US-Ukraine Business Council

"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"

PRESIDENT YUSHCHENKO AT WORLD ECONOMIC FORUM
"My key objective in coming to Davos was to stretch out my hand to
business," Yushchenko told reporters on the sidelines of the World Economic
Forum, an annual meeting of top executives and politicians in this
Alpine resort. "It's extremely important to ensure my hand
doesn't hang unshaken." [article one]

"THE ACTION UKRAINE REPORT" - Number 420
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, MONDAY, January 31, 2005

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

1. YUSHCHENKO URGES FOREIGN FIRMS TO INVEST IN UKRAINE
My key objective in coming to Davos was to stretch
out my hand to business.
Associated Press, Davos, Switzerland, Saturday, January 29, 2005

2. UKRAINIAN PRESIDENT YUSHCHENKO AND EBRD PRESIDENT
LEMIERRE DISCUSS INVESTMENTS IN UKRAINE
Ukrainian News Agency, Kiev, Ukraine, Sun, January 30, 2005

3. UKRAINE'S PRESIDENT ASKS FOR HELP AT ECONOMIC MEETING
Yushchenko lays out sales pitch to investors
By Mark Landler, The New York Times
New York, New York, Saturday, January 29, 2005

4.Q&A WITH PRO-UKRAINE INVESTMENT BANKER MICHAEL BLEYZER
By Vlad Lavrov, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, Jan 27, 2005

5. SENATORS LEVIN AND LUGAR INTRODUCE BILL TO GRANT
NORMAL TRADE RELATIONS TO UKRAINE
Offices of Senator Carl Levin and Senator Richard Lugar
United States Senate, Washington, D.C., Monday, January 24, 2005

6. UKRAINE PRESIDENT TO LOOK AT PRIVATIZATION
Associated Press, Saturday, January 29, 2005

7. UKRAINE INVESTOR SENTIMENT CONTINUES TO IMPROVE
By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, Jan 27, 2005

8. "WHAT I DISLIKE ABOUT UKRAINE BY VIKTOR YUSHCHENKO"
By Sean Maguire, Reuters, Davos, Switzerland, Sat, Jan 29, 2005

9. YUSHCHENKO TO 'TACKLE CORRUPTION'
Mr Yushchenko seeks business investment in Ukraine
By Tim Weber Business Editor, BBC News website, in Davos
BBC NEWS, UK, Sunday, January 30, 2005

10. U.S. HOUSE RESOLUTION CONGRATULATES PEOPLE OF
UKRAINE AND VICTOR YUSHCHENKO
Remarks by Rep. Christopher Smith (R-NJ), Co-Chairman,
Helsinki Commission and Rep. Ben Cardin (D-MD), Ranking
House Member, Helsinki Commission
U.S. House of Representatives,
Washington, D.C., Tuesday, January 25, 2005

11. "MILESTONE FOR DEMOCRACY"
COMMENTARY: By Bob Schaffer, Denver Post
Denver, Colorado, Tuesday, January 25, 2005

12. YUSHCHENKO: 'LIVE AND CARRY ON'
"60 MINUTES" TV Program, CBS News,
New York, New York, Sunday evening, January 30, 2005
==========================================================
1. YUSHCHENKO URGES FOREIGN FIRMS TO INVEST IN UKRAINE
My key objective in coming to Davos was to stretch
out my hand to business.

Associated Press, Davos, Switzerland, Saturday, January 29, 2005

DAVOS - Ukrainian President Viktor Yushchenko on Saturday committed
himself to rooting out the corruption in his country that he says has scared
off foreign investors, and urged companies to have confidence. "I think it's
a disgrace that Ukraine only attracts $600 million in annual foreign direct
investment," he said. "But low investment is the first sign of a lack of
trust in government."

"My key objective in coming to Davos was to stretch out my hand to
business," Yushchenko told reporters on the sidelines of the World Economic
Forum, an annual meeting of top executives and politicians in this Alpine
resort. "It's extremely important to ensure my hand doesn't hang unshaken."

On Friday, Yushchenko delivered a keynote address to the forum, appealing to
the West to help his former Soviet republic shed its past and pull even with
the world's prosperous democracies.

Yushchenko was sworn in as president earlier this month, after the so-called
"Orange Revolution" - the wave of opposition protests that paved his way to
victory in the Dec. 26 presidential rerun of a contested poll in the former
Soviet republic. He said he will spare no effort to convince investors that
the graft-riven country is set to change.

"Business can be compared to love," he said, laughing. "Saying 'I love you'
once doesn't mean it's for a lifetime. This has to be repeated every
morning." He also said his new government plans to shake up the country's
"overcomplicated" business rules, which he claimed have spurred corruption
because firms need a number of licenses from officials before they can enter
Ukraine 's market.

"Our intention is to cut out everything that doesn't work," he said. "As
long as there's an empty office or a counterproductive function, this will
plant the seeds of corruption." "There are no exceptions" in the
anti-corruption drive, he said, noting that the clampdown could target
senior former and current government officials. He didn't elaborate.

Pressed on the lessons of Ukraine 's revolution for neighboring Belarus and
Moldova, where hardline Soviet-style governments are still in power,
Yushchenko declined to mention either country by name. "I think the Orange
Revolution has set a very good example for many citizens outside Ukraine
because it showed a way to protect one's rights," he said. "It's an example
applicable to any country where human rights are not respected."
==========================================================
2. UKRAINIAN PRESIDENT YUSHCHENKO AND EBRD PRESIDENT
LEMIERRE DISCUSS INVESTMENTS IN UKRAINE

Ukrainian News Agency, Kiev, Ukraine, Sun, January 30, 2005

KIEV - President Viktor Yuschenko and the European Bank for
Reconstruction and Development's President Jean Lemierre have discussed
drawing investments to Ukrainian market. Press service of the President of
Ukraine informed about this with reference to the meeting of Yuschenko
and Lemierre.

Yuschenko said that holding liberal reforms and improvement of investment
climate in Ukraine will be a priority in work of the new Ukrainian
government. "All this will be done for one aim: to improve the life of
people," Yuschenko said.

Lemierre said that the world today hopes for holding wide-scale reforms in
Ukraine and noted that the EBRD is ready to organize drawing up to EUR 1
billion of investments annually to the Ukrainian market. As Ukrainian News
earlier reported, Yuschenko had left Krakow (Poland) for Davos (Switzerland)
on Friday, January 28, with a visit that lasted until January 29, to
participate in the World Economic Forum. -30-
==========================================================
3. UKRAINE'S NEW PRESIDENT ASKS FOR HELP AT ECONOMIC MEETING
Yushchenko lays out sales pitch to investors

By Mark Landler, The New York Times
New York, New York, Saturday, January 29, 2005

DAVOS, Switzerland, Jan. 28 - Viktor A. Yushchenko, still basking in the
glow of the street protests that swept him to power in Ukraine, appeared
here on Friday to ask for help in creating "a prosperous Ukraine in a
successful, united Europe."

"I'm addressing you as a president," Mr. Yushchenko told the World Economic
Forum's gathering of high-powered business executives, men, world leaders
and intellectuals here. "Please help Ukraine, and quite shortly, you'll see
a European, beautiful nation."

Declaring he wanted to attract foreign investment and propel Ukraine into
the global economy, Mr. Yushchenko laid out an ambitious agenda, ranging
from an anticorruption drive and a reform of the legal system to a speedier
entry into the World Trade Organization.

At the heart of his agenda is bringing Ukraine into the European Union, a
campaign that has met with a lukewarm response in Europe and that could
put it at odds with its neighbor, Russia.

Looking healthier than he has in previous appearances, he made the case that
Ukraine, with its educated populace and fast-growing economy, belongs
nowhere else. "Ukraine has manifested its European values," he said. "We are
no longer at the crossroads or at its margin. The European choice of Ukraine
has taken part in the hearts and minds of the people."

Mr. Yushchenko's speech ended a hectic week of travel that reflected the
many challenges facing Ukraine. On Monday, he visited Russia to reaffirm the
"eternal" partnership between the countries, despite his turn to the West.
Then he went to Poland to mark one of Europe's great horrors, the death
camps at Auschwitz, liberated 60 years ago.

For Mr. Yushchenko, this speech was a chance to introduce himself to another
useful constituency: European and American investors and business people.
They gave him a hero's welcome.

Still, the diplomatic hurdles are formidable. Ukraine's yearning to join the
European Union has put its leaders, who championed Mr. Yushchenko's cause,
in an awkward position. "Ukraine is a problem for the E.U.; they don't want
to deal with it," said Mikhail Saakashvili of Georgia, who like Mr.
Yushchenko rode a populist tide to the presidency of his country.

While European officials have not closed the door on Ukraine, they have made
it clear that other matters - like the integration of the 10 newest members
and complex negotiations with Turkey - will take precedence. Some here also
speak of "enlargement fatigue" after the Turkish debate, which raised hard
questions about Europe's identity and eventual boundaries.

"After the big bang of enlargement last May, and all the decisions on the
table, I think the European Union needs to move gradually and carefully,"
Olli Rehn, Europe's commissioner for enlargement, said. In meetings with
European Union officials here, Mr. Yushchenko's aides struck an informal
bargain that they would not pin Brussels to a date for entry if Brussels did
not rule out eventual admission.

That left Mr. Yushchenko to speak of history, and accept compliments from
leaders like Poland's president, Aleksander Kwasniewski, who shared a stage
with him. He also met with Davos luminaries like Chancellor Gerhard Schröder
of Germany and Bill Gates of Microsoft.

Meanwhile, his advisers fanned out in this Alpine ski resort to engage in
another Davos pursuit - deal-making. Oleg Rybachuk, the newly appointed vice
prime minister for European integration, said Ukraine's focus would be less
on aid or technical assistance than on private investment.

He vowed to abolish cumbersome regulations for foreigners to set up
operations in Ukraine, and he said the government would combat corruption,
which is deeply rooted in the public and private sectors.

Mr. Yushchenko noted that on Thursday, a Ukrainian court froze the shares
of the country's largest steel mill, which had been sold to a group of
well-connected investors, including a son-in-law of Ukraine's former
president, Leonid D. Kuchma, in a heavily criticized privatization. "My
government will not be stealing," Mr. Yushchenko said. "Business will be
separated from politics."

At a packed lunch with investors and corporate executives, Mr. Rybachuk
said the president's guiding principle would be to make every facet of the
Ukrainian economy "euro compatible." The heavy focus on Europe left
some of the American guests shifting in their seats.

Mr. Rybachuk added to the tension by saying that Ukrainians had been
dismayed by the lack of support the United States had given to Mr.
Yushchenko after the first, rigged ballot. Several guests noted that the
former secretary of state, Colin L. Powell, had strongly protested the
election fraud.

Some conferees warned that Mr. Yushchenko could not afford to alienate
Moscow, given the deep links between Ukraine and Russia. "They have to
deal with each other," said William F. Browder, an American who runs a
Russian investment fund. "Otherwise, the lights will go off in Ukraine,
since Russia supplies all their gas."

In Davos, however, the Ukrainians showed they were nothing if not adaptable.
The lunch to promote Mr. Yushchenko was organized by Viktor Pinchuk, the
same businessman and son-in-law of the ex-president whose steel mill is a
target of the new government. -30- [Ukraine Report Monitoring Service]
----------------------------------------------------------------------------
www.nytimes.com/2005/01/29/international/europe/29forum.html?oref=login
==========================================================
4.Q&A WITH PRO-UKRAINE INVESTMENT BANKER MICHAEL BLEYZER

By Vlad Lavrov, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, Jan 27, 2005

The investment banker says that if Viktor Yanukovych had managed to win the
election, it would have meant "essentially retreating from Ukraine" for
SigmaBleyzer. But things turned out differently.

Michael Bleyzer is president and CEO of SigmaBleyzer, an American investment
banking group that manages the assets of the Ukrainian Growth Fund III,
which owns Volia Cable. An American citizen, Bleyzer was born in Kharkiv in
1951 and moved to the United States at age 27.

Prior to founding SigmaBleyzer in 1994, he held senior managerial positions
at the Exxon Corporation and Ernst&Young. The Post met with Bleyzer at his
office on Jan. 25, days after Viktor Yushchenko was sworn in as president of
Ukraine.

Kyiv Post (KP): What are your impressions about what's going on in Ukraine
at the moment?

Michael Bleyzer (MB): I am certainly euphoric. I think it is absolutely
incredible what has happened in Ukraine. I think for the first time since
independence Ukraine is a hip, cool and sexy country. That makes my job,
which is explaining to people in the world why Ukraine is a good place to
come and invest, why Ukraine is a good place to come and visit, why
Ukraine is worth talking about - it makes my job much easier.

I was here throughout the height of the Orange Revolution, going to Maidan
every day. In my lifetime, this was one of the most exciting times. I think
what happened was an incredible transformation of civil society; a period of
cleansing some of the bad and horrible things that happened in this country
over the last 10-12 years. And the good things that also happened here were
underestimated and overlooked, because the negative things were never fully
admitted or disclosed the way it should have happened in any honest and
transparent society.

I think that [the changes spurred by the Orange Revolution] are
unprecedented. I think that no other country has had this incredible
sociological experiment that succeeded in a very short period of time
without any violence. There were similar conditions and events in other
places like Georgia, but the scale and the significance of this event has
no parallels.

That is what has made Ukraine a wholly different country. From being this
obscure, backward and strange swamp that people just didn't know what
to do with, all of a sudden [it is totally different].

When we were trying to help a group of companies organize an inaugural ball,
before the ball I had some friends come with me to look at the set-up. When
they saw the multiple screens playing the revolution music and videos, one
of them commented, "There is one thing that Ukrainians know how to do, and
that is to run a really cool and hip revolution. Nobody has had a revolution
that was so cool!"

It was in many ways an MTV-style revolution. If MTV were staging a
revolution, they could not have done a better job than what the Orange
Revolution actually did by itself. That is the incredible beauty of it,
which showed the conviction and goodness of the Ukrainian people, but it
also showed the energy and young spirit of the Ukrainian nation.

I think Ukraine is in. And that is the big news.

When I left Ukraine on Nov. 29, I went to London and then to the United
States. In an elevator of a good hotel in London, there was a Brit standing
next to me. I was wearing an orange sweater, and he asked me, "Are you
wearing Ukrainian colors?" I replied, "Yes, there is a good reason for
that." He said, "I know; this is absolutely unbelievable."

It is not just the support, but the absolute fascination of the world as to
the events here [that strikes me].

KP: Did you ready yourself for Plan B - Yanukovych becoming president?

MB: The answer is yes. For us, it meant essentially retreating from Ukraine.

We believe that from an investment attractiveness point of view, those
countries that are in the process of EU accession, or are at least making
progress in their reforms that would lead to their closer integration with
Europe, are the best places to invest. And that will continue to be the
case, certainly within the next decade or more.

Had the other side won in this country, it would be next to impossible to
get additional investments into this country, especially if that other side
had won, as they intended to, by falsifying the elections. You simply cannot
keep this quiet, you cannot give the impression this is legitimate, when
everybody knows it is a lie.

It would turn Ukraine into a so-called banana republic, and getting money to
invest here would be extremely difficult. So for us Plan B was slowing down
and probably trying to wind down our business over here.

KP: What's happening in the business community now? Do you see a line of
investors wanting to come to Ukraine?

MB: Yes, I do see that. It is absolutely amazing. I am getting phone calls
from investors who only a few years ago were avoiding even talking about
investing in Ukraine. Now they tell me they want to do it immediately.

KP: Could you forecast how FDI will grow over the coming years, under
the most optimistic scenario?

MB: Ukraine has a very fast rate of economic growth, one of the fastest in
the world. With the rating agencies keeping Ukraine at a reasonable
non-investment grade, it would probably be a couple of years until it
reaches investment grade. Assuming that the government takes the necessary
steps that will help fight inflation and keep the national currency stable,
I would expect that FDI will continue to grow.

Ukraine is close to reaching $2 billion per year [in FDI], which will be a
tremendous success. However, based upon our studies, Ukraine would be
capable of attracting and successfully deploying as much as $5 billion per
year.

Having $5 billion per year over the next, say, 10 years could make a
dramatic contribution to Ukraine's success. The domestic investments will
continue to grow, but they will not be sufficient to finance all the growth
that is necessary.

Therefore, reaching $2 billion this year would be an ambitious target, but
certainly achievable, and there's the potential we could exceed that. But
setting our sights on the $3-4 billion per year range is quite possible, if
the government takes certain, necessary steps.

KP: What are those steps?

MB: This is an opinion of a businessman: I think the key thing that the new
government could do is to start communicating with the population in a
different way. True transparency is when the government is engaged in open
and honest dialogue. There could be nothing better than when the leader of
the country is talking to the country's people on a regular basis; to
explain in very simple terms what the problems are and how they can be
addressed; to explain to them that some of the problems were many years in
the making and you simply cannot change them [immediately].

However, it is vitally important to begin educating people. For example,
raising pensions and minimum wages may feel good, but if this leads to
inflation it's totally meaningless, as with more money you would actually be
able to buy less. At the same time this would also begin to destroy the
economy.

So one of the very first things that the new government will need to do is
to get its fiscal house in order. There is a clear danger that Ukraine, with
the populist moves made in the last couple of months, will have a budget
deficit at close to five percent of GDP instead of being at 1 to 1.5
percent, which is quite sustainable. [A high budget deficit] will reasonably
quickly lead to both inflation and loss of credibility.

To get its fiscal house in order, [the government] has to review its
spending, as well as its tax treatments.

Looking into the tax area is going to be a very important short-term goal,
to make sure you have the right balance of receipts paid to the government,
but at the same time taxation levels that can stimulate business
development.

Another area that you cannot wait to work on is to define the role of the
government. The government's role should be limited. Today, if you could
actually [eliminate] the complexities of setting up new businesses, it would
shortly lead to an explosion in the creation of small- and medium-sized
enterprises, which is how you can sustain economic growth.

It is very important to unleash the power of private capital by getting
government intervention out of business; it will lead to a very quick
payoff.

Civil service review is also very important. You need to understand the
types of people who will be working, how to motivate them, and how many
civil servants you need.

You need to get really motivated and dedicated civil servants that are being
paid accordingly. At the same time, punishment for bribes has to be
increased significantly, otherwise you cannot fight corruption.

Overall, I think that this government has several very charismatic leaders,
which does two things: it makes Ukraine more appealing to the West, but
more importantly it makes it more interesting for its population.

KP: What about reviewing some of the recent privatizations?

MB: I am in favor of reviewing some of the most dramatic cases which are
on everybody's mind and which are such bad examples. I think it would be
difficult to move forward without bringing them to closure.

I would be against having multiple reviews, like "re-dividing the capital."
It would take a tremendously long time and [lead to great] expenses, it
would lead to tremendous problems, and it would be impossible to do it
completely fairly.

I would take one or two showcases and review them, trying to be fair and
objective. In some cases, getting additional compensation would be
sufficient if there is enough assurance that that would have been the market
price had the tender been run transparently; in other cases it is possible
that re-tendering them would be the option.

However, this is a less attractive option, as it will send a very bad
message that the old government giveth and the new government taketh. So
I would certainly be very careful not to do a lot of those things.

KP: Would you want to be in Yushchenko's shoes at the moment?

MB: No, I would not want to trade places with him, because it in fact is
extremely challenging and extremely difficult. However, I feel so strongly
about this country that I would be willing to help in any way I can.

KP: What's the biggest challenge Yushchenko and his government are now
facing?

MB: I think it is changing the way this country is governed. To define
exactly how the new government, including the whole public administration
sector, should look, so that the country can be efficient. I assume that
once you define it on paper, it would look very different from what it is
now, with much fewer people, with very different jobs, with many ministries
and committees simply disappearing completely.

Then the most unpopular step should be made - you have to fire every single
civil servant in the country. Next day, you start re-hiring them on a very
competitive basis into the new structure. If you do that you will
significantly undermine, or hopefully break the back of the worst obstacle
toward progress that Ukraine faces - the nomenklatura. Many of them would
be back in their jobs, but on a competitive basis, having had to prove their
skills.

In the beginning we talked about the cleansing of civil society. Now the
same thing needs to happen with the public administration.

KP: Are you afraid people might be disappointed in Yushchenko and his
government?

MB: I never said it will be [a rosy future]. We are going through an
incredible period of excitement, and we are now at the stage when an
incredible victory has been achieved.

All my life I have been a great believer that it is important to celebrate
victories. People work very hard, and if they don't celebrate victories,
they don't really know what they have been working for.

Now it is time to celebrate victory, and that is why I am so enthusiastic.
You have to take the time to do that. Several days, not several years. And
I think we are pretty close now to the end of this celebration. It is
important to actually have that done.

So from this point on, am I optimistic? Yes. Am I naive enough to think
everything will be great - and immediately so? Absolutely not. In fact, yes,
I am concerned about being disappointed. My main concerns are that
implementation is so much more difficult than any planning.

However, if this government is truly transparent, and talks with the people
all the time, and if they are able to convince the people that they are in
it together, that will go a long way. It will buy them time, and therefore
the problems of the bumps on the road - and there will be many - will be
easier to deal with. -30- [Action Ukraine Report Monitoring Service]
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LINK: http://www.kyivpost.com/business/invest/22264/
==========================================================
5. SENATORS LEVIN AND LUGAR INTRODUCE BILL TO GRANT
NORMAL TRADE RELATIONS TO UKRAINE

Offices of Senator Carl Levin and Senator Richard Lugar
United States Senate, Washington, D.C., Monday, January 24, 2005

WASHINGTON - Sen. Carl Levin, D-MI, and Sen. Richard Lugar, R-IN,
today introduced legislation to grant normal trade relations to Ukraine.
The Senators contend that the Cold War-era trade restrictions that deny
"most favored nation" trade status to imports from Soviet Bloc countries,
which were established as a tool to pressure Communist nations to allow
their people to freely emigrate and adopt democratic institutions, are no
longer applicable to Ukraine.

"Since reestablishing its independence in 1991, Ukraine has demonstrated a
commitment to creating democratic institutions and a free-market economy,"
Levin said. "Ukraine allows its citizens the right and opportunity to
emigrate; it has adopted laws protecting individual liberties and
prohibiting discrimination; and it held a free and fair election in 2004 in
which the Ukrainian people elected a new president. The United States can
help advance this young democracy by repealing Cold War-era restrictions
and welcoming them as a full trade partner in the international economic
community."

"Extraordinary events have occurred in Ukraine over the last three months.
A free press has revolted against government intimidation and reasserted
itself. An emerging middle class has found its political footing. A new
generation has embraced democracy and openness. A society has rebelled
against the illegal activities of its government. It is in our interest to
recognize and protect these advances in Ukraine," said Lugar, who served
as President Bush's personal representative during the Ukrainian run-off
election last November.

The Jackson-Vanik amendment was included in the 1974 Trade Act to pressure
Communist nations to permit emigration and adopt democratic economic and
political practices. Since 1992, Ukraine has been certified annually as
meeting the Jackson-Vanik requirements, and the United States and Ukraine
have had a bilateral trade agreement in place. The Levin-Lugar bill would
make this trade relationship permanent and, in doing so, would stimulate
further market reforms and encourage its continued commitment to
safeguarding individual liberties.

In addition to granting Ukraine permanent normal trade relations, the
Levin-Lugar bill urges the U.S. to remain committed to the democratization
of Ukraine in the areas of emigration, religious freedom, restoration of
property and human rights.

"In addition to welcoming the Ukrainian government to the family of
democracies, we must also honor the Ukrainian people for displaying their
commitment to democracy through peaceful demonstrations," Levin said.
"Free and fair elections were conducted only because of the courage and
hard work of the Ukrainian people."

"The United States has a long record of cooperation with Ukraine through
the Nunn-Lugar Cooperative Threat Reduction. Ukraine inherited the third
largest nuclear arsenal in the world with the fall of the Soviet Union.
Through the Nunn-Lugar Program the United States has assisted Ukraine in
eliminating this deadly arsenal and joining the Nonproliferation Treaty as a
non-nuclear state," said Lugar (R-IN), Chairman of the Senate Foreign
Relations Committee.

A companion bill will be introduced in the House of Representatives by
Rep. Sander Levin , D-MI and others. -30-
--------------------------------------------------------------------------
Mark Helmke, Senior Professional Staff, U.S. Senate Foreign Relations
Committee, Chairman Richard G. Lugar
Phone: 202-224-5918, Fax: 202-228-0403
=========================================================
6. UKRAINE PRESIDENT TO LOOK AT PRIVATIZATION

Associated Press, Kiev, Ukraine, Saturday, January 29, 2005

KIEV - Ukrainians joke bitterly that this ex-Soviet republic's
privatizations of government enterprises were models of transparency -
clearly rigged to benefit the elite.

New President Viktor Yushchenko's vow to re-examine the deals in which
prize industries were sold at unexpectedly low prices has sparked optimism
that real transparency may return to Ukrainian business. But it's also given
rise to fears that the move could devolve into political revenge and
thereby scare off investors.

"Ukrainian society is watching for a clear signal that privatizations can be
fair and transparent and benefit the state, but it would be a very big
mistake for this to turn into an act of revenge," said Ina Pidluska, a
Kiev-based political analyst.

For most of the post-Soviet period, Ukraine had been comparatively laggard
in its privatizations. But in the first six months of last year - with
lame-duck President Leonid Kuchma's term about to expire - some prime
industrial jewels were rushed onto the auction block, and the government
raked in US$1.5 billion (euro1.15 billion).

That was far less than they should have fetched, analysts and Yushchenko's
new government contend. Critics note that tycoons with close government
connections were the big winners, including Kuchma's son-in-law Viktor
Pinchuk and coal-and-steel magnate Rinat Akhmetov.

The most-criticized sale was that of Kryvorizhstal, Ukraine's largest steel
mill. As one of the world's most profitable steel operations, it attracted
substantial outside interest, including bids from Russia's OAO Severstal and
a consortium of United States Steel and LNM Group.

But a peculiar tender requirement that successful bidders must have produced
at least 1 million tons of coking coal annually in Ukraine during the past
three years shut the door to all but a handful of homegrown companies and a
consortium including Pinchuk won, even though its US$800 million (euro613
million) bid was lower than Severstal's and LNM/US Steel's. "Without
competition, without a realistic price ... I don't consider that
privatization," said Yulia Tymoshenko, Yushchenko's prime
minister-designate.

The sale sparked outrage in Ukraine and abroad and is currently being
challenged by a Ukrainian parliamentary commission in the courts. Pinchuk
said he would adhere to any court decision provided it is "according to the
law."

Some in Yushchenko's circle have hinted that they may be prepared to let the
sale stand - as long as the new owners pay additional cash. The amount could
be huge, with analysts predicting at least an additional US$700 million
(euro536 million).

Other companies in the firing line could be Ukrrudprom, an iron-ore company
that was also sold last year for a pittance to a Pinchuk-linked group and
the Petrovsky steel mill, in which only local companies were allowed to
participate.

"Privatization in Ukraine is a shadowy part of the country's economy and
Krivoryzhstal is certainly not the only case and probably it isn't even the
worst," said Andriy Dmytrenko, an analyst with Kiev's Dragon Capital
investment bank. But it is the most visible and how the new government
handles it will be a significant signal.

"It is very important that the new government not get carried away by this
victory wave and that it resists the temptation to reprivatize attractive
pieces of property to their own benefit," Pidluska said. Viktor Medvedchuk,
Kuchma's powerful former chief-of-staff, also warned that if the government
appeared to be on a witch-hunt, "the investment climate could significantly
deteriorate."

Yushchenko can't risk that. He has promised to raise pensions and create
jobs with higher-paying salaries, and needs an influx of cash and new
investment to achieve that. One option is to fulfill a long-delayed promise
to privatize the communications giant Ukrtelekom, which is likely to draw
significant foreign interest and a high price. A transparent tender would
offset investor fears about renationalization. The risk, though, is that a
foreign owner might raise tariffs, angering consumers. Dmytrenko said:
"There are no easy solutions. Someone will always complain." -30-
==========================================================
7. UKRAINE INVESTOR SENTIMENT CONTINUES TO IMPROVE

By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, Jan 27, 2005

"Overall sentiment is higher than ever, and we have never experienced such
high liquidity on the Ukrainian stock market."
- John Suggitt, Concord Capital.

Investor sentiment towards Ukraine has risen dramatically since late
December, when it became clear that Viktor Yushchenko would be Ukraine's
next president.

The newly inaugurated leader's first steps, which included appointing his
combative ally Yulia Tymoshenko acting prime minister, have further lifted
the hopes of both Ukrainian businessmen and foreign investors.

Yushchenko and Tymoshenko have pledged to weed out corruption and cut red
tape, and push forward with privatization of state assets. Furthermore, they
have promised to establish a level playing field for both small Ukrainian
businesses and Western investors and eradicate the privileges that benefited
a select elite under former President Leonid Kuchma.

Reports that the new government would establish a special committee headed
by English-speaking Oleh Rybachuk, a close associate of Yushchenko, to deal
with investor problems promises to further boost the positive sentiments.

Tomas Fiala, managing director of Kyiv-based investment bank Dragon Capital,
expects "fast" and "explosive" reforms from Tymoshenko's government. "I am
quite optimistic about Yushchenko's policy outline, and his first steps,"
Fiala said, adding that he expects the moves to "boost investor confidence
in Ukrainian assets." "I expect FDI to at least double this year to $3
billion on the back of interest from European and U.S. strategic investors,"
he added.

Expectations that the reform-minded Yushchenko would gain control of the
country boded well for the nation's stock market. Activity on Ukraine's
securities market began surging late in 2004, when prices for Ukrainian
securities rose by more than 30 percent, reaching six-year highs. While
Fiala might be optimistic, others remain wary of a Tymoshenko-led
government.

"Tymoshenko's appointment will likely increase volatility [on Ukraine's
securities market] over the next six months," said John Suggitt, managing
director of Kyiv-based Concorde Capital securities brokerage house. "But
overall sentiment is higher than ever, and we have never experienced such
high liquidity" on the Ukrainian stock market, Suggitt said. "Mostly, we
look forward to companies being more transparent and them waking up to
the reality that they need investors."
RUSSIAN SLIDE
Russia's market, meanwhile, has been flat amidst reports that more companies
would be targeted by the government for back tax claims - tax claims similar
to those that sunk former oil giant Yukos. New York-based mobile phone firm
Vimplecom and tobacco giant JTI have also been targeted. The moved have
signaled to investors that Russia is an increasingly risky place to invest.

Fiala said the sharpest increase on Ukraine's securities market occurred
after the Supreme Court ordered a re-vote of the presidential elections on
Dec. 3, 2004. The KP-Dragon index, a measurement of Ukraine's top trading
stocks, doubled from 1,507 to 3,009, he added.

Historically, Ukraine's $10 billion market has been pegged to that of its
northern neighbor, which has a market capitalization in the range of $200
billion. Ukrainian shares have traditionally performed in tandem with their
Russian counterparts, but have remained undervalued in comparison.
Ukrainian stocks offered investors higher-risk bargains.

"Russia's investment environment has deteriorated a lot since Putin's
reelection last year," Fiala said. "More than a dozen Russian investors and
brokers have opened trading accounts with us in the last month alone." Fiala
believes Ukraine's recent political events have distanced Ukraine from
Russia in the eyes of many investors, forcing them to take a fresh look at
the country. Economic ties between Russia and Ukraine have not been as close
as many thought, he said. For instance, Ukraine exports more to Europe than
Russia, and it has a more diversified economy than its northern neighbor,
which relies heavily on exports of raw materials such as oil and gas.
REAL ESTATE, BANKING TO SURGE
Meanwhile, real estate experts are expecting a rebound in market activity
after a slowdown late last year caused by political uncertainty during the
campaign for the Ukrainian presidency. "We are expecting an investment boom
on the market for office space in the second half of 2005, now that the
election events are winding up," Radomir Tsurkan of Colliers International
told Interfax-Ukraine.

Oleksandr Bondarenko, President of the Ukrainian Association of Real Estate
Specialists, was cited by Interfax-Ukraine as saying real estate prices
should increase this year by as much as 15-25 percent.

Ukraine's banking sector should also stage a comeback after it faced
increased uncertainty from Ukrainian depositors and foreign creditors during
the election.

Like many Ukrainian banks, Dnipropetrovsk-based Privatbank experienced
uncertainty during the presidential election campaign, which triggered many
depositors to withdraw their savings from the bank, putting international
creditors on red alert. Rating agencies followed up by lowering Ukrainian
banks' credit ratings.

In anticipation of possible political chaos, Ukraine's central bank late in
December imposed limits on deposit withdrawals from commercial banks and
restrictions on movement of currency and payment of loans. The moves were to
prevent capital flight, deposit withdrawals and banking system disruption.

On Jan. 25, rating agency Standard & Poor's removed a CreditWatch warning
imposed against Privatbank on Dec. 2, affirming its 'B-/C' long- and
short-term counterparty credit and certificate rating. Privatbank, one of
the country's three largest banks in terms of net assets and branch network
size, was the first Ukrainian bank to raise capital on the international
debt market through a three-year $100 million Eurobond placement, brokered
in Dec. 2002. -30- [The Action Ukraine Report Monitoring Service]
==========================================================
8. "WHAT I DISLIKE ABOUT UKRAINE BY VIKTOR YUSHCHENKO"

By Sean Maguire, Reuters, Davos, Switzerland, Sat, Jan 29, 2005

DAVOS --- Courts that run to the whim of the president, an economy
mired in graft and the beheading of journalists are some of the things
Viktor Yushchenko dislikes about the Ukraine he has inherited.

The new president, inaugurated a week ago, laid bare the failings of his
country in a bleak assessment of the challenges he faces in reforming his
country of 47 million people into a modern, democratic, free market
European state.

"It's a summary of what we dislike about Ukraine and what we want to
change in the legacy I have taken over from my predecessor," Yushchenko
told reporters on Saturday at the World Economic Forum in the Swiss
ski resort of Davos.

Ukraine must end criminal behaviour by local and central government
officials whose extortions have driven more than half of the economy
underground and who offer protection and favours to powerful business-
men in exchange for bribes, he said.

"There is no rule of law in Ukraine," said Yushchenko. He pledged to create
an honest, incorruptible bureaucracy and slash obstructive regulation that
hinders business and gives corrupt, poorly-paid officials an incentive to
demand bribes. Justice depended on the wishes of the state, he said.

"Sometimes a telephone call from the presidential administration to a court
can matter much more than a handful of laws," said the 50-year-old former
central banker, brought to power by popular revolts that overturned a
fraudulent election.

Yushchenko said there would be no repeat of the disappearance and killing
of anti-government reporters, in a cutting reference to the most prominent
human rights abuses committed under the rule of his predecessor, Leonid
Kuchma.

"We will not tolerate journalists with different opinions being beheaded
for this deviation," he said. The headless corpse of investigative reporter
Georgiy Gongadze was found in Ukraine in 2000. Kuchma denied any link
to the murder.
NO BRIBES PLEASE
Yushchenko is finishing a week of high-level diplomacy that took him to
Moscow to persuade Russia that his pro-Western tilt would not damage
ties and then across Europe to press his case that Ukraine deserves
eventual membership of the European Union.

At the World Economic Forum, he tried to convince business it would
be safe to invest in Ukraine in the future.

"For me as an economist, it's a disgrace that Ukraine only gets $600
million of foreign investment a year," he said. "My job is to convince
business that we have a new country with a new government that won't
steal and won't accept bribes."

Ukraine would begin a national debate on corruption, a blight that previous
governments had pretended did not exist. Employing fewer officials but
paying them better was one road to a more efficient, less corrupt
administration, he said.

A major challenges is to reduce the strength of vested interests, many of
them close to Kuchma and his family, who amassed great wealth and
economic power since independence in 1991. Yushchenko said the law
would be applied without favour.

The new president said there was one other thing he disliked -- his
pockmarked face.

He asked reporters to respect his privacy when questioned on the treatment
for dioxin poisoning that left his previously youthful face bloated and
disfigured. Yushchenko says the old government tried to kill him to block
his rise to power.

"I still can't get used to the face of Yushchenko that you can see today,"
he told reporters. -30- [The Action Ukraine Report Monitoring Service]
==========================================================
9. YUSHCHENKO TO 'TACKLE CORRUPTION'
Mr Yushchenko seeks business investment in Ukraine

By Tim Weber Business Editor, BBC News website, in Davos
BBC NEWS, UK, Sunday, January 30, 2005

Businesses should stop paying bribes to Ukrainian officials, the country's
new president Viktor Yushchenko has said. Calling Ukraine a "deeply corrupt
country", he promised to tackle this "complex... but not incurable" problem.

He said it was a disgrace that 50% of the country's economy was "in the
shadow" - failing to "pay a penny" in taxes that could be spent on social
programs and infrastructure. Speaking at a dinner on the sidelines of the
World Economic Forum in Davos, Mr Yushchenko also said he was sure the
Ukraine would join the European Union, but acknowledged this would take
a long time.
'NUMBER ONE TARGET'
Ukraine's new president was elected after protests at the outcome of
elections the country's supreme court found to have been rigged. Mr
Yushchenko said tackling corruption would be his "number one political
target". "In 2005 business people have to make another entry on their
balance sheets: 'saved expenses from not giving bribes to Ukrainians'," he
joked.

On Friday, Mr Yushchenko had told business leaders that Ukraine needed them
"to visit, to invest, to help us become a strong country". Mr Yushchenko
promised businesses lower taxes and "no prosecution", a pointed reference to
the disputes between the Moscow government and a string of Russian firms
like Yukos and Vimpelcom.

He also pledged wide-reaching reforms of the health and pensions systems, an
independent judiciary, and press freedom - although he noted that Ukraine's
media were currently controlled by just "two or three powerful families".
'I AM EUROPEAN'
Key to Ukraine's success, he said, was the adoption of European values,
regardless of whether the country joined the European Union.

The president described Russia as a "strategic partner" Talk of "European
accession" made him uncomfortable, though. "I'm in Europe already, I am
European, I do possess European values," he said. But he also declared
Russia a "strategic partner" and said he had set himself a goal of
conducting an "honest and effective" policy towards his powerful neighbour.

However, Russia experts attending the World Economic Forum warned the
Ukrainian president would find it difficult to move his country closer to
the West without upsetting relations with Moscow. Ukraine's economy relies
heavily on gas imports from neighbouring Russia, whose government had
supported Mr Yushchenko's rival in the disputed elections.
DRINKING WITH FRIENDS
Mr Yushchenko, his face still heavily scarred as a result of dioxin
poisoning that he says was an attempt on his life, made light of his
condition. Ending his speech with a toast to the health of his fellow
diners, he insisted on clinking his glass with everybody on the table.
"Clinking glasses was invented in Kiev hundreds of years ago," he said.

"It was to make sure that one shares the table with friends." "By clinking
glasses heavily, some drops would be exchanged between both glasses, then
nobody would poison you," Mr Yushchenko said with a big grin on his face.
----------------------------------------------------------------------------
LINK: http://news.bbc.co.uk/1/hi/business/4220005.stm
===========================================================
10. U.S. HOUSE RESOLUTION CONGRATULATES PEOPLE OF UKRAINE
AND VICTOR YUSHCHENKO

Remarks by Rep. Christopher Smith (R-NJ), Co-Chairman,
Helsinki Commission and Rep. Ben Cardin (D-MD), Ranking
House Member, Helsinki Commission
U.S. House of Representatives, Washington, D.C.
Tuesday, January 25, 2005

Mr. SMITH of New Jersey. Mr. Speaker, I thank the chairman, the gentleman
from Illinois (Chairman Hyde), for his leadership on Ukraine and on so many
other important human rights issues around the world. And for the resolution
that he offered and gave us the opportunity to vote on in the latter part of
last year, calling on the Ukrainian Government to respect the democracy
process and to have a fair and free election which, thankfully, on the
second go around, they indeed did.
I also want to thank Chairman Hyde for H. Con. Res. 16, which gives us as
a body the opportunity to congratulate the people of Ukraine for conducting
a democratic, transparent, and fair run-up election. The historic triumph of
the Ukrainian people, Mr. Speaker, in what has come to be known around the
world as the Orange Revolution, did not come about easily. There were many
moments of uncertainty.
Congratulations to Victor Yushchenko on his election as Ukraine's
president. President Yushchenko displayed remarkable personal courage and
dignity as he led the struggle for democracy and freedom, despite the
debilitating dioxin poisoning attempt on his life and numerous other
attempts that were designed to thwart him. He deserves our admiration for
his incredible persistence in carrying out the fight for Ukraine's
democratic future.
Mr. Speaker, I chaired the Helsinki Commission during the last 2 years,
and we followed very closely the developments in Ukraine. We ourselves tried
to influence and to bring to light many of the problems associated with the
run-up to the election and the first election which thankfully was
nullified. In various statements and speeches leading up to that election,
and in hearings of the commission we noted that this election when conducted
freely and fairly was perhaps the most important event in Ukraine since the
restoration of independence.
Accordingly, we sent members of the commission staff to Ukraine to act
as poll watchers to try to ensure that ballot stuffing and a myriad of
devices used to steal an election did not happen.
I would also point out to my friends that in a remarkable display of
people power, more than a million Ukrainians took to the streets of Kiev and
elsewhere in a historic, peaceful and well-organized protest, a protest that
caught the attention and the imagination of the world, and many people in
dictatorships noted as well. This people power intention was to compel a
second election. We got the run-off election, and thankfully, that was
judged to be free and fair, and the outcome is beyond dispute.
With the stunning success of the Orange Revolution, Mr. Speaker, Ukraine
is now firmly on the path to fulfill its quest to become a thriving
democracy in which human rights are honored and the rule of law prevails.
The model of Putin's Russia or Lukashenka's Belarus have been rejected
resolutely by the Ukrainian people. Ukraine has made its choice for
democracy and freedom and for integration with the Euro-Atlantic community
versus reintegration with Eurasia, with all of the implications of that
choice for Ukraine's independence and its freedom.
Mr. Speaker, throughout much of the 20th century, the Ukrainian people
were the victims of unspeakable suffering, most notably the genocidal
Ukrainian famine of the early 1930s, perpetrated by brutal dictatorships and
various invaders. Toward the end of that century, the promise of renewed
independence, for which so many had sacrificed, at long last came to
fruition. The Orange Revolution and the victory of Viktor Yushchenko have
brought Ukraine its freedom and, despite the formidable challenges that lie
ahead, the true promise of a bright future.
Mr. Speaker, finally, while listening to President Bush's inaugural
address, I could not help but think of the recent events in Ukraine as a
powerful example of what he called, and I quote him, "one force of history
that can break the reign of hatred and resentment, and expose the
pretensions of tyrants, and reward the hopes of the decent and tolerant
people, and that is the force of human freedom.'' We have seen, Mr. Speaker,
this happen in Ukraine, and we must stand ready to offer our help and
support and assistance to President Yushchenko and the Ukrainian people as
they consolidate their free, democratic future.
I thank my good friend for this resolution, for his great leadership, and
for my good friends, the gentleman from Maryland (Mr. Cardin) on the
Helsinki Commission, and the gentleman from California (Mr. Lantos), the
ranking member. We are united as a Congress on this very important issue.

Mr. CARDIN. Mr. Speaker, I want to thank the gentleman from California
(Mr. Lantos) and the gentleman from Illinois (Mr. Hyde) for their leadership
on bringing this resolution forward. It is a very important moment in the
history of the Ukraine.
I also want to congratulate my colleague, the gentleman from New Jersey
(Mr. Smith) for his leadership on the Helsinki Commission that has
consistently raised the issue of fair and transparent elections among the
member states for the Organization of Security and Cooperation in Europe.
I want to congratulate Viktor Yushchenko and the people of the Ukraine on
the fair and transparent run-off elections on December 26. What is very
noteworthy is just 5 weeks earlier, that country had a run-off election that
was marked by widespread fraud.
After that election on November 21, something happened in Ukraine. The
spirit of democracy that we have seen in so many of the former republics of
the Soviet Union finally made its way to the Ukraine. The support from the
United States was instrumental in bringing about a change in the Ukraine.
The support within the OSCE in insisting that its member states comply with
requirements of the fair and transparent elections also helped. The will of
the people prevailed.
All of us remember what happened in Independence Square in Kiev known as
the Orange Revolution. It gave strength to their country to seek freedom and
fair elections. It gave strength to their institutions, and on December 3,
the Supreme Court ruled the November 21 election invalid.
Now Ukraine has followed the lead of the former Soviet republic Georgia
in their Revolution of Roses to bring about a fair election process, but,
Mr. Speaker, there is a hard task ahead. They have to overcome the dual
legacy of corruption and disregard for the rule of law.
I know I speak for every person of this Chamber that if Ukraine follows
the path of democracy and respect for human rights, as they showed in this
past election, they will have this body, they will have this Nation on their
side as they fight to develop a democratic system within their country.
I applaud this resolution. I strongly support it. I urge my colleagues to
support it.

U.S. House of Representatives
Washington, D.C., January 6, 2005

TEXT of RESOLUTION:
Whereas the establishment of a democratic, transparent, and fair election
process for the 2004 presidential election in Ukraine and of a genuinely
democratic political system have been... (Introduced in House)
HCON 16 IH, 109th CONGRESS
1st Session, H. CON. RES. 16

Congratulating the people of Ukraine for conducting a democratic,
transparent, and fair runoff presidential election on December 26, 2004, and
congratulating Viktor Yushchenko on his election as President of Ukraine and
his commitment to democracy and reform.

IN THE U.S. HOUSE OF REPRESENTATIVES
Washington, D.C., January 6, 2005
Mr. HYDE (for himself, Mr. LANTOS, Mrs. JO ANN DAVIS of Virginia,
Mr. BURTON of Indiana, Mr. WEXLER, and Ms. KAPTUR) submitted the
following concurrent resolution; which was referred to the Committee on
International Relations CONCURRENT RESOLUTION

Whereas the establishment of a democratic, transparent, and fair election
process for the 2004 presidential election in Ukraine and of a genuinely
democratic political system have been prerequisites for that country's full
integration into the international community of democracies;
Whereas the Government of Ukraine has accepted numerous specific
commitments governing the conduct of elections as a participating State of
the Organization for Security and Cooperation in Europe (OSCE);
Whereas the election of Ukraine's next president was seen as an unambiguous
test of the extent of the Ukrainian authorities' commitment to implement
these standards and build a democratic society based on free elections and
the rule of law;
Whereas a genuinely free and fair election requires government and public
authorities to ensure that candidates and political parties enjoy equal
treatment before the law and that government resources are not employed to
the advantage of individual candidates or political parties;
Whereas a genuinely free and fair election requires the full transparency of
laws and regulations governing elections, multiparty representation on
election commissions, and unobstructed access by candidates, political
parties, and domestic and international observers to all election
procedures, including voting and vote-counting in all areas of the country;
Whereas efforts by national and local officials and others acting at the
behest of such officials to impose obstacles to free assembly, free speech,
and a free and fair political campaign took place throughout Ukraine during
the entire 2004 presidential election campaign without condemnation or
remedial action by the Government of Ukraine;
Whereas on October 31, 2004, Ukraine held the first round of its
presidential election and on November 21, 2004, Ukraine held a runoff
presidential election between the two leading candidates, Prime Minister
Viktor Yanukovich and opposition leader Viktor Yushchenko;
Whereas a consensus of Ukrainian and international election observers
determined that the runoff election did not meet international standards for
democratic elections, and these observers specifically declared that state
resources were abused in support of Viktor Yanukovich, and that illegal
voting by absentee ballot, multiple voting, assaults on electoral observers
and journalists, and the use of counterfeit ballots were widespread;
Whereas following the runoff presidential election on November 21, 2004,
tens of thousands of Ukrainian citizens engaged in peaceful demonstrations
in Kiev and elsewhere to protest the unfair election and the declaration by
the Ukrainian Central Election Commission that Viktor Yanukovich had won a
majority of the votes;
Whereas the Ukrainian Supreme Court blocked the publication of the official
runoff election results thus preventing the inauguration of the next
president of Ukraine until the Supreme Court examined the reports of voter
fraud;
Whereas on November 27, 2004, the Parliament of Ukraine passed a resolution
declaring that there were violations of law during the runoff presidential
election on November 21, 2004;
Whereas on December 1, 2004, the Parliament of Ukraine passed a no
confidence motion regarding the government of Prime Minister Viktor
Yanukovich;
Whereas European mediators and current Ukrainian President Leonid Kuchma
began discussions on December 1, 2004, to attempt to work out a resolution
to the standoff between the supporters of both presidential candidates;
Whereas on December 3, 2004, the Ukrainian Supreme Court ruled that the
runoff presidential election on November 21, 2004, was invalid and ordered a
new presidential election to take place on December 26, 2004;
Whereas on December 8, 2004, the Parliament of Ukraine passed laws to reform
the Ukrainian electoral process, including to reform the Ukrainian Central
Election Commission, and to close loopholes for fraud in preparation for a
new presidential election;
Whereas on December 26, 2004, the people of Ukraine again went to the polls
to elect the next president of Ukraine in what the consensus of domestic and
international observers declared as a more democratic, transparent, and fair
election process with fewer problems than the previous two rounds;
Whereas on December 28, 2004, the election victory of opposition leader
Viktor Yushchenko was certified by the Ukrainian Central Election
Commission; and
Whereas the runoff presidential election on December 26, 2004, signifies a
turning point for Ukraine which offers new hope and opportunity to the
people of Ukraine: Now, therefore, be it
Resolved by the House of Representatives (the Senate concurring), That
Congress--
(1) commends the people and Government of Ukraine for their commitment to
democracy and their determination to end the political crisis in that
country in a peaceful and democratic manner;
(2) congratulates the people and Government of Ukraine for ensuring a free
and fair runoff presidential election which represents the true choice of
the Ukrainian people;
(3) congratulates Viktor Yushchenko on his election as President of Ukraine;
(4) applauds the Ukrainian presidential candidates, the European Union and
other European representatives, and the United States Government for the
role they played in helping to find a peaceful resolution of the crisis;
(5) acknowledges and welcomes the strong relationship formed between the
United States and Ukraine and expresses its strong and continuing support
for the efforts of the Ukrainian people and the new Government of Ukraine to
establish a full democracy, the rule of law, and respect for human rights;
and
(6) pledges its assistance to the strengthening of a fully free and open
democratic system in Ukraine, the creation of a prosperous free market
economy in Ukraine, the reaffirmation of Ukraine's independence and
territorial sovereignty, and Ukraine's full integration into the
international community of democracies. -30-
----------------------------------------------------------------------------
NOTE: According to information we received from Orest Deychakiwsky
of the Helsinki Commission the Resolution above passed the U.S. House
of Representatives on Tuesday, January 25th by a vote of 392 to 1. EDITOR
==========================================================
11. "MILESTONE FOR DEMOCRACY"

COMMENTARY: By Bob Schaffer, Denver Post
Denver, Colorado, Tuesday, January 25, 2005

A milestone in the democracy movement occurred Sunday as Ukrainians
inaugurated Viktor Yushchenko, their third president since declaring
independence from the Soviet Union in 1991.

He succeeded outgoing President Leonid Kuchma, whose administration, with
the help of Russian President Vladimir Putin, went to extraordinary lengths
to steer the election outcome toward Viktor Yanukovych. This time, their
attempts - legal and otherwise - were just not enough.

The inauguration of Yushchenko caps an unprecedented marathon election
marked by rampant election fraud, voter intimidation, assassination
attempts, the presence of Russian troops and appeals to the nation's top
court. Last Thursday, the end became certain as the Supreme Court rejected
Yanukovych's last desperate appeal. Yushchenko is Ukraine's former prime
minister. His performance established him as a leader with pro-Western
leanings. His penchant for privatization, free markets and private-property
rights put him in the crosshairs of Ukrainian and Russian oligarchs whose
tremendous wealth is built upon exclusive government deals and on the backs
of Ukraine's working class.

These same Ukrainian commoners define the "Orange Revolution," named after
Yushchenko's campaign color. I was in Ukraine as an election monitor during
the start of the revolution and witnessed millions of Ukrainians pouring
into Kiev's Independence Square.

The protest was sparked when the government announced fraudulent election
results and tried to hand Yanukovych a false victory. Demonstrators stayed
in the streets for weeks in sub-zero weather demanding a new election and an
end to corruption.

Yushchenko's election is important for two reasons. First, with the help of
international observers (including several Coloradans), Ukrainians conducted
a legitimate election in the face of difficult odds.

Given the history of oppression in Ukraine, the election is a triumph of
courage. Today's Ukrainians are the grandchildren, children and survivors of
Stalin's engineered famine of 1932-33. For generations, they have seen that
Ukrainians who challenge governing authorities often die untimely deaths.

The election is also a triumph for women. In 35,000 polling stations
throughout Ukraine, it was the women who insisted on a transparent election.
They were the brave volunteers who stood up to thugs, dressed down armed
government agents and enforced the rules to protect the ballot box.

Indeed, the Patrick Henry of Ukraine is Yulia Tymoshenko, a parliamentarian
who marshaled the masses in the peaceful, purposeful and well-organized
Orange Revolution. Tymoshenko is emblematic of Ukrainian women. Their
leadership has made the greatest difference in Ukrainian politics, business,
academia and culture.

For Ukrainians, Yushchenko represents unleashed opportunity. Ukraine's
massive underground economy has the potential to become one of the most
powerful economies in Europe. Yushchenko understands this.

He has charted an ambitious agenda for reforming Ukraine's economic
institutions with an emphasis on attracting foreign investment and improving
domestic productivity. Ukraine's economy is quite strong. Last year's
increase in its gross domestic product was among the highest in the world.

A country of 48 million, Ukraine has a highly educated workforce and nearly
100 percent literacy. It is the second- largest country in Europe, has
abundant natural resources, contains the planet's richest soil and enjoys a
geographic location conducive to trade.

In anticipation of a Yushchenko presidency, foreign investors have been
busting down the doors of Kiev in search of ground-floor opportunities.
Yushchenko's promise to accelerate NATO cooperation, European integration
and Western economic standards is underscored by his immediate travel
schedule. This week he heads to a meeting of the Council of Europe, then to
the World Economic Forum in Davos, Switzerland.

Colorado shares many common features with Ukraine which have led to
partnerships in agriculture, mineral extraction, medicine, space development
and education. Strengthening these partnerships in the Yushchenko era
presents a solid opportunity for Coloradans to help secure democracy and
freedom in Ukraine while expanding trade here at home. -30-
------------------------------------------------------------------------
Former U.S. Rep. Bob Schaffer is from Fort Collins and recently returned
from observing the elections in the Ukraine.
==========================================================
12. YUSHCHENKO: 'LIVE AND CARRY ON'

"60 MINUTES" TV Program, CBS News,
New York, New York, Sunday, January 30, 2005

It's a plot straight out of spy novel. A presidential candidate in the
heart of Europe is stricken by a mystery poison that disfigures his face
and nearly kills him.

But this is no fiction. It’s the story of how Ukraine’s new president,
Viktor Yushchenko, triumphed over his country’s authoritarian rulers,
while leading a massive people-power revolution.

For the first time since his inauguration, Yushchenko tells his incredible
story to CNN's Christiane Amanpour, on assignment for 60 Minutes.

In Kiev, the capital of Ukraine, the walls of St. Michael's Monastery of the
Golden Domes resonate with a painful history. Demolished by Stalin’s
henchmen, this 12th century cathedral has been rebuilt from scratch, a task
almost as monumental as the one faced by Yushchenko, Ukraine’s new
president.

"It's a huge responsibility," says Yushchenko. "Ukrainians have dreamt of
being free for centuries. So no one expected we'd come so close to
dictatorship."

And that might have happened if the plot to poison Yushchenko had succeeded.
It has completely disfigured him.

"You challenged people about your face," says Amanpour. "You said that your
face is everything that is wrong with Ukraine. What do you mean by that?"

"People cry when they see my face, but my country has also been disfigured,"
says Yushchenko. "Now, we’ll bring both back to health."

How does he deal with his disfigurement now? "This Yushchenko," he says,
"I'm still not used to."

Six months ago, when he began his campaign to unseat Ukraine's authoritarian
rulers, did he have any idea that it would be so difficult and that he would
go through such personal hardship?

"I know what kind of country I live in, and who’s in charge of the
government," says Yushchenko. "But I didn’t think they’d be cynical enough
to poison me."

Ignored by Ukraine’s highly controlled media, Yushchenko’s grassroots
campaign against government corruption was somehow starting to catch on. He
barnstormed the country with his American-born wife, Katherine, often at his
side.

"He was a great threat to the old system, where there was a great deal of
corruption, where people were making millions, if not billions," says
Katherine, whose parents were Ukrainian immigrants to Chicago.

She was used to straddling two worlds, but nothing prepared her for
Ukraine's poisoned politics.

"The whole purpose of what they did, I believe now, was to keep him out of
the campaign, to knock him out," says Katherine. "They tried to destroy him
politically, and I always feared that when they were not successful, they
would try to then do something physically."

She also feared that something would happen to her family. And then,
suddenly it did. On Sept. 6, Yushchenko fell critically ill, and no one in
Ukraine could explain why.

"It was a very, very, very difficult situation," says Katherine. "Many of
the doctors told us that they were, that they just had never experienced
somebody having so much pain for so many unknown reasons."

He had symptoms like a swollen pancreas, stomach ulcers, and a crippling
backache. His family rushed him to a clinic in Austria, but Dr. Michael
Zimpfer was just as baffled by his seemingly unrelated symptoms.

"That made us suspicious," says Zimpfer. "We inform the patient that we
never saw an identical clinical picture before, and we suspect, don’t know
yet, but we suspect that there might be an act of bio-terrorism or poisoning
behind that."

The doctors struggled to save his life, but they couldn’t keep him in bed
for long. Eight days later, Yushchenko insisted on going home with tubes
dripping painkillers inserted right into his spine.

Did Katherine ever try to dissuade him? "He knew he had to go forward
and there was no turning back," she says.

Three days after returning to Kiev, Yushchenko faced down his political
enemies in parliament. They had mockingly attributed his mystery illness to
bad sushi or excessive drinking. But no could explain why his face was so
horribly swollen.

"Look at my face, this is a fraction of the problems I’ve had," said
Yushchenko in parliament. "This isn’t a problem of cuisine; we’re talking
about the Ukrainian political kitchen, where assassinations can be ordered.
You know very well who the killer is. The government is the killer."

But the government brushed off these allegations, until the hard proof came
in. Three months after Yushchenko first fell ill, a lab in Amsterdam
reported dioxin levels in his blood that was 6,000 times above normal.

"This is the highest we've ever seen, and one of the highest ever reported,"
says Bram Brouwer, who runs the lab. "And it fits very well with the
symptoms that are now observed, with Mr. Yushchenko's face, the chloracne."

The evidence that Yushchenko was poisoned was now irrefutable. Dioxin, one
of the world’s most toxic chemicals, was responsible for the scarring of his
face and threatened his future with cancer. But the question remained. Who
carried out this crime?

The attempt to eliminate Yushchenko is as Byzantine as Kiev’s skyline,
filled with plots and potential villains. One theory is that he was poisoned
by Ukraine’s security services, the old KGB, because just before he fell so
gravely ill, he had been invited to dinner by the security chiefs.
Yushchenko and his hosts shared crayfish, salad and a few beers, and
ironically they had been meeting to discuss the death threats against him.

Ukraine’s security services deny they had anything to do with the poisoning.
Their director had in fact been helping the Yushchenko camp.

Does Yushchenko know who did this to him? "I have no doubts this was by
my opponents in the government, that's who would benefit the most from my
death," says Yushchenko.

But there is still the question of how it was done. One way to solve it is
to trace the poison. And some people in Yushchenko's camp think that it came
from a Russian chemical weapons lab.

"Dioxin like this is produced in four or five military labs in Russia,
America, and a few other countries," says Yushchenko. "Our security services
have informed me how this material got into Ukraine, but that evidence is
now with our general prosecutor, who eventually must answer this question."

They must also examine another plot on Yushchenko’s life. Ukraine’s security
services say a powerful car bomb, targeting Yushchenko’s headquarters, was
discovered during the presidential campaign. Two Russian nationals are being
interrogated.

Spokesmen for the Russian security services would not comment on either
case, but President Vladimir Putin’s role during the election remains
controversial. He openly backed the handpicked successor of the previous
regime, coming to Kiev twice to lend his support.

"President Putin supported your opponent during the election. How do you
reconcile with him," asks Amanpour.

"I'll give him my hand, and I say, 'Vladimir Vladimirovich, let’s forget the
past and think of the future,'" says Yushchenko.

This week he did just that, greeting Putin on his first trip abroad after
his inauguration.

"Everyone now understands only Ukrainians have the right to choose Ukraine’s
president," says Yushchenko. "Our president is not elected in Moscow, or
anywhere else."

That became apparent when the previous regime tried to steal the
presidential election through massive voting fraud. It triggered what became
known as the Orange Revolution, a spontaneous revolt of outraged citizens
who for weeks besieged their own capital

Democracy was finally taking root in a country where greed and corruption
had become the rule of law.

When government troops lined up for what could have ended in an
European-style Tiananmen Square, the people’s power of persuasion won the
battle of the streets and Yushchenko and all those who had believed in him
triumph in a bloodless revolution.

"The millions who came out on the street showed that they don’t want
tyranny," says Yushchenko. "They want freedom."

But what a price for freedom he paid. "Everyone has paid a price," says
Yushchenko.

"A lot of people asked me, 'How did you deal with it,' and my answer
was always my husband’s alive. My children are alive, I'm alive," says
Yushchenko's wife, Katherine. "It was such a small episode in a huge
revolution. Generations of Ukrainians, you could say centuries of
Ukrainians, have dreamed and have fought, and have died for a chance
to be right where we are right now."

"When I heard that millions were praying for me, it went straight to my
heart," says Yushchenko. "But I also felt an obligation to live. To die is
not very original, but to live and carry on -- that’s special." -30-
----------------------------------------------------------------------------
In his first American interview since his election, President Viktor
Yushchenko speaks to Christiane Amanpour. (Photo: CBS)
The once-dashing candidate's face was horribly disfigured with cysts called
chloracne - a symptom of exposure to dioxin. (Photo: CBS)
Yushchenko and his American-born wife, Katherine. (Photo: CBS)
CBS VIDEO: Ukraine Pres. Talks Poisoning
http://www.cbsnews.com/stories/2005/01/28/60minutes/main670103.shtml
----------------------------------------------------------------------------
NOTE: Subject: PRESIDENT YUSHCHENKO on 60 MINUTES

After watching 60 Minutes on CBS tonight (Sunday) and the interview with
President Yushchenko I feel that there should be a concentrated effort to
start a e-mail campaign congratulating 60 Minutes and especially a young
producer of this segment Andriy Tkach who in my mind did a tremendous
job for President Yushchenko and Ukraine. There is nothing like an avalanche
of congratulations to the Network to help a young producer. Andriy by the
way is a brother of Virlana Tkach of Yara Arts Group.

So please disseminate this as much as you can and do write to CBS. Please
include your full name, address and telephone no. in your e-mail or
correspondence, otherwise it will not be read and just discarded.

E-mail: 60m@cbs.com; Tel: 212-975-3247
Address: 60 Minutes, 524 W. 57th St., New York, NY 10019

Sincerely, Jaroslaw Kurowyckyj
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