========================================================
ACTION UKRAINE REPORT -
AUR
An International
Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary
Ukrainian History, Culture, Arts, Business, Religion,
Sports,
Government, and Politics, in Ukraine and Around the
World
ACTION UKRAINE REPORT - AUR - Number
877
Mr. E. Morgan Williams, Publisher and Editor,
SigmaBleyzer
WASHINGTON, D.C., FRIDAY, OCTOBER
12, 2007
INDEX OF ARTICLES
------
Clicking on the title of any article takes
you directly to the
article.
Return to Index by clicking on Return to
Index at the end of each article
2
. EU: RUSSIA-UKRAINE GAS DEAL BOOSTS THEIR
CREDIBILITYReuters, Brussels, Belgium, Wed Oct 10, 2007
3
. UKRAINE ACCUSES RUSSIA OF APPLYING
POLITICAL
PRESSURE IN GAS DISPUTE
Associated Press (AP), Kiev,
Ukraine, Thursday, October 11, 2007
4
. UKRAINE: THE MYSTERIOUS GAS DEBT TO GAZPROM
Why was Ukraine
caught off guard by the $2.2 billion gas debt?
Analysis: By Roman
Kupchinsky, Radio Free Europe/Radio Liberty
Prague, Czech Republic, Thursday,
Oct 11, 2007
5
. TYMOSHENKO MAY
REPUDIATE RUSSIA-UKRAINE GAS AGREEMENT
Interview: with Margarita M. Balmaceda, School of Diplomacy & Int
Relations, Seton Hall University, & Harvard Ukrainian Research
Institute
Alexander Timoshik, Pravda.Ru, Moscow, Russia, Thu, Oct 11, 2007
6
. FIVE COUNTRIES SIGN AGREEMENT
FOR OIL PIPELINE
Associated Press, Vilnius, Lithuania, Thursday, October
11, 2007
7
. U.S. CO. VANCO WINS
UKRAINE GOV'T FAVOR FOR OIL DEALUkraine finally allows a serious
Western energy player to explore and develop
what could be billions of barrels of oil buried beneath its Black Sea
shelf.
John Marone, Staff Writer, Kyiv Post, Kyiv, Ukraine, Thu, Oct 11,
2007
8
. ESTONIAN BILLIONAIRE ABONDONS
RUSSIA FOR UKRAINEProperty Xpress, Sofia, Bulgaria, Wednesday,
October 10, 2007
9
. UKRAINE COMPANY'S
BID CLEARED BY AUSTRALIAN
By Jesse Riseborough, Bloomberg, Melbourne, Australia, Wed, Oct 10,
2007
10
. UKRAINE SCARING OFF
POTENTIAL INVESTORS
By Oleksii Savytsky for The Day Weekly
Digest
Kyiv, Ukraine, Thursday, October 11, 2007
11
.
WHY ARE THE PEARLS SO SMALL? WEALTH MOUNTING
IN A COUNTRY OF TOTAL POVERTYBy Nataliya Yatsenko
for Mirror Weekly #37
Kyiv, Ukraine, Saturday, October 6-12,
2007
12
. UKRAINE: GOODBYE
GREENBACK, END OF DOLLARISATION Briefing: Oxford Briefing
Group, London/Kyiv, Wed, 10 Oct 2007
13
. BANK OF GEORGIA BUYS UKRAINE BANK FOR $82 MILLIONReuters,
Tbilisi, Georgia, Wednesday, October 10, 2007
led by ex-premier Yulia Tymoshenko, his newly reconciled
ally.
Reuters, Bratislava, Slovakia, Thursday, October 11,
2007
15
. UKRAINE: NEW NADIR FOR KING
COMPROMISER
President's call for a broad political compromise to
Ukrainians who have
placed their faith in the democratic process it is little short of a kick
in the teeth.
COMMENTARY: Peter Dickinson, Business Ukraine magazine
Kyiv,
Ukraine, Monday, October 8, 2007
Ukraine 3000 Foundation, Tuesday, October 9. 2007
Published by the Action Ukraine Report (AUR) #877, Article 21
Kyiv,
Ukraine, Friday, October 12, 2007
Interview: with Thomas Dine
By: Irene Jarosewich for The Ukrainian
Weekly
Ukrainian National Association (UNA)
Parsippany, New Jersey,
Sunday, September 23, 2007
A congressional resolution about massacres in Turkey 90 years
ago endangers present-day U.S. security.
EDITORIAL: The Washington Post,
Wash, D.C., Wed, Oct 10, 2007
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1. UKRAINE PRESIDENT ASSURED
EUROPE OF ENERGY TRANSIT
Reuters, Vilnius,
Lithuania, Thursday, Oct 11, 2007
VILNIUS - Ukraine's President
Viktor Yushchenko assured Europe on
Thursday his government would meet its
obligations to ensure Russian oil
and gas exports flow across its soil on
schedule and in full.
Yushchenko gave the assurance days after Kiev
resolved a dispute with
Russia's Gazprom (GAZP.MM: Quote, Profile, Research)
over the payment
of debts worth $1.2 billion.
The
Russian gas export monopoly had threatened to reduce supplies to Ukraine
in
a move many analysts saw as putting pressure on the country, as election
votes were being counted, to form a government willing to work with
Moscow.
The threat caused unease that Russian gas supplies to Europe
might also be
disrupted.
"Our government guarantees the timely and
total fulfilment of all our
obligations to transport oil and gas through our
own territory," Yushchenko
told a regional energy conference in the
Lithuanian capital Vilnius.
Yushchenko has given politicians until the
end of the week to agree a
framework for a new government and on a prime
minister after a parliamentary
election intended to end months of political
deadlock between him and
Ukraine's prime minister.
Parties behind the
2004 "Orange Revolution" that swept Yushchenko to power
in 2004 won a very
narrow majority of seats.
But Yushchenko has said
"orange" parties must also reach an understanding
with his adversaries from
the Regions Party of his longstanding rival, Prime
Minister Viktor
Yanukovich.
Yanukovich is seen as more sympathetic to Moscow, while
relations with
Russia fell to a low point when the leader of the pro-Western
camp, Yulia
Tymoshenko, was prime minister in 2005.
\
Russia and Ukraine are
yet to agree on gas import prices for 2008, which are
expected to rise from
the current $130 per 1,000 cubic metres.
A price dispute between Moscow
and Kiev led to cuts in Russian gas supplies
to Europe in January 2006.
Europe gets the majority of its Russian energy
supplies -- a quarter of the
EU's needs -- through Ukraine.
The EU said on Wednesday the dispute's
timely resolution had strengthened
the credibility of Russia and Ukraine as
supplier and transit
countries.
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2
. EU:
RUSSIA-UKRAINE GAS DEAL BOOSTS THEIR CREDIBILITY
Reuters,
Brussels, Belgium, Wed Oct 10, 2007
BRUSSELS - An agreement between
Russia and Ukraine on payment for
natural gas strengthens their credibility as supplier and transit
countries, the
European Union's top energy official said on
Wednesday.
"The rapid solution of this bilateral commercial issue and the
level of
transparency shown ... during the affair strengthens the reputation
of
Russia and Ukraine as reliable supply and transit countries to EU
markets,"
Energy Commissioner Andris Piebalgs said in a
statement.
Following a week-long dispute, Russian gas export monopoly
Gazprom on
Tuesday reached an agreement with Ukraine that set out a
repayment schedule
for $1.2 billion.
A similar pricing dispute
between Gazprom and Ukraine had led to cuts in gas
supplies to Europe in
January 2006, putting a question mark in the eyes of
some EU governments
over Russia's reliability as an energy supplier.
Gazprom, the world's
largest gas producer, supplies a quarter of Europe's
gas and ships 80
percent of it via Ukraine.
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3
. UKRAINE ACCUSES RUSSIA OF
APPLYING POLITICAL
PRESSURE IN GAS DISPUTE
Associated
Press (AP), Kiev, Ukraine, Thursday, October 11, 2007
KIEV, Ukraine:
President Viktor Yushchenko's administration accused Russia
on Thursday of
seeking to use a recent dispute over natural gas to influence
Ukrainian
politics following parliamentary elections.
Russia's state-controlled
natural gas monopoly, OAO Gazprom, said last
week Ukraine owed more than
US$1.3 billion (euro920 million) for gas and
threatened to decrease supplies
if it was not paid this month. Russian Prime
Minister Viktor Zubkov later put
the figure at US$2 billion (euro1.4
billion).
The move raised concerns
of decreased deliveries to Europe and added to
political uncertainty in
Ukraine, where parties were in tense talks on
forming a coalition and Cabinet
following the Sep. 30 parliamentary
elections.
"We regard it as a
certain political pressure on Ukraine in this complicated
moment of forming a
new government in our state," said deputy presidential
administration chief
Oleksandr Shlapak, according to the president's Web
site.
Gazprom made
the announcement shortly after it became clear that opposition
leader Yulia
Tymoshenko, who has tense relations with Moscow, could become
prime minister.
Tymoshenko has criticized the use of an intermediary in
supplying gas to
Ukraine and has promised to get rid of it.
This week Ukraine agreed to
settle the debt, partly by paying cash and
partly by handing some of its gas
reserves back to Gazprom.
Shlapak suggested Moscow was also eager to
weaken Ukraine's position before
talks on the gas price for next year, which
Ukrainians fear could rise from
the current US$130 (euro92) per 1,000 cubic
meters.
"In my view, the very timing and tone of the statement shows that
Gazprom
wants to see something more behind these negotiations than simply
problems
between companies," Shlapak
said.
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4
. UKRAINE: THE MYSTERIOUS GAS DEBT
TO GAZPROM
Why was Ukraine caught off guard by the $2.2 billion gas
debt?
ANALYSIS: By Roman Kupchinsky, Radio Free Europe/Radio
Liberty
Prague, Czech Republic, Thursday, Oct 11, 2007
Ukraine has
reached an agreement on its outstanding debt to Gazprom,
clearing the air
ahead of negotiations on gas supplies for 2008 and
mollifying wary European
consumers.
But behind the turbid deal stands one outstanding question --
how was
such a large debt accrued in the first place?
After the
Russian energy giant Gazprom threatened earlier this month to cut
off natural
gas to Ukraine unless it received $1.3 billion for past
supplies, Russian
President Putin remarked that "the large debt was
totally
unexpected."
An astonished Ukrainian Deputy Prime Minister
Mykola Azarov told reporters
in Kyiv, "It can't be true that the debt is as
high as [Gazprom] says it
is."
And Ukrainian Deputy Energy Minister
Vadym Chuprun did did his best to
describe a complicated situation in which
Ukraine is not responsible for the
debts, saying that the many suppliers,
owners, and operators involved in
supplying Russian-controlled gas to Ukraine
had to "settle their accounts
first, and when the amount drops we'll see
whose debt it is and whose fault
it is."
The lack of awareness was
difficult to fathom, considering that one of the
companies deemed responsible
for accruing the debt, the Swiss company
RosUkrEnergo, has three powerful
members of Gazprom's management
committee on its board.
Even more
befuddling was the fact that when the smoke cleared and the
numbers of the
debt-payment agreement were crunched, the combined debt
by all debtors was
$2.2 billion.
EXAMINING THE
DEBT
The debt was purportedly incurred by two companies --
RosUkrEnergo and
UkrGasEnergo (UGE), a Ukrainian-registered joint venture
between
RosUkrEnergo and Ukraine's state-owned Naftohaz Ukrayiny.
Much
of the disagreement centered on ownership of natural gas stored
in
underground facilities in Ukraine.
When Ukrainian Energy Minister
Yuriy Boyko on October 9 signed an agreement
with Gazprom CEO Aleksei Miller
to pay off the debt by November 1, it was
decided that 8.5 billion cubic
meters of gas belonging to RosUkrEnergo,
worth $1.2 billion, would be turned
over to GazpromEksport.
The remainder of the debt, $929 million, would be
paid by UkrGazEnergo
and Naftohaz Ukrayiny from their own funds, in
cash.
The full text of the signed agreement has not been published and
has yet
even to be seen by Ukrainian President Viktor Yushchenko, raising
fears that
it will forever remain hidden from public scrutiny.
Perhaps
this should not be surprising, considering the opaqueness of the
system under
which Ukraine receives Russian-controlled gas.
The middleman Swiss
company RosUkrEnergo was created in July 2004 by
Russian President Putin
along with former Ukrainian President Leonid Kuchma.
Other key players in
the deal were [1] Yuriy Boyko, the current Ukrainian
energy minister who in
2004 headed Naftohaz Ukrayiny; [2] Dmytro Firtash, a
Ukrainian businessman
with no affiliation to the Ukrainian government; and
[3] Gazprom CEO
Miller.
RosUkrEnergo was essentially formed to replace the discredited
Budapest-
based EuralTransGas, which was later exposed in the Western press
as
being a creation of Gazprom and Firtash.
Gazprom presently owns 50
percent of RosUkrEnergo while Firtash and his
partner, Ivan Fursin, a banker
from Odessa, own the rest through a company
called Centragas, which in turn
is owned by the secretive Mabofi Holdings in
Cyprus.
Medvedev, the
deputy head of Gazprom's management committee, sits on
RosUkrEnergo's board,
as does Valeriy Golubev, who is in charge of Gazprom's
sales to CIS
countries. And Konstantin Chuichenko, the head of Gazprom's
legal division,
serves as co-director of RosUkrEnergo.
TRIAL OF NUMBERS
According to the January 2006
agreement signed between Ukraine and Russia,
RosUkrEnergo -- at Gazprom's
insistence -- was brought in to be the monopoly
supplier of Central Asian and
Russian gas to Ukraine.
The agreement stipulated that RosUkrEnergo would
purchase a "basket" of
Central Asian and Russian gas from GazpromEksport at
$95 per 1,000 cubic
meters.
The total volume of gas purchased by
RosUkrEnergo, according to the
agreement, was 73 billion cubic meters (bcm)
-- about 20 bcm more than
Ukraine consumed when Ukrainian production of 20
bcm is taken into account.
The extra 20 bcm was the commission Naftohaz
Ukrayiny paid to RosUkrEnergo
for its services. RosUkrEnergo in turn sold
this gas in Europe to, among
others, Emfesz KFT, a Hungarian-based company
controlled by Firtash.
Emfesz then resold part of the gas to Poland --
undercutting Gazprom's
price -- and sold the rest on the Hungarian domestic
market.
However, in mid 2007, sources in the Russian gas industry
reported that
Firtash's companies had accrued a debt to RosUkrEnergo of more
than $2
billion.
GAZPROM WARY OF
FIRTASH'S ABILITY TO REPAY
It appears Gazprom become wary of
Firtash's ability to repay the debt and
decided to rein him in, but had
little leverage over the maverick
businessman who seemingly maintained a
close working relationship with
Ukrainian Prime Minister Viktor Yanukovych's
administration in Kyiv and,
above all, with Boyko and Yanukovych's chief of
staff, Serhiy Levochkin.
Considering the complexity of the gas-transit
arrangement and the internal
dealings, it appears that the October 9 debt
deal is just a temporary
solution to a recurring problem.
And one can
expect that the 8 bcm of gas returned to GazpromEksport will be
used as
leverage over the new Ukrainian government as negotiations for
Gazprom
supplies to Ukraine in 2008 kick off this
month.
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5
. TYMOSHENKO MAY REPUDIATE RUSSIA-UKRAINE
GAS AGREEMENT
INTERVIEW: With Margarita M. Balmaceda, School of Diplomacy & Int
Relations, Seton Hall University, & Harvard Ukrainian Research
Institute
Alexander Timoshik, Pravda.Ru, Moscow, Russia, Thu, Oct 11, 2007
Russia 's state-controlled gas monopoly Gazprom said Tuesday it agreed
to
settle Ukraine's debt for gas supplies, seeming to resolve a dispute
that
has raised concerns of a supply cut to Europe and added to the
political
uncertainty in Ukraine.
OAO Gazprom said earlier this month
that Ukraine owed $1.3 billion (920
million euros), but Russian Prime
Minister Viktor Zubkov said Tuesday that
Ukraine's debt had climbed to more
than $2 billion (1.4 billion euros).
Ukraine would repay $1.2 billion
(850 million euros) of the debt by
transferring gas from underground storage
facilities in Ukraine to Gazprom
for further export, Zubkov said during a
televised meeting with Ukraine's
Prime Minister Viktor Yanukovych in
Moscow.
The remaining $929 million (659 million euros) is to be paid by
the
companies that supply gas on the Ukrainian market, he said.
To
find out more about the present-day relations between Russia and
Ukraine
Pravda.Ru has interviewed an expert in the Ukrainian policy Margarita
M.
Balmaceda, School of Diplomacy and International Relations, Seton
Hall
University, and Harvard Ukrainian Research Institute, Harvard
University.
Pravda.Ru: Russian gas monopoly Gazprom threatened Ukraine to
cut gas
supplies because of debs. Ukraine's orange bloc said that Moscow
tries to
put pressure on Ukraine willing Yanukovychto become Prime minister.
Do
you think that Russia uses gas as a tool to influence Ukraine's
policy?
Margarita Balmaceda :Yes, I believe the Russian government uses
gas as a
tool to influence both Ukrainian domestic politics, and
Ukraine's
international policy. The recent crisis involving "Ukraine's $1.3
billion
debt to Gazprom" is a good example of this.
Although the
Russian side knew for months already that the debt was
accumulating and would
reach a critical point in late September, the issue
was not "made" into a
crisis until it was politically expedient to do so.
First, the Russian
side avoided making a "big deal" of the issue while the
election campaign was
going on, presumably in order not to diminish
Yanukovich's chances of winning
by giving the Bloc Yulia Timoshenko
more ammunition against the current PM
and Government.
At the same time, bringing the issue up exactly at the
time when
coalition-formation negotiations are going on is a way to seek to
affect,
indirectly, the outcome of these negations.
Not to speak of
the fact that it is exactly this month that negotiations on
Ukraine's gas
supply for 2008 have to take place, and highlighting this
crisis exactly at
this moment is a way to put pressure on the Ukrainian
side.
So,
indeed, the Russian government uses energy as a tool of political
influence
in Ukraine, as it has been doing since at least 1994.
But what we should
not forget is that, in addition to political goals, there
are also many
economic interest involved, including some related to
corruption, and that
certain players in the Ukrainian side have benefited as
much from then as
actors on the Russian side.
(I discuss this issue in length in my book,
Energy Dependency, Politics and
Corruption in the Former Soviet Union:
Russia's Power, Oligarch's Profits
and Ukraine's Missing Energy Policy,
1995-2006 (RoutledgeCurzon, 2007),
which should be coming out later this
month.)
I must add that the whole way in which this latest gas crisis has
played out
is very worrisome. It is very clear to me as well to Ukrainian
energy
experts that this is not Ukraine's state debt, but RosUkrEnergo's
private
debt, so it is very worrying that the Ukrainian government has
decided to
treat it, basically, as state debt.
Moreover, the sudden
increase in the debt from $1.3 billion to $2 billion
tells me some
non-transparent business may be going on. It is exactly on
this question
that the Yulia Tymoshenko bloc has asked the RNBO
(Natsionalnii Soviet po
Bezpeki I Oborony) to look into in an urgent manner.
Pravda.Ru: Do you
think that the victory of Ukraine's Orange bloc in the
elections is a step
towards democracy in Ukraine? Why?
Margarita Balmaceda : It is a step
towards democracy in the sense that the
population has delivered a clear
"no" to two parties, that, whether we like
it or not, has been involved in
non-transparent dealings in Ukraine,
including in energy
relations.
In particular, the success of the Yulia Timoshenko bloc, which
campaigned
calling for a repudiation of the January, 2006 gas agreements
with Russia,
represents a clear popular "no" to that way of doing
business.
More broadly, the increase in support for Tymoshenko in some of
the central
parts of the country speaks of a broader trend in which some of
the regional
divides in politics may be softening, and that is a very
positive
development for Ukraine.
Pravda.Ru: How could the election
results change Ukrainian-Russian and
US-Ukrainian relations
?
Margarita Balmaceda : If a Tymoshenko government comes to power, it is
very likely that the January, 2006 gas agreements with Russia, involving
the
intermediary company RosUkrEnergo, will be repudiated.
In that
case, the energy relationship with Russia, intermediaries and
Central Asian
producing states will need to be renegotiated. This could
touch important
economic and political interests on both sides of the
border.
Concerning relations with the US, I would expect them to
improve somehow
should an "orange" coalition come to power, but I do not
think the effect
will be so drastic.
With the exception of the
question of NATO, Yanukovich has tried to present
himself - and to act-as
someone who understands Ukraine's interests lay, in
the final analysis, in
closer integration with Western (in his view, mainly
Western European)
institutions.
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6
. FIVE COUNTRIES SIGN
AGREEMENT FOR OIL PIPELINEAssociated Press, Vilnius,
Lithuania, Thursday, October 11, 2007
VILNIUS, Lithuania -- Ministers
from five Eastern European countries signed
a deal for construction of an
oil pipeline linking the Black and Baltic
seas -- a project aimed at
improving regional energy security and reducing
dependence on Russian crude
oil.
The agreement, signed by Azerbaijan, Georgia, Ukraine, Poland and
Lithuania,
calls for building a 500-kilometer extension to a pipeline in
western
Ukraine northward to the Polish port of Gdansk on the Baltic Sea and
securing supplies of Azerbaijan's crude from the Caspian
Sea.
Presidents of the countries involved praised the deal, saying it
would help
bring predictability and stability to oil supplies. "This deal
will have
great impact not only for signatory countries, but for all of
Europe,"
Poland's president, Lech Kaczynski, said.
The estimated
euro500 million ($700 million) project is considered to be a
victory for
Eastern European governments, which are increasingly wary of
Russia's energy
policy and are searching for both alternative energy sources
and supply
routes.
Mr. Kaczynski stressed that the agreement wasn't made against any
country, a
reference to Russia.
In the last three years, European
countries have complained that Russia has
wielded its energy resources as a
diplomatic weapon, punishing former Soviet
satellite states for not toeing
the Kremlin line. Russia has temporarily cut
off natural-gas supplies to
Ukraine and Belarus and ceased oil deliveries to
Lithuania and
Latvia.
Europe receives 25% of its natural gas and a third of its crude
from Russia,
according to Eurostat, and its dependency on Russia has
increased in recent
years. Several Eastern European states receive nearly
all of their
hydrocarbons from Russia.
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7
. U.S. VANCO WINS UKRAINE GOV'T FAVOR FOR OIL
DEAL
Ukraine has finally allowed a serious Western energy
player to explore and
develop what could be billions of barrels of oil buried
beneath its Black Sea shelf.
John Marone, Staff Writer, Kyiv Post,
Kyiv, Ukraine, Thu, Oct 11, 2007
Ukraine has finally allowed a serious
Western energy player to explore and
develop what could be billions of
barrels of oil buried beneath its Black
Sea shelf.
The outgoing
government of Prime Minister Viktor Yanukovych approved a
Production Sharing
Agreement (PSA) with US Vanco Energy on Oct. 3,
ending more than a
year-and-a-half of tough negotiations.
Although the PSA still has to be
signed by Deputy Prime Minister Andriy
Kluyev, it marks the latest in a
recent series of breakthroughs by Western
oil companies onto Ukraine's
promising production market, and the first onto
the country's Black Sea
shelf.
If significant hydrocarbon deposits are found in Ukraine's
so-called
Prykerchenska field, a 12,900-square-kilometer swathe of territory
that
comprises about 17 percent of all expected reserves in the Black and
Azov
Sea shelves, the country could ease Russia's stranglehold on its
energy
supplies.
Due to the technical difficulty of the deep-water
drilling involved, Ukraine
has been unable to develop the Black Sea shelf on
its own.
"Vanco is very pleased to have concluded successfully with the
government of
Ukraine the negotiations on the Prykerchenska Production
Sharing Agreement.
Although the discussions were long and intensive, they
were always conducted
in a positive and constructive atmosphere," reads a
statement released by
Vanco on Oct. 9.
Vanco International Ltd., a
subsidiary of Houston-based Vanco Energy
Company, won the exclusive right to
present a PSA agreement to the Ukrainian
government in a tender held on April
19 of last year.
Vanco competed in the tender on a 50-50 basis with
UK-based JNR Eastern
Investments Limited, part of the JNR group of companies,
which represent the
interests of Nathaniel Rothschild and his family in the
former Soviet Union
and Eastern Europe.
Also taking part in the tender
were multinational heavyweights like Shell
and ExxonMobile, which submitted a
joint bid; Ukrnafta, Ukraine's largest
oil producer; Turkish state-owned oil
company TPAO; and US company
Hunt Oil.
Vanco, whose profile of
operations has focused on deepwater offshore
projects in West Africa, first
submitted its PSA proposal to the Ukrainian
government in July
2006.
But the government rejected the proposal and started compiling
a
counterproposal in October, leading some observers to question
whether
other proposals might be considered.
In April of this year,
just weeks before the signing deadline, the
government submitted its
counterproposal to Vanco, which requested a
six-month deferral to consider
the new terms.
The government explained the delays in finalizing a deal
by the scope of the
PSA, which is for 30 years, and the fact that Ukraine had
never signed such
a deal before.
Another major hitch was determining
which side would get what percentage of
the oil produced and at which stage
of production.
Vanco representatives told the Post that their company
came to an agreement
with the government last month, but declined to disclose
the breakdown of
the production sharing.
"The agreement approved by
the Cabinet of Ministers satisfies Vanco's three
key criteria of fairness,
openness and durability, and provides an effective
framework for the major
investments needed to complete what is undoubtedly
a very risky deep water
exploration and production project.
"The PSA also ensures that the state
of Ukraine will receive the major share
of the benefits arising from any
hydrocarbon discoveries within the
Prykerchenska area," Vanco's Oct. 9
statement reads.
The government did not respond to the Post's requests
for further
information in time for the publication of this
article.
Dr. Jim Bown, Vanco's Representative in Ukraine said, "Vanco
looks forward
now to the completion of formalities and the signing of the
agreement within
the next seven to ten days so that work can begin
immediately on the
implementation of the exploration program."
Vanco
has said it is prepared to invest "a minimum" of $100 million for the
first
three years of exploration, and has already spent well over $6 million
in
preparation for receiving the PSA.
"If there are hydrocarbons in the
Prykerchenska area the geology even at
this early stage suggests that the
resources could be very large indeed. So
Vanco's job now is to find the
hydrocarbons and produce them.
The Government's approval of the
Production Sharing Agreement is the first
step on the road that we all hope
will lead towards Ukraine's energy
independence," Bown said.
Ukraine
currently imports the lion's share of its hydrocarbon needs from
Russia. But
developing the field will take several years, leaving Ukraine
reliant on
Russia for most of its energy needs in the near term.
Ivan Poltavets, a
Ukrainian energy analyst, said the Vanco deal would not be
a radical
breakthrough in solving Ukraine's energy needs, but it could help
the country
fulfill its goal of producing 25 percent more gas within the
next 20
years.
Having unexpectedly doubled the price Ukraine pays for gas at the
border in
2006 and then raising it again by a third this year, the Kremlin
looks
prepared to keep putting pressure on Kyiv to pay more for its energy
needs.
Poltavets said that by bringing in a Western company, the
government will
get the necessary technical expertise needed to develop the
shelf and send a
positive signal to other international energy
investors.
Critics of Vanco's development of the shelf have argued that
more than one
company should have been selected, given the size of the shelf
zone and the
fact that Vanco is expected to contract out the exploration and
drilling
anyway.
But Ukraine has in recent years opened the gates to
large hydrocarbon
exploration and production rights to Western companies,
hoping their
expertise and financial muscle could help tap into deep or
hard-to-reach
reserves.
Ukraine's state-owned oil and gas company
Naftogaz Ukrainy and a subsidiary
of the US-based Marathon Oil Corporation
inked a cooperation agreement in
June 5 to explore for hydrocarbon deposits
in the country's Dnipro-Donets
Basin, which supplies Ukraine with 80 percent
of its hydrocarbons and is
believed to contain natural gas deposits deep
below those being exploited.
The Marathon deal follows on the heels of a
2005 cooperation agreement
between Ukraine and Anglo-Dutch energy giant
Shell, which has committed to
invest $100 million into the
country.
Shell has already obtained development licenses in the
Dnipro-Donets Basin
and recently landed an interest in a Ukrainian filling
station network
through a joint venture with Moscow-based Alliance
Group.
------------------------------------------------------------------------------------------------
LINK:
http://www.kyivpost.com/business/general/27538/
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8
. ESTONIAN BILLIONAIRE ABONDONS
RUSSIA, FOCUS ON UKRAINE
Property Xpress, Sofia, Bulgaria,
Wednesday, October 10, 2007
SOFIA - The Estonian billionaire Hilar Teder
has sold his stake in the
Russian supermarket chain OK to focus on Ukraine
where he hopes to
develop the domestic hypermarket operator OK.
Teder said he is
looking to Ukraine because of a lack of big business in
Estonia. The main
strategy of the hypermarket is to attract people through
low prices, focusing
on a big turnover.
Over the next four years, the company intends to
allocate USD 800 mln for
its development. According to the plan, commercial
space totalling 200,000
sq. m will be in place within a year.
The
expected value of the usable area amounts to USD 1,000 per sq. m. This
year,
three hypermarkets are scheduled for opening, the first of which will
appear
in Kiev on November 14, on the Dnepr Riverside Street.
The Estonian
billionaire has established his own operator, as it was
difficult to find an
operator which would take on the lease of his
hypermarkets.
Former
Director at Carrefour for Poland has been selected to create the
concept of
the Ukrainian chain. Estonian experts with experience in Finnish
retail
chains have been appointed as consultants. Project finance will be
secured by
their own funds.
OK Ukraine was established in Luxembourg, where one of
Teder's companies
is headquartered. The Ukrainian OK chain is not related to
the Russian chain,
except the name, Rynok.biz reports. Russian newspaper Komersant reports
that the Russian chain OK is already controlled by Russian
businessmen.
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LINK:
http://www.propertyxpress.com/getnews/0000003409
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9
. UKRAINE COMPANY'S
BID CLEARED BY AUSTRALIAN
REGULATORS TO BUY LARGEST MANGANESE
PRODUCER
By Jesse Riseborough, Bloomberg, Melbourne, Australia, Wed, Oct 10,
2007
MELBOURNE - Ukrainian billionaire Gennadiy Bogolyubov
won Australian
regulatory approval for his company's A$1.03 billion ($927 million) bid to
buy the country's largest manganese producer, Consolidated Minerals
Ltd.
The Foreign Investment Review Board approved the offer and a
bidder's
statement for Perth-based Consolidated will be lodged by Oct.
17,
Palmary Enterprises Ltd., controlled by Bogolyubov, said today in
a
statement to the Australian Stock Exchange.
Bogolyubov's company is
competing with proposals from Pallinghurst
Resources Australia Ltd., chaired
by former BHP Billiton Ltd. Chief
Executive Officer Brian Gilbertson, and
Territory Resources Ltd.
Consolidated has had no indication offers superior
to Palmary's will
be forthcoming, it said today in a separate
statement.
Unless extended further, Territory's offer closes Oct. 14
and
Pallinghurst's offer closes Oct. 15, Consolidated said in
the
statement. The board of Consolidated continues to recommend
the
Palmary offer, it said.
Consolidated fell 3 cents, or 0.6 percent,
to A$4.97 at the 4:10 p.m.
close of the Australian Stock Exchange in Sydney.
The stock has more
than doubled this year compared with the 19 percent gain
for the
benchmark
index.
-----------------------------------------------------------------------------------------
To
contact the reporter on this story: Jesse Riseborough in
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10
. UKRAINE SCARING OFF
POTENTIAL INVESTORS
By Oleksii Savytsky for The Day
Weekly Digest
Kyiv, Ukraine, Thursday, October 11, 2007
The socialist
Valentyna Semeniuk, head of the State Property Fund, sees
no reason for her
agency to panic. She recently spoke at a hotline talk
and a press conference
in the Cabinet of Ministers' club, where she put
in an appearance not so much
as Ukraine's privatization boss as
a representative of her
party.
Semeniuk also offered an analysis of the elections and reached the
conclusion that falsifications during the voting were directed primarily
against the Socialist Party of Ukraine.
Semeniuk said she hopes to
remain in her position a lot longer but did not
exclude a different scenario:
"The specialists in the fund are sufficiently
experienced. Any representative
may be appointed head of the fund."
At the same time, she emphasized that
both appointments and removals from
office require a majority vote in the
Verkhovna Rada.
"I would like to see another person walk into the session
room and garner
as many votes as I did - 313," she said with a trace of
nostalgia in
her voice.
Ms. Semeniuk said that there is "too much work
for her to do" at the fund
because the schedule for budget receipts from
privatization has been
disrupted due to protracted court trials. In her
opinion, this is
the cause behind the continuing deterioration of Ukraine's
investment
attractiveness and losses to the budget.
She says this is
advantageous primarily for Ukrainian big shots that
are deliberately scaring
off foreign investors, thus beating down
the price of enterprises slated for
privatization. "If they want
to bring the price down, they go to court, and
halt the competition.
Then the Special Control Commission passes a resolution
or the president
issues an edict to cancel the auction.
This causes a
significant drop in the price because potential buyers
abandon the
purchases," said Semeniuk, describing current schemes.
At the same time, she
believes that Ukraine's oligarchs will have
no trouble issuing an Initial
Public Offering (IPO) even now.
"Today the dozen or so of Ukraine's
wealthiest oligarchs can easily
reach the IPO level. They can all issue it,"
said the head of the State
Property Fund.
Ukrtelekom is also entangled
in a similar legal imbroglio: for some time
now it has been subjected to the
privatization procedure but to no avail.
Naturally, the State Property
Fund is interested in obtaining as much as
possible from the auction.
However, it has yet to hear a desirable figure
from potential
buyers.
"Ukrtelekom is worth $800 million. But before privatizing it, we
need
to study the situation in the market. If its shares are listed, we
take
the listed figure as the starting point for the auction," Semeniuk
says.
However, "some players are not interested in this.
They stop the
fund's initiatives, thus scaring off foreign investors...
If the price of one
share is 1.15 UAH, then Ukrtelekom's starting price
is 4.7 billion UAH. Why
are they so afraid of transparency and an honest
estimate of Ukrtelekom's
assets?
Because they want to get it for a song," Semeniuk said in
response to
her own question. "I met potential buyers, and in response to my
question
they said that they cannot buy Ukrtelekom before the parliamentary
elections
because the situation in Ukraine is unstable now. Another thing:
why were
all private companies given the right to do business in the
cellular phone
sector whereas the state-owned company wasn't?
This
was to prevent this company's capitalization level from going up.
So we put
five percent of Ukrtelekom's shares to sell on the stock exchange
in order to
gauge the company's real value."
The fund is facing even more serious
challenges, such as the Kryvy Rih
Oxidized Ore-Dressing Complex. President
Yushchenko asked the Security
Service of Ukraine and the Prosecutor General's
Office to investigate
the fund's actions in connection with this
enterprise.
On Sept. 20 the State Property Fund was planning to sign a
contract
to set up a joint venture to complete the construction of the
complex.
The other party to the contract was going to be the Ukrainian
Ore
Metallurgy Company, owned by the Russian holding company
Metaloinvest
on parity principles with Ukrainian Smart-Holding. The contract
was
not signed.
The president believes that the fund violated the law.
"I request that an
investigation be launched within your respective
jurisdictions into whether
the State Property Fund abided by current
legislation when it decided
to create a joint venture attached to this
complex. In the event of a
violation, I request that necessary measures be
taken," Yushchenko's decree
states.
In response, Semeniuk claims that through his decree the
president was
lobbying in the interests of the owners of Mittal Steel. "It's
simple:
Mittal Steel's lobbying interests won. Mittal Steel wants to gain
control of
everything, after which Ukraine's metallurgy will come to a halt,"
Semeniuk
told journalists on Wednesday, before the start of the Cabinet of
Ministers'
meeting in Kyiv. (LINK:
http://www.day.kiev.ua/189283/)
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11
. WHY ARE THE
PEARLS SO SMALL? WEALTH
MOUNTING IN A COUNTRY OF TOTAL
POVERTY
By Nataliya Yatsenko for Mirror Weekly
#37
Kyiv, Ukraine, Saturday, October 6-12, 2007
There are
different ways to assess poverty. One can compare living
standards in Ukraine
with those in some African or Latin American country
or the income of an
average Ukrainian and his neighbor that is buying
a modest two-room flat in
Kyiv for $100,000 or a ten-day tour to Vietnam
for
$2,500.
Internationally, Ukraine rates decently, but in terms of income
levels
within the country, the situation is going from bad to worse each
year.
According to the latest survey of Ukrainian households, absolute
poverty
has been practically overcome (by UN criteria for Central and Eastern
Europe). At the same time, 84.5 percent of Ukrainians consider themselves
poor.
The UN has several reference points, considering the unique
situations of
different countries. It sets the absolute poverty threshold (by
solvency)
until 2013 at $1.07 per day for Sub-Sahara countries, $2.15 for
Caribbean
countries, $4.30 for Central and East-European and CIS countries,
and
$14.76 for developed countries.
Thanks to the dollar's inflation,
Ukraine's standing looks more or less
agreeable (in Euro terms it is doing
much worse, but standard calculations
are normally made in USD). Ukrainian
officials can proudly report that
"their" $4.30 nearly equals UAH 5.00 [$1 =
UAH 5.05 - A.B.] in terms of
solvency.
And after the promised pension
increase up to UAH 415 per month
on October 1, even the poorest pensioner may
not appear to be that poor
with his UAH 13.8 per day. In 2006 a mere one
percent of Ukrainians lived
below the poverty line. Since then, the
government has raised pensions
and salaries several times.
Thus, in
absolute figures this country is moving closer and closer
to the poverty
threshold for developed countries and is likely to reach
it sooner than
2013.
According to the latest survey of households, last year the
maximum
individual annual income in Ukraine was UAH 32,000. The State
Tax
Administration reported about 185 people with income between UAH
500,000
and UAH 1,000,000 and 75 people with income exceeding UAH
1,000,000.
However, a survey of households normally left out such people.
It is
hard to imagine a millionaire's wife keeping a spending diary
and
recording her expenses on manicures or carrots.
There are two
conclusions: a) the actual level of absolute poverty
in Ukraine is even lower
than officially reported; b) economic disparity
is becoming deeper and
graver. Both factors have a serious influence
on relative poverty
indices.
According to Ella Libanova, director of the Institute of
Demographics
and Social Research, since 1999 the gap between the five-percent
wealthiest
and the rest of the population has widened, despite the latter's
increasing
incomes.
It was only in 2005 when the income of 50 percent
of the poorest grew
faster than 50 percent of the richest. The actual state
of affairs differs
with the widely advertised high rate of GDP
growth.
GDP is growing, indeed, but different groups of the Ukrainian
population
receive different dividends from this growth. 20 percent - the
poorest -
have seen their incomes grow 3.37 times since 2000; the figures for
each
next 20-percent group (up to the richest) are 3.40, 3.46, 3.47, and
3.78
respectively. As for the millionaires, the approximate size of
their
income could only be known from the Polish magazine Wprost.
Who
are those "poor citizens"? What can they afford? How do their children
live
and what are their chances to get a good education and competitive
job with a
decent salary?
Judging from the latest survey of households, families
with children
under 16 and single old people over 80 are still in the risk
group.
27.8 percent of families with children, two employed parents, and
no
disabled adults, are poor. If they also have old pensioners,
the figure
is 39.3 percent.
Even though salaries and pensions keep growing, the risk
of poverty
in Ukraine remains directly proportional to the number of
children
in a family and inversely proportional to the size of the
locality
where the family lives.
Minimum income is growing, but
medium-size income is growing faster.
The man that cannot afford enough fruit
and juice-s for his child
does not care a bean that in 2000 every seventh
Ukrainian family
lived like this and now only every fortieth does.
One
of the best remedies for poverty is higher education: one university
graduate
in a family reduces its poverty risk. Paradoxically enough,
employment status
is far from decisive: 78.1 percent of poor families
have at least one
employed member and practically every third household
in the 10-percent group
of rich families has at least one unemployed member.
Experts distinguish
two categories of poverty - objective and subjective,
i.e. self-assessed.
Since the 1970, when Dutch scientists introduced this
approach, it has become
very popular as a barometer of public awareness and
behavior.
The
Ukrainian "barometer" is going off the scale: almost 85 percent
of Ukrainians
consider themselves to be poor. Interestingly, two-thirds
in the 20-percent
group of the richest also list themselves in this
category.
Are their pearls too small or cars not prestigious enough?
"The
self-determined poverty line has risen immensely,' says Ella
Libanova.
'Several years ago it was nearly on par with the line set
by the government.
Now about half the population link it with the average
wage and about 20
percent set it at the level of two and a half average
wages.
That must be some psychological abnormality. In my view, it's our
political
and economic elite that should be blamed for such erratic
evaluations.
"The economic elite vaunt their wealth in every way they
can. They don't
understand that their behavior provokes and pressures the
average citizen.
What do I mean? Ukraine ranks third last in Europe by GDP
per capita
followed only by Albania and Moldova) but is in the top five by
the number
of expensive cars sold.
"Trying to buy popularity, the
political elite raise bonuses and social
allowances instead of trying to
raise salaries.
"The number of births in Ukraine as well as the rest of
Europe has been
on the rise since 2002. Now it's problematic to place a child
into school.
30-35 first-graders have to sit in one classroom. It would be
logical
to build more schools, but it's a big problem.
The preschool
system (especially for kids under three) is practically
ruined, and our
political leaders offer generous childbirth allowances.
UAH 50,000 is more
than three annual salaries! Without knowing it,
they cultivate a sense of
inferiority in the rest of their compatriots."
There is one more alarming
tendency: growing expectations of help
from authorities. 24 percent of
households with young people believe
that their welfare is the exclusive or
partial responsibility of
the government. That is the result of the
"socially-oriented policy"!
Regrettably enough, such parasitic attitudes are
growing.
"This problem needs special attention,' concludes Ella
Libanova.
'It may be one of the most serious negative phenomena. I am
sure
that subjective poverty is more dangerous than objective.
It is very
responsive to leaders' calls for putting up or
storming
barricades..."
---------------------------------------------------------------------------------------
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12
. UKRAINE: GOODBYE GREENBACK, END
OF DOLLARISATION
BRIEFING: Oxford Briefing Group,
London/Kyiv, Wed, 10 Oct 2007
As the dollar reaches new historical lows
against pretty much all other
global currencies, Ukrainian monetary
policymakers must be wondering how
much longer they should defend a narrow
exchange rate corridor against the
greenback.
Ukraine's currency, the
hryvnia (UAH), has been de facto pegged to the
dollar since the 1998
financial crisis. Since a currency revaluation in
April 2005, the hryvnia
has been trading at UAH5.05:$1, which places it
comfortably within a
declared band for movement of UAH 4.95-5.25:$1.
As such, it has been very
successful in stabilising the economy by giving
people faith in the local
currency. This in turn has helped bring down
inflation and facilitate
economic growth.
Ukraine is not unique in this respect. A number of
countries in emerging
markets use hard dollar pegs to fix their exchange
rate frameworks. The
difference is that in their case, such as in the Gulf,
the US is their
biggest trading partner.
Thus, the weakening dollar
is not having a substantial impact on those
countries' principle export
commodities. In Ukraine's case, its main trading
partners are EU member
states, with a substantial part of those transactions
nominated in
euros.
As a result, the dropping value of the dollar is having a direct
impact on
Ukraine's external competitiveness vis-à-vis Europe. There is both
a
positive and a negative effect.
On the one hand euro strength
against the dollar means that Ukrainian
principle export commodities, such
as steel, chemical products and machinery
are more competitive in terms of
price.
However, to become more competitive and increase productivity,
Ukraine needs
to import capital goods - factory equipment, technology,
materials - a lot
of which comes from Europe and is nominated in
euros.
Consumer goods like cars, washing machines and mobile phones are
also
getting more expensive because of a stronger euro. This in turn results
in
inflationary pressure - a monetary evil policy makers are at pains to
eradicate.
Another possible negative effect that could be generated
by weakening dollar
is that majority of people traditionally held their
savings in dollars. It
made sense, because the prices for housing, cars and
even salaries were all
referenced in dollars.
However, there is a
risk that a weaker US currency could result in a switch
from dollar prices
to euro prices, which would be equivalent to a 40% price
increase.
This took place in other East European countries such as
Bulgaria and
Romania as well as the Baltic states that used to have
dollar-based
economies, but now use the euro as their reference
currency.
In the case of these countries, the transition was relatively
slow and
smooth and the gap between the dollar and the euro was much
smaller. A
sudden switch at this point would be very expensive for consumers
and
would effectively erode a substantial part of people's savings.
"A
stable hryvnia-dollar exchange rate remains an important psychological
anchor among Ukrainians and therefore the key monetary tool in stabilising
the currency," said Adomas Navickas, a partner at KBC Securities Baltic
Investment.
A more gradual transition through relaxation of the
exchange rate mechanism
and widening of the dollar-hryvnia corridor may be
the best solution It
would allow the market to determine the value of the
Ukrainian currency with
the central bank intervening to offset sudden
external shocks.
Volodymyr Stelmakh, governor of the National Bank of
Ukraine, suggested back
in May that a shift in monetary policy may be
imminent. However, nothing has
yet taken place, in the absence of a
functioning parliament and clear
political vision.
Indeed, given the
political situation it is probably best no major monetary
policy changes are
implemented until there is a stable government.
The peg was introduced
precisely because there was no faith in policy
making. The fear is that
short-term political tampering with the exchange
rate would only undermine
faith in the local currency, as politicians are
often accused of fixing the
exchange rate to suit their own business goals.
Seen from that
perspective, the recent election has hopefully served as an
important
milestone in creating a political consensus on future monetary
policy.
It is clear that Ukraine cannot retain a hard dollar peg
indefinitely and
policy makers need to project a clear vision of where to go
next. As in its
geo-political choice, the answer is probably either closer
to the euro or
the
ruble.
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Enquiries
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13
. BANK OF GEORGIA BUYS UKRAINE
BANK FOR $82 MILLION
Reuters, Tbilisi, Georgia,
Wednesday, October 10, 2007
TBILISI - The Bank of Georgia, the country's
biggest bank by assets
said on Wednesday it has acquired a bank in Ukraine
for $81.7 million.
The Georgian bank said in a statement that it had
bought Ukraine's
Universal Bank of Development and Partnership, which has
about
0.22 percent of the local market by total assets.
Bank of
Georgia is the most liquid stock on the Georgian Stock
Exchange and the first
Georgian company to float in London.
The bank is more than 80 percent
owned by institutional investors,
including funds such as Firebird and East
Capital The bank issued
Eurobonds worth $200 million at the start of
2007.
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14
. UKRAINE'S PRESIDENT
YUSHCHENKO SAYS HE
KNOWS IDENTITY OF THE NEXT PRIME
MINISTER
Yushchenko backed an orange government in the
campaign, to be
led by ex-premier Yulia Tymoshenko, his newly
reconciled ally.
Reuters, Bratislava, Slovakia, Thursday,
October 11, 2007
President Viktor Yushchenko said on Thursday he knew the
identity of the
prime minister to be appointed after parties form a viable
post-election
parliamentary coalition, but gave no details.
Groups
linked to the "Orange Revolution" that swept the president to power
in 2004
won a tiny majority in the poll, aimed at ending months of deadlock.
But the
party of his rival, Prime Minister Viktor Yanukovich, is the largest
single
group.
Yushchenko backed an "orange" government in the campaign, to be
led by
ex-premier Yulia Tymoshenko, his newly reconciled ally. But he has
since
said she could become prime minister only if a political deal was
reached
with Yanukovich's Regions Party.
Speaking during a visit to
Slovakia, the president said he hoped a coalition
agreement could be signed
sometime next week.
"I already know the name of the future prime
minister," he told a news
conference alongside Slovak President Ivan
Gasparovic.
He said the combined tally of two "orange" groups --
Tymoshenko's bloc
and the pro-presidential Our Ukraine party "is the winner of the election,
it
has a majority, and obviously it has the right to nominate its prime
minister." But he repeated that creating a coalition required "a
constructive dialogue" between its parties and the
opposition."
Yushchenko on Monday summoned all parties that won seats in
the Sept. 30
election and gave them until the end of the week to produce a
blueprint for
a working coalition. Leaders have since made few
statements.
Tymoshenko said she would be willing to offer some of the
current prime
minister's allies top government jobs. And Yanukovich said his
party was
prepared to go into opposition if, after the talks, he was not
kept on as
premier.
Yanukovich backs the creation of a "broad
coalition" bringing together his
Regions Party and Our Ukraine, touted by
some analysts as a way of bridging
the longstanding gap between Ukraine's
Russian-speaking east and the
nationalist west.
Yushchenko has never
called for such a pairing, but says his rivals must get
some top jobs to
build trust. Tymoshenko says she will go into opposition if
a "broad
coalition" takes shape.
Yushchenko defeated Yanukovich in the re-run of a
rigged election in the
aftermath of weeks of "orange" rallies.
But
Yanukovich made a comeback last year and became prime minister after
"orange" groups proved unable to form a government. He has since chipped
away at Yushchenko's powers.
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15
. UKRAINE: NEW NADIR
FOR KING COMPROMISER
The President's call for a broad
political compromise among the country's
leading parties may sound admirable
to outsiders, but to Ukrainians who
have placed their faith in the democratic
process it is little short of a
kick in the teeth.
COMMENTARY:
Peter Dickinson, Business Ukraine magazine
Kyiv, Ukraine, Monday, October 8,
2007
There was an almost audible rumble at around 5pm on October 3 as the
entire nation collectively let out a hearty groan. It was reacting to
President
Yushchenko's surprise TV address, in which he called on all
political
parties to unite and work together.
Both seasoned analysts
and partisan politicians were taken off guard by the
news, but to the
proverbial man in the street it must have seemed like just
one more example
of Yushchenko's apparent passion for party political
machinations
masquerading as statesmanship.
CREATING
COALITION CONFUSION
The immediate result of the president's
address was to throw the seemingly
straightforward coalition talks into
chaos, which, presumably, was
Yushchenko's intention.
His appeal
certainly succeeded in throwing a temporary spanner into the
wheels of the
Tymoshenko victory parade just as her progress to the prime
minister's office
was beginning to seem all but assured.
Such turns of fate are routine
events in Kyiv, but this attempt to undermine
the self-proclaimed democratic
opposition in their moment of glory was in
particularly bad taste, and flew
in the face of much that Yushchenko has
stood for as a politician over the
past nine years.
Supporters of a broad coalition would no doubt point to
the over 50% of the
electorate who didn't vote for an Orange coalition, and
argue that by
including the likes of the Party of Regions in some way it
would be possible
to bring everyone onto the same team.
This at least
seems to be what Yushchenko was getting at, but if that is the
sum total of
his thoughts on the subject then he obviously holds to some
fairly odd
interpretations as to what democracy is all about.
FEAR OF THE YULIA FACTOR?
It is far likelier
that he was driven by a desire to demonstrate to Yulia
Tymoshenko that he is
still the ultimate arbiter of the Ukrainian political
scene. There is little
to suggest at this stage that Yushchenko has any hope
whatsoever of
re-election in 2009, but he is nevertheless widely thought to
harbour dreams
of a second term.
As such he must be acutely aware that his biggest rival
is not Viktor
Yanukovych but Tymoshenko, who now has an unprecedented
national support
base and would surely thrash any candidate who dared go head
to head with
her in a race for the presidency.
The idea that he would
sacrifice the ideals of democratic Ukraine for the
sake of his own political
career may seem fanciful, but this is not the
first time he has performed
ideological contortions to suit a shifting
political climate and protect his
own tenuous grip on power.
Few will forget the deal struck with his
erstwhile arch-enemy Yanukovych in
autumn 2005, or the way he handled
simultaneous negotiations with rival
blocs following last year's
parliamentary vote.
This time he has surpassed even himself, and the
damage this time could be
terminal. It is hard to imagine any voter
demographic that would support
this call for a mixed administration and
regardless of the outcome of
ongoing coalition talks, Yushchenko's hard won
reputation as the defender
of Ukraine's young democracy is tarnished
forever.
DISARMING A DIFFICULT
NEIGHBOUR
As all this was going on, Russia entered the fray
in the form of a threat to
cut gas supplies if huge and previously hushed-up
debts were not promptly
paid in full. This is fairly standard posturing from
the Putin regime, and
is to be expected.
The real question now is how
long Ukraine's politicians will allow the
albatross of addiction to cheap
Russian gas to hang round their necks and
obstruct the country's
progress.
Dealing with the energy issue will inevitably be a painful
process for any
Ukrainian government brave enough to take it on, but not
doing so will leave
Ukraine stuck in the limbo of dependency and unable to
implement the
far-reaching reforms that the electorate has given Tymoshenko
and her
Orange coalition colleagues a mandate to pursue.
Talk of European
integration and a brave new Ukraine will remain empty
words until the country is in a position to act independently.
In
the long term Ukraine could look to utilise Western sympathy for
its
democratic transition in order to secure the kind of major funding
that
would soften the economic blow of any energy policy
revolution.
For the time being Kyiv could at least look to disarm
Russia's energy
arsenal by inviting EU member states to deal directly with
the Kremlin for
the gas Ukraine currently transits, and stop getting caught
in the
middle.
----------------------------------------------------------------------------------------
Letters
to the editor are welcomed at
peter.dickinson@nfmg.co.uk.
-----------------------------------------------------------------------------------------
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16
. LAW: UKRAINE'S PARLIAMENT SHOULD
CONVENE NEXT MONTH
By Stephen Bandera, Kyiv Post Editor, Kyiv
Ukraine, Thu, Oct 11, 2007
The parliament that Ukrainians elected on
Sept. 30 may not convene
until the end of November.
The Constitution
states that a newly-elected parliament should hold
its first meeting within
30 days after the official publication of
election results by the Central
Election Commission (CEC). But the
process can be stalled if the CEC is
prohibited from publishing election
results by the country's administrative
court system.
According to law, the CEC has until Oct. 15 to establish
the official
final vote tally. CEC deputy head Andriy Mahera indicated that
the
commission is likely to announce the official final results on Oct.
14
or Oct. 15.
"Legal challenges of the results can be filed with the
Higher Administrative
Court (HAC) within five days after the establishment
[of results] by the
CEC, in this case until Oct. 20," explained electoral
law expert Serhii
Kalchenko, attorney at the Moor & Krosondovych law
firm in Kyiv.
"The courts have another five days to make rulings, but
that deadline
can also be extended if the courts so rule."
"It is
possible that 'traditional' juridical mechanisms will be used after
the CEC
establishes election results. A claim could be filed with the HAC
together
with a claim to prohibit the CEC from publishing official results
until the
case is considered. If this happens, then the CEC will have to
wait for the
court's decision," Kalchenko explained.
Kalchenko said that if legal
challenges proceed and the Higher
Administrative Court ultimately rules that
the CEC's actions were perfectly
legal, then official final election results will be announced on Oct. 26.
If
events unfold according to this scenario, then the new Rada should
convene
no later than Nov. 25.
"It will be interesting to see how this works
out in practice, as Nov. 25
is a Sunday," Kalchenko said.
Maksym
Kopeychykov, a partner of the Kyiv-based Ilyashev & Partners law
firm,
said that he does not think any legal challenges will be heard by the
HAC.
Neither Kalchenko nor Kopeychykov were aware of any legal challenges to
the
election results.
"It depends more on the results of negotiations
between the winners of
the elections," Kopeychykov said.
"If there is
no agreement with the Regions Party, then, probably, those
CEC members who
were appointed by the previous governing coalition will
become too ill to be
present at the CEC's meetings," Kopeychykov explained.
The governing
coalition of the Regions, Socialists and Communists enjoy
a one-vote majority
on the 15-member CEC. Despite failing to qualify for
seats in the parliament,
Socialist leader Oleksandr Moroz said Oct. 5 that
his party will not
challenge the results of the "unconstitutional"
elections.
The
Communists, who gained more than 300,000 votes in the latest poll,
have
demanded a total recount of all votes cast, but have not said they will
not
challenge the results of the Sept. 30 elections in the courts. Prior to
the vote,
the CPU said it would legally challenge the results of last month's
vote.
On Oct. 5 the Party of the Regions' representative in the CEC
Vladislav
Zapansky said his political force was not planning to challenge the
results
of elections - that have not been falsified - in the
courts.
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17
. CAN TYMOSHENKO LIVE WITH
A GRAND COALITION?
COMMENTARY: By Pavel Korduban, Eurasia
Daily Monitor
Jamestown Foundation, Wash, DC, Wednesday, October 10,
2007
Opposition leader Yulia Tymoshenko's hopes to become prime
minister
may be dashed. President Viktor Yushchenko wants to invite the
Party
of Regions (PRU), led by her archrival, Prime Minister Viktor
Yanukovych,
to join a new Cabinet of Ministers.
If the PRU, which will
have more seats in parliament than the
Yulia Tymoshenko Bloc (BYuT) as a
result of the September 30
parliamentary election, joins the cabinet, it may
elbow out Tymoshenko.
Yushchenko explains that he wants unity in Ukraine,
which is impossible
without cooperation with the most popular party. However,
a weakened
Tymoshenko may be his real goal, as she is expected to be his
rival
in the next presidential election.
On October 3 Yushchenko
called on the PRU, the BYuT, and his
Our Ukraine-People's Self-Defense Bloc
(NUNS) to launch talks to form
a majority in parliament and the next cabinet.
Yanukovych, who has never
objected to a grand coalition, hailed Yushchenko's
statement.
Tymoshenko suggested that Yushchenko did not mean coalition
talks,
but consultations with the PRU about its role as a party that
should
become the major opposition force. Yuriy Lutsenko, who topped
NUNS's
list for the election, said that NUNS would not join a coalition with
the
PRU.
The constitution stipulates that the cabinet is formed by a
majority
in parliament, which Tymoshenko planned to build with NUNS.
Before
the election, the BYuT and NUNS agreed that, if they form a
majority,
posts in the cabinet would be evenly divided between the two,
but
the prime minister's post would go to the more popular party.
The
BYuT scored more than twice as many votes as NUNS -- 31% against
14% -- so
Tymoshenko should be prime minister under that formula.
The constitution
does not authorize Yushchenko to decide on
a majority in parliament. But he
can dictate his conditions, because
the format of a future coalition depends
on the position of his NUNS.
While a coalition between the BYuT and the
PRU is hard to imagine,
neither BYuT nor PRU can form a coalition without
NUNS. Tymoshenko
knows that there are people in NUNS who are skeptical of her
leadership
and who are not against cooperation with the PRU. Because of
this,
she has to make concessions to Yushchenko.
A NUNS-BYuT coalition
would have 228 votes in the 450-seat parliament,
just two more than the
simple majority required to appoint the prime
minister.
This may be
not a wide enough margin, given Ukraine's recent
political volatility. "A
parliament in which the majority has an
insignificant advantage over the
minority is not acceptable for
the president," Vadym Karasyov, an analyst
close to Yushchenko's team,
explained to Interfax-Ukraine.
In
contrast, a NUNS-PRU coalition would control almost 250 seats.
Segodnya, a
newspaper close to the PRU, reported that it was
"100% settled" that the
majority would consist of the PRU, NUNS,
and the Lytvyn Bloc - a small party
that barely cleared the 3%
barrier to enter parliament.
Analyst
Volodymyr Fesenko told the newspaper that businessmen in NUNS,
such as Petro
Poroshenko, as well as Foreign Minister Arseny Yatsenyuk
and former prime
minister Yuriy Yekhanurov would not reject a coalition
with the
PRU.
The head of Yushchenko's administration, Viktor Baloha,
apparently
is also in favor of a broader coalition. "I cannot imagine
any
decisions made by NUNS, including those on the formation of
the
coalition and the cabinet, that would run counter to the vision
of the
president," he warned in a statement on October 5.
A day earlier,
Lutsenko had said that his People's Self-Defense
group within NUNS was
categorically against any alliance with the PRU.
Segodnya said Baloha may
replace Yanukovych as prime minister
if NUNS and the PRU form an
alliance.
"I would like to ask all politicians who are saying that
they
will never talk to anyone else to withdraw their statements
and to
meet for talks," Yushchenko said in Paris on October 5,
apparently having in
mind Tymoshenko and Lutsenko. They did so,
meeting at Yushchenko's office
with Yanukovych, the Communists,
and Lytvyn's people on Monday, October
8.
Yushchenko continued to dictate conditions. He said he would
like
to appoint law-enforcement chiefs such as the interior minister,
and
he demanded the cancellation of the law on the Cabinet of Ministers.
The
law, which diminished his authority, was drafted by Yanukovych's
party and
passed by parliament in early 2007 with Tymoshenko's backing.
Yushchenko also
urged the parties to come up with a candidate for
prime minister within five
days.
After the meeting, Yanukovych insisted that the PRU reserves
the
right to nominate the prime minister as the election winner.
Tymoshenko
signaled some readiness for concessions.
She said that her coalition with
NUNS would be ready to give
the PRU the posts of deputy ministers, deputy
regional governors,
the chairmanship of key standing committees in
parliament, and one
deputy prime minister's post. Whether Yanukovych accepts
or not
is yet to be
determined.
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18
. UKRAINE: ORANGE DEAL NOT
SEALED
By Zenon Zawada, Kyiv Post Editor, Kyiv,
Ukraine, Thu, Oct 11 2007
The pro-Western Orange political forces gained
a slight majority in the
Sept. 30 parliamentary elections, but that hasn't
guaranteed them anything
in the square dance of Ukrainian
politics.
In forming the next government, President Viktor Yushchenko and
Presidential
Secretariat Chair Viktor Baloha will play the role of
"kingmaker," deciding
whether Yulia Tymoshenko or Russian-oriented Prime
Minister Viktor
Yanukovych will take power.
Their steps following the
election demonstrated the Secretariat isn't eager
to reunite with the
Tymoshenko bloc (Byut), partly because Yushchenko needs
to find concessions
with the Party of Regions, political observers said.
"There needs to be
an adequate distribution of power," said Yuriy Syrotiuk,
a political analyst
with the Kyiv-based Open Society Foundation, which is
financed by the
British and American governments."President Yushchenko
understands this, so
he has proposed that everyone be in government and be
satisfied."
Unfortunately for the president, Tymoshenko has
repeatedly stated she will
not join a government with the Yanukovych-led
Party of Regions.
In her compromise bid proposed Oct. 8, Tymoshenko
offered her adversaries
the chairmanship of the government's Accounting
Chamber, assistant minister
positions and assistant chairs of regional state
administrations, which is
the president's governing arm in the
regions.
Regions' leaders have dismissed her offer, stating that
Tymoshenko hasn't
even secured power to begin making such proposals, and
that it was nonsense
for the opposition to be in government.
"It
makes no sense to bear the responsibility for an Orange coalition's
collapse," said Mykhailo Chechetov, a Party of Regions parliament
member.
Its responses revealed that the Party of Regions is also taking
an
all-or-nothing approach to forming the coalition government - either
being
in absolute control or in opposition.
FRAGILE OUR UKRAINEAs a result, President
Yushchenko, who has called for compromise among the
election's three major
winners - Byut, Byut's coalition partner by prior
agreement, the
pro-presidential Our Ukraine-People's Self-Defense (OUPSD),
and the Party of
Regions - is caught between a political rock and a hard
place.
If
Yushchenko returns Yanukovych and the Party of Regions to power, the
OUPSD
bloc could splinter and lose a significant part of its electorate,
observers
said.
At least 40 of 73 qualifying Our Ukraine lawmakers signed a letter
to
Yushchenko opposing his decision to conduct coalition-forming talks with
the
Party of Regions.
"An Our Ukraine-Party of Regions coalition is
impossible, because 90 percent
of Our Ukraine is against it," said Taras
Kuzio, president of Kuzio
Associates, a Washington consulting firm. "It
would mark the end of Our
Ukraine."
In the event of an Orange
coalition, Tymoshenko will characteristically
dominate the coalition's
agenda, and the government will likely face an
aggressive opposition in the
Party of Regions, which represents Ukraine's
biggest business
interests.
Moreover, the parliamentary majority captured by the Orange
forces in the
elections, giving them a paper-thin two-seat majority of 228
parliamentarians in the 450-seat chamber, coupled with their turbulent
history, has led observers to doubt their cohesiveness and effectiveness
within their potential government.
"Tymoshenko will do things her
way, which won't sit well with [Viktor]
Baloha, who controls the levers in
the Secretariat," said Ivan Lozowy, a
Kyiv political
insider.
Overall, President Yushchenko succeeded in shaking up the
political
landscape with his command to hold pre-term elections, but not by
much.
THE LYTVYN
FACTORVoters dismissed the president's archenemy, parliament
speaker and Socialist
Party leader Oleksandr Moroz, after Moroz and his
Socialists switched
allegiances in parliament from Orange to Blue (Party of
Regions) following
the March 2006 parliamentary elections, and gaining the
speaker's seat as a
reward.
Voters kept the two pro-Western OUPSD and
Byut parties and the two
Russian-oriented Party of Regions and Communist
parties, and replaced the
Socialists with the Volodymyr Lytvyn Bloc, a force
with close links to
former President Leonid Kuchma that casts itself as
multi-vectored and
moderate.
Although incapable of tipping the scales
in coalition-forming, the Lytvyn
Bloc would prove valuable in any
government.
Were Lytvyn to join his bloc to the Tymoshenko and OUPSD
blocs, that
would create a so-called "democratic coalition" with a comfortable
parliamentary majority of 22 votes.
A coalition between the Party of
Regions, OUPSD and the Lytvyn Bloc would
create a pro-business government
that may take a multi-vectored approach,
instead of being divided along
pro-Western and pro-Russian lines.
Former Ukrainian President Leonid
Kravchuk said the Lytvyn Bloc's best
option would be to remain neutral, but
it might not have that luxury.
"For businessmen, the parliament is a
publicly-traded stock company,"
Syrotiuk said. "They feel with their
investment, they should obtain
dividends. Moreover, if he remains neutral,
he could hurt the career of his
influential relatives. Lytvyn will be forced
to take sides."
Lytvyn has better relations with Yanukovych and the Party
of Regions than
Tymoshenko, observers said, but may end up going Orange
anyway.
OPPOSITION-READY
Throughout the election
campaign, OUPSD leaders assured the Ukrainian
electorate that it would only
form a coalition with its stalwart Orange
Revolution partner, the Tymoshenko
bloc.
After the vote, Orange leaders repeated their vows, promising that
a
democratic coalition agreement would emerge within a day or two of the
final
election results, which are expected on Oct. 15.
They said they
would base the coalition on a pact signed between the two
forces in
February, in which they distributed key government posts, giving
the prime
minister post to the bloc with the most votes.
However, President
Yushchenko's vague Oct. 3 announcement, hinting at
inviting the Party of
Regions into a broad coalition, sent shivers down the
spines of Orange
supporters.
Concern immediately spread after the president's remarks that
Our Ukraine
would once again court the Party of Regions and play hard-to-get
with the
Tymoshenko bloc, as it had done last year.
Tymoshenko
declared she would rather enter the opposition than form a
government with
the Party of Regions. Days later, she offered her
concessions, which drew
derision from the Party of Regions. Few political
observers believed the
Party of Regions would quietly agree to go into the
opposition.
Leading up to the election, the Party of Regions set up
two stages at Kyiv's
central Independence Square, with its leaders
threatening protests and
demonstrations to defend their election results if
necessary.
Quite mysteriously, the Party of Regions took down one stage,
sent its
camped-out supporters back home and didn't rattle its swords,
except for a
threat that it could have 150 parliament members surrender
their mandates
and liquidate the next parliamentary convocation, just as the
Orange forces
had done.
On Oct. 5, the party announced that it would
accept the election results
without any protest. Days later, Yanukovych
announced the Party of Regions
would not work with Tymoshenko as prime
minister.
Yanukovych's Oct. 8 statement that the Party of Regions was
willing to go
into opposition reveals that it doesn't feel threatened by an
Orange
government with a slim majority, Syrotiuk said. "The Regions might be
able
to attract Our Ukraine votes," Syrotiuk said.
"They are most interested in economic votes, for which they can find
partners in Our Ukraine, but will lose support from the Communists. To pass
laws, the Regions will have to find support not only within Our Ukraine and
the Tymoshenko blocs, but also the president, who has veto
power."
Regardless of whether she becomes prime minister, Tymoshenko
gained the
most from the election and demonstrated she is the most relevant and
dynamic
politician on the Ukrainian political scene, observers said. "Yulia
Tymoshenko saved the Orange Revolution and Yushchenko's presidency,"
Kuzio said.
Tymoshenko earned more than 7.1 million votes, gaining
more than 1.5 million
supporters since the March 2006 election - more than
anyone else. Her
popularity grew in every region, except for the pro-Russian
Autonomous
Republic of Crimea.
"Everyone is shocked by the election
results, particularly the Party of
Regions," Lozowy said. "They thought they
would get the majority with
the Communists. But they aren't taking any radical steps because they are
waiting for the president's next moves."
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19
. UKRAINE: PARLIAMENTARY
ELECTION ONCE
AGAIN FAILS TO RESOLVE DEEP POLITICAL
CRISIS
COMMENTARY: By Markus Salzmann
World Socialist
Web Site (USWS), UK, Thursday, 11 October 2007
A third election within
three years has proved incapable of resolving the
deep political crisis in
Ukraine. Once again, it has become clear that the
struggle between rival
political cliques, carried out at the expense of the
broad population, has
nothing in common with democracy.
In the early parliamentary election of
September 30, Our Ukraine led by
Viktor Yushchenko won around 14 percent of
the vote, while the Bloc
Yulia Tymoshenko (BJT) received well over 30
percent.
Together, the two parties, which three years ago led the
so-called Orange
Revolution, picked up 44.8 percent of the vote. This means
they have a
razor-thin majority of 228 seats out of 450 in the new parliament
(Rada).
According to the electoral committee, all other parties standing
won
approximately 44 percent. The "blue" Party of the Regions led by
Prime
Minister Viktor Yanukovich won 34 percent, and its ally, the
Communist
Party, received 5 percent and also entered the Ukrainian
parliament. The
Socialist Party, which had previously been part of the
government coalition,
failed to win enough support to re-enter
parliament.
The Litwin Bloc led by former parliamentary president,
Vladimir Litwin,
received 3.9 percent for the first time, and therefore
crossed the 3 percent
level necessary to enter parliament.
Litwin has
refrained from making clear his real political intentions and, in
light of
the close outcome of the election, is now being courted by the
Orange
parties.
The election turnout was low, at 63 percent, reflecting
widespread hostility
in the population to all of the competing camps.
Yushchenko had dissolved parliament at the beginning of April hoping
that
fresh elections would favourably resolve his longstanding struggle for
power
with Yanukovich.
Following Yanukovich's victory in parliamentary
elections last year,
Yushchenko had felt compelled to appoint his rival as
prime minister.
Then last spring, a number of deputies from the Orange
opposition switched
over to the government coalition. Yushchenko described
this as a
falsification of the 2006 election result and dissolved the
parliament.
Yanukovich and his coalition partners opposed the move, and
only after long
negotiations was an agreement reached for a new
election.
Two years after the Orange Revolution, the differences within
the Ukrainian
elite expressed through the two rival camps-Yushchenko and
Tymoshenko on the
one side, and the oligarchs led by Yanukovich on the
other-have narrowed
considerably.
The latter camp had previously
maintained a strong orientation to Russia,
but are now looking increasingly
towards the West to secure their economic
interests. Day by day, it is
becoming ever clearer that there are no
principled political differences
between the two political camps.
In the meantime, Yushchenko has called
upon all the political forces
entering the new parliament to develop a model
for cooperation between the
government and that opposition, as well as to
take measures aimed at
consolidating the powers of the state.
He
offered government ministries to Yanukovich's party-"from vice-prime
minister
down to ministerial positions." Everything was possible-this was
the only way
to secure stability in the parliament and government,
Yushchenko
explained.
Yanukovich reacted positively to this offer made by the
president and
expressed his own support for the construction of a "broad
coalition."
Tymoshenko, however, has so far rejected any cooperation with
Yanukovich's
party and announced she is only prepared to participate in a
coalition with
"democratic" forces. If Yushchenko and Yanukovich form a
coalition,
Tymoshenko has announced she will go into
opposition.
Yushchenko's proposal is an attempt to prevent the political
division of the
country. While the west and the centre of the country mainly
support the
parties involved in the Orange Revolution, voters in the south
and east have
voted in the past in the majority for Yanukovich. At the same
time, it is
clear that the Orange camp itself is deeply split.
A
coalition of the BJT and Our Ukraine would be anything but stable, and
such
an alliance would have only a very narrow majority. It still remains
unclear
which position the Litwin Bloc will take.
But in the main, the individual
parties are driven by economic and personal
interests rather than politics or
programme, and the widespread corruption
of deputies is an established fact.
"Two or three votes are always up for
sale," political commentator Vadim
Karasyov wrote in the Kyiv Post.
At the same time, the relatively high
vote for Tymoshenko represents a
danger to Yushchenko's political future.
Yushchenko's miserable showing in
the election (14 percent) was his
punishment by the electorate for the
catastrophic social consequences of the
government's policies in recent
years.
Tymoshenko was able to pick up
votes for the opposition on the basis of her
populist election campaign. It
is unlikely that Yushchenko would play
important role in the long-term role
should he enter an alliance with the
BJT.
Meanwhile, there are doubts
in the pro-West camp over Tymoshenko's politics.
Analysts expressed the
concern of investors, who referred to Tymoshenko's
role as prime minister in
2005.
At that time, she announced she wanted to investigate the legal
status of
the privatisations previously carried in the era of President
Leonid Kuchma.
She declared that the privatisation of up to 3,000 formerly
nationally owned
companies could be reversed.
Since the collapse of
the Soviet Union and independence for Ukraine in 1991,
the layer around
Kuchma had sold off the country's assets and in the process
shamelessly
enriched themselves. The enterprises were sold for low prices on
the basis of
political and regional criteria.
At the back of Tymoshenko's reversal of
the privatisations lies a scheme for
the future re-division of what is
nothing other than stolen national
property.
Following renewed
nationalisation, Tymoshenko plans to sell off the
enterprises once again-this
time at a better price-to those oligarchs close
to the Orange alliance, or to
Western companies.
Alarm bells rang amongst financial analysts following
Tymoshenko's
declaration last Sunday that the privatisation procedures would
be subject
to court scrutiny. They fear that the whole procedure could lead
to
irresolvable economic and political conflicts involving broad layers of
the
population.
One example of the privatisations policy was the fate
of the steel plant
Krivorijstal, the country's largest steel exporter. The
Donetz oligarchs
Rinat Akhmetov and Viktor Pinchuk acquired the company in
2004 at a
rock-bottom price. At the time, there are said to have been a
number of much
higher offers, including a bid by the American company, US
Steel.
At the beginning of 2005, the sell-off was then waived following a
court
order issued after pressure from Tymoshenko, and at the end of the
year,
Krivorijstal was finally sold off to the Mittal concern.
The
affair caused such a scandal that even the World Bank felt compelled
to
intervene in the "Krivorijstal case" in order to prevent damage to
the
general investment climate. At the time, economist Oleksij
Plotnikov
detected a "serious blow for the investment climate. The effect is
a shock."
The increasingly sceptical attitude taken by the Ukrainian
elite towards
Tymoshenko was revealed in an interview given by the director
of the
International Institute for Political Studies in Kiev, Vladimir
Malinkowich,
to the Viennese Standard.
When asked what the election
result means for Ukraine, he answered: "nothing
good." Tymoshenko "promises
the impossible and thereby ruins our economy.
But what is most dangerous is
that she does not want to strengthen
democratic institutions."
When
asked about her relationship with Yushchenko, Malinkowich explained,
"She
will have even more power over him. When he opposes her now she will
stand
against him in the next presidential election and is likely to win.
The most
probable variant of an Orange coalition will therefore prove to be
quite
unstable.
Two persons will continue to fight one another at least until
the
presidential election in 2009, and it will continue to remain unclear who
is
in charge and represents the country in the west, he or she."
THE FRAUD OF THE ORANGE
REVOLUTION
A coalition of Our Ukraine and the Party of the
Regions would be just as
incapable of solving the fundamental political
problems confronting the
country as any new version of an Orange bloc
government. In the final
analysis all three-Yushchenko, Tymoshenko and
Yanukovich-represent the
interests of different clans of
oligarchs.
Those in the east of the country, who primarily back
Yanukovich, have closer
links to Russia and the former Soviet economy, while
those in the west have
closer bonds to the US and western Europe.
In
2004, Yanukovich was condemned as an electoral fraud and hunted out
of
office. He was regarded as the natural successor to president Kuchma by
the
Kremlin and by Kuchma himself.
The US and western Europe had
bankrolled the "democratic" opposition, and
financed and backed Yushchenko,
the former head of the central bank and
prime minister under
Kuchma.
His advocacy of "market reforms" aimed at privatisation and the
deregulation
of the economy, together with his promise to distance the
country from
Russia and move closer to the European Union and NATO, made him
the favoured
candidate of the West.
The American government and
Western media supported Yushchenko and Yulia
Tymoshenko-the richest woman in
Ukraine, who had accumulated her fortune as
an energy minister under
Kuchma-at a time when both politicians attacked
Yanukovich's election as
president as fraudulent.
Yushchenko and Tymoshenko base themselves on
pro-capitalist, anti-communist
layers, which were formerly opposed to Kuchma.
Their opposition, however,
was based less on their rejection of growing
repression and pervasive
corruption in the country than on their abiding
desire to enrich themselves.
The sincere opponents of Kuchma were cynically
manipulated by the pair.
Nine months later, the new Orange leadership
collapsed under charges of
mutual corruption. In September, Yushchenko
dismissed the government of his
former ally Tymoshenko and then formed a pact
with his former opponent
Yanukovich, in order to ensure the nomination of
Yuri Yekhanurov as
Tymoshenko's successor in the office of prime
minister.
It was also agreed that a candidate from the Party of the
Regions would
occupy the post of deputy prime minister, while Tymoshenko and
her allies
were denied any important posts.
In so doing, Yushchenko
had recalled representatives of the two most
important clans of Ukrainian
oligarchs-from Dnjepropetrowsk and Donetz-into
government in the same
tradition as his predecessor in office, Leonid
Kuchma.
In less than
three years, the true character of the Orange Revolution-widely
praised in
the West as a breakthrough for democracy and liberty-has been
revealed. In
2004, many Ukrainians still believed that such a movement could
improve their
political and social situation.
Now, broad swathes of the population have
learnt that the entire ruling
elite has completely detached itself from the
masses and is only interested
in its own enrichment.
According to a
current poll, all Ukrainian politicians receive a negative
rating when it
comes to the issue of trust. According to the Ukrainska
Pravda in February
2005, over 50 percent of all Ukrainians thought the
country was headed in the
right direction, while 20 percent thought the new
government and the new
president were worse than their predecessors.
Six months later, the same
polling institute registered more than 60 percent
who regarded the government
and the president to be taking a false course.
An investigation by the
institute showed that in October 2005, support for
the government had fallen
by half-to just 20 percent-and this process is
continuing.
While the
ruling political caste seeks to sing the praises of economic
successes in the
country, the reality for the majority of the population is
very different.
Price increases in basic goods and energy have outstripped
any wage increase
for workers in some industries and public service during
the past two
years.
Foodstuffs and clothes have increased in price, and in particular,
there
have been sharp increases in the price of electricity and fuel.
Inflation
just for the month of September topped 6
percent.
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20
. MRS. YUSHCHENKO MEETS WITH FOREIGN
REPRESENTATIVES
AND INTERNATIONAL ORGANIZATIONS REGARDING THE
HOLODOMOR,
THE MANMADE DEATH BY FAMINE OF 1932-1933
Ukraine 3000 Foundation,
Kyiv, Ukraine, Tue, Oct 9, 2007
KYIV - October 9, 2007, the Ivan Honchar
Museum hosted an informative
meeting, dedicated to the Holodomor Manmade
Famine of 1932-1933, for
foreign states and international organizations
representatives.
The event was organized by the Ukraine 3000
International Charitable Fund as
a part of its History Lessons: Holodomor of
1932-1933 program jointly with
the Ministry of Foreign Affairs.
The
goal of the meeting was providing representatives of the global
community
with comprehensive information on the Holodomor to ensure
recognizing this
tragedy an act of genocide on the bilateral and
international
level.
Among the participants in this event were Head of the Supervisory
Board of
the Ukraine 3000 International Charitable Fund Kateryna Yushchenko,
First
Deputy Minister of Foreign Affairs Volodymyr Ohryzko, Acting Head of
the
Security Service of Ukraine Valentyn Nalyvaychenko, Head of the
National
Memory Institute Ihor Yukhnovsky, Department Head with the Institute
for
Political and Ethno-National Research at the National Academy of Sciences
of
Ukraine and Ph. D. in History Yuri Shapoval, heads of the
diplomatic
missions of over 50 states and foreign organizations
representatives, and
members of the Ukraine 3000 Fund.
Addressing the
audience, Mrs. Yushchenko said, "Ukraine survived a tragedy
of world
proportions. We have looked it in the eyes and have made
conclusions.
We hope that our knowledge will help humanity to avoid similar
tragedy in the
future. We do not want the Holodomor to ever be repeated
anywhere in
any form.
To achieve this, it is necessary that the world learns the
truth about the
Holodomor, and that it recognizes it as an act of genocide. I
am certain
that if the world community reacted adequately to the Holodomor 75
years
ago, humanity would have been able to avoid this catastrophe that took
the
lives of tens of millions of people on various continents."
Mrs.
Yushchenko described the project carried out by the Ukraine 3000 Fund
as a
part of its History Lessons: Holodomor of 1932-1933 program, and voiced
her
hope that the meeting would help those present to learn more about
the
1932-1933 events and draw their conclusions.
Speeches were also
delivered by renowned scholars, politicians, community
leaders, and witnesses
of the tragedy. The guests could also visit the
Destroyed by the Famine: the
Unknown Genocide of the Ukrainians exhibition
prepared by the Ukraine 3000
Fund. The exhibition was premiered in March
2007 in Brussels, at the European
Parliament.
Besides, the audience was invited to taste the "bread of the
famine," cooked
from the ingredients which were used in the years of
Holodomor.
All diplomats received from the Ukraine 3000 International
Charitable Fund
sets of books on the Manmade Famine, published with the
Fund's support.
The set includes The Declassified Memory: The Manmade
Famine of 1932-1933
through GPU-NKVD Documents compiled by Valentyna
Borysenko and Manmade
Famine of 1932-1933 in Ukraine: Documents and Materials
compiled by Ruslan
Pyrih, a CD with materials form the Declassified Memory
exhibition of SSU
materials, and the Holodomor: the Technology of Genocide
film (2005),
directed by Viktor
Deriuhin.
------------------------------------------------------------------------------------------------
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21
. MRS. KATERYNA YUSHCHENKO SPEAKS
IN KYIV ABOUT
THE HOLODOMOR, THE MANMADE FAMINE OF 1932-1933,
AT
AN INFORMATIONAL EVENT FOR THE DIPLOMATIC
CORPS
Ukraine 3000 Foundation, Tuesday, October 9. 2007
Published by the Action Ukraine Report (AUR) #877, Article 21
Kyiv,
Ukraine, Friday, October 12, 2007
Dear Friends,
I am happy to
see you in this hall. I would like to thank everyone who has
come to today's
event. The issue we are discussing today is very
significant for
Ukraine and for the world community.
75 years ago a horrible tragedy took
place on our land. Millions of
Ukrainians were murdered in a famine
which was intentionally organized by
Stalin's regime.
All food was
confiscated, people were denied all means of existence and
survival.
Starving regions of Ukraine and the Kuban were surrounded by
armed forces,
the borders of Ukraine were closed so that no one could escape
and so no
assistance could enter. This was a true war of the communist
regime
against the Ukrainian nation; a terror famine was the chief weapon.
Most
experts confirm that more than 7.5 million people died during
the
Holodomor. Some use even higher figures. But all researchers
agree that
millions were murdered during this 1930s crime.
Imagine
this figure - it is the population of an entire country that ceased
its
existence in less than a year.Each Ukrainian family lost relatives,
loved
ones, friends.
We intentionally chose the wonderful Ivan Honchar Museum
to hold this
event, so that you could see the faces of those people who were
physically
annihilated, the rich and unique culture that they tried to
destroy.
The truth about this crime, its extent and its reasons were
hidden for more
than 50 years from people, and from the world
community. During Soviet
times, even mention of the Holodomor could
mean being put behind bars.
But the Ukrainian people preserved their
historical memory. Only after the
declaration of our independence did
we have the opportunity to appropriately
honor the victims of the
Holodomor.
In thousands of cities and villages throughout Ukraine
memorials were
created. Every month there more are
established.
Experts have researched a huge amount of information.
We are constantly
opening up and making public new facts that prove that the
Holodomor was
part of a criminal policy of the Soviet leadership to destroy
the Ukrainian
nation. Thanks to a great deal of research and
educational work over the
last five years, attitudes in Ukraine toward the
Holodomor have change
significantly.
When the Verhovna Rada in 2006
approved a law recognizing the Holodomor as
an act of genocide, more than 70%
of the population of Ukraine supported the
decision. This was a very
positive signal, since despite regio