"THE ACTION UKRAINE REPORT"
An International Newsletter
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 132
The 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, THURSDAY, August 5, 2004
-----INDEX OF ARTICLES-----
"Major International News Headlines and Articles"
1.UKRAINE'S PRESIDENTIAL ADMINISTRATION HOLDING MAJOR
FIRE SALE OF STATE ASSETS MANAGED BY SECRETIVE STATE
STRUCTURE JUST AHEAD OF PRESIDENTIAL ELECTION
Put simply - It used to be the state's, now it's ours.
ANALYSIS: By Danylo Ivaniv, "The Peak of Kleptomania"
Ukrayina Moloda, Kiev, Ukraine, in Ukrainian 30 Jul 04; p. 1,4
BBC Monitoring Service, UK, in English, Monday, Aug 02, 2004
2. YUSHCHENKO: UKRAINE HAS NEVER SEEN SUCH A CYNICAL
AND UNDISGUISED PLUNDER OF PUBLIC PROPERTY AS IN 2004
Privatization process is as savage, illegal and immoral as never before
"Press Service of Viktor Yushchenko," Kyiv, Ukraine, Wed, July 28, 2004
3. RUSSIAN INTEREST IN BUYING TELECOM MONOPOLY
ANALYSIS: Semen Stepanchykov
"Ukrtelekom: Dances With Tambourines"
Zerkalo Nedeli, Kiev, in Russian 31 Jul 04, p 1,8
BBC Monitoring Service - United Kingdom; Aug 01, 2004
4. AZAROV FORECASTS THAT CABINET OF MINISTERS WILL
COMPLETE DRAFTING OF UKRAINE'S UKRTELECOM
PRIVATIZATION TERMS IN EARLY AUGUST
Viktor Riasnyi, Ukrainian News, Kyiv, Ukraine, Tue, August 3, 2004
5. MEMBER OF PARLIAMENT SEMENIUK OPPOSES SALE OF
42.86% IN UKRTELECOM BEFORE PRESIDENTIAL ELECTIONS
Yurii Yeriomin, Ukrainian News, Kyiv, Ukraine, Tues, August 3, 2004
6. UKRAINIAN ORE DRESSING PLANT SOLD FOR 120M DOLLARS
Korrespondent.net web site, Kiev, in Russian 3 Aug 04
Korrespondent, Kiev, in Russian 31 Jul 04
Ukrayina Moloda, Kiev, in Ukrainian 22 Jul 04; p 8
Obkom web site, in Russian 4 Aug 04
BBC Monitoring Service, UK, in English, Wednesday, Aug 04, 2004
7. "OUR UKRAINE" WILL NOT ALLOW THE PLUNDERING
OF THE KRYVYI-RIH IRONWORKS
Ironworks must not be sold for a trifle as being planned by government
Viktor Yushchenko Website, Kyiv, Ukraine, Wed, 4 August 2004
8. UKRAINIAN SOCIALIST LEADER MOROZ CALLS FOR AN
OFFICIAL STATEMENT REGARDING GONGADZE REVELATIONS
Interfax-Ukraine news agency, Kiev, Ukraine, in Russian, 4 Aug 04
BBC Monitoring Service, UK, in English, Aug 04, 2004
9.VIKTOR YUSHCHENKO'S PRESIDENTIAL CAMPAIGN MANAGER
IN MOSCOW TO PROMOTE THE YUSHCHENKO PROGRAM
Russia plays dirty tricks on campaign manager Oleksandr Zinchenko
ICTV television, Kiev, Ukraine, in Ukrainian, 4 Aug 04
BBC Monitoring Service, UK, in English, Wednesday, Aug 04, 2004
10. RUSSIA WILL NOT HAVE MORE STABLE RELATIONS WITH
ANY OTHER GOVERNMENT THAN THAT OF YUSHCHENKO
"Our Ukraine' Website, Kyiv, Ukraine, Wednesday, 4 August 2004
11. MOSCOW STRESSES GEOPOLITICS OF UKRAINIAN
PRESIDENTIAL RACE
Moscow has own stakes in Ukrainian presidential race
By Igor Torbakov, Eurasia Daily Monitor, The Jamestown Foundation,
Washington, D.C., Wednesday, 3 August 2004, Volume 1, Issue 66
12. "THE ACTION UKRAINE REPORT"
The Action Ukraine Program, Washington, D.C., Mon, August 2, 2004
13. CANADA: FESTIVAL BY THE SEA IN SAINT JOHN
REGINA'S UKRAINIAN DANCERS RETURN AFTER 20 YEARS
By Katie Rook, St. John Telegraph-Journal
Saint John, New Brunswick, Canada, Wednesday, August 4, 2004
========================================================
ACTION UKRAINE REPORT-04, No.132 ARTICLE NUMBER ONE
========================================================
1. UKRAINE'S PRESIDENTIAL ADMINISTRATION HOLDING MAJOR
FIRE SALE OF STATE ASSETS MANAGED BY SECRETIVE STATE
STRUCTURE JUST AHEAD OF PRESIDENTIAL ELECTION
Put simply - It used to be the state's, now it's ours.
ANALYSIS: By Danylo Ivaniv, "The Peak of Kleptomania"
Ukrayina Moloda, Kiev, Ukraine, in Ukrainian 30 Jul 04; p. 1,4
BBC Monitoring Service, UK, in English, Monday, Aug 02, 2004
KIEV - The presidential administration has begun selling off assets managed
by a secretive state structure, an opposition-supporting newspaper has
reported. Ukrayina Moloda wrote on 30 July that a secret presidential
decree issued in February, a photocopy of which appeared alongside the
article, authorized the Directorate of State Affairs to dispose of the state
assets under its control.
It also quoted a source as saying that property is being sold off cheaply
and in haste to insiders in return for political favours ahead of this
autumn's presidential election. The following is the text of the report by
Danylo Ivaniv titled "The Peak of Kleptomania"; subheadings have been
added editorially:
What does one of the two sides in a war do with material assets and
industrial enterprises when it is forced to retreat before an enemy assault?
That's easy: some of the important property is evacuated, some is destroyed
to prevent it falling into enemy hands\ý [ellipsis as published] But what if
the war is a political one - in this case, the presidential election? The
current residents of Bankova [street in Kiev where presidential
administration is located] control plenty of state properties that they
would be physically unable to carry off to Cyprus. And it would be a shame
to blow them up. But then they can be\ý [ellipsis as published] Yes,
privatized.
Whereas previously this eventuality came up in the context of the likes of
Kryvorizhstal [steelworks sold in controversial tender in June] or
Ukrtelekom [state telecommunications monopoly due for sale this autumn],
documents obtained by Ukrayina Moloda allow similar conclusions to be
drawn over the holy of holies of state property - the Directorate of State
Affairs. It is hard to describe this bureaucratic-business operation as
anything other than the triumph of cynicism.
It appears that Viktor Medvedchuk is not just burning all bridges behind him
as he prepares to leave the post of presidential administration head, he is
also hastening to drag over these bridges to the far, privately-owned, shore
as many as possible of the material assets that are currently at the
disposal of the Directorate of State Affairs - a special state body under
the presidential administration that is responsible for "providing material
and technical, social and domestic, and other support for the activity of
the president, Supreme Council [parliament], Cabinet of Ministers,
National Security and Defence Council and other bodies".
A STATE WITHIN A STATE
The above definition is taken from the statute on the Directorate of State
Affairs, which was confirmed in presidential decree No 1180 of 17
December 2002. This document aroused the righteous indignation of the
opposition. In particular, Yuliya Tymoshenko said: "To be honest, it should
be called "the structure that ensures a happy life for the president and his
entourage'. The Supreme Council and Cabinet of Ministers have also been
called into service for this purpose, but even that was not enough.
Clearly, the need has arisen to significantly increase certain powers of
this state department. It is not just all the expenditures of the president,
Supreme Council and the Cabinet of Ministers that have been gathered
under one hand, but also of the National Security and Defence Council,
which was not previously included, and other state bodies, and the
apparatuses and departments that were created to maintain their
functioning.
This is, in essence, 'a state within a state' - a department that
subordinates to the president's apparatus all, even the most minor,
expenditures - business and otherwise - that are made by all of Ukraine's
state bodies. Personnel changes among Kuchma's entourage have not
been neglected - and such attention always has a specific cash equivalent.
Take a look - for the first time, this document stipulates that the head of
the Directorate of State Affairs is agreed\ý [ellipsis as published] with
guess who? Of course, with the head of the presidential administration. With
the notorious Viktor Medvedchuk. Budgets too are agreed with him. While
'the number of luxury services provided to officials of all ranks has been
substantially increased', additional enterprises and real estate have been
placed at the disposal of the Directorate of State Affairs."
This was the second stage, so to speak, in the strengthening of the
Directorate of State Affairs, which is currently managed by Ihor Bakay.
The first stage began after 23 February 2000, when a presidential decree
created this all-embracing state feudal estate on the basis of the
presidential administration's business affairs directorate and transferred
to it bodies from the jurisdiction of the Cabinet of Ministers, the Supreme
Council business affairs directorate, the National Security and Defence
Council, and other ministries and agencies. The third round is the most
striking. This is what we will be talking about below.
SECRET DECREE
Presidential decree No 144/2004 of 3 February 2004 is mentioned in the
official legislative data base, but even its name is "not for publication",
not to speak of its contents. But there is nothing so secret that it does
not become known sooner or later. Ukrayina Moloda has obtained a
photocopy of this document and has established how its key points are
being implemented.
The decree is not actually very lengthy and it contains corrections to the
statute about the Directorate of State Affairs signed by Medvedchuk and
confirmed by presidential decree No 1180 of 17 December 2002. The
change is that the Directorate of State Affairs now has the right to
transfer ownership of the state property entrusted to it; to agree and
establish the mechanism for privatization or rent of integrated property
complexes or separate property items under it; take decisions on the
corporatization of the Directorate of State Affairs' enterprises; authorize
the State Property Fund to create enterprises with foreign investment of
any organizational form to whose statutory fund property managed by
the Directorate of State Affairs may be transferred.
Put simply - It used to be the state's, now it's ours.
HASTY PRIVATIZATION
And it's under way. Today the Directorate for State Affairs has on its
books (for the time being) a large number of the best state objects
industrial, agricultural and construction enterprises and bases, alcohol and
liquor plants, buildings and sanatoria, large land plots in and around the
capital, and in Crimea, stables, nature reserves, state dachas, and so on.
Who, given time and the necessary authorization from the guarantor [of the
constitution; refers to the president], could pass up the chance to acquire
ownership of such juicy morsels?
According to Ukrayina Moloda's information, a streamlined process of not
entirely legal, to put it mildly, privatization and sale of state objects
from the Directorate of State Affairs's books is under way. Informed sources
report that these tempting lots are being acquired for derisory prices - the
state is getting nothing from this. Specific individuals are benefitting.
And, according to our information, it is Medvedchuk who is directing the
process - Bakay is simply signing the documents that the "grey eminence" of
Bankova puts in front of him.
The first stage of privatization involves almost 150 entities, including
vodka distilleries, land plots in state reserves and sanatoria, and stud
farms.
The base of the Directorate for State Affairs' construction department is of
particular interest, and they want to transfer it into private hands
quickly. It is located in the Korchuvate district of Kiev at 56
Novopyrohivske Highway. It occupies 9 hectares of land on the right bank
of the Dnipro. It contains up-to-date equipment for building construction,
as well as carpentry and other workshops. A document has been prepared
transferring the entire structure - together with land, people and all
equipment - to Tariel Vasadze, an MP from the Working Ukraine faction.
Before entering parliament, Tariel Shakrovych was president of the Kiev
joint stock company Ukrainian Automobile Corporation. It would, perhaps,
have been more appropriate to give him a vehicle base.
But a building enterprise is clearly not a bad trophy. The new operation for
increasing the assets of No 28 on the election list of the For a United
Ukraine bloc [which was formed by a number of pro-presidential parties
ahead of the 2002 parliamentary elections] is being kept secret. Apparently,
the plan is for it to be completed in a single day. If the deal goes
through, there is little doubt about who will benefit from the grateful
Vasadze's vote when parliament considers crucial bills and resolutions in
future.
One more example. In a picturesque spot by the capital's cleanest lake out
beyond Kiev's Shevchenko square lies the state recreation centre
Pushcha-Vodytsya. Its grounds cover several hundred hectares of beautiful
pine forest. Medvedchuk has drawn up a map for dividing this land up
among the "needed" and "willing" deputies who in September will vote for
the version of constitutional amendments that suits him.
It is possible that the size of the plots allocated from 2 to 10 hectares
will be in proportion to their level of loyalty and the need for their
votes. Our source reports that some of these fortunates have already begun
building in Pushcha-Vodytsya without waiting for a decision from Kiev
Council or official permission.
Our source, whom there are no grounds not to trust, says: "Medvedchuk is
hurrying to get everything done in August and September. In order that the
new president (whoever it is) will not be able to halt the process. While
the candidates are conducting their election campaign, Medvedchuk is
illegally selling off on behalf of the current guarantor and at deflated
prices state property that serves the activity of the president and other
state leaders, and which, logically, should not be transferred at all, let
alone on these conditions."
Ukrayina Moloda's efforts to obtain commentary from the Directorate of
State Affairs itself were, unfortunately, fruitless. Neither Bakay, nor his
first deputies Ihor Borysovych Cherkaskyy and Vasyl Hryhorovych Tkachuk,
nor deputies Oleh Mykhaylovych Ihnatov, Ihor Vasylyovych Savchenko,
Tyberiy Yosyovych Bolvari and Hryhoriy Yevdokymovych Smityukh were
available yesterday. Reception told us that nobody was in and that we
should call again later.
The question arises: why are so many deputies needed if nobody is at their
desk on a working day? But Ukrayina Moloda invites representatives of the
Directorate of State Affairs at a convenient time (and if, of course, they
so wish) to express their views on the implementation of decree No 144/2004
for publication in our pages.
"SCORCHED EARTH" TACTICS
We have read on the pages of the opposition press materials compromising
the Directorate of State Affairs based, say, on the fact that the Chayka
subsidiary enterprise is selling its products (milk, say) on the food market
and earning money to benefit the state leaders. If such business activity by
a department that is closed to scrutiny by state bodies is the start of
Ukrainian corruption, and the mass vacation of the state leadership in
Baden-Baden is its continuation, then the distribution to "insiders" of
enterprises and land from the estate of the Directorate of State Affairs is
clearly its climax.
We have to speak again of the "scorched earth" tactics being employed by
some state leaders during the last months in power. Under the sound of the
pre-election battles, everything is being snapped up that isn't nailed down.
In this case, the property of the Directorate of State Affairs is not nailed
down and it is working very well. But, as opposition MPs have repeatedly
stated, this sector actually exists in complete shadow - the efforts of the
president and his administration mean that the Directorate of State Affairs
is effectively closed to outside scrutiny.
At the beginning of the summer the Constitutional Court began considering a
case submitted by 55 MPs concerning the constitutionality of a number of
presidential decrees on the activity of the Directorate of State Affairs.
"The budget report on the Directorate of State Affairs's implementation of
its budget only gives a vague idea of how this department is using public
resources and what revenues it makes on its own and how," said Our Ukraine
MP Yevhen Zhovtyak, who recently submitted a question to the head of one
of Ukraine's most secretive state bodies.
Clearly, the opposition's questions over the previous doings of Medvedchuk,
Bakay and company were just little quibbles. The real thing has come after
the implementation of the secret presidential decree No 144/2004. It is
therefore necessary to ring all the bells. Because it looks like the next
president (whoever it is) will find himself inside the bare walls of the
Bankova, after the previous occupants took for themselves all the property
they could. For nothing and in secret. In their style.
SIDEBAR: AND ANOTHER THING
In his question to Ihor Bakay, MP Yevhen Zhovtyak states that, according
to the treasury report on the implementation of the state budget in the
first four months of 2004, 134m hryvnyas was spent on maintaining the
Directorate of State Affairs, of which 22 per cent (or 30m hryvnyas) came
from the special budget fund.
SIDEBAR: A FULL CUP
The following entities come under the jurisdiction of the Directorate of
State Affairs:
Department for Sanatoria and Resorts (19 Vasylyev Street, Yalta);
Pushkino sanatorium complex (Gurzuf, Yalta);
Ayu-Dag recreation centre (Gurzuf, Yalta);
Rayduha children's health camp (Pishchane, Bakhchysaray District, Crimea);
Crimean Nature Reserve (Alushta);
Ukrayina sanatorium (Gagri); Artek international children's centre (Gurzuf);
Zhytomyr vodka plant; Chudnivskyy alcohol plant;
Synyohora guest house; Synyohora holiday camp;
Syvulske forestry enterprise; Mezhyhirske forestry enterprise;
Zalissya state residence (Brovary);
Biloozerske hunting park (Khotsky, Pereyaslav-Khmelnytskyy District);
Ivanenko subsidiary agricultural enterprise (Petrivtsi, Myrhorod District);
Azov-Syvash national park (Henicheskyy District);
Pushcha-Ozerna sanatorium (Kiev);
State enterprise Directorate of Presidential Affairs Harant Servis (Kiev);
Directorate of State Affairs united transport enterprise Avtobaza (Kiev);
State aviation enterprise Ukrayina; President-hotel Kievskyy;
Repair and construction enterprise; Dudarkiv subsidiary agricultural
enterprise;
Administrative buildings (state residences); Hotel Kiev;
Automobile-transport enterprise (7 Nesterivska Street, 2 Kabelna Street,
Kiev); Cafeteria (22 Hrushevskyy Street, Kiev);
Ukrayina public catering complex (103 Velyka Vasylkivska Street, Kiev);
Construction-installation department (1/14 Sadova Street, Kiev);
Printing house (4a Shovkovychna Street, Kiev);
Komunar garment maker (16 Instytutska Street, Kiev);
Expocentre Ukraine (1 Hlushkova Street, Kiev);
Kindergartens No 87, 378, 418 (Kiev);
An incomplete construction project (value - 50,476.7 hryvnyas);
Administrative building (8 Kruhlouniversytetska Street, Kiev);
Chayka enterprise (38 Harmatna Street, Kiev);
Kindergartens No 143, 628 (Kiev); Cafeteria (1 Bankova Street, Kiev)
Presa Ukrayiny publishing house; Ukrayina national palace;
Passenger quay No 4 at River Station (Kiev);
The hall for official delegations and the Antey restaurant at Boryspil
International Airport; Dibrivskyy stud farm No 62.
In addition, it has been reported that the Directorate of State Affairs has
on its books, or has been given management of:
A Mi-8T helicopter, Kalkan-P and Kalkan patrol boats (from the State
Border Committee);
Two APCs, two MT-LB caterpillar-tracked tractors, a Tu-134A aircraft
with an additional TA-8 power units, three Zil-131 lorries, two self-loading
ZiL-131 lorries, two GAZ-66 chassis (from the Defence Ministry);
Bereznyaki quay (from Kiev River Port). (END) (ARTUIS)
=======================================================
ACTION UKRAINE REPORT-04, No.132: ARTICLE NUMBER TWO
=======================================================
2. YUSHCHENKO: UKRAINE HAS NEVER SEEN SUCH A CYNICAL
AND UNDISGUISED PLUNDER OF PUBLIC PROPERTY AS IN 2004
Privatization process is as savage, illegal and immoral as never before
"Press Service of Viktor Yushchenko," Kyiv, Ukraine, Wed, July 28, 2004
KYIV - "The Power of the People" coalition has declared its position many
times regarding the moratorium on large-scale privatization before the 2004
presidential election.
We declared that we were not in favour of property redistribution and
complete revision of privatization results since the 1990's. We proceed from
the fact that we should manage to put an end to the past so as not to plant
the bomb in the future.
However the year 2004 is a particular one in the history of Ukrainian
privatization. It might seem that from the ten-year experience authorities
could have learned to carry out fair, transparent, competitive and maximum
profitable for our budget, hence for the people, privatization. Still, the
reverse is true.
This is the year when the privatization process is as savage, illegal and
immoral as never before. The winners of contests are determined in advance.
The price of the companies for sale is well-known beforehand too and is far
from the true sellers market one.
The so-called national investors took possession of "Kryvorizhstal', bidding
half as much and now they are going to benefit by reselling it to the
Germans. And some private persons will pocket "lucre."
Generally speaking, our budget lacks tens of billions of hryvnyas regarding
the "sold" objects in 2004, which could provide the real but not nominal
rise in wages, pensions and scholarship.
The most regrettable thing is that the top-officials' relatives, friends and
mates have become the immediate participants of privatization tricks. Over
the decade Ukraine has never seen such a cynical and undisguised plunder
of public property, as the one occuring in 2004, screened by the
authorities.
We demanded the declaration of a 2004 privatization moratorium as early
as 2003, having foreseen this situation. Now the ruling clique, quitting
the stage, is trying to grab all the national economy. Besides, authorities
and oligarchs are going to steal the "Ukrtelecom" company. They are
elaborating their plan of actions at the present moment.
We are warning all the accomplices in this robbery that a new democratic
government won't acknowledge the fact of the so-called "Ukrtelecom"
privatization provided it takes place in 2004. The same holds true for the
legal recognition of the other privatization frauds that occurred this year.
They will have to give back all stolen goods.
They will have to make up for those things bought for a trifling sum.
They will be prosecuted for law infringement during privatization process.
=======================================================
ACTION UKRAINE REPORT-04, No.132: ARTICLE NUMBER THREE
=======================================================
3. RUSSIAN INTEREST IN BUYING UKRAINE'S TELECOM MONOPOLY
ANALYSIS: Semen Stepanchykov
"Ukrtelekom: Dances With Tambourines"
Zerkalo Nedeli, Kiev, in Russian 31 Jul 04, p 1,8
BBC Monitoring Service - United Kingdom; Aug 01, 2004
Only Russian companies are seriously interested in buying Ukraine's telecom
monopoly, Ukrtelekom, an analytical weekly has said. The qualification
requirements for privatization tenders mean that they could only bid in
partnership with big Western firms. Russian President Vladimir Putin is
rumoured to favour the Russian company Sistema, and a deal may have been
done on that between him and Ukrainian President Leonid Kuchma at the recent
Yalta summit, the paper said.
The following is the text of the article by Semen Stepanchykov entitled
"Ukrtelekom: dances with tambourines", published by the Ukrainian newspaper
Zerkalo Nedeli on 31 July; subheadings have been inserted editorially:
Journalists and experts have more than once forecast that the privatization
of [Ukrainian telecom monopoly] Ukrtelekom that has been talked about for so
long, will end with a scandal. They were mistaken. What happened in the past
few days could more likely be called a circus. And certainly one with
clowns. Participants in the process have not tired of demonstrating their
scornful attitude to legislation and mutual accords: officials, by the
prevalence of their personal business interests over state interests, and
politicians by the most unexpected alliances.
One wonders why it needed almost five years to prepare for the epoch-making
deal, to pass laws, to confirm plans, to hire expensive Western consultants
and so forth, if the business culture of officials and businessmen over
those years has not risen one inch above the wild market and the epoch of
prime accumulation of capital? This whole cinema could have been filmed with
the same success before the 1999 [presidential] elections.
Undoubtedly the apotheosis of it all was the enforced stoppage on Wednesday
night [28-29 July] of the Presa Ukrayiny [printing] presses where the 29th
issue of Vidomosti Pryvatyzatsiyi was being printed at the time. It had
already been delayed by one day because on the Wednesday [28 July], the
normal day of issue, there was a sitting of the government that approved the
competition conditions for the sale of 42.88 per cent of the shares in
Ukrtelekom. The issue, already prepared for printing, whose last page
carried the "Information report from the State Property Fund [SPF] of
Ukraine on open trading in the sale of a stake in Ukrtelekom" was destroyed.
And on Friday [30 July] the "real" 29th issue appeared, in which the
information was absent. There has never been such a thing in the history of
domestic privatization!
According to witnesses' evidence, the events on that fateful night developed
in the following way. The order to halt the printing press came about two
hours after midnight from the leadership of the SPF. According to some
reports, it was the result of a night conversation between [SPF Chairman]
Mykhaylo Chechetov and [presidential administration chief] Viktor
Medvedchuk. The latter in extremely weighty expressions convinced the SPF
chairman that the Cabinet of Ministers had not approved the competition
conditions. And so, by printing information about them, he was making a big
mistake.
Chechetov did not want to make a mistake. In order to correct his blunder,
on Thursday he officially renounced all his previous statements that the
competition would be announced on 29 July. He also officially postponed the
start of the Ukrtelekom competition "until the Cabinet of Ministers has
approved its definitive conditions stipulating the requirements for
potential investors and also the starting price for the stake and the time
scale".
The irony is that the Cabinet's conditions were approved! Moreover, not just
somewhere in an office without witnesses, but at a sitting chaired by the
first deputy prime minister (and also the chairman of the commission for
Ukrtelekom privatization), Mykola Azarov. And most members of the government
voted in favour of the decision. And Prime Minister Viktor Yanukovych on 28
July signed two instructions on this - No 513-r "On approving the decision
of the commission on privatization of Ukrtelekom" and No 514-r "On approving
the detailed plan for floating shares of Ukrtelekom". And they were
published quite happily in [official government newspaper] Uryadovyy Kuryer
on 29 July.
Clearly Medvedchuk did not risk "overturning" the publication of that
newspaper. Or he simply let slip the possibility of Kuryer publishing it.
Even considering the fact that the government press organ did not carry the
actual text of the competition conditions (and it should not have), the
publication of these instructions says that as of 0200 in the morning on 29
July [2300 gmt on 28 July] the government decision approving the conditions
of privatization was in force! And that means that Mr Medvedchuk had simply
wrongly informed Mr Chechetov.
QUALIFICATION REQUIREMENTS
What for? It is understandable from point 8 in the "Qualification
requirements for claimants to participation in the open trading\ý" [ellipsis
as published] of the "perished" SPF information report. Since some copies of
the now rare initial version of the 29 July issue of Vidomosti
Pryvatyzatsiyi were picked up as souvenirs by participants in the print run,
Zerkalo Nedeli had the possibility of familiarizing itself with the fruit of
the many months of work of the privatization commission. And we were able
independently to convince ourselves that indeed only the major and most
respectable world telecom operators on the level of Deutsche Telekom,
Vodafone or Verizon meet the "qualification requirements". And not a single
Russian potential purchaser of Ukrtelekom, let alone any Ukrainian one, is
able to meet them.
The system of qualification requirements includes, among others, the
necessity of: total assets of at least 10m euros; sales volume of at least
10m euros over the last accounting year; at least 5m subscribers; at least
50,000 km of trunk lines in ownership; work experience on world
communications markets outside CIS countries;
experience of participation in privatization of state telecommunications
companies and reform of telecom state monopolies.
But the main thing is the presence of an international credit rating by S&P
and Fitch of not less than BB, by Moody's of not less than Ba2 and the
absence of legal disputes with state organizations of Ukraine as of 28 July
2004 (personal greeting to [the Russian telecommunications company]
Sistema).
There is no doubt that British Telecom and Vodafone and AT&T could have
taken part in the competition and could have had a chance to win it. Only it
is very dubious whether Deutsche Telekom needs the Ukrainian company
[Ukrtelekom], as it [Deutsche Telekom] not that long ago hurriedly got rid
of assets in [leading Ukrainian mobile operator] UMC [UMC, Ukrainian Mobile
Communications, formerly part of Ukrtelekom, was later sold to the Russian
telecommunications company MTS which now has a controlling stake in it]. Or
[whether] France Telecom, fined 1.7m dollars two weeks ago by the European
Commission for tax evasion [needs Ukrtelekom]. The interest that world
telecommunications giants have been showing in Ukrtelekom during the road
show was a matter of paying respect rather than serious intentions. Real
plans for buying Ukrtelekom were nurtured only by Russian companies.
What do they have? The profit of [Russian company] Svyazinvest in 2003 was
less than 5m euros - it is ruled out by that condition. [Russian company]
Alfa-Group in itself does not pass either by profit (2.9m dollars in 2002,
the previous account has not been published - author) or by rating. However,
both companies could take part in the privatization in tandem with foreign
partners. For example Alfa with Telenor (rating A2, 2003 profit of 6.3bn
euros) or Vodafone (rating A, 2003 profit of 46bn euros), while Svyazinvest
could go in tandem with any of its American partners. It is not for nothing
that the minimum rating of contenders was made at the level of the Russian
sovereign [rating]\ý [ellipsis as published]
The Donetsk-Turkish joint enterprise with the participation of
[Donetsk-based mobile telephone company] DCC and [the Turkish mobile
telecom operator] Turkcell should be mentioned separately. Neither the owner
of the Ukrainian operator, SCM, [System Capital Management company, owned
by Donetsk tycoon Rinat Akhmetov, owns an 85-per-cent stake in DCC] nor
even the owner of the Turkish company, the Cukurova holding, satisfies the
requirements. Actually, if one combines all their assets and profits, then
they may reach the necessary figures, but the sovereign rating of Turkey
(and that means leading Turkish companies) according to the S&P version is
B+. That means at a level lower than the minimum necessary.
The point about legal disputes evidently was added, since Sistema still has
the possibility of entering the competition in alliance with its long-term
partner Deutsche Telekom, which corresponds to the above-mentioned
requirements. For example, on the part of the Cetel B.V. company, which at
one time was a middleman in the purchase by MTS-Sistema of the state stake
in UMC, and which for the same reason was one of the defendants in the
well-known lawsuit by the [Ukrainian] Prosecutor-General's Office. It looks
as if the people who signed those qualification requirements had decided
that UMC was enough for Sistema. [The Prosecutor-General's Office is trying
to cancel the sale of UMC to Sistema, see Ukrayinska Pravda web site, Kiev,
in Ukrainian 14 Jun 04.]
LIKELY BUYERS
And so the conclusion is that the winner of such a competition most likely
could be a holding company that includes a Russian financial industrial
group and a world telecommunications giant. Considering the active
participation in the sale preparation of [brother of Kuchma's wife and
reported owner of a 21-per-cent stake in another major Ukrainian mobile
operator, Kyivstar GSM, Yuriy] Tumanov and [Kuchma's first aide, Serhiy]
Lyovochkin, it can be assumed that it would be Alfa-Group - (Telenor or
Vodafone). Naturally, such a disposition does not suit the others.
Especially Alfa's direct rival Sistema. Its owner and chief, Vladimir
Yevtushenkov, has been in Ukraine since last Monday [26 July] and so has
had the opportunity to take a direct and lively part in the historic events.
Immediately after the day before last's night-time scandal, information
appeared in the Internet (the ForUa and Podrobnosti sites) that on Wednesday
and Thursday Sistema had held "active negotiations" with the presidential
administration in the person of Viktor Medvedchuk and also with the office
of [opposition Our Ukraine bloc leader and frontrunner in the October
presidential election campaign] Viktor Yushchenko. The subject of
negotiations was cancelling the Ukrtelekom competition and postponing it
"until autumn" (why not until after the elections?). According to some
people present there, it was said that [Russian President] Vladimir Putin
himself was interested in the purchase of Ukrtelekom by Sistema.
Judging from the fact that Viktor Medvedchuk actively joined in the game,
he was the first to have been convinced. There is a report that a draft
presidential decree had been drawn up in the presidential administration
cancelling the above-mentioned cabinet instructions (it is possible that the
leaders of the [State Property] Fund were persuaded that there "was no"
cabinet decision precisely by counting on that decree). Yevtushenkov tried
to meet the president [Kuchma] on Thursday [29 July] with that piece of
paper. At the time that Zerkalo Nedeli was going to press there was no
information that the decree had been signed, but considering the tradition
of the presidential administration to publish fateful decisions on Friday
evening, it may still be.
KUCHMA-PUTIN SECRET AGREEMENT?
Sistema demonstrated assuredness of its strength in all sorts of ways. This
makes it possible to assume the existence of some agreement regarding
Ukrtelekom between Yevtushenkov, Kuchma and Putin, which were evidently
confirmed on Tuesday [27 July] at the meeting in Yalta. Does this mean that
Sistema has been cheated for a second time?
Meanwhile, Viktor Yushchenko signed a statement from the People's Strength
coalition [Syla Narodu opposition bloc] that if he comes to power, he "will
not recognize the fact of the so-called privatization of Ukrtelekom if it
happens in 2004", and will rescind its outcome. This statement in itself
should cool down the serious buyers unable to afford to bear political risks
as well.
Mr Yushchenko, as a wise politician, on coming to power will probably
nevertheless think seriously about whether to cancel the results of the
privatization. It is one thing to promise it before the elections and
another thing to strike a blow at the country's already shaky investment
image. After all, the very possibility of a political review of the results
of deals is equivalent to the possibility of default, and a competent head
of state, having weighed up all the pros and cons will most likely decide to
leave things as they are.
However, looking at these "dances with tambourines" that the long awaited
privatization has turned into, you start to wonder: maybe indeed it is
possible just once to start up and show with all clarity and firmness that
this cannot be done? It is simply not worth it. However, it is a matter of
political will. (END) (ARTUIS)
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ACTION UKRAINE REPORT-04, No.132: ARTICLE NUMBER FOUR
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4. AZAROV FORECASTS THAT CABINET OF MINISTERS WILL
COMPLETE DRAFTING OF UKRAINE'S UKRTELECOM
PRIVATIZATION TERMS IN EARLY AUGUST
Viktor Riasnyi, Ukrainian News, Kyiv, Ukraine, Tue, August 3, 2004
KYIV - First Deputy Prime Minister/Finance Minister Mykola Azarov is
forecasting that the government will make a final decision on the terms of
privatization of Ukrtelecom, Ukraine's largest telecommunications company,
before the end of this week. Azarov announced this at a press conference.
"This process will [obviously] be completed this week," Azarov said.
According to him, the Cabinet of Ministers already approved the terms of
privatization of Ukrtelecom in late July, but it can still make several
changes to the terms with the aim of selecting the optimum buyer. He denied
information that the delay in the final approval of the terms of
privatization of Ukrtelecom is connected with Russia's Sistema company as
a potential participant in the privatization competition.
Azarov stressed that the Cabinet of Ministers wants a serious and reliable
investor to buy 42.86% of the shares in Ukrtelecom.
As Ukrainian News earlier reported, the Cabinet of Ministers has decided to
sell 42.86% of the shares in Ukrtelecom by September 30, 2004. The starting
price of this stake has been set at UAH 2,733.4 million. Ukrtelecom's
statutory capital amounts to UAH 4.68 billion. Its shares have a nominal
value of 25 kopecks per share.
The State Property Fund recently decided to conduct open bids for 42.86%
of the shares in the company if it receives at least two tenders. Ukrtelecom
ended the year 2003 with a net profit of UAH 616 million. The company's
revenues rose by 15.9% to UAH 5.1 billion in 2003.
Ukrtelecom controls over 80% of the Ukrainian local telephone market and
has the most extensive primary fiber-optic communication network in Ukraine,
which has a length of over 12,000 kilometers. .14% of the shares in the
company have been sold to its employees via the preferential subscription.
The remaining 92.86% of the shares are held by the state. (END) (ARTUIS)
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ACTION UKRAINE REPORT-04, No. 132: ARTICLE NUMBER FIVE
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5. MEMBER OF PARLIAMENT SEMENIUK OPPOSES SALE OF
42.86% IN UKRTELECOM BEFORE PRESIDENTIAL ELECTIONS
Yurii Yeriomin, Ukrainian News, Kyiv, Ukraine, Tues, August 3, 2004
KYIV - Parliamentary deputy, the head of the special parliamentary
commission on privatization Valentyna Semeniuk is against the sale of 42.86%
in Ukrtelecom, the largest telecommunications company in the country, ahead
of the presidential election. Press service of the Socialist Party of
Ukraine informed Ukrainian News of her statement.
In opinion of Semeniuk, holding of the Ukrtelecom's tender is consistent
with the interests of the buyer, who is determined beforehand. "Replacement
of the members of the Ukrtelecom's privatization commission, assessment of
the 42.86% stake by the Donetsk-based firm, conditions of the competition -
these are only few of many factors that speak for biased sale of the largest
telecommunications company in the country," Semeniuk opined.
In her statement it is said that the SPU will be pushing for checks into
legality of this privatization tender by law enforcement agencies.
As Ukrainian News reported previously, the Cabinet of Ministers passed a
decision to sell the 42.86% stake in Ukrtelecom by September 30, 2004,
and earlier it established the starting price at UAH 2,733.4 million.
The statutory fund of Ukrtelecom amounts to UAH 4.68 billion with a single
face value being at UAH 0.25. Earlier, the State Property Fund had decided
to hold an open tender to sell the 42.86% stake if at least two bids are
submitted.
In 2003, Ukrtelecom made a net profit of UAH 616 million on revenues of UAH
5.1 billion, an increase of 15.9% over 2002 revenues.
The company controls more than 80% of the market for local telephony, and it
owns the most extensive fiber optic primary networks with a total length of
12,000 kilometers. Apart from 7.14% of the shares that were sold on closed
subscription terms to company employees, the remaining shares (92.86%) are
owned by the state.
=======================================================
ACTION UKRAINE REPORT-04, No.132: ARTICLE NUMBER SIX
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6. UKRAINIAN ORE DRESSING PLANT SOLD FOR 120M DOLLARS
Korrespondent.net web site, Kiev, in Russian 3 Aug 04
Korrespondent, Kiev, in Russian 31 Jul 04
Ukrayina Moloda, Kiev, in Ukrainian 22 Jul 04; p 8
Obkom web site, in Russian 4 Aug 04
BBC Monitoring Service, UK, in English, Wednesday, Aug 04, 2004
KIEV - The Dnipropetrovsk company Solaym has paid 689.419m hryvnyas
(130m dollars) to Ukraine's State Property Fund for a 93-per-cent stake in
the Kryvyy Rih iron ore dressing plant, Korrespondent.net web site reported
on 3 August, quoting State Property Fund chairman Mykhaylo Chechetov.
After the controversial sale of Ukraine's biggest steel plant Kryvorizhstal
to a company linked to President Kuchma's son-in-law Viktor Pinchuk earlier
this year, opposition media expressed doubts about the fairness of the ore
dressing plant's privatization. The newspaper Ukrayina Moloda said on 22
July that the Mariupol-based Illich steelworks was ready to pay 700m
hryvnyas, and voiced fears that the plant would be sold off to
well-connected businessmen for a fraction of the sum. But the price paid by
Solaym is just 10.5m hryvnyas short of what Illich was reportedly ready to
offer, and triple the asking price of 242m hryvnyas.
The Obkom web site reported on 4 August that Solaym is controlled by the
Dnipropetrovsk-based Pryvat group, which already has substantial holdings in
the ore-mining and metallurgy sectors. Pryvat group is controlled by the
Dnipropetrovsk businessmen Ihor Kolomoyskyy, Oleksiy Martynov and
Hennadiy Boholyubov (see Korrespondent, Kiev, in Russian 31 Jul 04).
Ukraine's opposition had earlier called on the government to suspend the
sale of state assets until after the presidential elections in October,
saying the government's privatization record is marred by cronyism. The
government rejected the charges, pledging that the terms of privatization
would be fair and transparent. (END) (ARTUIS)
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7. "OUR UKRAINE" WILL NOT ALLOW THE PLUNDERING
OF THE KRYVYI-RIH IRONWORKS
Ironworks must not be sold for a trifle as being planned by government
Viktor Yushchenko Website, Kyiv, Ukraine, Wed, 4 August 2004
ODESSA REGION - Victor Yushchenko is convinced that the stocks of
the Kryvyi-Rih ironworks must not be sold for a trifle as it is being
planned by the current government; he made such statement while visiting
the Odesa region.
He reminded that the "Our Ukraine" coalition suggested imposing a
moratorium on privatizing strategically important state enterprises in 2004
several months ago and the corresponding bill was brought up for the
parliamentary hearing.
"We were governed by one thing only - this government will not conduct
honest privatization. It will engage in the under-the-table games and will
want to privatize the main strategic subjects of our national economy:
"Kryvorizhstal," Kryvyi-Rih ironworks as well as "Ukrtelecom" or the Odesa
port factory prior to October 31. This government understands that it will
not have such opportunities after October 31. Its philosophy is that life
does not go on after October 31," declared the presidential contender.
"Our Ukraine" does not acknowledge what the government is calling
privatization as legal. We will resolve all these cases through court,"
stressed Victor Yushchenko.
He reminded that these were not singular incidents when the
"under-the-table" privatization was furnished to suit a certain buyer. At
the same time the leader of the "Our Ukraine" coalition noted that he did
not approve of such terms as "nationalization" or "re-privatization" and
assured that honest businesses had nothing to fear.
"Kryvyi-Rih Ironworks" PC produces ore via subterranean mining. The
company consists of four mines: "Batkivshchyna," "Zhovtneva,"
"Hvardiyska," and the Lenin mine. The ironworks produced 6.312 million
tons of ore and earned over 282 million hryvnyas on foreign transactions.
The State Property Fund has recently set a share holding of this enterprise
up for sale. LINK www.yuschenko.com.ua. (END) (ARTUIS)
======================================================
ACTION UKRAINE REPORT-04, No.132: ARTICLE NUMBER EIGHT
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8. UKRAINIAN SOCIALIST LEADER MOROZ CALLS FOR AN
OFFICIAL STATEMENT REGARDING GONGADZE REVELATIONS
Interfax-Ukraine news agency, Kiev, Ukraine, in Russian, 4 Aug 04
BBC Monitoring Service, UK, in English, Aug 04, 2004
KIEV - Socialist Party leader Oleksandr Moroz has challenged top officials
to react to prosecutors' admission that documents posted on the Internet
last month are leaked materials from the investigation of the murder of
journalist Heorhiy Gongadze in 2000. The leaked documents, which are posted
on the web site www.delogongadze.org, include records of the questioning of
police officers who said they had been shadowing Gongadze ahead of his
disappearance.
The documents were the basis of an article published in the UK newspaper
The Independent in June, which said they showed top Ukrainian officials were
blocking the Gongadze investigation. The following is an excerpt from a
report by Interfax-Ukraine news agency:
Kiev, 4 August: Socialist Party leader and presidential candidate Oleksandr
Moroz has called on the country's leaders to "immediately issue an official
statement on the deliberate violation of the law on investigative activity
and the constitution" in connection with "the admission by the
Prosecutor-General's Office that police officers were illegally shadowing
journalist Heorhiy Gongadze".
The Socialist Party's press service reported today that in his letter to the
president, prosecutor-general and interior minister, Moroz says that in 2000
President Leonid Kuchma "officially announced that he would personnally
supervise the investigation of the Gongadze case and that the `best forces'
would be used for the investigation".
"It has now become clear from the records of the questioning of police
officers (which have appeared on the Internet, and which the
Prosecutor-General's Office has said are leaked materials from the pre-trial
investigation - Interfax) that these `best forces' were guilty of the most
blatant abuses of office - tampering with important evidence, telling lies,
and sending the investigation in a wrong direction," it says.
Moroz said, "All the new information about the circumstances of the crime
and the complete inactivity of the authorities will be officially submitted
to all the leading international organizations that follow developments in
the Gongadze investigation".
Moroz also said that the first question parliament will consider in
September is on hearing the report of the special parliamentary commission
investigating the Gongadze case.
On 2 September, the head of the press service of the Prosecutor-General's
Office, Serhiy Rudenko, told a press conference in Kiev that the 180 pages
of records of the questioning of witnesses in the Gongadze case posted on
the Internet are a leak of investigation materials. [Passage omitted:
Background. UNIAN news agency, Kiev, in Ukrainian 1106 gmt 2 Aug 04]
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ACTION UKRAINE REPORT-04, No.132 ARTICLE NUMBER NINE
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9. VIKTOR YUSHCHENKO'S PRESIDENTIAL CAMPAIGN
MANAGER IN MOSCOW TO PROMOTE YUSHCHENKO PROGRAM
Russia plays dirty tricks on campaign manager Oleksandr Zinchenko
ICTV television, Kiev, Ukraine, in Ukrainian, 4 Aug 04
BBC Monitoring Service, UK, in English, Wednesday, Aug 04, 2004
KIEV - Opposition leader Viktor Yushchenko's presidential campaign manager,
Oleksandr Zinchenko, was in Moscow on 4 August to challenge Russian
perception of Yushchenko as a radical nationalist, the Ukrainian
pro-government ICTV channel reported on the same day. Zinchenko's news
conference at the Interfax news agency was cancelled by Interfax at short
notice - a move blamed by Zinchenko on Yushchenko's opponents in Ukraine,
said the channel, which is owned by President Kuchma's son-in-law Viktor
Pinchuk.
ICTV's generous reporting on Zinchenko's trip contrasts sharply with the
scant and mostly critical coverage of Yushchenko's campaign on channels
linked to presidential administration chief Viktor Medvedchuk's United
Social Democratic Party, Inter and One Plus One, as well as the state-owned
UT1. The following is the text of report by Ukrainian ICTV television on 4
August:
[ICTV Presenter] Some Ukrainian election news today were made in Moscow.
Deputy speaker of the Ukrainian parliament and head of [opposition leader]
Viktor Yushchenko's election headquarters, Oleksandr Zinchenko, gave a news
conference there. Viktor Yushchenko's promotion abroad was not unhindered.
The Interfax news agency, where the news conference was to take place,
cancelled the event at short notice.
Yushchenko's supporters have blamed the incident on their opponents.
Eventually, a meeting with the Russian press, although attended by fewer
correspondents than planned, was held at the Sobesednik weekly. Oleksandr
Zinchenko fulfilled his task - described his candidate as the best one and
traditionally criticized the Ukrainian authorities. Our special
correspondent, Viktor Soroka, reports from Moscow.
[Correspondent] The goal of the Moscow visit of Yushchenko's election
campaign chief, Oleksandr Zinchenko was to spell out Viktor Yushchenko's
position for journalists and the political elite. A news conference planned
at the Interfax news agency did not take place. They said the conference
room hall was being refurbished. So, Zinchenko talked to the press in a
cramped room at the Sobesednik weekly. There were no journalists from
central TV channels. Zinchenko assured those present that Yushchenko
viewed Russia not as an enemy but as a strategic partner, and that Our
Ukraine's stance was patriotic rather than radically nationalist.
[Zinchenko, in Russian] With Yushchenko as president, Ukraine will be a
consistent partner, a pragmatic partner, a predictable partner. I guarantee
that everything will be all right in this respect. You will not get more
stable relations under any other regime.
[Correspondent] Presidential candidate Yushchenko has many connections
among Russia's influential people, Zinchenko said. Zinchenko himself, who
used to work as a high-ranking official in the Komsomol [the youth branch
of the Soviet Communist Party] felt at ease here today. He was received by
the Federation Council [upper house] chairman Sergey Mironov and members
of the Duma [lower house] commission for relations with Ukraine. Meanwhile,
many Moscow political advisers say that the current prime minister, Viktor
Yanukovych, has more support in the Kremlin, although everyone agrees that
Moscow does not openly support any of the candidates.
[Kiril Koktish, captured as political scientist, in Russian] As regards
current preferences, there are practically none. The most reasonable
behaviour for Russia is to hold talks with both candidates. I think the
Russian authorities will more or less stick to this strategy.
[Correspondent] Assurances that Russia will not directly influence the
Ukrainian presidential elections are the main result of Zinchenko's trip.
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10. RUSSIA WILL NOT HAVE MORE STABLE RELATIONS WITH
ANY OTHER GOVERNMENT THAN THAT OF YUSHCHENKO
"Our Ukraine' Website, Kyiv, Ukraine, Wednesday, 4 August 2004
MOSCOW - "Russia will not have more stable relations with any other
government than that of Victor Yushchenko," declared Oleksandr Zinchenko,
the head of Victor Yushchenko's electoral campaign, at the Press conference
in Moscow. According to him, relations between Ukraine and Russia will be
consistent and honest when Yushchenko is president. Zinchenko also stated
that Yushchenko would fight for Ukraine's national interests and follow the
existing bilateral agreements.
The vice speaker of the Verkhovna Rada thinks that it is easy to forecast
Yushchenko's future policies towards Russia because one just has to remember
his time as prime minister. Zinchenko reminded that it was during Yushchenko
's premiership in Ukraine that the longstanding tendency of declining
production between the two countries was reversed. "Moreover, product
turnover between Ukraine and Russia increased 25% in the year Yushchenko
was prime minister. Besides that, it was Yushchenko's government that put
an end to the illegal siphoning of gas and established the system of timely
payments for Russian energy supplies," stressed the head of Victor
Yushchenko's electoral campaign.
Oleksandr Zinchenko informed the journalists that, when Victor Yushchenko
was the prime minister of Ukraine, the official Kyiv was implementing the
policy of attracting Russian investments to Ukraine. He also suggested that
the Russians find out the total amount of investments into the Donetsk
region over the period when Victor Yanukovych was the head of its regional
administration and reminded that the Russians were not allowed to
participate in the privatization of "Kryvorizhstal" that has taken place
recently.
The head of Victor Yushchenko's presidential campaign promised that, "the
government of the new president of Ukraine will make several serious offers
to Russia in its first month in power and the new quality of relations will
be measured in new projects and new work places." (END) (ARTUIS)
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ACTION UKRAINE REPORT-04, No. 132 ARTICLE NUMBER ELEVEN
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11. MOSCOW STRESSES GEOPOLITICS OF UKRAINIAN
PRESIDENTIAL RACE
Moscow has own stakes in Ukrainian presidential race
By Igor Torbakov, Eurasia Daily Monitor, The Jamestown Foundation
Washington, D.C., Wednesday, 3 August 2004, Volume 1, Issue 66
With Ukraine's presidential election just three months away, Russia appears
to be stepping up efforts to influence the outcome of the ballot in its
neighbor. Ukraine remains the linchpin in the new frontier of Russia-led
Eurasian integration. The result of the October 31 election may either spur
the integrationist drive or dash hopes for the economic and political
institutionalization of the "Euro-East." Kremlin-connected political gurus
argue that Moscow should more actively counter what they call the West's
interference in Ukraine's political life.
On July 26, speaking at the Russian-Ukrainian business forum, Russia's
President Vladimir Putin sternly warned the West not to get in the way of
closer ties between Russia and Ukraine. "By getting closer we increase our
competitiveness. And this is understood not only by us but by serious
people, our partners abroad," Putin told a gathering of Ukrainian and
Russian businessmen in the Crimean resort town of Yalta. "Their agents,
both inside our countries and outside, are trying everything possible to
compromise integration between Russia and Ukraine," added Putin.
The bulk of Russian analytic community seems to view the Ukrainian
presidential race not as a primarily internal affair of Ukraine but rather
as a major geopolitical tug-of-war between Russia and the West. Of all ten
presidential hopefuls, the Kremlin regards the two frontrunners as polar
opposites in terms of their strategic orientation. Ukraine's Prime Minister
Viktor Yanukovych, President Leonid Kuchma's heir apparent, is seen as
the man who will best secure Russia's political and economic interests in
the region, whereas Viktor Yushchenko, the leader of the oppositionist
"Our Ukraine" party, is perceived as dangerously pro-Western.
Viktor Chernomyrdin, Russia's influential ambassador to Ukraine, spoke
out in favor of Yanukovych in an interview in July with the Kyiv weekly
Korrespondent, saying Yanukovych's election would help maintain good
bilateral relations. He also hinted that the Kremlin dislikes that
Yushchenko is looking more to the West for allies than to Russia.
Thus, Kuchma and Putin share similar outlooks on Ukraine's presidential
election. In his desire to secure victory for Yanukovych, Kuchma is eager to
get as much support from Russia as possible. For his part, Putin is eager to
install in Kyiv a "reliable man" who will draw Ukraine closer to Russia. In
an apparent move to please Putin, Kuchma announced a significant change in
Ukraine's military doctrine, which now says that Ukraine should no longer
strive to join the European Union and NATO, but only to "deepen relations"
with the two organizations.
Meanwhile, fully aware of how valuable Moscow's support is to Kuchma's
clan, Putin, in his Yalta address, energetically called for Ukraine and
Russia to come up with a joint strategy for joining the World Trade
Organization and also to speed up their own economic integration through
the Single Economic Space.
Some Moscow-based political strategists contend that Russia should clearly
define its political agenda in Ukraine and more aggressively defend its
interests throughout the election campaign. According to Gleb Pavlovsky,
president of the Effective Policy Foundation, "Russia, as a great power,
while making its stakes in the presidential election in the neighboring
country -- an allied country, not just a partner nation -- simply doesn't
have the right to ignore the comparative advantages of the candidates."
According to Pavlovsky and other Russian analysts, "It's absolutely clear
today that Yanukovych has better chances to consolidate Ukrainian voters
and Ukrainian power elites." On the other hand, Yushchenko, the Kremlin
political advisors argue, is not seen as a politician capable of uniting
both the elites and Ukraine's regions. "Yushchenko's victory would mean the
victory of Ukraine's west over the east, which is extremely dangerous for
Ukraine," Pavlovsky contends. The Kremlin spin doctors hint that the latter
scenario is being promoted by the "Western centers of influence, which are
very active in Ukraine."
In the opinion of Sergei Markov, director of the Moscow-based Institute of
Political Studies, hundreds of Western-funded foundations are currently
operating in Ukraine and "brainwashing" public opinion there. The majority
of those Western centers and think tanks, Markov argues, are controlled by
the so-called "Brzezinski group," people hostile to Russia. "Ukraine is just
a chess piece for them in their [geopolitical] game against Russia." As the
Kremlin analysts see it, Ukraine's major problem is, "The 15% Russophobic
minority is trying to impose their will on the 80% of Russo-Ukrainian
Orthodox majority."
The task of the Kremlin advisors is to "help this Russo-Ukrainian Orthodox
majority to define the fate of the country in their own interests." To
fulfill this "humanitarian mission," Pavlovsky has recently launched a
"Russian Club" in Kyiv. Pavlovsky's club is technically a non-governmental
forum to discuss bilateral relations, but it is also one of the many
channels through which Moscow can influence the outcome of Ukraine's
October 31 presidential election (Kreml.org, July 1; Russ.ru, July 7, 12,
14; Trud, July 14; Moscow Times, July 21, 27). (END) (ARTUIS)
--------------------------------------------------------------------------
Igor Torbakov is a freelance journalist and researcher who specializes in
CIS political affairs. He holds an MA in History from Moscow State
University and a PhD from the Ukrainian Academy of Sciences. He was
Research Scholar at the Institute of Russian History, Russian Academy of
Sciences, Moscow, 1988-1997; a Visiting Scholar at the Kennan Institute,
Woodrow Wilson International Center for Scholars, Washington DC, 1995,
and a Fulbright Scholar at Columbia University, New York, 2000. He is now
based in Istanbul, Turkey. (END)(ARTUIS)
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future is very much appreciated. (END)
========================================================
ACTION UKRAINE REPORT-04, No. 132 ARTICLE NUMBER THIRTEEN
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13. CANADA: FESTIVAL BY THE SEA IN SAINT JOHN
REGINA'S UKRAINIAN DANCERS RETURN AFTER 20 YEARS
By Katie Rook, St. John Telegraph-Journal
Saint John, New Brunswick, Canada, Wednesday, August 4, 2004
SAINT JOHN - A high kickin', fast spinnin', quick steppin' Ukrainian
dance group from Regina hopped onto the Pugsley Park stage Tuesday
night to wow the crowd.
This is the second time the Travia Ukrainian Folk Dance Ensemble has
performed at the Festival by the Sea. The last time the dancers were in
Saint John was 1985, when the festival began. "Dancing is just what we
do. Ukrainian dancing is everything," said Chad Strecker, 24, who has
been Ukrainian dancing since he was five years old.
The group has six male dancers and 13 female dancers, ranging in age
from 16 to 31 years old. They can jump higher than professional basketball
players, touch their toes while in mid-air and land with the grace of a
ballet dancer, all the while keeping in sync with one another and the fast-
tempo, instrumental Ukrainian music.
There is only a gleam of light sweat on Mr. Strecker's forehead after 15
minutes of a non-stop, intense practice. In a performance of 45-50 minutes,
the group members will change eight times. Every colourful costume
represents a different region of the Ukraine. There are skirts and leather
slippers for the women, baggy pants and red leather boots that slouch
at mid-calf for the men. They each wear embroidered blouses.
"Oh my heavens, we're ecstatic. That's the word. They're here celebrating
our 20th anniversary with us," said Wendy Morton, the festival president.
Festival co-founder Tom Condon remembers the success of the group's first
performance.
"They were a real smash hit. They're full of energy and vigorous dancing and
are very colourful in their Ukrainian costumes. It just added a tremendous
dimension. They were a big hit," said Mr. Condon. "I think way down deep
most people love the arts. Whether it's singing or dancing or performing or
theatre or ballet. I think people love music. People love the arts and given
the chance they come out to it and they do," he said.
The Travia Ensemble has been performing in Canada for 28 years, though the
performers themselves change. "We wanted to do some Canadian travelling.
We're totally enjoying ourselves," said Tarilynn Tymiack, the dance group's
administrator. The dancers have travelled twice to the Ukraine, once to
Alaska, throughout western Canada and the Prairie provinces. They regularly
perform at conferences and weddings.
Ms. Tymiack says she was surprised at the Saint John airport when two
strangers offered to drive her to her hotel. "I got a real warm, fuzzy
feeling from them. Regina is a small city, but that wouldn't happen there,"
she said.
Husband and wife team Yuri and Nina Pats moved from Ukraine to Regina
in January 2000 to coach the Travia group. They met through Ukrainian
dance and performed with the world-renowned Virsky Folk Dance
Ensemble of Kyiv. Later they coached the Nadzbrashka Performing
Ensemble of Ternopil.
Mrs. Pats, 57, says it is easy to direct the dancers if they want to be
there. She encourages them to be "very light, enjoy, smile, light eyes, very
big heart, show energy." "Saint John, very good, beautiful city, beautiful
people. Now we are a part of Saint John," said Mr. Pats, 59. The dance
group will be leaving Saint John on Thursday to perform in Charlottetown
and later Halifax.
The Travia group's only scheduled performance was Tuesday night, but they
say they enjoy any chance to dance and have been known to enjoy a
kolomeyka or spontaneous dance opportunity when the music is provided.
"It has no limits and gives you a chance to show off stuff you've been
working on," said Mr. Strecker. [Reach our reporter: rook.katie@nbpub.com]
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"POWER TENDS TO CORRUPT,
ABSOLUTE POWER CORRUPTS ABSOLUTELY"
An observation that a person's sense of morality lessens as his or
her power increases. The statement was made by Lord Acton, British
historian of the late nineteenth and early twentieth centuries.
True then, true today, true always.
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