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Action Ukraine Report

"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 189
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, TUESDAY, October 12, 2004

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

1. DR. HENRY KISSINGER SPEAKS IN UKRAINE NEXT WEEK
By E. Morgan Williams, Publisher and Editor
The Action Ukraine Report, Kyiv, Ukraine, Tue, Oct 12, 2004

2. U.S. CONGRESSMAN ROHRABACHER WARNS: UKRAINIAN
OFFICIALS THWARTING DEMOCRATIC PROCESS
WILL PAY A PRICE PERSONALLY!
By Luba Shara, Ukrayinska Pravda Journalist, Washington DC,
Ukrayinska Pravda, Kyiv, Ukraine, Mon, October 11, 2004

3. "THE PENTAGON'S RESTRAINED OPTIMISM"
US Deputy Defense Sec Paul Wolfowitz says Ukraine should join NATO
COMMENTARY: by Serhiy Solodky, The Day
The Day Weekly Digest in English, Kyiv, Ukraine, Tue, Oct 12, 2004

4. COMPREHENSIVE INTERACTIVE WEB SITE FOR UKRAINIAN
VOTERS ABROAD LAUNCHED ON THE UPCOMING
UKRAINIAN PRESIDENTIAL ELECTIONS
Mountain View, California, Mon, October 11, 2004

5. UKRAINE: "'SCENERIOS' DON'T MATTER"
Briefing by Vasyl Baziv, Deputy Chief of the Presidential Administration
Reported By Volodymyr Soniuk, The Day
The Day Weekly Digest in English, Kyiv, Ukraine, Tuesday, Oct 12

6. POLAND AND GERMANY HAND IN HAND IN CALLING ON
THE EUROPEAN UNION TO TREAT UKRAINE AS KEY NEIGHBOR
Provided the Ukrainian elections do not make matters more complicated
Polish News Bulletin, Warsaw, Poland, Tue, Oct 12, 2004

7. PRIME MINISTER VIKTOR YANUKOVYCH WANTS TO INCREASE
SPENDING ON UKRAINE'S MILITARY-INDUSTRIAL COMPLEX
BY SIXTY PER CENT IN YEAR 2005
As for replacing old weapons and equipment, we shall use the capacity of
our Ukrainian military-industrial complex. Shall use the state order system.
Source: UT1 State TV, Kiev, in Ukrainian, 11 Oct 04
BBC Monitoring Service, UK, in English, Mon, October 11, 2004

8. UKRAINE PRESIDENT VOWS TO RETURN CHURCH PROPERTY
Source: ICTV State television, Kiev, in Ukrainian, 11 Oct 04
BBC Monitoring Service, UK, in English, Mon, Oct 11, 2004

9. FORMER UKRAINIAN PRESIDENT SAYS FOREIGN CRITICISM
OF UKRAINE ELECTION PROCESS IS DISRESPECTFUL
Kravchuk says no need to fear expulsion from the Council of Europe
Source: TV 5 Kanal, Kiev, in Ukrainian 1500 gmt 11 Oct 04
BBC Monitoring Service, UK, in English, Mon, October 11, 2004

10.UKRAINE'S PRESIDENT DISCUSSES AEROSPACE COOPERATION
WITH FORMER US AMBASSADOR AND NOW BOEING SENIOR
VICE PRESIDENT THOMAS PICKERING
Source: UT1 State TV, Kiev, in Ukrainian, 12 Oct 04
BBC Monitoring Service, UK, in English, Tue, October 12, 2004

11. UKRAINIAN FOREIGN MINISTRY EXPECTING INCREASE IN
NUMBER OF POLLING STATIONS ABROAD
In Russia, Vietnam, Italy, and the Transdniestrian Moldovan Republic.
Ukrainian News Agency, Kyiv, Ukraine, Tue, October 12, 2004

12. UKRAINE SAYS "FULL SPEED AHEAD" ON RECONSTRUCTION
OF DANUBE-BLACK SEA NAVIGABLE CANAL
Ukrainian News Agency, Kyiv, Ukraine, Tue, Oct 12, 2004

13. "EAST OR WEST: UKRAINE'S ELECTION COULD ALTER
RELATIONS WITH RUSSIA AND EUROPE"
By Chrystia Freeland, Stefan Wagstyl and Tom Warner
Financial Times, London, UK, Tuesday, October 12 2004
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER ONE
========================================================
1. DR. HENRY KISSINGER SPEAKS IN UKRAINE NEXT WEEK

E. Morgan Williams, Publisher and Editor
The Action Ukraine Report, Kyiv, Ukraine, Tue, Oct 12, 2004

KYIV - Dr. Henry Kissinger, former U.S. Secretary of State, Nobel
Prize winner, author, and founder/chairman of Kissinger Associates in
New York City, will speak in Kyiv, Ukraine late next week as part of
an international lecture series according to reports in Kyiv.

Dr. Kissinger will be the guest of Viktor Pinchuk, member of the
Ukrainian Parliament, a leading industrialist who is the owner of several
large businesses in Ukraine including the ICTV Channel. Mr. Pinchuk
is married to Olena Franchuk, daughter of Ukrainian President
Leonid Kuchma. Olena Franchuk recently started a foundation in
Ukraine to fight the spread of HIV-AIDS.

MP Viktor Pinchuk started and is funding an international lecture series in
2004. Guests for his lecture series have included former U.S. President
George Herbert Walker Bush who spoke in Kyiv on May 21, former
U.S. general and former commander of NATO troops in Europe, Wesley
Clark, who gave a lecture in Kyiv on June 2, and Richard Holbrooke,
former U.S. Ambassador to the United Nations and presently a foreign
policy advisor to Democratic presidential contender John Kerry, who
made a presentation in Kyiv on July 9, 2004.

Dr Kissinger has long taken an interest in Ukrainian matters. He met
with Ukraine's former foreign minister Anatoliy Zlenko in New York on
January 21, 2004. During the meeting Kissinger noted the importance
of further deepening the partnership relations between Ukraine and the U.S.
Kissinger also noted the favorable economic growth in Ukraine and stated
Ukraine is " a factor of stability in the European continent," according to
Interfax-Ukraine.

The prime minister of Poland Marek Belka met with Dr. Kissinger in
Warsaw on May 6, 2004, and they discussed the political and economic
situation in Eastern Europe, including Poland's interest in Ukraine's
further progress in its interest in Euro-Atlantic Integration. Dr. Kissinger
participated in the international conference entitled, "New Geopolitics of
Central and Eastern Europe, Between the European Union and the United
States."

In additional to giving the lecture Dr. Kissinger is expected to meet with
Ukrainian President Leonid Kuchma, Prime Minister and presidential
candidate Viktor Yanukovych, former Prime Minister and presidential
candidate Viktor Yushchenko and other government and political officials
in Ukraine.

Dr. Kissinger was born in Fuerth, Germany, came to the U.S. in 1938
and was naturalized a U.S. citizen in 1943. He served in the Army from
1943 to 1946. He graduated summa cum laude from Harvard College
in 1950 and received M.A. and Ph.D. degrees from Harvard University
in 1952 and 1954 respectively.

>From 1954 until 1971 he was a member of the Faculty of Harvard University,
both in the Department of Government and the Center for International
Affairs. Kissinger served as Secretary of State under Presidents Nixon and
Ford. He was also a key negotiator of the withdrawal of American forces
from Vietnam, for which the won the Nobel {Peace Prize in 1973. After
leaving government service he founded Kissinger Associates, an international
consulting firm, of which he is chairman. -30- (The Action Ukraine Report)
=======================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER TWO
=======================================================
2. U.S. CONGRESSMAN ROHRABACHER WARNS: UKRAINIAN
OFFICIALS THWARTING DEMOCRATIC PROCESS
WILL PAY A PRICE PERSONALLY!

By Luba Shara, Ukrayinska Pravda Journalist, Washington DC,
Ukrayinska Pravda, Kyiv, Ukraine, Mon, October 11, 2004

WASHINGTON - When on September 18 "Ukrayinska Pravda" and
"Dzerkalo Tyzhnia" (Weekly Mirror) reported on Bill HR 5102 IH
Constantine Menges Ukraine Democracy and Fair Elections Act of
2004 being introduced in the US House of Representatives, many
Ukrainian pro-government politicians sneered at it with a great deal
of skepticism.

This document dwells not upon a theoretical significance of free and
fair elections in Ukraine, but rather introduces a set of actual
sanctions against actual individuals within the Ukrainian leadership
if they encroach upon those principles.

"It appears as some kind of fiction", said Mykhailo Pohrebynsky,
advisor to Kuchma's Chief of Staff in his interview to Radio Liberty.

"Somebody has doodled something, and we are supposed to comment
on that nonsense? Well, a publication in Ukrayinska Pravda cannot be
a reason enough for me to comment ", added Pohrebynsky.

Here is what Pohrebynsky said about the Bill's author, US
Congressman Dana Rohrabacher: "So give me something more serious,
than just a monkey business of some parliamentarian. You know, we
have plenty of fools here. I think there are as many of them over
there."

Despite such sarcastic statements by Mr. Pohrebynsky, Bill HR 5102
is neither a fiction nor a monkey business, but a scary reality for
himself and other individuals close to the Ukrainian leadership.

Following is what US Congressman Dana Rohrabacher (R) of
California's 46th District tells in his interview to Ukrayinska
Pravda.

UP. Mr. Congressman, have you ever been to Ukraine?
DR. Oh, yeah, I have been to Ukraine several times.

UP. What do you think about the outcomes of the Presidential
elections in Ukraine?
DR. I think that this is the first time that I have seen in Ukraine
where you have had some very strong leaders and strong candidates
that offer Ukrainians the alternatives to vote for on the ballot.

UP. What were your reasons to introduce Bill 5102, Ukraine
Democracy and Fair Elections Act of 2004?
DR. This Bill sets down a marker not only for the powers in Ukraine
but also for people of the United States, for the United States
government. We are coming to the end of our session now and we
want to make sure this Bill was proposed so that if the Ukrainian
elections are subverted by fraud or dishonesty, we would then be
able to know what we need to do to retaliate if that happens.

UP. The Bill has tough questions specifically regarding Ukrainian
politicians who have property in the United States. Do you think it
is real to deny visas to such politicians?
DR. We want to have a very harsh alternative to those in Ukraine who
might be tempted to stay in power by undermining the free elections.
And, if someone in Ukraine, a government official, does something
that might officially let them stay in power, by doing so they are
thwarting the will of people, by fraud or some sort of intimidation
or restriction of the process itself, we want those officials to
know they will not benefit personally. There will be a price to pay
personally for Ukrainian officials who thwart the democratic process.

UP. Does the United State Government have a list of those people
how have property or assets in the United States or what would be
the source of such information?
DR. Oh, we will track them down.

UP. Do you believe the Bill can be passed before the end of this
session of the Congress?
DR. It is possible. It could be voted on before the end of the
session. But the attempt was not to have it. The attempt was to lay
down a marker for passing it early next year if the Ukrainian vote
is tainted. But if it is not tainted, then we do not have not go
forward with the Bill.

UP. Many people in power in Ukraine do not believe you were
serious introducing this Bill. Many of them believe it was just a joke,
that it wasn't serious.
DR. Well, we will find out who is laughing if they are just trying
to thwart the democratic process and are called to task afterwards
by our government.

UP. Do you have co-sponsors of this bill?
DR. I have a lot of people volunteering to be co-sponsors. I am not
officially going in this direction. The bill is a marker for the
next session of the Congress. We want to make sure people in
Ukraine, especially people in power in Ukraine, knew there would
be consequences.
Leaders of Ukraine who are in power right now need to know that
there would be consequences if they try to intimidate people or
commit fraud or release other underhanding tactics to force the will
of people who are voting. And there will be tough consequences.
-----------------------------------------------------------------------
http://www2.pravda.com.ua/en/archive/2004/october/8/1.shtml
-----------------------------------------------------------------------
FOOTNOTE: After the interview, found above, took place
Congressman Dana Rohrabacher (R-CA) decided to add some
text to his original bill to strengthen it and then to re-introduce the bill
in the House. Congressman Howard Berman (D-CA) came on the
new bill as a co-sponsor. The new bill, H.R. 5247, was
introduced into the U.S. House of Representatives on Thursday,
October 7th.

Before the House went into recess the following additional co-
sponsors were added to the H.R. 5247: Congresswoman Marcy
Kaptur (D-OH), Congressman John Shadegg (R-AZ), Congressman
John Shimkus, (R-Il), and Congressman Chris Smith (R-NJ).

The interest in this legislation regarding Ukraine picked up considerable
speed in the U.S. Congress during the past two weeks. Senator Jon
Kyl (R-AZ) decided to introduce the bill in the U.S. Senate. Senator
Pete Domenici (R-NM) and Senator Gordon Smith (R-OR) joined
as co-sponsors. The Senate bill, S. 2957 was introduced on Friday,
October 8th.

Additional co-sponsors are expected to be added to the House and
Senate bills during the recess. Congress will come back in session in
November after the U.S. presidential election. [Morgan Williams,
Editor, The Action Ukraine Report]
=======================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER THREE
=======================================================
3. "THE PENTAGON'S RESTRAINED OPTIMISM"
US Deputy Defense Sec Paul Wolfowitz says Ukraine should join NATO

COMMENTARY: by Serhiy Solodky, The Day
The Day Weekly Digest in English, Kyiv, Ukraine, Tue, Oct 12, 2004

Ukraine should join NATO, declared US Deputy Defense Secretary Paul
Wolfowitz during his recent visit to Poland.

In fact, this is the first public statement by a top US official, who spoke
about the need to admit Ukraine to the North Atlantic Treaty Organization.
Before, Kyiv's aspiration to move toward NATO membership was in the
best-case scenario only a possibility not to be ruled out or merely
welcomed. It is worth noting that the statement by the Pentagon
representative comes at a time when Ukrainian politicians are engaged in
pre-election debates on whether Ukraine should join the alliance. Opponents
of Ukraine's NATO accession argue that no one in the military-political
union of twenty-six developed countries of Europe and America is ready to
embrace Ukraine. Paul Wolfowitz was the first to refute this assumption.

"It is particularly important to extend the values of what NATO stands for
to the whole of Europe," Wolfowitz said in a speech at Warsaw University.
"Our objective of a Europe whole and free will not be complete until Ukraine
is a full fledged member of Europe," he added. He reminded his listeners
that several years ago US President George W. Bush said in Warsaw "we
must extend our hand to Ukraine as Poland has already done with such
determination." He also called for "continued effort to build bridges with
Belarus, whose population has been deprived of freedom by an authoritarian
dictator."

Incidentally, similar signals have come from abroad not only within the
context of Ukraine's integration with NATO. During his meeting with
President Leonid Kuchma Sweden's new ambassador to Ukraine Jon
Christofer Olander spoke about Sweden's "unconditional support for
Ukraine's European aspirations."

"Sweden wants to see Ukraine in the European Union," reported
Interfax-Ukraine. Latvia's leadership has also expressed its support for
Ukraine's aspiration to join the WTO, NATO, and the EU. Artis Pabriks,
foreign minister of this former Soviet republic and current NATO and EU
member, said that Riga understands the problems that Ukraine faces on its
way to the EU, for which reason his country is willing to further share its
experience of European and Euro-Atlantic integration.

But so far the words of Western politicians and diplomats have rarely
translated into deeds. For example, during the Istanbul Summit this past
June NATO did not support Ukraine's initiative to raise the level of
cooperation. This is one of the things that prompted the Ukrainian
leadership to amend Ukraine's Military Doctrine, striking off the paragraph
about Ukraine's ultimate goal of NATO membership. However, positive
developments in Ukraine's relationship with the alliance are possible during
the ministerial meeting of NATO member states and Ukraine slated for this
December.

In this connection the latest statement by Paul Wolfowitz sounds quite
symbolic. It is obvious that such words are not spoken haphazardly, and in
this case they were addressed to skeptics of Ukraine's NATO accession.
Pessimism in foreign policy may perhaps be justified when it comes to Kyiv's
ambitions to join the EU, which thus far can offer Ukraine nothing more than
EU neighbor status. Nonetheless, the fact that there are at least a few EU
member states that are sympathetic to Ukraine's full European integration,
proof of which are recent statements, is also an important signal. -30-
----------------------------------------------------------------------------
LINK: http://www.day.kiev.ua/125394
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER FOUR
========================================================
4. COMPREHENSIVE INTERACTIVE WEB SITE FOR UKRAINIAN
VOTERS ABROAD LAUNCHED ON THE UPCOMING
UKRAINIAN PRESIDENTIAL ELECTIONS

Press Release, Mountain View, California, October 11, 2004

MOUNTAIN VIEW, CA - A group of Ukrainians working in Silicon
Valley, in conjunction with the Emigrant group in Ukraine, have created
and launched an interactive web site on upcoming Ukrainian Presidential
Elections for Ukrainian voters abroad: http://www.vyboryUA.org,
The website is in Ukrainian.

This site features the most comprehensive and timely information on the
upcoming Ukrainian elections, and is both action-oriented and interactive
enabling users to post questions, download sample forms, and get in
touch with the right people in order to register to vote.

The new website is being updated daily with the most important and timely
information posted in the "What is Important Now" section. Additionally,
www.vyboryUA.org, now features local elections information on how to
register to vote in specific towns/districts/countries outside of Ukraine in
the Section "Come and Vote"

The site has already connected and furnished the necessary elections
information to hundreds of voters abroad.

If you have localized elections information for your city/district/country
or any other pertinent information related to the upcoming Ukrainian
Presidential elections, please e-mail it to info@vyboryUA.org

For more information about this press release or web site, please contact
e-mails: info@vyboryUA.org; phone/fax: 38-044-244-34-53 in Kyiv.
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER FIVE
========================================================
5. UKRAINE: "'SCENERIOS' DON'T MATTER"
Briefing by Vasyl Baziv, Deputy Chief of the Presidential Administration

Reported By Volodymyr SONIUK, The Day
The Day Weekly Digest in English, Kyiv, Ukraine, Tuesday, Oct 12

KYIV - Addressing a briefing last Friday, Vasyl Baziv said President
Leonid Kuchma of Ukraine is calling on this country's citizens to remain
calm and not be taken in by provocative allegations that force may be
used to change the course of the presidential campaign. The leadership
will do its utmost to preserve stability in the country. "The President
firmly dissociates himself from the so-called strong-arm scenario that does
not and cannot exist,"

Mr. Baziv said. In his words, "the much hyped strong-arm scenario that the
government has allegedly hatched is the fruit of irresponsible politicians'
morbid imaginings." According to Mr. Baziv, the rumor that the military
parade in honor of the 60th anniversary of Ukraine's liberation from the
Nazis, scheduled for October 28, is in some way connected with the
government's plans to thwart the elections is an "insult to war veterans."

Commenting on what may happen in Ukraine on Election Day, the
president's deputy chief of staff said, "the state will be prepared to face
any developments and preserve stability in Ukraine."

Mr. Baziv told journalists that the National Security and Defense Council
would gather next week to discuss the situation in Ukraine in light of the
ongoing election campaign. He noted that, as the election campaign unfolds,
the domestic situation is becoming tense owing to not always appropriate
and responsible words and deeds of the political forces taking part in the
election campaign. This makes it imperative for the council to look into
this matter. At the same time Mr. Baziv pointed out that "Ukraine could
have a different election campaign, during which people might discuss the
presidential candidates' programs and governmental strategies, instead of
slinging mud at each other in the literal sense of the word."

According to Mr. Baziv, President Kuchma says his successor will continue
Ukraine's European integration policy. "The European choice is the choice
of President Kuchma, who is convinced that his successor will continue to
follow this strategic political course to which there is no alternative,"
the Presidential Administration deputy chief said. Commenting on the recent
US Congressional resolution on the presidential election in Ukraine, Mr.
Baziv noted that Ukraine, like the US, is interested in a fair and
transparent campaign. Yet the Presidential Administration deputy chief
pointed out that this resolution was intended not only for the government
but presidential candidates as well.

Responding to journalists' questions, Mr. Baziv commented on the discovery
of dubious propaganda materials in the storeroom of the National Exhibition
Center, which is run by the State Administrative Department. "The
Administrative Department, as a governmental institution, has nothing to do
with this," he said, adding that the blame for these propaganda materials
should be placed on the election managers of certain candidates. "The ones
who lease facilities do not always know what's going on there," Mr. Baziv
said in defense of his position.

As to the Danube-Black Sea canal situation, the deputy chief claimed that
world public opinion has swung in favor of Ukraine because this country has
been taking a rational stand by averting, in particular, any "negative
environmental consequences."

President Kuchma has set up a foundation that will be formally opened in
early November, said Mr. Baziv, adding that very soon journalists will have
an opportunity to meet this country's president at a press conference. -30-
=======================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER SIX
Additional names for the distribution list are always welcome
========================================================
6. POLAND AND GERMANY HAND IN HAND IN CALLING ON
THE EUROPEAN UNION TO TREAT UKRAINE AS KEY NEIGHBOR
Provided the Ukrainian elections do not make matters more complicated

Polish News Bulletin, Warsaw, Poland, Tue, Oct 12, 2004

WARSAW - Poland and Germany are hand in hand in calling on the European
Union to treat Ukraine as its key neighbour. According to Polish Foreign
Affairs Minister Wlodzimierz Cimoszewicz, other EU member states should
back the Polish-German initiative, "provided that the Ukrainian elections do
not make matters more complicated."

The declaration to recognise the importance of Ukraine's EU aspirations was
presented by Poland and Germany during a conference of EU's foreign affairs
ministers in Luxembourg. No minister present at the conference contested the
declaration.

Prime Minister Marek Belka proposed that the parliamentary elections be held
in the second half of May 2005, after the Sejm's own resolution led to its
dissolution in April. "Elections held in the spring will give the next
government time to prepare the new budget. Besides, next year there will
also be the presidential election and possibly a referendum on the EU
constitution. A few months between the parliamentary elections and the
presidential one will allow Poles to think things through," said the
PM. -30- [Action Ukraine Monitoring Service]
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER SEVEN
========================================================
7. PRIME MINISTER VIKTOR YANUKOVYCH WANTS TO INCREASE
SPENDING ON UKRAINE'S MILITARY-INDUSTRIAL COMPLEX
BY SIXTY PER CENT IN YEAR 2005
As for replacing old weapons and equipment, we shall use the capacity of
our Ukrainian military-industrial complex. Shall use the state order system.

Source: UT1 State TV, Kiev, in Ukrainian, 11 Oct 04
BBC Monitoring Service, UK, in English, Mon, October 11, 2004

KIEV - [Presenter] The government will rely on Ukraine's own military-
industrial complex when reforming the army, Prime Minister Viktor
Yanukovych said today during his visit to a testing facility of Kharkiv-
based armour design bureau. Yanukovych said the government plans to
boost defence spending by 60 per cent next year, up to 8bn hryvnyas
[1.5bn dollars].

Addressing the servicemen of the 61st detached mechanized battalion,
which has just returned from Iraq, Yanukovych said that the active phase
of military reform will begin next year. Special attention will be paid to
rapid-reaction forces. During the reform, the issue of social security of
discharged servicemen will be taken into account. This summer the
government approved a number of decisions on social and legal protection
of servicemen, in particular, concerning the housing problem.

Spending on these programmes increased by 20 per cent, and next year
it will increase by another 50 per cent. The pension gap of military
retirees was also discussed. [Those who retired in the early 1990s currently
receive much smaller pensions than officers of the same rank who retired
recently]

[Yanukovych] The first priority will be social security of military
servicemen. As for replacing old weapons and equipment, we shall use
the capacity of our Ukrainian military-industrial complex. We shall use the
state order system. Military representatives will return to industrial
companies. They will control and commission the equipment supplied by
our companies. This will be done soon, and military reform will be
conducted gradually. -30- [Action Ukraine Monitoring Service]
========================================================
ACTION UKRAINE REPORT-04, No. 188: ARTICLE NUMBER EIGHT
Letters to the editor are always welcome
========================================================
8. UKRAINE PRESIDENT VOWS TO RETURN PROPERTY TO CHURCHES

Source: ICTV State television, Kiev, in Ukrainian, 11 Oct 04
BBC Monitoring Service, UK, in English, Mon, Oct 11, 2004

KIEV - [Presenter] The head of state [Leonid Kuchma] met bishops of the
Ukrainian Greek Catholic Church today. He thinks that the role of religion
in the moral upbringing, primarily of young people, will be increasing. The
president laid special emphasis on returning to the church its property,
which is not being used for its original purposes.

Kuchma is planning to sign a decree putting an end to the adverse
consequences of the totalitarian policy towards religion in the Soviet
Union. The return of church property and the allocation of land to religious
organizations involve a lot of problems but the government will deal with
them, Kuchma said. He stated that there is trust between the Church and
the state in Ukraine.

[Kuchma] The return of its former property to the church and the restoration
and building of new churches is a priority of Ukraine's current state policy
towards religion. Trusting one another, acknowledging our common goals and
serving the interests of Ukraine and its people is our most significant
joint achievement. -30- [Action Ukraine Monitoring Service]
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER NINE
========================================================
9. FORMER UKRAINIAN PRESIDENT SAYS FOREIGN CRITICISM
OF UKRAINE ELECTION PROCESS IS DISRESPECTFUL
Leonid Kravchuk says no need to fear expulsion from the Council of Europe

Source: TV 5 Kanal, Kiev, in Ukrainian, 11 Oct 04
BBC Monitoring Service, UK, in English, Mon, October 11, 2004

KIEV - [Presenter] Ukrainian MP Leonid Kravchuk has said that the
statements by the Parliamentary Assembly of the Council of Europe and
the US Congress concerning possible sanctions against Ukraine if the
[31 October presidential] election is not democratic are disrespectful.

The former president of Ukraine and leader of the [pro-presidential] United
Social Democratic Party [parliamentary faction] said that Ukraine is a large
European country which must be reckoned with under any circumstances. He
said there is no need to fear expulsion from the Council of Europe because
such measures are taken very rarely.

[Kravchuk] I would not want for others to keep trying to scare us. Even if
it is the US Congress or the Council of Europe. I think when a member of
parliament says [changes tack] if the election in Ukraine is undemocratic,
our government will give Ukraine a bashing. Maybe Chernobyl has got to
them too. -30- [Action Ukraine Monitoring Service]
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER TEN
========================================================
10.UKRAINE'S PRESIDENT DISCUSSES AEROSPACE COOPERATION
WITH FORMER US AMBASSADOR AND NOW BOEING SENIOR
VICE PRESIDENT THOMAS PICKERING

Source: UT1 State TV, Kiev, in Ukrainian, 12 Oct 04
BBC Monitoring Service, UK, in English, October 12, 2004

KIEV - President Leonid Kuchma today discussed Ukrainian-American
relations with Boeing Senior Vice President Thomas Pickering. They talked
mainly about cooperation in the aerospace and aviation sectors. They noted
the successful cooperation between the United States and Ukraine in the
Sea Launch [satellite launch] programme.

Pickering said that under the leadership of Leonid Kuchma, Ukraine became
one of the fathers of this programme. There is a crowded schedule of
launches over the next few years. Pickering said that cooperation with
Ukraine in the aerospace sector was of fundamental importance to the
Boeing company.

The two also discussed the future of Ukrainian-American relations in the
context of the Ukrainian and US presidential relations. -30-
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER ELEVEN
========================================================
11. UKRAINIAN FOREIGN MINISTRY EXPECTING INCREASE IN
NUMBER OF POLLING STATIONS ABROAD
In Russia, Vietnam, Italy, and Transdniestrian Moldovan Republic.

Ukrainian News Agency, Kyiv, Ukraine, Tue, October 12, 2004

KYIV - The Foreign Affairs Ministry is expecting an increase in the
number of polling stations installed abroad for voting in this year's
Ukrainian presidential elections. Markian Lubkivskyi, the head of the
Ukrainian Foreign Affairs Ministry's press service, announced this to
journalists.

According to him, Russia and Vietnam have already authorized the
opening of additional polling stations. The Ministry has also requested
that the Central Electoral Commission open a polling station at a
Ukrainian-Vietnamese enterprise that employs 200 Ukrainian citizens.
The ministry is hoping that the CEC will accept this request.

Thus, according to Lubkivskyi, it can be said that 114 polling stations
will be opened abroad during the presidential elections. According to
Lubkivskyi, the places where additional polling stations will be opened
in Russia are presently being determined and agreed. According to him,
Italy has also authorized voting on its territory on the condition that the
polling stations are located at Ukrainian diplomatic and consular missions.

Lubkivskyi said that 1,457 Ukrainian citizens would work at election
commissions abroad, including 153 representatives of the presidential
candidates.

According to Lubkivskyi, the Foreign Affairs Ministry is continuing
explanatory work with Ukrainian citizens abroad and holding meetings
with them to discuss the presidential elections. The Ministry is also
continuing cooperation with foreign voters on Ukrainian territory.

As Ukrainian News earlier reported, Moldova recently authorized the
opening of additional polling stations for the Ukrainian presidential
elections in the areas where Ukrainian citizens are concentrated on the
territory of the self-declared Transdniestrian Moldovan Republic. The
CEC has created 113 election commissions abroad for this year's
Ukrainian presidential elections. -30-
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER TWELVE
========================================================
12.UKRAINE SAYS "FULL SPEED AHEAD" ON RECONSTRUCTION
OF DANUBE-BLACK SEA NAVIGABLE CANAL

Ukrainian News Agency, Kyiv, Ukraine, Tue, Oct 12, 2004

KYIV - Ukraine is going to continue reconstruction of the Danube-Black
Sea navigable canal. Markian Lubkivskyi, the head of the Foreign Ministry's
press service, disclosed this while responding to a question of Ukrainian
News on the call made by the European Union not to start the second phase
of the construction of the navigable canal until international experts shall
have conducted assessments of its impact on the environment.

At the same time, Lubkivskyi emphasized that Ukraine is going to continue
holding consultation with the European Union relating to this issue. "[It]
is important for us...we are continuing work. And from the other side, we
want to continue these works against the background of understanding
from the side of the European Union," said Lubkivskyi.

According to the head of the press service, the findings of the European
Commission on the impact of the construction works on the environment
will soon be made public. "As far as I am aware, the findings of the
European Commission will be made public within the next two weeks,"
said Lubkivskyi.

In his opinion, what will happen before is not of any significance -
irrespective of whether the findings of the European Commission will be
made public or if the second phase of the reconstruction works on the
navigable channel will begin.

"This is a technical issue, what will happen first, [or] what will happen
later. In principle, this does not have a particular significance," said
Lubkivskyi. In his words, Ukraine is attentively listening to the
recommendations that have been made to it regarding the reconstruction
of the Danube-Black Sea navigable canal.

As Ukrainian News earlier reported, the European Commission is asking
Ukraine not to start the second phase of construction work on the canal
until experts examine the situation and carry out an assessment of the
possible environmental impact.

Ukraine favors the creation of a system for international monitoring of the
situation in the Danube Delta, having already reached the corresponding
agreement with the delegation of the European Commission. A delegation
of the European Commission arrived in Ukraine on October 6.

A dispute arose between Ukraine and Romania over the ecological impact
of the reconstruction, (the wording Ukraine prefers to use), or construction
by Ukraine of a shipping canal in the Bystre Estuary.

At Romania's initiative, an international commission was set up to
investigate the construction of the Danube-Black Sea Canal by Ukraine.
For its part, Ukraine has asked Romania to provide information about the
project that Romania is implementing in the Georgievsky section in the
Danube Delta. Ukraine has also expressed concern over frequent emission
of contaminants into the rivers by Romania.

The Ukrainian Ministry of Transport completed the first stage of restoration
of the Danube-Black Sea shipping canal in the Bystre Estuary on August 26,
which envisages reconstructing the offshore ship canal with length of 3.3
kilometers, bottom width of 85 meters, depth of 7.65 meters and the dam
section with length of 1.54 kilometers. Moreover, the navigable canal runs
170.36 kilometers. The second stage envisages construction of a deep canal
of up to 8.32 meters, an increase of the width to 100 meters and the length
of the dam to 3 kilometers. -30- [Action Ukraine Monitoring Service]
========================================================
ACTION UKRAINE REPORT-04, No.188: ARTICLE NUMBER THIRTEEN
Checks to support The Action Ukraine Report are always welcome
========================================================
13. EAST OR WEST: UKRAINE'S ELECTION COULD ALTER
RELATIONS WITH RUSSIA AND EUROPE

By Chrystia Freeland, Stefan Wagstyl and Tom Warner
Financial Times, London, UK, Tuesday, October 12 2004

Two bombs explode in a market. Fourteen people are wounded, one later
dies in hospital. The police arrest five people and say the perpetrators
were opposition activists trying to discredit the authorities. Opposition
leaders deny any connection with the suspects and say it is the police
who are doing the discrediting.

Welcome to the Ukrainian presidential election. Even though the polls are
still weeks away [only two and one-half weeks], the campaign has already
been marred by violence, cries of electoral fraud, and the alleged poisoning
of a leading candidate.

But unlike in Russia and in most of the rest of the former Soviet Union,
there is a genuine electoral race under way with the two leading candidates
closely matched and no telling who will win when Ukrainians vote for a new
president in two rounds on October 31 and November 14.

The result could have a profound effect on Ukraine's future and on relations
with the west and neighbouring Russia. After a decade in office, the
authoritarian Leonid Kuchma is stepping down. Even though he will try to
retain his influence, his departure from the presidency will clear the way
for a new leader for this country of 48m people, spread between Russia,
Poland and the Black Sea.

Among the 24 candidates, the principal contenders are Viktor Yanukovich,
the tough-minded prime minister, and Viktor Yushchenko, a former central
banker who also served briefly as prime minister and now leads Our Ukraine,
the main opposition party.

The choice is stark. Mr Yanukovich is backed by Mr Kuchma, the presidential
administration, the regional governors, the security services, the biggest
television networks and most of Ukraine's business oligarchs. Mr
Yushchenko's supporters are liberals, nationalists and others united mainly
in their desire to drive Mr Kuchma and his associates out of power.

Both men talk earnestly of pursuing Ukraine's relations with Russia and with
the European Union. But in practice, Mr Yanukovich has support from
Vladimir Putin, who has privately ordered his oligarchs to back Mr
Yanukovich. Mr Yushchenko enjoys more favour in the west.

Mr Yanukovich stands for continuity. Mr Yushchenko for change. Mr
Yanukovich is for an oligarch-dominated economy. Mr Yushchenko is for open
markets. Mr Yanukovich is, by instinct, an authoritarian while Mr Yushchenko
wants to foster democracy. As Hryhoriy Nemyria, head of the International
Renaissance Foundation, a liberal think-tank based in Kiev, says: "The
choice is consolidating autocracy or consolidating democracy."

A win for Mr Yanukovich would strengthen Russia's influence in the region
and represent a big advance for the authoritarian ideas that dominate the
former Soviet Union. A victory for Mr Yushchenko would show that
democracy can survive in the unhospitable terrain of Russia's borderlands.

All this assumes that Mr Kuchma would accept the voters' verdict. There is
a danger that he might reject a Yushchenko victory and deploy the security
forces to defend the political status quo, as former president Eduard
Shevardnadze tried to do in Georgia. The opposition would come out on to
the street in protest, with unpredictable consequences.

Until recently, international investors would have cared little about a
Ukrainian election. For much of the 1990s, the country remained a dark place
for business in which scores died in battles to build oligarchic empires on
the ruins of communism. Outsiders repeatedly lost out in opaque
privatisations often won by Mr Kuchma's business associates, including his
son-in-law Viktor Pinchuk.

But, since 2000, modest economic reforms and strong steel prices - Ukraine's
biggest export - have generated rapid economic growth, hitting a peak of
over 13 per cent so far this year (see below). With the enlarged EU on
Ukraine's border, international investors are looking further for
opportunities. A Yushchenko victory would encourage more business people
to visit Kiev. But, given the macro-economic data, many would be interested
even if Mr Yanukovich won.

Today's Ukraine is very much Mr Kuchma's creation. When he first became
president in 1994, there were still doubts about whether Ukraine would
survive as an independent country following its break from the former Soviet
Union in 1991. But Mr Kuchma, who won re-election in 1999, avoided
emotive cultural issues and maintained ties with both east and west.

Participation in Nato's partnership for peace programme was balanced with
concessions to Russia, which has a naval base on Ukraine's territory. More
recently, Kiev has leaned closer to Moscow, with Ukraine joining Russia,
Belarus and Kazakhstan in a planned common market. It has also ignored
western protests and reversed the flow of a key pipeline, the Odessa-Brody,
so that instead of taking Caspian oil to the west it will help move Russian
oil to the Black Sea.

Mr Kuchma has long recognised that money talks. He bought the loyalty of
officials and businessmen alike by distributing favours to a narrow circle
of associates who have come to dominate the economy. Corruption and abuse
of power have run rife, including attacks on media freedoms. In a notorious
case, Mr Kuchma was accused by a parliamentary commission of involvement
in the murder of journalist Georgy Gongadze.

But the state is not monolithic. Mr Kuchma has been unable consistently to
control parliament, and even the hard core of his supporters is divided into
regional camps and competing business groups.

Mr Yushchenko rose to prominence as central bank chairman in the 1990s
when he griped repeatedly about government overspending and slow reforms.
In 1999 Mr Kuchma unexpectedly made him prime minister with a brief to
boost an ailing economy. In 16 months in office, Mr Yushchenko launched
a blitz of effective reforms, including liberalising agriculture,
eliminating tax privileges and attacking opaque barter schemes. He deftly
advertised his successes, winning public support.

But Mr Kuchma's associates wanted slower reforms that would allow them
to continue expanding their business empires. Mr Yanukovich, who became
prime minister in 2002, fitted the bill. As governor of the industrial
Donetsk region since 1997, Mr Yanukovich had tamed the powerful local
trades unions and the Communist party, and had unified the warring local
business clans into a single political force, co-operating closely with
Rinat Akhmetov, the region's wealthiest businessman.

Raised by his grandmother in Yenakievo, a grim steel and coal town in
eastern Ukraine, Mr Yanukovich was jailed twice in his youth for fighting.
But by working hard and making personal connections, he convinced local
people in authority to repeal his convictions and give him a second chance.
He proved himself an effective manager, organising the transportation of
coal and miners.

Since moving to Kiev, Mr Yanukovich has faced questions about his
convictions, his Donetsk loyalties, and his simple background. But public
opinion polls for the past year have shown that Mr Yanukovich would make
the most popular candidate from Mr Kuchma's side. Ordinary Ukrainians
tended to give him some credit for the fast economic growth, while blaming
the less pleasant aspects of Mr Kuchma's regime on others.

In a recent interview with the Financial Times, Mr Yanukovich stood by his
economic record. "We have already convinced society that we are able to
change the lives of our citizens for the better, to improve the economy. I
will continue this policy but with greater dynamism and Ukraine will be
changing fast," he said.

But as election day has drawn nearer, Mr Yanukovich's campaign has
shifted to cruder tactics. His strategy has been to attempt to associate
Mr Yushchenko with extreme rightwing groups, such as the anti-semitic
Ukrainian National Assembly.

The effort to pin an "extremist" label on Mr Yushchenko is being taken to
absurd extremes. Recently, appearing in front of students in western
Ukraine, Mr Yanukovich was hit by an egg thrown from the crowd. The
100 kg prime minister clutched his chest, collapsed and let himself be
carried away by his panicked bodyguards. For the next three days, Mr
Yanukovich stayed in hospital, while pro-government groups rallied
against the "extremism" they said Mr Yushchenko was promoting.

The prime minister's campaign team claimed he was hit by a stone or battery
although television footage of the incident showed only an egg. However,
these pictures were shown locally only on Channel 5, a channel owned by
one of Mr Yushchenko's allies. The three main national television channels,
which are biased in favour of Mr Yanukovich, took the authorities' line.

Kiev's Institute for Mass Information, an independent media monitor, notes
that Channel 5 is hindered from broadcasting in several big cities, while
three regional opposition newspapers are hindered from publishing and a
national opposition paper has had its accounts frozen.

Mr Yushchenko's supporters say the authorities do not shrink from violence.
The most disturbing incident of the campaign has been the alleged severe
poisoning that incapacitated Mr Yushchenko for most of September. He
has accused un-named "authorities" of deliberately poisoning him.

Despite it all, democracy is at work. Both candidates are making populist
pledges, promising big increases in pensions and public employees' salaries.

Mr Yushchenko speaks of putting "bandits" in prison, which also strikes a
chord. Most Ukrainians are convinced their country is dominated by
criminals. Opinion polls show Mr Yushchenko ahead of Mr Yanukovich
by 3 to 9 points.

All previous national elections have suffered from some degree of vote-
rigging. In the 2002 parliamentary elections, regional election commissions
miscounted results from polling stations. Ukrainians are discussing whether
a disputed victory for Mr Yanukovich might be followed by protests of the
kind that toppled Mr Shevardnadze in Georgia last year. The opposition
would certainly call for protests if it felt its victory was stolen. Whoever
prevails, they will bring changes. The new president is likely quickly to
stamp his authority over the police and security forces and may well send a
few opponents to jail or exile. There would be immediate re-alignment in
parliament followed by parliamentary elections in 2006.

A Yushchenko victory might bring faster economic changes. Despite the
campaign rhetoric, it is unlikely there would be any sweeping moves against
the well-entrenched oligarchs. Mr Yushchenko said he would review only
one privatisation: the recent sale of Kryvorizhstal, Ukraine's biggest steel
mill. However, if Mr Yushchenko succeeds in creating a more transparent
economy, the oligarchs could find it more difficult to fend off competition.

Mr Yanukovich would have the support of Ukrainian and Russian big business.
But his presidency could also prompt shifts of power among the oligarchs -
perhaps with his own associates in Donetsk benefiting at the expense of
people closer to Mr Kuchma.

In international relations, Mr Yushchenko would start off with strong
backing from the EU and US. A partial customs union with the EU and
membership of Nato and the World Trade Organisation would be plausible
goals. Mr Yushchenko says Ukraine could be a "normal" European country.
"I think that European economic, social and democratic standards suit every
person who lives in Ukraine," he told the FT recently.

Mr Yanukovich could also bring Ukraine into the WTO, and he might make
progress liberalising trade with the EU. But he would probably focus more
on improving trade with Russia and other former Soviet republics and develop
the Russian-inspired planned common market.

Mr Yushchenko's relations with Russia would be difficult. Ukraine could
become more involved in plans to bring Caspian oil to Europe, and Russia
could try to cut its reliance on Ukraine's oil and gas pipelines. But both
sides would have many motives to co-operate.

Even if few Ukrainians go to the ballot box with these geo-strategic issues
in mind, the way they cast their votes will seriously affect the balance in
Europe between Russian and the west.

During the 1990s, the Ukrainian economy contracted but between 2000
and 2003 the trend was reversed and it expanded by one-third. The
country's gross domestic product has grown by 13.6 per cent this year
and the trade surplus is running at 12 per cent of GDP.

Kiev and major industrial centres are busy with renovation. Shops and
restaurants are opening their doors, and advertising is everywhere. "All of
a sudden, Ukraine is on the map. I'm convinced there's going to be a crazy
rush to get in," says Terry Pickard, a Briton who has run a property
business in Kiev since 1992.

But other business people worry about rampant corruption, red tape and
the dominance of key sectors by a handful of politically influential
business oligarchs. Willem Buiter, chief economist at the European Bank
for Reconstruction and Development, the multilateral bank, says: "Business
conditions remain very difficult."

The recovery began from a low base as GDP had fallen to 35 per cent of
Soviet-era levels. The initial impetus came from exports, stimulated by a
sharp devaluation in the currency, but also from strong domestic demand,
encouraged by a rapid increase in the money supply. Viktor Yushchenko,
prime minister in 1999-2001, stabilised the economy and in the past two
years Ukraine has had a further boost from rising world prices for its main
export, steel. There has also been growing demand in Russia for industrial
machines. Total exports increased by 24 per cent in 2003 and 43 per cent
in the first half of this year.

Reforms have slowed since Mr Yushchenko left office but key decisions
have helped to keep market forces rolling. A mortgage law has livened up
the housing market. Profit tax rates were cut to 25 per cent and personal
income tax rates to a flat 13 per cent. Tax revenues are rising as lower
rates are encouraging people to move out of the unregistered economy.

Mykola Azarov, finance minister, insists the outlook is good, with a
forecast of 8.6 per cent growth in 2005. While accumulated foreign
investment is low - at $7bn compared with more than $55bn in neighbouring
Poland - it is growing. Ikea, the Swedish furniture group, is planning to
invest $300m.

However, there are flies in the ointment. First, the forthcoming election
has prompted the government to relax the purse strings and double minimum
pensions. Inflation spiked upward in September and the central bank warned
this week that the government cannot afford all its promises. One of the
government's advisers says: "If they start running big deficits now, things
could get much harder when growth slows down."

Banks have sharply increased lending, taking the volume of loans relative to
GDP up to 29.5 per cent, prompting fears of a bad loans shock. The
International Monetary Fund has warned of "serious concerns about credit
risk in the banking sector". Also, the economy is dominated by a handful
of wealthy oligarchs, who squeeze out competition.

Owners are starting to invest in up-dating their businesses. But while trade
surpluses are high so is capital flight. Exporting companies are still
stashing billions of dollars abroad, like their Russian counterparts.

Finally, many foreign investors hesitate to enter an economy perceived as
one of the world's most corrupt. Transparency International ranked Ukraine
106th out of 133 countries in its corruption perceptions index last year, on
a par with Zimbabwe and Bolivia.

Ukraine remains a poor country with huge investment needs and widespread
social problems, including alcoholism and Aids. GDP per head is forecast to
reach about $1,250 this year - only about 40 per cent of Romania's and
one-third of Russia's. Opinions differ about the effect of this month's
elections. Some businessmen argue that, if the vote is not seen to be fair,
foreign investors will stay away.

Mr Pickard says Ukraine's vibrant entrepreneurs will inevitably carry the
day. He and two partners have launched the country's first property
investment fund, Primeros. The fund's $40m offer expires on October 31,
the day the polls will be held. -30-
========================================================
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