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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 194
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 19, 2004

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

1. "A CRUCIAL CHOICE FOR UKRAINE"
OP-ED: By U.S. Senator John McCain
The Washington Post, Washington, D.C.
Tuesday, October 19, 2004; Page A23

2. "UKRAINE READY TO CRACK DOWN ON ELECTION PROTEST"
By Tom Warner in Kiev, Financial Times, London, UK, Tue, Oct 19, 2004

3. FATE OF DEMOCRACY IN UKRAINE WILL BE AT STAKE OCT 31
OP-ED: by Daniel Sneider, Foreign Affairs Columnist
San Jose Mercury News, San Jose, California
Knight Ridder Newspapers, Monday, October 18, 2004

4.VIKTOR YUSHCHENKO STANDS BY POISONING ALLEGATIONS
Interfax-Ukraine news agency, Kiev, in Russian, 18 Oct 04
BBC Monitoring Service, UK, in English, Mon, Oct 18, 2004

5. "BIO-WEAPONS IN UKRAINE?"
Jane's Intelligence Digest, Jane's Information Group
Coulsdon, Surrey, UK, Friday, October 15, 2004

6. PRES CANDIDATE YANUKOVYCH OPPOSES SALE OF LAND
Ukrainian News Agency, Kyiv, Ukraine, Tue, October 19, 2004

7. AMERICAN WORLDWIDE CHEMICAL LLC, AND UKRAINIAN
CHEMICAL MAJOR AZOT TO CREATE JOINT ENTITY
Azot third largest producer of ammonia in the country
IntelliNews, Ukraine Today, Kyiv, Ukraine, Tue, October 19, 2004

8. UKRAINE GOV'T WORSENS INFLATION FORECAST FROM
6.7% to 8.5% IN 2004 SAYS PM YANUKOVYCH
Goal is to have wages and household incomes grow faster than inflation
IntelliNews - Ukraine Today, Kyiv, Ukraine, Tue, October 19, 2004

9. "SOUFFLET UKRAINE" JOINED UKRAINIAN GRAIN ASSN
French Group Soufflet one of the world's largest agribusinesses
AgriMarket.Info, Dnipropetrovsk, Ukraine, Mon, October 18, 2004

10. "RED DIRECTORS"
Ukraine's Soviet-era business managers wary of upcoming elections
By Serhiy Vovk, Invest-Gazeta, Kiev, in Russian 12 Oct 04; p 8 - 11
BBC Monitoring Service, UK, Monday, Oct 18, 2004

11. UKRAINIAN PRES CANDIDATE VIKTOR YUSHCHENKO
DRAFTS DECREE ON TROOP PULLOUT FROM IRAQ
Interfax-Ukraine news agency, Kiev, in Russian, 18 Oct 04
BBC Monitoring Service, UK, in English, Mon, Oct 18, 2004

12. "BELARUSIAN SCENARIO" CREEPING INTO UKRAINE
AHEAD OF PRESIDENTIAL ELECTIONS
Ukrayinska Pravda website, Kyiv, in Ukrainian, Oct 14, 2004
BBC Monitoring Service, UK, in English, Mon, Oct 18, 2004
========================================================
ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER ONE
========================================================
1. "A CRUCIAL CHOICE FOR UKRAINE"

OP-ED: By U.S. Senator John McCain
The Washington Post, Washington, D.C.
Tuesday, October 19, 2004; Page A23

One election this year will determine the political destiny of a vitally
important country, define its international orientation and test its
democratic credentials. I do not refer to the recent free elections in
Afghanistan, or the elections next year in Iraq or even our own presidential
race. All these are critical in their own right, but so is Ukraine's
historic step on Oct. 31. When the Ukrainian people line up that day to
select a new president, the world will be watching.

The importance of this election lies not so much in the candidate selected
but rather in its indication of whether Ukraine will continue down a
democratic path. So far the prospects appear dim. President Leonid Kuchma
is retiring, and the two front-runners in the race to replace him are Prime
Minister Viktor Yanukovych and opposition candidate Viktor Yushchenko.
The Ukrainian government has used its tax laws to target Yushchenko and
other opposition candidates, denied the opposition equal access to the
media, disrupted campaign events, and intimidated candidates and their
supporters. Most recently, Yushchenko survived a suspected poisoning
that left his face partially paralyzed.

In August I traveled to Ukraine to talk to government officials and
opposition candidates. What I found was a sense that Ukraine was moving
backward, not forward, on the road to democracy. Not only were the reports
of intimidation against the opposition widespread, but there was also a
pervasive expectation that the October election -- and the second-round
runoff three weeks later -- will be rigged by the government. Already a
local election in western Ukraine has been stolen, and there have been
balloting irregularities in other local elections.

These developments are disturbing not just because they abridge the
political rights of the Ukrainian people but because they cast a shadow over
the country's international orientation. Should the government continue this
crackdown on the opposition and rig the presidential election, Ukraine's
relations with the United States and Europe will inevitably suffer. And if
our relations deteriorate, we risk Ukraine slipping further into the Russian
orbit.

I believe that, if offered the choice, most Ukrainians would choose a future
tied to the West. But many Ukrainians believe that they have been denied
this very choice: While the West's door seems closed -- neither NATO nor
the European Union has offered Ukraine much hope of joining their
organizations anytime soon -- Russia's is always open. It would not be
surprising if Ukrainian leaders increasingly aligned their country's
ambitions with those of their Russian neighbors. As Zbigniew Brzezinski
wisely remarked, with Ukraine subordinated, Russia automatically becomes
an empire.

So it is incumbent upon both the Western democracies and the government of
Ukraine to reassess where things stand today. The Ukrainian government must
end its siege of democracy and make the courageous choice to hold free, fair
elections. If it does so, the United States and Europe should pursue an
enhanced relationship with Ukraine, looking hard at its eventual membership
in NATO and the European Union, expanding our bilateral relations, and
determining ways to enhance the trading relationship.

Ukrainian officials must understand that more than their country's future is
at stake in this election. Their reputations and their ability to conduct
business are also at risk. If the oppression continues and this presidential
election is stolen, the United States and Europe should institute visa bans
against those responsible. These would not merely limit the ability of these
officials to go skiing abroad; the visa bans would handicap their ability to
conduct business in Europe and the United States. The Western democracies
should also consider implementing other targeted penalties. If Ukraine's
leaders wish to take their country further in the direction of Belarus, then
they will be increasingly treated by the world like the leader of Belarus --
an international pariah.

This outcome is entirely avoidable, but we should be prepared to move in
that direction if necessary. The people of Ukraine are free individuals
whose democratic rights are under attack. In his most famous work, the
great Ukrainian poet Taras Shevchenko wrote of his desire for Ukrainian
independence, hoping that one day his countrymen would join "the family of
the free." The people of Ukraine have achieved this dream, and they have
grasped their democratic rights. The question now is whether this love of
freedom and democracy is limited to the Ukrainian people, or whether their
rulers embrace it as well. -30-
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The writer is a Republican senator from Arizona.
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http://www.washingtonpost.com/wp-dyn/articles/A43718-2004Oct18.html
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ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER TWO
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2. UKRAINE READY TO CRACK DOWN ON ELECTION PROTEST

By Tom Warner in Kiev, Financial Times, London, UK, Tue, Oct 19, 2004

KIEV - Ukrainian police could use new methods to deal with people
protesting about the results of presidential elections on October 31. The
methods had been approved by the health ministry and would not cause
health problems, a top police official said yesterday.

The warning from Olexander Milenin, Kiev's police chief and a deputy
interior minister, came as authorities launched a nationwide crackdown on
the Pora youth group connected to the campaign of Viktor Yushchenko,
opposition presidential candidate.

Mr Milenin's comments and the accusation from the prosecutor general that
the youth group was suspected of terrorism mark an escalation of tensions
before the vote in which Leonid Kuchma, the outgoing president, strongly
supports Viktor Yanukovich, the prime minister. Ukrainian media predict the
results of the elections will be disputed and followed by street protests.

Mr Yushchenko, interviewed by Vremya Novosti, the Russian newspaper,
said the case against Pora showed "the growing hysteria among the
authorities" about the possibility that he would win. He said his supporters
would protest "using only legal means" if votes were falsified.

But Mr Milenin, in a newspaper interview, said: "There won't be any
revolution here. We are ready for the unexpected. We even have our ninjas -
a recently formed subdivision - trained in special measures. "We also have
new means, which for now I won't speak about. I'll only say that their use
has been approved by the health ministry. I assure you, the health of
citizens won't suffer," he said.

The case against Pora is the first time authorities have brought criminal
charges against Mr Yushchenko's campaign activists. The prosecutor general's
office said a bomb was found during a weekend raid of the group's office in
Kiev. Mr Yushchenko's campaign said the bomb was planted. Mr Milenin
said Pora members were highly mobile and were evading arrest.

Taras Stetskiv, a member of parliament from Mr Yushchenko's Our Ukraine
movement, said he was present when police conducted an initial search of
the Pora office in Kiev, and a Pora activist made a videotape showing that
police thoroughly searched the office and found nothing. Mr Stetskiv said
police announced they had found the bomb after a second search, during
which no one except police was present.

Yaroslav Hodunok, an activist in the Our Ukraine movement, on Saturday
was placed in a special interrogation cell at the elite SBU national secret
police force. Mr Yushchenko's campaign said a second activist, Viktoria
Fomenko, was arrested by SBU officers in Odessa yesterday, and other
activists had been questioned and released.

Local media reported police raids in Kiev and Lviv, including one on Sunday
on the main building of the Kiev-Mohyla Academy, a private university where
some Pora activists study. On Friday, the US protested about "serious
violations" during the campaign and warned that it would re-examine its
relationship with Ukrainian leaders if the election was not fair. -30-
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ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER THREE
=======================================================
3. FATE OF DEMOCRACY IN UKRAINE WILL BE AT STAKE OCT 31

OP-ED: by Daniel Sneider, Foreign Affairs Columnist
San Jose Mercury News, San Jose, California
Knight Ridder Newspapers, Monday, October 18, 2004

Two days before Americans go to the polls, there will be another
presidential election that is of great importance to the United States.
The fate of democracy in the former Soviet republic of Ukraine will be at
stake in its October 31 vote. The choice is likely to shape whether Ukraine,
a nation of 50 million people, faces West toward Europe, or back East
toward its former imperial master, Russia.

The Ukrainian election campaign has been a turbulent, even ugly, affair.
Hints of violence and manipulation of the results are in the air. The
government-controlled media have steered coverage toward the current rulers
in Kiev. And the main opposition candidate, the pro-Western former Prime
Minister Viktor Yushchenko, was apparently poisoned. He believes it was by
the regime itself.

But the most disturbing element has been the blatant intervention of Russian
President Vladimir Putin. Nothing could have been more obvious than the
televised coverage recently of an ostensibly private celebration of Putin's
birthday at his residence outside Moscow. Putin kissed the current
Ukrainian president and his anointed successor, declaring: "Russia is not
indifferent to the choice that the people of Ukraine will make. ... The
future of relations depends on how Ukraine's leadership will build its
policy toward Russia."

Russia's choice, Prime Minister Viktor Yanukovych, returned the favor,
reaffirming that he will reverse Ukraine's current course toward eventual
membership in the NATO alliance.

Moscow is worried that reformist opposition leader Yushchenko would move
Ukraine more rapidly toward both NATO and toward membership in the
European Union. But Yushchenko is a pragmatist, and he knows that
neighboring Russia is Ukraine's largest trading partner. Despite the
depiction of him by the Russian media as an extremist Ukrainian nationalist,
he will try to keep good ties with Russia.

Moscow has a larger goal in mind: close economic integration among the core
of the old Soviet Union, namely Russia, Belarus, Ukraine and Kazakhstan.
Moscow's current geopolitical thinking has moved away from an earlier
emphasis on integration with Europe. Now the Kremlin envisions "two
Europes" - the EU and a Russian-led "Euro-East."

"Russia still values its status as a European country, especially if it can
cast itself as a leader of the `other Europe,'" Igor Torbakov, a
Moscow-educated Ukrainian scholar and journalist, told me.

Beyond economics, Ukraine occupies a special place in the minds of Russians.
For them, it is still Rus, the birthplace of Russian civilization and
culture. "Without Ukraine, there can be no Russian empire," said Torbakov.

The current Ukrainian government is a comfortable fit with Putin's Russia -
it, too is dominated by big business oligarchs and government bureaucrats,
bound in a web of deep corruption. As in Russia, the government controls all
the national TV channels and most of the print media. It relies heavily on
support from the Russian-speaking eastern part of Ukraine and the coal and
steel belt in the south.

Unfortunately for Moscow, as indicated by polls, Ukrainians are not taking
the hint. Polls give the pro-Western reformer a clear lead. That has
increased fears that there will be an attempt to rig the vote. Those
concerns were underlined when Yushchenko spent weeks in an Austrian
hospital, partly paralyzed, from the effects of some kind of poisoning. The
government tried to brush this off as a case of food or alcohol poisoning -
but former KGB Major General Oleg Kalugin told me that such weapons
have long existed in the arsenal of the former Soviet secret services.

The West and the United States need to wake up to the critical nature of the
Ukrainian election. Unfortunately, the White House seems happy just to
praise the current regime in Ukraine for sending 1,650 troops to Iraq.

The United States needs to make clear that Ukrainian democracy is a vital
interest. Large numbers of international observers should be present for the
vote, and exit polls should be taken to try to block a fix. And we need to
be thinking what to do should Ukrainians take to the streets if their rights
are denied. -30-
----------------------------------------------------------------------------
Daniel Sneider is foreign affairs columnist for the San Jose Mercury News.
Readers may write to him at: San Jose Mercury News, 750 Ridder Park Drive,
San Jose, Calif. 95190-0001, or e-mail him at dsneider@mercurynews.com.
========================================================
ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER FOUR
Your comments about the Report are always welcome
========================================================
4. VIKTOR YUSHCHENKO STANDS BY POISONING ALLEGATIONS

Interfax-Ukraine news agency, Kiev, in Russian, 18 Oct 04
BBC Monitoring Service, UK, in English, Mon, Oct 18, 2004

KIEV - Opposition presidential candidate Viktor Yushchenko has said
that he stands by his statements that a mystery illness that kept him out of
the campaign for over a month was the result of deliberate poisoning.
Progovernment politicians and media savaged Yushchenko, who said in
parliament on 21 September that the authorities had tried to kill him, for
failing to produce conclusive proof to back up his allegations.

Yushchenko also said that he would make public all documents about his
treatment at Vienna's Rudolfinerhaus hospital in the face of criticism that
he has not cooperated with the parliamentary investigation into the causes
of his illness. The following is the text of a report by Interfax-Ukraine
news agency:

LVIV - Presidential candidate Viktor Yushchenko has said that all material
relating to his treatment in Austria will be made public. Yushchenko told
this to journalists in Lviv on 18 October.

"I want this process to be public and transparent. Therefore I promise that
all this material will be made public," Yushchenko said. He said that some
of the material is already in Ukraine. He has already handed part of this
material over to parliament. He will hand over the rest after completion of
a number of tests.

Yushchenko said that he would undergo a full medical examination when he
had time in order to dispel rumours about his "chronic diseases". "I now
feel fine and am leading an active lifestyle. I am travelling a lot and
meeting people. I'm a mountaineer and rock-climber, I am a downhill skier.
So all the rumours about chronic diseases are simply fairy tales," he said.

Yushchenko also said that he would not be taking back a word from his
previous statements about his poisoning. "I want you to understand that I am
not retracting anything I said earlier. What happened to me was a way of
settling with a presidential candidate," he said.

Yushchenko was unable to return to Kiev after a rally in Luhansk on 17
October due to bad weather. For the same reason, he was not able to land
in Zaporizhzhya, where he plans to address a rally today. Yushchenko flew
instead to Lviv. He will fly to Zaporizhzhya later today.

[Pro-presidential TV channels have said that Yushchenko's medical records
show that he has long suffered from chronic gastro-intestinal conditions -
see ICTV television, Kiev, in Ukrainian 1500 gmt 3 Oct 04.] -30-
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ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER FIVE
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5. "BIO-WEAPONS IN UKRAINE?"

Jane's Intelligence Digest, Jane's Information Group
Coulsdon, Surrey, UK, Friday, October 15, 2004

Last month, Ukrainian opposition leader Viktor Yushchenko, who leads in the
polls for the 31 October presidential election, fell ill. In this special
extended report, JID's regional correspondent reviews mounting evidence that
points to a sinister assassination plot and echoes our warnings of a
probable dirty tricks campaign ahead of the poll (see JID 20 August 2004).

After falling ill, Yushchenko was sent to the well-known Vienna private
clinic Rudolfinerhaus for the treatment of what Ukrainian doctors had
initially diagnosed as 'food poisoning'. However, Austrian specialists
discovered that the politician's ailment was something far worse than an
upset stomach and caused by what they believed were 'chemical' substances
introduced artificially into his food or drink.

Yushchenko's illness was so grave that the Vienna clinic believed that his
life would have been in danger if he had arrived two days later. With such
symptoms patients have 80 per cent chance of falling into a coma from which
they rarely recover.

After returning to Kiev, Yushchenko accused the Ukrainian authorities of
attempting to poison him in a tough speech before the country's parliament.
Both his statement and the obvious disfigurement of his face convinced most
parliamentary deputies to vote in favour of the creation of a special
parliamentary commission to investigate the alleged poisoning.

Several policies were immediately set in motion to offset the mounting
negative publicity towards the authorities and their presidential candidate,
Prime Minister Viktor Yanukovych. First, the oligarchs went on the
offensive.

Reuters news agency reported on 10 October that a letter, allegedly written
by one of Yushchenko's Austrian doctors, claimed that there were no grounds
to prove that he had been poisoned, although he certainly was not in good
health.
SOMETHING HE ATE?
The oligarch-controlled media in Ukraine then proceeded to publicise the
Reuters report, while other Western and Russian news agencies picked up
the story. A character assassination of Yushchenko then followed in
Ukraine's domestic media that centered on alleged lies about a poisoning
attempt, claiming instead that his illness was due to a combination of bad
health and poor diet. This criticism was particularly strident on Ukraine's
ICTV, a television channel controlled by Pinchuk.

Next, the pro-presidential factions in parliament began demanding the
liquidation of the parliamentary commission that was investigating the
alleged poisoning. Failing to achieve this, they started boycotting
parliamentary sessions. They were particularly infuriated by Ukrainian
parliamentary chairman Volodymyr Lytvyn's call for international statesmen
to create a fact-finding commission to investigate Yushchenko's alleged
poisoning. Then the head of the parliamentary commission, former Security
Service officer Volodymyr Sivkovych, was persuaded to support the line that
Yushchenko had not been poisoned in his report delivered to parliament on 7
October. The deputy head of the commission and other members of the
commission promptly distanced themselves from Sivkovych.

Following these events, what is now believed to have been a fake
'assassination' attempt was made on Yanukovych when he travelled to
Yushchenko's stronghold of western Ukraine. Wearing a bulletproof vest to
protect him, Yanukovych was instead unexpectedly hit by an egg thrown by
student. Believing it to be part of the planned 'assassination' attempt, he
promptly fell over.

The entire incident was replayed on television channels not controlled by
pro-presidential oligarchs. They poked fun at Yanukovych for having fallen
over after being hit by an egg. The planned fake assassination backfired
badly. Nevertheless, it helped to stoke up demonstrations in
Russian-speaking regions of Ukraine against western Ukrainian 'nationalists'
and Yushchenko's supporters for their alleged radical tactics.

Meanwhile, Yushchenko's health continued to deteriorate after his return
from Austria. He was then sent to Vienna a second time for more tests and
treatment. He only returned to election campaigning in Ukraine on 10 October
where he addressed a 100,000 rally in the western Ukrainian city of Lviv.
Yushchenko has lost between three and four weeks of campaign time in the
crucial month preceding the election.
VIENNA'S SHOCK ANNOUNCEMENT
However, after 10 days of intensive testing, the specialists in Vienna
arrived at a stunning conclusion. On 7 October, the clinic issued a
statement admitting that its staff had exhausted all their tests and were
unable to find the real cause of Yushchenko's illness. His symptoms did
"not correspond to the range of diseases known in civil medicine".

The statement then made the bombshell observation that the specialists
suspected the use of what they termed a "biological weapon" and added that
they had sent out requests for experts on chemical and biological weapons to
assist them.

"The clinical course of the disease is now giving grounds to suspect the use
of specific substances that are usually found in biological weapons," the
Vienna clinic stated. Meanwhile, the probable biological weapon was being
described by members of Yushchenko's election team as five picogrammes
of an endtoxin.

A day later Austrian police seized all of the documents pertaining to
Yushchenko's illness from the Vienna clinic. The directors explained this
step by saying that it was due to a 'crime' having been committed that had
both Europe-wide and international repercussions.

Mikail Zimpfer, president of the clinic, confirmed that the final results of
the diagnosis and investigation of Yushchenko's illness, made together with
chemical and biological weapons experts, would be ready by the end of
October. In other words, in time for Ukraine's presidential poll. Zimpfer
accompanied Yushchenko on his return from Vienna through Lviv to Kiev.
After his initial press conference at Kiev's airport, other joint events for
the
media were planned. Yushchenko also planned to address parliament again
with the aim of increasing his pressure on the authorities by again accusing
them of being behind the alleged assassination attempt.

In an interview with a Kiev weekly after he returned to Ukraine, Yushchenko
accused the authorities of having become the main "threat to [Ukraine's]
national security". The prospects of President Leonid Kuchma and his allies

heading off a Georgian-style revolution will be made even more difficult
following the latest allegations of 'bio-terrorism'. According to an opinion
poll released shortly after Yushchenko returned to Ukraine, 51 per cent of
Ukrainians who were aware of Yushchenko's poisoning believed that it was
an assassination attempt.
DOES UKRAINE HAVE BIO-WEAPONS?
The conclusion reached by the Vienna clinic of the use of biological agents
against Yushchenko give rise to two theories as to where such substances
might have originated. The first is that, a front line Soviet state, Ukraine
was not only home to large concentrations of Soviet troops, but also
different types of weapons of mass destruction. Until June 1996, Ukraine
possessed the third-largest nuclear arsenal in the world. This raises the
question of whether a biological weapon had been sourced from stocks that
Ukraine failed either to destroy or to transfer back to Russia during the
1990s.

The Security Service of Ukraine has denied that the country has secret
laboratories that manufactured biological weapons either during the Soviet
era or since Ukraine gained its independence. However, this does not rule
out some elements of the security forces continuing to maintain small stocks
of WMDs inherited from the former Soviet Union.

Ukraine's former defence minister, Yevhen Marchuk, reported earlier this
year that large stocks of weapons inherited from the Soviet Union had gone
missing while his predecessor was in office. Marchuk was replaced earlier
this month by Oleksandr Kuzmuk, who had been minister of defence in the
1990s until his resignation in 2001.

The second possibility is that a biological substance could have been
supplied via Russia. Moscow is actively meddling in the Ukrainian elections
through 'dirty tricks' public relations specialists. Could an assassination
attempt against Yushchenko have been a joint operation undertaken by Russia
and Ukraine? The siloviki ('men of power') in the Kremlin are as desperate
as Kuchma and Medvedchuk to prevent Yushchenko coming to power at
almost any cost.

Regardless of whether Western governments suspect either the former or the
latter scenario, Ukraine is again in the international spotlight for the
suspected proliferation of weapons. The latest controversy follows scandals
surrounding arms sales to the Taliban regime in Afghanistan, the provision
of weapons for civil wars in western Africa and Kuchma's authorisation of
the sale of the mobile Kolchuga radar system to Saddam Hussein's Iraq.

The latest incident will be especially embarrassing to the US. Last week the
Ukrainian opposition unearthed 150 tonnes of anti-American and
anti-Yushchenko leaflets and posters in Kiev which portrayed Yushchenko
as Washington's stooge. Now, the Bush administration will have to deal with
allegations that Ukraine - which contributes the fourth largest number of
troops to the US-led Coalition in Iraq - is suspected of involvement in the
possible proliferation of biological weapons.

The alleged attempted assassination of Yushchenko, whether by chemical or
biological agents, is likely to rule out any chance of Western governments
accepting the presidential elections as having been held in a free and fair
manner. If Yanukovych is elected, his chances of being recognised as the
legitimate president may be slim. -30-
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ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER SIX
Additional names for the distribution list are always welcome
========================================================
6. PRES. CANDIDATE YANUKOVYCH OPPOSES SALE OF LAND

Ukrainian News Agency, Kyiv, Ukraine, Tue, October 19, 2004

KYIV - Prime Minister Viktor Yanukovych, who is a candidate in this
year's presidential elections, has expressed opposition to introduction of
sale of land.

Yanukovych was addressing residents of the Reshetilivka district during his
tour of the Poltava region. "Regarding land, I oppose the sale of land. We
should continue land reform, but land should not be sold under any
circumstances," Yanukovych said.

According to him, every Ukrainian who has the right to a plot of land should
obtain it while the authorities should ensure fair evaluation of this plot
and build such a system of land relations that will ensure that nobody can
take away land from its owner and allow inheritance of land.

As Ukrainian News earlier reported, the parliament extended the moratorium
on the sale of land until January 1, 2008, in early October. The parliament
extended the moratorium until January 1, 2007, in July, but President Leonid
Kuchma vetoed the relevant law.

Kuchma argued that the extension of the moratorium on sale of land would
create an obstacle to creation of proper conditions for development of a
land market, hamper the rights of citizens, corporate entities, territorial
communities, and the state to own land, and violate landowners' right to
freely dispose of their assets.

According to Kuchma, extension of the moratorium will also render the
agro-industrial sector less attractive to investments and curtail land
reform in the sector. According to the Land Code, citizens have the right
to sell their land plots from January 1, 2005. -30-
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ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER SEVEN
Suggested articles for publication in the Report are always welcome
========================================================
7. AMERICAN WORLDWIDE CHEMICAL LLC, AND UKRAINIAN
CHEMICAL MAJOR AZOT TO CREATE JOINT ENTITY
Azot third largest producer of ammonia in the country

IntelliNews, Ukraine Today, Kyiv, Ukraine, Tue, October 19, 2004

KYIV - A commission for choosing an investor for state-held chemical
major Azot (Severodonetsk) chose American company Worldwide
Chemical LLC to create a closed stock, based on Azot.

According to local media, there were three potential investors participating
in the tender, namely East-Ukrainian Chemical Company, Ukragrokon
Ukraine and Worldwide Chemical LLC. The new joint stock society might
be created in Apr 2005 after readjustment process is completed.

According to the condition of the tender, Worldwide Chemical LLC will
own a 50%-1 share stake in new entity, while government – 50%+1 share
stake. This scheme is similar to that of resent creation of joint stock
Titan, another chemical major.Azot is the third largest producer of ammonia
in the country. In 2003, net profit of the enterprise made up UAH 100mn
(USD 20.64mn), while net revenues increased 99.5% y/y to UAH 1.23bn.
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ACTION UKRAINE REPORT-04, No. 194: ARTICLE NUMBER EIGHT
Letters to the editor are always welcome
========================================================
8. UKRAINE GOV'T WORSENS INFLATION FORECAST FROM
6.7% to 8.5% IN 2004 SAYS PM YANUKOVYCH
Goal is to have wages and household incomes grow faster than inflation

IntelliNews - Ukraine Today, Kyiv, Ukraine, Tue, October 19, 2004

KYIV - During his visit to Chernigiv region, PM Viktor Yanukovych noted
that government forecast in 2004 average annual inflation would make up
8.5% y/y. Worth noting, government previously forecasted average inflation
at 6.7% y/y and 5.8-6.3% eop.

At that, Yanukovych underlined that the government’s goal is to make sure
wages and household income grows faster than inflation.

According to government’s forecast, taking into account the expected
inflation rate, wages and incomes should increase at least 25%. Yanukovych
announced that rapid price growth was caused by the fact that wages and
pension benefits were increased. However, food prices should not rise that
fast. He argued that overall price growth is not that alarming as prices of
electricity, gas and water did not increase significantly. -30-
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ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER NINE
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9. "SOUFFLET UKRAINE" JOINED UKRAINIAN GRAIN ASSN
French Group Soufflet one of the world's largest agribusinesses

AgriMarket.Info, Dnipropetrovsk, Ukraine, October 18, 2004

DNIPROPETROVSK - Company Soufflet Ukraine Ltd, representing
the interests of French Group Soufflet on Ukrainian market, has become
a member of Ukrainian Grain Association (UZA), Kyiv.

Soufflet group of companies is one of the world's largest business units,
specialising in trade and processing of grains. The main fields of its
business activities are trade of barley and wheat on the world market.
Ukrainian Grain Association represents the interests of Ukraine's major
grain exporters. (www.agrimarket.info) -30-
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ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER TEN
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10. "RED DIRECTORS"
Ukraine's Soviet-era business managers wary of upcoming elections

By Serhiy Vovk, Invest-Gazeta, Kiev, in Russian 12 Oct 04; p 8 - 11
BBC Monitoring Service, UK, Mon, Oct 18, 2004

While many directors of large enterprises in Ukraine have been in their
positions since Soviet times, they have managed to retain control over a
number of very influential factories and companies, a Ukrainian business
weekly has said. These "red directors" owe a lot of their longevity to ties
with Ukrainian President Leonid Kuchma, who "in the past was also a red
director".

However, with the presidential election looming, these directors will have
to seek support elsewhere and the author contends that this is likely to
take place in parliament, "where they might even form their own faction".
The following is the text of the article by Serhiy Vovk, entitled "Red
Directors", published in Ukrainian business weekly Invest-Gazeta on 12
October, subheadings as in original, except where noted:
WHY TALK ABOUT IT?
ONE ON THE FIELD OF WAR [ellipsis as published]
...[ellipsis as published] and all the more in business. Especially if that
"one" has been in control of a big enterprise since Soviet times, has been
able to hold on to it through the transition from a planned to a market
economy and fend off all attacks by large financial-industrial groups. In
the mid 1990s red directors were considered leftovers from the Soviet era,
and were not expected to be able to withstand the rapidly developing private
business in Ukraine or be able to compete with Western companies on
foreign markets. However, in reality everything happened according to
another scenario. Today the red directors control not only large
enterprises, but companies which are leaders in their sectors, and are
playing the role of market-makers in their own way.

Volodymyr Boyko (Mariupol-based Illich steelworks) in metallurgy; Mykola
Yankovskyy (Stirol concern) in chemicals; Yukhym [Yefym, also referred to as
Yukhum in the database] Zvyahylskyy (Zasyadko mine) in the coal industry;
Heorhiy Skudar (Novokramatorsk tooling plant); Vyacheslav Bohuslayev
(Motor Sich); and Volodymyr Lukyanenko (Frunze refinery), Oleksandr
Slobodyan (Obolon) in the brewing industry, and the list can go on. It was
no coincidence that at the businessmen's forum in Yalta in June this year,
attended by the presidents of Russia and Ukraine, there were five red
directors alongside the leaders of large financial-industrial groups [FIG]
(of the 17 members of the Ukrainian delegation).

By the term "red directors" we do not mean to say that any of these managers
are antiquated or sympathize with the Soviet school of management (much less
is this a reference to their party allegiance). It is probably not expedient
to include the leaders of large state companies here (Naftohaz Ukrayiny,
Ukrzalynzystya, Khlib Ukrayiny and so on), since the significance of these
companies for the country's economy means that their independence is clearly
limited by the authorities (the government). While the "red directors" are
people who had positions in factories during Soviet times and were able to
retain their influence and relative independence in decision-making in the
independent Ukraine. Although not all were able to hold onto their own.

Recall, for example, Oleksandr Bulyandu who headed the Azovstal metalworks
for 15 years. He was a deputy in the Supreme Council of the USSR and Ukraine
several times and the former first deputy secretary in the Mariupol city
Communist Party. Bulyanda was unable to smooth relations with private owners
and after several months of confrontation he quit his position as leader of
Azovstal, in November 1998. However, that is already history, Bulyanda
himself is a pensioner (in 2003 he was member of the supervisory council of
the First Ukrainian International Bank) and sometimes even talks to Azovstal
owner Rinat Akhmetov. As Bulyanda noted in an interview, the current owner
of the company calls him "grandpa"...[ellipsis as published]
BUSINESS FACTION IN PARLIAMENT [EDITORIAL]
The upcoming presidential election is an especially crucial period for the
red directors. After all, it is due precisely to personal ties with
[Ukrainian President] Leonid Kuchma (who in the past was also a red
director) that many executives owe their present positions. A change in the
main players on the Mt Olympus of power will essentially weaken the position
of a number of directors and force them to seek new modes of contact with
the authorities.

They will most likely begin "building bridges" in parliament, and one cannot
even rule out their forming their own faction. The experience of backstage
work cannot engage figures such as Mr Boyko and Tariel Vasadze, but the
powerful support of thousands of workers' collectives will create a
necessary ideological base. And things here do not lie in financial
resources either.
AUTONOMY WITH RESERVATIONS
The two main components of relations between the red directors and the
authorities are lobbying on government level and reinforcing complete
control over enterprises in their own hands. And while most directors
achieved the latter under privatization via workers' collectives, they will
need to find "points of contact" with the new masters of Bankova Street
[presidential administration] to effectively lobby their interests.

"We want to work calmly without looking from side to side, so we need to
head off possible aggression from all sorts of financial industrial groups."
Probably most domestic red directors could be signed up under this phrase
uttered by the president of the Novokramatorsk tooling plant, Heorhiy
Skudarya. Ahead of the upcoming presidential election Skudarya's words
have become something of a handbook for action, both in economic and
political terms.

After all, the red directors not only have significant financial resources
due to their control over enterprises with billions in cash flow, but they
have influence over thousands of workers' collectives. In the election
campaign the significance of this resource is difficult to overestimate. It
is no coincidence that [Prime Minister] Viktor Yanukovych's nomination for
president of Ukraine was made public in Zaporizhzhia not by politicians but
by "powerful industrialists" - the chairman and the director of Motor Sich,
Vyacheslav Bohuslayev and Heorhiy Skudar.

And the directors are not limiting themselves to mere political support for
the candidate from the authorities but are also looking at "various forms of
insurance" from the threat of being swallowed up by FIGs. The recipe for
withstanding being swallowed up is very simple: closing the enterprise into
a closed joint stock company [CJSC] and concentrating over 90 per cent
of the shares in the hands of management.
THE COLLECTIVIZATION OF ASSETS
Most of the red directors have used similar schemes for concentrating
control over enterprises in their own hands. At the dawn of independence
(from 1991 to 1996) the most popular scheme was having the workers'
collective rent [the facilities] with the option to buy in the future. The
enterprise paid all the requisite payments to the budget and the clean
profit was directed at buying up the company from the state stage by stage.
During this time, the directors themselves often combined the regular
"managerial" posts of director general and board chairperson with the
position of chairperson of the renters' council and directly controlled the
process of buying shares.

After the worker's collective - nominally - but in effect the management
of the enterprise - concentrated a big (near 90 per cent) stake, it was
transferred to the foundation capital of the CJSC and in this way the
company was "closed" to the influence of outside business groups. Various
enterprises got by without the rent clause - via the special law on
privatization. As a result, now most of the red directors control their
companies via CJSCs, by controlling large share holdings.

One exception is the Zasyadko mine, which is still controlled by a renters'
council. However, in June this year [2004], at a meeting of those authorized
by the renters' organization, it was proposed to create and found the CJSC
A. F. Zasyadko mine. Naturally, the interests of the organization in all
institutions, including in issues related to registering a new association,
were entrusted to the chairman of the renters' council, Yefym [Yukhym?]
Zvyahylskyy.

Control over the enterprise via a CJSC is certainly a good way to retain
assets, as was undeniably demonstrated by the situation around the purchase
of Obolon shares by the Sarmat company. Despite a nearly two-year stand-
off, the management, headed by Oleksandr Slobodyan, was able to retain
control over the enterprise. The fear that similar attacks could be carried
out against other companies has caused the red directors to increase their
stakes in enterprises under their control.

In particular, this summer the main shareholder of the Mariupol-based Illich
steelworks, CJSC Illich Stal concerned itself with the purchase of shares in
the enterprise. CJSC Illich Stal is controlled by the Mariupol-based Illich
steelworks management headed by Volodymyr Boyko. At the end of May,
CJSC Illich Stal announced it had raised its stake in Mariupol-based Illich
steelworks to 90 per cent and by the end of June to the 93 per cent mark.

A similar course was taken at the Mykolayiv Tooling Plant [NTP] . In July,
NTP president Hryhoriy Skudar announced the purchase of shares. "A large
and successful enterprise, the NTP has always been of interest. And a firm
appeared this month which wants to buy shares for somewhat more than they
are being sold internally. We considered things and decided to buy what is
left at higher prices. We are giving people a normal length of time (until
October 1) to think. Whoever does not sell, that is his right, we won't
force anyone. But we hope most people will understand what needs to
be done," Skudar said.
THE FUTURE UNDER QUESTION
Without question, giants such as the Mariupol-based Illich steelworks or
NTP are "tasty tidbits" for large FIGs. For example, the very same
Mariupol-based Illich steelworks is neighbours in Mariupol with another
large metal works, Azovstal, which is controlled by Rinat Akhmetov. Several
issues arise from this being in the same neighbourhood: the logistics of
loading in the Mariupol port and railyards and the "migration" of personnel
from one enterprise to the other in search of better pay (especially middle
management).

Rumours of Azovstal's intent to swallow up the Mariupol Illich steelworks
have arisen more than once, but things have never got down to specific
actions - not least of all thanks to Mr Boyko's ties with relative
ministries and with Mr Kuchma personally. It was no coincidence that he
approached the president with a request for assistance in privatizing the
Kryvorizstal iron works. But the Mariupol Illich steelworks were not
admitted to the privatization of Kryvorizstal and the hunger for raw
materials is now the Achilles' heel of the general Mariupol Illich
steelworks estate. Problems with coke and iron ore supplies were also
resolved via Kiev.

Big machine tooling plants are also seriously interested in support from
government levels. Enterprises such as Motor Sich, Zorya-Mashproyekt,
the Frunze concern, the Pivdenmash Makarov plant and Turboatom are in
operation today because of lobbying big contracts on the intergovernmental
level. But if the authorities' support waned or emphasis was placed on
outside markets, these enterprises would automatically turn into convenient
targets for acquisition. And those very same Russian companies which today
buy their products could become the potential acquisitioning parties.

The positions of the directors of state companies traditionally dependent on
government agencies and ministries are very shaky: Ivan Plachkov
(Kyyivenerho), Valeriy Horbatko (Odessa port), Anatoliy Buhaytsa
(Turboatom) and others. In addition, after the 2004 election, one cannot
rule out the privatization of these companies, that is, the prospects of
top-managers directly depends on their relationships with private
capitalists.

Separately, one should consider the directors of holdings, whose activities
rest upon administrative resource and personal ties. One indicative example
is the holding of Volodymyr Polyachenko, Kyyivmiskbud, which is patronized
by the Kiev city authorities. It includes several enterprises, each of which
has its own shareholders who also want to influence the management of the
enterprise. Without the support of the authorities for the management of
Kyyivmiskbud, the holding could simply crumble into several independent
companies.

In the end, the red directors have one last chance to retain their status,
they can sell their stakes to outside shareholders and agree with the new
owners on guarantees for themselves. Here a good example is the Lviv-based
confectionery Svitoch. The plant's property was bought from the government
in the 1990s by the workers' collective chaired by Andriy Tavpash. In 1998
a controlling stake was sold to the Swiss confectionery giant Nestle, but
Tavpash retained his position as general director and board chair of the
company.

And in 2003, the shareholders elected a new chair of management...[ellipsis
as published] Yuriy Tavpash, the son of the man who had directed the
company for many years. Although such a happy ending in relations between
a director and a new investor in Ukrainian practice is more often the
exception than the rule, sooner or later either the shareholders or the
director becomes the "master of the situation". -30-
========================================================
ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER ELEVEN
Additional names for the distribution list are always welcome
========================================================
11. UKRAINIAN PRES CANDIDATE VIKTOR YUSHCHENKO DRAFTS
DECREE ON TROOP PULLOUT FROM IRAQ

Interfax-Ukraine news agency, Kiev, in Russian, 18 Oct 04
BBC Monitoring Service, UK, in English, Mon, Oct 18, 2004

KIEV - Immediately after [opposition presidential candidate] Viktor
Yushchenko is elected president of Ukraine, his decree "On the withdrawal
of the Ukrainian peacekeeping contingent from Iraq" will become valid,
Yushchenko's personal web site has said.

"Our troops will be pulled out from Iraq quietly and without any haste, and
the process will be under control and fully provided for logistically,"
Yushchenko said.

Yushchenko expressed confidence that the Ukrainian servicemen's mission
in Iraq has already been completed. "Politicians, diplomats and businessmen
should replace them," he said, adding that "Ukraine is willing to take part
in rebuilding the Iraqi economy".

Yushchenko signed the draft decree on the troop pull-out from Iraq on
Monday [18 October], along with two more decrees. Last week the made
public eight of his first presidential decrees. Five of them are part of the
social package and the other three formed part of the anticorruption
package. -30-
========================================================
ACTION UKRAINE REPORT-04, No.194: ARTICLE NUMBER TWELVE
========================================================
12. "BELARUSIAN SCENARIO" CREEPING INTO UKRAINE
AHEAD OF PRESIDENTIAL ELECTIONS

Ukrayinska Pravda website, Kyiv, in Ukrainian, Oct 14, 2004
BBC Monitoring Service, UK, in English, Mon, Oct 18, 2004

KIEV - A Ukrainian Internet paper has said that the blocking of a web
site critical of the authorities and expulsion of a Serbian rights activist
is proof that Ukraine is sliding into an environment of repression and
intimidation along the lines of Alyaksandr Lukashenka's Belarus ahead
of the 31 October presidential elections.

The following is the text of the article "State of collapse heralds the
Belarusian scenario" published by the Ukrainian Ukrayinska Pravda web
site on 14 October; subheadings have been inserted editorially:
FIRST SIGNS OF BELARUSIAN SCENARIO
While everyone fears the "Georgian scenario", another scenario - the
Belarusian one - is cheerfully sneaking up to Ukraine. Two events which
would not have surprised anyone in the neighbouring state [Belarus], but
have caused low waves of protest in Ukraine, took place this week.

Blocking a critical web site and deportation of a foreigner from the country
are moves typical for the neighbouring country ruled by a paranoiac with a
moustache. They could not even pretend to be news. But now, Lukashenkization
is coming to Ukraine. These two events might seem like insignificant
episodes to someone. But in reality they are the first symptoms. And if
society accepts them, it will not have to wait long for new ones.

Access to the site with jokes about Yanukovych for Internet users surfing
the network via the state-owned company Ukrtelecom has been blocked for
about a week. The situation is absurd, because there are several easy ways
to avoid this censorship and continue laughing at the incumbent prime
minister's steps. But despite this, the initiators are not going to remove
the obstacles.

Moreover, no-one from Ukrtelecom is able to clearly explain why the site is
not open when their channels are used, but when one enters from others, the
jokes are downloaded.
YUGOSLAV HUMAN RIGHTS ACTIVIST HELD IN CUSTODY
The situation surrounding the deportation of the founder of the Yugoslav
organization Otpor and activist of the US structure Freedom House,
Aleksandar Maric, is equally ominous.

SBU [Security Service of Ukraine] did not want to give an explanation as to
why he had not been admitted into Ukraine even two days after the event.
Ukrayinska Pravda has been trying for several hours to get a comment from
the spokesperson for the Security Service chief, Maryna Ostapenko. The
outcome was her refusal to speak on this issue.

But why? "Because there is an international convention that prohibits
comments on this", Ostapenko said, but unfortunately failing to specify what
kind of document that was, the date and place of its adoption and the year
when Ukraine joined it.

The border troops' comment on the reasons for Maric's detention was equally
cynical. "He was not admitted to Ukraine at the SBU's request, we do not
know the reason, nobody bothered him, and he spent the night in the waiting
hall," or something along those lines. In fact, it was quite easy to detect
the lie. Maric disclosed all the details in an interview with his colleagues
from the Kiev project I Know.

"I arrived in Kiev on the flight of the Hungarian company Malev at about
2000 [1700 gmt]. I went to passport control in 20 minutes. After the
computer check I was asked to step aside, and then another border officer
was called. A lady came to check all my documents, including my passport and
air tickets. She asked me to take my luggage and wait. She also instructed a
man wearing a uniform different from the border troops' uniform to accompany
me."

"Some 10-15 minutes later, a certain high-ranking border official approached
me. He asked me about where I had arrived from - Budapest. Have I ever had
legal problems? I answered that I had never had any legal problems
anywhere - either in Serbia or any other place in the world. Nobody has ever
detained me at the border anywhere until now. What is the purpose of my
visit to Ukraine? I answered that I was an adviser to the Freedom House
organization safeguarding democracy throughout the world."

"Then he announced to me that I might not enter the territory of Ukraine.
And nothing else - no explanations. When I asked him: why? - he said that he
might not answer this question. Being a representative of the border
service, he was acting "only upon the instruction of the Security Service of
Ukraine". He did not know the reasons why SBU prohibited my entry to the
country."

"Then I was taken to a certain room, my luggage was checked, I was searched,
my mobile phone, camera and all the personal effects I had with me were
taken away, even my shoelaces. I want to emphasize that my mobile phone was
taken away, and I was thus deprived of the possibility to make a call even
to the embassy or Serbian [Serbia-Montenegro] Foreign Ministry, to say
nothing of my Ukrainian friends."

"I was in custody! I read in the Serbian press yesterday that Mr Oleksandr
Samarchenko, Head of the Public Relations Department of the State Border
Service, made a statement saying that I had spent the night "in the waiting
hall". All this is an impudent and incredible lie!

"I spent 10 consecutive hours - from 2200 on 12 October till 0700 on 13
October - denied the opportunity to communicate, of freedom of movement,
being unable to inform anyone about what was going on!"

"I can only give you a detailed description of the place where I was
staying. There were three cells. A young lady of about 20 years of age from
Congo was in one of them, it seems to me, while a Swede was in the second
one, but he was released a few hours later. There were two other people
together with me in the third cell. They were a fifth-year student from
Tunisia studying in Donetsk and a Ukrainian citizen temporarily working in
Portugal. The name of the security serviceman appointed to guard us was
Kolya. If necessary, I can give you a detailed description of all the
premises, door locks, gratings, air conditioner types and four lamps
resembling those installed in ships in one of the rooms."

"In the morning they woke me up and demanded money for the ticket. As I did
not have money and was not allowed to make a call to my friends who might
give me some, they bought me a ticket themselves. I am very grateful to them
for this! I shall certainly thank them when I return to Ukraine. I was
ejected from Ukraine on the first flight to Budapest at 0750 on 13 October."
LACK OF EXPLANATIONS AS A SIGN OF THE
AUTHORITIES' COLLAPSE
The most dangerous thing in this story is the lack of explanation from the
Ukrainian authorities. Why was a person who had crossed the Ukrainian
border at least 10 times in the last few months not admitted one morning?
The lack of explanation is a very beneficial position. In fact, it not only
denies the right to appeal against the authorities' actions, but even to
complain and provide arguments for one's own defence.

In reality, the authorities have not taken into account one thing - their
actions leave only one impression. That is fear. The state of collapse has
been transferred from its candidate [Yanukovych; reference to his fainting
spell when hit by an egg at a campaign rally in Ivano-Frankivsk] to the
entire structure. If the state machinery with its half-a-million-strong army
of soldiers, policemen, security servicemen and even political
technologists, was afraid of one single activist from a Yugoslav
organization which had made its contribution to Milosevic's downfall - this
is the best diagnosis they were able to make for themselves.

Meanwhile, one question has not been clarified: why should one be afraid of
someone teaching people how to fight against electoral falsification? Mr
Kuchma, do you think that the Yugoslavs or Georgians regret that they have
overthrown Milosevic and Shevardnadze? Even if this were true, the
Ukrainians would not have exactly the same emotions in your case. -30-
========================================================
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