AUR#898 Aug 20 NATO Tells Russia: No ‘New Line’ In Europe; Investors Fear Kyiv Next On Kremlin List; Russia Warns Ukraine; Westinghouse; Bunge; AeroSvit Airlines;

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By John Thornhill and Stanley Pignal in Brussels
Financial Times, London, UK, Wednesday, August 20, 2008 
Meeting of the North Atlantic Council at the level of Foreign
Ministers held at NATO Headquarters, PR/CP (2008)104
Brussels, Belgium, Tuesday, 19 August 2008
OPINION: By Ronald D. Asmus, The Wall Street Journal Europe
New York, New York, Monday, August 18, 2008
The Russians themselves appeared to ridicule the NATO declaration.
By Karen DeYoung, Washington Post Staff Writer
Wednesday, August 20, 2008; Page A09
By Roman Olearchyk in Kiev and David Oakley in London
Financial Times, London, UK, Wednesday, August 20 2008
By Ruth Sullivan, Financial Times, London, UK, Monday, August 18 2008
Interfax, Kyiv, Ukraine, Tuesday, August 12, 2008
By Sebastian Tong, Reuters, London, UK, Monday August 18 2008
We shouldn’t let Russia pick each of our countries off separately
By Anne Applebaum, Columnist, The Washington Post
Washington, D.C. , Tuesday, August 19, 2008; Page A13
By Olga Bondaruk, Associated Press (AP), Tuesday, August 19, 2008
Letter-to-the-Editor: From Peter Lewycky
Action Ukraine Report (AUR), Wednesday, August 20, 2008

We call upon all of you to support the Georgian people
Appeal from the European Movement Ukraine, Kyiv
Letter-to-the-Editor, Action Ukraine Report (AUR)
Washington, D.C., Wednesday, August 20, 2008
Letter-to-the-Editor: By Oksana Bashuk Hepburn, Gatineau
Re: The bully is back, Aug. 13., The Ottawa Citizen
Ottawa, Ontario, Canada, Monday, August 18, 2008
Analysis & Commentary: By Peter Borisow, USA
Published in Den and other newspapers
Action Ukraine Report (AUR), Wash, D.C., Wed, August 20, 2008
By Jay Solomon, Neil King, Jr. and Siobhan Gorman 
The Wall Street Journal, New York, NY, Monday, August 18, 2008; Page A11
Russia has gone over to he dark side
OP-ED: By Fred Hiatt, Columnist, The Washington Post,
Washington, D.C., Monday, August 18, 2008; Page A11
Commentary: By Reno Domenico, Courier-Post
South Jersey, New Jersey, Friday, August 15, 2008
Russian reassurances don’t match reality in Georgia.
Lead Editorial: The Washington Post
Washington, D.C., Tuesday, August 19, 2008; Page A12
Commentary: By Patrick J. Buchanan, Information Clearing House
Imperial Beach, California, Friday, August 15, 2008 
OP-ED: By Michael Gerson, The Washington Post
Washington, D.C., Wednesday, August 20, 2008; Page A15
US company Westinghouse succeeds in bringing greater
international competition to nuclear fuel market
By Jim Davis, BusinessUkraine weekly magazine,
Kyiv, Ukraine, Monday, July 28, 2008
America’s Bunge expects to remain among leaders in booming Ukrainian agribusiness
By Jim Davis, BusinessUkraine weekly magazine
Kyiv, Ukraine, Monday, July 28, 2008
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Friday, June 13, 2007
U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Wednesday, June 25, 2008
By John Thornhill and Stanley Pignal in Brussels
Financial Times, London, UK, Wednesday, August 20, 2008 
Nato warned Russia on Tuesday that it could not draw a “new line” in Europe preventing Georgia and other countries from joining the western military alliance if they wished to do so.
Meeting in emergency session in Brussels, the western military alliance’s 26 foreign ministers also suspended regular top-level ties with Russia, saying that “business as usual” could not continue while Russian troops remained in Georgia.
Expressing their strong support for Georgia’s independence in one of the most serious disputes between the west and Russia since the end of the cold war, Nato members agreed to establish a permanent commission with the embattled Caucasian country, which is desperate to join the western alliance. Nato is also sending 15 civil emergency experts to Georgia to ease conditions for an estimated 150,000 refugees.
Condoleezza Rice, US secretary of state, insisted that Moscow could not divide those countries that had already entered Nato from those that still aspired to do so.
“There will absolutely be no new line. Nato does not accept that there is a new line, and we are acting as if there is no new line,” she said, evoking the Iron Curtain that divided Nato from the Soviet bloc during the cold war.
“Nato intends to support the territorial integrity, independence and sovereignty of Georgia and to support its democratically-elected government, and to deny Russia the strategic objective of undermining that democracy and making Georgia weaker,” she said.
Earlier, Jaap de Hoop Scheffer, Nato’s secretary-general, called on Moscow to withdraw all its military forces in Georgia to the positions they occupied on August 6, the day before the military confrontation erupted.
A Nato statement added that Russian military action had been “disproportionate and inconsistent with its peacekeeping role” in parts of Georgia.
Russia began withdrawing military units from parts of Georgia on Tuesday in accordance with a six-point ceasefire agreement brokered by the European Union. However, Russian officials reacted furiously to Nato’s criticisms and its declaration of support for Georgia’s eventual membership.
Dmitry Rogozin, Russia’s representative to Nato, said that the west was hypocritical in condemning Moscow for its aggression while supporting Mikheil Saakashvili, Georgia’s president. Mr Rogozin condemned Mr Saakashvili as a “war criminal” who had bombarded civilians and Russian soldiers in South Ossetia, provoking Moscow’s intervention.
Mr Rogozin added that if Nato had already accepted Georgia as a full member, then the western alliance and Russia would now be at war.
“Are you ready to risk your prosperity and risk your lives and the lives of your children for the sake of Saakashvili?” Mr Rogozin asked correspondents in Brussels.
Ms Rice said the US – and Nato – had no desire to isolate Russia. But she added that Russia’s incursion into Georgia and the bombing of civilian targets was isolating Russia from the world. “There can be no business as usual with Russia while this kind of activity goes on,” she said.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Statement: Meeting of the North Atlantic Council at the level of
Foreign Ministers held at NATO Headquarters, PR/CP (2008)104
Brussels, Belgium, Tuesday, 19 August 2008

The North Atlantic Council met in special Ministerial session on 19 August 2008, expressed its grave concern over the situation in Georgia and discussed its wider implications for Euro‑Atlantic stability and security.  A peaceful and lasting solution to the conflict in Georgia must be based on full respect for the principles of Georgia’s independence, sovereignty and territorial integrity recognised by international law and UN Security Council resolutions. 

We deplore all loss of life, civilian casualties, and damage to civilian infrastructure that has resulted from the conflict.  We are assisting humanitarian relief efforts.  We met with the Chairman‑in‑Office of the OSCE, Finnish Minister of Foreign Affairs Mr. Alexander Stubb, to discuss the key issues which he believed needed to be addressed.

We welcome the agreement reached and signed by Georgia and Russia, through the diplomatic efforts of the European Union, the OSCE and the US, to end the hostilities and to bring about a political solution to the conflict.  We stand fully behind these efforts.  We stress the urgency of swift, complete, and good faith implementation of the agreement, including a new international mechanism to monitor respect for these engagements. 

Military action must cease definitively and military forces must return to their positions held prior to the outbreak of hostilities.  Fully international discussions must begin on the modalities for security and stability in Abkhazia and South Ossetia.  Economic activity in Georgia, including international aviation and shipping, must not be hindered.
We are gravely concerned by the humanitarian situation.  Allied governments are working together, and in concert with international organisations and others in the international community, to ensure that the civilian populations affected by the conflict have the assistance they need to meet immediate and ongoing humanitarian needs.  We call on all parties, in accordance with their obligations under international humanitarian law, to ensure access for international humanitarian relief efforts to all affected populations.

We have also agreed today to support Georgia, upon its request, in a number of areas.  In addition, we have agreed to task the North Atlantic Council in Permanent Session to develop with Georgia rapidly the modalities for a NATO‑Georgia Commission.  This Commission will supervise the process set in hand at Bucharest, including the measures of support agreed at today’s meeting. 

These measures are intended to assist Georgia, a valued and long‑standing Partner of NATO, to assess the damage caused by the military action and to help restore critical services necessary for normal public life and economic activity. Georgia’s recovery, security and stability are important to the Alliance. 
NATO will continue to cooperate with Georgia in the framework of the Partnership for Peace and Georgia’s Individual Partnership Action Plan with NATO, and will review any additional Georgian requests for assistance.  We also welcomed the fact that a number of our governments have indicated that they will actively support measures to help the economic reconstruction of Georgia.

The conflict between Georgia and Russia has compromised regional stability and security.  We deeply deplore the use of force in the conflict between Georgia and Russia.  We reiterate that there is no military solution to the unresolved conflicts.  We remind all parties  that peaceful conflict resolution is a key principle of the Partnership for Peace Framework Document.

We remain concerned by Russia’s actions during this crisis and remind Russia of its responsibility for maintaining security and order in the areas where it exercises control, especially in light of continuing reports of Russia’s deliberate destruction of civilian infrastructure.

Russian military action has been disproportionate and inconsistent with its peacekeeping role, as well as incompatible with the principles of peaceful conflict resolution set out in the Helsinki Final Act, the NATO‑Russia Founding Act and the Rome Declaration.  We call on Russia to take immediate action to withdraw its troops from the areas it is supposed to leave under the six‑principle agreement signed by President Saakashvili and President Medvedev[1] 
The Alliance is considering seriously the implications of Russia’s actions for the NATO‑Russia relationship.  In 2002, we established the NATO‑Russia Council, a framework for discussions with Russia, including on issues that divide the Alliance and Russia. 
We have determined that we cannot continue with business as usual.  We call on Moscow to demonstrate – both in word and deed – its continued commitment to the principles upon which we agreed to base our relationship.

We reaffirmed our commitment to the decisions taken by Heads of State and Government at the Bucharest Summit in April 2008, including those regarding Georgia’s Euro‑Atlantic aspirations, and we will continue our intensive engagement with Georgia to address in December the questions pertaining to its Membership Action Plan application, taking into account developments until that time.
[1] As complemented by President Sarkozy’s letter dated 16 August 2008 and

subsequent correspondence on this issue.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

OPINION: By Ronald D. Asmus, The Wall Street Journal Europe
New York, New York, Monday, August 18, 2008

Russia’s invasion of Georgia is a game changer. This war is part of a Russian strategy of roll-back and regime change on its borders. The more evidence that comes in, the clearer it is becoming that this is a conflict Moscow planned, prepared for and provoked — a trap Tbilisi unfortunately walked into. A core Western assumption since 1991 — that Moscow would never again invade its neighbors — has been shattered.

As Moscow basks in its moment of nationalistic triumphalism, the West needs to take steps to prevent further Russian moves from spreading instability to others parts of Europe.
If they want to contain this crisis, NATO foreign ministers meeting here tomorrow need to focus on two strategic imperatives. The Alliance must take steps to reassure those members fearing Russian pressure that NATO’s mutual-defense commitments are credible and real. And ministers must consider speeding up enlargement plans to lock in stability in the Balkans and bring in Ukraine and the southern Caucasus.
The Alliance can start with a very simple but clear statement declaring that Moscow’s operation was an act of aggression incompatible with international law and the United Nations Charter, fundamental principles of security and cooperation in Europe as reflected in the Charter of Paris, and even the founding principles of the NATO-Russia Founding Act in 1997.
But strong words are only a first step. So the Alliance should also reassure current members who feel threatened by Russia’s move and, above all, Moscow’s rationale for action. Since the Alliance began enlarging a decade ago, it has not conducted any defense planning against a possible Russian military threat to new members in Central and Eastern Europe or the Baltic states.
We have unilaterally refrained from such steps partly as a confidence-building step toward Russia. New members have complained bitterly about this. It is why the Alliance is seen by many in the region as hollow. It is time to take this step as a prudent part of Alliance defense planning.
Furthermore, we need to back up such planning by making our security guarantees to existing NATO members more credible. In the NATO-Russia Founding Act, the Alliance undertook a political pledge to carry out commitments under Article 5 — which stipulates that an attack on one NATO ally is an attack on them all — by relying on building military infrastructure in the new member states and sending reinforcements to defend that country in a crisis, as opposed to the permanent forward deployment of large numbers of combat troops.
We did this, again, to reassure Russia and because our military commanders believed we could afford this given Western military superiority. This commitment was political, not legal, and was contingent upon the maintenance of a benign security environment — diplo-speak for a peaceful Russia.
NATO, however, unilaterally decided not to seriously develop that infrastructure or reinforcement capability. It is time to put into place the infrastructure, reinforcement capabilities and symbolic deployments we are fully entitled to as a stabilizing and confidence-building measure for new allies.
NATO also needs to reassure those partners likely to be the next targets of Russian pressure and possible aggression, first and foremost Ukraine. This means rethinking NATO’s enlargement strategy. In the mid-1990s, NATO adopted an enlargement strategy based on integration and not as a strategic response to Russia.
We consciously raised the bar and requirements for new members. Our focus was less on protection than on democratic reforms to help anchor these countries to the West. But we also consciously left ourselves the option of lowering the bar in the future if the security environment took a turn for the worse. It now has done just that, and we need to shift our criteria again.
Strategic reassurance should now come first. This means more robust NATO outreach and a fast-track approach to enlargement in the Balkans, Ukraine as well as the southern Caucasus. Ukraine is likely to be Moscow’s next target along with Azerbaijan, which holds the key to the viability of Europe’s trans-Caspian energy corridor.
While many of these countries might not qualify under the criteria of the 1990s, they are strategically important for the West and at risk. We need to embrace them quickly in spite of their imperfections. That means granting them so-called Membership Action Plans and moving toward fast-track enlargement. We should not give up our goal of pushing for democratic reform in these countries. But let’s first help make them safe.
Leaders in these partner countries also have big decisions to make. In Ukraine, the NATO issue is part of the domestic battle for power. But it is time to put politics aside and be serious. European Union association agreements currently under debate are good for the country but will not shield Ukraine from Russian pressure and aggression.
Opposition leaders publicly oppose NATO to score points, but in private many say they want it. They must now decide if they want to be part of the West.
If parts of the opposition join a bipartisan consensus, the Alliance should move quickly to embrace Ukraine. In Azerbaijan, presidential elections are approaching. Azerbaijan is not a democracy and has its own “frozen conflict” with Armenia in Nagorno-Karabakh. If Baku conducts free and fair elections and moves toward a democratic opening, and makes credible moves to make peace with Armenia, we should also be prepared to embrace Azerbaijan.
That of course leaves Georgia. Following this war, it will be years before Georgia again reaches NATO’s current criteria for new members. Here, too, we need to change our approach and embrace a country whose survival is at stake, too. These new commitments, if undertaken, must be backed up by credible military planning and defense arrangements that deter Russia.
Last but not least, we should freeze the NATO-Russia dialogue in Brussels for the foreseeable future. If we are honest, this relationship has never become what we wanted: a channel for consultation and real cooperation. Moscow has walked away from many of its commitments in the Founding Act.
It treats the NATO-Russia Council as yet another platform for its anti-Western strategy. Russian NATO Ambassador Dimitry Rogozin behaves like an old-style propagandist seeking to sow dissension in the ranks of allies. We have lots of channels to talk to Moscow. Let’s shut this one down until Moscow gets serious about doing business and not spreading anti-NATO propaganda.
The stakes are high. It is time for the kind of leadership and trans-Atlantic unity that will preserve our values, interests and security in a more dangerous world.
NOTE: Mr. Asmus is executive director of the Brussels-based Transatlantic Center and in charge of strategic planning at the German Marshall Fund of the United States. These views are his own.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
The Russians themselves appeared to ridicule the NATO declaration.

By Karen DeYoung, Washington Post Staff Writer
The Washington Post, Wednesday, August 20, 2008; Page A09

BRUSSELS, Aug. 19 — NATO allies said Tuesday that there will be no “business as usual” with Russia until its troops withdraw from all parts of
Georgia, but Moscow’s refusal to bend to the West’s political will left the alliance with few options for punishment.

A declaration issued after an emergency meeting of NATO foreign ministers here called on Russia to “demonstrate — both in word and deed” — its
commitment to a cooperative relationship with the alliance. It outlined a series of measures the alliance would take to help Georgia rebuild and
ultimately bring it into the embrace of the West.

NATO Secretary General Jaap de Hoop Scheffer said NATO would coordinate assistance to what he said were more than 150,000 Georgians displaced by the fighting. The alliance, he said in a news conference, would dispatch experts to assess damage to Georgia’s infrastructure and armed forces.

But with no sign that the Russians have begun a full-scale withdrawal from Georgian territory — days after pledging to do so — diplomats privately
described the document as an indication of the limits of what NATO’s diverse membership would agree to beyond denunciation.

The Russians themselves appeared to ridicule the declaration. While Secretary of State Condoleezza Rice told reporters the document was a “clear
indication of NATO’s interest and NATO’s concern,” Dmitry Rogozin, Russia’s envoy to the alliance, assessed in his own news conference that “the
mountain gave birth to a mouse.”

Russian Foreign Minister Sergey Lavrov also dismissed NATO’s declaration, the Associated Press reported, saying the alliance was trying to make a
victim of Georgia’s “criminal regime.” Georgia’s desire for NATO membership is strongly opposed by Russia.

Though Rice said the United States got precisely what it wanted in the declaration, a German diplomat said that his government did not consider NATO the best place to discuss a global response to the Georgian crisis.

Some of NATO’s newest members — including those formerly part of the Soviet Union — called for a more robust statement, the diplomat said. But “Georgia is not a member of NATO,” the diplomat said. “What can NATO do?”

The cease-fire negotiated last week by French President Nicolas Sarkozy and signed over the weekend by Russian President Dmitry Medvedyev, called for
Russian troops to return to their positions of Aug. 6, before they flooded from Russia through the separatist zone of South Ossetia and into undisputed
Georgian cities and towns.

The demand in NATO’s Tuesday declaration for a Russian withdrawal covers troops who crossed from Russia as part of the war. It does not cover several
hundred Russian soldiers who were stationed on disputed Georgian land as peacekeepers prior to the escalation.

NATO hopes that U.N. action will result in an international peacekeeping force deploying to the two disputed areas of Georgia.

The declaration welcomed an agreement, reached between Georgia and Russia this Tuesday at the Vienna-based Organization for Security and Cooperation in Europe, to expand a small group of unarmed OSCE military monitors on the ground in Georgia from nine to 29. OSCE Chairman Alexander Stubb said that the monitors — eventually to number 100 — would initially be deployed only in areas in Georgia proper “adjacent” to South Ossetia and the other
disputed enclave, Abkhazia.

Calling Georgia a “valued and long-standing Partner of NATO,” the alliance’s declaration said a NATO-Georgian commission would be formed to help Georgia move toward eventual membership. But it made no mention of fast-tracking action on Georgia’s application.

Until the Georgia situation is resolved, Scheffer said he saw no indication that the NATO-Russian Council, established in 2002 to facilitate cooperation, would convene. In an indication of NATO’s inability to agree on specific steps, he said that “no specific decisions on projects or programs have been taken.”

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
U.S.-Ukraine Business Council (USUBC):
Promoting U.S.-Ukraine business relations & investment since 1995.

By Roman Olearchyk in Kiev and David Oakley in London
Financial Times, London, UK, Wednesday, August 20 2008
The cost of insuring Ukraine’s debt against restructuring or default rose to its highest since the 2004 Orange Revolution yesterday, as investors fretted that the Kremlin’s spat with the west could spill over into a vast country of 46m people that straddles the divide between a resurgent Russia and the European Union.
Worries about the debt intensified after a dispute over Russian warships’ use of the Ukrainian Black Sea port of Sevastopol highlighted tensions between Russia and Ukraine, which became independent from Russia following the collapse of the Soviet Union.
Dmitry Medvedev, Russia’s president, sent a warning to Ukraine’s pro-western leadership on Monday not to restrict Moscow’s use of naval bases on the Crimean peninsula.
“Nobody should be telling us how we should behave . . . interference [by Ukraine] will not lead to anything good,” he told reporters in the Russian city of Vladikavkaz.
Five-year credit default swaps rose six basis points from Monday’s close to 467 basis points, Commerzbank said. Ukraine’s CDS have risen sharply since August 8, the day when fighting broke out between Russia and Georgia.
Paul Biszko, senior emerging market strategist at RBC Capital Markets, said: “The market has become increasingly nervous as the Russians have refused to budge from Georgia. As the crisis has dragged on, the intransigence of the Russians has suggested to many investors that Ukraine could be next on the hit-list as they have the key strategic asset of the Crimea, where the Russian fleet is based in the Black Sea.
“Could the Russians decide to take back the Crimea from Ukraine? It is possible. That’s why we have seen the cost to insure Ukraine debt rise sharply.”
Kiev has been a vocal supporter of Georgia and in a bid to tie its defence policy more closely with its western allies, Viktor Yushchenko, president, last week offered Nato use of Ukraine’s early warning radar system.
That move could inflame suspicions in Moscow that Ukraine plans to join a US- led anti-missile defence system along with Poland and the Czech Republic.
Another potential flashpoint is a sizeable Russian minority in the Crimea, where more than 100,000 of the region’s 2m population have Russian citizenship.
Leonid Kravchuk, the first elected president of Ukraine after it declared its independence from the Soviet Union, urged the present leadership to be cautious with Russia. “We should not give any grounds for a forceful or conflict scenario of settling both country’s differences, starting with the question of Russia’s Black Sea fleet,” he said.
Kiev worries that Moscow may refuse to remove its Black Sea fleet from Sevastopol when a lease agreement expires in 2017. More disturbing is the prospect of Russian support for separatists in the Crimea, with the aim of annexing it in much the same way Georgia claims Moscow plotted with Abkhazia and South Ossetia to wrest them from Tbilisi.
Proryv, a pro-Russian organisation that operates in Abkhazia and South Ossetia, is also active in Crimea. Nadyezhda Polyakova, leader of the group in Crimea, says “heightened tensions” in connection with events in Georgia and persecution of pro-Russian organisations by Ukraine’s authorities could “spark serious escalation and conflict as seen in Georgia”.

Influential Russians such as Yuri Luzhkov, the Moscow mayor, have repeatedly questioned Ukraine’s territorial rights over Crimea, which was administered as part of Russia until 1954. The Kremlin has not publicly questioned Kiev’s rights but Ukrainian officials fear it could have ambitions to reclaim the peninsula.
Kiev also accuses Russia of dragging its feet on agreements to demarcate borders on the Azov Sea. At stake, in addition to a strategic naval base, are potentially vast untapped oil and gas reserves.
Mr Yushchenko has urged Ukrainians to support his bid to join Nato as soon as possible, arguing that Kiev desperately needs foreign security guarantees.
However, two-thirds of Ukrainians fear it will upset Russia. Ukraine’s armed forces are much bigger than Georgia’s, but are dwarfed by the might of Russia.
Mr Yushchenko hopes fears that Ukraine might suffer the same fate as Georgia will bolster support for Nato. “What happened in Georgia is the best example [of] how easily military actions, and questions of territorial integrity, can in today’s conditions be forced upon a country that does not have collective security guarantees,” he says. If Ukraine’s borders are “questioned”, as happened to Georgia, “then that means we are on verge of deep and serious military actions”.
President Victor Yushchenko has vowed to give strong moral support to pro-western allies in Tbilisi. Ukraine and Georgia, independent since the collapse of the Soviet Union, have angered Russia by seeking membership of Nato.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
By Ruth Sullivan, Financial Times, London, UK, Monday, August 18 2008
Investment houses exposed to the fledgling asset management industry in central and eastern Europe are managing to offset weakness in western Europe as investor appetite in the continent’s former communist states remains robust.
Stripping out low-margin money market funds, the CEE’s mutual fund markets showed net outflows of just euro6bn (lb5bn, $9bn) in the first six months of the year compared with nearly euro164bn in western Europe, according to data from fund information service Lipper Feri.
This comes after a period of breakneck growth that has seen the volume of fund assets in Europe’s excommunist states surge to euro67bn from just euro18bn five years ago, even as many western European nations have haemorrhaged assets.
“Investors in eastern Europe are much more likely to put money into their own equity markets than their western counterparts. CEE fund markets are underdeveloped and mostly domestically oriented, which makes them attractive to domestic investors and so the money is flowing in,” said Bella Caridade-Ferreira, publisher and editor at Lipper Feri.
Until the late 1990s, the former communist countries had no mutual fund sector. Since then, the industry has taken root, with more developed markets such as Poland seeing assets increase fivefold during the past five years in spite of modest recent outflows.
The latest quarterly data from Lipper Feri showed mature markets such as France, Italy and Spain suffering big redemptions in the three months to June while the Czech Republic, Slovenia, Latvia and Romania all recorded positive flows.
Almost without exception, eastern European economies are growing faster than their western peers, driving up income, savings and investment assets. Among the international banks and asset managers that have benefited from the rampant growth in eastern Europe is Austria’s Raiffeisen International. It now has euro4.5bn in assets; euro3.4bn in mutual funds and the rest in pension funds.
Barbara Valkova, head of asset management at Raiffeisen, said: “If markets do well, we could grow as much as 20 per cent in countries that are most developed in the region such as Croatia, Hungary and Slovakia.”
Last year, Raiffeisen opened its doors in Serbia, where it is focusing on equity funds, and it is planning to expand into Ukraine. It now has eight asset management operations in the region at different stages of development, with Romania and Bulgaria among the most embryonic. In Romania, Raiffeisen is targeting growth of 150 per cent in 2009 if market performance is strong.
Belgium’s KBC, another of the biggest players in the region, generates a 10th of its euro180bn of assets from eastern Europe, according to Johan De Ryck, general director of KBC Asset Management for central and eastern Europe and Russia.
Over the past four to five years, KBC’s asset management business has experienced growth rates of 30-40 per cent in the region and, although this year is not showing such strong flows as 2007, Mr De Ryck forecasts at least 20 per cent growth in 2009. He expects even stronger fund growth from less mature markets such as Bulgaria, Romania, the Balkans and Russia.
“Although inflation is rapidly increasing across the region, the strong salary growth of the past years does not yet seem to have slowed down, so savings and disposable income are still strong,” he said.
Pioneer Investments, part of Italian banking group UniCredit, is also active in the region, which accounted for almost 5 per cent of its euro230bn of assets under management at the end of last year.
Although the region has shown mixed performance this year, fund managers and central and eastern European aficionados agree with Ms Caridade-Ferreira’s conclusion that “it is a region where the fund industry will continue to grow”.
Page 11, Quarterly Industry Review
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Interfax, Kyiv, Ukraine, Tuesday, August 12, 2008

MOSCOW – Analysts at Citi believe that investors must reassess the risks in Ukrainian assets owing to the current situation in the Transcaucasian
region. The Citi note said: “A more aggressive Russian foreign policy within the former Soviet Union is likely to pose a threat to Ukrainian asset prices.”

“This looks particularly likely in view of the fact that we already believe that Ukraine’s fundamentals will deteriorate during the latter part of 2008
on the back of the prevailing inflationary growth mix. As such, widening external deficits should become an increasing source of pressure on the
hryvnia as seasonal support fades and key reforms are shelved, all of which threatens the outlook for capital inflows,” the note said.

“Tensions in the Caucasus are almost certainly related in our view to Russia’s dissatisfaction over the consequences of the “colour revolutions”
in Ukraine and Georgia in 2003 and 2004, when pro-western governments emerged in these two countries,” the note said.

Citi experts said that Russia is against Georgia and Ukraine’s accession to NATO, as well as Ukraine’s EU integration since such a move would reduce
Russia’s influence in the region.

“If conflict with Russia decelerates or reverses Georgia’s integration with the West, a similar fate could also affect Ukraine. Russia may find it
convenient to raise the level of tension with Ukraine in the run-up to the December NATO review, and there are plenty of issues which Russia might
choose to pursue, including the price of gas imports; the future of Russia’s Black Sea fleet and the control of Sevastopol; the independence of Ukraine’s
Orthodox church; the dependence of Ukraine’s arms and electronics industry on Russian contracts; and Russia’s objection to Ukraine’s oil exploration in
the Black Sea,” the note said.

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NOTE: Send in a letter-to-the-editor today. Let us hear from you.

By Sebastian Tong, Reuters, London, UK, Monday August 18 2008

LONDON – The refinancing of the debt of Ukraine’s highly leveraged banks is at risk if foreign investors take fright from worsening relations between the country and Russia, Standard & Poor’s said on Monday.

The ratings agency also said an escalation in tensions between Ukraine and Russia would lead to a drop in foreign direct investment into Ukraine, shutting down a key source of funding to cover the country’s widening current account deficit.
“Ukraine’s banking sector is highly leveraged and dependent on foreign investors to refinance existing debt. Western investors already have less appetite for Ukrainian risk than they did two weeks ago,” Frank Gill, S&P director of European sovereign ratings, told Reuters.
S&P estimates that foreign debt of Ukrainian banks reached more than $35 billion as at mid-2008, representing 28 percent of the banking sector’s total liabilities.
As a row continues over the use of a Ukrainian Black Sea port by Russian warships, the cost of insuring Ukraine’s debt against restructuring or default rose on Monday to its highest levels since Ukraine’s “Orange Revolution” of 2004. For more see [ID:nLI728791].
Russia’s military intervention in Georgia’s breakaway region of South Ossetia has inflamed tensions among former Soviet countries, with Russia seen to be taking a harder stance against neighbours such as Ukraine and Georgia which aspire to NATO membership.
Gill said the Georgian crisis would probably lead to further political polarisation in Ukraine, cementing divisions between existing political parties, such as the pro-Russian Party of Regions and pro-Western parties associated with President Viktor Yushchenko and Prime Minister Yulia Tymoshenko.
“Those opposed to NATO entry will be more vehemently so, while the pro-Western side will redouble efforts to gain membership to NATO and other Western multilateral organisations,” Gill said.
Earlier in the day, Yushchenko’s office accused Tymoshenko of betraying national interests by not backing Georgia in its conflict with Russia.
Gill said Ukraine’s “B+” credit rating was not under pressure as the ratings agency had already taken into account Ukrainian political risk arising from Russia’s tendency to intervene in the politics of its neighbours.
“There is a recognition among Ukrainian leaders of Russia’s importance to its economy. In terms of trade flows, Ukraine’s economy is more integrated into Russia’s versus Georgia,” Gill said, adding that Tymoshenko has shifted to a “more nuanced and pragmatic approach” towards Russia.
“There is always a risk of some kind of conflict between the two countries, but this is not part of our core expectations at this moment,” he said.
Ratings agency Moody’s also said the tensions were not likely to have an immediate impact on Ukraine’s B1 rating with positive outlook.
“Geopolitical issues are among the things we look at,” said New York-based Ukraine analyst Jonathan Schiffer. “We would probably wait and see what Ukraine’s response is, what the EU, U.S. and NATO’s response is. Then we would try to draw up a new balance sheet which takes these things into consideration.” Schiffer said the risks of an overheating economy in Ukraine were hindering the country’s chances of a near-term ratings upgrade.
Ratings agency Fitch said last week that Ukraine faced greater risks to its BB- debt rating from the current account deficit, rising external debt levels and inflation than from tensions with Russia.
Ukrainian annual consumer price inflation stood at 26.8 percent in July. (Additional reporting by Carolyn Cohn; Editing by James Dalgleish)
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We shouldn’t let Russia pick each of our countries off separately
By Anne Applebaum, Columnist, The Washington Post
Washington, D.C. , Tuesday, August 19, 2008; Page A13
Forty years ago this week, on the night of Aug. 20-21, 1968, thousands of tanks and hundreds of thousands of Soviet and Warsaw Pact soldiers entered Czechoslovakia. The goal of the invasion was straightforward: to prevent a Soviet satellite from carrying out democratic reforms that, had they been allowed to succeed, could have threatened the legitimacy of the governments of other Soviet satellites and, indeed, of the Soviet Union itself.
Superficially, it has to be said, the events of August 1968 do bear some resemblance to the events of August 2008, as Secretary of State Condoleezza Rice has observed.
For yes, not only are tanks with Russian commanders again rolling over the territory of another sovereign country, the invaders’ intentions are in some ways similar: Once again, Russians are punishing a former satellite whose reforms, if successful, could challenge their own political system.

True, Russia is no longer Soviet. But its ruling clique, led by former president and current Prime Minister Vladimir Putin, remains steeped in the paranoid, highly controlled, conspiracy-obsessed culture of the old KGB. Putin and his entourage are not communists, but neither do they believe in free markets or free societies.

Instead, all important decisions must be made in Moscow, by a small, unelected group of people who know how to resist sabotage organized from abroad. Events cannot be allowed to just happen; they must be controlled and manipulated. Elections cannot just take place; their outcomes must be determined in
The Russian state’s open hostility toward not only Georgia but also Ukraine and the Baltic states is, in this sense, partly ideological. Genuine elections have taken place in those countries; people who have not been preselected by a ruling oligarchy do sometimes gain wealth or power. Georgia’s Rose Revolution and Ukraine’s Orange Revolution even involved street demonstrations that helped unseat more oligarchic regimes.
Thus it is not pure nationalism, or mere traditional great-power arrogance, that makes the Russian leadership disdainful of Georgia and Ukraine: It is also, at some level, fear that similar voter revolutions could someday challenge Russia’s leaders, too.
Nevertheless, the word “superficial” is worth repeating: As I’ve written before, I don’t really like historical analogies, which can conceal as much as they reveal. For one, the ethnic conflict that sparked the Georgian president’s foolhardy response and the Russian invasion two weeks ago has been twisted and manipulated, but it nevertheless involves real people.
Any long-term solution to the current crisis has to find some accommodation for the South Ossetians whose homes and livelihoods have been destroyed in the exchange of fire.
More important, the international situation is utterly different. Despite some misty-eyed memories of alleged Cold War decisiveness, we did not, back in 1968, have the will or the ability to help the victims of Soviet expansionism.
Our only real response to the Soviet invasion was a bit of public spluttering. Most of Europe was still recovering from the “events of 1968,” the student uprisings celebrated across the continent this year in a haze of post-radical nostalgia.
Today’s Russian leaders, despite the paranoia they learned in KGB training, have far more profound relationships with Western institutions, not only the Group of Eight and the Council of Europe but also with the Western banks and companies that invest their money and manage their property. Today’s Europe is theoretically better prepared to engage Russia, too, though it has not been engaged until now.
After the invasion, I wrote that the West, which failed for many years to address the security vacuum in the Caucasus, would have no influence over Russia, and in the short term this has proved true. Despite a cease-fire brokered by France, Russian troops are withdrawing very slowly, if at all; we have no military means to force them and should not pretend otherwise.
But if this becomes a long-term conflict, if the Russian military remains in Georgia proper, if this turns out to be only the first of several incursions into other neighboring states, there are relationships we have and meaningful levers we can use, whether over Russian membership in international institutions or Russian leaders’ luxury apartments in Paris — if, of course, we are willing to use them.
The critical question now is whether the West is prepared to behave like the West, to speak with one voice and create a common transatlantic policy.
In recent years, Russia has preferred to deal with Western countries and their leaders one by one. Just last week, an affiliate of Gazprom, the Russian state-dominated gas company, added a former Finnish prime minister to its payroll — which already includes former German chancellor Gerhard Schroeder. If we hang together instead of allowing Gazprom to pick us all off separately, there is at least a chance that this mini-chill won’t last another 40 years, too.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Olga Bondaruk, Associated Press (AP), Kiev, Ukraine, Tuesday, August 19, 2008
KIEV, Ukraine – Russia’s foreign minister warned Ukrainian leaders Tuesday against trying to restrict the Kremlin’s use of a Crimean naval base it leases from Ukraine, adding to tensions that have heated up since Russian troops invaded Georgia.
Ukraine’s pro-Western president, Victor Yushchenko, has sided with Georgia and moved last week to restrict Russian warships at the leased military base at the Black Sea port of Sevastopol, saying the vessels’ movements were subject to Ukrainian approval.
Russian Foreign Minister Sergey Lavrov dismissed that argument in a sharply worded barb Tuesday, saying Russia’s ships don’t need any permission to use the port. The lease agreement says “nothing about us needing to explain to someone why, where to and for how long the Black Sea Fleet ships are leaving their walls,” Lavrov was quoted as saying by Russia’s state-controlled ITAR-Tass news agency.
Ukraine’s Defense Ministry said it was considering Russia’s request to allow four Russian warships to enter Sevastopol on Wednesday, but declined further comment.
However, Foreign Minister Volodymyr Ohryzko sought to cool tensions, saying his country wouldn’t physically prevent Russian ships from entering or leaving the naval base. “Without a doubt, there won’t be any mine fences or military collisions; one shouldn’t even talk about that,” Ohryzko said in Kiev, the Interfax news agency reported.
Many Ukrainians worry that after dealing with Georgia, the Russians might set their sights on Ukraine, which like Georgia is a former Soviet republic government that has angered by Moscow by seeking closer ties with the West and membership in the NATO military alliance.
Russia’s critics say the conflict in Georgia heralds a new, worrying era in which an increasingly assertive Kremlin has shown itself ready to resort to military force outside its borders in pursuing its goals.
Many Ukrainians fear the Kremlin’s fierce opposition to Ukraine’s drive to join NATO and Moscow’s desire to regain control of the palm-lined Crimea peninsula and the Sevastopol naval base might put Ukraine at a risk of a military conflict with its giant neighbor.
Moscow Mayor Yuri Luzhkov has warned Ukraine that it still isn’t too late to return “what doesn’t belong to it” — a reference to Crimea.
Ukraine is also important to Russia because its pipelines carry Russian oil and natural gas westward. The country also has a huge Russian-speaking population in its east and south that wants to remain linked with Russia.
While siding with Georgia, Ukrainian officials have acknowledged that Moscow’s quick military victory exposed their nation’s own vulnerability.
“I think that Russia is looking for a reason to have a serious conflict with Ukraine,” said Iryna Mezentseva, a 21-year-old secretary in Kiev.
Associated Press writer Maria Danilova in Moscow contributed to this report.
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LETTER-TO-THE-EDITOR: From Peter Lewycky
Action Ukraine Report (AUR), Wednesday, August 20, 2008

Thanks you for the recent postings re: Georgia-Russia. (I  thought that you were permanently dormant)  I’m heartened to read there are knowledgeable and influential people who rose to the occasion to condemn Russia’s attempt at annexation.

A number of writers made reference to Ukraine and Crimea. One or more allowed that there was a ‘Russian’ majority; hence laying open the possibility of further Russian adventures. While I’m not a historian I have a recollection that in 1954 Crimea joined Ukraine as a result of a plebescite.
I also have a recollection that when Ukraine with Crimea left the USSR, Russia demanded that a special plebescite be held in Crimea to ascertain whether or not Crimea wished to stay with Ukraine. Moscow packed Crimea’s electoral list with USSR military personnel and despite this, they still lost! 
I would appreciate that this fact be known: That the people of Crimea voted to join Ukraine in 1954 and voted again to stay with Ukraine in 1992; despite Moscow’s rigging of the vote. Unfortunately none of your writers pointed out this most salient fact.
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We call upon all of you to support the Georgian people
Appeal from the European Movement Ukraine, Kyiv
Letter-to-the-Editor, Action Ukraine Report (AUR)
Washington, D.C., Wednesday, August 20, 2008

We call upon all of you to support the Georgian people who are at this very moment spilling their blood in defense of their homeland’s territorial integrity.

By violating Georgia’s territorial integrity, Moscow has started to realize its global geopolitical project of renewing and consolidating its political and economic hegemony over the territories of the former USSR. The primary goal of the new geopolitical strategy is the horrific symbiosis of Russian imperialism and Stalinist totalitarianism.

In realizing this new geopolitical strategy, the Kremlin’s use of military aggression serves a twofold purpose. The first is to strengthen Moscow’s influence over the countries that were once part of the Soviet Union. The second is to frustrate the Euro-Atlantic aspirations of those nations who gained their liberty with the USSR’s demise.

The seriousness of the current situation dictates the need to adopt urgent measures in order to ensure that human history’s most horrific episodes are not repeated. The international community’s reaction should be proportionate to the cynical violation of international law.

Strict sanctions should be adopted against Moscow as an aggressor for “no territorial acquisition or special advantage resulting from aggression is or shall be recognized as lawful” (UN Resolution 3314).

The European Movement Ukraine calls upon our friends and colleagues in the European Union to display civil valor and honesty.

We believe that the time-honored European values of solidarity, justice and rule of law are more than just empty phrases and that together we will do everything required of us to stop the aggressor and help the courageous Georgian people in their battle for freedom and their homeland’s territorial integrity.
NOTE: European Movement Ukraine:
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LETTER-TO-THE EDITOR: By Oksana Bashuk Hepburn, Gatineau
Re: The bully is back, Aug. 13., The Ottawa Citizen
Ottawa, Ontario, Canada, Monday, August 18, 2008
Thank you to the Citizen for doing the right thing by lending support to Georgia in its David and Goliath fight.
I have been reminded that Russia, the repeat offender, is still out there. In the last 50 years alone, countless Ukrainians, Poles, Hungarians, Czechs and Slovaks, Afghans, Chechens, have lost their lives to Russia’s oppressive governments. Some say the count stands at around 40 million dead in the former Soviet Union alone.
Its current government is denying Russia a chance to become a modern, civilized nation. It needs to apologize for past wrongs and thus start a road to redemption and deserved respect rather than demand the world listen to its mutterings about wounded pride over its lost bloody empire and watch its attempts to recreate it with new human sacrifices.
I am proud of the positions taken by Canada and other western countries. Thank you to the United States, to Prime Minister Stephen Harper for articulating strong support for little Georgia; thank you for President Nicolas Sarkozy for his efforts.
And to the five other presidents, friends of Georgia, in the Baltic states, Poland and Ukraine — all of whom have experienced Russia’s tyranny. They know Russia holds life, freedom, sovereignty and peace in disregard. Fortunately, they do not. Georgia’s fight against oppression is our fight. I, too, am a Georgian.
FOOTNOTE: I [Oksana Bashuk Hepburn], encourage all of us to keep actively engaged in this matter.  The Russians are counting on the fact that we will let their invasion of Georgia fade from our TV sets and then into oblivion.  Just like Chechnya.  Then, they will do what thy have done endless times before destroy and control.  Please do something: write or call your politicians; call the Russian Embassy and express your disdain; organize a demo; letters to editors; emails to blogs; etc..  Please feel free to distribute further.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Published in Den and other newspapers
Action Ukraine Report (AUR), Wash, D.C., Wed, August 20, 2008
When Russian Dictator Vladimir Putin ordered his storm troopers to invade Georgia last week, he was doing far more than simply propping up a pro-Russian wannabe puppet government in a Georgian province long ago seeded for the purpose with Russian nationals and KGB operatives.  The game thus begun and how the West responds to it will write history as inevitably as did Hitler’s march into Czech Sudetenland.
For Hitler, Chamberlain’s infamous appeasement became a green light to take what he wanted in Europe, marking the start of WWII.  For Putin, anything short of strong and united international action to force Russia to cease and desist and immediately.
Withdraw All Russian forces from All of Georgia will be read by Putin as yet another green light – future license to proceed against his ultimate goal – to seize control of the last major oil pipelines to Europe not yet under Russian control and restore the Russian Empire by conquering Ukraine and Moldova.  The resulting domino effect on Europe and the West will be catastrophic. 
It is now urgent and critical for all people to call on their government officials and representatives to demand:
     1)  Immediate withdrawal of All Russian forces from All Georgian territory;
     2)  Immediate replacement of Russian so-called “Peacekeeping” Forces in South Ossetia, a province of Georgia, with a neutral multinational         
           peacekeeping force and if necessary, a NATO peacekeeping force;
     3)  Immediately sending a substantial U.S./NATO Naval presence for permanent station in the Black Sea;
     4)  Immediate granting of NATO MAP status to Georgia and Ukraine;
     5)  Reconfirmation of the inviolability of international borders;
     6)  Rejection of all “breakaway provinces” as acts of war;
     7)  Condemnation of Russia’s efforts to dismember Georgia to suit its own ends;
     8)  Specific and severe trade and diplomatic sanctions against Russia including expulsion from the G8, the WTO and the IOC;
     9)  Senior Russian Government and Military Officials be individually listed as Terrorists and their assets in U.S. Banks be seized and frozen;
     10) Prosecution of Senior Russian Government and Military Officials as War Criminals for the wanton slaughter of Georgian civilians.
Our brave new world has shown it will not tolerate toothless mini-tyrants like Saddam Hussein.  Now the question is whether the world has the courage to face down Maxi-Tyrants like Putin, savage heir to Stalin’s blood-drenched legacy, the same legacy from which Hitler learned there are few limits to the horrors civilized nations will tolerate just to be left alone, even if just for a while. 
Russia does not understand diplomacy and protests.  Putin responds only to brute force and raw power.  Short of a military reaction, the only alternative is to make it brutally clear to Russia that as a Rogue Sate the same harsh diplomatic and financial sanctions we apply to International Terrorists will now apply to Russia and individually to Russia’s leaders.  We need a Dirty Dozen List of Russian Leaders whose assets are seized and who are banned from business and travel in the civilized world. 
Russia and its leaders must be made to understand – “If you behave like a Terrorist, you will be treated like a Terrorist.”
Tragically, Russia’s invasion of Georgia was enabled by the self-centered shortsightedness of both European and U.S. governments and politicians.  Among the enabling acts were:

     1) Allowing Russia to be the official United Nations Peacekeeping Force in Ossetia – a move on par with letting Bin Laden guard U.S. nuclear 

     2) European leaders’ succumbing to Russian bullying and gas bribery to stop Georgia and Ukraine from starting NATO Membership Accession Plans
         this past spring; and, most recently –
     3) The U.S. and Europe’s failure to reject the Schumer Appeasement Doctrine. 
First declared by New York Senator Charles Schumer this summer, the Schumer Appeasement Doctrine (SAD) proposes the U.S. yield to Russian Hegemony in Eastern Europe in exchange for Russian support against Iran and help to lower crude oil prices.
Where President Reagan said, “Mr. Gorbachev, Tear Down This Wall!” Senator Schumer seems to be saying, “Mr. Putin, Put Back Your Iron Curtain – It’s O.K.”
The crucial question is whether Schumer is just a Times Square Aberration or if his proposed Appeasement Doctrine foreshadows a quantum shift in U.S. foreign policy.
Since Schumer is a prominent Democrat, failure by the Democratic Party and by Presidential Candidate Obama to reject the Schumer Appeasement Doctrine has led the Russians to expect they will not be vigorously challenged by the U.S. in the event Obama wins the November election. 
A parallel failure by the President Bush to reject the Schumer Appeasement Doctrine has led to Russian suspicions about his resolve as well.  Although Republican Presidential Candidate McCain has taken a strong position on Russia’s invasion of Georgia, it remains to be seen to what extent this will influence President Bush.
For reasons perhaps best attributed to simple lack of courage to acknowledge reality, the West has consistently failed to respond in a timely fashion to Russian tactics – tactics that should be familiar to us by now as they not changed much in the last century. 
Russia’s basic steps are:
     1) Seed the desired territory with Russian nationals and agents;
     2) These agents, supported by Russian nationals and whatever local fellow travelers they can recruit, start complaining they are being mistreated by the
          local people and government;
     3) Russian agents provoke armed conflicts with the local population;
     4) Russian agents call for Russia to protect them against – persecution, aggression, mistreatment, etc. (pick whatever works at the moment);
     5) Or, Russian agents declare themselves to be the “true representatives” of the people of the desired territory and call on their brethren to help them
         drive out the “usurpers” (i.e., the locals);
     6) Russia sends in armed forces to – protect its local nationals, secure strategic assets, fight terrorists, etc. (again, pick whatever works at the moment);
     7) Russia slaughters the opposition and grabs what it wants.
These same tactics were used successfully starting with Ukraine in 1918, then on to Latvia, Lithuania and Estonia in ’46, Hungary in ’56, Czechoslovakia in ’68, and Afghanistan in 1980.  In the ’90s, Russia took a time out to change costumes.  They flushed the worn out Marxist “USSR” façade and put on the current, more marketable “Russian Federation” façade.  And then – Here we go again – Georgia in 2008. 
If not stopped by the West, Ukraine and Moldova will follow in short order.  Russia’s tactics in Ossetia are virtually identical to those currently being staged in the Crimea and Transdnistra, Putin’s next “breakaway provinces.”  Russia’s Dictator is not just seriously intent on restoring Stalin’s Russian Empire – He’s Doing It!
And, sometimes, the other guys are just so inept, they give Russia gifts they wouldn’t have dreamed of asking – like letting Russians be appointed United Nations Peacekeepers in Ossetia!!!  What next?  How about getting Al Qaeda to handle Security for Washington D.C. and Hamas for the Wailing Wall?  Russian “Peacekeepers” in Ossetia!  When the definitive guide to stupidity (or treachery) in diplomacy is finally written, this one will need its own chapter. 
Equally disturbing is the West’s failure to acknowledge that Russia’s policy towards Ukraine has not changed in the 350 years since Peter I decided to make himself an empire by slaughtering and devouring his neighbors.  The most fundamental requirement for Russia to have a credible empire was then and is today … Ukraine. 
Without Ukraine, Russia is little more than Asian tundra, armed to the teeth and with lots of money – a kind of frozen Saudi Arabia with nukes.  To be credible as an empire, or even simply European, Russia needs Ukraine – her land, her soil, her faith, Church, culture, traditions and industry – her natural cornucopia of God’s Bounty.
The only thing Russia does not need is the Ukrainian people, whom Russia has worked for centuries to kill off and destroy, most recently with 26 years of ongoing genocide in the first half of the 20th Century, which culminated in the Holodomor, when 10 million innocent Ukrainians, the majority elderly and women and children, were killed in the Genocide of 1932-33.  No one doubts there is any shortage of Russian leaders who are ready, willing and able to complete the job.
Russia’s invasion of Georgia immediately endangers Georgia’s survival as a free and democratic nation.  It is the first step to brazenly reconstitute the Russian Empire.
Russian’s invasion of Georgia foreshadows a similar military invasion of Ukraine and Moldova in the near future, perhaps as early as 2009. 
Russia’s invasion of Georgia sets the stage for a future where Russia effectively controls virtually all energy supplies to Europe.  Such European dependence on Russia for energy will effectively destroy the North Atlantic alliance, thus paving the way for subordination of the United States as well as Europe to Russian Hegemony.  
Russia, master of the world’s energy routes, fearing no nation’s military – suddenly unchallenged as the New Supreme World Power, and all in the hands of a ruthless Stalinist Dictator – Now That is an Evil Empire.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Jay Solomon, Neil King, Jr. and Siobhan Gorman 
The Wall Street Journal, New York, NY, Monday, August 18, 2008; Page A11

WASHINGTON — As the West presses Russia to withdraw its troops from Georgia, the Bush administration and its European allies are also exploring actions that could alter their post-Cold War relationship with Moscow.

U.S. officials over the weekend said Russia’s actions inside Georgia in recent weeks were forcing Washington and Europe to examine measures that could result in isolating Russia from the West. Among these, they said, are potentially blocking Russian participation in global bodies such as the World Trade Organization and the Group of Eight forum for industrialized nations.
Meanwhile, U.S. Secretary of State Condoleezza Rice will attend an emergency session of the North Atlantic Treaty Organization in Brussels on Tuesday to fashion a more detailed response to Russia’s actions in Georgia and the disputed territories of South Ossetia and Abkhazia.
“The damage to Russia’s reputation and the damage to people’s views of Russia’s suitability for some of these institutions, that damage can’t be undone,” Ms. Rice said Sunday on CBS television’s “Face the Nation.” “Georgia can be rebuilt. Russia’s reputation is going to take a while, if ever.”
Among the most immediate issues to be addressed at the NATO meeting, said U.S. and European officials, will be the need to deploy peacekeepers to the Caucasus to oversee a cease-fire between Russia and Georgia. NATO members are also expected to address longer-term strategic issues that could further heighten tensions with Moscow, such as the expansion of NATO membership to additional former Soviet states, as well as moves to deploy a missile-defense shield across Europe.
The conflict in Georgia is already forcing a broader reassessment of Europe’s relationship with Russia, said European diplomats. One said he hopes the conclusion from the NATO meeting will be that “we cannot go on with business as usual” with Moscow. In recent days, NATO has canceled a number of scheduled joint-military exercises with Russian forces because of the Georgia conflict.
And the Bush administration and Poland accelerated the signing of an agreement last week that will allow the U.S. to deploy American missile-interceptors on Polish soil. Washington committed to stationing Patriot-missile batteries in Poland as part of a greater U.S. commitment to defending the country from attack.
Saturday, Ukrainian President Viktor Yushchenko announced that Kiev would be willing to assist a regional missile-defense system by providing early-warning information from its satellites.
“You wouldn’t expect Ukraine to try to attach itself to the missile-defense project,” said the European official. “It’s probably reflecting their general concern about Russia.”
Moscow immediately criticized the missile-defense agreement between the U.S. and Poland as designed to target Russia, something neither American nor Polish officials have attempted to refute in recent days.
Still, many American and U.S. diplomats said it remains unclear just how fundamentally the Georgian conflict is going to reshape Europe’s strategic map.
NATO’s willingness to expand its membership, and include countries such as Georgia and Ukraine, is unlikely to be discussed in depth Tuesday and may not get a more thorough airing until the organization’s December summit. But even then, it could take a considerable amount of time before either Tbilisi or Kiev became NATO members, said U.S. and European officials.
A White House spokesman, Gordon Johndroe, said NATO countries are likely to put Georgia and Ukraine on the track to becoming members at a meeting of foreign ministers in December, although the U.S. failed to persuade other NATO members to do that at an alliance summit earlier this year. He held out the possibility that the time frame could even be accelerated. “We’ll see if there is a move to do it earlier,” he said.
The decision involves creating a membership action plan for each country. It has typically taken a few years for aspiring member countries to join after they’ve received such plans.
Countries such as Germany and France have held that Georgia shouldn’t join NATO until it resolves all of its territorial disputes, while Ukraine must build greater domestic political support for its membership. The fighting in Georgia isn’t expected to change this calculus.
The timing of the deployment of a U.S. missile-defense system for Europe is also still in question. In addition to the U.S. agreement with Poland, the Czech Republic agreed last month to host a radar station. Approval of the move by the Czech Parliament later this year seems likelier now, in part because many Czech officials are comparing the war in Georgia to Moscow’s invasion of Prague 40 years ago.
Still, many European states are concerned that deployment of the missile-defense program will further militarize Europe and possibly antagonize Moscow. A number of European diplomats said it remains unclear how the conflict in Georgia might shift opinion in countries such as Germany and France.
“Russia may have set the conditions for [the missile-defense] program to be accelerated,” said a European official. “We’ll have to see.”
–John D. McKinnon contributed to this article.
Write to Jay Solomon at, Neil King Jr. at and Siobhan Gorman at
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Russia has gone over to he dark side
OP-ED: By Fred Hiatt, Columinist, The Washington Post
Washington, D.C., Monday, August 18, 2008; Page A11
As Russian forces loot and occupy a neighboring state, conscripting Georgian civilians at gunpoint to sweep their city streets, it’s not uncommon, in Moscow or in Washington, to find America at fault.
Russia has gone over to the dark side — or, in the Moscow version, has finally stood up for itself — in understandable reaction to U.S. disrespect, according to this view. And the next president should learn a lesson from this: that there are limits to how far Russia can or should be pushed.
This narrative of American provocation cites a long list of grievances, but the principal and original sin is NATO expansion. After the dissolution of the Soviet Union in 1991, the United States encouraged the newly free nations of Central and Eastern Europe to join a military alliance whose founding purpose had been containment of the U.S.S.R. Russia hated the idea from the start, and the United States should have known that Moscow, once it recovered its strength, would exact retribution.

But was this really something that was done to, or even against, Russia? The vision behind NATO expansion under both President Bill Clinton and President Bush was a Europe whole and free. The carrot of NATO membership was dangled, first of all, to ease the dangers of transition. Applicant countries had to promise civilian control of their militaries, fair treatment of ethnic minorities and respect for international borders.

Given the terrible things that might have accompanied the dissolution of the Soviet Union, the Warsaw Pact and Czechoslovakia — Yugoslavia on a far greater scale — the policy was amazingly successful.
Of course, applicant nations had an additional motive: They wanted an insurance policy against the possibility that Russia might eventually revert to its old form and seek hegemony over them. America sympathized but also hoped that Russia would cooperate with and someday even join NATO — that it would recognize the potential benefits of living as part of a neighborhood of prosperous, freely trading, democratic nations.
It did not seem crazy to hope that Russians themselves would notice how much better off Germans are today, for example, living in respectful peace with smaller neighbors such as Denmark and Belgium than they were when Germany sought domination.
But Vladimir Putin, who came to power in 2000, had a different vision of Russia’s place in the world. Russia “has tended to feel absolutely secure only when everybody else, particularly those around its borders, feels absolutely insecure,” Russia hand Strobe Talbott noted last week, and Putin fell squarely in that tradition.
At home, he quashed political opposition and independent media. He brought Russia’s mineral riches back under state control and then began using them — oil and natural gas in particular — to enforce obeisance abroad.
And he viewed NATO expansion as an affront, as something done to Russia, not because he imagined that Estonia or Georgia or even NATO itself ever would attack Russia, but because it complicated Russia’s drive for hegemony. Seeing the world as a contest among spheres of influence, he could not imagine that the leaders behind NATO might see things differently.
So NATO expansion is an affront only to the kind of Russia that the West would find unacceptable in any case. But, even if America has not sought to encircle or strangle Russia, should it not have been more sensitive to Russia’s wounded pride? Might Russia have evolved more democratically if Washington had been more deferential?
Maybe so, but there’s not much evidence to support such a theory. The West spent a good part of the past 17 years worrying about Russia’s dignity — expanding the Group of Seven industrial nations to the G-8, for example — and it’s not clear such therapy had any effect.
Putin had his own reasons for stifling democracy, and, to quote Talbott again, the “more authoritarian or totalitarian” Russia has been, “the more aggressively it asserts its interests overseas.”
The unhealthy cycle is on display now: Hearing only about Georgian “genocide” and aggression on state-controlled television, Russians cannot understand Western criticism of Russia’s actions as anything but further evidence of unfairness, which could be used to justify more aggressive behavior.
What does all this mean for the next president? By all means he should cooperate with Russia when possible, and he should remain open to the idea that Russia might one day join NATO and other international arrangements on terms of mutual respect.
But if the hope is that greater understanding of and deference to Russia’s imperial ambitions would tame those ambitions, the historical analogies are not encouraging. (
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COMMENTARY: By Reno Domenico, Courier-Post
South Jersey, New Jersey, Friday, August 15, 2008
The current crisis between Georgia and Russia has serious consequences for the Caucasus region, the European states of the former Soviet Union, and the entire Euro-Atlantic alliance.
The genesis of this hot war in a formerly frozen conflict can be found in the incoherent foreign policy of the United States as pursued by both the current Bush administration as well as the former Clinton administration.
Whereas the policy toward the former Soviet Union pursued by President Clinton resulted in the dismal privatization programs that impoverished millions while creating the oligarch class that now dominates those nations, the Bush administration’s cowboy approach fanned the flames of nationalism that has sparked the current crisis resulting in the death of thousands.
NATO push
While ignoring the serious economic dislocation caused by the breakup of the Soviet Union, and not recognizing the nationalistic reemergence of the Russian Federation as a result of its petroleum-fueled economy, the Bush administration embarked on a policy of integrating former Eastern Bloc republics into NATO.
Part of this policy was the abrogation of the Anti-Ballistic Missile (ABM) Treaty, and the push to place ABM batteries and radars on the border with Russia. This was viewed as directly provocative by the Russian government.
The push for Georgian and Ukrainian membership in NATO failed at the last summit. In Ukraine, the question of NATO membership is very controversial, with less than 50 percent of the population supporting the idea. In Georgia, having ongoing conflicts with Russia, support for NATO membership was higher.
Additionally, Georgia and the United States have cooperated on a series of military projects, including a significant number of Georgian troops in Iraq, and a robust US training program for the Georgian military.
This military cooperation and the prospect of NATO membership in the future clearly emboldened the Georgian government to challenge Russia by attempting to reoccupy South Ossetia. The result has been catastrophic for the people who live in South Ossetia, as well as for the Georgian military. However, the danger is really a regional one.
There are some in the Ukrainian government who would like to deny the Russian navy the right of return to its Black Sea fleet headquarters in Sevastopol, Crimea. Sevastopol, and the Autonomous Republic of Crimea, is a very Russian leaning region of Ukraine, with significant Russian linguistic, historical and cultural ties. Having divided the Black Sea fleet when the Soviet Union dissolved, Russia still has treaty rights to its base in Sevastopol until 2017.
Eyewitness accounts on Wednesday night in Kiev, the capital of Ukraine, reported the movement of several brigades of fully armed Ukranian tanks and troop carriers toward the railway station in the city center. It can be speculated that those brigades are southbound for deployment in Crimea. The question is, for what purpose? Unfortunately, the answer to that question is not a good one.
There are also rumors circulating that Ukranian forces may be inserted into Georgia as peacekeepers.
If the mission is to deny the Russian fleet’s return to Sevastopol, this could clearly expand the conflict across the Black Sea. If that happens, what will be the reaction of the essentially Russian population of Crimea?
All this has transpired against the backdrop of the Olympics, where nationalism plays itself out in the spirit of sporting competition and mutual respect. When the conflict in Georgia started I watched what appeared to be a “Katrina” moment, when President Bush, obviously enjoying himself, was sitting in support of American athletes at the games.
Simultaneously, Russian Prime Minister Vladimir Putin put on his coat and rushed out of the stadium to take control of the Russian forces on the Georgian frontier.
Not until Wednesday did President Bush and Secretary Rice finally take some kind of decisive action in support of the European Union mediation efforts. Once again, as it has been U.S. policy since the fall of Soviet Union, it’s too little, too late.
LINK: The writer is the president of Sterling Business School in Ukraine ( and former chairman of the Camden City Democratic Committee. He has made more than 50 trips to Ukraine and Russia since 1989. Contact him at
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Russian reassurances don’t match reality in Georgia.
Lead Editorial: The Washington Post
Washington, D.C., Tuesday, August 19, 2008; Page A12
“EUROPE CAN be proud of this success,” French President Nicolas Sarkozy wrote in our newspaper yesterday, referring to his negotiation of a cease-fire between Russia and Georgia. The congratulations may have been premature. Yesterday, in a by-now depressingly familiar pattern, Russian officials, up to and including the president, announced the withdrawal of forces from Georgia, while in Georgia itself there was no sign of withdrawal.
On the contrary, Russian forces continued to dig in and loot as they occupied a large swath of Georgian territory. They remained in control of the central city of Gori and the western city of Senaki. They moved tanks into Igoeti, 22 miles from the capital of Tbilisi. They have wrecked the rails on a bridge of the main east-west railroad and taken control of the main east-west highway, essentially cutting off most trade and transport in Georgia.
They have seized the Inguri power plant, which provides 78 percent of Georgia’s electricity. Meanwhile, as disturbing reports of rapes and murders of civilians continue to seep out of Russian-controlled South Ossetia, the Russians blocked a visit to the region by the head of the International Committee of the Red Cross.

What does Russia hope to gain by this partial occupation of a tiny neighboring country? Russian President Dmitry Medvedev must understand that his international reputation is not enhanced by the enormous gap between his statements and reality. The offsetting benefits that he, or Prime Minister Vladimir Putin, perceives must be large. It may be that by asserting squatters’ rights in Georgia, Russia hopes to enhance its negotiating position that Georgia’s territorial integrity should no longer be respected.

It may hope that by wrecking Georgia’s economy, it can spark an uprising against Georgian President Mikheil Saakashvili, the elected leader whom Mr. Putin despises. Russia may just want to drive home the lesson to small neighboring states that they should follow Russia’s lead, or else.
In the long run, this will not help Russia’s standing anywhere. A telling sign came with the release of a prominent political opponent from prison by Belarus’s dictator; if even he is looking to open a channel to the West, Russia’s neighbors are indeed nervous. But Georgia cannot wait for the long run to arrive.
The West — the International Monetary Fund, the United States, the European Union — must help Georgia’s economy withstand the pressure, and it must make clear, including at a meeting of NATO foreign ministers today, that there can be no business as usual with Russia while this military campaign goes on. “This withdrawal has to be carried out without delay,” Mr. Sarkozy wrote in The Post yesterday. “For me, this point is not negotiable.” Russia seems set on putting Mr. Sarkozy’s determination to the test.
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COMMENTARY: By Patrick J. Buchanan, Information Clearing House
Imperial Beach, California, Friday, August 15, 2008 

Mikheil Saakashvili’s decision to use the opening of the Olympic Games to cover Georgia’s invasion of its breakaway province of South Ossetia must rank in stupidity with Gamal Abdel-Nasser’s decision to close the Straits of Tiran to Israeli ships.

Nasser’s blunder cost him the Sinai in the Six-Day War. Saakashvili’s blunder probably means permanent loss of South Ossetia and Abkhazia.

After shelling and attacking what he claims is his own country, killing scores of his own Ossetian citizens and sending tens of thousands fleeing into Russia, Saakashvili’s army was whipped back into Georgia in 48 hours.

Vladimir Putin took the opportunity to kick the Georgian army out of Abkhazia, as well, to bomb Tbilisi and to seize Gori, birthplace of Stalin.

Reveling in his status as an intimate of George Bush, Dick Cheney and John McCain, and America’s lone democratic ally in the Caucasus, Saakashvili thought he could get away with a lightning coup and present the world with a fait accompli.

Mikheil did not reckon on the rage or resolve of the Bear.

American charges of Russian aggression ring hollow. Georgia started this fight — Russia finished it. People who start wars don’t get to decide how and when they end.

Russia’s response was “disproportionate” and “brutal,” wailed Bush.

True. But did we not authorize Israel to bomb Lebanon for 35 days in response to a border skirmish where several Israel soldiers were killed and two captured? Was that not many times more “disproportionate”?

Russia has invaded a sovereign country, railed Bush. But did not the United States bomb Serbia for 78 days and invade to force it to surrender a province, Kosovo, to which Serbia had a far greater historic claim than Georgia had to Abkhazia or South Ossetia, both of which prefer Moscow to Tbilisi?

Is not Western hypocrisy astonishing?

When the Soviet Union broke into 15 nations, we celebrated. When Slovenia, Croatia, Macedonia, Bosnia, Montenegro and Kosovo broke from Serbia, we rejoiced. Why, then, the indignation when two provinces, whose peoples are ethnically separate from Georgians and who fought for their independence, should succeed in breaking away?

Are secessions and the dissolution of nations laudable only when they advance the agenda of the neocons, many of who viscerally detest Russia?

That Putin took the occasion of Saakashvili’s provocative and stupid stunt to administer an extra dose of punishment is undeniable. But is not Russian anger understandable? For years the West has rubbed Russia’s nose in her Cold War defeat and treated her like Weimar Germany.

When Moscow pulled the Red Army out of Europe, closed its bases in Cuba, dissolved the evil empire, let the Soviet Union break up into 15 states, and sought friendship and alliance with the United States, what did we do?

American carpetbaggers colluded with Muscovite Scalawags to loot the Russian nation. Breaking a pledge to Mikhail Gorbachev, we moved our military alliance into Eastern Europe, then onto Russia’s doorstep. Six Warsaw Pact nations and three former republics of the Soviet Union are now NATO members.

Bush, Cheney and McCain have pushed to bring Ukraine and Georgia into NATO. This would require the United States to go to war with Russia over Stalin’s birthplace and who has sovereignty over the Crimean Peninsula and Sebastopol, traditional home of Russia’s Black Sea fleet.

When did these become U.S. vital interests, justifying war with Russia?

The United States unilaterally abrogated the Anti-Ballistic Missile treaty because our technology was superior, then planned to site anti-missile defenses in Poland and the Czech Republic to defend against Iranian missiles, though Iran has no ICBMs and no atomic bombs. A Russian counter-offer to have us together put an anti-missile system in Azerbaijan was rejected out of hand.

We built a Baku-Tbilisi-Ceyhan pipeline from Azerbaijan through Georgia to Turkey to cut Russia out. Then we helped dump over regimes friendly to Moscow with democratic “revolutions” in Ukraine and Georgia, and tried to repeat it in Belarus.

Americans have many fine qualities. A capacity to see ourselves as others see us is not high among them.

Imagine a world that never knew Ronald Reagan, where Europe had opted out of the Cold War after Moscow installed those SS-20 missiles east of the Elbe. And Europe had abandoned NATO, told us to go home and become subservient to Moscow.

How would we have reacted if Moscow had brought Western Europe into the Warsaw Pact, established bases in Mexico and Panama, put missile defense radars and rockets in Cuba, and joined with China to build pipelines to transfer Mexican and Venezuelan oil to Pacific ports for shipment to Asia? And cut us out?

If there were Russian and Chinese advisers training Latin American armies, the way we are in the former Soviet republics, how would we react? Would we look with bemusement on such Russian behavior?

For a decade, some of us have warned about the folly of getting into Russia’s space and getting into Russia’s face. The chickens of democratic imperialism have now come home to roost — in Tbilisi.
Mr. Buchanan is a nationally syndicated columnist and author of Churchill, Hitler, and “The Unnecessary War”: How Britain Lost Its Empire and the West Lost the World, “The Death of the West,”, “The Great Betrayal,” “A Republic, Not an Empire” and “Where the Right Went Wrong.”

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OP-ED: By Michael Gerson, The Washington Post
Washington, D.C., Wednesday, August 20, 2008; Page A15
The nation of Georgia is a place of inspiration and danger. I saw both in a single hour.
I was in Tbilisi’s Freedom Square during President Bush’s visit in May 2005, along with Secretary of State Condoleezza Rice and Assistant Secretary of State Daniel Fried. During the Georgian national anthem, the speaker system broke down and tens of thousands of Georgians movingly sang that song without music — a song that had been illegal to sing under Soviet occupation.
It is shocking to imagine those joyful people now bombed, fearful and occupied.
At the same event, an assassination attempt was made against President Bush. A man threw a grenade wrapped in a handkerchief. Bush was behind a bulletproof shield but within the blast radius of the weapon. The grenade was live but did not explode — or maybe the explosion in Georgia was just delayed.
A few days ago I spoke with Ambassador Fried — one of America’s finest diplomats — on his way back from Georgia, after tense negotiations. Sounding exhausted from a “tough few days,” he described the French-sponsored cease-fire as flawed but important.
He predicted that in 10 years the invasion would be seen as a strategic mistake because it will have branded Russia “as a rogue.” Of the Russian government, he vented: “Picking on weak Georgia — is this the thing that makes them proud?”

Georgia badly miscalculated in this crisis. President Mikheil Saakashvili believed he could quickly gobble up his breakaway provinces through military force, just as he did in Georgia’s southwest four years ago. He is a hothead who acted against American advice.

But it was Russia that provoked this provocation, for which it was thoroughly prepared. In December 2007, Russia suspended its adherence to a treaty that required it to report the massing of its troops along borders. Two months before the invasion, hundreds of Russian engineers were engaged in repairing railroad bridges eventually used by Russian troops.
Vladimir Putin is a leader defined and consumed by his grievances, from European missile defense to Kosovo. And now he has adopted the ideology and tactics of the schoolyard bully — trying to restore Russian self-respect by beating up the weak. It is pathetic and dangerous in equal parts. It has also been a military success. Bush administration officials are now debating how to turn Russia’s tactical victory into a strategic defeat.
In the short term, this involves denying Russia some things it wants, such as a coup that deposes Saakashvili. It also involves achieving some things Russia doesn’t want, particularly the deployment of international monitors and eventually peacekeepers in the breakaway regions. Russian troops, after all, are not peacekeepers but combatants.
But there also needs to be a broader strategic consequence for Russia. Russia is attempting to combine 19th-century adventurism with membership in 21st-century international institutions. America needs to prove that is not possible — to demonstrate that there is no place for czarism in the Group of Eight or the World Trade Organization.
Few question this goal, but there are many questions about the method. Does a direct assault on Russia’s prickly pride make things worse or better? Should America pick a bruising public fight over G-8 membership or simply begin acting through the G-7, as Secretary Rice has already begun to do? Should America announce its opposition to Russian WTO membership, or merely stop pushing for it?
The worst option would be to excuse Russia by blaming ourselves. NATO expansion did not cause Russian belligerence. The desire to be part of NATO in liberated Europe was fueled, in part, by a justified fear of Russian belligerence. Citizens of the Baltic states, for example, are now glad that NATO expanded with relative speed, or they might be next on Putin’s list.
Again and again in European history, there has been a temptation to sacrifice the freedom of small countries to the interests of great powers. And it generally hasn’t worked out very well, for them or for us.
Georgia has been foolish. But Russia’s crude overreach has had one good effect — revealing the courage of others. Poland has quickly upgraded its relations with America, even under nuclear threat from Russia.
Ukraine has been defiant, even though Russia still makes claims on Crimea. These nations have recent memories of Russian national “pride.” And their courage should provoke our own. []
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US company Westinghouse succeeds in bringing greater
international competition to nuclear fuel market

By Jim Davis, BusinessUkraine weekly magazine
Kyiv, Ukraine, Monday, July 28, 2008

The whole world has come to know the story of the explosion at the Chornobyl
Nuclear Power Plant and its aftermath as the greatest atomic energy disaster
in history. Unfortunately, the story of Ukraine’s long-time and highly
successful use of nuclear power to generate nearly 50% of its electrical
power is less well-known.

On March 30, 2008, Westinghouse Electric won a contract that promises to
make nuclear fuel supply to Ukraine more competitive and help the country
assure a more reliable and secure supply of electrical power.

Westinghouse says the five-year contract, signed with the country’s umbrella
nuclear operating company, Energoatom, will provide nuclear fuel supplies to
three Ukrainian reactors beginning in 2011.

A long-term commitment

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

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

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

Westinghouse Electric has roots in the power generation field which go back
to 1886 when the company was founded by George Westinghouse, acknowledged
during his lifetime as one of the world’s greatest engineers. During the
20th century, Westinghouse scientists and engineers were granted more than
28,000 US government patents, the third highest number for any company.

Westinghouse’s signing of the nuclear fuel agreement with Energoatom is the
first such contract ever signed by Ukraine with a western country. Although
Westinghouse in recent years has been fully committed to the commercial
nuclear power industry, the name Westinghouse has been associated with a
large number of significant achievements, mostly related to electricity and

Among the company’s milestones are the first commercial AC power generating
station (1886); the first commercial radio broadcast (1920); the first
diesel-electric rail car (1929); the electronic amplifier to enhance X-ray
images (1948) and the first commercial pressurised water reactor (1957).
Additionally, Westinghouse provided the cameras that enabled the world to
watch man’s first walk on the moon in 1969.

Absorbing the painful lessons of Chornobyl

The Chernobyl nuclear event is rightfully remembered as one of the great
disasters in Ukrainian history. However, the lessons learned from Chernobyl
led to a level of safety consciousness that makes Ukraine’s nuclear power
industry one of the country’s greatest success stories.

Today, Ukraine remains heavily dependent on nuclear energy with 15
operational reactors. Ukraine still receives most of its nuclear services
and nuclear fuel from Russia, but implementation of the contract with
Westinghouse will enhance Ukraine’s energy independence.

In 2004 Ukraine commissioned two large new reactors and long-term plans
call for the government to maintain nuclear’s essential share in electricity
production at least to 2030 and probably far beyond. This reflects the
worldwide trend back toward nuclear fuel as a safe alternative to the
escalating costs and pollution problems with fossil fuels.

In 1991, due to breakdown of the Soviet Union, the country’s economy
collapsed and its electricity consumption declined dramatically from 296
billion kWh in 1990 to 170 kWh in 2000, all the decrease being from coal and
gas plants.

Total electricity production in 2007 amounted to 195 billion kWh. 47.4% of
this power came from coal and gas (approx 20% gas), 47.5% from nuclear and
5% from hydro.

A major increase in electricity demand to 307 billion kWh per year by 2020
and 420 billion kWh by 2030 is envisaged, and government policy is to
continue supplying half of this from nuclear power.

Westinghouse looks forward to providing options that will help Ukraine reach
its nuclear power generation goals with the ultimate goal of making Ukraine
as energy independent as possible.

NOTE: Westinghouse is a member of the U.S.-Ukraine Business Council.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
America’s Bunge expects to remain among leaders in booming Ukrainian agribusiness

By Jim Davis, BusinessUkraine weekly magazine
Kyiv, Ukraine, Monday, July 28, 2008

A fairly recent addition to Ukraine’s major agriculture and food companies,
nevertheless Bunge has since 2002 gained a reputation for its community
involvement and outstanding human resource practices. Founded in 1818 in
Amsterdam as an export/import trading firm, Bunge has gone on to become a
recognised world leader in global agribusiness.

Bunge’s integrated operations, now headquartered in the United States,
circle the globe, stretching from the farm field to the retail shelf. The
Bunge family in Ukraine is a part of 22,000 employees worldwide at over
450 facilities in 32 countries, all dedicated to improving the global
agribusiness and food production chain.


Bunge Ukraine’s operations are an extension of the company’s Agribusiness
and Edible Oil Products divisions. The Agribusiness division is one of the
world’s largest oilseed processors and a major global grain trader, while
the Food products division is a major supplier of edible oils and
shortenings to food processors and foodservice customers, and is a leading
supplier of consumer edible oils and related products in select markets.

Bunge is the world’s largest seller of bottled vegetable oils to consumers
and has played a major role in making Ukraine a world centre for sunflower
seed oil (sunoil) production and marketing.


Dmitry Gorshunov, Managing Director of Bunge Ukraine made it clear in an
interview with Business Ukraine that the company considers its Ukraine
operations a part of the company’s long-term strategic plans. “Bunge fully
intends to continue its growth in Ukraine. The Ukrainian environment is
challenging but with those challenges come opportunities,” Mr. Gorshunov

Bunge first invested in Ukraine through its 2002 purchase of Cereol, which
at the time owned a Dnipropetrovsk facility that processes sunflower seed to
make bottled cooking oil. Since that initial purchase Bunge has increased
the size of the Dnipro facility by 50%. In addition to its extensive sunoil
operations, Bunge has purchased several grain elevators and has also
invested in construction of another oilseed processing facility in

Already a leading sunseed processor through its facility in Dnipropetrovsk,
the company has recently finished commissioning a jointly-owned sunseed
processing facility in Illyichevsk. Bunge plans to operate the new plant
during the coming season, and consider opportunities to crush alternative
crops there as well, such as rapeseed.

In addition, Bunge have substantially grown its capabilities in grain
origination over the past several years. In 2005/2006 (the last season in
which grain exports were not restricted by government quotas), Bunge was the
leading exporter of grains from Ukraine. Since then the company has invested
in its grain elevators.


However, Bunge believes it is more important that the company has built a
strong team to handle trading, risk management and logistical support. Bunge
has already negotiated a substantial throughput agreement with one export
grain terminal, and is  working to negotiate another.

“High commodity prices have sent a call to farmers worldwide that more
grain and oilseeds are needed.  Ukrainian farmers are uniquely positioned to
respond to that call, as there is a lot of room to improve farming practices
and inputs, especially as funding becomes increasingly available.

“We at Bunge believe that Ukraine will become one of the world’s major
suppliers of grain and oilseed products, and we intend to participate in
that growth by investing further in the human and physical infrastructure
needed to bring Ukrainian products to the world,” Gorshunov says.

On the food side of its operations Bunge is currently the second largest
supplier of bottled oil to Ukrainian consumers. Its flagship brand, Oleina,
was the first refined, bottled oil in Ukraine, and it remains one of the
strongest brands in the market. Bunge says it will continue to invest in its
food business and is actively exploring new avenues for growth including
other categories beyond bottled oils.


Bunge has been the target of so-called raider attacks that have made life
difficult for some other foreign investors in Ukraine. However, Gorshunov
made it clear that such attacks will continue to be very vigorously repelled
and will not discourage company management and employees who support
the company’s strong position as a good corporate citizen.

“Bunge has for the past several years suffered repeated attacks from
corporate raiders. These attacks have taken a wide variety of forms, ranging
from lawsuits regarding our shareholdings and brands, to media attacks and
even pamphlets making ridiculous allegations against the Oleina brand. These
attacks have caused us to divert a lot of time and effort from our business
into legal defences and public relations work, but they have not changed our
overall strategic direction in Ukraine.

“Throughout this process we have continued to build our business, invest in
our people and invest in our infrastructure. Moreover, we believe that as
Ukraine is increasingly integrated into the community of nations through
trade and through vehicles such as the WTO, such issues will subside and
Bunge will be able to focus its efforts on building its business, which in
turn will help to bring economic growth and individual prosperity to
Ukraine,” Gorshunov concludes.

NOTE: Bunge is a member of the U.S.-Ukraine Business Council (USUBC).
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
U.S.-Ukraine Business Council (USUBC):
Promoting Ukraine and U.S.-Ukraine business relations since 1995.

U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Friday, June 13, 2007

WASHINGTON, D.C. – The executive committee of the U.S.-Ukraine
Business Council (USUBC), on behalf of the entire membership, is most
pleased to announce that Solid Team LLC, a management company based
in Claremont, California, has been approved for USUBC membership. Solid
Team LLC is USUBC member number 83.

Solid Team is owned by five senior U.S. executives who have been quite
successful in their primary careers and are now working together to develop
other businesses.  They have been working in Ukraine for over nine years.


Solid Team LLC has signed a ten-year, $200 million Memorandum of
Cooperation with the Ukrainian Ministry of Industrial Policy for aviation
infrastructure improvements. 

The first major project is the development of the Bila Tserkva International
Cargoport, a major air cargo hub and industrial park south of Kyiv on the
Odessa-Kyiv highway.  This is a joint venture between the city of Bila
Tserkva and Solid Team.

The Bila Tserkva International Cargoport will involve an investment
approaching $150 million.  It will provide manufacturing space and logistic
centers in a modern industrial park setting.  It will become the premier air
cargo hub in Eastern Europe and will provide employment for thousands of
Ukrainians.  It is expected that the cargoport will opening late 2009.

During development, the runway will be lengthened; the air traffic control
equipment, landing system, and control tower will be installed; and new
emergency response vehicles obtained.  Attractive new road entrances will
be installed and the rail system upgraded.

In addition to efforts at the Bila Tserkva International Cargoport, Solid Team
represents the interests of Ukrainian Helicopter Company and the Kharkiv
Antenna Company.


The owners of Solid Team LLC include:

(1) Major General Nicholas Krawciw (USA, Ret.), the highest ranking U.S.
Army officer of Ukrainian birth. Nick moved with his family to Germany at
the start of World War II. In 1949, the family emigrated to the United States.

At the behest of the Chief of Staff of the U.S. Army and the Undersecretary
of Defense, Nick and his wife Christina moved to Ukraine in 1992 where, for
a year, he worked to reorganize, educate, and restructure the Ukrainian military
along Western lines. Beginning in 1993, he served as a consultant to the
Secretary of Defense on Ukrainian matters, and later as Secretary of Defense
Senior Military Representative to Ukraine.

(2) William McLaughlin, a physicist with a military background, who has
invented many significant items of importance and started a number of U.S.,
Canadian, and Irish companies. McLaughlin serves as the General Manager
of Solid Team LLC and spends considerable time in Ukraine.

(3) Thomas Noel, retired U.S. Army officer and former Assistant Secretary
of Energy, who ran the largest environmental company in the world;

(4) Marcus Mota e Silva, former president of California Steel Corporation;

(5) Bradley Jacobs, a physicist and economist, who was Assessor of the
County of Orange in California for 23 years.


Some of Solid Team’s accomplishments since 1999 include:

Provided bidding opportunities for a major U.S. aerospace firm for air
traffic control systems.

Received a $200 million umbrella contract to support the Ukrainian aviation
industry over 10 years.

Participated in a USTDA feasibility study related to establishing an air
cargo hub at the Antonov Airport worth $408,000 which will lead to over
$15 million worth of additional U.S. exports and having Solid Team receive
an equity interest in the facility.

Initiated the marketing of an advanced line of telecommunications equipment
from a California company for which test quantities have been proposed.
This effort could lead to substantial additional exports.

Leased some $300,000 worth of cargo flights using Antonov aircraft in
direct support of operations in Iraq.

Signed an agreement to assist in the export of vaccines from the United
States to Ukraine. These vaccines will create profits for U.S.
pharmaceutical companies and Solid Team as well improve public health in

Initiated support activities in the United States to help Ukrtransnafta with
the Odessa-Brody pipeline. This effort is not only of direct benefit to
Solid Team, American oil companies and Ukrtransnafta but also relates to
sovereignty efforts of Ukraine.

Participated in the presentation of an advanced antenna technology that
would improve reception of first responder radios in high-rise buildings and
urban environments.

Reached agreements related to promotion and sale of Ukrainian ingredients
for health foods and cosmetics.

Initiated funding for the first Ukrainian environmental remediation company
in the country. It will use U.S. technologies and techniques.

Additional information can be found at

“The U.S.-Ukraine Business Council (USUBC) is most pleased to have
Solid Team LLC join the rapidly expanding USUBC membership.” said
Morgan Williams, SigmaBleyzer, who serves as President of USUBC.


“The international and domestic business community is now the main
driving force regarding Ukraine’s Euro-Atlantic integration. It is important
for the business community to work together to influence the government
to adopt reforms that will bring Ukraine’s laws and standards more into
line with internationally accepted practices,” Williams said, “business
and economic development is rapidly moving Ukraine forward.”

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


U.S.-Ukraine Business Council (USUBC)
Washington, D.C., Wednesday, June 25, 2008

WASHINGTON, D.C. – The executive committee of the U.S.-Ukraine
Business Council (USUBC), on behalf of the entire membership, is most
pleased to announce that AeroSvit Ukrainian Airlines has been approved
for USUBC membership.  The airline is USUBC member number 86.

AeroSvit is the leader of the national air transport industry in Ukraine and
is the only Ukrainian carrier directly connecting Ukraine with the United
States.  This is through their non-stop flight from Kyiv to New York City.

AeroSvit is interested in the further development of Ukraine-U.S. relations
and in expanding their flight operations related to connecting Ukraine with
the U.S.

AeroSvit was founded in 1994 as a closed joint-stock company (CJSC).
In October 1994, AeroSvit leased its first Boeing-737, which was used
to perform flights from Kyiv to the capitals of Russia, Israel, and Greece
as well as to Larnaca (Cyprus) and Odesa.

In 2002-2004, the company opened five direct transcontinental flights
between the capital of Ukraine and Bangkok, New York, Toronto, Delhi,
and Beijing.

AeroSvit Ukrainian Airlines in 2007 signed an agreement with the Boeing
Company concerning purchase of up to 14 NG (next generation) Boeing

USUBC has been working with AeroSvit executives Aron Mayberg,
Director General, Kostadin Botev, Executive Director and with Yevgen
Treskunov, Deputy Director General for Strategic Development.  Mr. Botev
attended a recent meeting in Kyiv with U.S. Ambassador William Taylor
sponsored by USUBC.


In 2007, the total volume of passenger traffic on AeroSvit Ukrainian
Airlines exceeded the two million mark for the first time. The airline
carried 2,054,000 passengers by the end of the year, which is an increase
of 31.5% over 2006. AeroSvit’s passenger turnover increased by 27.4%
to 4.5 billion passenger-kilometers.

Taking into account the dynamic growth of indicators following the results
of 2007, AeroSvit expects a further increase of its position in the most
prestigious aviation rating- the Top-200 list of the world’s largest

This list is updated each year based upon annual volumes of traffic
performed by the aviation market’s leading players and is published
in several top industry journals. Based on the results of 2006, AeroSvit
rose by 20 positions in the Top-200 and was ranked 155.

Ukraine was included in the Top-200 for the first time three years ago when
AeroSvit was named on the list of air carriers for the first time. During
the past three years, the company has managed to advance by 45 positions.


AeroSvit Ukrainian Airlines signed an agreement with the Boeing Company
in 2007 concerning purchase of up to 14 NG (next generation) Boeing 737’s.

The document stipulated the purchase of seven Boeing 737-800’s in
2011-2012 the value of which according to the manufacturer’s catalogue
reaches US$523 million as well as reservation of purchase rights for another
seven aircraft between 2008-2015. The contract price of the aircraft
delivery was not disclosed.

Boeing would also provide AeroSvit with technical training, marketing, and
financial assistance during aircraft commissioning. This support package
applies not only to the purchased aircraft but also to the NG Boeing
737’s AeroSvit plans to lease.

This is the first direct contract for the delivery of such a large
consignment of next generation aircraft in the history of Ukraine.

“Fleet renovation and extension by means of Boeing 737 NG aircraft will
allow AeroSvit to implement its development strategy as well as raise its
competitiveness while preparing for future Ukrainian air space
liberalization,” noted AeroSvit’s Director General Aron Mayberg.

“I am sure that this contract will start the process of Ukraine’s gradual
development into one of the world’s leading aviation countries. I am glad
that we have the honor to make this first important step showing the high
potential of Ukraine as a competitive country with established market
relations to the entire world”.

AeroSvit Ukrainian Airlines operates sixteen Boeing aircraft , including
thirteen middle-range Boeing 737’s and three long-range Boeing 767’s
(seventeenth B 737-300 is to be delivered within a couple of weeks).
The carrier serves more than 60 international routes to 33 countries as
well as 11 destinations within Ukraine.

AeroSvit is a member of many international organizations, namely:

. International Air Transport Association (IATA), including IATA
  Clearing House and IATA Billing and Settlement Plans (BSP),
. US Airlines Reporting Corporation (ARC)
. Association of European Airlines (AEA)
. European Business Association (EBA)
. American Chamber of Commerce in Ukraine (AmCham Ukraine)
. International Chamber of Commerce (Ukrainian national committee)
. UK Flight Safety Foundation
. The Ukrainian Chamber of Commerce & Industry (UCCI)
. U.S.-Ukraine Business Council (USUBC)

Additional information can be found on the AeroSvit Airlines website:

“The U.S.-Ukraine Business Council (USUBC) is most pleased to have
AeroSvit Ukrainian Airlines join the rapidly expanding USUBC membership.”
said Morgan Williams, SigmaBleyzer, who serves as President of USUBC.


AeroSvit Ukrainian Airlines is the 86th member for USUBC, the 34th new
member for 2008, and the 64th new member since January of 2007. USUBC
membership has nearly quadrupled in the past 18 months, going from 22
members in January of 2007 to 86 members in June of 2008. Membership
is expected to top 100 very soon.

The other new members in 2008 are MaxWell USA, Baker and McKenzie
law firm, Och-Ziff Capital Management Group, Dipol Chemical International,
MJA Asset Management, General Dynamics, Lockheed Martin, Halliburton,
DLA Piper law firm, EPAM Systems, DHL International Ukraine, Air Tractor,
Inc., Magisters law firm, Ernst & Young, Umbra LLC., US PolyTech LLC,
Vision TV LLC, Crumpton Group, American Express Bank, a Standard
Chartered group company, TNK-BP Commerce LLC, Rakotis, American
Councils for International Education, Squire, Sanders & Dempsey LLP,
International Commerce Corporation, IMTC-MEI, Nationwide Equipment
Company, First International Resources, the Doheny Global Group, Foyil
Securities, KPMG, Asters law firm, Solid Team LLC, R & J Trading
International and Vasil Kisil & Partners law firm.

The complete USUBC membership list and other information about
USUBC can be found at:


Ukraine’s Euro-Atlantic integration is first and foremost today being driven
by the private business community in Ukraine, Europe, and the United States.

“Ukraine’s aspirations for Euro-Atlantic integration, to be a major member
of the world’s community of strong, democratic, independent, prosperous,
private business sector driven nations, will be realized largely through the
present leadership and investments from the business community and then
hopefully with some real support later from the politicians and government
leaders,” wrote Morgan Williams, SigmaBleyzer, who serves as President
of USUBC, in a recent article published by the “Welcome to Ukraine”

“While the politicians of many countries, including Ukraine, argue and debate
about whether Ukraine should ever be given a MAP for eventual NATO
membership and when, if ever, Ukraine will have the opportunity to join
the European Union the Ukrainian and international business communities
are moving rapidly ahead with large-scale economic and business

“This integration is being accomplished in spite of a general lack of new
reforms being implemented by the government and the high level of political
instability that has existed for the last several years which has hurt the
number of new jobs created, the level of wages, the development of a
modern business infrastructure and the creation of wealth, ” according
to Williams.

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Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council (USUBC)
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