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Action Ukraine Report

"THE ACTION UKRAINE REPORT - AUR"
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"

UKRAINIAN POLITICS: INVESTORS REMAIN CAUTIOUS
Prime Minister advocates a much stronger state role in key markets
[article one]

"THE ACTION UKRAINE REPORT - AUR" - Number 485
E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, MONDAY, May 16, 2005

THE ACTION UKRAINE REPORT (AUR) DISTRIBUTION LIST

NOTE: Names and e-mail address for The Action Ukraine Report
(AUR) distribution list are always welcome. Please send us infor-
mation about those you think would like to receive the AUR and/or
send the AUR to your colleagues and friends and urge them
to sign up for the free AUR service. Ukraine is where the action is,
do not miss the action during year 2005. EDITOR

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

1. UKRAINIAN POLITICS: INVESTORS REMAIN CAUTIOUS
Prime Minister advocates a much stronger state role in key markets
By Tom Warner, Financial Times
London, UK, Friday, May 13 2005

2. TYMOSHENKO NAMES CONSTRUCTION PROGRAM FOR NEW
HOUSING, COMPENSATION OF DEPOSITORS OF FORMER USSR
SAVINGS BANK AND NEW BEEF AND PORK PRODUCTION PROJECTS
Ukrainian News Agency, Kyiv, Ukraine, Sunday, May 15, 2005

3. "THERE IS NOTHING LEFT TO SELL"
Ukrainian government against privatizing national telecom operator
or any other state assets says new head of State Property Fund
ICTV television, Kiev, in Ukrainian 1500 gmt 15 May 05
BBC Monitoring Service, UK, in English, Sunday, May 15, 2005

4. FDPM KINAKH CONCERNED OVER LOW RATE OF GDP GROWTH
DURING JANUARY-APRIL 2005 IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Sunday, May 15, 2005

5. UKRAINIAN PRIME MINISTER DECRIES RUSSIA'S "OIL BLACKMAIL"
Era, Kiev, in Ukrainian 1100 gmt 15 May 05
BBC Monitoring Service, UK, in English, Sunday, May 15, 2005

6. UKRAINE WANTS TO START DIRECT PURCHASES OF TURKMEN
GAS IN 2006 ACCORDING TO PM YULIYA TYMOSHENKO
Prime-TASS news agency, Moscow, in English 1243 gmt 14 May 05
BBC Monitoring Service, UK, in English, Sat, May 14, 2005

7. UKRAINIAN PRESIDENT WELCOMES FOREIGN INVESTMENT
IN THE AEROSPACE INDUSTRY
Interfax-AVN military news agency web site, Moscow, in English, 13 May 05
BBC Monitoring Service, UK, in English, Friday, May 13, 2005

8. UKRAINE PRES REASSURES BUSINESS OVER PRIVATIZATION
Associated Press (AP), Kiev, Ukraine, Friday, May 13, 2005

9. UKRAINIAN PRESIDENT GREETS NATION ON EUROPE DAY
UNIAN news agency, Kiev, in Ukrainian 1658 gmt 14 May 05
BBC Monitoring Service, UK, in English, Saturday, May 14, 2005

10. UKRAINE: FOREIGN CURRENCY RESERVES AT RECORD HIGH
New Europe, Athens, Greece, Monday, May 16, 2005

11. NEW GOVERNOR OLEKSIY DANYLOV HOPES TO WIN EAST
UKRAINIAN LUHANSK REGION OVER
Interview with Oloeksiy Danylov by Iryna Korobko
"Oleksiy Danylov: "I was introduced to Yushchenko by Brodskyy"
BBC Monitoring Service, UK, in English, Sat, May 14, 2005

12. G2: INSIDE STORY: A 21ST CENTURY REVOLT:
THE WORLD SAW IT AS A SPONTANEOUS DRIVE FOR DEMOCRACY,
BUT UKRAINE'S 'ORANGE REVOLUTION' WAS IN FACT AN
OPERATION YEARS IN THE MAKING
Daniel Wolf, The Guardian
London, United Kingdom, Friday, May 13, 2005

13. US EMBASSY REJECTS RUSSIAN ALLEGATIONS OF SPYING BY NGOs
AP, Moscow, Russia, Friday, May 13, 2005

14. ARTICLE "WAS WORLD WAR II WORTH IT" CAUSED SUCH OUTRAGE
AMONGST MY COLLEAGUES I FEEL DUTY BOUND TO RESPOND
LETTER TO THE EDITOR, The Action Ukraine Report
webmaster@theamericancause.org
FROM: Martin Nunn, Kyiv, Ukraine
Published by The Action Ukraine Report, #485, Article 14
Washington, D.C., Monday, May 16, 2005

15. "BUSH, YALTA AND THE BLUR OF HINDSIGHT"
OP-ED: By Jon Meacham, Outlook Section
The Washington Post, Washington, D.C.
Sunday, May 15, 2005; Page B01

16. "BUSH'S MOSCOW MISSTEP"
By Jeff Jacoby, Globe Columnist, Boston Globe
Boston, Massachusetts, Thursday, May 12, 2005

17. UKRAINE: KUCHMA'S DAUGHTER IS HERE TO STAY
New Europe, Athens, Greece, Monday, May 16, 2005

18. YUSHCHENKO SAYS HIGHER JURIDICIAL EDUCATION NON-
PRIORITY FOR JUSTICE MINISTER
Ukrainian News Agency, Kyiv, Ukraine, Friday, May 13, 2005

19. YUSHCHENKO SUPPORTS JUSTICE MINISTER ZVARYCH, WANTS
DISCUSSIONS, WEAVING OF PLOTS ABOUT HIS EDUCATION STOPPED
UNIAN, Kyiv, Ukraine, Friday, May 13, 2005

20. MAY ISSUE: POETRY INTERNATIONAL WEBSITE N-UKRAINE ONLINE
Kateryna Botonova, Editor Poetry International Web, Ukraine
Kyiv, Ukraine, Friday, May 13, 2005

21. ODESSA LOOKS BACK ON WAYWARD PAST
By Misha Glenny, BBC News, Odessa, Ukraine, May 9, 2005
===============================================================
1. UKRAINIAN POLITICS: INVESTORS REMAIN CAUTIOUS
The Prime Minister advocates a much stronger state role in key markets.

By Tom Warner, Financial Times
London, UK, Friday, May 13 2005

However much the Orange Revolution heightened interest in Ukraine's
economic potential, a great deal remains to be done before foreign
investors come charging through the doors.

And with the country's new leaders apparently thinking more about how
they can consolidate their victory in parliamentary elections - not due
until March - potential investors could hardly be blamed for being cautious.

Since he took power in January, Viktor Yushchenko, Ukraine's new
pro-western, liberal president, has moved more slowly than many hoped to
launch free-market reforms. His government has spent most of its first
months dealing with personnel and tackling immediate problems, such as
inflation.

This deflation of expectations was evident during a visit by reform advisers
organised by the UN Development Programme. Mr Yushchenko and his
prime minister, Yulia Tymoshenko, stood up the group.

One member, Mart Laar, the former Estonian prime minister, said he
understood Ukraine's new leaders were busy "working like a fire brigade" to
tackle inflation. The group's co-chair, Swedish economist Anders Aslund,
said: "You don't undertake major social economic reforms just before an
election. One simply has to accept this as a fact."

The reforms that Mr Yuschenko's team has focused on are the kind that rarely
please investors - collecting taxes and increasing pensions and public
wages. Mr Yushchenko has been consistent in saying these were top
priorities. Economists such as Mr Aslund protested when Mr Yushchenko's
opponent doubled pension payments a month before the elections, but Mr
Yushchenko responded by claiming only he had a realistic plan to find
funding.

His and Ms Tymoshenko's first moves have been an amended budget with
more social spending, an end to various kinds of tax privileges and a
crackdown on tax and customs evasion.

The finance ministry says revenues to the government's general fund were
up 68 per cent in January-April over the same period last year, without any
increase in the general tax rates.

The social spending has a bright side for such businesses as consumer goods
manufacturers and importers. But some foreign investors have been hit by the
closed loopholes, and a few are even suing the government over its decision
to cancel tax and customs holidays they claim were guaranteed when they
invested in "special economic zones".

More unsettling, Mr Yushchenko plans to challenge up to 40 of the
privatisation sales carried out by the former government, and he has been
slow to clarify which ones.

Longer term, the project could make key industrial sectors more competitive
by weakening the dominant position of local oligarchs. The immediate effect,
however, has been to scare the oligarchs, who have reduced investments.
Partly because of that, growth was down to 5.4 per cent in the first quarter
after reaching 12 per cent last year.

Mr Yushchenko's priorities were underscored by his appointment of a critic
of privatisation, Valentina Semenyuk, as head of the privatisation agency,
the State Property Fund. Ms Semenyuk, a member of the Socialist party,
advocates using the privatisation review to return property to state hands,
and argues that the state should seek to earn profits from its enterprises
and sell only loss-makers.

Ms Tymoshenko, who heads the centrist Fatherland party, advocates a
stronger state role in key markets and has used temporary price caps on
petrol to keep down inflation. Liberals from Mr Yushchenko's Our Ukraine
bloc, however, control the finance and economy ministries.

Next year's parliamentary elections will determine whether one of these
competing economic views - liberal, centrist and Socialist - will come to
the fore in Mr Yushchenko's presidency, or if the current, uneasy
cohabitation will continue.

In spite of the uncertainties, sentiments about Ukraine's long-term future
remain positive, especially in the banking and retail sectors. Ukraine is
seen as the next frontier for the big western groups already active in
central Europe.

Austria's Raiffeisen Bank, already Ukraine's seventh-largest banking group,
is in exclusive talks with the owners of the second-largest bank, Aval, a
deal that could be worth up to $600m.

The main influx of foreign investment this year has been in treasury bills,
driven by a conviction among economists that Ukraine's hryvnya currency
is undervalued and likely to appreciate. -30-
===============================================================
2. TYMOSHENKO NAMES CONSTRUCTION PROGRAM FOR NEW
HOUSING, COMPENSATION OF DEPOSITORS OF FORMER USSR
SAVINGS BANK AND NEW BEEF AND PORK PRODUCTION PROJECTS

Ukrainian News Agency, Kyiv, Ukraine, Sunday, May 15, 2005

KYIV - Prime Minister Yulia Tymoshenko has identified the implementation
of the program for construction of quality housing facilities, resolving the
issue of returning lost savings of depositors of the former Savings Bank
(Sberbank) of the USSR and arranging meat production as the govern-
ment's priorities for the next 100 days.

She made the comment to journalists during visit by members of the
Cabinet of Ministers to the National Architecture and Culture Museum in
the village of Pyrohove.

At a meeting on May 11, the Cabinet of Ministers approved a package
comprising 7 draft laws, which are necessary for implementation of the
program called "Territory of Quality Housing," envisaging construction of
new multi-storey modern buildings to replace the old housing stock in the
center of cities.

Speaking about the return of savings to depositors, Tymoshenko noted
that the government will deal with this issue immediately after the first
100 days. In particular, she said that the Cabinet of Ministers plans to
compensate the deposits partially with funds received from the full
payment for privatized assets.

Speaking about meat production, Tymoshenko noted that the government
will prepare standard projects for production and processing of pork and
beef by the end of the week.

She noted that such enterprises will be created within six months, and the
issue of providing the population with meat will be resolved. -30-
-----------------------------------------------------------------------------------------------------------
FOOTNOTE: What does the concept, "Government will prepare standard
projects for production and processing of pork and beef really mean?
Who will own and control the enterprises the Prime Minister says will be
created in six months and which she says will resolve the issue of providing
the population with meat?

This all sounds like the so-called 'state capitalism' or 'socialism' and not
private market driven business development. This all sound very scary and
not in tune at all with the promises and goals of the Orange Revolution.
This type of talk will push private investors and businessmen away rather
than bring them into Ukraine. The PM has made many statements recently
and taken many actions indicating she supports a stronger government
role and intervention in private markets.

This is not what the now President of Ukraine said before the Orange
Revolution or has been saying after the Orange Revolution. Many key
observers believe there seems to be a real disconnect developing
between the two top political leaders in Ukraine in regards to what is
being promised by the President and the actions by the Prime Minister.
[EDITOR]
=============================================================
3. "THERE IS NOTHING LEFT TO SELL"
Ukrainian government against privatizing national telecom operator
or any other state assets says head of State Property Fund

ICTV television, Kiev, in Ukrainian 1500 gmt 15 May 05
BBC Monitoring Service, UK, in English, Sunday, May 15, 2005

KYIV - [Presenter] State Property Fund head Valentyna Semenyuk and
the former industrial policy minister, Oleksandr Neustroyev, are in our
studio today. Good evening. [Passage omitted: Discussion on
privatization, jobs.]

[Semenyuk] I would like to say that the red line of economic security has
been reached. The state retains only 22 per cent of production companies.
Compared with the former Soviet countries, we have the highest level of
capitalization. So, there is nothing left to sell, as it were.

[Presenter] Well, there is Ukrtelecom [national telecom operator]. There is
much to be done, as it were.

[Semenyuk] The Cabinet of Ministers has asked parliament to cancel the
law on the privatization of Ukrtelecom, taking into account the situation on
the world market connected with the privatization of similar companies. I
think this decision was taken just in time. [Passage omitted: Semenyuk
says the State Property Fund will make an inventory of state
property.] -30- [The Action Ukraine Report Monitoring Service]
---------------------------------------------------------------------------------------------------
FOOTNOTE: The new State Property Fund head Valentyna Semenyuk
is a member of the Socialist Party. It was feared by many experts that
Semenyuk would not support the further privatization of businesses owned
by the Ukraine government. Those fears have now come true. In the above
news article Semenyuk says, "The red line of economic security has been
reached......there is nothing left to sell." One of the promises of the
Orange Revolution was that the privatization process in Ukraine would
continue. Most international experts agree that Ukraine still owns many
businesses it should privatize. The process of privatization should not
be over in Ukraine they believe. [EDITOR]
===============================================================
4. FDPM KINAKH CONCERNED OVER LOW RATE OF GDP GROWTH
DURING JANUARY-APRIL 2005 IN UKRAINE

Ukrainian News Agency, Kyiv, Ukraine, Sunday, May 15, 2005

KYIV - First Deputy Prime Minister Anatolii Kinakh has expressed concern
over the low rates of growth for the gross domestic product in January to
April. He made the comment to journalists during the time of their visit to
his office as part of the open day in the Cabinet of Ministers on May 14.

He particularly noted that the rate of GDP growth this year is 2 times lower
that in similar period of last year. "This issue very much worries me," he
said. Kinakh noted that by European standards the GDP growth rates of
4-5% are good, but Ukraine is not the kind of state, which can allow itself
to have such rates if it has set the task of attaining European living
standards.

He noted that a decision was taken at the recent meeting of the Cabinet of
Ministers to examine the situation in each sector so as to put in place the
mechanisms, which will forestall a reduction in the economic growth rates.
At the same time, Kinakh added that the Cabinet of Ministers does not plan
for the time being to revise the previously planned forecast of the GDP
rates for this year, which envisages GDP growth of 8.2%.

As Ukrainian News earlier reported, GDP grew for January to April by 5%
over that of January-April 2004. GDP grew in January to April 2004 by 11.5%
to UAH 86,645 million, compared with January-April 2003. The rate of GDP
growth in the state budget for 2005 is envisaged at the level of 6.5%, and
it is expected that by the end of 2005 it will nominally be UAH 409.5
billion.

Yuschenko grants that GDP growth in 2005 might remain at the level of 12%
as it was in 2004. -30- [The Action Ukraine Report Monitoring Service]
===============================================================
5. UKRAINIAN PRIME MINISTER DECRIES RUSSIA'S "OIL BLACKMAIL"

Era, Kiev, in Ukrainian 1100 gmt 15 May 05
BBC Monitoring Service, UK, in English, Sunday, May 15, 2005

KIEV - Ukrainian Prime Minister Yuliya Tymoshenko said today that the
situation with petroleum in Ukraine would stabilize in two weeks. ymoshenko
confirmed that the current situation with oil supplies has been caused only,
quote, by Russia's sabotage.

As an example, Tymoshenko mentioned the situation at the Kremenhcuk oil
refinery, to which Russia back on 7 May stopped pumping oil which had been
paid for. Tymoshenko stressed that this action was taken not by Russia as a
state but by Russia's big oil producers and traders.

Tymoshenko also denied a statement by her press service about an urgent
cabinet meeting on the situation on the oil market to be held today. She
said that the cabinet is currently holding talks with Kazakhstan on oil
supplies to Ukraine.

Tymoshenko said that she, quote, would not allow anyone to bully Ukraine,
presumably having oil blackmail in mind. For his part, Ukrainian Transport
and Communications Minister Yevhen Chervonenko said that the Ukrainian
tanker fleet is prepared to transport up to 2m tonnes of oil to Ukraine
monthly. -30- [The Action Ukraine Report Monitoring Service]
===============================================================
6. UKRAINE WANTS TO START DIRECT PURCHASES OF TURKMEN
GAS IN 2006 ACCORDING TO PM YULIYA TYMOSHENKO

Prime-TASS news agency, Moscow, in English 1243 gmt 14 May 05
BBC Monitoring Service, UK, in English, Sat, May 14, 2005

KIEV - Ukraine plans to start direct purchases of natural gas from
Turkmenistan starting in 2006, Ukraine's Prime Minister Yuliya Tymoshenko
said Saturday [14 May] following a meeting with Gaz de France senior
executive vice-president Jean-Marie Dauger.

Tymoshenko also said that Ukraine is interested in cooperation with Gaz
de France in gas production and pipeline construction. Ukraine is interested
in building gas pipeline networks to ship gas from Turkmenistan and Iran via
the Black Sea to Ukraine, she said.

Despite the fact that not all Turkmen reserves are audited and despite the
"political difficulties" in Iran, Ukraine wants to consider this option
given its dependence on supplies from Russia, she said.

According to an agreement between Russia and Ukraine, Rosukrenergo
has been supplying Turkmen gas to Ukraine since 1 January. Rosukrenergo
is a joint venture between Russian natural gas monopoly Gazprom
and Austria's Raiffeisen Bank Zentralbank Oesterreich AG. -30-
===============================================================
7. UKRAINIAN PRESIDENT WELCOMES FOREIGN INVESTMENT
IN THE AEROSPACE INDUSTRY

Interfax-AVN military news agency web site, Moscow, in English, 13 May 05
BBC Monitoring Service, UK, in English, Friday, May 13, 2005

KIEV - Ukraine is interested in attracting foreign investments into its
aerospace industry, President Viktor Yushchenko told a news conference
in Kiev Friday [13 May]. "I think that aircraft and rocket building is one
of strategic priorities of Ukraine," Yushchenko said.

According to him, the main challenge the Ukrainian hi-tech industries have
to face is the lack of patterns for attracting foreign investments. "Our
task is to present a programme that would provoke interest of investors in
our aerospace industry," he said, adding that such a programme is being
elaborated. "It is our priority now, and I will supervise its progress
personally," the president said.

Ukraine is negotiating the prospects of aerospace cooperation with world's
leading companies, including US Boeing and Sikorskiy Aircraft, Yushchenko
noted. The latter has given its consent to launch a helicopter business in
Ukraine.

Yushchenko hailed the potential of the Ukrainian-Brazilian project
envisaging the development of the Cyclon-4 rocket system at the Alcantara
spaceport in Brazil and the Ukrainian engagement into the Sea Launch
programme. He added that Ukraine has earned a reputation for being a
global space power. [Passage omitted: background on Boeing, Sikorsky]
------------------------------------------------------------------------------------------------------------
FOOTNOTE: It is hoped by experts who support the economic development
of Ukraine that the programme mentioned above designed to provoke the
interest of investors in the aerospace industry will be developed, announced
and put in place by the Yushchenko/Tymoshenko soon. No such program has
yet been put in place for any sector of the Ukrainian economy by the new
government according to the experts. It is time this process began for real
they believe. [EDITOR]
===============================================================
8. UKRAINE PRES REASSURES BUSINESS OVER PRIVATIZATION

Associated Press (AP), Kiev, Ukraine, Friday, May 13, 2005
.
KIEV - President Viktor Yushchenko tried to reassure Ukraine 's business
community Friday, saying he wasn't interested in the re-nationalization of
privatized industries or in harassing business leaders. "Authorities won't
persecute businesses with endless fiscal checks," Yushchenko said during
a wide-ranging news conference, marking his first three months in power.

He pledged that the list of 29 companies that the government says were
illegally privatized won't keep growing. Yushchenko said the list, completed
Thursday, will be made public after prosecutors and investigators review it.
If the courts agree privatization was illegal, a new auction will be held
and there will be nothing to bar the current owners from repurchasing the
business, Yushchenko said. "My team isn't involved in nationalization,"
Yushchenko said.

Many Ukrainian business leaders and investors had become wary of the
new government's plans to review some of this ex-Soviet republic's murky
privatization deals. The government claims that many key industries were
sold off to cronies of former President Leonid Kuchma at rock-bottom
prices, adding nothing to the state's needy treasury.

Initially, Prime Minister Yulia Tymoshenko suggested that thousands of
businesses might come under the government's review - setting off a
massive shock wave among investors who were just beginning to view
Ukraine with interest again after last year's Orange Revolution. Yushchenko
said Friday, however, that the list of 29 was "closed."

Yushchenko won the presidency last year after massive street protests
erupted against the election fraud that had initially handed the victory to
his opponent.

He vowed to fight graft that flourished during Kuchma's 10-year rule,
improve living standards and nudge Ukraine closer to the West, seeking
membership in the North Atlantic Treaty Organization and the European
Union. Yushchenko said Thursday he would let Ukrainians decide in
plebiscites about the membership in both organizations. -30-
===============================================================
9. UKRAINIAN PRESIDENT GREETS NATION ON EUROPE DAY

UNIAN news agency, Kiev, in Ukrainian 1658 gmt 14 May 05
BBC Monitoring Service, UK, in English, Saturday, May 14, 2005

Ukrainian President Viktor Yushchenko has congratulated the Ukrainian
people on Europe Day, the presidential press service has said.

The president's greeting says: "Today Ukraine is marking Europe Day,
which is a holiday of peace and unity on our continent." "This is our
holiday because we are a European nation," Yushchenko said.

"Ukraine has been an unalienable part of the European civilization since the
times of ancient cities on the Black Sea shore. Our great predecessors -
[9th century prince of Kievan Rus] Vladimir the Great and [12th century
prince] Yaroslav the Wise - wrote down glorious pages in the history of
Europe. Sources of European democracy include the Cossack republic of
[17th century Cossack leader] Bohdan Khmelnytskyy and the constitution
of [17th-18th century exiled Cossack leader] Pylyp Orlyk."

The greeting says: "The continent was liberated from the Nazis with the
blood of our fathers and grandfathers. Their deeds gave the Europeans
the unique chance to do away with old strife and begin the unification of
peoples on the basis of common values of our civilization.

"This chance was perceived by outstanding politicians Charles de Gaulle,
Winston Churchill, Konrad Adenauer and Robert Schuman. They laid the
foundations of a future democratic Europe, which is open to all nations
without exception. Europe Day is the reminder of a bold dream which has
become a reality," Yushchenko said.

He added: "This year's holiday has a special Ukrainian dimension. The Orange
Revolution has proved that the common European values of freedom and
justice live and win. They inspired and united millions of people on the
frozen Independence Square. The Ukrainian nation has proved that it shares
the same ideals as other free European peoples. Europe has felt, together
with us, that its heart is beating in Kiev."

"We have set out path towards the future," the greeting continues. "We see
Ukraine among the nations of a united Europe. High European standards
give people the opportunity to live a decent, free and well-off life. They
reliably protect the freedom and safety of peoples. We can see our
neighbours' achievements on the European path with our own eyes. We
are capable of achieving results which are no worse."

"EU entry is not an unachievable dream," the head of state said. "Ukraine
has its own 'road map' leading to it. Our every step on this path means new
jobs created as a result of the removal of barriers on the European market.

This is European social standards, which are our reference point in setting
the level of wages and pensions and the quality of health care and
education. This is guarantees of rights of every citizen and justice which
is just towards everyone. Our every step is aimed at opening up all
capabilities of our country, and at everyone of us receiving new chances,"
he added.

"We are marking Europe Day in the time of hope," Yushchenko said. "As
the president of Ukraine, I will spare no effort for the hopes to come true.
I believe in Ukraine. We will be able to cover the hard but very fruitful
European route."

Yushchenko said: "I believe in wisdom of European nations. Their willing-
ness to accept Ukraine into their family is growing before our eyes. This is
absolutely just. Ukrainians are a strong and beautiful nation. We can make
the common European home stronger, enrich it with our work and embellish
it with our unique culture. This all will come true!" -30-
===============================================================
10. UKRAINE: FOREIGN CURRENCY RESERVES AT RECORD HIGH

New Europe, Athens, Greece, Monday, May 16, 2005

Ukrainian foreign currency reserves are at a record high level, according to
data made public by the National Bank of Ukraine (NBU) last Tuesday,
Deutsche-Presse-Agentur (dpa) reported. The former Soviet state held
USD 13 billion of foreign currencies at the end of April, an 8.8 percent
increase over the previous record set in September 2004.

Foreign currency reserves have increased by a whopping 37 percent since
January, the strongest buildup in the country's history. The April growth
was driven by NBU buy-ups of foreign currency in order to slow down a
ballooning revaluation of the Ukrainian currency the hryvnia, continued
strong current account surplus, and increased demand for Ukrainian
securities, according to a report from the Kiev-based Dragon Capital
investment house.

Ukraine's already strong GDP (gross domestic product) received another
boost in the wake of the country's so-called "Orange Revolution" which saw
Viktor Yushchenko become president early this year, with the new Europe-
leaning government pushing to reduce corruption and increase foreign
investment.

Ukraine's economy depends on steel, chemical, machine industry and
agricultural exports; all bringing far more foreign currencies into the
country than its economy requires buying imports.

The result has been an explosion of demand for the hryvnia, which has
appreciated by more than 10 percent since the beginning of the year. The
NBU according to its 2005 plan expects to hold USD 13.6 billion in foreign
reserves by the end of the year. The number is likely to be revised upward
by close to 20 percent, the Dragon Capital report predicted. -30-
===============================================================
11. NEW GOVERNOR OLEKSIY DANYLOV HOPES TO WIN EAST
UKRAINIAN LUHANSK REGION OVER

Interview with Oloeksiy Danylov by Iryna Korobko
"Oleksiy Danylov: "I was introduced to Yushchenko by Brodskyy"
BBC Monitoring Service, UK, in English, Sat, May 14, 2005

The governor of Luhansk Region, Oleksiy Danylov, has acknowledged that
he is not popular in the region, but he hopes that his rating will improve.
Interviewed by a Ukrainian weekly, he pledged to root out corruption in
Luhansk, adding that corruption was rampant in law-enforcement agencies.

He said he was in favour of having regional governors elected rather than
appointed. He noted improvement with jobs and crime in the region. Speaking
of his past and biography, he said it was politician Mykhaylo Brodskyy who
introduced him to President Viktor Yushchenko

The following is the text of the interview with Danylov by Iryna Korobko,
entitled "Oleksiy Danylov: 'I was introduced to Yushchenko by Brodskyy'" and
published in the Ukrainian newspaper Stolichnyye Novosti on 10 May;
subheadings inserted editorially:

Luhansk regional governor Oleksiy Danylov, just as many of the incumbent
heads of regional administrations, has come to politics from large business.
However, Mr Danylov seems to feel at ease in his new role of a state
official. Moreover, he seems to enjoy the role of the "sovereign's eye" in
Luhansk Region.

BIOGRAPHY -----------
[Korobko] Mr Danylov, could you tell us something about yourself, as you
have not had much publicity as a politician?
[Danylov] My biography is quite plain. I was born in the coal-mining town of
Krasnyy Luch. After finishing the eighth form, I entered a farm college,
specializing as a veterinary. Then I served in the ranks of the Soviet Army.
Then I studied at a pedagogical university, but I did not graduate from it.

I registered the second cooperative in town in 1987. We produced dog
shampoo. It was my first good money. The business was going well, as nobody
except me was dealing with it. I was Luhansk city mayor in 1994-97. At one
of the meetings in November 1996 I said frankly that I did not understand
the way certain processes were going on here, and later on I paid for this.
Now I have three higher education degrees: in history, law and economics. I
have brought up four children, and I have a granddaughter.

[Korobko] How did your paths cross with Viktor Yushchenko?
[Danylov] I met Mykhaylo Brodskyy [the then leader of the Yabluko party] in
1994 under quite interesting circumstances. I was Luhansk city mayor at that
time. There was a call to my office, and I was told that a certain Mykhaylo
Brodskyy wanted to talk to me. I took the telephone receiver and heard:
"Hello, my name is Misha [contracted for Mykhaylo], and what is your name?"
I answered: "Oleksiy." Then he said: "Come to me when you are in Kiev. I
have to discuss with you some issues of basketball." I came to see him about
a week later, and our close communication began. Then Mr Brodskyy
introduced me to Viktor Yushchenko's team.

REGIONAL ECONOMY ---------
[Korobko] Does the change from large business to big-time politics come
easy to you as an entrepreneur?
[Danylov] I would say that it is interesting: approaches are somehow
different when one sees the scale of the region and hundreds of thousands
of people he is responsible for. I support the planned development of the
region, the way it used to be. For example, now we have an objective of
creating a sufficient number of jobs. Unemployment in Luhansk Region has
been reduced by 0.5 per cent in three months of our work, and now it equals
2.4 per cent, which is among the lowest indices in Ukraine.

Our second imperative was resolving the problem of water supply in Luhansk
Region. Generally speaking, we approach many issues the way which differs
from the habitual practice of old-type officials. We analyse everything from
the perspective of the regional economy. If the regional economy is healthy,
we shall also be able to fulfil the tasks outlined by the president on the
national scale.

[Korobko] Do you get the impression that many governors hold liberal views
while both the president and the government set social democratic tasks for
them?
[Danylov] The state is obliged to be socially oriented, but money should not
be distributed for nothing. It should be earned. I flatly reject the things
which happen in employment centres where people come and get money
for nothing. Thus, people form their attitude to life as dependants and
consumers. Anyone can find a job now. But if he is unable to do so, then
let us sit together and try to resolve this problem. When I substituted
Volodymyr Pantyukhin as the city mayor, I came to him and asked him: "Mr
Pantyukhin, what is a city?" He answered that a city is a large factory with
numerous workshops: retired and disabled people, medicine and
manufacturing.

CHANGING ATTITUDE IN RUSSIA ----------
[Korobko] Your region borders on the Russian Federation. Luhansk Region
traditionally used to have pro-Russian sentiments. You are an activist of
Yabluko and you advocate pro-European policy... [ellipsis as published]
[Danylov] We really have 46 km of border with Russia. Many people from
Luhansk have Russian roots. But the period of the heart-rending nostalgia is
passing away. People understand that Ukraine is an independent state. We
should resolve our problems on our own. Many of them are not happy with
developments in Russia: those in Chechnya and in Khabarovsk... [ellipsis as
published]

In addition, people used to get information on the Russian Federation mainly
from Russian media, where information on this country's real problems was
presented very scarcely. The situation in the Luhansk regional information
sphere changed after the well-known events [Orange Revolution] in December
2004. Moreover, it seems to me that the problems related to the region's
inclination towards the Russian Federation are more likely to be artificial
than real.

CRIME ----------
[Korobko] The criminal situation in the region has always been serious. Are
there changes in this sphere?
[Danylov] The majority of people representing criminal circles have ranks
of generals. They are officials at the Security Service of Ukraine, the
Prosecutor-General's Office, the tax administration, the Ministry of
Internal Affairs since 1997. I receive people, and 20-25 per cent of all
appeals are against people working in these structures. I am firmly
convinced that it is law-enforcers who provide "protection" to
representatives of low-level criminal circles. Heads of these agencies
have been changed in the region. I think that the situation with crime and
corruption will soon be changed drastically.

DEVELOPMENT PLANS ----------
[Korobko] Much was said about some regions feeding others during the
[2004 presidential] elections. Are there changes under way in this sphere?
[Danylov] We break up the regional economy into sectors and follow the
situation in cities, districts, coal mines and enterprises. Then we decide
on whom and where we should help. For example, the Linos [oil refinery]
privatized by TNK [Russia's Tyumen Oil Company] provides quite
substantial revenue to the budget (about 2bn [hryvnyas] a year).

The Alchevsk metal plant (belonging to [Industrial Union of Donbass] IUD)
which, in my opinion, is one of the largest investment projects in Ukraine
(2bn US dollars), is also located in our region. A large metallurgic plant
is also being built in the region. I would also like to mention Azot from
Severodonetsk which manufactures agricultural fertilizers and ammoniac
nitrate.

Luhansk Region is now rising from its knees. When I invite managers of
companies, I set wage rises for workers as their priority task. We should
start resolving the immense number of our problems by increasing salaries.
We are approaching a construction boom, but when we looked around, we
could not find a single cement plant. But we already managed to resolve this
issue: we have held talks with an Austrian cement company, and now
negotiations are under way to have our own modern cement plant in Luhansk
Region which will produce 2bn tonnes of cement for the construction industry
in one-and-a-half or two years.

[Korobko] Once upon a time, the Pittsburg city mayor transformed a giant of
the metallurgic industry into Silicon Valley. Would you like to invest
money, figuratively speaking, in increasing the qualifications and
professionalism of residents of the region, instead of wasting money on
unprofitable manufacturing?
[Danylov] I recently visited the Zasyadko coal mine: it does not need
subsidies because its basis is the private interest of its workforce, which
has been leasing the coal mine for 12 or 13 years already. I support the
idea of having mines in private ownership.

If private capital appears somewhere, traumatism is lower, extraction grows,
there is care about labour safety, as the owner understands that this man -
his worker - should be healthy and satisfied to ensure the productive
operation of the mine, and consequently, growth in the owner's profits.
These are normal market conditions which work in all civilized countries. As
soon as a mine becomes state-owned, it immediately starts requesting
substantial subsidies from the country... [ellipsis as published]

GOVERNORS SHOULD BE ELECTED ----------
[Korobko] What do you think of the idea of electing governors?
[Danylov] A governor should be elected. There is no doubt about that. But
there should be the sovereign's eye in a region because an official elected
by the people might be unable to realize the full scope of the region's
responsibility. There is also a threat that the governor's position can be
gained by a person who won the campaign exceptionally due to populist
slogans, but who will actually do nothing as soon as get gets the regional
leader's position.

[Korobko] Do you think that residents of the region would support you if the
elections were held today?
[Danylov] We have [the results of] social studies with regard to this. There
are 18.5 per cent of residents of Luhansk Region who would vote for me
today, while the rating of the former Luhansk regional leader, [Oleksandr]
Yefremov, is 34 per cent. I do not fear these figures at all. They are
today's figures, but I have been working as governor for two-and-a-half
months only.

NEW OPPOSITION LOSING POPULARITY ----------
[Korobko] Do you feel any changes of public political sentiments as an
"orange" [colour of Viktor Yushchenko's electoral campaign] or
"white-an-blue" [colours of former Prime Minister's Viktor Yanukovych's
electoral campaign] region? Can we say that Luhansk will be able to surprise
us with the percentage of votes in favour of the "orange" forces next march
[during the parliamentary elections]?

[Danylov] It seems to me that allegations that Luhansk Region is fully a
"white-and-blue" region are slightly exaggerated. Let us come back to social
studies: "white-and-blues" lost 30 per cent of their rating in three months.
Do not forget the situation we had on TV. I cannot say how many years will
be needed to knock all the nonsense forced by the old authority through
media on young people out of their heads.

Of course, one should be to put on trial and brought to book for this. But
there is no need to be afraid of the elections. Our people are already so
wise that they cannot be deceived. By the way, the Communists' rating is
catastrophically falling in our region... [ellipsis as published]

PLANS FOR 2006 ELECTION CAMPAIGN ---------
[Korobko] The Yabluko party has merged with Prime Minister [Yuliya
Tymoshenko-led] Fatherland Party... [ellipsis as published] Within what
party will you participate in the elections?
[Danylov] I am not a member of any party, as of today. I have no objective
of getting into the list of any party yet. I am the sovereign's eye on the
territory of Luhansk Region... [ellipsis as published]

[Korobko] Why are people being intimidated with Mykhaylo Brodskyy in
Luhansk?
[Danylov] I was disqualified from the race during the 2002 [parliamentary]
elections. Mykhaylo arrived to defend me, and he told the head of the
regional department of the interior everything he was thinking about...
[ellipsis as published] -30- [Action Ukraine Report Monitoring Service]
===============================================================
12. G2: INSIDE STORY: A 21ST CENTURY REVOLT:
THE WORLD SAW IT AS A SPONTANEOUS DRIVE FOR DEMOCRACY,
BUT UKRAINE'S 'ORANGE REVOLUTION' WAS IN FACT AN
OPERATION YEARS IN THE MAKING

Daniel Wolf, The Guardian
London, United Kingdom, Friday, May 13, 2005

It was one of those moments when the world seemed simple and beautiful
again. Hundreds of thousands flooded on to the streets, calling for an end
to dictatorship and corruption, demanding truth and democracy instead. They
listened, rapt, to their hero, Viktor Yushchenko, whose handsome face had
been ravaged by a recent dose of dioxin. It felt like a fairy tale: the bad
king had poisoned the people's champion and tried to stop him from taking
power, but the people had gathered in the capital and shouted with one voice
that they would not leave until they were given justice.

There is some truth in this version of Ukraine's "orange revolution", but it
is a half-truth. What the world thought it saw, last November, was a
spontaneous protest which grew, of its own accord, into a challenge to the
country's post-Soviet power structure. For most of the people gathered in
Kiev's Independence Square, the demonstration felt spontaneous. They had
every reason to want to stop the government candidate, Viktor Yanukovich,
from coming to power, and they took the chance that was offered to them.

But walking through the encampment last December, it was hard to ignore
the evidence of meticulous preparation - the soup kitchens and tents for the
demonstrators, the slickness of the concert, the professionalism of the TV
coverage, the proliferation of the sickly orange logo wherever you looked.
It was surprising how few journalists commented on what was so obvious.

In reality, the events in the square were the result of careful, secret
planning by Yushchenko's inner circle over a period of years. The true story
of the orange revolution is far more interesting than the fable that has
been widely accepted. It tells us, not just about what went on in Ukraine in
2004, but how the border between politics and entertainment is dissolving
in the 21st century.

According to one of the main organisers of the revolution, Roman
Bessmertny - Yushchenko's campaign manager and, currently, vice-prime
minister - the aim was, effectively, to carry out a peaceful coup d'etat:
"We created a system parallel to the state, because only a system could
defeat an opponent backed by the whole state."

More than two years before the 2004 presidential election, Bessmertny's team
set up a massive operation to combat election fraud, and to capture it on
camera where it happened. In some 30 months, they put as many as 150,000
people through training courses, seminars, practical tuition conducted by
legal and media specialists. Some attending these courses were members
of election committees at local, regional and national level; others were
election monitors, who were not only taught what to watch out for but given
camcorders to record it on video.

More than 10,000 cameras were distributed, with the aim of recording
events at every third polling station. As the orange revolutionaries saw it,
election fraud was inevitable because any government-sponsored candidate
would have to take votes from the built-in opposition majority in the west
and centre of the country. The orange plan was to turn election fraud to
their advantage, using it as a trigger for a mass protest in Kiev.

Their plan relied on volunteers such as Yuri Kolivoshko. A small-time
property developer in his early 30s, he had formerly been politically
apathetic, but by the second round of the election he was monitoring
activity at the polling booth, camcorder in hand. "I'm the kind of person
who believed that things had been decided on our behalf a long time ago,
that's all, and whether I went to vote wouldn't make any difference to me or
Ukraine."

Once Kolivoshko had voted, like millions of others, he began to believe that
Yushchenko's movement offered a chance of change. "In the second round
of voting I worked as an observer at a polling station until 6am. My task
was to monitor violations, and I filmed everything. Then I went to Kiev,
with the clothes on my back."

Kolivoshko's conversion backed up the confidence of the orange movement
that large numbers of people would rally to the cause, if they were given a
chance to protest effectively. You didn't have to spend long in Ukraine to
understand why. The regime run by former President Kuchma and his
cronies was a cynical kleptocracy spiced up with sporadic brutality. A new
generation had grown up since the end of the Soviet Union, and many had
worked abroad. They knew that life could be different.

The gamble of the orange team was that, if they could attract tens of
thousands of people to protest against election fraud on the streets of Kiev
and keep them there for long enough, they could break the government,
forcing it to concede to their demand for fair elections, and then replace
it.

Their plan of campaign was original and ambitious: they would organise a
marathon rock concert, playing 10 hours daily in the city centre. This, in
turn, would become the focal point for a huge continuing demonstration, that
would bring the city to a standstill. Beside Independence Square, where the
concert would play and opposition leaders would make speeches, there would
be an encampment, large enough to make it difficult for the authorities to
clear it without a humiliating and risky show of force.

Above all, the whole event would be covered on television, pulling in a
national audience and generating a stream of images for international news
reports. If the event was compelling, entertaining, watchable, then this
would be the perfect revolution for the 21st century, a combination of
"sit-in" and Live Aid. Any step the authorities took to act against it would
be in the full glare of live television.

There was one evident problem: how could the orange revolutionaries hope to
surprise the government, when there was no chance of keeping the operation
secret? It was just too big, and involved far too many people. Part of the
answer was to keep information about the operation in distinct compartments,
so that very few grasped the complete picture, but the main inspiration was
that every step should be taken in conformity with the law: "We ensured that
the state had no reason to complain," says Bessmertny.

The orange team submitted the first notice of the event on Independence
Square on November 15 2004, giving the authorities advance warning that the
revolution would begin on November 21. The government didn't know the real
agenda behind the concert and, even if it had, it would have found it hard
to stop it.

By November 21, following the second round of the election, Bessmertny's
team had a good idea of how many would arrive in the square: "We knew from
our events that, if we distributed half a million invitations around Kiev,
8,000 people would come. We knew that if FM stations transmitted 100
announcements every day for a week, saying that a meeting would take place,
then 200,000 people would come. So if we brought 35,000 people from the
regions, and added the people from Kiev, we believed we would have a minimum
of 100,000 people in the square. The figures weren't random, they were taken
from our experience."

The numbers game was crucial, because it determined whether troops might
be used against the demonstrators. One of the most sensitive, and secret,
aspects of the orange revolution was the attempt to bring the army on side.
For 18 months, a special contact unit was putting out feelers to army
commanders, trying to understand their contingency plans and to persuade
them to remain neutral.

The arithmetic, it turned out, was quite simple: there were 15,000 troops
available to the Kiev command, and the army would not act, with that number
of troops, if there were more than 50,000 people in the square. The task of
the opposition, then, was to keep enough demonstrators together in and
around the square to forestall an attack. As it turned out, there were
hundreds of thousands in the square and, at some points, up to a million.

The task of the demonstrators was to endure the cold and discomfort of the
streets. They were barely aware of the support-system sustaining their
efforts, unless they plugged into it directly. Igor Radkov, an advertising
agency manager from Donetsk, eastern Ukraine, decided to join the orange
revolution when he was beaten up by Yanukovich heavies while working for
the opposition in his home town.

As a former military officer, the experience didn't deter him but only made
him more determined. In Kiev, he found what he was looking for: "I have
never in my life seen such unity. I used to be indifferent, but when I stood
on the square, hand on my heart, and sang the national anthem, I'll never
forget it. I was sure truth would win."

As the demonstrators arrived, at first from Kiev and then from the rest of
the country, they found that everything was ready for them: "You have to
understand," Bessmertny says, "that the square wasn't just the beautiful
things you saw on television. It was also almost 300 toilets, which had to
be drained daily. And you had to feed people. We provided 5,000 tonnes of
porridge and 10,000 loaves of bread a day. And you had to keep people warm.
Every day we needed some 200 gas canisters, one or two heaters per tent, and
foam pads and sleeping bags. And we drove away 11 trucks of rubbish each
day."

The demonstrators, holding out in sub-zero temperatures, received impressive
medical support, and they needed it: the doctors received more than 5,000
calls a day. And if the concert wasn't enough, the organisers had prepared
teams of psychologists and therapists to work with the protesters. They also
invited in churches - the Scientologists were, apparently, particularly good
at spreading a positive vibe. Sometimes, however, the best efforts of the
support staff failed, and a group would be written off. They would be put on
buses, waiting to take them home.

The success of the orange revolution has promoted a kind of democratic
inebriation, in which random demonstrations around the world are each sold
as a new dawn of freedom in the Ukrainian tradition. Yet what Yushchenko's
team achieved requires more than a sense of grievance and the hope of
change. It needs large sums of cash (in this case, much of it American - the
US state department has said that it spentpounds 35m in Ukraine over the
past two years; it is estimated that the Russians, by the by, contributed up
to pounds 160m to the other side).

Along with the money, a democratic revolution on the orange model demands
long-term planning, superb organisation and charismatic leadership. It also,
of course, has to be addressed to a people who are ready to understand and
support it. In the words of Bessmertny: "The people were so sick of the
authorities, they were ready to give everything, ready to give their last
things so that people would carry on standing there, on the square. Because
everyone understood that, if the people dispersed nothing would ever
happen." -30- [The Action Ukraine Report Monitoring Service]
---------------------------------------------------------------------------------------------
Daniel Wolf directed Inside the Orange Revolution, to be shown on
BBC4 on Sunday at 10pm. [May 15, 2005]
===============================================================
13. US EMBASSY REJECTS RUSSIAN ALLEGATIONS OF SPYING BY NGOs

AP, Moscow, Russia, Friday, May 13, 2005

MOSCOW - The U.S. Friday sharply rejected allegations by the chief of the
KGB's main successor agency that Washington had used non-governmental
organizations and the Peace Corps for espionage. Nikolai Patrushev, director
of the Federal Security Service, made the accusations Thursday and directed
similar allegations at U.K., Saudi and Kuwaiti groups.

A statement from the U.S. Embassy said Washington "categorically rejects
charges...that American non-governmental organizations are being used to
carry out intelligence operations against Russia in the guise of charitable
and other activities. Moreover, allegations that the U.S. Peace Corps has
been involved in intelligence activities are completely unfounded and
untrue."

Patrushev said the groups were being used not only for espionage but to
promote political upheaval in former Soviet republics. The Kremlin has
watched with displeasure as popular uprisings sparked government changes
in Georgia, Ukraine and Kyrgyzstan over the past three months. All three
countries are part of what Russia regards as its historical sphere or
influence.

Key figures in those uprisings have had contact with Western
democracy-promoting groups that Russia accuses of fomenting revolution.
Among those groups is the International Republican Institute, which gets
most of its money from the U.S. government. The embassy statement did not
mention the IRI by name, but said that Russians who have worked with the
Peace Corps and NGOs "are now taking more active roles in the civic and
economic loves of their communities."

The Peace Corps pulled out of Russia in 2003 amid spying allegations. When
the program was closed "the Russian government expressed its gratitude for
the assistance Peace Corps had provided," the embassy statement said.

Russia's neighbor Belarus is widely expected to see rising pro-democracy
activity, with last year's Orange Revolution in neighboring Ukraine
encouraging opposition to hardline Belarusian President Alexander
Lukashenko.

Friday, Stepan Sukhorenko, head of Belarus' security service, which has
retained the Soviet-era acronym KGB, was quoted by the news agency
Interfax as saying "We are well aware of preparations from abroad to
change the powers in Belarus." -30-
===============================================================
14. ARTICLE "WAS WORLD WAR II WORTH IT" CAUSED SUCH OUTRAGE
AMONGST MY COLLEAGUES I FEEL DUTY BOUND TO RESPOND

LETTER TO THE EDITOR, The Action Ukraine Report
webmaster@theamericancause.org
FROM: Martin Nunn, Kyiv, Ukraine
Published by The Action Ukraine Report, #485, Article 14
Washington, D.C., Monday, May 16, 2005

RE: WAS WORLD WAR II WORTH IT?
OP-ED: By Patrick J. Buchanan, The American Cause
Vienna, Virginia, Wednesday, May 11, 2005
Published by The Action Ukraine Report, # 484, Article 17

Dear Morgan:

The above article has caused such outrage amongst my colleagues and
I that I feel duty bound to respond. I am surprised that you have felt
compelled to include such a prejudiced and right-wing piece in your
Ukraine Report as it does not do justice to the calibre of other articles
you have published over the months.

Dear Sir [Patrick Buchanan]

With the greatest of respect your recent article entitled "Was World War
II worth it" reprinted in the Ukraine Report 13th May is possibly the most
prejudiced piece of writing on the Second World War I have ever had the
misfortune to read. The assumptions you draw bare no relationship to the
actuality of the situation at the time or to any plausible understanding of
European politics.

I have to challenge you on the following points;

(1) Yes the Red Army was not the most disciplined army in the world and
their conduct may have been sanctioned by higher authorities but in many
ways Soviet soldiers were only exacting retribution for the atrocities
caused to their countrymen by the advancing Nazi's and their scorched
earth tactics.

Whilst this cannot be condoned it can be understood as the Nazi's had
systematically exterminated millions in their path particularly from
Ukraine. Bearing in mind the American treatment of native Americans less
that 100 years prior to the War, I suggest you are in no position to
comment.

(2) The speeches of President Bush may have done a lot for his ratings at
home but they ring rather hollow in this part of the world when coupled
with the vastly increased activities of the US secret services "in the
name of freedom" Mr Bush is currently seeking to encircle Russia in a
ring of democracy even if this means supporting some of the less
reputable regimes of central Asia to pursue the cause. Double standards
again and one that clearly demonstrates a naive understanding of the
Russian psychology.

(3) Please also remember that many of the current problems faced by the
Russian government today with Oligarchs and industrial decline stem
directly from the US government sponsored Russian privatisation
programme of the late 1980's.

(4) Any knowledgeable scholar of 20th century European history
understands that both Churchill and FDR had their hands tied in Yalta as
without Soviet military support Nazism probably could not have been
beaten in western Europe as the Fascist War machine was appreciably
stronger. You assume two things, firstly that there was a way of
Churchill and FDR stopping Stalin's policy in Eastern Europe and
secondly that because we know today that Stalin was a dictator we
cannot assume that this was fully understood then as Stalin had very
cleverly concealed the enforced famines of the early 1930's in Ukraine
from most nations of the world using both British politicians and
prominent American journalists.

Your comments that France, Holland and Belgium did not need liberating
before Britain declared War on fascist Germany is beyond belief. Have you
read anything of the rise of fascism in Europe? Even prior to the
declaration of War by Britain, Hitler had openly declared his intention to
rebuilding the pride of the German nation, built one of the strongest armies
in Europe and openly annexed vast tracts of Europe... How much more proof
do you need of his long term intentions after all he had just invaded his
neighbour using over 100 divisions and killing thousands of innocent Poles
in the process.

Before making such comments I suggest you spend a minute looking at US
reaction to the events of 9/11 and the impact on American psychology.

Now take a minute to imagine Nazi bombers blitzkrieging the cities of your
eastern seaboard as SS troops march your Jewish, native American, black,
Hispanic and gay communities off to the gas chambers whilst a 'new order'
replaces your version of freedom and perhaps you might get some inkling of
why we in 'Old Europe' actually appreciate the massive sacrifice made by
the people of the Soviet Union against fascism.

It is true to say that the peoples of Central Europe paid an even heavier
price and to them we are even more indebted for without their sacrifices
there would have been no future at all in Europe. And remember America
would have been next.

If you, Mr Bush and the American administration really want to help the
world by building freedom you would do well to understand that yours is not
the only version and some nations have already advanced well beyond your
current point in social history. We are all appreciative of US intentions
and of the sacrifices made by your citizens but not of the methods being
used by your government as in many cases they are a little too close to
our European memories. -30-
------------------------------------------------------------------------------------------------------------
Martin Nunn MCIPR, Chief Executive, Whites International Public Relations
Kyiv, Ukraine, E-mail martin.nunn@wipr.com.ua
===============================================================
15. "BUSH, YALTA AND THE BLUR OF HINDSIGHT"

OP-ED: By Jon Meacham, Outlook Section
The Washington Post, Washington, D.C.
Sunday, May 15, 2005; Page B01

The setting was convivial, the sentiments warm. On the morning of Sunday,
Feb. 11, 1945, in the billiards room once used by Czar Nicholas II in the
Livadia Palace at Yalta, Franklin D. Roosevelt, Joseph Stalin and Winston
Churchill were putting the final touches on a communique after a weeklong
conference at the Crimean [Ukraine] seaside resort. The war in Europe was
drawing to a close (Hitler had barely 11 weeks to live), and the Big Three
were contemplating the future of the European continent and the daunting
task of finishing the fight against Japan.

The language in the agreement they signed that day was eloquent and
high-minded. Order in Europe, it said, "must be achieved by processes which
will enable the liberated peoples to destroy the last vestiges of Nazism and
Fascism and to create democratic institutions of their own choice." The
Allies, including Stalin, pledged to defend "the right of all peoples to
choose the form of Government under which they will live" in order that "all
the men in all the lands may live out their lives in freedom from fear and
want." Churchill was so pleased with Yalta, a British diplomat noted, that
he was "drinking buckets of Caucasian champagne which would undermine
the health of any ordinary man."

As we now know, and as President Bush pointed out a week ago on the
occasion of the 60th anniversary of the end of the war in Europe, Churchill
was drinking to a deal that would soon fall apart with dark and long-lasting
consequences for a continent divided between freedom and fear. At the time,
though, Roosevelt, too, thought that, all in all, it had been a good week.
Stalin had agreed to become part of the prospective United Nations
organization, a long-cherished dream of the president's, and to join the
Pacific war -- a clash that FDR and Churchill expected to last until 1947.

(The Manhattan Project would not prove successful at making an atomic bomb
for another five months; to ensure Soviet help in the anticipated Asian land
war, FDR made territorial concessions in the Far East.) And while the
Soviets occupied Poland and much of Eastern and Central Europe, Roosevelt
and Churchill believed that Stalin had shown a willingness to live up to the
spirit of the communique. "We have wound up the conference -- successfully,
I think," Roosevelt wrote to his wife, Eleanor.

Such hope was illusory but understandable. After all, hadn't Stalin signed
the document promising democracy, toasted Churchill as "the bravest
governmental figure in the world" for inspiring England's lonely stand
against Hitler in 1940, and said he was "confident" that "our relations in
peacetime should be as strong as they had been in war"?

He had, but as Bush has reminded us, Stalin's word was worthless. Once a
bright, fleeting hope for an orderly, democratic peace, the Yalta pact is
now seen as a crucial opening phase of the Cold War, the moment when the
Anglo-American allies, but especially the more influential Roosevelt, failed
to protect Eastern and Central Europe from Soviet domination.

"V-E Day marked the end of fascism, but it did not end oppression," Bush
said in Latvia on May 7. "The agreement at Yalta followed in the unjust
tradition of Munich and the Molotov-Ribbentrop pact," he added, referring
to two treaties that cleared the way for World War II. "Once again, when
powerful governments negotiated, the freedom of small nations was
somehow expendable."

Harsh words -- overly harsh, in my view, and not because great leaders of
the past deserve automatic absolution at the altar of history. "To do
justice to a great man, discriminating criticism is always necessary,"
Churchill once wrote. "Gush, however quenching, is always insipid." But
Bush's criticism is more damning than discriminating. In its sweep, the
president's characterization of Yalta essentially indicts Roosevelt and
Churchill as knowing actors in the manufacture and hanging of the Iron
Curtain. For generations of post-World War II conservatives, "Yalta" was
code for the left-wing "sellout" to the communists, and Bush was probably
playing on deep-seated right-wing passions to set his own campaign for
democracy apart from the liberal failures of the past.

But such code rarely does justice to the world's complexities, and Bush
could one day come to regret his dismissive allusion. (How would he like
a future president to use "Iraq" as shorthand for a war fought on the basis
of incorrect intelligence and carried out with poor planning for the
aftermath?) By swerving to hit FDR and Churchill, Bush has committed the
same sin that presidents so often rightly deplore in others: He has
second-guessed well-meaning leaders who were in the arena dealing with
the world as it was, making the most difficult of decisions at the most
tumultuous of times.

And Bush's historical juxtaposition leaves much to be desired. Linking Yalta
to British Prime Minister Neville Chamberlain's concessions to Hitler at
Munich in 1938, which cleared the way for Germany's annexation of
Czechoslovakia before the war, is tenuous enough. At Yalta in 1945, driven
by the need to keep the Soviets in the fight against Fascism, FDR and
Churchill did nothing about the Soviet takeover of the Baltic states,
tacitly accepting what Stalin had done six years earlier.

But to put Yalta in the same sentence with the Molotov-Ribbentrop pact
unfairly casts Roosevelt and Churchill in the same light as Hitler and
Stalin. Struck in August 1939, that bargain between Nazi Germany and the
Soviet Union satisfied Stalin's territorial ambitions and enabled Hitler to
invade Poland on Sept. 1, 1939, without fear of a hostile Soviet reaction in
the east. It was, in other words, the agreement that most directly triggered
the beginning of World War II, a conflict that claimed nearly 60 million
lives.

Bush was not wrong to evoke Yalta and its lessons, but his judgment that the
conference was, as he put it, an "attempt to sacrifice freedom for the sake
of stability" reflects a misunderstanding of what Roosevelt and Churchill
hoped the communique would deliver as well as a failure to take the
realities of the time into account. It's true that Yalta was not the
Anglo-American allies' finest diplomatic hour and, as things turned out, may
indeed have been one of their worst.

The other Big Three conference, held at Tehran in late 1943, led to agree-
ment about Operation Overlord, the cross-Channel invasion of France.
Without that session it is conceivable that D-Day and the ensuing liberation
of Western Europe could have been delayed indefinitely. Tehran, then,
created something; the legacy of Yalta, on the other hand, was more about
ratifying facts on the ground than it was about pressing ahead in new
directions.

In hindsight, we can see that as one great conflict ended, another was
beginning. The battle against Hitler gave way to what President John F.
Kennedy -- at the time a young Navy lieutenant -- would later call the "long
twilight struggle" against Soviet tyranny. It was with just such hindsight
that Churchill, writing in the early 1950s, entitled the final volume of his
war memoirs "Triumph and Tragedy."

Yalta and the final months of World War II were tragic in the purest sense
of the term: a drama whose outcome was determined by fate and inherent
flaws in the central characters. Given world enough and time, Roosevelt and
Churchill both thought that they could have persuaded anyone of just about
anything. "Poor Neville Chamberlain believed he could trust Hitler,"
Churchill said on his return to London. "He was wrong. But I don't think I'm
wrong about Stalin." Yet he was wrong, and the reason why sheds light on
both the promise and peril of personal diplomacy.

Human connections between leaders can be essential -- contemporaries
believed that the pleasure FDR and Churchill took in each other's company
helped win the war -- but such emotional bonds are often tenuous and easily
broken. Bush could learn a useful lesson from the evaporation of affection
and unity in Yalta's aftermath. The U.S. president who once looked into
Vladimir Putin's soul and who this month took a well-photographed spin in
the Russian leader's Soviet-era car suggests that, like FDR, he may believe
that his personal connection with a Kremlin chief will lead to influence
over Moscow's ever more authoritarian ways. Such was not the case for
Roosevelt; perhaps Bush will fare better.

If FDR and Churchill were guilty of being too trusting and overly
self-assured -- not the worst of flaws -- Stalin was guilty of crimes of a
vastly different and deadly magnitude. A brutal killer who joined the war
against Hitler only after the Fuehrer double-crossed him, Stalin was, as
Churchill once said, "an unnatural man." He did not value liberty or life;
his chief end was power, his main means of attaining and keeping it murder.

In the cold light of history, then, counting on Stalin's good faith was a
terrible mistake, but what would Roosevelt and Churchill's retrospective
critics -- including President Bush -- have had them do? "Whoever occupies
a territory also imposes on it his social system," Stalin said in 1945.
"Everyone imposes his own system as far as his army can reach. It cannot
be otherwise."

Going to war with the Soviets in 1945 was hardly a reasonable option, and in
fact never proved reasonable in the ensuing 40 years. Had FDR lived, would
things have turned out differently with the Soviets? It seems unlikely.

The trouble was not in Washington or London but in Moscow. Just before
he left the capital for what would be his last trip to his cottage at Warm
Springs, Ga., Roosevelt told an aide: "We've taken a great risk here, an
enormous risk, and it involves the Russian intentions. I'm worried. I think
Stalin will be out of his mind if he doesn't cooperate, but maybe he's not
going to; in which case, we're going to have to take a different view."
Roosevelt knew that politics, like life, is an ever-unfolding story.
Reflecting on Yalta, Roosevelt told a friend: "I didn't say it was good . .
. . I said it was the best I could do."

Governing always looks easier from the visitors' side of the desk in the
Oval Office, and history suggests that America would do well to be more
forbearing and magnanimous in how we view past, present and, in campaigns,
future leaders. "People are constantly evaluating somebody's standing in
history, a president's standing in history, based upon events that took
place during the presidency, based upon things that happened after the
presidency," Bush has said. "And so I just don't worry about vindication or
standing." Bush can only hope that his successors will be more generous in
their verdicts about him than he has been in judging those who came before.
-------------------------------------------------------------------------------------------------------------
Jon Meacham, the managing editor of Newsweek, is the author of "Franklin
and Winston" (Random House). He is working on a book about Andrew
Jackson's presidency.
http://www.washingtonpost.com/wp-dyn/content/article/2005/05/14/AR2005051400091.html
===============================================================
16. "BUSH'S MOSCOW MISSTEP"

By Jeff Jacoby, Globe Columnist, Boston Globe
Boston, Massachusetts, Thursday, May 12, 2005

MOSCOW WAS the last place President Bush should have gone to mark
the 60th anniversary of the victory over Nazi Germany. Russian soldiers
goose-stepping through Red Square, dignitaries assembled in front of
Lenin's tomb, the strains of the Soviet anthem introduced by Stalin in 1944
-- this was not a scene that the leader of the free world had any business
being a part of.

Of course it cannot be forgotten that the Russian people paid an enormous
price during World War II -- 27 million dead, more than the losses of the
other allied nations combined. Without Russia's enormous sacrifice, the
Allies might never have prevailed.

But neither can it be forgotten that Russia did not enter the war on the
side of the Western democracies. On the contrary: It helped unleash the war
as accomplice of the Germans. The Molotov-Ribbentrop pact signed by the
Soviet and Nazi foreign ministers in August 1939 paved the way for the
invasion of Poland by the Wehrmacht and the Red Army a month later.

For nearly two years, Germany and the USSR were allies -- two years during
which the Nazis overran Norway, Denmark, the Netherlands, Belgium, and
France and sent wave after wave of bombers to attack Britain from the air.
In the same two years, the Soviets occupied Latvia, Lithuania, and Estonia,
and unleashed a vicious war against Finland. Only after it was invaded by
Germany in June 1941 did Moscow belatedly become an ally of the West.

Sixty years after V-E Day, moreover, Russia is the only major combatant in
the European war that is not today a free democracy. Vladimir Putin has
strangled his country's independent media, abolished the election of
regional officials, driven a major corporation into bankruptcy in order to
seize its assets, launched egregious prosecutions of businessmen who
oppose him politically, and grossly interfered in the domestic affairs of
neighboring countries. He is conducting a brutal war of butchery and
scorched-earth destruction in Chechnya, and openly encourages nostalgia
for the days of Stalinist empire and repression.

The Bush administration may have no choice but to work with him on issues
like nuclear proliferation and terrorism. It doesn't have to reward his
creeping fascism with high-prestige presidential visits -- least of all on
an occasion intended to mark the victory over Nazi fascism.

What made all of this so much worse -- and the president's attendance at the
Kremlin-sponsored pageant so much more troubling -- was Putin's repellent
defense of Russia's prewar collaboration with Nazi Germany. The Soviet
Union had been justified in signing the infamous Molotov-Ribbentrop pact,
Putin claimed, because it had to ensure the ''security of its western
borders."

His foreign ministry denied any wrongdoing in the Red Army's bloody
occupation of the Baltic republics. ''One cannot use 'occupation' to
describe those historical events," said the Russian ambassador to the
European Union.

But occupation was exactly what the Soviets inflicted on the Baltics, along
with slavery, mass killing, and exile.

Putin also described the end of the Soviet Union -- which led to the
liberation of Eastern Europe and the emancipation of tens of millions of
human beings -- as ''the greatest geopolitical catastrophe of the century."
In fact, the crumbling of the Iron Curtain was one of the 20th century's
finest chapters, and Putin's inability to say so speaks volumes about his
hostility to democracy and freedom.

The real geopolitical catastrophe of the last century was not the fall of
Soviet communism but its rise and rule -- the 70-year reign of a murderous
ideology that killed more people, crushed more souls, and inflicted more
cruelty than any other ''ism" in history. Nazi Germany in all its malignance
never came close to matching the degree of evil achieved by Soviet Russia.

But whereas a conscience-stricken Germany has deeply and contritely admitted
its sins -- most recently on Tuesday, when every senior member of the German
government attended the dedication of a new Holocaust memorial in Berlin --
Russia never has. It would be unthinkable for an official German celebration
to include swastikas and pictures of Hitler, yet the Victory Day celebration
in Red Square featured banners with the communist hammer-and-sickle and
images of Vladimir Lenin. Russia's communist heritage has never been
meaningfully repudiated. The atrocities of Soviet communism have never
been punished -- or even, in most cases, owned up to.

Which is why the pomp and circumstance in Moscow this week could not help
being as much an exaltation of Russia's Stalinist empire as of the Nazis'
defeat. So long as Russia refuses to break with its past, it will never be
inoculated against a return to autocracy.

No American president belongs on the Red Square reviewing stand next to
the man who is dismantling what remains of Russian democracy -- and who
still makes excuses for crimes like Molotov-Ribbentrop and the occupation
of the Baltics. -30- [The Action Ukraine Report Monitoring Service]
----------------------------------------------------------------------------------------------------------
Jeff Jacoby's e-mail address is jacoby@globe.com.
===============================================================
17. UKRAINE: KUCHMA'S DAUGHTER IS HERE TO STAY

New Europe, Athens, Greece, Monday, May 16, 2005

KIEV - Yelena Franchuk, the daughter of former Ukrainian President Leonid
Kuchma, said she has no plans to leave her country. Franchuk said her family
is now going through a difficult period. "We are going through a difficult
period now. But I prepared myself for it. I realised that everything would
be different, even without a good-situation-bad-situation context," she said
in an interview with Ukraine's Korrespondent magazine.

Franchuk said she is primarily worried about her father. "I have been
stressed since 2000, when the 'cassette' scandal took place. The effect
of stress simply becomes less acute from time to time. It's hard. But
sometimes, difficulties that emerge inspire the desire to overcome them,"
she said. "My father is a strong person. So is my mother. So am I," she
said.

Franchuk heads the ANTISPID (Anti-AIDS) foundation, which she founded in
2003 with the help of her husband - prominent Ukrainian industrialist and
member of parliament Viktor Pynchuk. Last year, Kuchma launched his own
Ukraine foundation. She said she also owns a stake in the Novy Kanal, ICTV,
STB and M1 television stations, which are members of her husband's media
holding.

Franchuk said she has been trying to play a broader role in the television
channels' operations over the past few months. "I would like to bring more
quality to television, make it more interesting than it is now. My opinion
is that we have all the capabilities to do that," she said. -30-
===============================================================
18. YUSHCHENKO SAYS HIGHER JURIDICIAL EDUCATION NON-
PRIORITY FOR JUSTICE MINISTER

Ukrainian News Agency, Kyiv, Ukraine, Friday, May 13, 2005

KYIV - President Viktor Yuschenko believes that higher juridical education
is not a priority for the person holding the post of the justice minister.
Yuschenko made the statement at a press conference. He explained that
this post is political. "For me the position of the justice minister is a
political post," Yuschenko said.

He cited an example of German Foreign Minister Joschka Fischer, who has
no higher education degree, which does not prevent him from being a good
minister. The president insists that Justice Minister Roman Zvarych has
higher education degree. He believes that Zvarych confirmed his
qualification when working in the Verkhovna Rada, taking part in mass
actions against 2004 presidential election frauds.

Yuschenko also said that the very issue is far-fetched, and the president
should not comment it on. Yuschenko said that in the near time he is going
to meet with those, who initiate this discussion on Zvarych's educational
degrees, including representatives of the newly created, but not registered
Pora party. The president is sure that such meeting will yield positive
results and the sides will reach mutual understanding. -30-
===============================================================
19. YUSHCHENKO SUPPORTS JUSTICE MINISTER ZVARYCH, WANTS
DISCUSSIONS, WEAVING OF PLOTS ABOUT HIS EDUCATION STOPPED

UNIAN, Kyiv, Ukraine, Friday, May 13, 2005

KYIV - President of Ukraine Victor Yushchenko proposes to stop discussions
around the education of the Justice Minister. According to an UNIAN
correspondent, President of Ukraine Victor Yushchenko has claimed this to a
news conference in Kyiv today.

Commenting on the situation around Justice Minister Roman Zvarych, Victor
Yushchenko has noted that the Minister is doing "professional perfect work".
The President has specified that R. Zvarych has the proper level of
education - "he has average, initial, and higher education".

At the same time Victor Yushchenko has stressed that he knows who is
standing behind the campaign against R.Zvarych. In addition, according to
Victor Yushchenko, he knows, who is trying to control the actions of young
people - "Pora" members.

Victor Yushchenko has called on to stop weaving plots around the Justice
Minister. He has noted that in the nearest future he will meet with "Pora"
representatives to solve the situation. -30-
==============================================================
20. MAY ISSUE OF POETRY INTERNATIONAL WEBSITE NOW ONLINE

Kateryna Botonova, Editor, Poetry International Web, Ukraine
Kyiv, Ukraine, Friday, May 13, 2005

Dear friends and colleagues, We are pleased to inform you that May
issue of Poetry International Web - Ukraine went online,
http://ukraine.poetryinternational.org.

This time Ukrainian 'poet of the month' is Vasyl Makhno. On his personal
page you may find nine poems translated by Richard Burns, Vitaly
Chernetsky, Kristina Lucenko and Michael M. Naydan. We also present
our specialties - translator's note on Makho's poetry by Michael Naydan
and interview with the poet by Kateryna Botanova.

As of today PIW-Ukraine also contains personal pages of Yuri
Andrukhovych, Natalka Bilotserkivets, Andriy Bondar, Halyna Krouk, Oleh
Lysheha, Ivan Malkovych, Mykola Ryabchuk, Oksana Zabuzhko, and
Serhiy Zhadan.

We would also like to remind you that you can subscribe to Poetry
International Web Newsletter and Poem of the Week on the site home-
page. If you want to receive PIW-Ukraine news, please, e-mail at
ukraine@poetryinternational.org. Comments, proposals, and ideas are
more than welcome at the same e-mail address.

We sincerely hope that the next issue of PIW - Ukraine appears in August.
You can make your contribution to support PIW - Ukraine and promotion
of Ukrainian poetry in the world. For more information, please, contact
Kateryna Botanova at ukraine@poetryinternational.org. Thank you!
----------------------------------------------------------------------------------------------------------
Kateryna Botanova, http://ukraine.poetryinternational.org
e-mail: ukraine@poetryinternational.org
===============================================================
21. ODESSA LOOKS BACK ON WAYWARD PAST

By Misha Glenny, BBC News, Odessa, Ukraine, May 9, 2005

The port's history was shaped by Soviet, gangster and oligarch rule
"V Odyessu pozdno vyecherom priyekhal parokhod..."
So ran the first line of a 19th-Century Russian song my father used
to sing to me when I was a boy.

It anticipates the arrival of another boatload of fun-loving sailors
preparing for a shore leave consisting exclusively of drinking and whoring.
The lyrics attach no opprobrium to this behaviour - on the contrary, the
sailors' antics are presented as the natural state of affairs in Odessa.

CHEERY
This Black Sea port, founded just over two centuries ago by a French
baron, boasts a quite singular reputation for mixing boisterous fun with
criminality.

And Odessa really does feel different from other former Soviet cities.
Half-an-hour's drive inland from the port, you can still see the original
two-storey housing of the early 18th Century when this was the
fastest-growing city in Europe. Mercifully this was not destroyed to
make way for the ugly functionalist nightmare of socialist architecture.

True, the sad dilapidation that affects most buildings aside from a few
chichi prestige projects in the very heart of the city reflects how Odessa
clearly fell on Soviet times followed by 15 years of gangster capitalism.
But despite this, it is a much cheerier and relaxed place than most of
Ukraine.

Large ports are, by dint of their economic function, a magnet for gangsters
and corrupt officials. But Odessa is in Ukraine which until the Orange
Revolution swept it away at the end of last year, was in the grip of what
even its mildest critiques referred to as a mafia regime.

During the misrule of the former President Leonid Kuchma, the billionaire
philanthropist, George Soros, made the witty but telling observation,
"Ukraine gives corruption a bad name."

RULE OF KARABASS
Before I arrived in Odessa, I had heard talk that in the early 1990s the
town had been largely under the control of a stone-cold mafia killer who
went by the name of Karabass, a moniker immediately recognisable to
locals as the evil puppet master in the Russian version of Pinocchio.

Soon after reaching Odessa, I learned that Karabass had been gunned down
in 1995 outside the Russian steam baths near the city centre and so first
thing the next day, I visited the scene of the crime. In a colourful if
somewhat rundown courtyard, I saw several bunches of fresh flowers.

Above these were two plaques - one engraved with the image of Karabass,
looking sleek and masterful, cropped hair in a suit over a neat T-shirt, the
other had on it a poem written by his closest friends in praise of the man
who they said had now flown to heaven to join the angels.

Happily nestled inside some of the flowers were banknotes. Now this really
was a mark of respect - in a place like Odessa, where there is a lot of
visible poverty and a lot of begging, to see banknotes sitting in a public
place untouched suggests profound respect for its late recipient.

"Karabass was no saint," a former policeman told me who like most people in
Odessa discussing this subject declined to be named, "but he was from
Odessa and loved this place and he maintained order according to some
civilised values."

MAFIA ANARCHY
Several people, including a professor of criminology, said that Karabass
gave strict orders to the drug dealers who plied their trade in the district
of Odessa known amusingly as Palermo, that he would not tolerate any
attempted expansion of their business into other areas of the city.

"Under Karabass," the ex-cop continued, "this city really was relatively
drug free in contrast to almost everywhere else in Russia and Ukraine
which experienced an explosion of drug abuse in the early 1990s."

Karabass's death occurred a year after Kuchma came to power. And it
appears that without its guardian angel, Odessa slipped very quickly into
a mafia anarchy which soon earned it the title of "the most criminal port in
the world", despite stiff competition from places like Shanghai.

Parts of the town became a shooting gallery as two rivals fought for control
of the mayor's office while behind this an even bigger game was being played
out between huge Russian companies determined to gain decisive influence
over Odessa's most important industrial asset, the oil terminal.

Like the rest of Ukraine, Odessa is about to begin the process of uncovering
just how much money was looted from the state and ordinary people by
Kuchma's oligarchy.

It will be very hard to restore normality to Odessa, if only because as a
strategic port in which not just Ukrainian but Russian oil companies have a
fervent interest, it would be hard to avoid corruption even under the most
enlightened ruler.

But after a grim decade of lawlessness, people here are partying with the
sailors again. -30- [The Action Ukraine Report Monitoring Service]
-----------------------------------------------------------------------------------------------------------
http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/4528933.stm
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