ukraine in Bucharest — including
postponement of MAPs, as some Western European governments seem to
be suggesting — would amount to a rejection of Georgia’s and Ukraine’s
international aspirations. It would prove disillusioning to their people,
and it would serve as a green light to Russia to continue the tired rhetoric
of the Cold War.

The administration, bipartisan majorities in Congress, and most members of
NATO have expressed support for extending membership to nations in
Southeastern Europe and for partnerships with those nations beyond. Why then
the hold up? Aside from Russia’s opposition, Greece has threatened to issue
a sole veto over Macedonia’s entry because Macedonia refuses to change its
country name.

The future of the trans-Atlantic alliance — and its credibility as the
pre-eminent political and military instrument of the world’s democracies —
are too important to be constrained by narrow disputes over semantics or to
intimidation tactics more befitting the last century.

A larger, reinvigorated alliance, with three new members and two potential
members, would augment NATO with countries that have a proven track
record of not only recognizing today’s challenges but also of consistently
contributing to the alliance’s efforts to promote and protect its interests.
Expansion would bring operational expertise and a spirit of cooperation to
an alliance in need of both.

All five nations would also bring to NATO an appreciation for the vigilance
required to defend liberty. With their peoples’ first hand experience of
Communist occupation, they see in Islamic extremism the dangers of an all
too familiar totalitarian ideology.

NATO’s mission in Afghanistan, thousands of miles from the European
continent, has been an historic step toward transforming NATO to meet new
challenges of the 21st century. But its work there has laid bare some hard
truths about the state of the alliance.

Restrictive national caveats imposed by some member nations currently
prevent their contingents from engaging in combat, causing other NATO and
non-NATO members of the coalition — such as those being considered for
membership currently — to carry a disproportionate burden of the alliance’s
work and sacrifice.

Outdated rules of engagement, uneven national commitments, and a lack of
sufficient urgency among several of its members are indisputable facts. And
so too are the possibilities of failure and creeping irrelevance if NATO
does not act wisely in Bucharest.

Expanding NATO to Albania, Croatia and Macedonia and building closer
partnerships with Georgia and Ukraine would help to assuage any concerns
that the alliance no longer has the collective grit for the tough work
necessary to overcome the challenges in Afghanistan. All five non-NATO
nations currently under consideration — in contrast with several full NATO
members — have demonstrated willingness to accept NATO responsibilities.

Albania, Croatia and Macedonia are today ready to accept those
responsibilities. Georgia and Ukraine will likely be ready to accept NATO
responsibilities in the coming years if issued membership action plans next
week. The Bucharest summit presents an opportunity to advance the interests
of all 26 member nations by expanding the NATO alliance. Now is not a time
for self-doubt. It is a time for U.S. and European leadership.
———————————————————————————————–
Mr. Rumsfeld was U.S. ambassador to NATO from 1973 to 1974 and was
the 13th and 21st U.S. secretary of Defense.
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LINK: http://online.wsj.com/article/SB120665952870370033.html
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11.  GEORGIA IN WARNING OVER ‘VETO’ FOR RUSSIA 
By Stephen Fidler in London and Stefan Wagstyl in Tallinn
Financial Times, London, UK, Monday, March 31 2008

Denying Georgia and Ukraine the right to move towards Nato membership this
week would amount to appeasement of Russia, according to Georgia’s President
Mikheil Saakashvili, who said such a move would grant Moscow a veto over
membership of the alliance.

The decision over whether to grant the two former Soviet republics
membership action plans (MAPs) – the final step before becoming an alliance
member – heads the agenda of the Nato summit in Bucharest which begins on
Wednesday.

The question threatens to split Nato. The US and alliance members from the
former Soviet bloc support an invitation, while other allies – mainly from
western Europe – oppose such an offer, in part because of strong Russian
opposition.

In a telephone interview with the FT, in which he also promised to send a
large contingent of troops for the Nato mission in Afghanistan, Mr
Saakashvili said Nato would make “a dramatic mistake” by denying invitations
to Ukraine and Georgia, saying it would reward Moscow hardliners.

“Appeasement is seen there by them as a signal that they should act . . .
even tougher, and they will be even more aggressive and provocative,” he
said, adding: “No matter what some Europeans might be thinking, it’s
basically giving them direct veto rights, because that’s how they’ll
perceive it.”

In a separate FT interview, Toomas Ilves, president of Estonia, backed the
bids by Georgia and Ukraine. “The main reason for saying no is a Russian
veto and that’s the most dangerous thing about all of this,” he said.

Mr Saakashvili said Georgia would decrease its military presence in Iraq and
“dramatically increase” its presence in Afghanistan, where Nato is seeking
more combat troops. Georgia currently has 2,000 troops in Iraq, the third
largest contingent there, and only a nominal presence in Afghanistan.

He said some governments were arguing that it was better for Russia to see
Nato united rather than arguing over MAPs for Georgia and Ukraine. “I think
this is a very, very wrong argument. Nato united around what? Around
appeasement? We’ve seen Europe united once like this in this last century
and we saw where it led.”

Mr Saakashvili disputed claims that granting MAPs to the two countries would
encourage Russia to make trouble, including in Georgia’s two disputed
territories of Abkhazia and South Ossetia. “If we get MAP, the aggressive
elements will back off. If we don’t get it, that’s exactly when they are
going to start all kinds of trouble,” he said.

Georgia has announced what the president called a “radical” peace proposal
for Abkhazia.
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Interview transcript: www.ft.com/saakashvili
http://www.ft.com/cms/s/0/6331e976-feba-11dc-9e04-000077b07658.html
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12.  FOREIGN MINISTER SAYS 2008 BEST TIME FOR UKRAINE
TO JOIN NATO MEMBERSHIP ACTION PLAN (MAP)
 
Ukrinform, Kyiv, Ukraine, Monday, March 31, 2008
KYIV – Ukrainian Foreign Minister Volodymyr Ohryzko believes that the
year 2008 is the best time for Ukraine to join the NATO Membership Action
Plan.
As journalists learned from Ohryzko, the ministry is expecting the positive
decision regarding Ukraine’s joining the NATO MAP from the Bucharest
summit. He noted that the MAP was the highest form of cooperation for
Ukraine to join NATO. According to him, Ukraine is expecting support of
many countries in the MAP question.
Ohryzko reminded that in order to accede to the NATO MAP, Ukraine should
receive consent from all the NATO member states, and expressed hope that
“we’ve convinced our partners that it’s the high time to give the positive
reply to Ukraine.”
 
“We understand that great work is expecting us in future, but we also know
that when we fulfill it, we’ll have the majority of our Ukrainian citizens who will
be approving Ukraine’s membership in NATO after all,” Ohryzko noted.
Apart from this, the ministry head said that during the visit of US President
George Bush to Kyiv on March 31 – April 1, the sides will approve the
“road map” for cooperation between Ukraine and the United States.
As the minister noted, this will be “a serious foreign political breakthrough
for Ukraine.” “In the light of the forthcoming events to take place in Bucharest,
it’s hard to overvalue importance of this visit,” Ohryzko said.
 
According to him, the year 2008 is the best period for joining the NATO
MAP since the state’s present top leaders are supporting Ukraine’s joining
NATO. He also reminded that before joining NATO, a nationwide referendum
on the issue should be held in Ukraine.
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13.  KEEP CLOSE CONTACT

EDITORIAL, Kyiv Post, Kyiv, Ukraine, Thursday, March 27, 2008

When Ukrainian President Viktor Yushchenko, Prime Minister Yulia Tymoshenko
and Parliamentary Chair Arseniy Yatsenyuk signed the now-famous January
letter requesting Ukraine’s acceptance into the North American Treaty
Organization’s (NATO) Membership Access Plan (MAP), it’s unclear whether
they truly believed the attempt would work.

Instead the letter, clandestinely prepared and sent, served as the perfect
pretext for the parliamentary opposition to launch protests and rally their
electorate. Seemingly, the “Letter of Three” did more to hurt Ukraine’s NATO
integration efforts than help them.

Now that MAP membership is unlikely at the Bucharest summit, not because of
Ukraine’s domestic opposition but because of the Russian Federation’s power
and influence, Ukraine’s pro-Western leaders need to regroup and plan their
future strategy.

For starters, Ukraine must continue engaging in as many joint exercises as
possible with NATO and keep reforming its military to conform with NATO
standards, with or without the MAP.

Should enough integration occur that close relations emerge regardless, MAP
membership could become a moot point, perhaps the best solution amidst an
aggressive Russian neighbor.

The most important agent for Ukraine’s NATO integration remains information.
The more Ukrainians are exposed to NATO and what it offers – unparalleled
security and modernization – the more Ukrainians will support it.

The problem remains of who will finance an information campaign. The US
government isn’t financing a NATO information campaign, US Ambassador to
Ukraine William Taylor, Jr. has said.

Potential candidates are NATO itself, as well as pro-NATO Ukrainian
political parties which stand to gain from wider NATO approval.

But the best information campaign is conducted by Ukrainians themselves, who
live and work in NATO countries, and by Ukrainian soldiers who serve in
international missions with NATO. The West must keep opening its doors
further to Ukrainians to spread the word.

Then there’s France and Germany. Ukraine’s diplomats should be more active
in convincing their French and German counterparts that the benefits of
Ukraine’s NATO integration outweigh any threat posed by Russia.

French newspapers have reported a possible compromise has been floated
between NATO and Russia to create a neutral zone consisting of Ukraine,
Moldova and Georgia. Ukraine should reject any such proposal. Falling into a
neutral zone is the equivalent of a black hole, in which Ukraine would not
make any progress in improving its security or modernizing its military and
economy.

Such a status could allow the West and Russia to exploit the situation,
rather than give Ukraine the chance to grow and prosper in a secure
alliance.
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14.  IT IS TOO EARLY TO CALM DOWN ABOUT UKRAINE’S
INDEPENDENCE SAYS PRESIDENT YUSHCHENKO
 
UNIAN, Kyiv, Ukraine, Thursday, March 27, 2008

KYIV – President of Ukraine Victor Yushchenko warns that it is too early to
calm down about the Ukrainian independence and sovereignty.

According to an UNIAN correspondent, opening the All-Ukrainian Forum of
Intelligentsia in Kyiv today, the President pointed out that very often the
territorial integrity and political independence of Ukraine is taken for
granted in discussions and political polemics.

“I would not say so”, the President noted, adding that the country, which
did not have its own state for 800 years, which language and culture was
banned for 300 years, which history, geography, and the like, were
re-written, must not calm down. To confirm his words, Victor Yushchenko
listed the example of the world’s attitude to Ukraine’s bid to join the NATO
Membership Action Plan.

“Please, tell me, did the world discuss the topic this much when Bulgaria,
Hungary, Romania, Poland, Czech, were joining the same plan? Did we hear at
least when it happened? Almost no. It was a logical and tolerant process”,
the President stressed.

He turned attention to the fact that the tussle in the world appeared even
not over the Ukraine’s bid to become a NATO member, but over its desire just
to join MAP, which stipulates a long way, after which the country will make
a final decision.

“Look at the political map of the world, look what is taking place, the
discussion. This happens for a particular reason. You know, if the world
pays such a big attention to the Ukraine’s bid, it means, serious
developments take place here”, the President noted.
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LINK: http://www.unian.net/eng/news/news-243340.html

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========================================================
Ukraine Monthly Macroeconomic Report From SigmaBleyzer:
http://www.sigmableyzer.com/index.php?action=publications 
========================================================
15.  WHERE EUROPE DRAWS THE LINE

OP-ED: By Jackson Diehl, The Washington Post
Washington, D.C., Monday, March 24, 2008; Page A13

Mikheil Saakashvili kicked off the second wave of freedom movements in
formerly Communist Europe in 2003 when he strode into the Georgian
Parliament, rose in hand. Now he’s president, and his country and his
revolution are in danger of being stranded between a weakening West and a
surging Russia.

Last week he came to Washington in the somewhat desperate hope that
President Bush would spend some of his last diplomatic capital to defend

the two European democracies born on his watch.

Georgia’s was the first of the “color revolutions”; the second was in
Ukraine, which in 2004 shook off an attempt by Vladimir Putin to install a
satellite autocracy. Now, like the first wave of post-Communist democracies
in Central Europe, Georgia and Ukraine are trying to consolidate their
liberal regimes, and their independence, by joining NATO.

Both have formally asked NATO to choose them for a “membership action plan”
at a summit two weeks from now in Bucharest. That would inaugurate a process
of monitored reforms that could lead to full membership in a few years.

It’s a logical step that already has allowed 10 European countries, from
Poland to Romania, to adopt the institutions and receive the protection of
the democratic West — arguably the greatest achievement in NATO’s history.
But the alliance and its leaders are weaker than they were a decade ago —
and more susceptible to intimidation by Putin.

German Chancellor Angela Merkel, who grew up in Soviet-dominated East
Germany, has taken a public stand against membership plans for Georgia and
Ukraine. The French government of Nicolas Sarkozy is also resistant.

Even the U.S. bureaucracy has been lukewarm; support for Georgia and Ukraine
has ranked below missile defense and Kosovo’s independence in Washington’s
dealings with both Europe and Russia.

That leaves Bush, who has called himself a “dissident president” in part
because his sympathy for democratic underdogs is often greater than that of
his own administration. At the White House last Wednesday, Bush was “very
motivated” and “very focused” about Georgia’s cause, Saakashvili said the
next day. The president held a news conference endorsing NATO membership

for Georgia and made a telephone call to Merkel the same day.

The danger is that Bush’s mobilization on behalf of the two democracies will
be too late and too underpowered. Administration officials already have a
fallback position: that Georgia and Ukraine be given some kind of
temporizing assurance by NATO but not a membership plan. “It’s rubbish,” the
incorrigibly outspoken Saakashvili said in a meeting at The Post. “We can’t
fool ourselves. We can’t fool our own people.”

Most of all, NATO’s face-saving formulas won’t fool Russia. However it goes,
the decision in Bucharest will send a powerful signal to Putin about the
degree to which Western governments are prepared to tolerate his attempts to
bully Ukraine and Georgia out of democracy and back into subservience to the
Kremlin. Already he’s been far from subtle.

Russia has banned trade with Georgia, has dropped bombs on its territory and
recently shot down one of its unmanned aircraft. Putin threatened to target
Ukraine with nuclear missiles if it moved toward NATO and cut off gas
supplies to Kiev just before a planned trip by its prime minister to
alliance headquarters in Brussels.

“By refusing us, [NATO] will be sending a signal to Russia of, ‘Go and get
them. We are not going to mind too much,’ ” Saakashvili said. “Russia will
be emboldened. They will conclude that they are on the right track when they
stir up trouble with us.”

The Germans argue, weakly, that it is trouble that they are trying to
avoid — that Putin has been pushed enough by NATO’s support for Kosovo’s
independence and U.S. missile defense bases in Europe.

The trouble with that logic is that, by insisting on those Western
priorities over Moscow’s vehement objections while conceding on Georgia

and Ukraine, NATO governments are effectively drawing a line in a
still-unsettled post-Cold War European order.

On one side are Kosovo and the missile bases in Poland and the Czech
Republic, which Putin is powerless to tamper with; on the other are the only
legitimate democracies between Poland and Turkey, where the response to
aggressive Russian meddling would be de facto acquiescence.

The Georgians are told that if they are put off at Bucharest they will have
another chance in just a year, when a NATO summit celebrating the alliance’s
60th anniversary is held in . . . Berlin. Saakashvili is doubtful. “If we
don’t get it now, the window of opportunity could be closing, for a number
of reasons,” he said.

Though he didn’t say so, one of them is that the “dissident” U.S. president
on whose watch democratic Georgia was born — not to mention his “freedom
agenda” — will no longer occupy the White House.
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http://www.washingtonpost.com/wp-dyn/content/article/2008/03/23/AR2008032301419.html
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16.  BUSH SEEKS TO SALVAGE LEGACY AT NATO

AND PUTIN SUMMITS

By Matt Spetalnick, Reuters, Washington, D.C. Monday, March 31, 2008

WASHINGTON – President George W. Bush left on Monday for his farewell
NATO summit and a final heads-of-state meeting with Russia’s Vladimir Putin
in a bid to salvage a foreign policy legacy frayed by the Iraq war.

Seeking to reassert himself on the world stage in the twilight of his term,
Bush will press NATO for more troops in Afghanistan, try to keep up
momentum in the alliance’s eastward expansion and attempt to ease strains
with Russia.

But with Bush even more unpopular overseas than at home, he could have a
hard time swaying world leaders at this week’s Bucharest summit as they look
to whomever will succeed him in January 2009.

“Many of them are looking forward now to the next president in Washington
and are already thinking about what the 2009 summit will bring,” said
Julianne Smith, a Europe analyst at Washington’s Center for Strategic and
International Studies.

Lame-duck status will not be Bush’s only obstacle as he ventures abroad for
the first in a series of international conferences marking his final year in
office.

Overhanging his travels will be the five-year-old Iraq war, which has
damaged America’s credibility with friends and foes alike. The latest spike
in fighting has increased doubts of further drawdowns of U.S. forces before
Bush leaves office.

He will also be trailed by a financial crisis at home that has roiled global
markets and sharpened criticism of his economic stewardship, once seen as a
bright spot on his record.

As he left for Europe, Bush called on the Democratic-controlled Congress to
approve housing legislation to help homeowners caught in a credit crisis
that has put pressure on the U.S. economy. He also urged approval of the
Colombia free trade agreement and anti-terrorism spy legislation, saying all
were “vital priorities.”
REASSURANCE FOR UKRAINE?
Bush’s first stop will be Ukraine, where he will try to reassure Kiev’s
reform-minded government over its aspirations for NATO membership but
offer no firm guarantees.

European partners are wary of letting Ukraine and Georgia into the alliance
because of opposition from Moscow, which sees it as encroachment on the
former Soviet sphere of influence.

Bush backs their bids for a roadmap for membership but may not have enough
clout to overcome French and German misgivings at the April 2-4 summit in
Bucharest.

Another source of friction is NATO’s role in the war in Afghanistan, which
has led to transatlantic finger-pointing.
Bush wants a greater commitment from NATO partners reluctant to send troops
to areas of heavy combat against a resurgent Taliban. A French offer of more
forces has helped ease the dispute but it remains unresolved.

Bush will share the summit spotlight with Putin, an unusual guest of the
Western alliance. How the two leaders interact may signal whether the West’s
relations with Russia will improve or deteriorate further.

Afterward, Bush will fly to Russia for a final round of one-on-one talks
with Putin before he steps down as Russian president in May.

The visit to Putin’s Black Sea villa in Sochi is aimed at using their
personal chemistry to repair relations strained over missile defense, Kosovo
independence and NATO expansion.

There has been speculation the two leaders will try to seal a compromise on
a planned U.S. missile shield in Eastern Europe that Russia sees as a threat
but which Washington insists is to deter countries like Iran that it
considers “rogue states.”

Stephen Hadley, Bush’s national security adviser, sought to lower
expectations, telling reporters last week that Bush and Putin hope to agree
on a “strategic framework” of U.S.-Russian relations to bequeath to their
successors.

The talks could help Bush gauge how much power Putin will wield behind the
scenes after Dmitry Medvedev, his protege, takes over as president and Putin
becomes prime minister.

Bush famously said after his first meeting with Putin in 2001 that he
trusted him after gaining a “sense of his soul.”

Critics say Bush was naive to believe Putin was committed to lasting
democratic reform. Aides acknowledge Bush has become more realistic about
Putin, who has grown more strident in his criticism of U.S. policies and
more assertive of the former superpower’s place in world affairs. (Editing
by Chris Wilson)
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17.  UKRAINE’S PM TYMOSHENKO CITES ACHIEVEMENT
IN FIRST 100 DAYS; OBSERVERS GIVE MIXED ASSESSMENT 

Associated Press (AP), Kyiv, Ukraine, Monday, Mar 31 2008

KYIV, Ukraine – Yulia Tymoshenko said Friday that economic growth and

more government revenues were clear successes during her first 100 days as
Ukraine’s prime minister, but observers warn that spiraling inflation and
uncertainty over Russian gas imports threaten to undo her achievements.

The return of the fiery Tymoshenko last year was viewed an opportunity for
pro-Western forces of the 2004 Orange Revolution to reunite and push through
much-needed reforms.

Tymoshenko told reporters that since resuming her post, she’s achieved
economic growth, fought corruption, replenished state coffers with customs
revenues and moved to clean up the country’s shady natural gas trade with
Russia.

“You have in front of you a government team that is taking on the ambitious
task of bringing true changes to Ukraine, making the reforms and
transformations that the country has long been waiting for,” she said.

Since her appointment, Tymoshenko has begun compensating people for all

or parts of savings lost amid the hyperinflation caused by the 1991 Soviet
breakup, earning praise from ordinary Ukrainians.

She also has scored an important victory in her drive to rid the country’s
natural gas trade with Russia of intermediaries, which are believed to just
siphon money into private pockets.

But observers and critics say the savings compensation program is fueling
high inflation that has soared to more than 20 percent. The new gas
agreement with Russia, while bringing more transparency, could leave Ukraine
with higher gas prices nationwide.

 
Still, many analysts say Tymoshenko’s anti-corruption efforts are
noteworthy.

“To me, it makes a lot of sense that the most popular politician in Ukraine
today is the one who takes corruption the most seriously,” said Geoffrey
Smith, an analyst at Renaissance Capital investment bank.

Tymoshenko was allied with President Viktor Yushchenko in the 2004
demonstrations that came to be known as the Orange Revolution, but the
alliance soon shattered and he fired Tymoshenko after only seven months as
his premier.

She returned to the post in December after her parties joined with
Yushchenko’s in a coalition government, and pledged to leave disagreements
behind.

The coalition, however, is showing cracks, with Yushchenko accusing
Tymoshenko of plotting intrigues. Both politicians are potential rivals in
the 2010 presidential elections, and observers say the president is trying
to limit her.

Tymoshenko said Friday that she is prepared to work together with
Yushchenko, but only if he exhibits “normal, harmonious cooperation.”
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18.  100 DAYS FOR TYMOSHENKO’S CABINET

OP-ED: By Vitaly Bala, Director of Situations Modeling Agency, Kyiv
Eurasian Home, Moscow, Russia, Friday, March 28, 2008

“100 days” implies carte blanche for any government. A government can do
almost whatever they like within that period: reshuffle the Cabinet, put
forward reforms or pursue their own economic policy.

In other words, a government is given a free hand. After one hundred days
one can speak about the first results and trends and, therefore, criticize
or support this government.

The Ukrainian situation is unique because Tymoshenko’s Cabinet didn’t have
the 100 days. There are two forces opposing the Cabinet’s actions since the
very beginning of its work. The first opposition force resides in the
Verkhovna Rada of Ukraine and is led by the Party of Regions. It is the
formal opposition.

The second opposition is informal. Its leader is head of the President’s
Secretariat Viktor Baloga who may be guided by President Viktor Yushchenko.

The situation has become more complicated because the Parliament’s
activities were blocked. Under the circumstances the government could not
work in full measure, amend the budget or submit legislative proposals. The
State Property Fund’s activities came to a standstill.

The Cabinet members could address only part of the issues they faced, and
only through decrees. Positive aspects include increase in grants, in
payments that are made when children are born and successful performances

on the international scene – in Brussels and Moscow.

The disadvantage is that the Cabinet tried to put up with the behavior of
the Secretariat of the President for a long time. For example, the
Secretariat officials often spoke that inflation may rise in Ukraine and, as
a result, it has risen. In such cases the population usually buys up
dollars, euros and goods, which leads to the price advance.

The political struggle is taking ugly shape. The politicians are struggling
against the Ukrainian people rather than against each other.

This way, the President and the Prime Minister are most likely to compete
with each other during the presidential election. Given the current
situation, the question has arisen – why have the ratings of Tymoshenko and
BYuT been rising during 100 days, while the ratings of her major opponents
have been decreasing, if everything is so bad?

This is shown by the public opinion polls held by different organizations
that may be connected with different political forces.

One of the significant reasons why Tymoshenko’s rating has become higher is,
of course, the return of the deposits of the Savings Bank of the USSR.
Although in this case it is unclear why her opponents tried to torpedo that
initiative and did not propose improving the deposit payment process. If
they had done so, Tymoshenko would not reap all laurels.

All in all, if the President’s team continues to follow the same policy,
Yanukovych and Tymoshenko will be the major presidential candidates.

As regards the forthcoming visit of the U.S. President George Bush to
Ukraine, I do not think that the political leaders will discuss the
presidential elections and Washington’s preferences. The visit will be
significant for Yushchenko’s authority in the West.

The point is that recently the West has favored Tymoshenko. That was
indicated by the gas conflict with Russia when the EU supported Tymoshenko
and the U.S. Secretary of State Condoleezza Rice has made a major
contribution to that.

That’s why during George Bush’s visit to Ukraine, Yushchenko will do his
best to show who indeed runs Ukraine and to make the American President pay
attention only to Yushchenko. Moreover, if Ukraine comes to terms with the
USA on a number of issues, Yushchenko will seek to attribute all the
achievements to himself.

Above all, those include the NATO issue, Ukraine’s possible accession to
NATO Membership Action Plan in the course of the NATO summit scheduled

for April in Bucharest.
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http://www.eurasianhome.org/xml/t/expert.xml?lang=en&nic=expert&pid=1490
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19.  YUSHCHENKO OF UKRAINE
The hollowing of a hero

OP-ED: By Nina L. Khrushcheva, International Herald Tribune
Paris, France, Thursday, March 27, 2008

MOSCOW: Ukraine’s President Viktor Yushchenko never fails to disappoint.

Of course, most successful revolutionaries are later regarded as
disappointments, even failures, in one way or another. That’s the nature of
revolutionary euphoria once it deflates. Yet even in such company,
Yushchenko stands out.

America, despairing of Yushchenko’s endless dithering and willingness to
compromise Ukraine’s independence from Russia, abandoned its support
for him over a year ago.

Recently, the European Union foreign policy chief, Javier Solana, in a
brutal session with Yushchenko in Brussels, let him know that the EU, too,
had had enough of his temporizing and political machinations.

Neither message, however, appears to have had any effect on Yushchenko,
whose only concern nowadays is his own political survival. Thus, he is
focused on reaching a deal with his former, pro-Russian opponents to secure
a second term as Ukraine’s president in 2010 rather than on opinion in the
West or among his supporters.

Indeed, it now seems clear that Yushchenko was only a reluctant leader of a
democratic revolution. From the moment of his victory in 2005, he sought to
distance himself from those who supported him and, instead, to forge an
alliance with those who opposed Ukraine’s democratic and free-market
transformation, preferring the crony capitalism that had developed since
Ukraine gained its independence. Now he wants to formalize that alliance.

Yushchenko’s plan is breathtakingly cynical. With his popularity ratings
having plummeted to around 10 percent, he can no longer command the
allegiance of the bulk of Our Ukraine, the party that he created but which
now (thanks to his unpopularity) is reduced to junior partner status in the
coalition government led by Prime Minister Yulia Tymoshenko.

Instead of trying to recover support, Yushchenko and his coterie of advisers
want to link the rump of Our Ukraine that they still control with the Orange
Revolution’s opponents, the Party of the Regions, which would then dump
the unelectable Viktor Yanukovich, Ukraine’s erstwhile prime minister and
Yushchenko’s one-time nemesis, as its standard bearer.

Of course, there are problems with Yushchenko’s plan. One big hurdle is his
support for Ukraine’s NATO membership, which he is hoping to push at the
alliance’s summit meeting in Bucharest next week.

Understanding that NATO is not popular in eastern Ukraine, the seat of
support for the Party of the Regions, Yushchenko has been trying to force
Tymoshenko, who has been more cautious about NATO because of its
current unpopularity, to embrace NATO membership publicly.

Even in a normal democracy, politicians who switch parties are regarded with
suspicion. Winston Churchill, for example, found “crossing the aisle” a hard
act to shake off. Moreover, Yushchenko is no Churchill, and Ukraine is a
very young democracy.

To be sure, unlike Russia or other parts of the ex-Soviet Union, Ukraine has
shown itself capable of handling the tumult of free and fair democratic
elections. But is it really ready for the type of political summersault
Yushchenko is preparing.

Moreover, Yushchenko’s survival instinct will do nothing to restore his
reputation; indeed, it will likely bury it once and for all. Years of
unfulfilled promises have undermined any faith in Yushchenko’s word among
most Ukrainians.

Openly mocked for his dithering, he recently issued a decree requiring his
cabinet to see him off at the airport whenever he travels. Tymoshenko acidly
remarked that she is always happy to say farewell to the president.

It is Yushchenko’s rivalry with Tymoshenko that is goading him on. Her vote
total more than doubled after Yushchenko dropped her as prime minister in
2005, and now she is leading in the polls for the presidential election.

With much of Our Ukraine now backing her, Tymoshenko stands out as the
only proven vote winner in the government coalition.

In contrast, Yushchenko’s lack of commitment to the political struggle
against the Party of the Regions gives scant credence to his belief that the
best way to defeat this party’s efforts to turn back the clock in Ukraine is
to cut political deals with it.

All of this would be comic if it were not so tragic. Yushchenko regards
Tymoshenko’s activism as an insult to his instinctive caution, which goes so
far as to back the continuing existence of the shadowy gas intermediaries
that have made energy security Ukraine’s biggest problem.

The only question now is whether Yushchenko sees himself as politically
strong enough to sack Tymoshenko and seek to govern with the support of his
historic rivals. America and the European Union should make it clear that so
naked a political betrayal will push him permanently out of favor in the
West.
———————————————————————————————–
Nina L. Khrushcheva teaches international affairs at The New School in New
York and is the author of “Imagining Nabokov: Russia Between Art and
Politics.”
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LINK: http://www.iht.com/articles/2008/03/27/opinion/edkhruscheva.php
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20.  THE GONGADZE TRIAL: A LOT TOO LITTLE,

A LOT TOO LATE

OP-ED: By John Morone, columnist, Kyiv, Ukraine
Eurasian Home, Moscow, Russia, Monday, March 17, 2008

Modern Ukrainian politics were born of the country’s 2004 Orange Revolution,
in which Western-reformer Viktor Yushchenko defeated the fraud-filled
presidential bid of Moscow’s favorite, Viktor Yanukovych.

But the revolution was conceived in 2000 with the grisly murder of
thirty-one-year-old journalist Georgiy Gongadze, who had dared to write
about abuse of power in Kyiv. As other journalists critical of the
authorities were killed, and evidence mounted that the police were
perpetrating the crimes, domestic and international indignation surged.

Politicians like Yushchenko, current Prime Minister Yuliya Tymoshenko and
Socialist leader Oleksandr Moroz capitalized on the public dissent to
further discredit the corrupt administration of President Leonid Kuchma, who
had hand-picked Yanukovych as his successor. During their rise to power, the
three Orange leaders promised their countrymen change, prosperity and
justice.

Nearly four years after the Orange Revolution and almost eight since
Gongadze’s headless body was found in a wood outside Kyiv, the people who
ordered the murder have still not been brought to justice.

Instead, a court has handed out jail terms to three former policemen who
took part in the killing. On Saturday, March 15, the Kyiv Court of Appeals
sentenced Colonel Mykola Protasov, Colonel Valeriy Kostenko and Major
Oleksandr Popovych to 13, 12 and 12 years in prison, respectively.

The panel of judges had convicted the three officers from the Interior
Ministry’s Department of External Surveillance and Criminal Intelligence of
kidnapping and murdering Gongadze on September 16, 2000. Popovych drove
the car, and the other two held Gongadze over a hole dug in the wood, while
their boss Oleksiy Pugach allegedly strangled Gongadze with the journalist’s
own belt. All three said they never knew that Pugach intended to kill him.

Pugach, who headed the department of external surveillance and criminal
intelligence at the time of Gongazde’s murder, is still at large. He managed
to flee Ukraine in 2003. But before doing so, in June 2002, General Pugach
allegedly kidnapped and strangled another Ukrainian journalist in a wood,
this time in Chernihiv Region.

As in the Gongadze case, two of Pugach’s subordinates, a colonel and major,
were tried and convicted of their part in the killing of Oleksiy Podolsky.
In May of last year, they received three-years prison sentences.

Against the backdrop of Gongadze’s murder and that of Donetsk TV chief Ihor
Oleksandrov, who was beaten to death with baseball bats in the summer of
2001 following his coverage of ties between local law enforcement and
organized crime, Podolsky’s murder is hardly remembered.

During the Kuchma years, at least a dozen journalists were killed in
Ukraine. As the Interior Ministry dismissed journalists’ fears, and the
Prosecutor-General’s Office made no relevant progress in its investigation,
opposition leaders organized mass protests.

The Gongadze murder was particularly eventful because it was followed up by
the release of secret recordings that implicated Kuchma and other top
Ukrainian officials in the crime. The result was the movements “Ukraine
without Kuchma” in 2001 and “Arise Ukraine” a year later, which brought
thousands of people on to the streets of the capital, in what turned out to
be dress rehearsals for the Orange Revolution.

In the mean time, Gongadze’s widow Miroslava was forced to seek asylum in
the United States for fear of persecution, while his mother appealed
unsuccessfully to have her son’s body finally given a decent burial.
Analyses after so-called analyses were conducted only to be disputed in a
never-ending atmosphere of denial and obfuscation.

Even after Yushchenko and the leaders of the Orange Revolution had replaced
Kuchma and Co., the wheels of justice continued to drag on.

The Kyiv Court of Appeals heard the Gongadze case for over two years. The
court proceedings began on 19 December 2005, and the panel of judges started
conferring on a verdict on 11 March 2008. Hearings were repeatedly postponed
due to illness alleged by one of the accused, Protasov.

And the proceedings may not be completely finished, at that.

Following the pronouncement of the sentences, the lawyer of Protasov called
the court’s decision “unjust”. Yuriy Hryhorenko, Kostenko’s lawyer, said
after the verdict was announced that, “given all the circumstances, the
sentence appears harsh. We will appeal against it.”

As for Pugach, he is unlikely to be found soon, at least not alive. Ukrainian

Prosecutor-General Oleksandr Medvedko said in an interview in January
this year that “Pugach is on a wanted list now as well as his girlfriend. A
criminal case was initiated against her for concealing a crime.

I cannot reveal her name. In addition to that, we found out about two people
who assisted them in fleeing. We had information that for a certain time
they were in Ukraine. We have compiled pictures of them and are looking for
these two people.”

Medvedko represents the latest in a line of prosecutor generals connected
either to Yanukovych’s Donetsk clan and/or Kuchma, a chain that President
Yushchenko has been reluctant to break.

In February 2008, the Ukrainian tabloid Segodnya quoted Gongadze’s mother’s
attorney, Valentyna Telichenko, as saying that one of the accused, Popovych,
had implicated two senior Interior Ministry officials in the murder: General
Yuriy Dahayev, who died under mysterious circumstances, and Eduard Fere, who
is reportedly in an irreversible coma.

But more importantly, the murderers behind the murderers are not even known,
much less in custody.

Prime Minister Yuliya Tymoshenko has criticized the way the case has been
prosecuted. “As always, those who stood at the end of the chain in the

Gongadze case were found, while those who ordered this crime and its
immediate participants, including politicians and public persons, went absolutely
unpunished. It is a shame that our justice is working so selectively. I am
certain that the moment will come when the real culprits who gave the orders
will answer for the murder of Gongadze and not these people whom they set
up to lead the case to a dead end,” she said after the announcement of the
sentences.

Socialist leader Oleksandr Moroz, who took the lead in national protests
against the administration of President Leonid Kuchma in the wake of the
Gongadze murder, has implicated his former Orange Revolution colleagues in
a cover-up. He said the fact that the contractors of the murder got away and
cannot be found is highly suspicious.

“It seems to me that a deal was cut between the former and current
leadership of Ukraine regarding a cover-up of the Gongadze case. Someone
wants to localize this case,” he said over the weekend.

Gongadze’s widow, Miroslava, also believes justice has not been fully
served: “Those who ordered the crime have yet to be punished. The people
who organized and ordered the murder must be tried. Until anyone who had
anything to do with the murder of Georgiy are punished, neither the
president nor high-placed officials have the right to tell the public and
the international community that the Gongadze case has been solved,” she
said in an interview to Radio Liberty.
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21.  LONDON STOCK EXCHANGE BOOSTS MARKETING
IN UKRAINE, SEEKS LISTINGS

By Dawn Cowie, The Wall Street Journal Europe
Europe, Thursday, March 27, 2008

THE LONDON Stock Exchange has stepped up marketing efforts in Ukraine,
where 80 companies have announced flotation plans, after two-thirds of
initial public offerings of shares from Russia and the former Soviet states took
place on the U.K. exchange or its junior Alternative Investment Market last
year.

There were a total of 33 listings by companies from the former Soviet states
last year, and 22 of those were either on the LSE or AIM, according to data
from PBN Co., a strategic communications firm focused on the region.

Only six Ukrainian companies floated shares last year, with four of those in
London. This included iron-ore company Ferrexpo PLC, which raised £102
million ($204.1 million) when it floated on the LSE’s main market in June.
JPMorgan Cazenove, a joint venture between J.P. Morgan Chase & Co. and
Cazenove Group, was global coordinator and joint book runner with Deutsche
Bank AG.

Of the 80 Ukrainian companies that have flotations in the pipeline, 17% have
said they were considering a London listing, 6.25% said they were
considering a Frankfurt float and 3.75% said they are looking at the Warsaw
Stock Exchange, according to advisory firm Ernst & Young LLP. The majority
haven’t disclosed their listing plans.

Ukrainian pipe maker Interpipe has said it aims to raise $1 billion when it
lists in London later this year, while media company U.A. Inter Media Group
has said it hopes to raise more than $500 million next year. Interpipe has
appointed Deutsche Bank, ABN Amro Holding NV and Merrill Lynch & Co.
as book runners on its float.

A London Stock Exchange PLC spokeswoman said the exchange’s
business-development team visits Ukraine almost every month. “We’ve got more
companies currently from Kazakhstan, but there’s a lot of potential issuers
in Ukraine, and the local capital market is relatively underdeveloped,” she
said.

There are three Ukrainian companies listed on the LSE’s main market and
eight on AIM, compared with 10 LSE listings and 11 AIM listings from
Kazakhstan-based companies.

“Many Ukrainian companies want to become more international and are
considering London listings because this offers access to the widest range
of investors,” said Oleksandra Dubovyk, associate director at Ernst & Young
in Ukraine. “It is considered to be the best place for commodities and
raw-materials companies because of the high liquidity.”

Although Ukraine is a commodity-rich state, a breakdown by sector of coming
flotations shows that 38% are retail and consumer-products companies, 21%
are from financial-services firms, 14% are from the industrial-products
sector, and 10% are energy, chemicals and utilities companies.

The outlook for initial public offerings from the region remains relatively
positive because of the strong commodities sector. Russia funds have
received net inflows of $968 million during the first 10 weeks of this year,
while global commodities and materials funds have had inflows of $3.2
billion, according to data from EPFR Global.

Kazakh metals and mining company Eurasian Natural Resources Corp., which
is incorporated in the U.K. and listed on the LSE’s main market, shot into
the top third of the FTSE 100 last week after its share price rose 76% since it
was floated in December.

“Companies with a growth story and a transparent structure that are
well-prepared for an initial public offering can win the trust of investors.
Investors are more nervous about developed economies than emerging
markets,” Ms. Dubovyk said.
———————————————————————————————
From Financial News at www.efinancialnews.com.
http://online.wsj.com/article/SB120656897391366665.html

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22.  HORIZON CAPITAL RAISES $122M IN DIRECT INVESTMENT
IN NEW EMERGING EUROPE GROWTH FUND II

Interfax-Ukraine, Kyiv, Ukraine, Thursday, March 20, 2008
KYIV – Horizon Capital direct investment fund management company, at
the first stage of formation of its new Emerging Europe Growth Fund II
(EEGF II), has raised $122 million for it, managing partner of the fund,
Natalia Yaresko [Jaresko], has told Interfax-Ukraine.

“By the end of spring, the second stage of raising [funds] will be
completed, and in fall – the third,” she said.

Yaresko said that the worsening of the situation on the international
financial markets did not affect the formation of the fund.

“On the contrary, investors are not able to earn good profits in Europe and
the United States, and that why they are considering emerging markets,” she
said.

She said that if the situation has worsened for those companies that want to
conduct private placements or issue eurobonds, the direct investment funds
found it easier to raise funds.

She said that private equity funds are interested in Ukraine more and more,
and if in 2006 there were only three private equity funds in the country,
last year, U.S. Advent International, several regional funds arrived on the
market, and large investment banks like Morgan Stanley started operating in

Ukraine.

At present, HorizonCapital manages the Western NIS Enterprise Fund

(WNISEF) and Emerging Europe Growth Fund (EEGF), and their volume
is $280 million. The third fund’s volume is estimated at around $300 million.
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U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
========================================================
23.  .  UKRAINE’S EXPRESS DELIVERY SECTOR:
IN DIRE NEED OF EXPRESS FIXING

By Jim Davis, Business Ukraine magazine
Monday, March 3, 2008, Kyiv, Ukraine

Express operators – DHL, UPS, FedEx and others – pride themselves on
guaranteed, fast and reliable, on demand, worldwide, integrated,
door-to-door delivery.

However, express shipments headed for Ukraine are guaranteed only as far
as the country’s borders where they collide with the State Customs Service,
which remains mired in Soviet-era bureaucracy and acts as a barrier to the
sector’s development

In an increasingly integrated world economy, in which the velocity of
business has accelerated immensely over recent decades, the express industry
worldwide and particularly in Europe has played an essential role in the
“just-in-time” concept that serves to provide business and industry with the
essentials of modern business.
GROWTH INDUSTRY IN A GROWING MARKET
The express industry developed first in the United States and by the 1980s
began to make a major impact in Europe. The European Express Association
(EEA), a membership association covering all the major express operators,
says the industry has more than 250,000 employees with that number expected
to reach 500,000 by 2013. EEA members deliver more than 450 million
packages each year, almost half the intra European air cargo traffic.

In Ukraine, the express figures are less widely known, but two long-time
express market competitors, DHL and UPS, continue to grow and expand
their investments. DHL is number one in the market with UPS a highly
competitive number two.
ASSESSING THE PROBLEMS
Because the express business is so competitive and because keeping
customers informed of the status of their shipments is an integral part of
the competitive marketing process, all of the major actors in the sector
have extremely sophisticated tracking systems.

Also because of the high sophistication of the technology, they are
extremely adept at spotting and pinpointing delivery problems.

Unfortunately, in recent years, Ukraine has had more problems than any
other major express destination in the world.

At least one of the major express companies actually has as part of its
tracking system in its headquarters a large, flashing red light that goes
off when some part of the system seriously breaks down and is not delivering
within prescribed standards. When that red light begins flashing more often
than not the problems have been in Ukraine – and almost invariably related
to customs matters.

We should point out that this was not always the case. A few years ago – the
late 1990s and early 2000s, Ukraine had problems but not as many as Russia
and it was Russia that got the attention – and then responded to the obvious
flaws in its express handling procedures.

Today Russia is now rapidly becoming competitive with other advanced
European countries in the sophistication of its express industry, while
Ukraine, once a beacon of hope, has slid back into a bureaucratic miasma
of failed opportunities.
LOOKING FOR SOLUTIONS?
As Ukraine fell further behind the international standards common to express
companies, the carriers, both through their membership associations and
individually, began a series of efforts to help Ukraine attain higher levels
of compliance and competence. For example, in March 2006, a delegation from
the EEA visited Ukraine at the request of the Ukraine Express Association
(UEA) to discuss with Customs ways to improve operating procedures for
members.

Following this visit, a delegation of senior Ukrainian customs officials,
accompanied by a number of company representatives, took a fact-finding
tour of the major European express interconnection hubs, located in
Brussels, Liege and Cologne.

The purpose of the visit was to enable Ukrainian officials to discuss first
hand with Belgian and German customs officials the application of simplified
electronic procedures for express operators and to observe these procedures
hands-on. The clear message following this tour was that Ukraine would
implement simplified electronic procedures as soon as practicable.
EXCUSES AND NO POSITIVE RESULTS
As of the end of February 2008, the express package customs clearance
situation in Ukraine, in spite of endless discussions between Ukrainian
customs officials and the express operators was little improved and some
would suggest even worse.

An example of good intentions gone wrong is exemplified by the following
excerpt from a joint implementation report of Ukraine-European Commission
work in 2003:

“Customs Regulations and Procedures. The New Ukrainian Customs Code,
which was signed in August 2002, will enter into force from January 2004 and
should allow for an efficient and smooth movement of goods into and out of
Ukraine and will eliminate the legal uncertainty and lack of transparency
for economic operators under which the customs authorities are currently
working.

“The EC expects that the new Customs Code should also simplify the
procedures for customs clearance, e.g. by moving to a ‘one-stop’ system and
thus, eliminating the current complex and time-consuming procedures for
customs clearance. This would significantly facilitate trade.”

Fine words, indeed, but rendered almost meaningless by time and an
unwillingness or inability of successive Ukrainian governments to turn the
words into positive and long-lasting changes.
A NEW FALSE DAWN
There was a hope that the introduction of simplified electronic procedures
as of January 1, 2008 was a breakthrough that would replace documents
with electronic transactions. In reality, the new procedure appears to have
little value for customs clearance and involves intense amounts of added
work for express operators.

The new system so far consists of an electronic database into which
operators have to enter all import and export shipments. The data inputted
must include not only those shipments that are liable for duty, but also
document-only shipments that would carry no duty at all.

The new electronic files are apparently for customs hold management and
perhaps could eventually lead to the implementation of a risk management
system. However, for now and the foreseeable future, all that has been
accomplished is to pile greater work on the express companies and build up
files on electronic data that are of no current value to anyone.

The new data remains almost totally unused as customs clings to the old
practices – and the old paperwork – assuring it of 100% control of all
incoming goods.

The 100% control system is still ingrained in law, regulation and practice
in Ukraine. It is so totally antiquated and out of touch with 21st century
business practice that Ukraine is increasingly placed at odds with the world
express industry and the millions of customers worldwide who depend upon
it to meet their needs and to increase business efficiency.
THE COST TO INDUSTRIAL DEVELOPMENT
Vadim Sidoruk, DHL’s Ukraine commercial manager explained one of the
greatest problems with Ukraine’s system: “Over and over again, companies
considering multi-million dollar investments in Ukraine come to us and asked
for an evaluation of the efficiency of the express delivery system here.

“We have no choice except to tell them the truth because we cannot afford to
mislead companies to make major decisions based on incorrect information.
“It is hard to imagine just what would lead the parliament and the Customs
Committee to make the changes necessary to remove the roadblocks.

“However, I cannot help but think that if they understood the many
development projects that have gone elsewhere in part because of the
antiquated customs procedures, that alone would have a very strong impact
on their thinking – and actions.”

Sidoruk also related a recent incident that points up the attitude that the
Customs service takes toward express companies and their customers.

Within the last ten days, DHL has moved to a new 8,000 square-metre,
USD 12 million state-of-the-art package processing centre in Kyiv. DHL
provided the customs service with fully equipped facilities for the 20
officers who staff the centre’s customs functions.

DHL provided moving services to the new centre to meet not only its own
needs, but also for the customs service. Once the move was complete, there
was a complaint that one box of personal effects belonging to a top customs
official was missing.

Rather than dealing with the issue in a reasonable fashion, customs
officials impeded the processing of incoming packages from all over the
world for two days while customs officers searched for the one box of
personal documents that had gone temporarily astray.

In effect, over 1,000 customers in a number of countries worldwide were
inconvenienced and their packages unnecessarily delayed because of the
pique of one customs official.

Sidoruk also pointed out that the new Ukraine DHL facility has what is
probably Europe’s largest holding and storage facility for uncleared
incoming express packages. Unfortunately, the reason that such capacity is
required, he pointed out, is that of all the packages held by customs in all
of eastern and central Europe, 70% are being held in Ukraine.
HOPE FOR THE FUTURE?
Svetlana Tidyakina, country manager of the worldwide United Parcel Service
(UPS) system, believes that Ukraine’s accession to the World Trade
Organisation could provide a part of the impetus needed for improvements
in the current situation.

“The structure of the customs service here is not attuned to change, but
change must be accelerated if we are going to deal with Euro 2012 and other
positive developments ahead,” Tidyakina states.

Tidyakina, who has been with UPS in Ukraine since 1992, said that she sees
no solution in the short run, and believes that a complete rewrite of
Ukraine’s Customs Code is essential for major improvements to the system.

“We expect our traffic to at least double and perhaps triple by 2012, which
requires that we all work together to effect system improvements now before
the current high inflow of express packages becomes a deluge,” Tidyakina
adds
WHAT IS REALLY NEEDED?
There is consensus among major express carriers that one of the first
changes essential to the system is an increase in the value threshold for
dutiable packages. Currently, any incoming package to a company name

a value of less than EUR 100 is not subject to duty (packages for private
individuals are subject to duty starting from USD 0.01!)

This is also complicated by the way that Ukraine looks at the dutiable
value. In Europe, the duty threshold is considered only based on the
intrinsic value of the transported goods. However, Ukraine calculates
dutiable value based on the value of the goods transported and includes
the cost of express transportation as a part of the dutiable value.

“All we need is a EUR 200 de minimus valuation on incoming packages and
we could solve many of the problems that we face today. Moreover, if we
really want to make progress, we need to adopt another standard European
procedure.

“In Europe, a dutiable package may be delivered to the customer, with the
customer then having 10 days in which to complete the formal declaration
process.

“Implementation of these two changes alone would allow us to solve about 70%
of the express package problems that are fouling our system today. Give us
that 70% relief and the 30% of other problems we could deal with.” DHL’s
Sidoruk concludes.
————————————————————————————————
LINK: http://www.businessukraine.com.ua/ukraine-s-express-delivery-in-of

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24. SOFTLINE COMPANY JOINS U.S.-UKRAINE BUSINESS
COUNCIL (USUBC), MEMBER NUMBER FIFTY-ONE
 
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Dec 2007
WASHINGTON: The Executive Committee of the U.S.-Ukraine Business
Council (USUBC) is pleased to announce it has approved the Softline
Company, Kyiv, Ukraine, through their U.S. company, Volia Software
(managed by Craig Phillips), located in Houston, TX, as the fifty-first
member of the USUBC.

Softline is a well-known Ukrainian designer of modern information control
systems and does considerable work internationally including the United
States.

USUBC has been working with Yuriy Sivitskiy, one of the original founders of
Softline, now a Senior Partner.  I have known and worked Yuriy and one of
his partners, Anton Marrero, with since 1999. Yuriy will represent Softline
on the USUBC board of directors. Softline is the 29th new member for
USUBC this year and member number 51.

Softline succeeds in competition with the world leading manufacturers of
software product. They participate and take first places in international
competitions and tenders along with the best transnational corporations and
IT-corporations.

Softline has attracted investors, such as the Ukrainian Growth Funds managed
by the SigmaBleyzer Emerging Markets Private Equity Investment Group,
top specialists and foreign partners. I introduced Softline to Michael
Bleyzer, President of SigmaBleyzer in the spring of 2000.  Many of their
technologies are successfully beating out a road to international market,
and a lot of  their specialists have been highly valuated by foreign
clients.

At the end of November, 1995 a team of bold and ambitious graduates of

Kiev Polytechnic Institute [including Yuriy Sivitsky] decided to try their
strength in sufficiently new activity of that time – design of corporate
information systems oriented towards business processes automation. The
first tender was won in 1996 and trading system “Forward” worked out for
the Ukrainian Agricultural Exchange is successfully operating up to now.

Softline has designed and installed are being profoundly used in state and
commercial structures throughout Ukraine – State Employment Office, JSC

MACA KYIAVIA, JSC Galakton, c.c.  Kievstar GSM, c.c. KyivMlyn as well
as in Ingersoll-Rand (Switzerland), Serena Software Inc. (USA). World known
companies such as Microsoft, Informix, Oracle, Intel, InterSystem (CACHE),
Ross Systems are among their clients and partners.

Additional information about Softline Company can be found on their website:
http://www.softline.kiev.ua/control/en/index.
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25.  HEAD OF MORGAN STANLEY UKRAINIAN REP OFFICE
MITIUKOV THINKS COMPANY MAY BUY BANK IN UKRAINE
 

 
Ukrainian News Agency, Kyiv, Ukraine, Sunday, March 30, 2008
 
KYIV – Ihor Mitiukov, the head of the Ukrainian representative office of
Morgan Stanley, a US-based investment bank, supposes that Morgan
Stanley may buy a financial establishment in Ukraine. He has announced
this in his interview with Kommersant Ukraine magazine.

“I do not rule out that in future, as it was in Moscow, Morgan Stanley
office turned into a full-fledged investment bank,” he said.

Mitiukov stressed, for an investment bank buying a financial establishment
in Ukraine is not so important goal, as, for instance, for a commercial
bank.

Mitiukov said that Morgan Stanley plans for Ukraine include developing
operations at the capital market, operations in the sphere of mergers and
takeovers, privatization deals, investments in real estate and agriculture.

“Today we speak about a complete range: all the kinds of financing,
operations in the capital market, merger and takeover operations, active
participation in privatization. We are very interested in the real estate
market. We are ready for heavy investments in agriculture, and also for
individual consultations of our customers,” he said.

Mitiukov added, he intends to actively use his business relations to

promote Morgan Stanley in Ukraine. “I’ll surely use my relations to the
extent business ethics allows. I want Morgan Stanley to acquire image of
a reliable and honest partner as for private business, so as for the
government,” he said.

As Ukrainian News reported, in mid March Morgan Stanley announced its
intention to open a representative office in Ukraine and also to appoint
ex-minister of finance Ihor Mitiukov as its head.
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26. INTERNATIONAL TAX AND INVESTMENT CENTER

(ITIC) JOINS U.S.-UKRAINE BUSINESS COUNCIL (USUBC) 
 
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Dec 2007

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

Council (USUBC) is pleased to announce it has approved the International
Tax and Investment Council (ITIC), Washington, as the 52nd member.

USUBC has been working with Dan Witt, President, Washington and
Alexander Savitsky, Kyiv, head of the Ukraine office, regarding membership.

The International Tax and Investment Center (ITIC) is an independent
nonprofit research and education foundation with offices in Russia,
Azerbaijan, Kazakhstan, Ukraine, the United Kingdom and the United States.
The ITIC is a member of the U.S.-Russia Business Council.

Organized in 1993, the ITIC serves as a clearinghouse for tax and investment
policy information, and as a training institute for key policy makers in the
former Soviet Union and other transition economies. Some have compared
the ITIC to a “private-sector version of the IMF or OECD.”

The ITIC has been active in Ukraine for several years and just recently have
expanded their program in Ukraine.

In late September ITIC, 2007, ITIC hosted the Ukrainian Ministry of Finance
delegation at the EU Excise Taxation Conference in The Hague.  ITIC was
in Kyiv the week following the conference to discuss many of these issues
with the Ministry of Finance and representatives from the major political
parties who were re-elected to the Verkhovna Rada on September 30.

The Cabinet of Ministers has officially finished its drafting of the new Tax
Code and it was approved by the incumbent Government on October 17.  The
proposed legislation was officially registered in the Rada on October 30.
It is expected to be one of the very first items on the new Rada’s agenda.

ITIC has been in active discussions with senior officials in the incumbent
Ministry of Finance.  Also, ITIC was contacted by several senior officials
from the two political parties who are expected to form the Government.

Specifically, ITIC was requested to bring a high-level team to meet with the
Ukrainian leaders to discuss Ukraine’s tax reform priorities and to provide
consultations to the officials who are expected to take a senior economic
position in the Government, and the key Committee chairmanships in the
Rada. ITIC is continuing these discussions, and expect to organize such
program in the near future.

Currently, ITIC is working with several analysts in Kyiv to prepare a “Tax
Reform Priority Issues Paper.”

Additional information about the ITIC can be found on their website:
http://www.iticnet.org. The ITIC is USUBC member 52 and the 30th

new member in 2007 for USUBC.
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27. HILTON HOTELS TO CONSTRUCT HOTEL IN KYIV 
 
Ukrainian News Agency, Kyiv, Ukraine, March 30, 2008
 
KYIV – Hilton Hotels Corporation – The Blackstone Group Europe &
Africa director disclosed this in a statement at Hotel Business In Ukraine
forum.
He said that the minimum area of the hotel will amount to 7,000 square
meters. The new hotel will be estimated for 257 rooms.
Hilton Hotels Corporation has announced a number of requirements for
possible partners. Among them, there are transparent financial and property
structure, experience in successful construction projects, financial and
economic acknowledgement by international consultants and project
concept worked out by experienced architects.
Hilton Hotels Corporation is one of the leading companies on the hotel
market of the world. Financial turnover of the company is about GBP 9
billion a year. As Ukrainian News earlier reported, opening of the first Hilton
Hotel had been scheduled for 2008-2009.
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28.  MAXWELL USA LLC JOINS U.S.-UKRAINE BUSINESS
COUNCIL (USUBC), FIRST FOR 2008, MEMBER NO. 53
 
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Jan 2008
 
WASHINGTON – The executive committee of the U.S.-Ukraine
Business Council (USUBC) is pleased to announce that MaxWell USA,
LLC, a Washington, D.C.-based medical/pharmaceutical company, has
been approved as the first new member for 2008 and as the 53rd member
of USUBC.
 
USUBC has been meeting with Dr. Peter M. Leitner, President of
MaxWell USA, and with Alex Meerovich, Public Relations Manager,
since early December 2007 about MaxWell’s strong interest in being a
member of USUBC.  Dr. Leitner will represent MaxWell USA on
the USUBC board of directors.
 
As a U.S. company with a growing presence in Ukraine, MaxWell USA
is working to meet significant unmet medical needs in the emerging
markets of the former Soviet Union, including through on-site production
of high-tech, high-quality bio- and chemopharmaceuticals targeting
oncological and cardiological diseases.
 
The head office is based in downtown DC, but the bulk of their current
activity is in Ukraine, where MaxWell is building a large, state of the art
pharmaceutical production facility in the town of Boryspil, just outside
Kyiv.
 
Once completed, the Boryspil facility will employ around 500 people
and will produce a range of bio- and chemo-pharmaceuticals in a variety
of formats. Production is slated to begin in 2008.
 
The company president is Dr. Ken Alibek, noted American microbiologist,
biotechnologist, and biodefense expert originally from Kazakhstan.  Dr.
Alibek currently divides his time between MaxWell’s corporate head-
quarters in Washington, D.C. and the Boryspil facility.
 
Their plans for Ukraine include much more than manufacturing and
distributing pharmaceuticals.  MaxWell is also establishing a network of
out-patient clinics across Ukraine (the first clinic in Boryspil opened on
August 1, 2007); they just published in Kyiv the first issue of their
popular-medical journal, “Science, Health, Life”; and they plan to open a
specialized cancer and cardiology clinic, a drug development center, a
clinical studies center, and a diagnostic and clinical center, all in close
proximity to the Boryspil plant.
 
In short, MaxWell is creating a novel and comprehensive healthcare
complex in and around Kyiv to realize the corporate motto: “We Help
You Live Longer.”
 
The  corporate website is www.max-well.com, available in Ukrainian,
Russian and English.
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29.  UKRAINE, UNITED STATES TO SIGN AGREEMENT ON
TRADE AND INVESTMENT COOPERATION THIS WEEK
To Set Up Ukrainian-U.S. Council for Trade and Investment

Ukrainian News Agency, Kyiv, Ukraine, Monday, March 31, 2008

KYIV – Ukraine and the United States are to sign an agreement on the trade
and investment cooperation. Ukrainian Ambassador to the United States Oleh
Shamshur has announced this at a briefing. The agreement will be signed
during US President George Bush’s visit to Ukraine.

“The agreement is a specific step toward the liberalization of the trade,
attraction of investment, and the agreement is the first step toward the
creation of a free trade zone between Ukraine and the Untied States,” the
ambassador said.

Presidential Secretariat Deputy Head Oleksandr Chalyi said in turn that the
agreement would envisage the creation of the Ukrainian-US council for trade
and investment.

“I am sure that the council would start the actual dialogue on how to make
closer our trade and investment regimes toward the creation of the free
trade area of Ukraine and the United States,” Chalyi said. He said the
council would be headed by the economics ministers of the two countries.

As Ukrainian News earlier reported, On March 31-April 1, U.S. President
George Bush will be on a visit to Ukraine.
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========================================================
30. CROWNE PLAZA HOTEL TO BE CONSTRUCTED IN KYIV

Ukrainian News Agency, Kyiv, Ukraine, Monday, March 31, 2008

KYIV – The ITT-Plaza Company, which is a part of the Kyiv-based ITT
financial and investment group, has agreed with the British InterContinental
group of hotels on the construction of Crowne Plaza four-star hotel at
Korolenkivska Street in Holosiivskyi district, Kyiv.  Ukrainian News learned
this from the ITT Company’s press service.

According to the statement, Crowne Plaza hotel will be part of the
multifunctional complex, the project of which is being implemented by the
ITT group.  The hotel is meant for 225 rooms – 175 standard rooms and 50
suits and club-rooms.

The hotel will also have restaurant, business-center, and five conference
halls with the total area of 1,020 square meters, SPA saloon and other. The
multifunctional complex will be built at the land plot with the total area
of two hectares. The total investments into the project make USD 120
million.

The ITT-Plaza intends to finalize the agreements by 2009. The ITT-Plaza

open joint-stock company is a part of the ITT financial and investment group.

The ITT group also includes the ITT-Invest company, specializing in
securities trading, as well as investment and banking activity, the
ITT-Capital company dealing with direct financing, the ITT-Management
company dealing with assets and funds control, and ITT-Consult –
specializing in the investment consulting.

As Ukrainian News earlier reported, InterContinental group of hotels
intended to open Golden Domes five-star hotel at 2A Velyka Zhytomyrska
Street near Mykhailivska Square in Kyiv by 2008. InterContinental group of
hotels is the owner of seven brands, including InterContinental Hotels and
Crowne Plaza.

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
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5. Law firm RULG – UKRAINIAN LEGAL GROUP, Irina Paliashvili,
President; Kyiv and Washington, general@rulg.com, www.rulg.com.
6. BAHRIANY FOUNDATION, INC.
7. VOLIA SOFTWARE, Software to Fit Your Business, Source your
IT work in Ukraine. Contact: Yuriy Sivitsky, Vice President, Marketing,
Kyiv, Ukraine, yuriy.sivitsky@softline.kiev.ua; Volia Software website:
http://www.volia-software.com/ or Bill Hunter, CEO Volia Software,
Houston, TX  77024; bill.hunter@volia-software.com.
8. ODUM– Association of American Youth of Ukrainian Descent,
Minnesota Chapter, Natalia Yarr, Chairperson
9. U.S.-UKRAINE BUSINESS COUNCIL (USUBC), Washington,
D.C., For information about USUBC please write to mwilliams@usubc.org 
or check on the USUBC website: http://www.usubc.org.

10. UKRAINIAN ORTHODOX CHURCH OF THE USA, Archbishop
Antony, South Bound Brook, New Jersey, http://www.uocofusa.org
11. UKRAINIAN AMERICAN COORDINATING COUNCIL (UACC),
Ihor Gawdiak, President, Washington, D.C., New York, New York
12. U.S.-UKRAINE FOUNDATION (USUF), Nadia Komarnyckyj
McConnell, President; John Kun, Vice President/COO; Markian
Bilynskyj, VP/Director of Field Operations; Kyiv, Ukraine. Web:
http://www.USUkraine.org
13. WJ GROUP of Ag Companies, Kyiv, Ukraine, David Holpert, Chief
Financial Officer, Chicago, IL; http://www.wjgrain.com/en/links/index.html
14. EUGENIA SAKEVYCH DALLAS, Author, “One Woman, Five
Lives, Five Countries,” ‘Her life’s journey begins with the 1932-1933
genocidal famine in Ukraine.’ Hollywood, CA, www.eugeniadallas.com.
15. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
16.  ARTUKRAINE.COM, www.ArtUkraine.com
17. SWIFT FOUNDATION, San Luis Obispo, California
18. TRAVEL TO UKRAINE website, http://www.TravelToUkraine.org,
A program of the U.S-Ukraine Foundation, Washington, D.C.
19. BUYUKRAINE.ORG website, http://www.BuyUkraine.org.
A program of the U.S.-Ukraine Foundation, Washington, D.C.
20. DAAR FOUNDATION, Houston, Texas, Kyiv, Ukraine.

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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 (USUBC)
1701 K Street, NW, Suite 903, Washington, D.C. 20006
Tel: 202 437 4707; Fax 202 223 1224
mwilliams@usubc.org; www.usubc.org
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Power Corrupts and Absolute Power Corrupts Absolutely.
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