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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"

"EUROPE'S CONSPIRACY OF SEMI-SILENCE"

"Since then a conspiracy of semi-silence has taken root. Constrained
by European leaders who are anxious about enlargement and keen to
please Russia, the European Commission has stuck to the surreal line
that "the door is neither open nor closed" to Ukraine's EU membership.

EU leaders know that Ukraine's case for a "European perspective" is
as strong as Turkey's - at least from a geographical point of view. After
all, Ukraine is undoubtedly in Europe, has taken a giant step towards
democracy and has set its sights on the EU. Mr Yushchenko talks
about EU entry "before 2016" - ie, at the same sort of time as Turkey."
[Financial Times, article one]

"THE ACTION UKRAINE REPORT" - Number 462
E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, FRIDAY, April 15, 2005

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

1. "EUROPE'S SEMI-SILENCE"
By Daniel Dombey, EU Diplomatic Correspondent
Financial Times, London, UK, Wednesday, April 13, 2005

2. "HOW YUSHCHENKO DISCOVERED AMERICA"
Kyiv Weekly, Kyiv, Ukraine, Thursday, April 14, 2005

3. "DON'T SELL OUT THE REVOLUTION"
BUSINESS EUROPE: OP-ED by Sarah Carey
The Wall Street Journal, Europe Edition
New York, NY, Wed, April 6, 2005

4. UKRAINE MAKES DRAMATIC CHANGE TOWARDS MORE
MEDIA FREEDOM UNDER NEW GOVERNMENT
BBC Monitoring research, 14 Apr 05
BBC Monitoring Service, UK, Thursday, April 14, 2005

5. UKRAINE HOLDS INTEREST FOR INVESTORS HOWEVER
POLITICAL AND JUDICIAL RISKS ARE STILL A GREAT CONCERN
Presentation by Myron Vasylyk of PBN a Seminar
Ukrayinhska Pravda, translated by Marianna Wakulowska
Kyiv, Ukraine, Wednesday, April 13, 2005

6. PRIVATIZE THOSE BLACKENED EYES"
Kyiv Weekly, Kyiv, Ukraine, Thursday, April 14, 2005

7. YUSCHENKO URGES CABINET TO ACTIVELY COOPERATE
WITH BUSINESSMEN
Ukrainian News Agency, Kyiv, Ukraine, April 14, 2005

8. PRESIDENT SIGNS DECREE ON THE CONSULTATIVE
COUNCIL ON FOREIGN INVESTMENTS
Ukrinform, Kyiv, Ukraine, Wednesday, April 13, 2005

9. YUSCHENKO: WORK OF FINANCE MINISTRY, ECONOMY
MINISTRY, NBU IN INFLATION CONTROL IS INSUFFICIENT
Ukrainian News Agency, Kyiv, Ukraine, Thursday, April 14, 2005

10. YUSCHENKIO CONCERNED OVER LOW PACE OF GDP
GROWTH IN JANUARY-MARCH
Ukrainian News Service, Kyiv, Ukraine, Thursday, April 14, 2005

11. UKRAINE MACROECONOMIC SITUATION - MARCH 2005
SigmaBleyzer Monthly Ukrainian Economic Report
By Iryna Piontkivska, Edilberto L. Segura
SigmaBleyzer, Kyiv, Ukraine, April 2005

12. POLISH PRESIDENT OFFERS SUPPORT: UKRAINE'S EU ENTRY
Associated Press, Warsaw, Poland, Monday, April 11, 2005

13. UKRAINE: THE WILD, WILD EAST
By Steve Miller, AgWeb
The On-line Portal of Farm Journal Media
Philadelphia, PA, March 16, 2005

14. YUSHCHENKO ADDRESSES U.S. CONGRESS
By Peter Savodnik, Staff Writer, The Hill newspaper
Washington, D.C., Thursday, April 7, 2005

15. LET'S SUPPORT YUSHCHENKO BY DROPPING JACKSON-VANIK
LETTER TO THE EDITOR,
From Sen. Richard G. Lugar (R-Ind.), Chairman
U.S. Senate Committee on Foreign Relations
Published by The Hill newspaper, Tue, April 12, 2005, Wash, D.C.

16. ACROSS THE FORMER SOVIET UNION
Trade, property restitution on table as president of Ukraine visits U.S.
By Vladimir Matveyev, JTA, New York, NY, Wed, April 6, 2005

17. INDUSTRIALISTS AND ENTREPRENEURS UNION TO PROMOTE
ST. SOFIA CATHEDRAL RESTORATION FUNDING
Ukrainian News Agency, Kyiv, Ukraine, Thursday, April 14, 2005

18. NEW UKRAINIAN MUSEUM IN NEW YORK OPENS ON A
FOUNDATION OF MODERNISM
Exhibition: Ukrainian-born Modernist sculptor Alexander Archipenko
By Grace Glueck, The New York Times
New York, New York, Thursday, April 14, 2005
=============================================================
1. "EUROPE'S SEMI-SILENCE"

By Daniel Dombey, EU Diplomatic Correspondent
Financial Times, London, UK, Wednesday, April 13, 2005

Whatever happened to Ukraine? Last year Kiev produced one of the
biggest continental shifts Europe had seen in years. This year the west
has to decide what to do about it. In 2004, the Ukrainian people voted for
opposition candidate Viktor Yushchenko, despite enormous pressure from
Moscow and the outgoing government. They stood by him, in the face of
fraud and intimidation, until he won repeat elections.

In many ways it was the result that the US and western Europe have been
working for over the past decade. Ukraine has been one of the biggest
recipients of both US and European Union funds. It has been a member of
Nato's Partnership for Peace since 1994. During all that time, the country
has been clearly perceived as a "swing state", poised between Russia and
the west. But when Ukraine duly "swung" last year it was to the amazement
of most of Europe.

Since then a conspiracy of semi-silence has taken root. Constrained by
European leaders who are anxious about enlargement and keen to please
Russia, the European Commission has stuck to the surreal line that "the
door is neither open nor closed" to Ukraine's EU membership.

EU leaders know that Ukraine's case for a "European perspective" is as
strong as Turkey's - at least from a geographical point of view. After all,
Ukraine is undoubtedly in Europe, has taken a giant step towards democracy
and has set its sights on the EU. Mr Yushchenko talks about EU entry
"before 2016" - ie, at the same sort of time as Turkey.

But those selfsame EU leaders are desperate not to talk about the issue,
even though they know someone will have to bring it up before too long.
As long as the EU's current constitutional debate rumbles on, the topic is
seen as simply too sensitive.

Indeed, there may be real difficulties in admitting any country into the EU
ever again. A recent French constitutional amendment, prepared with
Turkey in mind, foresees holding national referendums on all EU
enlargements after 2007.

But if the EU is currently constrained and inward-looking because of
constitutional niceties, Nato is not and nor is its most powerful figure,
President George W. Bush. The US supports Ukraine's Nato aspirations,"
Mr Bush declared in a joint statement with Mr Yushchenko last week. The
two men highlighted the importance of a Nato-Ukraine foreign ministers
meeting in Vilnius this month, which will feature "an offer of an
intensified dialogue on membership issues".

The contrast is clear with the EU's pussy-footing. Of course, the EU is a
much more difficult organisation to join than is Nato, since EU membership
transforms almost every aspect of a country's laws. And the discussion in
Vilnius will not bring about Ukraine's imminent entry into the military
alliance.

Nato secretary-general Jaap de Hoop Scheffer stresses that his is a
"performance based organisation", while residual worries about Ukraine
range from corruption and economic reform to the role of Russian security
services in the country. But all the same, the issue of Ukrainian membership
is squarely on the agenda, placed there by Messrs Bush and Yushchenko.

At the end of last year, one Nato ambassador remarked that he expected
two things in 2005: a Ukrainian application to join, and fierce US pressure
in support. Things certainly seem to be headed in that direction, even if
the schedule slips by a few months. What is in doubt, however, is how
placid - or otherwise - the process will be.

Will Germany and France take kindly to the US's support for shifting the
fault-lines of Europe? What will be the opinion of Russia, outside Nato but
hardly uninfluential? After all, Ukrainian membership of Nato could be a
much more incendiary topic than Kiev's entry into the EU.

Washington has put its cards on the table. Now the question is how Europe
will respond. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
2. "HOW YUSHCHENKO DISCOVERED AMERICA"

Kyiv Weekly, Kyiv, Ukraine, Thursday, April 14, 2005

Indeed, only a notebook and pen were allowed. Every time the congressmen
burst into thundering and passionate applause and shouted “Yushchenko,
Yushchenko!” tears filled the eyes of those present.

Yushchenko certainly is not a Roman orator. His slow manner of speech is
more calming than stirring and his most frequently used phrase “Dear
friends... I would like to tell you” have become classics of spoken genre.
Nevertheless, the speech by Ukraine’s president in Congress was probably
one of the best he has ever delivered.

Indeed, President Yushchenko pressed all the “buttons” he needed to press,
touched on all the issues that had to be addressed to the American audience
and, most importantly, listed eight points in which Ukraine seeks assistance
from the U.S. Even the tradition of reading from prepared text and the
absence of accents did not spoil the audience’s impressions of Yushchenko’s
speech.

Seemingly emphasizing the personal importance of U.S. assistance,
Yushchenko recalled how he met his wife Kateryna Chumachenko, who
helped him through all the travails of the presidential election campaign,
on an
exchange program financed by the American side. The audience in the hall
began to applaud and Chumachenko modestly stood up, bowed to the hall
and blew her husband a kiss, just like in Hollywood. How can a person hold
back one’s tears after witnessing such a moment?

Yushchenko’s speech in Congress was probably the most successful PR
campaign ever for Ukraine in America. However, the event also had purely
pragmatic significance. No matter how friendly the relations are between the
presidents of Ukraine and the U.S., it is the congressmen that will vote for
the cancellation of the Jackson-Vanik amendment, allocation of foreign aid
to Ukraine and acknowledgement of Ukraine as a country with a market
economy.

In the long run, it is also the U.S. Congress that will vote for recognition
of genocide against the Ukrainian nation during the famine of 1930-33 and
simplification of visa procedures for certain categories of Ukrainian
citizens.

The day after Yushchenko’s departure from America, the U.S. Senate
Appropriations Committee approved the allocation of US $60 mn in additional
assistance to Ukraine as proposed by U.S. president George Bush on April 7.
The Senate will consider the committee’s proposal this week and will most
likely approve it.

Recall that several weeks ago the House of Representatives voted in favor
of reducing the amount proposed by Bush to US $33.7 mn.

The committee also separately allocated US $3.65 mn in assistance to
non-governmental organizations in Ukraine, thus underscoring the important
role they played in the Orange Revolution this past winter.

Congressman Sander Levin introduced to the House of Representatives
the bill H.R.1170 with the title: To authorize the extension of
unconditional and permanent nondiscriminatory treatment (permanent normal
trade relations treatment) to the products of Ukraine, and for other
purposes.

This is something the former leadership of Ukraine never achieved. After
Yushchenko’s speech in Congress, the probability that the bill will be
approved is quite high.

After the speech in the U.S. Congress, at a reception organized for
Yushchenko by the National Democratic Institute and the International
Republican Institute, former Czech President Vaclav Havel unexpectedly
showed up. By his presence and kind works, Havel put Ukraine’s president in
the same category as the outstanding leaders of democratic movements in
Eastern Europe at the end of the 1980s. “While we defeated the Communist
regime,” stated Havel, “you defeated the post-Communist regime”, thereby
opening a new page in global democratization.

Tired of hearing the bad news from Ukraine and about Ukraine for many years,
the Ukrainian Diaspora in the U.S. benefited the most from Yushchenko’s
visit. After the Orange Revolution, the American-Ukrainians got a second
wind and began forging an idol out of Yushchenko in the same way they did
with Leonid Kravchuk in the beginning of the 1990s. One could read the
headline “Chicago Greets Its Hero” on the most popular Diaspora website
portal “brama.com”, where the word hero was capitalized and without a name.

Before leaving for home, the president felt at peace at a banquet organized
by local Ukrainian organizations in the U.S. and spoke “from the hip”
without reading from prepared text and using his favorite expressions.
“Thank you for putting flowers and oranges in front of me. I hope the
oranges are not drug-injected,” Yushchenko joked at the start of his
speech.

In addition, the Ukrainian president recounted the impressions that
President George Bush had of the events in Ukraine last year: “The
American president was at his ranch in a small town in Texas. Bush said,
In my village there are no traffic lights. I walk out of a restaurant and
see about 50 people with orange ribbons and flags.”

Ukraine and its president are at the mo peak of fame in the U.S. All the
meetings of Yushchenko in the U.S. are aimed at transforming democratic
achievements into economic dividends, which is a logical, relevant and
justified strategy. Notwithstanding, the status of a fighter against world
tyranny has its commitments.

It came as a surprise to some officials in Washington that Yushchenko
remarked in his final speech at the banquet on the fate of “50,000
Ukrainians that are citizens of Prydnistrovya”. Was this the announcement
of a new vector in Ukraine’s foreign policy?

The president should be very cautious and balanced when talking about this
hot spot on the border of Ukraine and keep in mind that many citizens of
Moldova — residents of Prydnistrovya — became Ukrainian citizens in the
same way that many Ukrainians in Crimea became Russian citizens.
Prydnistrovya remains an illegitimate formation that is not recognized by
the global community, but instead is regarded as a stronghold of Moscow’s
influence in the region.

Yushchenko also needs to decide how to build the relations of the govern-
ment in Belarus, whose participation in democratization he promised to Bush,
together with Russia, which has loads of oil and little democracy, with
Turkmenistan, where there is a lot of gas and no democracy at all and,
finally, with Cuba, which for many years treated Ukrainian children affected
by Chornobyl for free.

In short, as President Viktor Yushchenko repeatedly said in the U.S.,
“God bless America, God save Ukraine!” -30-
=============================================================
3. "DON'T SELL OUT THE REVOLUTION"

BUSINESS EUROPE: OP-ED by Sarah Carey
The Wall Street Journal, Europe Edition
New York, NY, Wed, April 6, 2005

The newly elected Ukrainian government recently announced plans to
reprivatize 20-30 major enterprises that were sold under former President
Leonid Kuchma. The new government claims that these valuable assets
were given away at bargain-basement prices to the politically connected,
sometimes with only one bidder participating in the auction.

The stated goal of the reprivatization effort is to secure a fair price for
the state. Not surprisingly, some of the beneficiaries of the earlier
auctions see the move as political retribution.

Many former Soviet republics have felt cheated by the deals they struck for
the sale of state assets and have often simply manipulated their tax systems
to squeeze more funds out of the new owners. The most extreme example
is the Yukos case in Russia, where the Kremlin manipulated the tax system
to such a degree that it became the basis for forfeiture of Yukos' key asset
to the state (indirect nationalization). Others have forced the new owners
to renegotiate their original deals.

Providing solid proof of the policy justification for reprivatization and
getting the process right is a major challenge for Ukraine's new President
Viktor Yushchenko. Non-transparent or legally dubious procedures will lead
to protracted judicial and political battles, discouraging future
investments.

The Ukrainian government will have its work cut out for it if it wants to
ensure that the reprivatization will be conducted in a manner that respects
due process and property rights and conforms with Ukrainian and
international law. This is an almost impossible challenge -- but if these
protections are not in place, the reprivatization effort will be viewed as
just another political vendetta.

The actual procedures have yet to be announced, although key components
were outlined recently at a conference in London by Economics Minister
Serhiy Teriokhin:

. Publication of the final list of privatization deals that will be revised;
. Valuation of the assets of these enterprises;
. Negotiations with the current owners who, in most cases, will have a
right of first refusal to meet the government's target price;
. Judicial review if the owner does not accept the government's proposal;
. If new auctions take place, compensation of the former owners.

When the regulations defining these procedures are published, it will be
important for the state to demonstrate that they conform with Ukrainian
constitutional and statutory requirements and, where relevant, with
international treaties. Further, any reprivatization must be completed in
an efficient manner over a relatively short period of time.

The negotiations regarding the composition of the list of enterprises to be
reprivatized are ongoing, with the potential targets for reprivatization of
course heavily campaigning to be excluded. A number of targets have also
changed hands since the initial privatization, making it problematic to go
after the current owners. Those enterprises that are included on the list
will, no doubt, appeal the decision, seeking to demonstrate that their
situation was not properly understood or that the process was illegal. It is
therefore important for the government to publish clear and fair criteria
that need to be fulfilled before an enterprise can be reprivatized.

The correct valuation of the asset, both at the time of purchase and the
current market price, will be particularly crucial. To assess the original
value, analysts will have to look at factors such as the health of the
enterprise's balance sheet, its market position, outstanding liens, debts
and other obligations to the state or third parties, prior mismanagement;
political and country risk factors, etc. To assess today's market value, the
investments and improvements the owner may have made over time will
have to be taken into consideration.

The selection of the firm(s) that will complete the valuations must be fair
and transparent and open to international competitors. The owner of each
enterprise should be given the opportunity to review and challenge the
valuation.

The negotiations between the state and the owner regarding the valuation
and paying the difference between the original price and the "true value"
of the asset at the time of purchase will be complex and it will be
important for the state to be flexible in reaching acceptable terms. Among
other things, the rules should permit the owner to borrow the funds to pay
off the obligations, to attract additional investor(s), and to make payments
over time. In-kind payments should also be allowed. The agreement between
the state and the owner should be made public and subject to international
arbitration.

According to Mr. Teriokhin's remarks, an owner who refuses to pay is
subject to judicial challenge. This aspect of the process requires a lot
more definition and explanation. On what basis the state will sue the
reluctant owner is not clear. Will the back payment be treated as some kind
of a tax and the lawsuit therefore fall under Ukraine's tax law? If so, will
there be new legislation to define the new tax? And what defenses or
appeals will be available to the owner? Absent a legislative mandate or
a contractual commitment, it is difficult to understand how a court can
compel two parties to reach an agreement.

Moreover, rules must be set in place for taking the owner's property,
organizing a new tender or auction by the state, and some sort of
compensation for the owner. Again, the legal framework is unclear.
Presumably the state will have to nationalize the asset or exercise eminent
domain with regard to the property, compensate the owner, and then
conduct the new auction.

The owner should not be barred from participation in the tender and steps
will have to be taken to encourage the owner to cooperate. Absent
cooperation, it will be difficult for interested buyers to complete the due
diligence necessary to reach a decision whether to bid for the asset.
Without that cooperation, potential buyers also risk getting entangled in
post auction litigation, discouraging them from bidding in the first place.
Finally, the basis for determining the compensation for the owner must
be spelled out in advance.

Given the complexities outlined above (which invite legal challenges at
every single step), a far simpler solution to the state's goal of recovering
the fair value for assets that were privatized too cheaply would be to enact
a one-time compensatory tax that leaves the current ownership in place.
Only those few privatizations that involved clear violations of laws in
effect at the time they occurred would then need to be handled by the
courts.

Given the clear advantages of such a one-time tax, it is a mystery why the
Ukrainian government insists on the more cumbersome and potentially
more costly reprivatization of former state assets. -30-
--------------------------------------------------------------------------------------------------
Ms. Carey, a Washington attorney, served on the board of Yukos Oil
Company. She also chairs the board of the Eurasia Foundation.
--------------------------------------------------------------------------------------------------
Contact: scarey@ssd.com
=============================================================
4. UKRAINE MAKES DRAMATIC CHANGE TOWARDS MORE
MEDIA FREEDOM UNDER NEW GOVERNMENT

BBC Monitoring research, 14 Apr 05
BBC Monitoring Service, UK, Thursday, April 14, 2005

KYIV - A dramatic change towards more editorial freedom and diversity of
opinion in the Ukrainian media has been observed since the Orange
Revolution and the arrival of the Viktor Yushchenko government.

After years of toeing the government's line, mainstream TV channels are now
airing a multitude of views, and Yushchenko's opponents are given ample
opportunity to make their voice heard. Lively debate on sensitive topics and
live appearances of politicians of all hues have become a common occurrence.

The previous administration's practice of sending out detailed spin
instructions to the media - known as the "temnyky" - has been abandoned.
Arrests have been made in the case of murdered journalist Heorhiy Gongadze,
which has for years been a symbol of harassment of opposition journalists in
Ukraine.

There has been no change of ownership at the leading outlets, and the top 5
TV channels which together have about 60 per cent of the audience are still
believed to be linked to just two political-business groupings, the United
Social Democratic Party of Ukraine (USDPU) and Viktor Pinchuk group, both
hostile to the new government.

But their owners appear to have much less sway over the channel's editorial
policy now. Only one TV channel, the Donetsk-based Ukrayina TV, retains a
consistent anti-government slant.

The print media enjoyed much more editorial freedom to begin with, but
similar changes have been observed at some papers as well, especially the
popular tabloids controlled by former President Leonid Kuchma's allies.
Television

Inter TV, Ukraine's leading channel owned by a key member the opposition
United Social Democratic Party, made a drastic shift towards a more balanced
reporting in the wake of the Orange Revolution. Apart from occasional mild
digs at the new administration, its news coverage is relatively neutral.
However, USDPU influence is still felt at times, and the opposition's recent
statements regarding the arrest of Donetsk regional council chairman Borys
Kolesnykov, a key ally of defeated presidential candidate Viktor Yanukovych,
were covered in great detail.

One Plus One, the second-most-popular channel, was strongly influenced by
the USDPU, but has since made a break from the past, featuring balanced
news and a wide variety of opinions. The channel's former head of the news
service, Vyacheslav Pikhovshek, who was seen as a leading advocate of the
Kuchma administration, was demoted in the wake of the protests and his
Epicentre talk show was closed. He is now co-presenting a new combative
political talk show "I challenge you", where his views, less outspoken but
still critical of the new government, are counterbalanced by another co-host
and a broad range of guests.

Ukrainian Television First Programme (UT1)

The state-owned channel's new chief, Taras Stetskiv, was one of the leaders
of the protesters' tent camp in Kiev during the Orange Revolution. The
channel offers detailed and fairly sympathetic coverage of the government's
doings, but the opposition's views also receive sufficient airtime. A debate
is now under way on the possibility of transforming UT1 into an independent
public broadcaster modelled on the BBC.

ICTV, Ukraine's third-most-popular channel, is part of a media conglomerate
that also includes STB and Novyy Kanal. It is owned by Kuchma's son-in-law,
influential MP and businessman Viktor Pinchuk. ICTV's news reporting is
fairly neutral, but a distinct slant is observed in stories where Pinchuk
and his business interests are involved (including the government's drive to
reprivatize the steel giant Kryvorizhstal, part-owned by Pinchuk).

5 Kanal television played a prominent role in the campaign of protests that
brought Yushchenko to power. It is linked to National Security and Defence
Council chief Petro Poroshenko. The channel went all-news in March. After
briefly ranking third after Inter and One Plus One during the "Orange
Revolution", the channel has dropped to 9th slot in popularity ratings with
just 1.74 per cent of the audience. Although the channel clearly favours
Yushchenko, it regularly features lengthy appearances by opposition leaders.

Ukrayina TV, owned by Donetsk mogul Rinat Akhmetov, strongly backed
Yanukovych during the election campaign. It became fairly neutral for a
time, but coverage of Kolesnykov's arrest was strongly pro-opposition.
Ukrayina broke its usual schedule to carry parliamentary hearings on the
case, and outraged comments by opposition figures far outweighed the
government's side of the story in its news bulletins. -30-
=============================================================
5. UKRAINE HOLDS INTEREST FOR INVESTORS HOWEVER
POLITICAL AND JUDICIAL RISKS ARE STILL A GREAT CONCERN
Presentation by Myron Vasylyk of PBN a Seminar

Ukrayinhska Pravda, translated by Marianna Wakulowska
Kyiv, Ukraine, Wednesday, April 13, 2005

KYIV - Ukraine still holds investment attractiveness, however, foreign
investors are held back by the political and judicial risks. This view was
expressed by the participants of the seminar titled, "Improvement of the
Investment Climate in Ukraine: the Next Steps," which took place Tuesday,
in the USA Embassy in Ukraine.

In particular, a member of the board of directors of the American Chamber
of Commerce in Ukraine, the senior vice-president of PBN Myron Vasylyk,
pointed out the high expectations that investors have of Ukraine in light of
the increasing consumer confidence and of the highest trust, throughout all
of the years of independence, in the government.

At the same time, he expressed concern that without active work to continue
the reforms, these possibilities could be lost. Vasylyk stressed that the
investors await for transparent and permanent reforms, as well as
governmental actions based on the judicial sovereignty and anti monopoly
principles. At this point, he stressed the importance of lowering the
budgetary deficit.

Vasylyk believes that the fundamental risks that remain for Ukraine are in
the political and judicial levels. On the political level, it is the factor
of the approaching parliamentary elections which could bring forth populist
decisions. On the judicial level, the risks are created by the frequent
changes in the judicial base.

At the same time, he pointed out that Ukraine is becoming a country of
market economy, and this, in the setting of growing interest in it, will
favor investments. Besides this, the factor that will determine their growth
will be the widening of the European Union to the Ukrainian borders.

In the words of the expert, the investment interest remains, especially for
the projects in the metallurgical fields, in the fields of transportation
and communications, and also in pharmaceuticals.

In that, Vasylyk, came to the conclusion, that business, as of today, awaits
for positive signals from the government. "So far, the government failed to
demonstrate the ability to have a dialogue with business," he said.

However, the director of the European Bank for Reconstruction and
Development (EBRD) in Ukraine, Kamen Zakhariyev, indicated improvement
in the tone of the government in communicating with investors. "If before
they asked what for do we need it for? Now they ask how and when to
better do it," he concluded.

At the same time, Zakhariyev noted that, in spite of some disenchantment
with the government's actions in the business circles, one should not forget
about its general line in the development of market relations. At the same
time, he stated that the government needs to demonstrate unity in its
actions.

Among the positive factors that influence the influx of investors to
Ukraine, he mentioned confidence in the reforms and the conditions for
securing macroeconomic stability (the awaited gain of positive balance in
the current numbers of the balance of payment, sufficient National Bank
fund reserves and the low level of debt in the corporate sector).

Speaking about the national budget deficit, he noted that from the point of
view of the International Value Fund, its amount is risky. However,
Zakhariyev, noted that if the deficit becomes more than what is expected,
the government will be able to finance, without any problems, on account of
its external loans. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
6. "PRIVATIZE THOSE BLACKENED EYES"

Kyiv Weekly, Kyiv, Ukraine, Thursday, April 14, 2005

Judging by the provisions of the government program "Towards the People"
and figures of the amended National Budget 2005, the Cabinet of Ministers
wants to sell coal at the maximum possible prices by holding auctions for
all coal produced by state-owned mines, continuing the privatization of
mines and auditing how funds allocated to the country's coal industry have
been expended in order to avoid situations where certain suppliers set too
high a price for equipment. The ultimate objective of the government is to
lower budget subsidies to the coal industry and attract non-state
investments into this sector.

Despite this, coal companies fear that everything might end in a negligible
decrease in industry financing, while the main objective, that of its
restructuring, will once again not be achieved. Whatever the case, there are
more than enough "blackened" experiences in the history of Ukraine's coal
industry.

Although coal production in Ukraine has gradually been curtailed over the
past decade, as the prices of oil and gas continue to grow, more and more
experts are inclined to believe that domestic coal production should be
preserved in the interests of the country's energy security.

The last attempt at reform in the coal industry was in 2003 when Serhiy
Yermilov was Fuel and Energy Minister. He argued that the minimum output in
the Ukrainian coal industry should be 100-110 mn tonnes a year (currently,
annual coal output amounts to about 80 mn t) in order to achieve more or
less respectable profit margins. In fact, a third of the currently operating
mines can provide such output, while the remainder of them should be shut
down. However, according to Yermilov, ensuring a 1 mn t increase in annual
output would require Hr 1 bn in investments.

The paradox is that a sweeping shutdown of mines will not ease the burden
on the national budget. On the contrary, this will require dozens of
billions of dollars of investments into the social sphere and the technical
process of shutdown, as the experience in coal industry reform in Great
Britain showed. Naturally, investments must be made in the remaining mines
in order to achieve an increase in output, profitability and labor
efficiency.

In short, reform of the coal industry is an expensive venture. This is
precisely why former governments took the path of least resistance by
plugging the holes in the industry with hundreds of millions of hryvnia in
order not to have to seek billions.

Yuriy Myroshnychenko, Energy Project Coordinator at the Kyiv representative
office of the International Bank for Reconstruction and Development,
believes that in this situation the Ukrainian government must attract the
knowledge and capital of the private sector to the coal industry and that
this process should be given more attention.

"No matter what form is chosen, be it privatization, contract management,
lease or concession, it should definitely be based upon a fair and open
platform in order to create equal conditions for all players on the market.
The rights and responsibilities of private owners, managers and the state
should be clearly delineated. I think that international financial
organizations will be ready to provide assistance in this respect," the
expert believes.

To this point, the Fuel and Energy Ministry has not felt it necessary to
involve the owners of already privatized coal enterprises in the process of
developing a new concept for the coal industry, though their share in total
coal output exceeds 35%. According to Oleksandr Chmyrenko, Executive
Director of the Donetsk Fuel and Energy Company, which includes the
privatized Komsomolets Donbasa and PavlohradVuhillya, both state and
private owners need a comprehensive concept for developing the coal
industry.

"The concept should outline the volumes of coal output that need to be
achieved by a certain deadline. If investments are required to increase
output, private investors and the state should act jointly in this process.
For example, PavlohradVuhillya has coal reserves of around 140 mn t, on
which a new mine could be built. But this would require over Hr 300 mn in
investments, which no owner can invest without increasing the prices of
coal. Involving the state in such investment projects would stabilize prices
in the coal industry at an acceptable level."

Meanwhile, in the past two years government officials have mainly treated
the privatization of mines as a means of adding proceeds to the budget
and a way of getting rid of socially complicated objects, rather than as a
source of financing reinvestment into the industry.

Generally speaking, there are two sides to the coin in curtailing budget
allocations to the coal industry. Namely, one year it might help achieve a
balanced budget, but the following year mines could explode, thus
causing a shortage of coal for the heating season, for supply of coking
coal to steel mills and so on.

In conclusion, given that capital investments into the domestic coal
industry will soon become inevitable, it is worthwhile thinking about
finding the necessary financing and spending the money in cooperation
with private capital, particularly since coal is once again becoming a
popular fuel throughout the world. -30-
=============================================================
7. YUSCHENKO URGES CABINET TO ACTIVELY COOPERATE
WITH BUSINESSMEN

Ukrainian News Agency, Kyiv, Ukraine, April 14, 2005

KYIV - President Viktor Yuschenko is urging the Cabinet of Ministers to
cooperate with businessmen more actively. The presidential press service
informed Ukrainian News about the consultations that the president held on
Wednesday to discuss the microeconomic situation in the country.

Yuschenko addressed his call to Prime Minister Yulia Tymoshenko, State
Secretary Oleksandr Zinchenko, First Deputy Prime Minister Anatolii Kinakh,
Economy Minister Serhii Teriokhin, Minister for Labor and Social Policy
Viacheslav Kyrylenko, State Tax Administration Chairman Oleksandr Kireev,
National Bank Chairman Volodymyr Stelmakh, his advisors Volodymyr
Lanovyi, Leonid Chernovetskyi and other participants of the meeting.

According to the report, the president requested the government to be
more enterprising, to immediately start fulfilling his decrees that
encourage businessmen to invest, and to fulfill all negotiated agreements
between the government and business representatives in a short period
of time. In addition, Yuschenko instructed Cabinet members to make out
an effective strategy for price control.

He added that he is mostly concerned about the price growth, inflation and
some other signs of cooling down economy. "It makes us unwilling to let the
grass grow under our feet. If the new team fails to peruse a quick pace of
DGP growth, we will loose the social sphere," the president was quoted as
saying. After the president's speech, the government members reported on
the state of payments, prices and budget in the economy.

Yuschenko concluded that consultations like these will be held regularly to
help them respond to economic challenges effectively, promptly and in time.
The president further accentuated his readiness for close cooperation with
the parliament and the government for the sake of implementation of the
anti-poverty program. "The overcoming of poverty must be power's priority
number one," Yuschenko declared.

As Ukrainian News earlier reported, the Cabinet of Ministers is forecasting
growth in foreign investments by not less than USD 1.7 billion to USD
10-10.5 billion in 2005. Tymoshenko urged foreign diplomats to help increase
the flow of foreign investments to Ukraine. The volume of foreign direct
investments to Ukraine in 2004 expanded by 23% or USD 1,559.468 million,
and as of January 1, 2005 it totaled USD 8,353.878 million. -30-
=============================================================
8. PRESIDENT SIGNS DECREE ON THE CONSULTATIVE
COUNCIL ON FOREIGN INVESTMENTS

Ukrinform, Kyiv, Ukraine, Wednesday, April 13, 2005

KYIV - President Viktor Yushchenko signed a decree on additional
measures to enhance the efficacy of the Consultative Council on
Foreign Investments to Ukraine, the presidential press service told
Ukrinform.

According to the document, with a view of improving the investment
climate, facilitating foreign investing and eliminating obstacles in
foreign investors' activity in Ukraine, the Council's main task was
determined the promotion of the improvement of the investment
climate in Ukraine.

Under the decree, an expert commission within the Consultative
Council on Foreign Investments to Ukraine will be established, with
a view of drafting proposals with regard to improving the legislation
on investment activity, simplifying the procedures of investing and
investments' repayment, reinvesting, promoting the extrajudicial
settlement of disputes which emerge between foreign investors and
executive power bodies and rendering consultative assistance to
the investors. -30-
-----------------------------------------------------------------------------------------------------
NOTE: According to information received by THE ACTION
UKRAINE REPORT the appointed members of the Council are:

(1) Victor Yushchenko, Pres of Ukraine, Head of the Council;
(2) Oleksandr Zinchenko, State Secretary of Ukraine;
(3) Anatoliy Kinakh, First Vice Premier of Ukraine;
(4) Volodymyr Lytvyn, Verkhovna Rada Speaker (upon acceptance);
(5) Victor Pynzenyk, Minister of Finance;
(6) Oleh Rybachuk, Vice Premier of Ukraine;
(7) Borys Sobolyev, Deputy State Secretary of Ukraine;
(8) Volodymyr Stelmakh, Head of the National Bank of Ukraine;
(9) Serhiy Teryokhin, Minister of Economics and on the
issues of Ukraine's European Integration;
(10) Yulia Tymoshenko, Prime Minister of Ukraine

These are from the Ukrainian side, and from the international side:

(11) Bill Gates, head of Microsoft;
(12) Raymond McDaniel, President of "Moody's Investor Service"
rating agency
(13) Jorge Zukoski, Pres of the American Chamber of Commerce
in Ukraine;
(14) Shigeo Katsu, Vice President of the World Bank, European
and Central Asian region;
(15) Jean Lemierre, President of the European Bank of Reconstruction
and Development (EBRD)
(16) George Christopher Logush, head of "Kraft Foods of Ukraine";
(17) Bjorn Markshtedt, President of the European Business
Association;
(18) Paul Ostling, head "Ernst and Young Global";
(19) Karin Rau, Delegate of the German economy in Ukraine;
(20) Dave Rogers, President of "Cargill Europe";
(21) Hans Yorg Rudolph, head of "Barklay's Capital";
(22) Illia Yurov, President of "TRUST" Investment Bank; and
(23) Natalie Ann Jaresko, President and Chief Exec Officer of
"Western NIS Enterprise Fund" -
--------------------------------------------------------------------------------------------------------
FOOTNOTE: It is important that a working group composed of
representatives of the above organizations with other appropriate
individuals and with professional staff be organized to support the
work of the Council. Otherwise the Council will be just another one
of those meet and greet, show and tell groups that meets once a
year and accomplishes very little. Most appointed Councils like this
around the world unfortunately end up with very little to show on the
bottom line. Most of them are not organized and supported in a
professional and appropriate matter to produce real results. [Editor]
=============================================================
9. YUSCHENKO: WORK OF FINANCE MINISTRY, ECONOMY
MINISTRY, NBU IN INFLATION CONTROL IS INSUFFICIENT

Ukrainian News Agency, Kyiv, Ukraine, Thursday, April 14, 2005

KYIV - President Viktor Yuschenko believes that the Ministry of Finance,
Ministry of Economy and the National Bank failed to cope with work on
controlling inflation in January-March. Yuschenko told this to journalists
at the press conference in Dnipropetrovsk on April 14. "The Ministry of
Economy, the Ministry of Finance and the National Bank did not do their
job very well," the President said.

He believes that inflation indicator in the first quarter is very high. "We
haven't had such inflation in many years," Yuschenko said. As Ukrainian
News earlier reported, the Economy Ministry has forecast that consumer
prices in April will rise at least by the same amount as in March, when
their growth was 1.6%.

Economy Minister Serhii Teriokhin made the statement that the Finance
Ministry and the National Bank of Ukraine are now taking measures to
contain inflation caused by increase of social payments. According to the
State Statistics Committee, inflation rose by 1.6% in March. Its growth in
January through March was 4.4%. -30-
=============================================================
10. YUSCHENKO CONCERNED OVER LOW PACE OF GDP
GROWTH IN JANUARY-MARCH

Ukrainian News Service, Kyiv, Ukraine, Thursday, April 14, 2005

KYIV - Ukrainian President Viktor Yuschenko is disturbed that the growth of
the gross domestic product in January-March was just 5.4%. He expressed
this concern, addressing reporters at a press conference in Dnipropetrovsk
on April 14. "This is not the figure we should like. This is a 'yellow
card'," the President said.

He said that on Wednesday, April 13 he had a meeting with the participation
of Economy Minister Serhii Teriokhin, Finance Minister Viktor Pinzenyk,
central bank experts and presidential advisers, where they tried to
establish the reasons for such situation in economy. "We focused on a
correct diagnosis of the Ukrainian economy," the President said.

At the same time, he refuted information that the results obtained in the
first quarter may cause any ministers' resignation. He said the talk of
April 13 was very patient. "It was an absolutely polite and tactful talk,"
Yuschenko said. He listed among positive results of the Cabinet of
Ministers' work a rather high level of budget execution, although there are
some problems in a number of industries and regions.

As Ukrainian News reported, Ukraine's real gross domestic product rose
by 5.2% in March to UAH 29,292 million compared with March 2004.
In January-March, the real gross domestic product rose by 5.4% in
comparison with January-March 2004, to UAH 79,356 million. The 2005
state budget provides for a 6.5-percent GDP growth, and by the end of
2005 it will comprise UAH 409.5 billion.

President Viktor Yuschenko admits that the growth of the gross domestic
product is likely to remain at the level of 12% this year. On April 13,
following the meeting on macroeconomic situation in the state, Yuschenko
recommended that Cabinet of Ministers members refrain from visits abroad
before completion of the sowing campaign in order to focus on the settlement
of issues involved in stabilization of the economic situation. -30-
=============================================================
11. UKRAINE MACROECONOMIC SITUATION - MARCH 2005
SigmaBleyzer Monthly Ukrainian Economic Report

By Iryna Piontkivska, Edilberto L. Segura
SigmaBleyzer, Kyiv, Ukraine, April 2005

KYIV - The latest edition of the SigmaBleyzer Ukrainian Monthly Economic
Report includes the following highlights:

(1) Real gross domestic product (GDP) growth picked up by a healthy
6.5% year-over-year (yoy) in January.
(2) In January, the consolidated budget posted a healthy surplus of 6.3%
of period GDP, but the fiscal outlook for 2005 depends on amendments
yet to be introduced by the new government in order to finance election
pledges.
(3) Inflationary expectations have eased in January as consumer inflation
reached 12.6% yoy.
(4) With the end of political turbulences associated with the presidential
elections, a subsequent liquidity crisis in the banking system has been
alleviated.
(5) During 2004, net inflow of FDI grew by 31% yoy to $1.56 billion,
which is the largest annual inflow since 1991.

To read the entire Ukraine Macroeconomic Situation Report click on
this link: http://sigmableyzer.com/files/Ukraine_Ec_Situation_03_05.pdf.
=============================================================
12. POLISH PRESIDENT OFFERS SUPPORT FOR UKRAINE'S EU ENTRY

Associated Press, Warsaw, Poland, Monday, April 11, 2005

WARSAW - Poland's support for Ukraine 's goal to join the European Union
is part of a long-term effort that could show results in a decade, Poland's
President Aleksander Kwasniewski said Monday.

Kwasniewski maintained his country's push for Ukraine 's E.U. entry, calling
on Europe to be more active in readying the country for an E.U. bid and
saying that the growing closeness between Ukraine and the west should
pave the way.

"Poland has extended and still extends support for Ukraine 's European
aspirations, especially concerning the opening of talks with the E.U.,"
Kwasniewski told reporters following a meeting with Ukraine 's President
Viktor Yushchenko. "What has happened now - the friendly relations between
Ukraine and the E.U. - should bring membership in the EU in the time frame
of 10 to 20 years," he said.

Yushchenko is in Warsaw on a two-day visit to discuss economic and
political cooperation, and to thank Kwasniewski for helping mediate a
democratic solution to Ukraine 's disputed presidential elections last fall.
Yushchenko beat his Moscow-backed competitor in a revote.

Ukraine "remembers everything that the Polish side and President
Kwasniewski did at the time of Ukraine 's greatest political crisis in
recent years," he said. Poland helped shape Ukraine 's image as "a
modern and democratic nation," he said.

Warsaw has been consistently in favor of Ukraine 's EU membership, but
the E.U. hasn't talked about beginning negotiations yet. Poland and nine
other mostly former communist nations joined the E.U. last May.

Poland has been by far the country's strongest advocate in the E.U., said
Valeriy Chaly, an analyst at the Razumkov Center in Kiev. Today Poland is
Ukraine's only strategic partner," he told The Associated Press.

Kwasniewski also promised to back Kiev's efforts to have the E.U. ease visa
requirements for Ukrainian students, scientist and doctors. Yushchenko has
been pushing for reforms in recent meetings with European leaders. The
countries will also work to simplify their border procedures, to cut down
the massive waiting times for trucks driving between the two nations, the
leaders said.

The talks also included the long-proposed extension of a Ukrainian pipeline
into Poland to bring Caspian Sea oil to Europe. Poland sees Caspian Sea oil
imports as a chance to limit its dependence on Moscow for energy sources.
Yushchenko said he would discuss steps to speed up the project during his
talks with Prime Minister Marek Belka later Monday. He plans a meeting with
the United States, Kazakhstan and Poland on the project, but gave no date.

On Tuesday, Yushchenko will meet with the students of Warsaw University
and will travel to the southeastern village of Mlyny to visit the grave of
Ukrainian poet Mykhailo Verbytski, author of the country's national anthem.
=============================================================
13. UKRAINE: THE WILD, WILD EAST

By Steve Miller, AgWeb
The On-line Portal of Farm Journal Media
Philadelphia, PA, March 16, 2005

As death threats go, it was impressively blunt: ''Does he carry a gun?''
asked one voice on the threat end of the phone line, speaking in Ukrainian.
''I don't know, but it doesn't matter,'' responded another. In the back-
ground was a snarling dog, doing his thing in the universal language of
intimidation.

David Sweere, the target of the recorded threat that was left on the
answering machine of his Kiev, Ukraine, apartment, had never encountered
such troubles when he was farming his family land in Minnesota's Red River
Valley in the 1970s and 1980s.

But now it was 1995. Weary of farming, he made some money in building
renovation, then moved on to the seed business-specifically, seeds for cold
weather farming. Included in his repertoire was cold-tolerant wheat, native
to Ukraine, and short-season corn, soybeans, canola and lupines. Sweere,
a barrel-chested man famous among pals for his big mouth and big heart,
stood out in a crowd. He had connections. He knew people.

During a visit to Minneapolis in 1990, Soviet President Mikhail Gorbachev, a
former collective farm manager, heard about this brash American. The Soviet
leader invited Sweere to bring his seed knowledge to the Soviet Union. ''You
come see me,'' Gorbachev commanded in broken English.

Sweere shot back that he'd rather go to Ukraine and work with chernozem,
the black earth that is considered the finest production soil in the world
and constitutes 60% of the country's land.

THINGS CLICKED
His company, the Kiev-Atlantic Group, was formed, and five years later
Sweere was conducting business in the Ukraine under the threat of death,
trying to construct a fuel plant to complement his $20 million soybean
processing operation 60 miles south of Kiev. The idea was not in favor
with some government officials, who, in 1995, viewed capitalism about
as favorably as religion.

Sweere turned the answering machine tape over to the KGB and contacted the
local U.S. Embassy. Next, his chief accountant's car was stolen and turned
up in flames in a nearby bone yard with a note on it: ''Tell your American
boss that he's next.'' Finally, five government heavies in a 600 series
Mercedes crashed his Kiev-Atlantic Group stockholder meeting toting
Kalashnikovs.

Some farmers die via an accident with machinery. But this was a different
kind of equipment. Sweere decided with uncharacteristic humility to drop the
fuel plant idea. After all, knowing your place in a sometimes-hostile former
Communist country is key to doing business.

BARGAIN PRICES
He can just look at the $14/acre rent he pays and see that
humility is a virtue. It's an acre that he says will yield 40 bu. soybeans
or 150 bu. corn with favorable weather and the right inputs. Machinery costs
are low, as well. At one point, Sweere farmed more than 7,500 acres while
owning less than $50,000 worth of farm equipment.

''Just to smell that earth is worth it,'' says Sweere, age 60. With the help
of his Ukrainian-born wife, Tamara, and the assistance of two of his three
sons, he is now the head of several enterprises, including the processing
mill and a soybean and corn operation on 12,500 acres of state-owned land.

In a country once run by wealthy oligarchs blessed by the government,
Sweere is a wealthy businessman in his own right, the anti-apparatchik.
"And I don't have to rely on government handouts, which is what those
subsidies in the U.S. are anyway,'' Sweere says, sitting at his kitchen
table in the posh Minneapolis suburb of Wayzata. ''They had cradle-to-
grave subsidies in Ukraine, and you can see where it got them.''

Sweere, born and raised on a dairy and beef farm in Perham, Minn., is both
garrulously kind and unsettlingly prickly. His loud opinions merge with his
drive to succeed, and he is a man with the brains to win without enduring
fools. Sweere can lash out, and he can embrace, which has made him a
formidable presence in Ukraine.

Among his trading partners has been President Bill Clinton-pardonee Marc
Rich, the international fugitive convicted in the U.S. of a host of misdeeds
including racketeering. Sweere has embraced and toasted his pal Viktor
Yushchenko, Ukraine's newly elected president. And, perhaps most
importantly, he has converted peasants-who once believed that work isn't
done, it just happens-into a real work force.

"That's been the biggest challenge, to get help from workers who had always
relied on the state to take care of them and it didn't matter how hard they
worked,'' Sweere says. ''We had truck drivers who couldn't drive a combine
and vice-versa. The land, when we took it over, hadn't been farmed properly,
and we had to level whole wheat fields. And they hadn't used fertilizers. So
we took the staff, doubled their salaries and showed them what to do.''

That meant shelling out $1 an hour to field hands, 50¢ an hour to truck
drivers. Money talks there, no matter the sum. But it was no surprise when
the economy tanked in the late 1990s. "We were one of the few U.S.
companies that hung on through the 1998 economic collapse,'' Sweere
says. ''We downsized, we sent our expatriate workers home, and we even
thought of leaving. But we made it.''

UKRAINE REFORMS
Sweere and his wife get back to the states for several months a year these
days, content that the operation is running itself as smoothly as anything
can in a former Communist country that is reforming itself, slowly.

He expects the big problems are in the rear view as reforms under President
Yushchenko begin to take hold. Sweere plans to bring more people on board
to take advantage of what he considers the unexploited agricultural gold
mine that is Ukraine.

But Sweere has some more stories about taking his own relentless capitalism
into unfriendly territory. How about the time, he says, that former
Ukrainian Prime Minister Pavlo Lazarenko stole all of his grain?

In 1996, with $10 million in grain orders ready and ships on the way for
pickup, Sweere got word of trouble at the grain elevators, where the product
was not being picked up as planned.

"I got to the elevator and found that the government had locked all of the
gates,'' Sweere recalls. In a day, he was at the doors of the U.S. Embassy,
seeking a little of this glasnost, trying to find out how to get his grain
back.

''I was told to go home, that the prime minister was taking it and that they
were going to kill me because I was making too much noise,'' says Sweere.
He lost all of his grain that year, and the pattern was threatening his
business, until a U.S. delegation made a visit to Ukraine leaders in spring
1997. ''[Vice President] Al Gore met with the president of Ukraine and
came with a list of troubles,'' Sweere says. ''And on that list was grain. I
got it replaced."'

Lazarenko was convicted last year in a U.S. federal court for money
laundering, wire fraud and extortion. Sweere, thanks to political heft,
lived to farm another day. ''They can't scare me,'' Sweere says from the
cozy confines of his U.S. townhouse.

OPERATION ENDURANCE
"He has gone through hell over there,'' says Art Quinn, a former business
partner who saw Sweere through the tough times. "He is one tough Dutch-
man, stubborn as they come. He was hassled by the tax police, received
death threats and he just never gave in. He is one of the true
entrepreneurs.''

American-born farmers in Ukraine are in for some unsettling ordeals, seconds
Roger Denhart, who in 1991 discovered the country's agricultural potential
while on a church mission. "Ukraine is so far from every place in terms of
government and judicial corruption,'' says Denhart. "It is so corrupt that
it makes things very tough on someone trying to make an honest business.
It's like the Wild West there.''

Moreover, for individuals like Sweere and Denhart to have endured despite
Ukraine's upheaval and transformation speaks highly of their devotion to
farming.

"Bigger companies like Cargill have been there but have limited their
growth,'' notes Ken Flies, a business consultant who has worked with
Sweere on development and financing in Ukraine. "As it all comes together,
people will see that the rich soil and the good markets around Ukraine are
worth the investment. But it is pretty rare for individuals like those guys
to hang in there.''

Ironically, for all the travails Sweere has overcome in Ukraine, he has also
met some strong opposition from U.S.-based companies when he has tried
to buy American equipment and supplies. Ukraine's farm equipment
manufacturing sector runs at between 15% to 30% capacity, he says, making
machinery scarce. European prices are too high and low quality, Sweere
adds, and he has paid up to $25,000 to ship a combine from the U.S.

''We try to buy everything we can from the U.S. because of the quality,''
explains Daniel Sweere, David's 39-year-old son who is in charge of daily
operations on the farm. "But vendors usually steer us to their European
suppliers. It's something that I am still fighting.''

But there's still a market waiting to happen in Ukraine. It needs farm
equipment dealerships, fertilizer dealers, chemical distributors, and seed
production and cleaning facilities.

''Farmers should come to the Ukraine if they want to get rich,'' says David.
''But they also have to be smart and learn to be liked and respected, or
they'll get a haircut so short they'll never forget it. There's no room for
American arrogance over there.'

STATE CAPITALIST
David and Tamara Sweere launched their Ukrainian business career in 1992
by importing diesel fuel from Russia and exporting feeder peas to western
Europe. The first loads of peas were shipped by truck to Germany, and soon,
with business blossoming, they began shipping them in vessels from Odessa
to southern Europe.

The business was lucrative, although risky, because of its dependence on
state services and facilities such as fuel depots, grain elevators and
railroads. By 1994, pockets fat enough to expand, the Sweeres began to
build their own private agribusiness center, including the first privately
owned grain elevator to be built in Ukraine since the Communist Revolution
of 1917.

Today, under a fluttering American flag, the center includes a 40,000-ton,
Midwest-style grain elevator, a soybean processing plant and one of the
most modern feed concentrates and feed milling plants in Ukraine.

In 2000, the Sweeres moved into commercial farming. By introducing
modern seed to a country suffering from Cold War genetics, that enterprise
took off, too.

The land has been improved after years of mismanagement and they have
been able to produce corn at 150 bu./acre at less than half the cost of the
world market prices. They do this while average corn yield in Ukraine,
according to USDA's Foreign Agriculture Service, runs about 50 bu./acre.

Ukraine, like most of Europe, is a net importer of vegetable protein and
most of this is in the form of soybean meal. Meal is as much as $50/metric
ton higher priced in Ukraine than in the U.S., giving the Sweeres a price
for their beans, once processed, that is close to 100% higher than their
American counterparts.

During the crop year, they run their used Case 9380 turbo-charged tractors
24 hours a days, 7 days a week. This past season they harvested more than
10,000 acres with just two late model Case IH 2388 combines. The other
2,500 acres were custom harvested.

While they export a limited amount of their product, it is hauled on leased
rail cars that are emblazoned with their names. Toss in some other alluring
factors, like annual moisture of 25" a year, 175 frost-free days, a climate
similar to the Midwest without the harsh winters and the country's forgiving
agricultural tax incentives, and you can understand how the Sweeres have
been able to prosper in Ukraine.' -30-
--------------------------------------------------------------------------------------------
http://www.agweb.com/pub_get_article.asp?sigcat=&pageid=116214
=============================================================
14. YUSHCHENKO ADDRESSES CONGRESS

By Peter Savodnik, Staff Writer, The Hill newspaper
Washington, D.C., Thursday, April 7, 2005

Ukrainian President Viktor Yushchenko yesterday signaled his country's
intent to join the North Atlantic Treaty Organization and the European Union
in an effort to transcend, once and for all, its Soviet past and join the
family of free nations.

Addressing a joint session of Congress, Yushchenko, sporting an orange tie
in honor of the recent revolution that elevated him to power, also called on
the United States to repeal a Cold War-era trade measure that, he said,
inhibits trade.

"Tear down this wall," Yushchenko said of the Jackson-Vanik Amendment
to the 1974 Trade Act, taking a page from President Reagan's 1987 call for
then-Soviet President Mikhail Gorbachev to raze the Berlin Wall. The
president spoke in Ukrainian; the Ukrainian Embassy provided an English
translation of his remarks.

Besides lifting the trade provision, Washington should also grant Ukraine
market-economy status and help pave the way for its entry into the World
Trade Organization, the president told the crowd of senators, House
members, administration officials and adoring Ukrainians in the House
gallery.

Both moves are expected to help create jobs in Ukraine, which has yet to
see the development of a free-market economy and remains riddled with
communist-era factories, dilapidated roads and bridges, and dying villages
with double-digit unemployment rates.

"Today, Ukraine is looking into the future with great hope and expectation,"
Yushchenko said.

"Free and fair elections have brought to state offices a new generation of
politicians not encumbered with the mentality of the Soviet past. They are
honest and professionals and patriots. We are working as one team in pursuit
of one goal - to lead our nation to success in the shortest time possible.

"We are shaping a new model of government. It must safeguard the
constitutional rights and freedoms of the citizens. We want a government
of the people, by the people, for the people."

Yushchenko reminded the crowd, including Vice President Cheney and
Defense Secretary Donald Rumsfeld as well as other Cabinet members,
that Ukrainian troops "are risking their lives shoulder to shoulder with
their American counterparts."

But he neglected to mention that shortly after taking office in early
January, in a bow to domestic political pressure, he called for the gradual
withdrawal of those troops beginning later this year.

Currently, 1,450 Ukrainians are in uniform in Iraq. A Ukrainian official
said that next month that figure will drop to 900 and that by the end of the
year there will be no Ukrainian soldiers in Iraq. But the official added
that Ukrainian "experts and consultants" will continue to work with the
Americans in Iraq. "We will still keep our flag in the coalition," the
official said.

House Chief Deputy Whip Eric Cantor (R-Va.) indicated there is momentum
in Congress to repeal Jackson-Vanik and help Ukraine gain admission to key
international bodies, despite the withdrawal of Ukrainian troops. But he
acknowledged that the Iraq question could color the debate. "I think we'll
have to wait and see," Cantor said. A spokesman for Sen. Joseph Biden
(D-Del.), who earlier opposed lifting Jackson-Vanik because the Ukrainians
had barred U.S. poultry, did not return phone calls.

Although some lawmakers have supported keeping Jackson-Vanik to use
as a bargaining chip with Ukraine, Yushchenko's call for repealing the
provision prompted many in the House gallery yesterday to stand in support.

Jackson-Vanik prevents Ukraine from getting most-favored-nation status.
While the United States grants yearly waivers, meaning the trade measure
has no economic impact, it retains significant symbolic value for
Ukrainians.

In a visit to Washington last month, Ukrainian Foreign Minister Boris
Tarasiyuk suggested there is a link between Ukraine's obtaining economic
help now and achieving political goals next year. Tarasiyuk and others in
the Yushchenko administration fear that if they are unable to deliver on
campaign promises - notably, bringing more economic opportunity to Ukraine -
they will be punished at the polls in the 2006 parliamentary elections.

Yushchenko's presidential rival, Viktor Yanukovich, remains a potent force
in his hometown of Donetsk and elsewhere in eastern Ukraine. Many democratic
reformers say they have yet to solidify their support and must boost their
forces in the parliament, or Rada, to safeguard against a return to the
pre-Yushchenko days. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
15. LET'S SUPPORT YUSHCHENKO BY DROPPING JACKSON-VANIK

LETTER TO THE EDITOR,
From Sen. Richard G. Lugar (R-Ind.), Chairman
U.S. Senate Committee on Foreign Relations
Published by The Hill newspaper, Tue, April 12, 2005, Wash, D.C.

I read with interest your April 7 article "Yushchenko addresses Congress,"
which included a discussion of removing Jackson-Vanik sanctions on Ukraine.
Your readers might be interested to know that a bill I introduced to lift
these sanctions, S. 632, is pending. This bill recognizes that Ukraine has
been found to comply with freedom of emigration requirements.

In the post-Cold War era, Ukraine has demonstrated a commitment to meet
these requirements, and has expressed a strong desire to abide by free
market principles and good governance.

Last November, I served as President Bush's personal representative to the
runoff election between Prime Minister Yanukovich and Victor Yushchenko.
During that visit, I promoted free and fair election procedures that would
strengthen worldwide respect for the legitimacy of the winning candidate.
Unfortunately, that was not possible. The government of Ukraine allowed, or
aided and abetted, wholesale fraud and abuse that changed the results of
the election. It was clear that Prime Minister Yanukovich did not win the
election.

In response, the people of Ukraine rallied in the streets and demanded
justice. After tremendous international pressure and mediation, Ukraine
repeated the runoff election on Dec. 26. A newly named Central Election
Commission and a new set of election laws led to a much-improved process.
International monitors concluded that the process was generally free and
fair. The result was a democratic election in which Yushchenko was elected.
As your article mentions, in recent his address to the U.S. Congress,
President Yushchenko called for the repeal of Jackson-Vanik to strengthen
ties among our nations.

Extraordinary events occurred in Ukraine over the past several months. It is
in our interest to recognize and protect these advances in Ukraine. Removing
Jackson-Vanik sanctions would further support the recent events in Ukraine
and its demonstrated commitment to meet these requirements. It is my hope
that S. 632 will receive prompt consideration and passage. -30-
---------------------------------------------------------------------------------------------------
http://www.hillnews.com/thehill/export/TheHill/Comment/LetterstotheEditor/041205.html
=============================================================
16. ACROSS THE FORMER SOVIET UNION
Trade, property restitution on table as president of Ukraine visits U.S.

By Vladimir Matveyev, JTA, New York, NY, Wed, April 6, 2005

KIEV, Ukraine - The Soviet Union may be a historical relic, but issues
dating from that era still haunt Ukraine's new president.

As Viktor Yuschenko visited the United States this week, two
longstanding Jewish issues were on the agenda: the restitution of Jewish
communal property and Ukraine's "graduation" from the 1974 Jackson-
Vanik Agreement, which linked trade restrictions to Ukraine's treatment
of its Jews.

In both Ukraine and the United States, Jewish officials said the two
issues are intertwined.

"The Jewish community is certainly interested in a speedy repeal of
the Jackson-Vanik amendment for Ukraine, but it is no less interested in
restitution of communal property," said Josef Zissels, a prominent Jewish
leader and head of the Va'ad of Ukraine, a Jewish umbrella organization.

In a speech Wednesday before a joint session of the U.S. Congress,
Yuschenko pledged to fight anti-Semitism.

"The 60th anniversary of the Allied victory over Nazism once again
calls upon us to fulfill our obligation to root out any expressions of
anti-Semitism and xenophobia, to secure minority rights and liberties," he
said. Yuschenko also highlighted the Holocaust and the famine that Stalin
inflicted on Ukraine in the 1930s.

Afterward, Yuschenko, whose father was a prisoner of war in Auschwitz
during World War II, toured the U.S. Holocaust museum and met with
U.S. Jewish leaders. "He made a commitment to work with us on
expediting the restitution process," said Mark Levin, executive director
of NCSJ: Advocates on Behalf of Jews in Russia, Ukraine, the Baltic
States & Eurasia.

At the meeting, which Levin called positive, issues of anti-Semitism,
including the Ukrainian Jewish community's desire for a new law on the
protection of Jewish cemeteries, also was discussed.

When the Soviet Union broke apart, its former republics inherited the
strictures of the Jackson-Vanik accord. For his part, President Bush
appears ready to allow Ukraine to graduate from Jackson-Vanik, which
was used as leverage to force the Soviet Union to relax emigration
restrictions.

Bush met with Yuschenko on Monday in Washington, and said he
believes the trade restrictions should be lifted, noting they were from
a "different era." The decision is up to Congress, however.

Kyrgyzstan, Armenia, Georgia and the Baltic states already have
graduated out of the agreement. A few years ago there was momentum
for Russia to graduate as well, until a dispute over U.S. poultry imports to
Russia turned some U.S. business interests into defenders of an
agreement they long had opposed.

Jewish leaders in Kiev say they realize how important lifting Jackson-
Vanik could be for Ukraine's economic development. Yet they insist
that the Jewish community must press the issue of restitution.

In the 1920s and 1930s, hundreds of pieces of Jewish community
property were nationalized by Ukraine's Soviet government. The
properties,including schools, theaters and warehouses, often were
passed from one state-run entity to another.

In March 1992, then-President Leonid Kravchuk signed a law on the
restitution of former religious property. Local authorities should have
returned the property to religious communities by the end of 1997, but
the law was never fully implemented. Only 10 percent of Jewish
properties have been returned to their original owners, Jewish leaders
say.

Aside from any political dimension to the issue, large-scale
restitution may play a crucial role for Jewish life in Ukraine, which still
largely depends on overseas donors and a tight circle of wealthy
domestic sponsors. If they got the properties back, cash-strapped
Jewish organizations could use them for their own activities, or sell
or lease them to fund programs.

Jewish leaders in Ukraine argue that the debate over Jackson-Vanik
should address how Ukrainian leaders are combating anti-Semitism.

Accusations of links to anti-Semitic groups dogged Yuschenko during
his campaign. Yuschenko was among several top opposition politicians
who signed a statement opposing a government threat to close the Silski
Visti newspaper for publishing an article asserting that 400,000 Jews
joined the S.S. during World War II.

Yuschenko called on the newspaper to apologize, but it never complied.
More recently, Yuschenko honored Silski Visti with an award seen as
gratitude for the paper's role in opposing his predecessor, then-President
Leonid Kuchma.

Zissels said it would be wrong if discussion of Jackson-Vanik focuses
narrowly on emigration. Jewish leaders say the concept of minority rights
should be handled in a broad manner and should include the restitution
issue. Jewish leaders in Ukraine say their support for Yuschenko on
Jackson-Vanik largely will depend on his ability to cope with anti-Semitism
and make progress on restitution.

"We ask for the legal framework of the implementation of the issue of
restitution. The Jewish community supports canceling the Jackson-Vanik
amendment. I've lobbied for it in the United States. But the authorities
must combat anti-Semitism in the country," said Rabbi Yakov Dov Bleich,
one of Ukraine's chief rabbis.

While visiting a Kiev synagogue in December 2004, Yuschenko was
asked by JTA about the prospects of restitution of former Jewish
communal property. He said he would follow the law. "Justice should be
the dominant question in the issue of restitution of Jewish property," he
said then. "The property must be returned to the owner."

Yuschenko has an additional incentive to move on the property
restitution issue - his goal of integrating Ukraine into NATO and the
European Union.

But one Yuschenko adviser said resolving the issue might not be
simple. "The issue of the restitution of Jewish religious property is very
important but it is not so easy. We also should think about where to move
museums and other organizations from the buildings," Alexander Sagan
told JTA.

"We should first convene a meeting of leaders of religious organizations
to discuss church-state relations, partnership with religious organizations
in the social sphere and church land use. Then we can bring a
comprehensive program to a meeting between Yuschenko and religious
leaders," he said. -30-
-------------------------------------------------------------------------------------------------
JTA Foreign Editor Peter Ephross in New York and JTA Staff Writer
Matthew E. Berger in Washington contributed to this report.
=============================================================
17. INDUSTRIALISTS AND ENTREPRENEURS UNION TO PROMOTE
ST. SOFIA CATHEDRAL RESTORATION FUNDING

Ukrainian News Agency, Kyiv, Ukraine, Thursday, April 14, 2005

KYIV - The Ukrainian Union of Industrialists and Entrepreneurs is going to
promote funding of restoration of the national memorial of the St. Sofia
Cathedral.

First Deputy Prime Minister and President of the Union of Industrialists and
Entrepreneurs Anatolii Kinakh made the statement at a ceremony of signing
of a corresponding agreement between the union and the conservation.

During the first phase of restoration works, which are expected to begin
next week, the iconostasis and holy gates of the cathedral will be restored
with the support of enterprises, which are members of the union. According
to chairman of the Enran company (Kyiv) Mykola Heorhiivskyi, the volume of
financing within the second phase of reconstruction will equal UAH 600,000.

According to Kinakh, the Ukrainian Union of Industrialists and Entrepreneurs
is further planning to step up engagement of its member enterprises in
charity activity on restoration of the cathedral and other historical and
cultural memorials. As Ukrainian News reported earlier, complex
reconstruction of the St. Sofia Cathedral was last time held in early 1970s.
=============================================================
18. NEW UKRAINIAN MUSEUM IN NEW YORK OPENS ON A
FOUNDATION OF MODERNISM
Exhibition: Ukrainian-born Modernist sculptor Alexander Archipenko

By Grace Glueck, The New York Times
New York, New York, Thursday, April 14, 2005

With a powerful inaugural show in its new building, a rare retrospective of
the Ukrainian-born Modernist sculptor Alexander Archipenko, the Ukrainian
Museum has taken a giant step from its modest beginnings in an East
Village brownstone in 1976.

The handsome four-story building (one below ground) of glass and brick
remains in the neighborhood where the city's Ukrainian community - the
largest outside Ukraine - flourishes. But now it has assumed the role of a
larger institution with expanded multifaceted programming, according to its
board president, Olha Hnateyko.

It's a far cry from the cramped quarters where the museum mounted shows
of Ukrainian cultural achievements and displayed collections of costumes,
needlework, textiles and pysanky, the decorated Easter eggs for which
Ukraine is famous.

Designed by a New York architect, George Y. Sawicki, and built with money
raised from Ukrainians in New York and around the country, the $9 million
building has an imposing two-story glass-fronted entrance lobby and two
levels of exhibition space - 24,000 square feet - with floors of maple and
white stone.

It is a fitting setting for this impressive Archipenko (pronounced
ARK-i-pen-ko) exhibition, organized by Jaroslaw Leshko, a professor
emeritus of art at Smith College, and splendidly installed by the Morris
Sato Studio in New York. It presents some 65 sculptures and sculpto-
paintings, an invention of the artist. Most of the works are from the
collection of his widow, Frances Archipenko Gray, and the Archipenko
Foundation, with other loans from museums and private collectors.

An avant-gardist although traditionally trained, the Kiev-born sculptor -
now a Ukrainian national hero - moved to Moscow in 1906. There, two years
later, Archipenko (1887-1964) saw an exhibition of recent French art, and
lost little time in getting to Paris. He arrived in 1908, at age 21, just in
time for the beginnings of the revolutionary Cubist movement begun by
Braque and Picasso.

He established a studio in Montparnasse and by 1910 was exhibiting at the
Salon des Indépendants with other Cubist-oriented artists. He became part
of the circle around the innovative brothers Marcel Duchamp and Raymond
Duchamp-Villon and joined with them and other like minds in Salon des
Indépendants shows through 1920.

Archipenko's drawings and sculptures appeared in the Armory Show of 1913,
the big bang exhibition that introduced New York to European Modernism. In
1923, after two years in Berlin, he and his new wife, also a sculptor, came
to the United States.

Although he traveled around the country on various teaching and lecturing
gigs, he eventually made his permanent home in Bearsville, N.Y., near
Woodstock, combining it with a school. His early works, from 1909 to 1914,
are grouped by Professor Leshko under the rubric "Content Into Form."

Their subjects vary widely, from religious and spiritual themes like
"Sorrow" (1909); an exquisite small figure of a weeping woman of painted
wood à la Gauguin, to "Family Life" (1912); a contorted, Cubist-influenced
bronze of man, woman and child in grotesquely bulging shapes.

Add to these two of his earliest constructions, "Médrano I" (1912-14) and
"Médrano II" (1913-14?), cited by Professor Leshko, who specializes in
20th-century Modernism, as among his greatest achievements. The quirky
figures (alas only viewable in photographs, since the first has been lost
and the second, owned by the Guggenheim Museum, is too fragile to
travel) probably relate to the Cirque Médrano, the famous Paris circus.

They depict, respectively, a juggler and a dancer. In them, Archipenko
explored the use of several different materials together, including wood,
glass and sheet metal, just as Picasso had in his famous construction
"Guitar" (1912), and painted the forms in brilliant colors. "Médrano I" had
a movable right arm, an early example of kinetic sculpture.

But the most exciting part of the show is a special room designated "Form
and Space" by Professor Leshko. It contains Archipenko's most radical
pieces, stunningly mounted on a translucent white platform, illuminated
from above and beneath.

Departing from the tradition of Western sculpture, most of the works here
are figures in which holes are cut through heads and body masses, as in his
famous "Woman Combing Her Hair" (1915). Her gracefully poised body is
Cubistically broken into what Professor Leshko calls "concave and convex"
elements while her head is a carefully shaped void that contributes
meaningfully to the overall design.

Archipenko's translation of solid mass into open space found echoes in the
work of later 20th-century artists, most notably Barbara Hepworth and Henry
Moore.

"It is not exactly the presence of a thing but rather the absence of it that
becomes the cause and impulse for creative motivation," Archipenko wrote.
The statement is lettered on the wall.

The sculptor worked in many other styles and often introduced innovations,
some more effective than others. A viable one was sculpto-paintings, an
invention of his World War I years in Nice (1914-18). They are polychromed
bronzes that combine the properties of painting and relief sculpture like
"Espaniola (Still Life With Head)," 1916, a Cubist arrangement of elements
delicately patinated in shades of green.

He returned to sculpto-paintings in the 1950's, this time combining
materials like wood, Bakelite and found objects. One brilliant result is
"Cleopatra" (1957), a reclining figure seven feet long. Smoothly melding
painted and sculptured biomorphic forms, the figure seems to lie languidly
on a couch, regarding its snakelike head in a mirror. If not among the more
fetching odalisques in art, it does assign vampish powers of seduction to
the Egyptian queen.

Less successful was his "Archipentura," a painting machine that he patented
in 1927 and dedicated to Thomas Edison and Albert Einstein. Fascinated by
the idea of art that moved, he designed the machine to produce continually
changing surfaces when painted horizontal canvas strips fixed in a frame
were slid over panels hung with metal slats like Venetian blinds. But the
venture came to nothing, and the machine has been lost.

One expression of Archipenko's continuing interest in materials are the
sculptures in Plexiglas that he created during the late 1940's. He worked
over blocks of the transparent stuff - also used by other Modernists like
Naum Gabo and Laszlo Moholy-Nagy - with a machine he devised that
supposedly made 60,000 rotations a minute.Among the more interesting
of these is "Ascension" (1950), a slender shaft whose body is pierced by
two elongated holes and whose "head" bears an eyelike shape in the
center. It is topped by a suggestion of a halo. Suffused with light, it has
the spiritual aspirations of an ancient icon.

Deeply involved in his own Modernist vision, Archipenko never took part in
later movements, like Surrealism and Abstract Expressionism. But while his
constant experimentation led to some uneven results, as a body his work
radiates the spirit and energy that makes this an invigorating show.

"Alexander Archipenko: Vision and Continuity" continues through Sept. 4 at
the Ukrainian Museum, 222 East Sixth Street, East Village, (212) 228-0110.
-----------------------------------------------------------------------------------------------
LINK: http://www.nytimes.com/2005/04/14/arts/design/14glue.html?
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