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Action Ukraine Report

"THE ACTION UKRAINE REPORT"
In-Depth Ukrainian News, Analysis, and Commentary

"The Art of Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World"

"THE ACTION UKRAINE REPORT" Year 04, Number 117
Action Ukraine Coalition (AUC), Washington, D.C.
Ukrainian Federation of America (UFA), Huntingdon Valley, PA
morganw@patriot.net, ArtUkraine.com@starpower.net (ARTUIS)
Washington, D.C.; Kyiv, Ukraine, FRIDAY, July 16 2004

-----INDEX OF ARTICLES-----
"Major International News Headlines and Articles"

1.UKRAINIAN GDP GROWS BY 12.7 PERCENT IN JANUARY-JUNE
Korrespondent.net web site, Kiev, Ukraine, in Russian 14 Jul 04
BBC Monitoring Service, UK, in English, Thursday, Jul 15, 2004

2. NOKIA WINS EUR125 MILLION CONTRACT IN UKRAINE
The deal represents a new customer for Nokia in this important market
NOKIA news release, Finland, Wednesday, Thursday, July 15, 2004

3. IKEA WANTS IN
Juggernaut multinational furniture retailer IKEA plans to hit Ukraine
By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 15, 2004

4. GERMANS TO FUND NEW AUTOBAHN IN UKRAINE
FROM KYIV TO ODESSA
Viktoria Braychenko, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 15, 2004

5. EBRD LOANS USD 15 MILLION TO CHUMAK COMPANY
[Major foodstuffs producer, outstanding business success story in Ukraine]
By Viktor Riasnyi, Ukrainian News, Kyiv, Ukraine, July 5, 2004

6. CABINET OF MINISTERS APPROVES STATE PROGRAM FOR
EXPANDING UKRAINIAN PRODUCTION OF SOPHISTICATED
FARM EQUIPMENT FOR YEARS 2004-2006
Liudmyla Martynova, Ukrainian News, Kyiv, Ukraine, Tues, July 13, 2004

7. UKRAINE APPROVES AGREEMENT WITH WORLD BANK ON
USD 195 MILLION LOAN FOR LAND DEEDS AND REGISTRY
By Viktor Riasnyi, Ukrainian News, Kyiv, Ukraine, July 5, 2004

8. VIKTOR YUSHCHENKO SURE BAN ON SALE OF UKRAINIAN
LAND WILL BE PROLONGED DESPITE PRESIDENTIAL VETO
UNIAN news agency, Kiev, Ukraine, in Ukrainian, 14 Jul 04
BBC Monitoring Service, in English, UK, Wednesday, Jul 14, 2004

9. PRIME MINISTER NOT IN FAVOR OF EXTENDING MORATORIUM
ON UKRAINIAN LAND SALES FROM YEAR 2005 TO YEAR 2007
Interfax news agency, Moscow, Russia, Friday, July 9, 2004

10. TOTAL RECEIPTS FROM PRIVATIZATION IN 2004 EXCEED UAH
10 BILLION ACCORDING TO STATE PROPERTY FUND
UNIAN, Kyiv, Ukraine, Tuesday, July 13, 2004

11. THERE'S NO APPARENT REASON FOR UKRAINE TO REVERSE
POLICY ON OIL PIPELINE, SAYS U.S. AMBASSADOR JOHN HERBST
By Anna Melnichuk, Associated Press, Kiev, Ukraine, Thur, July 15, 2004

12. UKRAINE TO SUPPLY 2,000 LORRIES TO IRAQ
Interfax-Ukraine news agency, Kiev, in Russian, 14 Jul 04
BBC Monitoring Service, UK, in English, Thursday, Jul 15, 2004

13.UKRAINIAN FOREIGN MINISTER REJECTS EUROPEAN UNION
CONCERN ABOUT DANUBE RIVER CANAL CONSTRUCTION
UNIAN news agency, Kiev, in Ukrainian, 15 Jul 04
BBC Monitoring Service, UK, in English, Thursday, Jul 15, 2004

14. RUSSIAN BLOC PARTY DECIDES TO SUPPORT CANDIDACY
OF UKRAINIAN PRIME MINISTER VIKTOR YANUKOVYCH
Supports Russian to receive the status of a national language
UNIAN news agency, Kiev, Ukraine in Ukrainian, 15 Jul 04
BBC Monitoring Service, UK, in English, Thursday, Jul 15, 2004

15. UKRAINE SIGNS JOINT DECLARATION TO COMBAT AIDS
AP Worldstream, Kiev, Ukraine, Thursday, Jul 15, 2004

16. IF MURDER WON'T WORK, TRY CRYING LIBEL
Her partner was kidnapped and beheaded. Now, charges Ukrainian journalist
Olena Prytula, government using courts to shut down her crusading Web site.
By Katharine Mieszkowski, Senior Writer
Salon.com Technology, Internet Media Company
San Francisco, California, Thursday, July 15, 2004

17. POLISH ORGANIZATIONS CALL FOR EU DECLARATION
ON UKRAINE'S EUROPEAN ASPIRATIONS
"Support for Ukraine's European Aspirations"
Polish Newspaper Rzeczpospolita web site, Warsaw, in Polish 13 Jul 04
BBC Monitoring Service, UK, in English, Tuesday, Jul 13, 2004
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER ONE
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1. UKRAINIAN GDP GROWS BY 12.7 PERCENT IN JANUARY-JUNE

Korrespondent.net web site, Kiev, Ukraine, in Russian 14 Jul 04
BBC Monitoring Service, UK, in English, Thursday, Jul 15, 2004

KIEV - GDP grew by 12.7 per cent year on year in Ukraine in January-June,
the Ukrainian web site Korrespondent reported on 14 July, quoting the
Ukrayinski Novyny news agency.

In June, GDP grew by 19.1 per cent year on year, the agency said. (END)
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER TWO
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2. NOKIA WINS EUR125 MILLION CONTRACT IN UKRAINE
The deal represents a new customer for Nokia in this important market

NOKIA news release, Finland, Wednesday, July 14, 2004

FINLAND - Nokia has signed a turnkey deal worth EUR 125 million with
Ukrainian operator DCC/Astelit to build and operate its GSM/EDGE radio
network. With this frame agreement DCC/Astelit, which is majority owned by
Turkcell, becomes a new customer for Nokia. In a deal expected to last two
years, deliveries of the Nokia base station subsystem (BSS) will start
immediately.

"Nokia is well known as the leader in the telecommunication world.
DCC/Astelit has chosen Nokia as a partner to build its GSM network in
Ukraine, based first of all on our trust in the company's name and our
recognition of the quality of its equipment," said Valeriy Grigorievich
Stepanenko, Chairman of the Supervision Board, CJSC "Digital Cellular
Communication of Ukraine".

"We are proud to provide DCC/Astelit with a GSM/EDGE BSS solution to
quickly achieve high quality network coverage in Ukraine. There is a large
untapped market to be addressed in this country, one of the fastest growing
markets of the region, and we look forward to working with DCC/Astelit
for quick and smooth rollout towards successful service launch," says Jaakko
Myllymäki, Vice President, Networks, Nokia.

Under the agreement Nokia will supply its complete GSM/EDGE base station
subsystem, which can be smoothly upgraded to 3G WCDMA. In addition
Nokia will provide turnkey implementation of the network, including site
acquisition, civil works, network planning, implementation and project
management for fast quality ramp-up of the solution.

Nokia is also providing its operations start-up package to support
DCC/Astelit in starting and developing its operations competencies and
procedures for the network for the first six months. Nokia Care services,
including software maintenance, emergency support and hardware services
as well as training will help keep the network running at peak performance.

Nokia can draw on its over 15-year track record of implementing and
operating networks and its extensive practical experience of implementing
mobile services for operators. Nokia has contracted operating services for
20 operators globally, in addition to providing full turnkey implementations
for a total of 25 customers in 21 countries.

ABOUT NOKIA
Nokia is the world leader in mobile communications, driving the growth and
sustainability of the broader mobility industry. Nokia is dedicated to
enhancing people's lives and productivity by providing easy-to-use and
innovative products like mobile phones, and solutions for imaging, games,
media, mobile network operators and businesses. Nokia is a broadly held
company with listings on five major exchanges.

ABOUT DDC
The company "Digital Communication of Ukraine" (DCC) was founded in
1995 in Donetsk. The first digital cellular communication technology
appeared in Ukraine in 1996 with the launch of DCC's network in Donetsk.
DCC has the licenses for cellular, long-distance & international
communication, and its network was constructed on the basis of the American
D-AMPS digital standard.
Now DCC provides services in Kyiv, Donetsk, Dnipropetrovsk, Kharkiv,
Odessa, Luhansk, Zaporizhza & in the regions of those cities, as well in
Simferopol & Crimea. DCC also provides roaming services for travelling
subscribers in CIS countries. For subscribers travelling overseas, the
company provides beneficial conditions for handset leasing with
communication services in 58 countries. The company now provides services
to more than 80 000 subscribers.
DCC has joined the International Association of DAMPS operators as a
Ukraine representative. The equipment used in its networks allowed DCC to
be among the countries which use advanced digital cellular communication
technologies.
Media Enquiries: Communications. Networks, Nokia
Tel. + 358 (0) 7180 38198. E-mail: networks.communications@nokia.com
Nokia Communications, Tel. +358 7180 34900, E-mail:
press.office@nokia.com, www.nokia.com
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER THREE
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3. IKEA WANTS IN
Juggernaut multinational furniture retailer IKEA plans to hit Ukraine

By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 15, 2004

Juggernaut multinational furniture retailer IKEA plans to hit Ukraine hard
in the near future, amping up local production and building the retail
outlets and shopping centers it needs to sell its brand.

Swedish IKEA founder and current senior consultant Ingvard Kamprad says
the company's operations in Ukraine will resemble those in Russia, where in
recent years it has pumped hundreds of millions of euros into building IKEA
retail stores and the IKEA-built shopping malls - lavish consumer and
entertainment complexes - that support them. The Swedish company also plans
to open a third production facility in Zakarpattya oblast, where it already
employs 3,000 people at its own saw mill and furniture production plant.

"Ukraine will be a part of the European Union and it is really a big
interest of ours to develop our relationship with Ukraine," Kamprad said
July 13, days after a short Ukrainian visit. During the July 7-9 visit, his
first to Ukraine, he met with President Leonid Kuchma to discuss investment
opportunities in the country.

"The shopping center alone would involve roughly 250 million euros ($308
million) in investment," Kamprad added.

For nearly 10 years IKEA has operated the saw mill and a furniture plant in
Zakarpattya oblast, but its well-known furniture outlets and shopping
centers remain to be seen. The Dutch-registered conglomerate has not yet
built any such stores or entertainment complexes in Ukraine, such as those
it developed in recent years in Russia, but Kamprad told the Post July 13
his company would like to open a third production facility in Zakarpattya
and launch a retail business in the country soon.

The all-in-one malls IKEA is developing in Russia are comprised of IKEA
stores, DIY stores, hypermarkets, retail boutiques, a food court and movie
theaters.

Irena Vanenkova, a spokesperson for IKEA in Moscow, said the company has
expanded steadily in Russia since opening its first store in Moscow in March
2000. The second IKEA store opened in December 2001 and was followed
by a MEGA shopping mall, which opened in December 2002.

IKEA, which has invested nearly $500 million in Russia since 2000, owns four
stores in Russia: two in Moscow, one in St. Petersburg and one in Kazan.
"Another shopping mall will open this December and we have about 12
additional projects which we would like to develop in Russia," Vanenkova
said. IKEA would like to apply the concepts used in Russia in its expansion
efforts in other CIS countries, she added.

The IKEA network consists of more than 180 stores in more than 30 countries.
It posted sales of more than $9 billion last year with retail sales in
Europe accounting for the majority of sales.

FOREIGN RETAILERS

Germany's Metro Cash & Carry, a large wholesaler that owns membership-
only hypermarkets, opened its first retail outlet in Teremky district of
Kyiv last year. Like IKEA, Metro is pushing forward with expansion plans
that involve more stores in Kyiv and other Ukrainian cities, but has faced
hurdles from local retailers who feel threatened by Metro and its
competitive price policies. Since Metro opened its first store, local
retailers have lobbied Kyiv city officials, urging them to halt Metro's
expansion and not issue Metro with plots of land on which to build new
outlets.

IKEA's plans to develop shopping malls in the country are also expected to
clash with the interests of local business groups, which have in recent
years built shopping malls throughout the country.

The arrival of IKEA's retail furniture outlets could also pose stiff
competition for a handful of Ukrainian furniture retailers, such as current
market leader Merx-Mebli, majority owned by the former Economy Minster
Valery Khoroshkovsky. Merx-Mebli is just part of Khoroshkovsky's business
empire, which includes Ukrsotsbank, one of Ukraine's top five banks in
network size and assets.

Officials at Merx-Mebli would not reveal their company's fiscal status, but
they did say the company has more than 35 furniture stores throughout
Ukraine. Director of Merx Mebli Yury Zboyev says IKEA will be a big,
but not feared competitor.

"We're happy that IKEA is entering our market, as they will help bring more
competition to the market - competition needed to help [the market]
develop," he said. Zboyev cited IKEA's low furniture prices as an added
option for Ukrainian consumers. "They will immediately affect the segment of
the market that is looking for less expensive furniture, but those looking
for high quality furniture will remain loyal to our company," Zboyev
insisted.

Kamprad said he was well aware of the hurdles IKEA could face in Ukraine,
though he remains impressed with how economically developed the country is.
"I had a very good meeting with Kuchma," Kamprad said. "I think we will get
all the information and support we need. "Of course it's a long road and
there are many problems in the country, but a lot of investment is needed,"
he said, adding, "I was delighted with everything I saw." (END) (ARTUIS)
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER FOUR
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4. GERMANS TO FUND NEW AUTOBAHN IN UKRAINE
FROM KYIV TO ODESSA

By Viktoria Braychenko, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 15, 2004

Germany's Deutsche Bank has approved a $480 million loan to Ukraine's
Transportation Ministry to rebuild a stretch of the high-speed toll road
connecting Kyiv and Odessa. The funds will also be used to construct a
toll-free alternative road.

"The Ministry received the Hr 2.5 billion ($480 million) loan on July 8. The
money has already been transferred," Interfax-Ukraine quoted Transportation
Minister Heorhy Kirpa as saying on July 12. Construction of the highway,
which has been stalled for months due to lack of funds, was resumed July 12.

"About Hr 1.35 billion has been spent by the Ministry on the construction
project, but [before the Deutsche Bank loan] we had only been reimbursed Hr
920 million. This led to a delay in construction," Kirpa said.

When the four- to six-lane highway is complete, it will operate under a toll
system. Revenues generated through toll payments will go toward repaying the
Deutsche Bank loan. Cars and trucks will be charged Hr 0.12 and Hr 0.31 per
kilometer, respectively, to travel along the 454-kilometer route between
Kyiv and Odessa. (END) (ARTUIS)
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER FIVE
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5. EBRD LOANS USD 15 MILLION TO CHUMAK COMPANY
[Major foodstuffs producer, outstanding business success story in Ukraine]

By Viktor Riasnyi, Ukrainian News, Kyiv, Ukraine, July 5, 2004

KYIV - The European Bank for Reconstruction and Development (EBRD)
has loaned USD 15 million to Chumak company (Kherson region), a major
foodstuffs producer, for it to purchase equipment and to expand its
sunflower oil production. This was reported in a statement of the EBRD.

According to the statement, USD 10 million is offered as long-term financing
of the equipment, and USD 5 million as short-term financing for purchase of
sunflower seeds. The loan terms would not be divulged. Chumak uses mostly
Ukrainian raw materials in its production.

As Ukrainian News earlier reported, Chumak was created by the South Food
Swedish company in a row with a couple of Kherson plants in 1996, and in
2000 the company's plants were consolidated into the closed joint-stock
company named Chumak. (END) (ARTUIS)
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER SIX
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6. CABINET OF MINISTERS APPROVES STATE PROGRAM FOR
EXPANDING UKRAINIAN PRODUCTION OF SOPHISTICATED
FARM EQUIPMENT FOR YEARS 2004-2006

By Liudmyla Martynova, Ukrainian News, Kyiv, Ukraine, July 13, 2004

KIEV - The Cabinet of Ministers has approved the State Program for
Expanding Production of Sophisticated Farm Equipment for 2004-2006.
Industrial Policy Minister Oleksandr Neustroev disclosed this to
journalists.

In his words, the program envisages perfecting the domestically produced
Slavytych grain harvesters and the tractors of the Kharkiv tractor plant and
the Pivdenmash association.

In particular, the program envisages making improvements to the quality of
the engines and axles for the tractors and harvesters, which in the words of

Neustroev, are considered today as the "sore spot" for domestically produced
farm equipment.

The minister said that a total of UAH 587.3 million has been envisaged for
financing the program, including UAH 331.3 million from the government
budget.

In 2004, the program will be financed with the use of the financial
resources of the enterprises, as well as with loans from banks and
investment funds of shareholders.

In all, UAH 77 million is envisaged in 2004, funds will be envisaged in the
state budget for this program from 2005. As Ukrainian News reported
previously, the Cabinet of Ministers had announced plans to enhance support
for producers of agricultural equipment. (END) (ARTUIS)
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7. UKRAINE APPROVES AGREEMENT WITH WORLD BANK ON
USD 195 MILLION LOAN FOR LAND DEEDS AND REGISTRY

By Viktor Riasnyi, Ukrainian News, Kyiv, Ukraine, July 5, 2004

KYIV - President Leonid Kuchma has signed the agreement between Ukraine
and the World Bank on provision of a loan of USD 195.13 million for issuance
of land deeds in rural areas and development of a national cadastre, which
the parliament has already approved. The presidential press service
disclosed this to Ukrainian News.

The parliament ratified the agreement by 290 votes; only 226 votes were
required for its ratification. The agreement provides for provision of the
loan at the interest rate of 1%, with the interest on it payable on January
15 and July 15 of every year.

Ukraine undertook to annually pay the WB a duty equal to 75% of 1% of
the loan principal. The agreement provides for financing privatization of
state and collective land through transfer of land parcels to employees and
pensioners of enterprises.

The agreement also provides for allocation of land parcels to employees and
pensioners of agricultural enterprises, issuance of state deeds for land to
them.

The agreement also provides for using the loan to finance the restructuring
of agricultural enterprises into more efficient units, finance development
of a national cadastre, and establish property rights for land.

As Ukrainian News earlier reported, the WB signed an agreement with the
State Committee for Land Resources in 2003 on providing a loan of USD
195.13 million for establishing a national cadastre and title registry
system in Ukraine, as well as for drawing up a cadastral map of the entire
territory of Ukraine and issuing government land deed in rural areas.

The loan was provided for 20 years at an interest rate equal to the LIBOR
rate for single-currency loans.

The State Committee for Land Resources has issued state deeds for land
to 4 million farmers or 59% of holders of land ownership certificates.
Ukraine has 41.8 million hectares of agricultural land (69.3% of the entire
Ukrainian territory), including 33 million hectares of arable land. (END)
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER EIGHT
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8. VIKTOR YUSHCHENKO SURE BAN ON SALE OF UKRAINIAN
LAND WILL BE PROLONGED DESPITE PRESIDENTIAL VETO

UNIAN news agency, Kiev, Ukraine, in Ukrainian, 14 Jul 04
BBC Monitoring Service, in English, UK, Wednesday, Jul 14, 2004

KIEV - Viktor Yushchenko, the leader of the Our Ukraine bloc, is sure that
the presidential veto placed on the law which prolongs the moratorium on the
buying and selling of land will be defeated.

Yushchenko's press service reports that commenting on the presidential veto
against introducing changes to the Land Code, Yushchenko stressed that if
the moratorium on selling land is not prolonged, "we will once again make
the same mistake as was made with voucher privatization when several
families bought up everything for a pittance. We will definitely defeat the
veto. Land should belong to people who work on the land and not to two or
three latifundists".

Yushchenko is convinced that in the future land should, without any doubt,
become a commodity, as this is general world practice. However, he said that
"under the current authorities the moratorium cannot be suspended" and that
"today, the privatization of land is one of the biggest points of
speculation of the authorities.

Everyone who is connected to the land and who works on it, in accordance
with Ukrainian legislation, should be a landowner. However, a land market
has not been formed in Ukraine yet, and if privatization were to be allowed
in this sector, then tomorrow we shall have several plantation owners who
will simply buy up all he land for a pittance."

Yushchenko also stressed that Ukrainian peasants should be real landowners
only when they have a state document stipulating this. [Passage omitted:
reiterates need for such documents]

On 17 June, the Ukrainian Supreme Council [parliament] adopted amendments
to the Land Code which envisage that the owners of land plots do not have
the right to sell them before 1 January 2007, but can only exchange or
bequeath them. On 8 July the president vetoed these amendments. (END)
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER NINE
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9. PRIME MINISTER NOT IN FAVOR OF EXTENDING MORATORIUM
ON UKRAINIAN LAND SALES FROM YEAR 2005 TO YEAR 2007

Interfax news agency, Moscow, Russia, July 9, 2004

KIEV -Ukrainian Prime Minister Viktor Yanukovych said during a working
trip to Donetsk region that creating a land market in Ukraine would help
create the necessary conditions for normal crediting in the agricultural
sector, the government's press service reported.

Talking about prospects for extending the moratorium on selling agricultural
lands, Yanukovych said that "I think Ukraine has to look to the future, so
we need a land market, as it is a necessary condition that would allow for
crediting in the agricultural sector."

Yanukovych also said that there are different opinions on vetoing the
moratorium on land sales, and that the question should not be politicized.
He added that a conscientious and careful approach is needed to create a
normally functioning land market in Ukraine. "In this issue, it is important
that we not turn farmers into farmhands," Yanukovych said.

[Ukrainian President Leonid Kuchma vetoed a law on 8 July that proposed
prolonging the moratorium on land sales until 1 January 2007 - UNIAN news
agency, Kiev, in Ukrainian 1014 gmt 8 Jul 04] (END) (ARTUIS)
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ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER TEN
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10. TOTAL RECEIPTS FROM PRIVATIZATION IN 2004 EXCEED UAH
10 BILLION ACCORDING TO STATE PROPERTY FUND

UNIAN, Kyiv, Ukraine, Tuesday, July 13, 2004

KYIV - Chairman of the State Property Fund of Ukraine Mykhailo
Chechetov forecasts that in 2004 the receipts from privatization
will exceed UAH 10 billion [hryvna][approximately $2 billion USD].
He has said it to journalists today.

"The receipts from the privatization will be more than during the whole
history of privatization in Ukraine", said he.

In his words, as of today, the total sum of receipts from privatization,
taking into account means from the sale of "Pavlohradvuhillya", makes
UAH 6.8 billion, and, till the end of the year, it is planned to sell such
large objects as "Ukrrudprom" and "Ukrtelecom". (END)(ARTUIS)
-----------------------------------------------------------------
FOOTNOTE: Heard on the street in Kyiv: The real reason for the rush
to sell and thus privatize large state assets in 2004 is twofold. The first
reason for the "fire sale" is to allow oligarchs buy key state assets at
very low prices before the October presidential election. The second
reason for the "fire sale" is to give the government of Ukraine a large
amount of extra funds they can use to make various social and wage
payments to millions of voters in September and October, again right
before the presidential election at the end of October.
=========================================================
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11. THERE'S NO APPARENT REASON FOR UKRAINE TO REVERSE
POLICY ON OIL PIPELINE, SAYS U.S. AMBASSADOR JOHN HERBST

By Anna Melnichuk, Associated Press, Kiev, Ukraine, Thur, July 15, 2004

KIEV, Ukraine - U.S. Ambassador to Ukraine John Herbst on Wednesday
questioned the Ukrainian Cabinet's decision to open a never-used pipeline
for shipments of Russian oil, instead of pumping European-bound shipments
from the Caspian Sea region.

"Shipment of oil from the Caspian Sea to Europe would be a great step toward
Ukraine's independence in the energy sector," Herbst said in Russian during
a telephone conference with readers of the Fakty daily newspaper. The U.S.
Embassy press office confirmed the quotes. "There is no apparent reason to
reverse the flow," he said.

Ukraine's government in February approved the use of its prized US$500
million pipeline to move oil from Kazakhstan and Azerbaijan to western
European markets instead of running Russian crude in the opposite direction.
But the government reversed itself last week.

The February decision had been seen as a victory for Washington, which
staunchly opposed reversing the flow, warning it would increase this former
Soviet republic's dependence on Moscow and the chances of a major oil spill
in Turkey's already clogged Bosporus Strait. Sending the oil westward would
also benefit Caspian Sea suppliers, such as the American oil behemoth
ChevronTexaco which controls one of the world's largest oil deposits in
Kazakhstan.

Herbst urged Ukraine's government to explain why they reversed their
decision so that "Ukrainian people can see the reasons for taking such a
decision."

The Cabinet has said the reversal is temporary, blaming it on technical
problems involved in pumping crude to Poland and Germany. Ukraine also
plans to extend the existing pipeline from Brody to the Polish town of
Plotsk, a move which would enable the flow of oil to European customers.

Last week Ukraine's state-owned pipeline operator Ukrtransnafta launched
an initiative aimed at creating a joint venture with the Poland's Przyjazn
oil company to complete the 300-mile extension for the estimated cost
of some $500 million.

Ukraine built the 413-mile long Odessa-Brody pipeline in 2001, but it has
remained idle due to bickering between exporters of Russian and Caspian oil.
Oil companies from Russia's Ural Mountains plan to use the pipeline to pump
their lower-grade oil from the Ukraine's western terminal in Brody to the
Black Sea port of Odessa. (END) (ARTUIS)
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12. UKRAINE TO SUPPLY 2,000 LORRIES TO IRAQ

Interfax-Ukraine news agency, Kiev, in Russian, 14 Jul 04
BBC Monitoring Service, UK, in English, Wednesday, Jul 14, 2004

KIEV -The AvtoKrAZ holding (Kremenchuh, Poltava Region) and the state
company Specialized Foreign Trade Firm Progress [arms exporter, subsidiary
of Ukrspetseksport] have signed a contract to supply about 2,000 KrAZ
vehicles to Iraq over two years as part of a post-war rebuilding programme.

The first shipment of KrAZ vehicles will be delivered at the end of July,
the company's press service said.

The press release said that KrAZ lorries had been adapted to Iraq's climate.
Most of the shipments, about 1,600 lorries, will be the basic KrAZ-6322 with
the 6x6 configuration, which is a modernized KrAZ-260 off-road vehicle.

The contract also envisages supplying fuel lorries and repair-evacuation
vehicles to Iraq. Some 120 Ukrainian and 25 Russian companies are involved
in the production of vehicles as part of the Iraqi project.

AvtoKrAZ is the only producer of lorries in Ukraine. It produces about 27
models and 150 various modifications of lorries for all the sectors of
business and the armed forces. [Passage omitted: KrAZ sales statistics]
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13. UKRAINIAN FOREIGN MINISTER REJECTS EUROPEAN UNION
CONCERN ABOUT DANUBE RIVER CANAL CONSTRUCTION

UNIAN news agency, Kiev, in Ukrainian, 15 Jul 04
BBC Monitoring Service, UK, in English, Thursday, Jul 15, 2004

KIEV - Ukrainian Foreign Minister Kostyantyn Hryshchenko has said that the
construction of the Danube-Black Sea canal will have no adverse impact on
the environmental situation in the region. Hryshchenko said this at a news
conference, commenting on the EU's warning Ukraine about the need to halt
the construction of the canal until a final environmental expert conclusion.

"This is not about constructing a canal but about resuming the functioning
of something which has long been in existence. Therefore, there can be no
talk at all that the environmental situation in the Danube delta has been
changing," he said.

Hryshchenko noted that the Ukrainian side provided the EU with all
explanations from the outset of the canal's restoration. During his stay in
Bucharest yesterday [14 July], Ukrainian Deputy Foreign Minister Oleksandr
Motsyk, too, made the Ukrainian position known both to EU representatives
and to all attendees of the Danube cooperation conference.

"Romania has three navigation canals. We are only restoring something that
is absolutely necessary for the revival of the region, which is in a
depressed state," the minister said, adding that the Biosfera [biosphere]
natural reserve has substantially been enlarged in the years of Ukraine's
independence [since 1991], with a decree of Ukrainian President Leonid
Kuchma.

Hryshchenko also said that Ukraine has been taking all measures for the
reserve to remain an important part of the environmental future of our state
and of Europe and to ensure that not only Ukrainian cargo ships but also
European transport routes in general could function efficiently and in
compliance with all environmental standards.

On 14 July the European Union asked Ukraine to suspend the construction
of a navigation canal in the Danube delta until ecologists fully examine the
aftermath of navigation through the Ukrainian canal. Earlier, Romania
protested against the project, while two months ago the United States
reminded the Ukrainian government that the area was given UNESCO
protection and was recognized as an environmental zone at the request
of the Ukrainian government itself. (END) (ARTUIS)
========================================================
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14. RUSSIAN BLOC PARTY DECIDES TO SUPPORT CANDIDACY
OF UKRAINIAN PRIME MINISTER VIKTOR YANUKOVYCH
Supports Russian to receive the status of a national language

UNIAN news agency, Kiev, Ukraine in Ukrainian, 15 Jul 04
BBC Monitoring Service, UK, in English, Thursday, Jul 15, 2004

KIEV - UNIAN has learnt from a statement issued by the political executive
committee of the Russian Bloc party that it will support the candidacy of
Ukrainian Prime Minister Viktor Yanukovych. The statement says that
Yanukovych "is capable of resolving the most pressing tasks faced by the
state and society".

In particular, it states that it is certain that "having become the
president of Ukraine, Mr Yanukovych will do everything in his power so that
the Ukrainian people flourish and Ukraine becomes a strong and successful
state".

In setting out its stance, the political executive committee of the Russian
Bloc party emphasizes: "The people need genuine prosperity and clear,
comprehensible prospects. They can only be fulfilled by a president who is
capable, not conflict with world or European bodies, to ensure fundamental
cooperation with Russia and Belarus, and who has the will to ensure
Ukraine's participation in the Single Economic Space [bloc, with Belarus,
Kazakhstan and Russia] as a fully-fledged member with equal rights.

The statement says that this will enable the living standards of Ukrainians
to be raised, allow the Russian language to receive the status of a national
language, allow the fully-fledged development of Russian culture and renew
the education system in Russian and strengthen the unity of the canonical
status of the Orthodox church language. The latter is the basis of Eastern
Slavic spiritual unity and will promote the harmonization of inter-ethnic
relations. (END) (ARTUIS)
=======================================================
ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER FIFTEEN
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15. UKRAINE SIGNS JOINT DECLARATION TO COMBAT AIDS

AP Worldstream, Kiev, Ukraine, Thursday, Wednesday, Jul 14, 2004

KIEV - Facing one of the fastest growing AIDS infection rates in the world,
Ukraine joined an international alliance to battle the disease, Ukrainian
health officials said Wednesday.

By joining the alliance, "Ukraine has recognized that the AIDS epidemics has
exceeded the dimensions of a medical problem" and that it affects this
ex-Soviet republic's social and economic development and causes irreparable
consequences for society, a statement obtained by The Associated Press said.

Brazil, Russia, China, India, South Africa, Thailand, Nigeria and Ukraine
are to formally sign the joint declaration during the 15th International
AIDS Conference in Bangkok, which opened Sunday, UNAIDS officials in
Kiev said.

The declaration stresses the need for experience sharing in combatting AIDS,
providing easy access to modern treatments for those affected and improving
research aimed at producing effective vaccines, the Health Ministry said.

Ukraine has the highest HIV infection rate in Eastern Europe, with some
500,000 people _ 1 percent of the population _ affected. Infection rates
here have grown 20 times in the last five years, mostly among young people.

More than 60,000 Ukrainians are officially registered as HIV-positive, but
the United Nations estimates that infection rates are 10 times higher. An
estimated 38 million people are infected with HIV worldwide, mostly in poor
countries. (am/av/mb) (END) (ARTUIS)
=======================================================
ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER SIXTEEN
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16. IF MURDER WON'T WORK, TRY CRYING LIBEL
Her partner was kidnapped and beheaded. Now, charges Ukrainian journalist
Olena Prytula, the government is using the courts to shut down her crusading
Web site.

By Katharine Mieszkowski, Senior Writer
Salon.com Technology, Internet Media Company
San Francisco, CA, Thursday, July 15, 2004

The beheading of Georgi Gongadze, a crusading journalist who uncovered
corruption and cronyism in the Ukrainian government, couldn't silence
Ukrayinska Pravda, the muckraking Web site he founded.

But almost four years after the 31-year-old's headless body was discovered
in a ditch in a suburb of Kiev, a libel lawsuit threatens to do what murder
couldn't achieve: shut Ukrayinska Pravda down. The plaintiffs are contesting
articles that allege their involvement in a coverup of who was really behind
the murder of Gongadze.

The details are murky, as the plaintiffs were unavailable for comment to
elaborate on the details of their lawsuit. But the key point, according to
Olena Prytula, the editor in chief and co-founder of the Web site, is that
the lawsuit isn't just demanding a retraction but is also aiming to close
down the publication. And the timing for that couldn't be better for the
very same politicians against whom the Web site has been on the warpath:
A national election in October will determine the successor to President
Leonid Kuchma, who is accused by a former bodyguard of personally
ordering Gongadze's killing.

For now, Ukrayinska Pravda, powered by a half-dozen journalists and led
by Prytula, is still publishing articles that rip into Kuchma's loyalists
with headlines like "Who Really Wears Pampers in Ukrainian Politics?" and
"10 Ways Ukraine Is a Neo-Soviet Country." The notoriety of the Gongadze
case has been a protection of sorts -- any further heavy-handedness would
spur more worldwide attention to an already controversial case. Still,
Ukrayinska Pravda's breed of outspoken opposition journalism is unusual
in the post-Soviet Ukraine, which suffers from state censorship of its
broadcast and print media.

"Internet was and still is the only place without censorship," explains
Prytula, sipping coffee in a Starbucks in San Francisco. Overseeing the site
remotely while on a John S. Knight fellowship at Stanford University,
Prytula is an athletic-looking, fair-skinned blonde who recently hiked the
Inca Trail to Machu Picchu and enjoyed the strenuous trek so much she
wants to do it again. But instead, she will return to Ukraine at the end of
July to fight the lawsuit and continue covering the run-up to the election.

The tale of Gongadze, Prytula, Kuchma and Ukrayinska Pravda reads like a
1950s film noir plot transplanted into a 21st century post-Soviet morass.
Parts of the story have been well reported, but the twists just keep on
coming. In the years since Gongadze's death, as his lurid murder remained
unsolved, secret tapes made by a former presidential bodyguard, who now has
asylum in the United States, surfaced suggesting that Kuchma himself ordered
the killing. The government argued that the tapes had been doctored to put
words in Kuchma's mouth. Then, a key witness in the case mysteriously died
in police custody, and his body was quickly cremated. Now, the government
claims to have a confession, although they refuse to name the killer,
calling him only "K."

"They said nothing about him, just that he is in prison, and he will be
there for the rest of his life because he murdered several people," says
Prytula. "Nobody believes it."

OLD SOVIET TACTICS REBORN

When Gongadze went missing, his disappearance, followed by the
circumstances of his death, became a national cause célèbre, prompting
protests in the streets that continued for years. In Ukraine, an agrarian
country of some 50 million people, most of whom do not have Internet
access, the story of the beheaded Internet journalist who'd taken on the
government, and perhaps been murdered for his stance, spread beyond
computer screens.

For months, Prytula found herself with state-funded bodyguards. But if the
state had been responsible for the death of her partner, who were they
protecting her from? Paradoxically, the attention following Gongadze's death
meant that Ukrayinska Pravda was untouchable, and it continued to publish
as it liked.

"It's been a very well publicized case, and it seems as if that's one of the
reasons why the authorities have kept their hands off this Internet site,
because it would have been pretty obvious if they had stifled it," says Nina
Ognianova, a research associate for Europe and Central Asia for the
Committee to Protect Journalists.

"Over the past three and a half years, the authorities did not dare to
undertake any serious attempts to pressure the Ukrayinska Pravda," stated
a May 22, 2004, editorial on the site. Then came the libel suit, which the
editors consider an indirect attack from the government. In the editorial,
titled "We Shall Overcome," the editors reiterated their argument that the
plaintiffs in the case against them are agents of the presidential chief of
staff who were involved in covering up a presidential involvement in the
Gongadze murder.

But libel isn't really the issue, Prytula argues. A contentious presidential
election, scheduled for Oct. 31, is fast approaching, and the journalists at
Ukrayinska Pravda are convinced the case is simply another attempt by the
government to silence them. Prytula also maintains that it will be
impossible for Ukrayinska Pravda to get a fair hearing in the court that
will be hearing the case.

"They [the plaintiffs] want not just money from us. They also want to arrest
all our bank accounts, and all our computers," Prytula says. Pointing out
that the two plaintiffs in the case are supposedly journalists, she adds:
"If the truth is the most important thing, why do you want to arrest all our
computers and bank accounts?"

The editorial says that one of the plaintiffs, Maria Sambur, then working
for another site, the Institute of Mass Information, doctored the letters of
the witness in the Gongadze case who died in jail. The omitted passages
allegedly accused Kuchma of involvement in the case.

The plaintiffs, Sambur and Valeriy Vorotnik, did not respond to requests
to be interviewed for this article.

"It's a common technique in the former Soviet Union to try to cripple media
outlets that are very critical of the government or associated with the
political opposition by filing for civil damages, and by the granting of
really prohibitive civil damages," says Rachel Denber, acting director of
the Europe and Central Asia Division of Human Rights Watch. "Sometimes
the damages awarded seem more aimed at crippling the outlet than at
redressing a tort -- a civil wrong."

But the Committee to Protect Journalists, a group that has sharply
criticized the Ukrainian government for its treatment of journalists -- it
named Kuchma one of the 10 worst enemies of the press in 2001 in part
because of the Gongadze murder-- cautions against assuming that the
lawsuit against the site is an example of the nefarious workings of the
government's tightening grip.

"So far there hasn't been anything out of the ordinary in the case,"
Ognianova says. "It seems like it's a case in which two private citizens are
looking for civil redress," although she does say that her organization is
monitoring it. "Because it's a civil claim we have to really wait and see
how the courts will react and whether they will make a fair decision."

"I'M NOT AFRAID TO DIE"

The government's statement that the killer has been found and is already in
prison seems a little too convenient to most observers of the case,
especially following on the heels of a story in the London-based Independent
uncovering new evidence that Kuchma sought to impede the investigation.

The prosecutor's official announcement of a break in the case has been
eyed askance by international watchdog groups. "We urge the prosecution
to pursue every lead in the case and to investigate fully allegations
involving President Kuchma," said Ann Cooper, the executive director of
the Committee to Protect Journalists, in a statement.

"We do not know who killed Gongadze, but we know there have been
serious failures in the way that the case has been investigated," writes
Simon Pirani, chairman of the London Freelance branch of the National
Union of Journalists, in an e-mail. "If Gongadze's killers get away with it,
this will be a green light to bullies and dictators all over Europe to kill
journalists as and when they please. The assassination of the investigative
journalist Paul Klebnikov in Moscow last week shows that the danger
persists."

The atmosphere for journalism in Ukraine is becoming ever more stifling,
as witnessed by the recent closing of two radio stations. "We just feel the
grip around the media is getting tighter and tighter," Ognianova says. "It
just seems as if the government is trying to stifle opposition voices right
around election."

Does that make Prytula apprehensive about going back to Ukraine after
her lengthy sojourn in the United States? Is she afraid for her own life?

Absolutely not. "I'm not afraid of death," she says. "Georgi's death taught
me that that I have to enjoy every moment of my life, because it maybe the
very last second." (END) (ARTUIS)
--------------------------------------------------------------------
About the writer: Katharine Mieszkowski is a senior writer for Salon
Technology. Photograph: Olena Prytula and Georgi Gongadze
[Hanya Krill of Brama-Gateway Ukraine]
---------------------------------------------------------------------
http://www.salon.com/tech/feature/2004/07/15/ukrayinska_pravda/index.html
=========================================================
ACTION UKRAINE REPORT-04, No. 117: ARTICLE NUMBER SEVENTEEN
=========================================================
17. POLISH ORGANIZATIONS CALL FOR EU DECLARATION
ON UKRAINE'S EUROPEAN ASPIRATIONS

"Support for Ukraine's European Aspirations"
Polish Newspaper Rzeczpospolita web site, Warsaw, in Polish 13 Jul 04
BBC Monitoring Service, UK, in English, Tuesday, Jul 13, 2004

WARSAW - A number of Polish non-governmental organizations have
appealed for "bold and distinctive initiatives [to] be undertaken in the
forum of the EU" on the future European prospects of Ukraine. They
ave also prepared a draft set of proposed tenets for an EU resolution
on Ukraine and the forthcoming Ukrainian presidential elections.

The following is the text of an open letter to President Aleksander
Kwasniewski signed by non-governmental organizations in Poland, the letter
itself dated 23 June 2004 and entitled "Support for Ukraine's European
aspirations", as carried by Polish newspaper Rzeczpospolita web site on 13
July:

The community of civil organizations and initiatives, for years engaged in
cooperating with our eastern neighbours, and in particular in the process of
Polish-Ukrainian reconciliation and supporting Ukraine's European
aspirations, perceives our country's membership in the EU as a great
opportunity. We want Poland to become a key co-creator of the EU's
neighbour policy, now emerging, although in our opinion this demands
that bold and distinctive initiatives be undertaken in the forum of the EU.
This year, Ukraine faces a great challenge - presidential elections will
demonstrate to what extent this country's democratic and European prospects
are real. In our opinion, Europe's voice should not be missing in this
regard.
We are appealing for Poland, together with the countries of the Visegrad
Group, to come forth in the EU forum with an initiative to have the Council
of the European Union adopt a political declaration on the issue of Ukraine.
We are proposing for the declaration to express the EU's explicit support
for Ukraine's European aspirations, by outlining a realistic path to
membership and showing the prospects for corporation and integration in
those spheres that are truly important to Ukraine. The declaration should
the same time call for absolute respect of the rules of democracy in the
upcoming elections, and observance of human rights. In an attachment
[below], we present the tenets that, in our opinion, could be included in
such declaration.
We are sending the present letter to the president of the Polish Republic,
the chairman of the Council of Ministers, the minister of foreign affairs,
and the Speaker and deputy Speakers of the Sejm [lower house of parliament]
of the Polish Republic. We are also making its content available to the mass
media.
On behalf of the Abroad Group ["Grupa Zagranica"], Jakub Boratynski.
The letter is signed by the following member organizations of the Abroad
Group: Caritas Polska,
The CASE Socio-Economic Analysis Centre, The St M. Maksymilian Kolbe
House of Reconciliation and Meetings, The European House of Meetings -
The Nowy Staw Foundation, The International Relations Centre Foundation,
The Education for Democracy Foundation, The Stefan Batory Foundation,
The Socioeconomic Initiative Foundation, The Social Communication
Foundation, The Local Democracy Development Foundation, The Polish-
Czech-Slovak Solidarity Foundation, The "Happy Childhood" Foundation,
The Helsinki Foundation for Human Rights, The Public Affairs Institute,
The Strategic Studies Institute, The Eastern Europe Collegium,
The Malopolska Education Association, The PAUCI / Freedom House,
Polish Humanitarian Action, The Polish Medical Mission,
The Polish-American Foundation for Freedom, The Association of Educators,
The "One World" Association, The School of Leaders Association,
The Democratic East Association, The Eastern European Democratic Centre,
as well as
The LIBERTOS Foundation for Intergovernmental Cooperation,
The National Polish Committee for Youth Accord in the Bug River Euroregion,
[Attachment:]
EU POLITICAL DECLARATION ON UKRAINE-Draft
Tenets:
1. Upon the expansion of the EU, Ukraine has become one of the largest and
most important neighbours and partners of the EU. The EU has a vital
interest in Ukraine being perceived as a stable, democratic, and dynamically
developing European state, tied to the EU by close economic, political, and
interpersonal bonds. We recognize that Ukraine has repeatedly expressed
aspirations for full integration with the EU.
2. We are counting on Ukraine to actively exercise the instruments that the
EU's neighbour policy provides. Putting the plan of action into force and
systematically adapting Ukrainian institutions and the Ukrainian economy to
European standards will lay the foundations for Ukraine's real integration
with the EU. At the present moment, the issue of Ukraine's full integration
with the EU remains an open question, pursuant to the provisions of article
49 of the Treaty on European Union.
3. We note with concern that discrepancies in the field of human rights and
the current state of reforms are serious obstacles in the process of
Ukraine's rapprochement with the EU.
4. We call upon the authorities of Ukraine and all political forces in the
country to demonstrate in the forthcoming months, via their actions and
attitude, that fully democratic, fair, and free elections can take place in
Ukraine, which will be preceded by an election campaign in line with
democratic standards, whereby all the candidates have guaranteed access to
the mass media and the opportunity to present their agendas to the voters.
The way in which the presidential elections are held will show how the rules
of democracy, the fulfilment of which is a necessary condition for EU
integration, are respected in Ukraine.
5. We desire for the EU's neighbour policy to meet Ukraine's authentic needs
half-way. The EU is declaring the possibility of incorporating Ukraine into
the zone of the four freedoms. Ukraine's full implementation of the plan of
action will enable significant progress to be achieved in such fields as the
liberalization of the traffic of individuals, simplifications for exports of
Ukrainian goods to the EU market, Ukraine's incorporation into EU
educational, cultural, and scientific programmes, including making it
possible for Ukrainian youth to undertake study in EU countries. We want to
intensify dialogue with Ukraine in the field of security, which will lead to
the gradual incorporation of Ukraine into the common foreign and security
policy, including the European policy of security and defence.
6. We want to bring about the better utilization of aid funds presently
allocated for cooperation with Ukraine, inter alia by coordinating the
instruments of trans-border corporation. Within the new EU budgetary
perspective spending in 2007, we are planning significantly greater funding
for cooperation with neighbours, including Ukraine.
7. Ukraine's observance of democratic norms, such as the freedom of the mass
media, the independence of the judiciary, free and fair elections, and the
consistent performance of the plan of action will enable a new agreement to
be reached, which would replace the agreement on partnership and cooperation
and would constitute the foundation for Ukraine's further integration with
the EU. (END) (ARTUIS)
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