Monthly Archives: April 2008

AUR#895 Apr 2 Germany, France & Russia Stand Against Ukraine & Georgia; United States Supports Ukraine & Georgia; Russia Warns Ukraine

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THE NATO SUMMIT: By Gregor Peter Schmitz in Washington D.C.
Der Spiegle Online,  Germany, Friday, March 28, 2008
Reuters, Paris, France, Tuesday, Apr 1, 2008

RIA Novosti, Moscow, Russia, Tuesday, April 1, 2008


By Terence Hunt, Associated Press (AP)
Bucharest, Romania, Tuesday, April 1, 2008

Agence France-Presse (AFP), Kiev, Ukraine, Wednesday, April 02, 2008

By Anne Penketh, Diplomatic Editor, The Independent

London, UK, Wednesday, 2 April 2008

The Alliance Stands At The Fork in the Road, Nudge It Forward
EDITORIAL: The Wall Street Journal, New York, NY, Wed, April 2, 2008

Roman Olearchyk, Ben Aris and Bernard Kennedy
bne, BusinessNewEurope, Berlin, Germany, Thursday, March 27, 2008

Commentary by Frederick Kempe, President, Atlantic Council
Bloomberg, New York, New York, Tuesday, April 1, 2008

The price of the question
OP-ED: by Timofei Bordachev, Director of the Center for European and
International Research, State University – Higher School of Economics
Kommersant, Moscow, Russia,  Monday, March 31, 2008

By Roman Olearchyk in Kiev and James Blitz in London
Financial Times, London, UK, Tuesday, April 1 2008


By Peter Baker, Washington Post Staff Writer
The Washington Post, Washington, D.C. Tue, Apr 1, 2008; Page A12

Presidential Secretariat, Kyiv, Ukraine, Tuesday, April 1, 2008

Reuters, Washington, D.C., Tuesday April 1 2008

OP-ED: By Malcolm Rifkind, MP was Defence Secretary, 1992-95
Telegraph, London, United Kingdom, Wednesday, April 2, 2008

VIEW: By Anders Aslund, Daily Times,

Lahore, Pakistan, Wednesday, April 2, 2008

OP-ED: By Yevgeny Kiselyov, a political analyst
Hosts a radio program on Ekho Moskvy
Moscow Times, Moscow, Russia, Wednesday, April 2, 2008

By Roman Olearchyk, Financial Times
London, United Kingdom, Wednesday, April 2 2008

U.S.-Ukraine Business Council (USUBC), Wash, D.C., Mar, 2008

International Banks Expanding in Romania, Ukraine, and Russia
By Stefan Wagstyl, Financial Times,

London, United Kingdom, Tuesday, April 1 2008
A World Leader in Aerospace, Combat Systems,
Marine Systems, Information Systems & Technology
U.S.-Ukraine Business Council (USUBC), Washington, D.C, Mar, 2008

THE NATO SUMMIT: By Gregor Peter Schmitz in Washington D.C.
Der Spiegle Online,  Germany, Friday, March 28, 2008

US President George W. Bush wants to bring more Eastern European countries
into the military alliance at the upcoming NATO summit. But Germany is
thwarting his plans, because of concerns about Ukraine and Georgia — and in
deference to Russia.

German objections dominate the debate over NATO expansion in the final days
leading up the military alliance’s summit meeting in the Romanian capital

James Goldgeier, a member of the National Security Council in the
administration of former US President Bill Clinton, told SPIEGEL ONLINE: “I
am amazed at how openly the current differences between Berlin and
Washington are being aired. In February it was the German role in
Afghanistan. Now it’s about the issue of NATO expansion, in which Germany
quite openly orchestrated the resistance to Ukraine and Georgia. This is
relatively unusual in advance of this sort of summit.”

Romania’s Ceausescu-era parliament building in Bucharest will host next
week’s NATO summit.Goldgeier’s words ring especially true when one considers
the importance of the issue for the Bush administration.

NATO expansion is one of the few strategies it took over almost seamlessly
from the Clinton administration. “Bush absolutely wanted to get the
acceptance process for Georgia and Ukraine underway in Bucharest,” says

A clear signal that things will not go quite as smoothly as Bush had hoped
was the discussion among foreign policy and security experts at the Brussels
Forum, sponsored by the German Marshall Fund, less than two weeks ago.

Moderator Ronald Asmus, who, as a senior official in the Clinton
administration in the 1990s, played a key role in the initial push to expand
NATO eastward, opened the meeting by calling EU and NATO expansion an
historic success. Asmus went on to rave about how the map of Europe had been
redrawn, and praised the joint tour de force by Europeans and Americans.

But after his nostalgic excursion into the past, Asmus was forced to segue
into a significantly trickier present, one in which the euphoria of new NATO
and EU membership has all but disappeared.

The crucial question is this: In addition to membership invitations that
will be extended to Albania, Croatia and Macedonia at the NATO summit in
Bucharest from Tuesday to Thursday of next week, should Georgia and Ukraine
be given the thumbs up for membership in the not-too-distant future?

In addressing the conundrum, Asmus’ tone quickly turned from jubilant to
sober. Would the United States be able to achieve these goals, he asked the
group apprehensively? There are already many critics today, he added,
critics like the Germans.

“An official from the German foreign ministry told me recently that he
couldn’t think of one member of the foreign affairs committee of the German
Bundestag who supports the initiation of NATO membership negotiations with
Ukraine and Georgia,” Asmus said.

Many Germans were sitting in the audience — and agreed with Asmus’
characterization. Eckart von Klaeden, foreign policy spokesman of the
conservative Christian Democratic and Christian Social Union (CDU/CSU)
parliamentary group, was only too willing to list Germany’s concerns.

In Ukraine, he said, large segments of the population oppose the idea of
NATO membership. And Georgia, with its internal conflicts? “We don’t want
another Cyprus in NATO,” said von Klaeden, referring to the Mediterranean
country’s division into Turkish and Greek regions.

Volker Stanzel, a highly-placed official at the German Foreign Office,
described the regional effects of another NATO expansion — and the concerns
in Moscow. “Russia is in the process of domestic political change, which,
together with a new president, also affects its foreign policy,” says
Stanzel. Is the right time for NATO to seek conflict with the Russians by
pushing eastward? Stanzel’s position: “Is this truly necessary?”

Despite the German objections, diplomats say that a row in Bucharest is
unlikely. Washington now seems more receptive to arguments coming from its
allies. Elizabeth Sherwood-Randall, a NATO expert at Stanford University,
told SPIEGEL ONLINE: “There is already a lot of frustration among our
partners over NATO’s fixation on Afghanistan and Kosovo. It takes up so

many resources that there is very little room left for strategic debates within
the alliance.”

According to Sherwood-Randall, the member nations are making it increasingly
clear to Washington that they do not feel that their contributions are
sufficiently recognized — contributions that in many cases were achieved in
the face of substantial resistance from within their populations.

All of which suggests that the Americans will hold back in Bucharest, at
least when it comes to new finger-pointing relating to the Afghanistan
mission. The Canadians will likely take a similar approach. In a recent
interview with SPIEGEL ONLINE, their defense minister, Peter MacKay,
reiterated Canada’s call for a stronger German role.

But now the Canadians assume that their demands will be met in Bucharest,
where other member states are expected to pledge 1,000 additional troops to
come to their aid in embattled southern Afghanistan.

And the expansion issue? Last week Bush continued to campaign for Georgia
and Ukraine with personal calls to European capitals. He also plans to pay a
demonstrative visit to Kiev just before the NATO summit.

But even senior Washington diplomats expect the Bush administration to come
around, perhaps by accepting a declaration that would lay the groundwork for
the beginning of an acceptance process for Ukraine and Georgia. The White
House apparently no longer believes that a rapid admission process, like in
the first expansion round, is possible today.

As expansion veteran Asmus recently wrote in Foreign Affairs, three key
factors have changed since then: the global situation, the candidate nations
and Russia. “Finally, Russia has changed,” he wrote. “In the 1990s, it was a
weak, quasi-democratic state that wanted to become part of the West. Now, a
more powerful, nationalist, and less democratic Russia is challenging the

This has not failed to escape the attention of President Bush, who has spent
the last few weeks seeking closer ties with Moscow. He sent Secretary of
State Condoleezza Rice and Defense Secretary Robert Gates to Moscow to

allay Russian concerns over the planned US missile defense system in Eastern

The president even plans to meet directly with Putin after the NATO summit,
on April 6 in the Russian Black Sea resort of Sochi, an accommodating
gesture that has surprised even some of his top advisors. “Good relations
with Russia are important to us,” Bush said this week.

Perhaps the election has something to do with it. John McCain, who is
campaigning to succeed Bush in the White House, could suffer in the
presidential race as a result of his support for the unpopular president’s
Iraq policies. A new escalation with Russia, instigated by the White House,
would only underscore the impression of a devastating Republican foreign
policy legacy.

Of course, McCain himself is seen as being highly critical of Moscow. The
Arizona senator has often said that he sees only three letters in Putin’s
eyes: “a ‘K’, a ‘G’ and a ‘B’.” While Bush was sending his love letter to
Moscow this week, his fellow Republican had a different message for the

As long as democracy does not progress in Russia, McCain said in a speech

on foreign policy, there could only be one conceivable reaction: The G8 must
exclude Russia. (Translated from the German by Christopher Sultan)
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Reuters, Paris, France, Tuesday, Apr 1, 2008

PARIS – France will not support bids by the former Soviet republics of
Georgia and Ukraine to become members of NATO, putting it at odds with
the United States, French Prime Minister Francois Fillon said on Tuesday.

“France will not give its green light to the entry of Ukraine and Georgia,”
Fillon told France Inter radio. “France has an opinion which is different
from that of the United States on this question.”

NATO leaders hold a summit later this week in Romania where Georgia and
Ukraine hope to obtain a Membership Action Plan (MAP) — a road map to
eventual entry already secured by Croatia, Macedonia and Albania.

President George W. Bush arrived in Ukraine late on Monday ahead of the
summit, and officials accompanying him remained optimistic that the alliance
could extend the plan to both countries at the summit.

“We think it’s very, very, very important (for) Georgia and Ukraine, that we
welcome their aspirations to be part of NATO, that we have an active
engagement in helping them move in that direction,” National Security
Council adviser Stephen Hadley told reporters aboard Air Force One.

“And the president has made clear we think the best way to do that is to
offer MAP at Bucharest and that’s what the president is pushing hard for.”

However, French officials are reluctant to embrace Ukraine and Georgia
because of fierce Russian opposition to their NATO membership drive.

“We are opposed to the entry of Georgia and Ukraine because we think it is
not the right response to the balance of power in Europe and between Europe
and Russia, and we want to have a dialogue on this subject with Russia,”
Fillon said.

“That’s what the president of the Republic will say in Bucharest tomorrow,”
he added.
(Reporting by Francois Murphy and James Mackenzie; Editing by Crispian
Balmer and Ibon Villelabeitia)

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

RIA Novosti, Moscow, Russia, Tuesday, April 1, 2008

MOSCOW – Ukraine’s admission to NATO will have a negative impact on

European security and on Kiev’s relations with Moscow, a Russian deputy
foreign minister said on Tuesday.

“Ukraine’s accession to NATO will cause a deep crisis in Russian-Ukrainian
relations that will affect all-European security. Therefore, the West must
also make a choice as to what kind of relationship with Russia is in its
interests,” Grigory Karasin said.

He said that Kiev’s admission to NATO would require a review of Russia’s
own security policy.

“Our policy with regard to Ukraine will be based on respect, but we will
develop it depending on Ukraine’s further actions,” he said.

He also said Russian and Ukrainian foreign ministers were to meet “in the
very near future,” and that a meeting of an intergovernmental commission on
economic cooperation was to be held later in Kiev. Russia’s Foreign Ministry
earlier said the ministers would meet on April 15 in Moscow.

Karasin was addressing a parliamentary hearing on the future of a
Russian-Ukrainian friendship, cooperation and partnership treaty, which
expires in exactly a year.

Some MPs have suggested that Russia should pull out of the treaty if Ukraine
joins NATO’s Membership Action Plan (MAP), a program that prepares

countries for accession to the Western military alliance but does not guarantee

The State Duma has proposed several recommendations to the Russian
government with regard to Ukraine – from tearing up the Russian-Ukrainian
treaty to extending it, but only if the treaty on the Black Sea Fleet’s
presence in Ukraine is extended for another 20 years.

“NATO’s approach to Russia’s borders is a situation that is unacceptable to
us, and we will do all we can to prevent that from happening,” State Duma
Speaker Boris Gryzlov said.

He said one of the reasons why he objected to Ukraine’s admission to NATO
was that the move was opposed by the majority of Ukrainians.

U.S. President George W. Bush arrived in Ukraine late Monday and following a
meeting with President Viktor Yushchenko told journalists on Tuesday: “We
support MAP for Ukraine.”

The visit is a stop-over before the April 2-4 NATO summit in Romania, which
Russian President Vladimir Putin will also be attending, as a guest.
Ukraine’s leaders requested in January to join NATO’s Membership Action

However, despite Washington’s unequivocal support for Ukraine’s bid,
membership is far from certain, with the majority of Ukrainians and a vocal
minority in parliament resisting the plans, partly over fears of provoking
its former Soviet master Russia.

The Kremlin threatened in February to target missiles at Ukraine if Kiev
joins NATO and allows Western military facilities on its territory.

On Monday, thousands of people gathered on Kiev’s Independence Square
(Maidan Nezalezhnosti) to rally against Bush and NATO, displaying Communist
flags and banners with the slogans: “NATO is worse than the Gestapo” and
“Put Bush’s bloody dictatorship under an international tribunal.”

Yushchenko condemned the rallies, however, saying: “these were the flags
that caused totalitarianism and suffering, the deaths of millions of

Ukraine’s drive toward NATO membership has triggered domestic parliamentary
opposition protests amid widespread antipathy toward the alliance. A survey
published earlier this month said only 11% of Ukrainians supported the idea
of NATO membership, while almost 36% were strongly opposed.

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

By Terence Hunt, Associated Press (AP)
Bucharest, Romania, Tuesday, April 1, 2008

BUCHAREST, Romania – Unflinching from a fight, President Bush said Tuesday
he fully supports proposals to put ex-Soviet states Ukraine and Georgia on
the road toward joining NATO despite French and German qualms it would

upset relations with Moscow.

Bush’s declaration laid the groundwork for an uncomfortable showdown when
leaders of the 26-member military alliance gather in Bucharest for a summit
Wednesday to Friday. France refused to back down under U.S. pressure.

t”France will not give its green light to the entry of Ukraine and Georgia,”
Prime Minister Francois Fillon said. “We are opposed to Georgia and
Ukraine’s entry because we think that it is not the correct response to the
balance of power in Europe, and between Europe and Russia.”

Bush turned up the heat on allies by making a high-profile visit to Ukraine
before traveling to Romania.

Soviet-era flags were carried in the streets of Kiev on the eve of Bush’s
arrival, the president noted. More than half of Ukraine’s population, most
in the Russian-speaking east and south, is deeply suspicious of the West and
opposes membership, polls show.

Brushing aside doubts in Ukraine, Bush said, “Look, this is an interesting
debate that’s taking place and … as every nation has told me, Russia will
not have a veto over what happens in Bucharest, and I take their word for
it. And that’s the right policy to have.”

Ukraine and Georgia are seeking a precursor to membership known as a
membership action plan that spells out what they would have to do to join
the alliance. Such a plan could take years to fulfill.

“I’m going to work as hard as I can to see to it that Ukraine and Georgia
are accepted into MAP,” Bush said. “I think it’s in our interests as NATO
members, and I think it’s in Ukrainian and Georgian interests, as well.”

To emphasize Bush’s case, the White House released excerpts of a speech he
will deliver Wednesday just hours before the summit opens.

Granting Ukraine and Georgia an action plan “would send a signal to their
citizens that if they continue on the path of democracy and reform, they
will be welcomed into the institutions of Europe,” according to the speech.
“And it would send a signal throughout the region that these two nations
are, and will remain, sovereign and independent states.”

There were backstage negotiations to resolve an argument among NATO partners
about Ukraine and Georgia; U.S. officials said they were uncertain of the
eventual outcome. White House press secretary Dana Perino said Bush was not
looking for a compromise.

“We are working very hard to talk with our allies and make the case,” Perino
said. “But it could be a clarifying moment, and that’s not a bad thing,

Bush also urged NATO allies to embrace a missile defense plan for Europe
that Russia has hotly opposed. U.S. officials have raised hopes that Bush
and Russian President Vladimir Putin may reconcile the differences when they
meet this weekend.

Bush, in the speech, quotes U.S. intelligence officials as saying Iran is
moving closer to testing an intercontinental ballistic missile capable of
reaching the United States and all of Europe, if it chooses.

“Today, we have no way to defend Europe against this emerging threat, so we
must deploy ballistic missile defenses here that can,” Bush said.

He said the system is not aimed at Russia. “The Cold War is over. Russia is
not our enemy. We are working toward a new security relationship with Russia
whose foundation does not rest on the prospect of mutual annihilation.”

In Ukraine, Bush told President Viktor Yushchenko the U.S. “strongly
supports your request” and a similar effort by Georgia for a path into NATO.

Russia is not a NATO member and holds no veto authority over the alliance’s
decisions. But all NATO actions require a consensus, meaning any one of the
26 nations can blackball a potential new member. Greece, for example, is
threatening to block Macedonia’s membership application because of a dispute
over Macedonia’s name.

Bush said it was a “misperception” that the U.S. might soften its push on
behalf of Ukraine and Georgia if Russia were to ease opposition to
Washington’s plan for the system to be based in Poland and the Czech

“There’s no trade-offs. Period,” Bush said, adding that is exactly what he
told Russian President Vladimir Putin in a recent telephone call.

Bush and Putin, whose successor takes over in May, are meeting Sunday in the
Russian Black Sea resort of Sochi. White House officials have expressed
hopes the leaders could end months of sharp disagreements and strike a deal.

As if to give a last reminder of Russia’s wishes, Putin’s deputy foreign
minister, Grigory Karasin, said Ukraine’s accession to NATO would cause a
“deep crisis” in relations with Ukraine and the West.

Nine former Soviet bloc countries are in NATO, and Russia opposes Ukraine
and Georgia even starting the process, fearing a further loss of influence
among the former Soviet sphere.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
U.S.-Ukraine Business Council (USUBC):

Agence France-Presse (AFP), Kiev, Ukraine, Wednesday, April 02, 2008

KIEV: George W.Bush last night threw his support behind Ukraine’s bid to
join NATO and told Russia it would have no right to veto the move.

But in a sign of protracted debate at the annual NATO summit in Bucharest
this week, France opposed letting Ukraine and Georgia into the alliance,
with Prime Minister Francois Fillon saying it could upset the balance of
power in Europe.

Speaking at a news conference in Kiev, the US President said Washington
wanted to see Ukraine and Georgia, both former Soviet republics, given a
Membership Action Plan, a formal step towards joining NATO.

“I strongly believe that Ukraine and Georgia should be given MAP and there’s
no trade-offs, period,” said Mr Bush, with Ukrainian President Viktor
Yushchenko at his side.

Mr Bush, however, stopped short, of saying that the Atlantic alliance must
extend MAP agreements to Ukraine and Georgia at the summit, which opens in
Bucharest tonight. His comments were likely to stoke tension with Russia,
and the membership move is opposed by Germany, France and other European

Mr Fillon said: “We are opposed to the entry of Georgia andUkraine because
we think that it is not a good answer to thebalance of power within Europe
and between Europe and Russia.”

Russian officials warned before Mr Bush spoke that Ukraine’s membership of
NATO would undermine European security.

“Admission of Ukraine into NATO will lead to a deep crisis in
Russian-Ukrainian relations. This affects pan-European security,” Russian
Deputy Foreign Minister Grigory Karasin said.

“So the West must decide what kind of relationship with Russia will serve
its interests.”

Russian President Vladimir Putin has threatened to target Ukraine and
Georgia with nuclear missiles should they join the alliance. Mr Bush said he
had recently spoken with Mr Putin to explain why the US supported Ukraine
and Georgia joining NATO and to assure the Russian leader that Moscow had
nothing to fear from such a move.

The US President and Mr Putin, both of whom leave office within a year, are
to meet this weekend at the Russian leader’s residence in the Black Sea
resort of Sochi.

Mr Bush said last night that Russia “won’t have a veto” over who is allowed
to join NATO. A top Russian official quickly responded by saying that

Moscow would make sure its position was taken into account.

“Russia has the right to express its view and has sufficient political
authority for its view to be reckoned with,” said Russia’s ambassador to
NATO, Dmitry Rogozin.

Mr Bush also admitted that there was still no agreement with Russia on US
plans to set up missile defences in two other former Soviet bloc states –
the Czech Republic and Poland.

“Obviously, we’ve got work to do to persuade (Mr Putin) that the missile
defence system is not aimed at Russia,” Mr Bush said. He said he was
“hopeful” there could be an agreement. Russia says the system is a direct
threat to its security, a notion dismissed by the US.

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

By Anne Penketh, Diplomatic Editor, The Independent
London, UK, Wednesday, 2 April 2008

President Bush has thrown down the gauntlet to Russia and set the stage for
a showdown with Europe by expressing public support for Ukraine and
Georgia to become members of Nato, Mr Bush said after talks with Ukraine’s
President, Viktor Yushchenko, that America “strongly supports” the former
Soviet republic’s bid for membership.

“In Bucharest this week, I will continue to make America’s position clear:
we support Map for Ukraine and Georgia.” Map refers to Nato’s membership
action plan for future members.

Nato itself is divided over whether to offer the two former Soviet republics
a path towards Nato membership. France and Germany want to avoid
antagonising Russia, which is opposed to Ukrainian and Georgian membership,
and the26-member military alliance operates on the basis of political

Mr Bush said the outcome of the Nato meeting should not be prejudged, but
the French Prime Minister said yesterday: “France will not give its green
light to the entry of Ukraine and Georgia. We think that it is not the
correct response to the balance of power in Europe, and between Europe
and Russia.”

Other states, however, are concerned about Russia – which is not a Nato
member – having what amounts to a veto over Nato membership. Mr Bush said
he had been assured by other Nato leaders “Russia will not have a veto over
what happens in Bucharest. I take their word for it.”

President Vladimir Putin, attending his last major international summit
before he becomes prime minister next month, will hold talks in Bucharest
with Nato leaders. Nine former members of the Soviet bloc are already Nato

Mr Putin’s spokesman, Dmitry Peskov, warned Ukraine and Georgia that
membership would “lead to additional tension”. In a telephone briefing from
the Kremlin with foreign reporters, he did not respond directly when asked
about possible linkage between the membership issue and a dispute with
America over plans to locate parts of a US missile defence shield in Poland
and the Czech Republic.

Mr Bush, who is expected to discuss the missile shield with Mr Putin at
their final summit in the Russian resort of Sochi next weekend, has rejected
any trade-off.

Mr Peskov said Russia would prefer the US to shelve its deployment plans,
but added: “We appreciate the effort from our American partners, and we are
ready to continue our mutual search for the way out of this very complicated
situation” which he said affected Russia’s strategic and national security

The Nato summit is expected to extend invitations to at least two
countries – Albania and Croatia – to join the alliance. A third invitation
had been expected for Macedonia. However, Greece repeated yesterday that it
would veto Macedonia joining unless there was an agreement with Athens on
the country’s name.

There has been a dispute for 15 years over Macedonia which has the same name
as a northern Greek province over which it is accused of having territorial
claims. It has UN membership under the provisional name of the Former
Yugoslav Republic of Macedonia.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
The Alliance Stands At The Fork in the Road, Nudge It Forward

EDITORIAL: The Wall Street Journal, New York, NY, Wed, April 2, 2008

George W. Bush is enjoying a week in the half of Europe that welcomes him
without clenched teeth. But the President had better be ready to spoil the
valedictory tour with tough diplomacy, particularly over NATO, or leave
unfinished business for the next Administration.

The centerpiece of the Eastern European swing is the three-day NATO summit
in Bucharest starting tonight. Washington pushed to hold it in the Romanian
capital to highlight NATO’s role in the ex-Soviet bloc.

Romania is one of seven new Alliance members brought in during the Bush
years. This strategic commitment is suddenly in doubt, however, thanks to
wavering in certain European capitals about the next step.

The invitation party for three future members from the Balkans – Croatia,
Albania and Macedonia – is in danger of being spoiled by Greece. A minority
government in Athens insists that neighboring Macedonia change its name, or
it won’t be allowed into NATO.

This absurd dispute over who gets symbolic claim to the name of Alexander’s
birthplace threatens stability in a region already roiled by the fallout
from Kosovo’s independence. The Greeks don’t know better, so Mr. Bush
and the other leaders have to find a creative solution.

Also on the table in Bucharest is whether Ukraine and Georgia belong in the
West. A preliminary step is a Membership Action Plan, or MAP, to one day
join NATO. Offering a MAP starts a long process with no preordained result.

Macedonia, Albania and Croatia got theirs a decade ago. In Kiev yesterday,
Mr. Bush said that “I strongly believe that Ukraine and Georgia should be
given MAPs,” and promised that Russia “will not have a veto.”

The current signals suggest otherwise. After meeting with Vladimir Putin in
Moscow on March 8, German Chancellor Angela Merkel hardened her
opposition to opening NATO’s door to Ukraine and Georgia.

About 10 other member states took cover behind her. Ukraine is too divided
over NATO, goes their argument, and Georgia’s democracy too unsettled by
last winter’s street riots and early elections. And why – the real reason –
annoy Russia?

A rebuff in Bucharest, which as of last night looked likely absent a
stronger American push, would be dangerous for Ukraine and Georgia, for
NATO and for Europe as a whole. It’s also morally wrong; these countries
are freely asking to be given a chance.

For all its troubles, Ukraine is the healthiest democracy in the old Soviet
Union (bar the three Baltic states). Germany effectively wants to consign
this large, strategic country to Russia’s sphere of influence.

In Georgia, Mikheil Saakashvili did his country no favors with his crackdown
last winter. A positive signal from NATO is the best way to help guide the
freest country in the Caucasus toward the West.

NATO has played an unheralded but critical mentorship role throughout the
post-Cold War era, starting with its invitations to Poland, Hungary and the
Czech Republic. It can do the same for Georgia and Ukraine.

Other pieces of the puzzle are falling into place better in Bucharest.
President Nicolas Sarkozy plans to announce plans to boost the French
military presence in Afghanistan, heeding the call from Canada and NATO
for reinforcements in the south of the country.

The U.S., Britain and Canada are leading the fight against the Taliban,
while Germany, Italy and Spain are convinced Afghanistan is a
“reconstruction” job. The summit usefully recommits the Alliance to see
the task there through.

NATO continues to mock its post-Cold War obituarists, meeting fresh
challenges – Eastern Europe, Balkans, Afghanistan – and enjoying renewed
political support, including, in a welcome surprise, from the new French

But again, in Bucharest, the Alliance stands at a fork in the road. A lame
duck from the White House has another opportunity to nudge it in the right

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

Roman Olearchyk, Ben Aris and Bernard Kennedy
bne, BusinessNewEurope, Berlin, Germany, Thursday, March 27, 2008

While Romania is set to enjoy two days of special holiday during this year’s
Nato summit in Bucharest on April 2-4, the atmosphere inside the halls and
meeting room will be anything but a holiday one.

At the top of the agenda, of course, will be Nato’s expansion; several
countries want to join, Russia wants to prevent them. However, worryingly
for the alliance there is a large existing member, namely Turkey, which
appears to be heading in the opposite direction.

According to sources close to Nato, neither Ukraine nor Georgia will be
formally accepted as candidates for Nato’s programme intended to prepare
aspiring members for joining the military alliance at April’s summit in
Bucharest, despite a last-minute push by US President George W. Bush.

Instead, the Nato leadership will seek a formula to reaffirm support for
Kyiv and Tbilisi’s bids, while putting the divisive issue off and giving
them more time to build up support amid member countries, the sources say.
The delay will also avoid aggravating relations with Russia, which has
issued dire warnings about the consequences that would follow the further
eastward expansion of the military alliance.

“There is an effort to find a formula which will not say ‘no’ to Ukraine and
Georgia, but will de facto put the decision off for later,” says Ilko
Kucheriv, a well-connected pro-Nato advocate in Ukraine who heads the
Kyiv-based Democratic Initiatives Foundation.

The ministerial meeting of Nato countries in Brussels on March 6 ended
without a consensus on these so-called Membership Action Plans (MAPs). The
US’ efforts have so far failed to convince key Western European alliance
members, foremost among them France and Germany, to support these bids.

These countries are worried that such moves would strain already tense
relations with Russia, which adamantly opposes Nato’s further expansion to
regions it views as falling within its own sphere of influence.

Russia’s outgoing president, Vladimir Putin, warned in February that Moscow
could point missiles at Ukraine should its former Soviet ally join Nato and
become a host for military bases.

“Nato member governments are not ready to offer MAP to Ukraine and Georgia,”
says Stephen J. Flanagan, senior vice president and director of the
International Security Program at the Washington DC-based Center for
Strategic and International Studies.

“There are doubts about the depth of support for Nato membership in Ukraine,
uncertainty about political trends in Georgia, and concerns that the move
would further strain relations with Russia. However, the US and others will
want to be sure that this reluctance does not send a message that Moscow’s
confrontational diplomacy is successful. The allies will look for some
concrete steps short of MAP to enhance dialogue with Ukraine and Georgia
that would keep Nato’s door open.”

Kucheriv says it’s the Russian factor that’s the main problem. “If Russia
did not make such a big issue out of this, then Ukraine and Georgia would
have been accepted into the Nato MAP long ago,” he says.

To the Kremlin, the Cold War never ended. Nato broke its promise made to
Russia in the early 1990s not to expand, yet today alliance troops are at
its western border in the Baltics; Poland is about to get a missile system
that sits in Russia’s front yard; and Ukraine, Georgia and Azerbaijan are
all actively pursuing membership. Russian President Vladimir Putin feels
like a man with a gun at his head.

Nato’s expansion is frightening for those brought up in the Soviet Union.
The non-stop propaganda taught them that Nato was their arch enemy,
untrustworthy and aggressive. So the West’s attempt to persuade them that
“we’ll all friends now” takes a leap of faith.

On the other side, small countries that broke with Moscow, like the Baltic
states and Georgia, want the protection of bigger countries against their
old master.

But in other countries, like Ukraine, the population is more ambivalent
about Nato; recent polls show the majority are all for joining the EU (if
and when Ukraine is offered membership), but the majority don’t want to join
Nato even if their leaders do.

The US seems determined to push home its advantage while it can. US
Secretary of State Condoleezza Rice and Defense Secretary Robert Gates were
in Moscow in the middle of March to try and break the deadlock over the
planned missile defense systems proposed for Poland. However, both sides dug
in their heels and little progress was made.
Imagine, then, how a former KGB colonel, whose whole career was built on
fighting a subcutaneous war with Nato members, feels. President Vladimir
Putin’s frustrations and fears over Russia’s relations with its former enemy
spilled over into a speech he gave in Munich just over a year ago in
February 2007.

The speech was the most outspoken Putin has been in his criticism of the
West and drew a line under the Kremlin’s less-than-enthusiastic efforts to
compromise with the other side. He dismissed out of hand the risible excuses
offered for the expansion by Nato command.

“I think it is obvious that Nato expansion does not have any relation with
the modernization of the alliance itself or with ensuring security in
Europe,” said Putin in Munich. “On the contrary, it represents a serious
provocation that reduces the level of mutual trust. And we have the right to
ask: against whom is this expansion intended?”

In the first decade following the fall of the Soviet Union, Russia was
offered promises that Nato would not expand – they were promptly broken.
Then it willingly signed up to a new Treaty on Conventional Armed Forces in
Europe that regulated the Cold War military presence – only to see this
treaty fall into limbo. “And what happened to the assurances our western
partners made after the dissolution of the Warsaw Pact?”

Putin asked the delegates in Munich. “Where are those declarations today? No
one even remembers them. But I will allow myself to remind this audience
what was said. I would like to quote the speech of Nati General Secretary Mr
Woerner in Brussels on 17 May 1990.

He said at the time that: ‘the fact that we are ready not to place a Nato
army outside of German territory gives the Soviet Union a firm security
guarantee’. Where are these guarantees?”

Amongst the many bones of contention is the stalled Adapted Treaty on
Conventional Armed Forces in Europe (ATCAFE), which was signed by the Cold
War rivals in 1999. The treaty was supposed to define the new military
relations in the post-Cold War world.

However, nine years on and only four of the 30 countries that signed off on
the deal have ratified it: Russia, Ukraine, Kazakhstan and Belarus. The rest
have linked ratification of this treaty to the so-called Istanbul
Commitments, which calls for Russia to remove its troops from Georgia and

The Kremlin has heavily criticised this link and suspended its membership
last year in frustration. The other important treaty of the Cold War-era,
the Strategic Arms Reduction Treaty that limits long-range nuclear weapons,
is due to expire in 2009, but attempts by Washington and Moscow to work out
a replacement deal have also failed.

The upshot of this impasse is that the Cold War treaties governing military
relations are still effectively in force.
At the start of 2007, the Kremlin launched a $1-trillion investment
programme that will run until 2012 to replace the worn out Soviet-era
infrastructure, which has cause much comment. However, less noticed is a
parallel programme to modernize and re-equip the Red Army that will cost
approximately $250bn over the same period.

This is a staggering amount of money and the development of Russia’s economy
is closely intertwined with its defence sector; it is no coincidence that
the state-owned arms export agency Rosoboronexport has also become a de
facto holding company for an increasingly acquisitive Kremlin and home to a
slew of new “national champions.”

Russia is a young democracy and so the support of the military remains a key
element in domestic high politics, as was so dramatically demonstrated by
Boris Yeltsin’s constitutional coup of October 1993. Putin always peppers
his “state of the nation” speeches with military detail that largely gets
ignored by the commentators.

And amongst the very first policy statements Russian president-elect Dmitry
Medvedev made after being nominated by Putin was a comment that Russia needs
a strong navy. “The navy must be revived so that Russia is a naval power,”
Medvedev said in January. “We were respected when we were naval power.”

And on top of everything else, arms exports are good business;
Rosoboronexport has more than doubled its revenues in the last eight years
to bring in over $7bn in 2007. Amongst the very first changes Putin made
after taking office in 2000 was to take Rosoboronexport directly under the
control of the presidential administration.

In addition to his job as president, Putin is also Russia’s best arms
salesman and has negotiated a string of multi-billion-dollar arms deals in
parallel with trade and energy ones during his many trips abroad. Arms
exports have become a foreign-policy tool for the Kremlin.
While states to the west, north and east may still view Nato membership as a
proof of their Western credentials and a potential steppingstone to EU
membership, to the south in Turkey – a Nato member since 1955 and still
stuck in the EU queue – the goals of the alliance appear to be diverging
increasingly from its own.

Although Ankara has twice taken command of Nato’s Isaf force in
Afghanistan – and currently has about 675 troops in the country – it is at
least as reluctant as any other Nato member to supply troops to “combat
terrorism” in the east and south of the country.

Speaking to Turkish journalists in Brussels on March 17, Nato General
Secretary Jaap de Scheffer named Turkey as one of the countries which is not
currently fulfilling its pledges to the Nato effort in Afghanistan.

But almost simultaneously, Chief of General Staff Yasar Buyukanit was
restating his opinion that he would “not send a single soldier” for combat
operations beyond the remit of Isaf. Tens of thousands of Turkish soldiers
were already fighting terrorism, General Buyukanit underlined, in a
reference to the conflict with violent Kurdish nationalist PKK rebels. In
February, Turkey lost 27 men in an eight-day land operation against PKK
positions in northern Iraq.

Buyukanit’s words may be designed to cut across the bows of Prime Minister
Recep Tayyip Erdogan, amid rumours that Washington is seeking more forces
for Afghanistan in return for its tolerance of and intelligence support for
Turkey’s northern Iraq operations.

Ankara has hosted a string of high-level US visitors in recent weeks,
including Defence Secretary Robert Gates and was due to receive Vice
President Dick Cheney in the third week of March. But widespread public
suspicion that February’s incursion was cut short on orders from Washington
is complicating any negotiations.
Turkish commentators also have reservations about Nato-EU cooperation and
the controversial US-proposed missile shield to be sited in the Czech
Republic and Poland. Any handover of Nato responsibilities to the EU could
exclude Ankara from decision-making even where immediate concerns such as
Cyprus or the territorial disputes with Greece are affected.

The shield, ostensibly designed to intercept missile attacks from “rogue
states” like North Korea and Turkey’s neighbour Iran, will not provide full
protection to Turkey or other states in Southeast Europe. However, Nato may
join the project without being able to agree to extend its coverage.

Following speculation that the US was proposing to make Turkey a third site
for the shield, a US Embassy spokesperson told the daily Today’s Zaman on
March 18 that Gates had recommended during his visit to Ankara on February
27-8 that any effort by Turkey to acquire a medium-range missile defence
system should be coordinated with its Nato allies – effectively curtailing
the Turks’ options.

One Nato project that Ankara does back is the membership of Albania, Croatia
and Macedonia, all of which it regards as friendly Southeast European
states. “Turkey will strongly support the two candidate countries Macedonia
and Croatia as well as Albania being invited for membership in the April
2008 Nato summit in Bucharest,” Foreign Minister Ali Babacan said at a joint
press conference with visiting Albanian Foreign Minister Lulzim Basha in the
Turkish capital on February 26.

However, if Greece’s objections to Macedonia’s name are not overcome, Turkey
may be unwilling to reward Athens by agreeing to membership for two
countries only.

Turkey is also likely to express support for Ukraine, Georgia and Azerbaijan
if they persist in their Nato membership drives. Nevertheless, Nato’s
expansion in the Black Sea region could raise fresh question marks,
according to Mustafa Turkes, professor of International Relations at the
Middle East Technical University in Ankara. Turkes notes that Romania and
Bulgaria have been challenging Turkey’s policies in the region since joining
Nato with Turkish support.

“The more active Nato becomes, the more the question of capacity will
emerge. Any move into unfamiliar regions gives cause for concern. Today we
are talking about Afghanistan; tomorrow it may be Pakistan. I think Turkish
views about Nato’s global role have changed. Confidence in Nato is not as
high as it once was,” Turkes concludes.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


Commentary by Frederick Kempe, President, Atlantic Council
Bloomberg, New York, New York, Tuesday, April 1, 2008

There are still times when Germans must be reminded of history’s lessons.

One of those came after the Sept. 11 attacks, when a courageous Chancellor
Gerhard Schroeder risked a no-confidence vote to take German combat troops
to Afghanistan. His argument: History’s obligation wasn’t pacifism, as many
argued, but a willingness to shed blood against new despots and terror.

Sadly, Germany may fail history’s test this week at the NATO Summit in
Bucharest, beginning tomorrow. Chancellor Angela Merkel has led opposition
to an alliance membership path sought by Georgia and Ukraine, states that
grew out of the former Soviet Union.

Though France, Italy and Spain also oppose, U.S. officials see Germany as
the chief impediment because the majority of alliance countries are in
favor, including all former Soviet bloc members. Merkel’s arguments seem
sound at first blush, but they are misguided and dangerous.

Her position: No country should join the North Atlantic Treaty Organization
if it has an unresolved territorial conflict with a neighbor (Georgia) or
where most of its citizens are against membership (Ukraine). The underlying
argument is that NATO shouldn’t risk worsening relations with the region’s
biggest power and energy spigot for the purpose of lower priorities.

Further, Merkel sees a window of opportunity for improved relations with
Russia in Dmitry Medvedev. She was the first foreign leader to visit the

What Merkel forgets is that West Germany itself entered NATO in 1955,

whenit had one of history’s most-intractable territorial conflicts with the
Soviet Union over Berlin, which Georgian President Mikheil Saakashvili
brought up with U.S. President George W. Bush last month in Washington. The
Soviets saw the move as such a direct threat that they then formed their own
military alliance: the Warsaw Pact.
This time around, Russian President Vladimir Putin says he will point
nuclear weapons at a Ukraine with NATO ambitions. His foreign minister,
Sergei Lavrov, warns that a membership course will only stir up more
separatist trouble in Georgia’s breakaway regions of Abkhazia and South

So when Merkel says, as she did March 10, that “countries that are involved
in regional or internal conflicts can not become members (of NATO),” she
not only forgets her own history but gives the Kremlin a permanent veto on
Georgian membership.

German Foreign Minister Frank-Walter Steinmeier himself conceded last year
that blocking accession on the grounds of unresolved conflicts “will enable
third parties to drag out the process endlessly.”

The further lesson of history is that NATO membership ultimately helped West
Germany normalize relations with the Soviet Union. Within the security of
alliance embrace, West Germany won Russian diplomatic recognition in 1955
and eventually gained reunification as a free and sovereign country.
Germany’s opposition to Ukraine’s request for a membership action plan is
just as mistaken. German officials seek solace in polls that show a large
majority of Ukrainians oppose NATO membership (unlike Georgia, where

more than 70 percent voted in favor in a referendum).

But that misses the point.

German officials are confusing actual membership, which neither Ukraine nor
Georgia seeks, with the proposed action plan, which would require a healthy
diet of political and military changes that might last a decade before
membership. That gives Ukrainian politicians some time to educate their
voters about NATO’s benefits — even though Ukraine already participates in
a host of NATO operations.

Merkel is right that the West must urgently reach out more effectively to
Russia. It isn’t the ideological enemy the Soviet Union was. Its current
animosity is rooted in resentment over lost standing and territory following
its Cold War defeat. It is a crucial player with rising economic and energy
Bush will meet with Putin on April 6 in Sochi, Russia. Given Putin’s more
cooperative tone during a recent visit to Moscow by Secretary of State
Condoleezza Rice and Defense Secretary Robert Gates, U.S. officials see a
chance for a missile-defense deal and improved relations.

Yet history’s lesson is that frustrating Georgian and Ukrainian ambitions is
a price that won’t buy a more cooperative Russia for very long. It can only
encourage revisionist thinking that Russia must defend and expand its sphere
of influence, when the real challenge is how to make Russia part of a common

German Chancellor Helmut Kohl gained reunification on favorable terms
because he kept his country firmly anchored in the West and resisted West
Germany’s historical temptation to find middle ground between Russia and its
neighbors. If Germany wants to play an historic role now, it must do that
It shouldn’t only support Georgian and Ukrainian ambitions, joining forces
with its eastern neighbors from Poland to Estonia that are lobbying Germany
for such an outcome, but it also should propose a creative course that would
deepen the alliance’s links with Russia, with the ultimate goal of that
country’s own NATO membership.

A Russian general already sits in NATO headquarters, Russian troops are
involved in NATO’s anti-terrorist initiative Operation Active Endeavor in
the Mediterranean, and Russia, unlike any other non-alliance member, can
communicate through its own NATO- Russia Council.

The NATO Summit will be about many things this week. The alliance will try
to deepen its commitment to stabilizing Afghanistan. It will try to extend
membership offers to Albania, Croatia and Macedonia. (Sadly, Greece may
block Macedonia not due to its qualifications but because it objects to its
name.) It will attempt to expand its mandate to energy and cyber threats.

Yet perhaps nothing is more important to the future of the alliance and
Europe than how Germany interprets history’s lessons.
(Frederick Kempe, president of the Atlantic Council, is a Bloomberg News
columnist. The opinions expressed are his own.) To contact the writer of
this column: Frederick Kempe in Washington at

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
The price of the question

OP-ED: by Timofei Bordachev, Director of the Center for European and
International Research, State University – Higher School of Economics
Kommersant, Moscow, Russia,  Monday, March 31, 2008

U.S. President George W. Bush’s visit to Kiev casts light on U.S. strategy
in Eurasia and the prospects for regional security. Relations between
Ukraine and NATO are a question of the stabilization or erosion of the
situation from the Atlantic to Vladivostok.

The former is possible through the creation of an international procedure
that will include all states in the region. The latter will be the
unavoidable result of the expansion of a union led by the United States.

The expansion of NATO in the 1990s was the reason the idea of a “new world
order” failed and the countries of the West were unable to form institutions
of collective security.

Why did it happen? First because he very scale of the expansion was
insufficient to accomplish the goals set for it. The inclusion in the bloc
of ten countries that had no independent military or strategic value was
able to stabilize only a very small part of Europe.

Second, Russia, the second center of power in Eurasia after the U.S., found
itself not only outside NATO, but in very complex relations with it. With
all the consequences that implies. Including extra-regional players like

I will grant that these European problems may look less important from the
point of view of U.S. global policy. It is much more important for
Washington to obtain new allies in Europe that it can depend on to carry out
its projects that are not related to European security. But in that case,
the destabilizing role of the U.S. in Europe can be considered a fait

European history provides indisputable examples of a country’s membership in
NATO playing a decisive role in its movement toward democracy or away from
confrontation. Italy was literally saved from political chaos at the end of
the 1940s. The membership of Turkey and Greece in the alliance allowed them
to avoid military clashes more than once.

But we will not forget that, in the case of Italy, participation in NATO was
reinforced by the role of founder of the European integration process. And
the alliance’s structures allowed Greece and Turkey a unique opportunity to
discuss disputed issues.

Neither of those factors are active in case of Ukraine. The European Union
will not accept Ukraine as a member in the next 10-15 years. Nor is there
any threat of conflict between Ukraine and another NATO candidate country.
Thus, the value of Ukraine’s membership in the alliance is null for security
in Eurasia and for its own development. But the potential harm in domestic
political turmoil and disassociation with Russia is huge. It has not only
regional dimensions, but global.

The strategic stability of Eurasia can be achieved only through full
participation by the countries that can disturb that stability, such as
Russia and the U.S. Keeping Ukraine out of NATO leaves open the possibility
of correcting the mistake of the 1990s. And the future possibility of
entering into a system of universal Eurasian collective security that
includes the “old” members of NATO, and Ukraine, and, most importantly,

Timofei Bordachev, director of the Center for European and International
Research, State University – Higher School of Economics
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


By Roman Olearchyk in Kiev and James Blitz in London
Financial Times, London, UK, Tuesday, April 1 2008

President George W. Bush on Tuesday promised Ukraine he would press for

the nation to take a significant new step towards joining Nato at Wednesday’s
summit, arguing that the outcome of negotiations should not be prejudged.

Speaking in Kiev on his way to Wednesday’s Nato meeting in Bucharest, Mr
Bush praised the “bold decision” by Ukraine to seek to join the alliance,
saying “Russia will not have a veto over what happens next” in the Romanian

But although Mr Bush remains committed to allowing Ukraine and Georgia to
join the alliance’s Membership Action Plan (Map), senior diplomats from
across the alliance were drafting a final communiqué that aimed to avoid an
overt split on the issue between the US on the one hand and Germany and
France on the other.

Paris and Berlin have indicated they are opposed to the two former Soviet
republics getting Map status, partly because it would offend Russia. “We
think it is not the right response to the balance of power in Europe and
between Europe and Russia,” François Fillon, French prime minister, said on

Diplomats from one European Union state said it was likely the final
communiqué would say a membership perspective for the two former Soviet
republics had now been opened, but that Map would not be granted at this

According to these diplomats, the communiqué will welcome Ukraine and
Georgia’s aspirations to join Nato and will set up structures that go beyond
the current level of “intensified dialogue”. The diplomats say Nato will
agree to review their membership status in about 2010.

Despite tensions between Moscow and Washington over the issue of Nato
expansion, there were signs that this weekend’s summit between Mr Bush and
Russian President Vladimir Putin could make further progress on the issue of
ballistic missile defence.
Mr Bush said: “I’m hopeful we can have some breakthroughs. I’ve made it
abundantly clear to President Putin that the missile defence system is not
aimed at defending against Russia.”

Robert Gates, the US defence secretary, was similarly upbeat in Denmark. He
said that “the Russians are probably never going to like missile defence”
but indicated that US compromises recently offered to Moscow could lead to a

“I think that the assurances that we have provided and the mechanisms that
we have proposed give them assurance that it’s not aimed at them, and my
hope is that that will lead to positive outcomes both in Bucharest and in
Sochi,” he said.

In Moscow, a Kremlin source told Reuters news agency that in Sochi Mr Bush
and Mr Putin would sign a document outlining the framework for strategic
relations between their two countries.

“Experts are working on a joint document, which will become a roadmap of

our co-operation during a transitional period and for the medium term,” the
Kremlin source said.

“I wouldn’t prejudge the outcome yet. The vote will be taken in Bucharest,”
Mr Bush said speaking to journalists at a joint press conference with
Ukraine’s pro-western president, Viktor Yushchenko.

Mr Bush’s Kiev visit comes on the eve of the April 2-4 Nato summit where
members are divided on whether to proceed with eastward expansion of the
military alliance by accepting bids by Kiev and Georgia to be accepted into
the ‘Membership Action Plan,’ a first step towards preparing for formal

“Your nation has made a bold decision, and the US strongly supports your
request. In Bucharest this week, I will continue to make America’s position
clear. We support MAP for Ukraine and Georgia,” the US president said.

Russia’s outgoing president, Vladimir Putin, is expected to stick to his
country’s hard-line warnings against Nato expansion at the summit in what is
likely to be one of his last major appearances before stepping down. Earlier
this year, Mr Putin warned that his country could point missiles at Ukraine
if it were to house military bases as a Nato member.

Kiev’s foreign policy shifted away from Moscow after the Orange Revolution
of 2004, which propelled Mr Yushchenko to power. European Union and Nato
membership were declared top foreign policy goals. The US has backed speedy
western integration for Kiev.

Wary of Moscow, Eastern European Nato members have backed the bids by Kiev
and Tbilisi. But fearing a backlash from Moscow, and expressing reservations
that support in Kiev for Nato is small, Germany and France have dragged
their feet on the issue.

Mr Bush said his country would continue to strongly push for Ukraine’s and
Georgia’s speedy integration into Nato, saying it in the interest of the
bloc. “We come with a message for Ukraine. Your country has a solid
 partner,” Mr Bush said.

“Ukraine is the only non-Nato nation supporting every Nato mission,” he said
referring to Kiev’s active role in peacekeeping efforts in Kosovo and other

Sitting alongside Mr Yushchenko, the main champion of the post Soviet
republic’s westward shift, Mr Bush said: “I am proud to be sitting next to a
leader who has strong convictions and courage. Ukraine has demonstrated its
commitment to democracy and open markets. I know you are proud of these
achievements and you should be!”

Moscow is deeply concerned about the eastward expansion of Nato into what it
sees as its own sphere of influence. But Mr Yushchenko repeated concerns
made in recent days by Georgia’s president, Mikheil Saakashvili, that
certain Nato members were de facto giving Moscow veto power at the alliance
by thwarting their bid.

Mr Bush said he was told by Nato members that they would not allow Russia to
exercise a veto vote against Ukraine’s and Georgia’s bid, and he added,
Russia (not a member) should not have any such veto influence.

Mr Bush said he would continue efforts to convince Mr Putin in Sochi later
this week that Nato expansion and a US backed missile defence system
envisioned for eastern Europe pose not threat to Russia.

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

By Peter Baker, Washington Post Staff Writer
The Washington Post, Washington, D.C. Tuesday, April 1, 2008; Page A12

KIEV, Ukraine, March 31 — The hundreds of thousands of demonstrators
who camped out on Independence Square here three years ago toppled a
pro-Russian government in favor of a Western-oriented coalition that pledged
to move this former Soviet republic closer to the rest of Europe.

But by the time President Bush arrived here Monday to hail the emerging
democracy and urge the NATO alliance to put Ukraine on the path to
membership, the mood on the square had changed. “Yankee Go Home,” read
one sign. “NATO Hands Off Ukraine,” read another. A hand-painted banner
unfurled around the square used a four-letter obscenity to describe what
both Bush and NATO should do.

Communists are no longer a dominant force in this society, but the thousands
flying hammer-and-sickle flags on the square did reflect a broad division in
a country situated on the edge of east and west.

Although Bush strongly supports President Viktor Yushchenko’s aspirations to
join NATO, the Ukrainian public is deeply split over the idea, in the face
of Russian opposition. Western European governments, also concerned about
Moscow’s reaction, are divided.

Bush landed here Monday night and was welcomed with the traditional gift of
bread and salt in advance of meetings Tuesday aimed at promoting Ukraine’s
candidacy. He heads Tuesday evening to Bucharest, Romania, for a three-day
NATO summit where the issue will be debated.

The alliance is poised to offer membership to Croatia, Albania and
Macedonia; Bush wants to offer a map toward membership further down the
road for Ukraine and its fellow former Soviet republic Georgia.

“We feel a gap in our security because all of our neighbors, to east and
west, are in some sort of security arrangement,” Oleksandr Chalyi, a foreign
policy adviser to Yushchenko, said in an interview, referring to NATO and
Russian-led alliances.

“Only we participate in neither. We don’t want to return back to the Russian
security system.” If NATO rebuffs Ukraine, he added, it would mean “the last
page of the Cold War is not turned.”

Moscow warned again Monday that even negotiations for membership for Ukraine
and Georgia would cross a “red line” for Russia. President Vladimir Putin
has threatened to target the two countries with nuclear missiles if they
join the alliance.

“We are not a source of threats,” Kremlin spokesman Dmitri Peskov told
foreign journalists in a conference call. But “membership to NATO will in no
way contribute to stability in the country. To the contrary, it will lead to
additional tension.”

What Ukraine and Georgia want out of the Bucharest summit are “membership
action plans,” known as MAPs, that would lead eventually to full status in
the alliance. The MAP process can take years — it took nine years for
Albania, for example — and forces applicants to meet NATO standards for
democratic institutions and military capabilities.

Although Canada and nine NATO members in Eastern Europe also support
road maps for the two aspirants, Germany and others say they are not ready,
especially given Ukraine’s internal divisions and Georgia’s struggles with
two breakaway republics. Because NATO operates by consensus, opposition
would nix any move in Bucharest.

Bush still hopes to finesse the issue. “We think it’s very, very, very
important that Georgia and Ukraine, that we welcome their aspirations to be
part of NATO,” national security adviser Stephen J. Hadley told reporters on
Air Force One. “And the president has made clear we think the best way to do
that is to offer the MAP at Bucharest, and that’s what the president is
pushing hard for.”

Putin plans to go to Bucharest and has sway with European nations that rely
on Russian gas and oil. His advisers have suggested Russia would help NATO
in Afghanistan by allowing planes to cross Russian airspace if Georgia and
Ukraine are not put on the membership path.

“We are ready to cooperate,” Foreign Minister Sergei Lavrov told the
newspaper Izvestia. “But we shall speak out firmly against any tendencies
that are damaging to our interests.”

Ukraine, a country long fractured between its Russian-influenced eastern
regions and its European-oriented western areas, remains torn over NATO.

A February poll found that 50 percent of Ukrainians oppose membership
compared with 24 percent in favor, nearly the reverse of public sentiment
before the Orange Revolution of 2004. But proponents take heart from the
fact that opposition has fallen by 10 percentage points since last year.

“We’re leading the protest to demonstrate to the world and to Ukraine that
not everybody is happy about the idea of joining NATO,” said Socialist Party
leader Oleksandr Moroz, a former parliament speaker. “The NATO issue
creates a big problem for us with Russia. That’s the main worry.”
Correspondent Peter Finn in Moscow contributed to this report.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]


Presidential Secretariat, Kyiv, Ukraine, Tuesday, April 1, 2008

PRESIDENT YUSHCHENKO: Dear Mr. President, dear Mrs. Bush, dear

guests and ladies and gentlemen. It is with great pleasure that I express my
feelings of utmost respect for His Excellency, President George Bush. The
active cooperation between our countries extends from the idea of a partnership
focused on the future.

And I’m especially impressed that this philosophy forms the basis of the
primary document we signed today, the road map of relations between Ukraine
and the United States of America, and in other documents signed during your

Common values and concepts for strengthening democracy, peace and security
unite our countries, enlarging our joint agenda and posing new tasks before
us. I am convinced that the widest political, civil and business circles of
both our countries will actively contribute to strengthening the foundation
of our partnership, which has withstood the test of time.

Dear ladies and gentlemen, Ukrainians highly value the support by the United
States of our aspirations to honor the memory of the victims of the
Holodomor of 1932 to ’33 in Ukraine. We will be immeasurably grateful for
the United States’ recognition of this crime by the totalitarian regime as
an act of genocide directed against our nation.

Ukraine shall always remember the honored names of American researchers
James Mace, Robert Conquest, and others whose work to introduce a tragic
truth about the famine to the world was invaluable.

Dear ladies and gentlemen, we sincerely thank the United States for its
support of Ukraine along the way to membership in the World Trade
Organization. With the conclusion of this process, before us lies an open
road to the fundamental expansion of our relations in the trade and
investment areas.

We are delighted to invite our American partners to focus joint efforts in
the areas of high technology, energy conservation, developing alternative
energy sources, and agriculture.

I am convinced that in the nearest future, we can anticipate new goals and
promising ideas and joint projects. We especially highly value the support
and assistance of the United States in Ukraine’s advance along the path of
Euro-Atlantic integration.

Today we look forward to a specific and clear signal from NATO, which will
attest to the transition of our relations to a qualitatively new level. I am
firmly convinced that the accession of our country to the NATO Membership
Action Plan will benefit both parties.

This shall be a formidable contribution to the creation of a new European
security architecture, extending and strengthening freedom, democracy and
human rights in the Euro-Atlantic states.

I am sincerely grateful to the United States, and personally to President
Bush, for the consistent and persistent support of Ukraine’s aspirations to
become an integral part of the collective security system in Europe.

 Dear friends, I am certain that we will use the chance we have been given
to benefit today’s and future generations of the people of our countries. I
believe in our joint success. The United States’ support as a partner
strengthens my determination.

I raise my glass to the future of our cooperation, to the health of the
President and Mrs. Bush, and for our nations and our friends.
(A toast is offered.)

PRESIDENT BUSH: Mr. President, Mrs. Yushchenko; Prime Minister; Mr.
Chairman; distinguished guests, thank you for your warm welcome. Laura and I
are honored to sit with you on Ukrainian soil, and we bring the greetings of
the American people, or as you’d say, “Vitaiyu Vas.” (Laughter and

The people of Ukraine have made great contributions to the history of human
freedom. During World War II, Ukrainian soldiers helped defeat the armies of
fascism and end the deadliest conflict in history. And at the end of the
Cold War, Ukrainians formed an independent nation and declared her desire to
live in freedom and peace.

In 2004, Ukrainians inspired the world with the Orange Revolution, using
peaceful demonstrations to protect your right to choose your leaders. Today,
Ukrainians are showing courage in helping to advance freedom in many parts
of the world. You’re helping to train security forces in Iraq, supporting a
provincial reconstruction team in Afghanistan.

Ukrainians are part of the U.N. Mission in Kosovo. Last month in Kosovo a
Ukrainian police officer gave his life, and many others were wounded helping
to defend the ideals of freedom.

Ukraine is contributing to every mission of the NATO Alliance, and honoring
the ideals that unite the transatlantic community. This week, Ukraine seeks
to strengthen its transatlantic ties through a NATO Membership Action Plan.
The United States strongly supports your request. We are proud to stand with
you in Bucharest and beyond.

Mr. President, our two nations share a common vision for the future. We seek
to advance a cause of freedom, and help all peoples of Europe live together
in security and peace. With great confidence in that future, I offer a toast
to you, to your gracious wife, and to a free and sovereign people of
Ukraine. END 12:09 P.M. (Local)

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

Reuters, Washington, D.C., Tuesday April 1 2008

WASHINGTON – The United States has signed an agreement to boost trade

and investment ties with Ukraine, which is on the verge of joining the World
Trade Organization this year after a lengthy period of economic reform, U.S.
trade officials said on Tuesday.

“Ukraine is making important strides to modernize its economy and attract
foreign trade and investment,” U.S. Trade Representative Susan Schwab said
in a statement. “The agreement … will assist Ukraine’s efforts to expand
its economy and diversify its markets.”

The new Trade and Investment Cooperation Agreement was announced while
President George W. Bush was in Kiev. Bush later left to attend a NATO
summit in Romania.

The agreement was signed by Schwab in Washington and Ukraine’s Economy
Minister Bohdan Danylyshyn in Kiev. It creates a forum to discuss ways to
boost two-way trade, which totaled about $2.56 billion last year, to
encourage stronger bilateral investment flows.

Ukraine is set to beat its bigger neighbor, Russia, into the WTO, which came
into existence about four years after the collapse of the Soviet Union in

WTO members voted in February to approve the terms of Kiev’s entry into

the world trade body. Ukraine will become a WTO member 30 days after its
parliament ratifies the accession agreement, which is expected by July 4,
the U.S. trade representative’s office said.

Russia has hoped to finish its long-time bid to join the WTO this year.
However, U.S. officials say they are still waiting for Moscow to fulfill
commitments it made in 2006 to improve protection of U.S. intellectual
property rights.

The European Union also has not given final approval to Russia’s application
to join the WTO.

Bush will meet on Sunday with outgoing Russian President Vladimir Putin at
Putin’s Black Sea residence. The leaders are expected to sign a document
outlining the framework for strategic relations between the two countries.

Relations between Washington and Moscow have been strained over issues
including U.S. plans to deploy elements of its missile shield in Europe and
NATO moves to bring ex-Soviet Ukraine and Georgia closer to the alliance.

Two-way trade between the United States and Russia totaled about $26.7
billion in 2007, or about 10 times the level of U.S.-Ukraine trade. (Writing
and reporting by Doug Palmer; Editing by Bill Trott)

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukraine Monthly Macroeconomic Report From SigmaBleyzer: 

OP-ED: By Malcolm Rifkind, MP was Defence Secretary, 1992-95
Telegraph, London, United Kingdom, Wednesday, April 2, 2008

When President Bush, Gordon Brown and other Nato leaders meet in Bucharest
today they must ensure that they do not, inadvertently, destroy Nato’s
supreme role as a mutual defence alliance. It is not the quarrel over
Afghanistan to which I am referring, vital though that is. President
Sarkozy’s pledge of additional French forces will be gratefully received.

Much more dangerous will be the issue of Nato enlargement. There are two
aspects to this. Three Balkan countries – Croatia, Albania and Macedonia –
are likely to be given a welcome. While they will make only a very modest
contribution to Nato’s military capability, their membership could help
contribute to the Balkans’ further integration into the Western world.

It is difficult to be as optimistic about Ukraine’s and Georgia’s
aspirations for membership. In many respects they have been amongst the
most impressive of the successor states of the old Soviet Union.

Ukraine and Georgia are light years ahead of the rest of the old USSR. They
have real elections, where their electorates actually decide who should be
their rulers. In Ukraine, no one knew until polling day whether Yuschenko,
Tymoshenko or Yanukovich would emerge triumphant..

In Georgia, too, Mikhail Shakashvilli has been a breath of fresh air.
Compared to the citizens of Azerbaijan, Uzbekistan and Kazakhstan, Georgians
have been able to pass their verdict on their rulers and elections have had
substance, not merely form.

So Ukraine and Georgia deserve our support and deserve more than they are
currently getting. That is not the same, however, as saying that they should
be made full members of Nato.

The crucial point, often overlooked, is that Nato is not just a political
association of friendly states with common values, like the Council of
Europe. Nor is it only concerned with the promotion of security, stability
and economic prosperity, like the EU.

Nato was devised as, and still is, more than anything else, a defence pact,
with its member states committed to collective security. These are more than
words. Under Article 5 of the Nato Treaty, every member state is committed
to come to the aid of any other member state, including by the use of armed
force, if such a state is subject to armed attack.

If Ukraine or Georgia become full members, Britain and other members could
find themselves required to contemplate war or other forms of military
intervention if either of these countries faced armed attack.

This cannot be considered a hypothetical concern. For some years, Georgia
has been unable to enjoy full territorial integrity because of the de facto
secession of Abkhazia and South Ossetia. Both secessionist regions enjoy
strong Russian support and there have already been clashes between Georgian
troops and those of the two breakaway regions.

Would it really be wise for Nato member states to accept a legal obligation,
not just an option, to come to the aid of Georgia if either or both of these
secessionist regimes, with or without the support of Moscow, continued to
use armed force against the Georgian government?

The situation is not so serious as regards Ukraine. Its government is in
full control of its territory and armed attack from any quarter is highly
unlikely. But the issue of Nato membership deeply divides the population,
with opinion surveys suggesting a substantial majority against Ukraine

Ukraine has a large Russian-speaking minority and Crimea is an ethnic
Russian territory that was only joined to Ukraine in the 1950s. Relations
between Ukraine and Russia remain tense, and the question of Ukraine’s
orientation towards the West is the seminal issue of Ukrainian politics,
with the population almost equally divided.

Against that background, one has to ask again whether it would be wise for
America, Britain and other Nato members to enter into a treaty obligation to
protect Ukraine when that commitment might involve the use of our armed
forces. Nato membership does not just give us the option to become involved:
it obliges us to become involved, a quite different matter.

There are ways in which we can give substantial help to Ukraine and Georgia
without the risks involved in full Nato membership. In part, this should be
through closer association with the EU with the prospect, one day, of full

So far as Nato is concerned, consideration should be given to the creation
of a new status of associate member, which would give Ukraine and Georgia
many of the benefits of membership, including the right for their forces to
train with Nato members and to serve alongside Nato states in international
operations. What it would not do would be to apply Article 5 of the treaty.

George W Bush and other Nato leaders must show caution in Bucharest. The
issue is not about trying to avoid annoying the Russians. Moscow has no
right to say who will be, or will not be, a member of Nato. The issue is the
preservation of Nato as a real defence pact and not merely as a political
alliance. The stakes are high and rightly so.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

VIEW: By Anders Aslund, Daily Times,

Lahore, Pakistan, Wednesday, April 2, 2008

In the early 1990s, many westerners and Russians wanted Russia to become a
full-fledged member of both the European Union and NATO, on the condition
that Russia became a full-fledged democracy. Unfortunately, the West never
made that offer, and Russian democracy went astray

On April 2-4, NATO will hold its biggest summit ever in Bucharest, the
capital of its new member, Romania. Incredibly, NATO has invited its
fiercest critic, Russian President Vladimir Putin, to attend. For the first
time since 2002, he will. His presence is an embarrassment to NATO, but

an even greater disgrace for Russia.

The two biggest issues in Bucharest will be whether to invite Albania,
Croatia, and Macedonia to join NATO, and whether to offer applications to
Ukraine and Georgia to start so-called “membership action plans”. These
questions should be decided by NATO’s members, not outsiders.

In February 2007, Putin, in an anti-Western tirade delivered in Munich,
declared: “I think it is obvious that NATO expansion does not have any
relation with the modernisation of the Alliance itself or with ensuring
security in Europe. On the contrary, it represents a serious provocation
that reduces the level of mutual trust.”

So Putin’s views about NATO are clear. He will scandalise the summit by
seeking to intimidate the former Soviet clients in the room.

Such an aggressive attitude benefits a country’s foreign policy only up to a
point – one that Putin passed long ago. Initially, he acted as an able
diplomat and accommodator, but since his Munich speech, Putin has begun
uniting the West against Russia.

In his speech on May 9, 2007, commemorating Russia’s victory in World War
II, Putin compared the United States with Nazi Germany: “We have a duty to
remember that the causes of any war lie above all in the mistakes and
miscalculations of peacetime, and that these causes have their roots in an
ideology of confrontation and extremism. It is all the more important that
we remember this today, because these threats are not becoming fewer, but
are only transforming and changing their appearance. These new threats, just
as under the Third Reich, show the same contempt for human life and the same
aspiration to establish an exclusive dictate over the world.”

Serious politicians do not speak like that. These are the rants of Putin’s
few remaining friends – Venezuela’s Hugo Chavez, Iran’s Mahmoud Ahmadinejad,
and Belarus’s Alyaksandr Lukashenka. At home, awareness is rising that Putin
is damaging Russia’s interests by insulting and intimidating everybody. He
is isolating his country among the world’s pariahs; worse yet, he has
achieved little.

When Putin became president in 2000, he named accession to the World Trade
Organisation as his foreign policy priority. He failed, because he gave in
to petty protectionist interests, imposing a timber embargo against Finland
and Sweden, a fish embargo against Norway, and various agricultural embargos
against Lithuania, Ukraine, Moldova, Georgia, and others.

Russia’s foreign policy is focused on the interests of its state-dominated
corporations, notably Gazprom, which has concluded agreements with many
foreign countries and companies for monopolistic deliveries.

But a Gazprom pipeline typically costs three times as much per kilometre as
a similar Western pipeline, because of “leakage” (kickbacks and waste). The
primary purpose of Russia’s foreign policy seems to be to tap Russia’s state
companies for the benefit of Kremlin officials.

But customers do not trust suppliers who cut deliveries, raise prices
unpredictably, expropriate competitors, and let production decrease in the
way Gazprom and Russia’s other state companies have done. As a result,
Russia’s gas exports to Europe have started declining.

Putin’s foreign policy also is evidently intended to whip up populist
chauvinism. Beating up on foreigners may boost his authoritarian rule, but
this, too, has a price. Not only the US and Europe, but all former Soviet
republics feel alienated by Putin’s aggressive tactics. Many are seeking to
shield themselves from Russia’s capricious embargos – for example, by
seeking alternative energy supplies.

Russia’s nationalists are also outraged by Putin’s foreign policy, because
it has alienated former Soviet republics and weakened Russia’s military. The
nationalist Council for National Strategy published a devastating report on
the decay of Russia’s military under Putin. Russian military procurement, it
claims, has plummeted. For example, only three new military aircraft have
been purchased since 2000.

True, armaments costs have risen sharply, but only because Putin’s KGB
friends, who monopolise weapons production, have stolen inordinate amounts.
Yet, despite this spending shortfall, Putin seems obsessed with making
pointless and provocative gestures, such as resuming long-range nuclear
bomber flights off the American coast.

In the early 1990s, many westerners and Russians wanted Russia to become a
full-fledged member of both the European Union and NATO, on the condition
that Russia became a full-fledged democracy. Unfortunately, the West never
made that offer, and Russian democracy went astray.

Russia should be given a new chance, but only after Putin has departed.
Russia is no enemy of the West; Vladimir Putin is.
Anders Aslund, a senior fellow at the Peterson Institute for International
Economics, is the author of Russia’s Capitalist Revolution: Why Market
Reform Succeeded and Democracy Failed

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

OP-ED: By Yevgeny Kiselyov, Political Analyst
Hosts a radio program on Ekho Moskvy
Moscow Times, Moscow, Russia, Wednesday, April 2, 2008

Will Russia’s fierce opposition to possible NATO membership for Ukraine and
Georgia force the alliance to withhold its official invitation to these two
current members of the Commonwealth of Independent States when the NATO
summit opens in Bucharest on Wednesday?

And what will President Vladimir Putin say during his speech at the summit?

He could do a repeat of his speech from Munich last year, which was full of
grievances and ridiculous accusations leveled at the West. Or, as the
Kremlin has indicated, Putin, in his last personal address before Western
leaders, could seize the historic opportunity by making positive proposals
for improving relations between Russia and NATO countries.

I think Putin feels torn because, on the one hand, he would like to continue
lambasting the West, but, on the other hand, he understands that Western
countries are not Russia’s enemies, but its partners.

Since the country’s presidential elections are over, what purpose would it
serve now to continue frightening voters about a fifth column and supposed
enemies who have encircled Russia because they do not want to see it get up
off its knees?

The average Russian actually cares little about NATO expansion. But if you
stop him on the street and ask him, “Are you for or against Ukraine joining
NATO?” he will probably answer “against.”

That is how he has been taught to think. This is not surprising considering
that state propaganda has hammered into his head for decades that NATO is an
aggressive bloc that once menaced the Soviet Union and now threatens Russia?

But if you were to ask him to list his fears and concerns, I would guess
that NATO membership for Kiev and Tbilisi would never enter his mind.
Instead, he would mention inflation, rampant corruption, abuse of power by
the police, a lack of justice, traffic jams and a host of other issues
without ever mentioning NATO.

Russians have already heard Putin cry wolf with regard to NATO’s eastward
expansion. The former Warsaw Pact countries of Poland, the Czech Republic
and Hungary all joined the alliance without any terrible consequences for
Russia. Following that, Latvia, Lithuania, Estonia, Romania and Bulgaria
joined its ranks, bringing NATO up to Russia’s border. Nothing frightening
came of that either.

During a recent meeting with German Chancellor Angela Merkel, Putin made an
extremely important statement. “Under modern conditions, when there is no
longer confrontation between two hostile systems, an endless expansion of
the military and political alliance is not only impractical, but
counterproductive,” he said.

In other words, Putin admitted that NATO did not represent a military threat
to Russia. What is actually bothering him then? His further comments provide
the answer: “It would seem that attempts are being made to create an
organization to take the place of the United Nations. NATO is already going
beyond the scope of its mandate. We have nothing against helping
Afghanistan, but … this is not a NATO problem.”

So that is the chip Putin been carrying around on his shoulder. He is
worried that the entire framework of international relations is changing — 
that alongside the United Nations, where Russia enjoys the privilege of
being a permanent Security Council member with veto power, NATO is

rivaling its global influence. And because this organization requires member
countries to observe basic democratic values and procedures, Moscow might
find itself on the sidelines.

Also looming on the horizon is the threat by U.S. presidential candidate
John McCain –whose chances of taking the White House are increasing with
every day — to exclude Russia from the Group of Eight for revanchism,
staging cyber attacks against other states and backtracking on democracy.
Some would say this is nothing but pre-election rhetoric from the McCain
camp, but it appears that the Russian elite are not interested in taking
that chance.

The elite seem to understand that continually irritating the West is a
luxury they can no longer afford. An example: Once Russia spoiled its
relationship with Britain, even Russians who regularly traveled to London on
official business and who used to receive long-term multiple-entry visas on
a regular basis are shocked to find out that they are now granted visas just
long enough to conduct their affairs and go home. If your meeting in Britain
will last one day, you will get a one-day visa — maybe a two- or three-day
visa if you are lucky.

That news had a disquieting effect on this country’s higher-ups. It is no
secret that Russia’s economy is integrated into the world economy and that
the lives of its ruling elite are linked to the West because of their vast
financial interests there. As a rule, Russia’s richest business moguls own
major shares in leading Russian companies through foreign offshore financial

In the West, they have their bank accounts, real estate, wives, children,
soccer teams, seaside villas and mega-yachts anchored at marinas in Sardinia
and the Cote d’Azure. This explains why many politicians are trying to lower
the temperature in relations with the West.

The problem of Russia’s political and economic legitimization is still on
the authorities’ agenda. Solving that problem will only be possible in the
context of a completely different atmosphere in international relations.
This is what has motivated leaders to step back from the policy of
confrontation and look for another approach.

Extremely indicative of this was President-elect Dmitry Medvedev’s decision
to give his first big interview following his election to the Financial
Times, a newspaper based in Britain, a country that has been Russia’s enemy
No. 1.

In the interview, Medvedev said he respected Prime Minister Gordon Brown

and declared that he was prepared to restore full cooperation with Britain with
no preconditions. Imagine if the next U.S. president were to give his or her
first official interview as president to Izvestia or Kommersant.

A direct flight between Moscow and Tbilisi has already been reinstated, and
Georgian wines and Borjomi are expected to make their reappearance any day
now. In addition, talks are under way to smooth out disagreements over
Russian gas shipments to Ukraine.

What’s more, U.S. Secretary of State Condoleezza Rice and Defense Secretary
Robert Gates, who recently came to Moscow for talks with their counterparts
and with Putin and Medvedev, were left speechless by the outpouring of
friendship shown by their Russian hosts.

They even appeared willing to look for a solution to the European
missile-defense deployment stalemate.

It could be, however, that all of this goodwill is coming too late and that
Russia will still have a price to pay for their earlier hysterics. And this
price could come in the form of NATO membership for Ukraine and
[return to index] Action Ukraine Report (AUR) Monitoring Service]
You are welcome to send us names for the AUR distribution list.

By Roman Olearchyk, Financial Times
London, United Kingdom, Wednesday, April 2 2008

Ukrainian companies have a big appetite for debt after seven years of strong
economic growth. Gross external debt swelled by 56 per cent last year to
$84.5bn, with much of the acceleration attributed to the banking sector.

Borrowing costs are expected to rise this year in connection with the global
credit crunch. But bankers and analysts in the country are upbeat, showing
little concern for potential shocks that may follow if banks tighten their
lending criteria and hedge funds pull back from investments in the Ukrainian
stock market.

The fear is that borrowers in some East European countries could be next to
fall victim to the credit squeeze – particularly those where foreign bank
credits account for 50-70 per cent of gross domestic product such as
Ukraine, Hungary and Romania.

Ukrainians are borrowing in record numbers but the ratio of total loans to
gross domestic product stood at 61 per cent at the end of 2007, which Oleg
Pronin, analyst at Kiev-based investment bank Dragon Capital, describes as a
“quite comfortable level for a country posting rather high GDP and
disposable income growth”.

The Ukrainian banking sector has “zero exposure to any derivative
instruments and, in particular, those relating to the subprime bubble in the
US,” he adds. “Consequently, Ukrainian banks have nothing to do with the
heavy losses being widely posted by financial services industry in the US
and EU countries.”

A flurry of acquisitions in recent years has tripled the presence of foreign
players in Ukraine such as Raiffeisen, Intesa Sanpaolo, Unicredit, Swedbank
and PNB Paribas.

Currently, foreign banks control about a third of the banking sector in
terms of net assets having purchased the largest and most solvent of the 170
registered banks. Their financial muscle is expected to cushion any shocks
as they fight for valuable market share, says Mr Pronin.

Less certain is how many Ukrainian-owned banks will survive. With access to
borrowing tightening, owners may sell out to larger foreign rivals.

Delta Bank, a fast-growing consumer lending group founded in 2006 by 35-year
old entrepreneur Mykola Lagun, is not panicking. He sees the need for a
strategic partner to help fund Delta’s expansion, but he does not expect the
credit crunch to influence his decision.

“The market doubled last year and the trend should continue this year even
if access to foreign borrowing is limited,” he says.
Peter Vanhecke, head of Investment Banking for Renaissance Capital in
Ukraine, says the credit crunch will “undoubtedly” affect Ukraine, but that
the “impact is expected to be more tangible for debt instruments than for
equity products.”

Last year, net foreign direct investment surged by 61 per cent to an
all-time high of $9.2bn, bringing total foreign direct investment to
$38.5bn. Net inflows of portfolio investments reached $5.8bn.

Spiralling inflation, which reached 17.6 per cent last year, is a major
point of concern. But GDP growth rates have remained high for the past eight
years, enough to keep wages and consumption on the rise. Dragon Capital
expects 6.9 per cent year-on-year GDP growth this year.

“We have seen some recent instances of capital switching from mature markets
to emerging markets – including Ukraine – and all indicators are that 2008
will be another record year for direct foreign investment in Ukraine,”
Vanhecke adds.

Anton Khmelnitski, director of Eastern European Equities at UK-based Polar
Capital Holdings, is very upbeat. This year, Polar moved its regional office
from Russia to Ukraine, where it sees more upside. Currently, the firm has
about $100m invested in Ukrainian equity, and plans to boost this to about
$500m in the next few years.

“If you look at the first credit crunch shock from August, both the
petro-dollar driven Russian and Kazakhstan economies lost capital, but the
fast growing economy of Ukraine actually attracted additional foreign direct
investment,” he says.

“If the investment inflows into Ukraine continue, the credit crunch will not
affect Ukraine’s growth that much. The bigger concern is the possibility
that world prices sink for steel, Ukraine’s top export and source of foreign

“Ukraine is no different from Poland in the mid-1990s,” says Mr Khmelnitski.
“I’m looking for a repeat of what happened in Poland but on a much larger
scale because the country is much larger.

If the cost of borrowing does become more expensive for Ukrainian companies
due to the credit crunch as everyone expects, then this will only open up
opportunities for us to fill the gap by investing into these companies. It
is probably the best opportunity for those companies like ours offering to
provide capital,” he adds.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

U.S.-Ukraine Business Council (USUBC), Wash, D.C., Mar, 2008
WASHINGTON, D.C. – The executive committee of the U.S.-Ukraine
Business Council (USUBC) is pleased to announce that MJA Asset
Management, LLC, a U.S. company who invests in under performing
historic property, with offices in New York, Connecticut and New Jersey,
has been approved for membership in the U.S.-Ukraine Business Council
MJA is the 57th member, the 5th new member for 2008 and the 35th new
member since January 2007. MJA Asset Management, LLC was founded
to fill the needs of a niche real estate market, represented by Historic
Landmark properties.   

USUBC been working with Irena Holiat, founder of MJA Asset
Management, LLC.  Irena has over 30 years of real estate investment
experience and felt Landmark properties were under served due to a lack
of expertise in understanding their unique investment value, preservation
and management. 
Irena is a Ukrainian-American and her family has been leaders in the
Ukrainian-American community for many years.
Morgan Williams, SigmaBleyzer, president of the USUBC, asked Irina
about her interest in now expanding her unique business to work in Ukraine.
She explained, “It is my Heritage that motivates me to give back to the
country my parents had to leave as political refugees.  I saw their undying
love for Ukraine, one parent from the west the other from the east. 

“My father became the Superintendent of Ukraine language schools here in
the states, in his retirement he was head of the Free Ukrainian University in

“My mother set her own milestones, she was the only female student in her
graduating class and she graduated Magna Summa Cum Laude from Graz
medical school, in a foreign language no less.  She went on to become an
anesthesiologist at a time were this was not the specialization of choice for
women MD’s.

“The capacity of Ukraine’s people, was exemplified to me by my parents,
there was never any doubt in my mind that Ukraine would never give up
until it was free and democratic!  

“My parents always asked me not to forget Ukraine, and if at all possible
when the opportunity presented itself to step up to the plate and help. I
am thrilled that  my company is in a unique position to be of service, and
humbled to be able to fulfill my parents legacy.”
Combining real estate knowledge and a deep commitment to preserving
historic properties for the next generation, MJA Asset Management,
LLC invests in under performing historic property, and land. 

MJA Asset Management’s business model seeks to create added value
and investment interest in Historic structures through creative new uses
and upgrades, while retaining or restoring the Historic Landmark integrity
of the property.
In addition to investing and managing its own portfolio of Historic
Landmark properties MJA Asset Management, LLC serves as a
consultancy resource. 
It promotes Historic Landmark property investment to high net worth
individuals seeking to diversify their real estate portfolio holdings via
rare property acquisition.  

As a consultancy resource MJA Asset Management, LLC removes the
impediment to investing in these high maintenance properties due to a lack
of competent management resources. MJA Asset Management, LLC
becomes that resource, facilitating the ongoing stewardship of these
MJA Asset Management, LLC staff with a combined 75 years of real
estate experience,  adds additional value to its properties by implementing
forward looking and innovative improvements, such as greening or
creating property uniqueness by planting rare tree species, such as the
American Chestnut.   

MJA Asset Management, LLC property stewardship seeks to develop
new cash flow opportunities through creative new uses of the property,
government or philanthropic grants, tax abatements for Historic
preservation and/or upgrades.
In 2006 in recognition of its contribution to the preservation of Historic
Landmark Properties, active participation in developing public policy for
Historic Landmark preservation, and the unique entrepreneurship of its
founder, Irena M. Holiat, the U.S. State Department invited MJA Asset
Management, LLC to be one of six American businesses founded by
women, to join Under Secretary Karen Hughes as part of her delegation
to the Middle East North African Partnership Initiative in Abu Dhabi. 

The delegation was to meet with 250 top women leaders of the Middle
East and North Africa for a Women’s Economic Initiative Summit 

The delegation’s mission was to help develop economic hubs, create
economic empowerment for women, and identify and foster the
development of entrepreneurial training so that the region could produce
exceptional business and civil society leaders.   The initiative was hugely
successful and remains an active initiative to this day.
MJA Asset Management, LLC has offices in New York, Connecticut
and New Jersey, and looks forward to offering their unique expertise
and skill set to Ukraine.
The five new USUBC members in 2008 are: MaxWell USA, Baker &
McKenzie, Och-Ziff Capital Management Group, Dipol Chemical
International, Inc. and MJA Asset Management.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
International Banks Expanding in Romania, Ukraine, and Russia

By Stefan Wagstyl, Financial Times,

London, United Kingdom, Tuesday, April 1 2008

Business has never been better for the international banks that dominate in
much of central and eastern Europe. But the upheavals in international
financial markets could presage more difficult times, even if the region is
spared the worst of the turmoil.

Bankers say growth in central and eastern Europe is sufficiently strong for
the region to weather the storm, but individual countries and companies have
run into difficulties – and they may be joined by others before stability
returns to world markets.

As Andreas Treichl, chief executive of Austria’s Erste Bank, says: “People
say things will improve in the second half of 2008 but I am not so sure
because I don’t know all the bad news is out.”

Most banks have been celebrating record results for 2007. Italy’s Unicredit,
the biggest bank in central and eastern Europe, reported a 9 per cent
increase in net profits to nearly Euro6bn ($9.4bn); Erste, with extensive
central and south east European investments, reported a rise of 26 per cent
to Euro1.2bn net; and US-owned GE Money, a division of General Electric,
reported $944m net for its east European business, with profits growing at
an annual average of more than 60 per cent in the past three years.

Of the leading international financial groups which are big in the region,
only France’s Société Générale and Citibank of the US have been seriously
affected by the global credit squeeze. Whether by luck or judgment, the rest
have mostly been too busy investing in central and eastern Europe to put
much money into exotic instruments.

With most big banks in central and south-east Europe already in the hands of
international owners, the focus of acquisitions in the past year has been on
the less familiar markets further east.

If the biggest banking acquisition of 2006 was Erste’s Euro3.75bn
acquisition of BCR – Romania’s largest bank – the most significant deals of
2007 have been in Ukraine, where Sweden’s Swedbank bought TAS-Kommerzbank
for $735m, plus future performance-linked payments of up to $250m, while
Unicredit paid $2.1bn for Ukrsotsbank.

Banks are also looking hard at Russia and Kazakhstan, where they think the
liquidity problems experienced by some local banks creates buying
opportunities. Unicredit has, for example, dived into the choppy Kazakh
market and agreed to buy control of ATF Bank for $2.2bn.

On top of acquisitions, banks are investing heavily in the expansion of
networks and product lines, notably in Ukraine, Romania and Russia. Herbert
Stepich, chief executive of Raiffeisen International – in asset terms the
third-largest bank in the region behind Unicredit and Erste – says:
“Conditions for expanding our business remain very good.”

Bankers argue that because the global credit squeeze coincided with a period
of very strong growth in central and east Europe, the moderate economic
slowdown now taking place is not unwelcome in reducing the dangers of
over-heating. Some central banks were in any case acting to slow credit
growth even before last summer.

Raiffeisen forecasts moderate declines in credit growth from high levels: in
Russia from more than 50 per cent last year to 26 per cent in 2008, in
Ukraine from 76 per cent to 24 per cent and in Romania from 53 per cent to
24 per cent. Mr Stepich says: “We see some air coming out of over-heated
economies of the past few years.”

Of course, even if the general outlook is benign, there is scope for
significant nasty surprises. The region’s banking sector is by no means
uniform. In central and south-east Europe, the industry is dominated by
international groups, which mostly have bigger operations elsewhere.

Unicredit, for example, has about 20 per cent of its total assets in the
region. These groups generally finance their east European operations from
their own resources.

But in Russia and Kazakhstan, markets are dominated by locally-owned banks
raising large amounts of money from the international market.

Some of these institutions are now vulnerable, as is reported elsewhere in
this report. The oil-rich Russian and Kazakh authorities are supporting
banks that have run into trouble. But, especially in Kazakhstan, that is not
enough to put confidence back into the banking market.

Jean Lemierre, president of the European Bank for Reconstruction and
Development, says his government-owned institution stands ready to play a
role in easing fund-raising problems. “The challenge we have for 2008 is to
help some companies and some banks to go back to the market.”

Manfred Schepers, the EBRD’s vice-president for finance, says local currency
markets the EBRD assisted in establishing in Russia and Ukraine can
contribute support. “Our role as a stabiliser in these economies in 2008
will be a very important role.”

For the region’s policymakers, one comfort from the financial turmoil is
that local financial markets are small in relation to total economic output.
According to Raiffeisen, bank assets are the equivalent of 235 per cent of
Gross Domestic Product in the eurozone, but just 75 per cent in central
Europe, 74 per cent in south east Europe and 53 per cent in the former
Soviet Union.

For mortgages, which have caused so much trouble in the US, the figures are
even lower – just 11 per cent of GDP in Poland, 2 per cent in Romania and
1.2 per cent in Russia.

At these low levels, the danger of a financial shock having a big
macro-economic effect is smaller than in more financially-developed
economies. But it is far from negligible. The impact of a financial crisis
on economic confidence could still be considerable, as it was in Russia in
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A World Leader in Aerospace, Combat Systems,
Marine Systems, Information Systems & Technology
U.S.-Ukraine Business Council (USUBC), Washington, D.C, Mar, 2008
WASHINGTON, D.C. – The executive committee of the U.S.-
Ukraine Business Council (USUBC) is pleased to announce that
General Dynamics has been approved for membership in USUBC.
General Dynamics is a world leader in business aviation; land and
expeditionary combat vehicles and systems, armaments, and
munitions; shipbuilding and marine systems; and mission-critical
information systems and technologies. 
General Dynamics is the 58th member, the 6th new member for
2008 and the 36th new member for USUBC since January of 2007,
according to Morgan Williams, SigmaBleyzer, who serves as
USUBC president.
Patrick Sweet, President, Sweet Analysis Services, Inc. (SASI), a
long-time member of USUBC and a member of the USUBC
executive committee made the introduction to General Dynamics.
We express our appreciation to Patrick for his support.
General Dynamics employs approximately 83,500 people and has
a global presence. Headquartered in Falls Church, Virginia, the
company reported 2007 revenues of $27.2 billion.

General Dynamics has four main business segments:

(1) Aerospace designs, develops, manufacturers and services a
comprehensive offering of advanced business-jet aircraft. 

(2) Combat Systems is a global leader in producing, supporting and

sustaining land and expeditionary combat systems for the U.S.
military and its allies.

(3) Marine Systems designs, builds and supports submarines and a

variety of surface ships for the U.S. Navy and commercial customers. 

(4) The Information Systems and Technology group offers a breadth

and depth of technology and service capabilities that support a wide
range of government and commercial needs, including systems
integration expertise; hardware and software products; and
engineering, management and support services.

More information about the company is available on the Internet at

Information about the U.S.-Ukraine Business Council (USUBC)
can be found at

Washington, D.C. (

March, 2008, Fifty-Eight Members


1.  AES Corporation

3.  American Continental Group

4.  Archer Daniels Midland Company (ADM)
5.  Atlantic Group
6.  Baker & McKenzie
7.  The Boeing Company
8.  Bracewell & Giuliani LLP
9.  Bunge North America
10. Charles H. Camp, Attorney
11. Cardinal Resources
12. Cargill
13. Case New Holland
14. Chadbourne & Parke LLP
15. Cisco Systems, Inc.
16. The Coca-Cola Company
17. Deere & Company
18. Dipol Chemical International Inc.
19. ECdata, Inc.
21. The Eurasia Foundation

22. General Dynamics
23. Heller & Rosenblatt
24. Holtec International
25. Horizon Capital Advisors,
      LLC-Emerging Europe Growth Fund
26. International Environmental Trading Group
27. International Tax and Investment Center (ITIC)
28. Kennan Institute, Woodrow Wilson
      International Center for Scholars
29. Kraft Foods Ukraina
30. Kyiv-Atlantic Group of Companies
31. Marathon Oil Corporation
32. Marks & Sokolov LLC
33. MaxWell USA

34. MJA Asset Management, LLC,
35. Northrop Grumman
36. Och-Ziff Capital Management Group
37. Open World Leadership Center,
      U.S. Library of Congress
37. The PBN Company
39. Procter & Gamble
49. Russian-Ukrainian Legal Group, PA
41. Salans, international law firm
42. Shell Oil Company
43. SigmaBleyzer Private Equity Investment Group
44. Siguler Guff & Co, LLC
45. Softline Company

46. Sweet Analysis Services, Inc. (SASI)
47. TD International, LLC
48. The State Export-Import Bank of Ukraine
49. The U.S. Civilian Research & Development Foundation
50. U.S.-Ukraine Foundation (USUF)
51. Ukrainian American Bar Association (UABA)
52. Ukrainian-American Environmental Association (UAEA)
53. Ukrainian Federation of America (UFA)
54. Ukrainian Development Company (UDC)
55. UPS
56. Vanco Energy Company
57. Westinghouse
58. WJ Export-Import Agricultural Group
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Oilseed Crushing Plant, Ilvichevsk, Ukraine
5. Law firm RULG – UKRAINIAN LEGAL GROUP, Irina Paliashvili,
President; Kyiv and Washington,,
7. VOLIA SOFTWARE, Software to Fit Your Business, Source your
IT work in Ukraine. Contact: Yuriy Sivitsky, Vice President, Marketing,
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Houston, TX  77024;
8. ODUM– Association of American Youth of Ukrainian Descent,
Minnesota Chapter, Natalia Yarr, Chairperson
For information about USUBC please write to 
or check on the USUBC website:

Antony, South Bound Brook, New Jersey,
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:
13. WJ GROUP of Ag Companies, Kyiv, Ukraine, David Holpert, Chief
Financial Officer, Chicago, IL;
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,
15. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
16. SWIFT FOUNDATION, San Luis Obispo, California
17. TRAVEL TO UKRAINE website,,
A program of the U.S-Ukraine Foundation, Washington, D.C.
18. BUYUKRAINE.ORG website,
A program of the U.S.-Ukraine Foundation, Washington, D.C.
19. DAAR FOUNDATION, Houston, Texas, Kyiv, Ukraine.

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Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation

Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council (USUBC)
1701 K Street, NW, Suite 903, Washington, D.C. 20006
Tel: 202 437 4707; Fax 202 223 1224;
Power Corrupts and Absolute Power Corrupts Absolutely.
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