"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"

"THE ACTION UKRAINE REPORT - AUR" - Number 490
E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, MONDAY, May 23, 2005

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

1. OIL CRISIS: ENOUGH BLAME TO GO AROUND
ANALYSIS & COMMENTARY: By Tammy M. Lynch
Institute for the Study of Conflict, Ideology & Policy
Boston, Massachusetts
Original article for THE ACTION UKRAINE REPORT
Washington, D.C., Monday, May 23, 2005

2. UKRAINE: DIVERGENT VIEWS OF A LOOMING ECONOMIC ICEBERG
The government has undertaken no economic reforms
Newly appointed bureaucrats on average tend to
be greedier than their predecessors.
STATFOR (Strategic Forecasting)
Predictive, Insightful, Global Intelligence
Austin, Texas, Friday, May 20, 2005

3. WHAT CHANCE FOR UKRAINIAN 'ENERGY INDEPENDENCE'?
ENERGY SECTOR ANALYSIS: Andrew Neff, Senior Analyst
GLOBAL INSIGHT, Washington, D, C., Friday, 20 May 2005

4. FUEL CRISIS DRAGS YUSHCHENKO BACK INTO THE
FRAY OF UKRAINE'S POLITICS
By Tom Warner in Kiev, Financial Times
London, UK, Monday, May 23 2005 03:00

5. WITNESS DOWNPLAYS ROW BETWEEN UKRAINE PRESIDENT, PM
TV 5 Kanal, Kiev, in Ukrainian 1830 gmt 22 May 05
BBC Monitoring Service, UK, in English, Sunday, May 22, 2005

6. UKRAINIAN PRESIDENT SAYS ALLIANCE WITH PM, SPEAKER STRONG
UT1, Kiev, in Ukrainian 1600 gmt 22 May 05
BBC Monitoring Service,UK, in English, Sunday, May 22, 2005

7. UKRAINE TO DIVERSITY NUCLEAR VENDORS
Russia TVEL will have to oppose the UK-US Westinghouse
Kommersant, Moscow, Russia, Friday, May 20, 2005

8. ENERGY SECRETARY BODMAN TRAVELS TO MOSCOW, BAKU, KIEV
TO DISCUSS ENERGY AND NUCLEAR SECURITY
Meeting with Yushchenko, Tymoshenko, Poroshenko
Will be principal speaker at Kiev's Eighth Annual Energy Conference
United States Embassy, Kiev, Ukraine, Monday, May 23, 2005

9. UKRAINIAN COURTS PROBE 191 PRIVATIZATION DEALS
Interfax-Ukraine news agency, Kiev, in Russian, 20 May 05
BBC Monitoring Service, UK, in English, Sat, May 21, 2005

10. UKRAINE'S OLDEST MANAGEMENT SCHOOL CELEBRATES
Moves into new, custom-designed building
By Linda Anderson, Financial Times
London, UK, Monday, May 23 2005

11. EUROPEAN BUSINESS: CUTTING THEIR LOSSES
U.S. multinationals are scaling back their presence in Western
Europe in favor of more promising venues in Eastern Europe
BUSINESSWEEK, USA, Monday, MAY 23, 2005

12. YUSHCHENKO DEPARTS FOR CHERKASY REGION TO MARK
RE-BURIAL OF POET TARAS SHEVCHENKO
Ukrainian News Agency, Kyiv, Ukraine, Sunday, May 22, 2005

13. EURO-UNITY AND DIVISIONS IN KIEV
Kiev's Big Night Out
By Michael Osborn, BBC News entertainment reporter in Kiev
BBC, Kiev, Ukraine, Sunday, May 22, 2005

14. HOPEFUL UKRAINE LAPS UP ATTENTION
Chris Stephen in Kiev, Irish Times
Dublin, Ireland, Monda, May 23, 2005

15. RUSSIA'S FAMOUS DOCTOR ROSHAL AND UKRAINE'S PRESIDENT
YUSHCHENKO AMONG EUROPE'S STARS
MOSNEWS, Moscow, Russia, Friday, May 20, 2005

16. U.S. SENATE PASSES RUSSIAN APOLOGY RESOLUTION
Joint Baltic American National Committee (JBANC)
Washington, D.C., Saturday, May 21, 2005

17. THE OTHER MONSTER
A cascade of new books examines Stalin and his terror.
By Andrew Nagorski, Newsweek International
Newsweek, New York, NY, May 30, 2005 Issue

18. THE GREAT DICTATOR
A surreal new production at the Sovremennik Theater
attempts to paint a portrait of a kinder, gentler Stalin.
By John Freedman, Moscow Times, Moscow, Russia, May 20-26, 2005
===============================================================
1. OIL CRISIS: ENOUGH BLAME TO GO AROUND

ANALYSIS & COMMENTARY: By Tammy M. Lynch
Institute for the Study of Conflict, Ideology & Policy
Boston, Massachusetts
Original article for THE ACTION UKRAINE REPORT
Washington, D.C., Monday, May 23, 2005

As the first 100 days of the new Ukrainian government have come and gone,
much remains unclear. To be sure, the country's new leadership can point to
considerable progress in a number of areas - for example, a decrease in
cross-border smuggling, increased customs and tax revenue, and the rooting
out of corrupt officials throughout the country. But the "big" questions
remain.

What will happen to the "oligarchs" who became super rich by avoiding taxes
and reaping the benefits of their association with the previous
administration? How will Ukraine climb out of its almost total dependence
on Russian oil and gas conglomerates supported by the Russian government?
And what should be done with the men and women who stole just about every
last cent from the state budget as their administration collapsed around
them?

The answers are still being formulated. Nevertheless, there are worrying
signs that on the largest questions facing the country, President Viktor
Yushchenko appears less able to craft and implement actual reform packages
than to make bold public statements, while resorting to back room deals and
an emerging tendency toward backtracking and scapegoating. Events of the
last week highlight these tendencies and lead to questions about
Yushchenko's ability to effectively collaborate with hard-charging Prime
Minister Yulia Tymoshenko.

On Saturday, Yushchenko released a statement reaffirming his support for
Tymoshenko, saying his "positive appraisal of the government's work remains
unchanged." The statement came after several days of increasing tension
between the president and prime minister over her cabinet's handling of the
oil market. Tensions peaked Thursday, when a disagreement reportedly
ended with Yushchenko telling Tymoshenko that she was "free to resign."

Saturday's statement was intended to suggest that, despite isolated
disagreements, the president and prime minister are united. However, the
actions of the leadership during the oil crisis demonstrate the opposite.

On 19 May, in response to understandable domestic frustration over
continuing petrol shortages, Yushchenko severely criticized Tymoshenko's
government. "The crisis emerged because of the improper actions of the
Ukrainian government in terms of setting prices and excessive administrative
regulation of oil and oil markets," he said. "What happened on the oil
market was a clear example of how not to manage affairs. I saw no
professional approach."

These words, distributed extensively throughout Ukraine and the rest of the
world, stand in sharp contrast to a previous statement made by Yushchenko
about the petrol situation. During a 28 April interview with Ukrayina
Moloda while discussing his first 100 days in office, Yushchenko took credit
for convincing Russian President Vladimir Putin to accept administrative
price control over Russian oil products.

"That's how we agreed on the pricing policy in the oil market," he said. "I
called Vladimir Vladimirovich last Wednesday and asked him: how did it
happen that world prices for crude oil increased by 25% since the beginning
of the year, and they increased by 50% in Ukraine? Meanwhile, almost all
the oil we have is from Russia. I understand that the situation in this
market is now changing in producers' favor, but the tendencies we now have
in Ukraine can hardly be justified, and sometimes cannot be justified by the
price situation at all. I was glad to get a positive response on this
issue; later on, when I was on a visit to Romania, there was a meeting
between the prime minister of Ukraine and oil companies' managers, and
they managed to reach an agreement [to reduce petrol prices on Ukrainian
market]."

With these words, Yushchenko clearly implied that he viewed the oil "pricing
policy" as a personal success, and his statement on that day showed support
for the Prime Minister's strategy (the support was highlighted given that in
the same interview the president criticized the Prime Minister's meat
pricing policy). During a press conference on the work of the government,
Tymoshenko took particular note of Yushchenko's "valuable assistance"
regarding the oil crisis. Moreover, at that same press conference,
Yushchenko went out of his way to praise Tymoshenko's work, saying he
would give it "the highest assessment."

He volunteered, without prompting, that in viewing the decisions of the
government, he had "seen clear and correct answers to the current
challenges." Therefore, given repeated opportunities to even gently
criticize the oil pricing policy, President Yushchenko did not. He did not
interfere and he did not provide an alternative plan.

Clearly, the effects of the price controls placed on oil products were far
more severe than either Yushchenko or Tymoshenko predicted. Within
nine days, shortages began. Gasoline dried up throughout the cities, and
rationing continues even now. Attempting to regulate prices without an
immediate strategy to deal with its effects was a serious mistake.
Nevertheless, the Prime Minister met the shortages with her typical fire,
blasting the Russian owners of Ukraine's oil refineries for "sabotage." She
repeated her contention (previously supported by Yushchenko) that the
Russian companies supplying Ukraine's oil have formed a "cartel" and
engaged in "collusion" to artificially inflate prices.

In response to Ukraine's bucking of these prices, she said, these Russian
companies had reduced Ukraine's oil and petrol supplies. She noted that
two of Ukraine's six refineries suddenly had been shut for "repairs," and
that a third had not received its expected oil allotment (or had received it
but kept it in "reserve"). She called the Russian Lukoil, Tatneft and
TNK-BP corporations "bullies" that "want to put Ukraine in its place."

At the same time, the Prime Minister announced a series of proposals to
alleviate Ukraine's dependence on Russian oil. She proposed that an
existing refinery in Kremenchug be re-equipped to process non-Russian
crude oil within three months, and that a new refinery be built in Odessa
during the next two years for the same purpose.

She also proposed building at least several hundred new petrol stations
within three months, and announced that the government would negotiate
with Kazakhstan and Iraq to import oil from these countries by late 2005.
Tymoshenko maintained her previously stated position, and, as usual,
was ready for a fight.

Yushchenko was not. Faced with not only Russian pressure, but also
questions from the West about administrative price controls and long lines
of angry motorists at petrol stations, the president publicly backed down.
Although he himself had taken little action, he criticized the government
for acting "too late," and invited Tymoshenko and the heads of the Russian
oil companies to his office for a discussion. While Yushchenko continued
to identify the monopolistic nature of oil deliveries to Ukraine as one of
the causes of the current oil crisis, he refrained from criticizing the
actions of specific Russian companies.

In an almost total concession to the oil companies, he pledged that Ukraine
would operate "exclusively along market rules." This seemingly suggests
that the country would make no attempt to interfere in the prices set by
these companies even if they are higher than the global level, and even
though each of these companies is connected to the Russian government.

He ordered the cabinet to rescind all oil price controls within one week
(the controls were due to expire on June 1), to eliminate all taxes and
customs duties on oil imports (the action was already underway and a bill to
that effect was passed in parliament on the same day), to consolidate all
state owned shares in oil refineries within the Ukrnafta energy company,
and to create an oil and gas reserve totaling 10 percent of Ukraine's needs.

At the same time, National Security and Defense Council Secretary Petro
Poroshenko, the man who would be prime minister, and Yushchenko's main
ally, rejected many of Tymoshenko's oil diversification proposals. "Ukraine
is not going to redirect its oil refineries from [processing] Russian oil to
Kazakh or Iraqi oil," he said. It is unclear what effect Poroshenko's views
may have on this proposal. Poroshenko also opposed the lifting of import
duties, to no avail.

Despite some backtracking by Yushchenko in the face of pressure from
international business interests, in the long term, the oil crisis could be
an important turning point for Ukraine. If the country continues with the
majority of the proposals announced in reaction to these shortages, it
could, for the first time, be on track to a significantly higher level of
energy independence. But it will take a commitment, an understanding that
obstacles must be overcome, not retreated from, and an acceptance that
mistakes will be made.

President Yushchenko must resist the urge to undermine his prime minister
for what seems to be his own personal benefit. For all of her faults - her
impatience, her reliance on sharp, often threatening rhetoric, and her
sometimes apparently black-and-white views - Yulia Tymoshenko continues
to be an engine for reform. She gets things done.

In the current government, with limited domestic action coming from the
presidential administration, her creative energy is even more necessary.
Yushchenko would do better to try to direct this energy - which occasionally
leads to hasty announcements - than to try to stop it. But the prime
minister must moderate her tone whenever possible, and must understand
that force and willpower cannot solve every issue.

While in Kuchma's cabinet and during the Orange Revolution, Yushchenko
and Tymoshenko proved that working as a team can lead to impressive results.
During this oil crisis, Yushchenko and Tymoshenko demonstrated that working
at cross-purposes can lead to strain and recrimination.

There is enough praise for the government's successes, and enough blame
for its mistakes, to go around. For the good of Ukraine, Yushchenko and
Tymoshenko must share responsibility for both. -30-
---------------------------------------------------------------------------------------------------------------
The author is a Senior Research Fellow at the Institute for the Study of
Conflict, Ideology & Policy in Boston, Massachusetts. She worked in Kyiv
with the European Network of Election Monitoring Organizations throughout
the presidential election cycle and previously served in Moscow as the
Interim Director of the National Democratic Institute's Russia program.
Contact: tammymlynch@yahoo.com
===============================================================
2. UKRAINE: DIVERGENT VIEWS OF A LOOMING ECONOMIC ICEBERG
The government has undertaken no economic reforms
Newly appointed bureaucrats on average tend to be greedier
than their predecessors.

STATFOR (Strategic Forecasting)
Predictive, Insightful, Global Intelligence
Austin, Texas, Friday, May 20, 2005

SUMMARY

The Ukrainian president and prime minister have taken opposite views on
the country's current energy crisis. This is merely the tip of an iceberg of
looming economic problems and power struggles that -- if left unchecked --
could have a dramatic impact on Ukraine's economy, political stability and
international image.

ANALYSIS

Ukrainian President Victor Yushchenko responded to the country's growing
energy crisis May 19 by canceling import tariffs on petroleum products and
promising that the government -- which he says is responsible for the
crisis -- will allow oil prices to be controlled by free-market factors.

Yushchenko's reaction and proposed solution to Kiev's energy crisis clashes
sharply with those of Prime Minister Yulia Timoshenko, who believes Russian
oil companies purposely created the energy crisis.

Yushchenko's and Timoshenko's reactions to the energy crisis -- and the
crisis itself -- are symptomatic of two larger problems facing Ukraine: an
internal power struggle between the country's two most prominent and
powerful politicians and the lack of internal economic reforms. The former
problem has only compounded the latter and could result in Kiev's severely
hurting its domestic economy as well as international image.

Timoshenko set up Ukraine's petroleum sector for its current crisis when,
just after taking office, she chose state administration of the economy as
opposed to free-market management. At her direction, the government
arbitrarily imposed a ceiling on fuel prices of no more than 13 percent
above a baseline established by the government. Second, she imposed
import tariffs on petroleum products.

In theory, the tariff was meant to help increase the amount of revenue
available for Ukraine's national budget. Instead it increased the overall
production costs for Russian and other oil companies who export to Ukraine.
These higher costs, along with Ukraine's habit of delaying payments, have
prompted oil companies -- namely TNK-BP, LUKoil and Tatneft -- to
decrease their portion of output exported to Ukraine.

Ukraine's need to beef up its budget and its inability to make timely
payments are symptomatic of larger economic problems, which worsened
after Yushchenko took office. In the aftermath of the "Orange Revolution,"
the government has undertaken no economic reforms. Instead, Yushchenko
has revamped government at all levels by firing those considered loyal to
the old regime and appointing those loyal to the new. Along with firing
political opponents, some of whom were indeed useless, the new govern-
ment fired thousands of highly skilled professionals.

Altogether, more than 18,000 officials were dismissed, Yushchenko said in
April. Those experienced professionals have been largely replaced with
unskilled individuals who seem more actively engaged in regulating market
activity while having no desire -- or idea how -- to reform the Ukrainian
economy. Instead, the government is attacking opposition parties and big
business.

Because attention has been diverted from the nation's true economic
problems, Ukraine's economy is faring rather poorly and suffers from high
levels of inefficiency. Even before the current energy crisis, food and
basic-goods prices skyrocketed 100 percent compared to prices before
the revolution. Ironically, the very thing the new government says it is
actively fighting -- corruption -- seems to be increasing rather than
decreasing.

This is due to the phenomenon that haunts almost all countries in
transition: Newly appointed bureaucrats on average tend to be greedier than
their predecessors. After years in power, veteran bureaucrats already have
enriched themselves, while new ones start putting their hands on whatever
is within reach. Given the chronic instability in transitional countries --
Ukraine being no exception -- many officials consider their positions to be
tentative and are in a race with the clock to maximize their profits.

Currently, since it is not so easy to steal government money because of the
ongoing anti-corruption drive, many officials opt to steal from the mostly
impoverished population.

One telling example: Sources in Ukraine have said new Interior Minister Yuri
Lutsenko issued an intra-agency directive requiring every individual in the
country who wants to get a driver's license to obtain a certificate from a
regional panel of psychiatrists certifying that he or she is not mentally
ill. How do Ukrainian psychiatrists determine this? Sources say they
interview the candidate and ask questions such as, "What is the product of
389 multiplied by 527?" If the candidate cannot answer instantly, he or she
is not certified sane. The only way around it is for the candidate to fork
over $300 in cash to bribe the panel.

Many victims of this scheme suspect Lutsenko implemented it because of his
background in psychology and association with fellow practitioners, who are
now enriching themselves. In any case, the scheme is just one of many new,
"creative" ways to separate the Ukrainian people from their money. And a
$300 bribe for a driver's license has quite an impact in Ukraine, where most
people try to get by on $100 or less a month.

Exacerbating the corruption, of course, is the current energy crisis, which
Yushchenko blames on the Ukrainian government while Timoshenko
continues to insist that oil companies are at fault. These conflicting views
reveal the second critical problem facing Ukraine -- a power struggle
between the president and the prime minister.

As Stratfor has warned, Timoshenko's radical views (not exactly in keeping
with free-market capitalism) as well as boundless ambition and questionable
past are bringing trouble to Ukraine. Her personal ambitions of
consolidating Ukraine's power into a presidency she assumes, gaining
personal wealth in the process, have dictated and will continue to dictate
her approach to national and international politics.

Many Ukrainian and Russian officials are suspicious about the latest tariff,
given that Timoshenko has been under investigation by Russian and Ukrainian
law enforcement for laundering $400 million during her stint as deputy prime
minister. She allegedly bribed five Russian generals in a scheme involving
food products that were never delivered to the Russian army (the generals
admitted that she bribed them and were subsequently sentenced for their
crimes).

Though Ukraine's Interpol representative said May 20 that Timoshenko's file
has recently been erased from Interpol's criminal database, Interpol sources
in Russia say U.S. and European agencies are still investigating her
seemingly shadowy deals. Perhaps it is no surprise that Timoshenko has yet
to travel to any Western countries.

Timoshenko has been using her office's political influence to help achieve
her long-term goal of winning the Ukrainian presidency after the fall 2006
elections. Her campaigns against corruption, opposition parties, big
business and now Russian oil companies seem to all be part of her efforts to
gain popular support and create an important and powerful image for herself.

Throughout the energy crisis, Yushchenko has consistently blamed the
Ukrainian government and has not once even alluded to the possibility that
Russians or the oil companies could be at fault. Sources close to him
confirm that, although he values close ties with Washington, Yushchenko has
abstained from implicating Russia even subtly. This suggests he believes
that Timoshenko's initiating and implementing the tariff and wrestling with
the energy firms are the underlying causes of the energy crisis.

Yushchenko probably knows that the livelihood of Ukraine's domestic economy
depends on internal reforms, that the energy crisis severely threatens the
country's government and economy and that accepting Timoshenko's political
posturing would essentially be a concession in the continuing power
struggle -- and he cannot afford to take such a position.

Though it appears that Yushchenko's canceling non-market restrictions
imposed by Timoshenko could help resolve the energy crisis, Kiev should
not let itself be lulled into a false sense of security. The energy crisis
is only part of a larger economic problem that is further complicated by the
power struggle. These problems seem to be so well ingrained in Ukraine's
political and economic way of life that one can safely expect continued
turbulence in the country for the foreseeable future.

Unless Yushchenko wants to commit political suicide and fall under
Timoshenko's thumb, the rivalry inside the government will not end any time
soon. "Unruly Yulia," as some inside the new government call her, has no
intention of backing off from her crusade for ultimate power in Ukraine. The
rivalry will continue to divert the government's time and resources away
from instituting fundamental reforms in Ukraine's economy and government --
reforms that are necessary for Ukraine to survive economically and
geopolitically.

The delayed reforms already have shed a negative light on Ukraine. Many
Western supporters of the "Orange Revolution" expected Kiev to adopt
Western ideas across the political board -- that is, to include free-market
reforms with shifts in foreign policy. The lack of these reforms now haunts
Kiev as it faces growing calls from the European Union and NATO to make
internal changes before it even thinks about membership in either
organization. -30-
------------------------------------------------------------------------------------------------------------------
LINK: http://www.stratfor.com/
===============================================================
3. WHAT CHANCE FOR UKRAINIAN 'ENERGY INDEPENDENCE'?

ENERGY SECTOR ANALYSIS: Andrew Neff, Senior Analyst
World Markets Research Centre, GLOBAL INSIGHT
Washington, D, C., London, Friday, 20 May 2005

Successive crises in the Ukrainian retail fuel sector over soaring prices
and dwindling supplies have prompted the government to embark on a
campaign to reduce Ukraine's dependence on imported energy supplies
from Russia and to strive for a seemingly unobtainable goal:
self-sufficiency.

GLOBAL INSIGHT PERSPECTIVE

SIGNIFICANCE: In the wake of parliament's desperate actions to ease the
oil product crunch and alleviate a widening shortage of petrol (gasoline)
and diesel supplies on the Ukrainian retail fuel market, President Viktor
Yushchenko has ordered the government to stabilise the oil product market
while issuing directives geared towards reducing Ukraine's reliance on
Russian energy imports.

IMPLICATION: Yushchenko, who blamed the Ukrainian government for
exacerbating the problems on the domestic oil product market, has made the
country's 'energy independence' an underlying policy goal of his presidency
thus far, with plans to reverse the Odessa-Brody oil pipeline, attract
foreign investors to help Ukraine produce more oil and gas, build new
refineries, and establish a new vertically integrated national oil company
(NOC).

OUTLOOK: Considering the enormous difference between Ukraine's annual
oil and gas consumption and its indigenous production, the government will
be hard-pressed to achieve self-sufficiency, but a major reduction in
Ukraine's dependency on Russian supplies would be a significant victory
nonetheless.

THE QUEST FOR INDEPENDENCE

Ukraine's recent problems on its retail fuel market have driven home a
simple fact to the government: Ukraine is dependent on imported energy
supplies. Prime Minister Yulia Tymoshenko blamed the successive crises
over surging prices and diminishing supplies in the oil product market on
Russia's dominant role in supplying the Ukrainian market, although
Yushchenko took Tymoshenko to task for the government's ham-fisted
market interventions that exacerbated the problems.

The latest crisis appears to have abated following the passage of a law -
expedited through parliament and promptly signed by the president - that
removes duties on oil imports and cuts oil product import taxes.

UKRAINE'S ENERGY (IM)BALANCE
Production Consumption
Oil 84,000 barrels/day 430,000 barrels/day
Gas 710 billion cubic feet 2.85 trillion cubic feet
Coal 90.7 million short tons 95 million short tons
Power 180 billion kilowatt-hours 158 billion kilowatt hours
(Source: Global Insight; all figures are 2004 estimates)

Still, the crises have hammered home the issue of Ukraine's dependency -
especially on Russia - for its energy supplies. Although Ukraine is a net
power exporter, the country relies on imported supplies of oil, gas, and
coal to meet domestic requirements (see table). Ukraine could conceivably
produce more coal (or, better yet - given the sorry state of the coal
sector - consume less) in order to balance out production and consumption,
but the country's dependence on imported oil (more than 80% of its
consumption requirements) and gas (nearly 75% of demand) makes it
impossible for Ukraine to be fully 'energy independent'.

Or does it? Ambitious as it may sound, President Yushchenko has embarked
on a campaign to make Ukraine self-sufficient in terms of energy supplies.
A central pillar of his presidency thus far has been to re-orient Ukraine
away from Russia and towards the Euro-Atlantic community of nations.

Reducing Russia's political and economic leverage over Ukraine via the
former's control over the latter's energy sector is a key component of this
policy.

By decreasing Ukraine's dependence on Russian energy supplies,
Yushchenko is hoping to reduce Russia's overall influence over Ukraine,
allowing Ukraine to finally break free of Russia's long shadow and thereby
cement the national independence that Ukraine won in 1991.

THE LONG ROAD TO FREEDOM

In the context of the energy sector, Ukraine has a difficult road to travel
in order to achieve its true independence. For years, Ukraine and Russia
have had a symbiotic energy relationship, with Ukraine providing transit
services for the bulk of Russia's land-based oil and gas exports to Europe,
while Russia supplied the bulk of Ukraine's oil and gas supplies to cover
the latter's domestic deficit. Rather than accepting Ukraine's fate as the
'junior partner' in this longstanding relationship, Yushchenko has actively
sought to break free of the shackles of the Russia-dominated partnership.

NATURAL GAS PRODUCTION AND RESERVES (2004)*
Reserves: 1.12 Tcm (39.6 Tcf)
Production: 20.1 Bcm (710 Bcf)
Reserve Ratio: 55.8 years
* years of proven crude reserves remaining at current rate of depletion

On the gas front, the Western-oriented Ukrainian government has re-doubled
the lackadaisical efforts of its predecessor in seeking to bring a European
partner into a consortium to manage and develop Ukraine's gas transit system
(GTS). Although the Ukrainians see the GTS - which transports some 85% of
Russia's gas exports - as a strategic national asset, the system is in dire
need of investment and modernisation.

Instead of settling for a joint venture (JV) for a new pipeline between
Russian gas giant Gazprom and Naftogaz Ukrainy, the Ukrainian state oil and
gas holding, the government is trying to bring in a third partner and expand
the JV to cover the whole of the GTS - to balance out Gazprom's influence as
well as to ensure the necessary maintenance and development of the system.

In conjunction with the GTS strategy, the government has sought to put the
Ukrainian-Russian gas sector relationship on a more equal footing by calling
for an end to the problematic 'transit-for-supplies' barter arrangement.
Efforts to monetise the agreement - under which Ukraine provides Russia with
gas transit services in exchange for gas supplies as in-kind payment - will
help to root out corruption on both sides and foster a more business-like
trading relationship between the two countries. Ukraine turned to
Turkmenistan in 2001 as its major gas supplier, but only recently has the
Ukrainian government attempted to cut out the intermediaries that have
profited from the transit of Turkmen gas to Ukraine via Russia.

OIL PRODUCTION AND RESERVES (2004)
Reserves (millions of barrels) 395
Production (millions of b/d) 84,000 b/c
Reserve Ratio* 12.9 years
* years of proven crude reserves remaining at current rate of depletion

In the oil sector, Yushchenko has focused his goals on attracting foreign
investment and securing alternative sources of supply. One of his
administration's first pronouncements upon taking office was the plan to
reverse the flow of oil in the Odessa-Brody oil pipeline. The pipeline,
constructed in 2001, had been sitting idle since former president Leonid
Kuchma ordered it to be reversed last year, allowing Russian oil exports to
flow from Brody to the Black Sea.

Yushchenko has said that the pipeline - originally built to carry Caspian
oil to Europe and reduce Ukraine's dependence on Russian oil imports - will
be reversed by 2008 once an extension is built to link to Poland. The recent
oil product crisis has prompted the Ukrainian government to step up efforts
to secure non-Russian oil supplies, with deals in the works with Kazakhstan
and Azerbaijan for crude oil supplies in addition to oil product import
deals with Belarus and the Baltics.

Yushchenko has vowed to build a new refinery at Brody to ensure that the
Poland extension to the Odessa-Brody pipeline is built, and the dominant
position of the Russian oil companies in Ukraine's refining sector - Russian
companies control four of Ukraine's six refineries - has triggered the calls
for a government-owned refinery to be constructed at Odessa. Moreover,
Ukraine is threatening to re-visit the privatisation of several refineries,
although the current owners will be given the chance to pay to retain their
assets.

Yushchenko has even followed in the footsteps of his predecessor by issuing
an order to create a new vertically integrated NOC, with state stakes in
three refineries to be transferred to the new company. Kuchma's vision of
the new NOC stumbled out of the gates and then was put on hold in the run-up
to Ukraine's 'orange revolution', but Yushchenko's resuscitation of the idea
would give the state more say in the oil sector.

UkrNafta, the upstream oil subsidiary of Naftogaz Ukrainy, is in the process
of expanding further into the retail sector by building new petrol stations
and acquiring existing ones, giving the state a greater say in the retail
market.

OUTLOOK AND IMPLICATIONS
Of course, the recent crises in the Ukrainian oil product market make clear
that having control of retail fuel sector does not guarantee smooth success
(although Tymoshenko supporters would argue that it is precisely due to
Ukraine's lack of a sufficient voice in the operations of the Ukrainian
refining and retail fuel sectors that the crisis developed in the first
place).

Similarly, reducing Ukraine's dependence on Russian oil and gas supplies
does not equate with the achievement of Ukraine's 'energy independence';
indeed, as Ukrainian imports of Turkmen gas must still pass through Russian
territory, Russia continues to exert a fair amount of leverage over
Ukraine's energy supplies.

In order to achieve true energy independence, Ukraine must increase its
indigenous oil and gas production. Ukraine has sizeable oil and gas
reserves, meaning there is clearly scope for the country to increase its
domestic oil and gas output (see tables). However, foreign investment and
technical expertise that could help boost Ukraine's production have been
largely absent in the post-Soviet era, as most international oil companies
(IOCs) have shied away from Ukraine due to the country's endemic corruption,
cumbersome bureaucracy, and unstable investment climate.

Yushchenko has made a conscious effort to clean up Ukraine's image by
cracking down on corruption, and the new government is striving to get the
IOCs to take a second look at Ukraine. The government is hoping that Shell's
recent decision to partner with Naftogaz on an exploration agreement will
help lure other investors to Ukraine. Likewise, stepped-up oil and gas
exploration in the Black Sea may have a 'demonstration effect' - especially
if development of the area around resource-rich Serpents Island begins in
earnest.

Still, even with added production, Ukraine will struggle to bring domestic
oil and gas output up to the level of the country's consumption
requirements. Market-oriented reforms could tamp down consumption by
making demand more rational, but - in the absence of a major new discovery -
Ukraine appears doomed to be tagged with the label of net energy importer.

However, even if the government's goal of energy self-sufficiency appears
unobtainable, the campaign is not without its merits. Reducing Ukraine's
reliance on Russian energy supplies will go a long way towards cementing
Ukraine's political and economic independence, if not energy independence.

The government's efforts to loosen the stranglehold that the Russian oil
companies have on Ukraine's refining and retail sectors will help reduce
Russian leverage over Ukraine, allowing Ukraine to assert itself and declare
at least a partial 'victory' in the struggle for energy independence. -30-
---------------------------------------------------------------------------------------------------------
LINK: http://www.globalinsight.com
===============================================================
4. FUEL CRISIS DRAGS YUSHCHENKO BACK INTO THE
FRAY OF UKRAINE'S POLITICS

By Tom Warner in Kiev, Financial Times
London, UK, Monday, May 23 2005 03:00

Little more than 100 days after Viktor Yushchenko won the Ukrainian
presidency on the back of "Orange Revolution" pro-democracy protests, a
petrol shortage has forced him to delve into the nitty-gritty of managing
the country.

Mr Yushchenko, a former central bank chairman who had sought to maintain
a detached, presidential role away from day-to-day government, last week
stepped in to defuse a fuel crisis sparked last month when Yulia Tymoshenko,
his hand-picked prime minister, ordered price caps on oil.

The move was intended to lower prices and overall inflation, but Russian
energy companies, which meet 80 per cent of Ukraine's oil needs, sharply
reduced imports, causing severe shortages.

Mr Yushchenko then ordered the caps to be gradually lifted, satisfying
suppliers and easing fears that Ms Tymoshenko was pushing the country
too far to the left.

In an interview with the Financial Times, Mr Yushchenko said: "I wouldn't
draw the conclusion that what has happened in the government's first 100
days represents the absolute fundamentals of economic and social policy."
He also appealed for understanding from foreign investors who have been
put off by some of his government's early moves.

The fuel crisis sparked speculation that Ms Tymoshenko would be asked to
resign. During the weekend, both she and Mr Yushchenko denied a rift.
The Ukrainian president, in a statement, said his team was "as monolithic as
always" and that his "positive evaluation of the government's work remains
unchanged".

Ms Tymoshenko grabbed headlines in recent weeks with accusations against
oil companies, and also announced plans to increase the state's role in a
range of markets, including petrol, electricity, insurance and mortgages.
She also fanned worries among business leaders in Ukraine and Russia -
who have heavily invested in the country - that a review of previous
privatisations would not be limited to a pre-defined list of companies, as
Mr Yushchenko had promised.

Mr Yushchenko, however, reiterated in the interview that a fixed list of
companies subject to review would be published in "the near days". A list of
29 companies that was published this week by the Russian newspaper
Kommersant was a preliminary but "not official" version, he said. The list
published by Kommersant was dominated by steel plants, ore mines and
other metallurgy companies sold in 2003-2004 to domestic tycoons.
However, it also included several Russian-owned companies.

Mr Yushchenko said he would support moves to improve the management
of state assets, including the creation of a vertically integrated state oil
company, but he would not permit any nationalisation. The companies whose
privatisations will be reviewed could be re-auctioned, with current owners
allowed the chance to keep their companies by matching the highest bid.

Mr Yushchenko said he did want to reduce Ukraine's dependence on Russia
as a supplier and transit route for oil and gas by pursuing a range of
investment projects.

Ms Tymoshenko had argued the oil price caps were necessary to fight what
she claimed was politically motivated collusion among Russian oil companies
eager to make things difficult for the pro-western president.

The president, however said he saw no evidence of cartel behaviour and
criticised the price-cap policy for not being "liberal or market- oriented".
"To go in that direction is not correct, and it won't happen. I was obliged
to again remind the government that such policies don't fit in the goals or
methods of the new administration," he said.

He also pointed to his government's "colossal success" in quickly tackling
what he argued had been a thoroughly corrupt and dysfunctional political
system. He said more than 16,000 civil servants were replaced in the
government's first 100 days in a crackdown on corruption and inefficiency.
===============================================================
5. WITNESS DOWNPLAYS ROW BETWEEN UKRAINE PRESIDENT, PM

TV 5 Kanal, Kiev, in Ukrainian 1830 gmt 22 May 05
BBC Monitoring Service, UK, in English, Sunday, May 22, 2005

KIEV - A participant in a meeting at which Ukrainian President Viktor
Yushchenko reportedly suggested that Prime Minister Yuliya Tymoshenko
should resign over the oil crisis has downplayed the incident, saying the
remark was not made seriously.

Petro Miroshnykov, the president of the Kazakh-owned Alliance-Ukraine oil
company who took part in the meeting between Yushchenko, Tymoshenko
and oil companies on 19 May, was speaking in a live studio interview on 5
Kanal television on 22 May.

On 21 May, the influential weekly Zerkalo Nedeli quoted anonymous govern-
ment sources as saying that Yushchenko told Tymoshenko she was free to
resign and join the opposition after she refused to accept his criticisms of
the government's handling of the oil crisis.

Both Yushchenko and Tymoshenko later downplayed the incident, saying
their alliance remained strong and all the differences over the handling of
the crisis had been resolved.

Miroshnykov broadly confirmed that an exchange between Yushchenko and
Tymoshenko did take place. He said Tymoshenko voiced her disagreement
with the part of Yushchenko's decree on tackling the oil crisis which
criticized the cabinet's handling of the situation. But he went on to say
that Yushchenko's remark did not sound as if it was made seriously, and
neither was it taken at face value by Tymoshenko. "It did not look like a
conflict," Miroshnykov told 5 Kanal.

"When Tymoshenko's turn to speak came up, she commented on the
emotional part of the president's decree. She said she saw the situation
differently.

The president interrupted her, but in a very kind, I would even say fatherly
manner. Yes, the phrase that if you don't like something, you are free to
resign, was uttered. But it wasn't really serious... There was no reaction
to this remark, it was just a turn of phrase, part of a conversation."

Asked again by the presenter whether the president's remark was interpreted
as a serious request for Tymoshenko's resignation, Miroshnykov said, "It was
nothing of the kind - and it didn't come up at any point later during the
meeting". -30- [The Action Ukraine Report Monitoring Service]
===============================================================
6. UKRAINIAN PRESIDENT SAYS ALLIANCE WITH PM, SPEAKER STRONG

UT1, Kiev, in Ukrainian 1600 gmt 22 May 05
BBC Monitoring Service,UK, in English, Sunday, May 22, 2005

KIEV - [Presenter] President Viktor Yushchenko has said that the
[propresidential] Our Ukraine People's Union party, the Fatherland party
[led by Prime Minister Yuliya Tymoshenko] and the People's Party [led by
parliamentary speaker Volodymyr Lytvyn] can jointly stand in the 2006
parliamentary elections.

Yushchenko said this at Chernecha Hora [burial site of the 19th-century
Ukrainian poet, Taras Shevchenko] in Kaniv [Cherkasy Region].
Yushchenko, Prime Minister Yuliya Tymoshenko and speaker Volodymyr
Lytvyn were attending festivities dedicated to Shevchenko there.

The president believes that hope for a free, independent and prosperous
Ukraine unites these three forces in the same way as during the Orange
Revolution. So they should put aside their pride and work together. It is
smart to be together but not smart to stand in the elections individually,
Yushchenko said.

[Yushchenko] The values with which we went to Kiev's Maydan [Independence
Square] during the Orange Revolution truly belong to these three political
forces. They truly belong to them. This is the outlook with which we went
there, and which we fought for. I cannot imagine how this outlook can be
divided into political cells and how the three political forces can split.
===============================================================
7. UKRAINE TO DIVERSITY NUCLEAR VENDORS
Russia TVEL will have to oppose the UK-US Westinghouse

Kommersant, Moscow, Russia, Friday, May 20, 2005

MOSCOW - Ukrainian delegation headed by the state-run Energoatom
President Yury Nedashkovsky has completed its tour to enterprises of
Russian TVEL, yet monopolistic vendor of fresh fuel to Ukraine. TVEL
will have to oppose the UK-US Westinghouse already this year.

Nedashkovsky specified they first visited Novosibirsk Works of Chemical
Concentrates, after that, they inspected nuclear fuel assembly production at
the Engineering Works in the Moscow District's town of Electrostal. "Our
prime objective is to examine the quality control system. Now I may say for
certain - we don't doubt we were absolutely correct to shift to industrial
operation of Russian fuel assembly of improved design," Nedashkovsky said.

Negashkovsky announced Ukraine expects to pass this year a new fuel/energy
concept that covers the period up to 2030. "The guidelines were presented to
Prime Minister of Ukraine Yulia Timoshenko about three weeks ago," he
pointed out, adding that the concept provides for reduction of gas and
petroleum consumption at the power plants and promotes coal and nuclear
industries.

In 2004, four nuclear plants of Ukraine accounted for 53.2 percent energy
output of the country. According to Nedashkovsky, Ukraine will construct
nine new nuclear units by 2030, and construction of two more units will be
in progress.

The next statement made by Nedashkovsky was next to sensational. He
announced Ukrainian intention to hold an international tender for
construction of new power units, i.e. not only contractors but also
suppliers of nuclear reactors will compete with each other. Today's nuclear
power plants in Ukraine are equipped with Russian reactors (VVER-440
and VVER-1000).

Moreover, Ukraine is willing to diversify deliveries of fresh fuel, which is
currently supplied by Russian TVEL. "Already this year, we will load six
fuel rod arrays made at Westinghouse to the South Ukrainian nuclear plant,
42 more cartridges will be loaded in 2006," head of Energoatom specified.
----------------------------------------------------------------------------------------------------------------
LINK: http://www.kommersant.com/page.asp?id=579167
===============================================================
8. ENERGY SECRETARY BODMAN TRAVELS TO MOSCOW, BAKU, KIEV
TO DISCUSS ENERGY AND NUCLEAR SECURITY
Trip Will Focus on World Energy Security, Energy Resource
Development, and Nuclear Nonproliferation

Meeting with Yushchenko, Tymoshenko, Poroshenko
Will be principal speaker at Kiev's Eighth Annual Energy Conference

United States Embassy in Kiev, Kiev, Ukraine, Monday, May 23, 2005

KIEV - Secretary of Energy Samuel Bodman this week travels to Moscow,
Russia; Baku, Azerbaijan; and Kiev, Ukraine, where he will hold discussions
with senior officials on a variety of energy and nuclear safety issues,
including encouraging the development of diverse energy resources, promoting
market transparency and investment, and advancing nuclear nonproliferation.

"A healthy, vibrant and transparent global energy market is critical to the
economic success of America and all nations," Secretary Bodman said.
"Russia, Azerbaijan and Ukraine are important international partners of the
United States. I look forward to discussing ways that we can strengthen
cooperation on energy and nuclear nonproliferation issues and ensure the
continued growth of the energy sector in this region."

In Moscow, Secretary Bodman will meet with, among others, Viktor Khristenko,
Minister of Industry and Energy, and Alexander Rumyantsev, Director of the
Federal Atomic Energy Agency. Their discussions will center on progress in
achieving the Bratislava Initiative, an agreement struck by Presidents Bush
and Putin earlier this year with two primary goals for the US Department of
Energy and its Russian counterparts -- energy cooperation and nuclear
security cooperation.

In expanding energy cooperation, Secretary Bodman and his Russian
counterparts seek to enhance energy trade and investment in Russia, increase
markets for Russian oil and gas, and promote efficient development and use
of energy resources. The Bratislava initiatives also enhance nuclear
security cooperation between the two countries and encourage the safe use
and development of nuclear power and increased nuclear security.

Traveling next to Baku, Azerbaijan, Secretary Bodman will participate in the
"First Oil" Ceremony of the Baku-Tbilisi-Cayhan (BTC) Pipeline, an East-West
transport corridor for Central Asian oil and gas.

The goals of the BTC pipeline project are to unlock the vast store of energy
from the Caspian Sea by providing a new crude oil pipeline from Azerbaijan,
through Georgia, to Turkey, and onward to world markets. The BTC pipeline
has been a major policy goal of the Bush Administration, and is one of the
recommendations in the National Energy Policy that was established early on
by the Administration. The ceremony marks the first loading of oil in the
BTC pipeline.

In Kiev, Ukraine, the final leg of the trip, Secretary Bodman will meet with
President Victor Yushchenko and with Prime Minister Yulia Tymoshenko to
discuss the advantages of developing a market-based energy sector that
attracts Western investment.

He will also discuss with National Security and Defense Council Secretary
Petro Poroshenko the return to Russia of Ukraine's Russian-origin high
enriched nuclear fuel, and the conversion of its research reactors to the
use of low enriched uranium.

Also in Kiev, Secretary Bodman will be a principal speaker at Kiev's Eighth
Annual Energy Conference titled "Energy Security of Europe for the XXI
Century -- Eurasia Energy Corridor." The conference theme focuses on
world energy security, development of energy resources and investment in
Ukraine's fuel and energy sector.

During his discussions with senior officials of each country, Secretary
Bodman will emphasize America's interest in generating greater international
cooperation to encourage energy security for America and our international
partners. He will also focus on using technology to enhance energy resource
development in the most efficient and environmentally responsible manner,
and the benefits of transparent markets that attract foreign investment.
---------------------------------------------------------------------------------------------------------------
Public Affairs Section, United States Embassy Kyiv
4 Hlybochytska St., Kyiv 04050 Ukraine
(380 44) 490-4026, 490-4090, Fax (380 44) 490-4050
http://usembassy.kiev.ua, info@usembassy.kiev.ua
http://usembassy.kiev.ua/infocentral_eng.html
===============================================================
9. UKRAINIAN COURTS PROBE 191 PRIVATIZATION DEALS

Interfax-Ukraine news agency, Kiev, in Russian, 20 May 05
BBC Monitoring Service, UK, in English, Sat, May 21, 2005

KIEV - State Property Fund Chairman Valentyna Semenyuk has said that as of
1 April 2005 there were 191 companies which would be returned into state or
communal ownership (that is, their purchase and sale agreements would be
cancelled). Semenyuk presented a document confirming this during a web chat
on Friday [20 May]. The document says that this list comprises shares in 54
joint stock companies, 38 property complexes and 99 unfinished construction
projects.

By the beginning of the second quarter, there were 16 cases in court to
revoke or declare null and void the purchase and sale agreements involving
the Black Sea Shipyards, Kryvorizhstal [steelworks], the Nikopol ferroalloys
plant, the Konstanta airlines, the Lesko private company, the
Simferopolsilmash [agricultural machinery] company, and also stakes in the
Ukrrudprom [Ukrainian Ore Industry] company, the Merydian Shipyards, the
Dnipropetrovsk electrotechnical equipment plant, the Kherson cotton plant,
Ukrpapirprom [Ukrainian Paper Industry] (including cardboard plants in
Izmayil, Zhydachiv and Rubizhne), the Montazhnyk Ukrayiny company, the
Porshen company, and the Severodonetsk Azot Chemical Plant.

Courts are also considering a further 12 cases to defend the interests of
the state in joint ventures, and also cases to confirm state ownership of
real estate in the companies Oriana, Rosava and Luhanskteplovoz, the Zolotyy
Bereh holiday home, the Chysti Metaly company, the Moloda Hvardiya children
centre, the Technology House, 10 real estate items belonging to
Kryvorizhstal, three hostels belonging to the Slovvazhmash company, an
unfinished block of flats belonging to the Kryvyy Rih-based Konstar turbine
plant and an unfinished block of flats belonging to the Ukrpyezo company.

As a result of claims filed by the State Property Fund in 2003-05, courts
have cancelled six purchase and sale agreements with the Parus instrument
making plant, the Donetsk chemical agents plant, the Drohobych car cranes
plant, the Alhorytmtsentr company, the No 24657 Lviv motor company and the
Promin-Ekspo company for failing to meet their commitments. [Passage
omitted: more claims filed against unnamed companies] -30-
===============================================================
10. UKRAINE'S OLDEST MANAGEMENT SCHOOL CELEBRATES
Moves into new, custom-designed building

By Linda Anderson, Financial Times
London, UK, Monday, May 23 2005

KIEV - The International Management Institute MIM-Kyiv, Ukraine's oldest
management school, celebrated its 15th birthday by moving into a new,
custom-designed building at the weekend, writes Kester Eddy.

The five-storey complex, a $3m (£1.6m), investment, is located in Shulavka,
the old quarter of Kiev. It more than doubles the school's teaching space,
with 11 class and computer rooms, a conference hall and library, plus a
small hotel for out-of-town students.

And with demand for courses outstripping the capacity of the former site,
the new school enables MIM to reduce the pent-up demand for management
programmes and other events.

In the initial drive for finance, begun five years ago, funding was
primarily from donors, chiefly from MIM partner companies and alumni but
also from the Ukrainian diaspora in North America and western Europe, which
contributed $1m. (www.mim.kiev.ua)
===============================================================
11. EUROPEAN BUSINESS: CUTTING THEIR LOSSES
U.S. multinationals are scaling back their presence in Western
Europe in favor of more promising venues in Eastern Europe

BUSINESSWEEK, USA, Monday, MAY 23, 2005

David N. Farr, chairman and chief executive of St. Louis industrial group
Emerson Electric Co., keeps a close eye on Europe. That makes sense.
The region accounts for about one-fourth of Emerson's (EMR ) $15.6 billion
revenues and 16% of its worldwide assets. But more and more, Farr is
discouraged by what he sees. Western European sales have been flat for
months, as corporate customers delay purchasing the power networks,
air-conditioning systems, and other big-ticket capital goods Emerson sells.

Come to think of it, there hasn't been much life in these markets for years.
"The European economies have continued to weaken and weaken," Farr
laments. Even worse, a strong euro and stringent anti-layoff laws make it
tough to trim costs.

Now, Emerson has had enough. It has halted new investment in Western
Europe, while pouring money into faster-growing, more lightly regulated
economies in the old Soviet bloc. Vacant jobs in Western Europe are not
being filled. "As we need more capacity, we're putting it in Eastern and
Central Europe," says Edward L. Monser, Emerson's chief operating officer.

It's hardly news that Western Europe is a tough place to do business these
days. Growth for the euro zone economy is forecast to be below 1.5% this
year, less than half the rate in the U.S. and Asia. Unemployment averages
8.9%, retail sales are sagging, and euro zone manufacturing production
shrank in April. High oil prices only add to the gloom. U.S. multinationals
from McDonald's (MCD ) to Caterpillar (CAT ) to Wal-Mart (WMT ) complain
that their European operations, particularly in Germany, are dragging down
companywide sales and profits.

TROUBLING CONTRAST
But as Europe heads into a fifth year of economic anemia, some U.S.
multinationals are finally concluding that a robust recovery won't arrive
soon -- if ever. Like Emerson, they're scaling back longstanding operations
and diverting investment to more promising venues. Until now, many U.S.
companies have hesitated to reduce European payrolls because of local
laws requiring cumbersome, expensive layoff procedures.

But more and more are concluding that it's worth the trouble. IBM (IBM )
says that the bulk of the 10,000 to 13,000 worldwide job cuts it announced
on May 5 will be in Western Europe, while the company is hiring in Hungary
and Slovakia. General Motors Corp. (GM ) plans to eliminate up to 12,000
Western European jobs by 2006, even as it expands manufacturing in Poland.

The big numbers tell the story most clearly. Foreign direct investment in
the European Union's 15 longstanding member countries fell almost 50% in
2004, to $165 billion, with every one of the EU's major economies except
Britain posting a decline. By contrast, in the eight Central and Eastern
European countries that joined the EU last year, foreign investment rose by
one-third, to $36 billion. Foreign direct investment in the U.S. also rose
sharply last year.

Of course, the U.S. is losing manufacturing and service jobs to lower-wage
countries, too. And European companies are doing plenty of offshoring
themselves. A survey by Woodlands (Texas)-based consulting firm TPI
found that European companies accounted for 49% of all major outsourcing
contracts last year, ahead of U.S. companies, which had 44%.

But the malaise in Europe is far more pervasive than any dislocation in the
U.S. While sales of consumer-goods companies such as Kraft Foods Inc.
(KFT ) and Colgate-Palmolive Co. (CL ) are strong stateside, they're sagging
in Europe as consumers turn to cheaper private-label brands stocked by
fast-growing discount chains such as Germany-based Aldi Group and Lidl &
Schwarz. Sara Lee Corp. (SLE ) recently announced plans to sell its European
packaged-meat business, which is fighting stiff competition from
discounters. Ad spending is weak, too.

Paris-based advertising giant Publicis Groupe (PUB ) says its first-quarter
European revenues grew only 1.8%, compared with 4.8% in North America
and 7% in Asia. After first-quarter advertising lineage at The Wall Street
Journal's European edition plunged 20.6%, owner Dow Jones & Co. (DJ )
announced plans on May 9 to trim staff in Europe and Asia and switch to a
tabloid format in both regions.

Despite the prolonged slowdown in Europe, no U.S. company with global
ambitions can afford to turn its back completely on a region that has 380
million consumers and boasts its own stable of world-class corporations.
"You have to fish where the fish are," says Stuart Wilson, Kraft's
vice-president for strategy in Western Europe.

That explains why some American corporations are fighting hard to win back
European consumers. McDonald's Corp., which on May 8 announced that
same-store sales declined 0.7% in Europe during April, has slashed prices
in Germany while running an advertising blitz for new menu offerings in
Britain. Wal-Mart Stores Inc. has struggled to make headway against
established German retailers. Now it is building a state-of-the-art
distribution center in the western German city of Bingen.

Still, the broader numbers look worrisome. "It is not a stampede," says Dirk
Schumacher, a Frankfurt-based economist for Goldman Sachs & Co. (GS ).
"But some [companies] are saying: 'We can't afford another five years of
this."'

That's what Emerson execs have concluded. While the company's sales are
set to stagnate in Western Europe, they're expected to climb at least 20%
this year in Eastern Europe, where Emerson has opened 10 plants in the past
five years, for a total of 28 in the region. More flexible labor regulations
and weaker unions are another of Eastern Europe's attractions, Emerson
President James G. Berges says. "I hate to say this, because we've got
terrific German, French, and Italian companies and people, but you hate to
hire people in those countries because the cost if you ever have to [lay
them off] is so enormous."

How bad could the pullback get? A recent survey by Boston Consulting
Group showed that one in five U.S. companies with operations in Germany
is planning to relocate some activities to lower-cost, less regulated
countries. Although Germany and some other nations have moved to relax
labor regulations, the reforms don't go nearly far enough to make them
competitive with Eastern Europe.

Among the corporations that are most likely to flee eastward: automobile
and auto parts companies and makers of appliances and furniture, says
Kevin Waddell, a Warsaw-based partner in Boston Consulting. Looks like
Emerson will have plenty of company. -30-
---------------------------------------------------------------------------------------------------------
By Carol Matlack in Paris and Michael Arndt in Chicago, with Adrienne
Carter in Chicago
http://businessweek.com/magazine/content/05_21/b3934086_mz054.htm
===============================================================
12. YUSHCHENKO DEPARTS FOR CHERKASY REGION TO MARK
RE-BURIAL OF POET TARAS SHEVCHENKO

Ukrainian News Agency, Kyiv, Ukraine, Sunday, May 22, 2005 (10:32)

KYIV - President Viktor Yuschenko has departed for Kaniv (Cherkasy region)
to visit international literary and cultural holiday dedicated to re-burial
of poet Taras Shevchenko in Kaniv. At first, the President and the Verkhovna
Rada speaker Volodymyr Lytvyn lay flowers to the monument of Glory.
Thereafter they head for meeting-requiem near Assumption cathedral and
make two short speeches.

Following laying flowers in the cathedral to the place where the coffin with
Shevchenko's body stood, Yuschenko and Lytvyn go to Shevchenko
museum to award winners of the pupils' creative competition Let's Unite,
My Brothers.

Yuschenko and Lytvyn are also expected to examine restoration of the
Shevchenko national reserve and climb Tarasova hill. The press conference
follows after both officials visit Shevchenko's house. After all this the
President returns to Kyiv.

As Ukrainian News earlier reported, Yuschenko introduced the National
Shevchenko Day to be celebrated every year on March 9. Great Ukrainian
poet and artist Taras H. Shevchekno was born of March 9, 1814; in 1847 he
was arrested and deported till 1857, after death of Russian tsar Nikolay I.
While in deportation Shevchenko was prohibited to write and paint.

The poet died on March 10, 1861 in St. Petersburg, and in 2 months his
body, in accordance with the will, was moved to Ukraine and buried on the
Chernecha hill (presently Tarasova hill) in Kaniv. -30-
==============================================================
13 EURO-UNITY AND DIVISIONS IN KIEV
Kiev's Big Night Out

By Michael Osborn, BBC News entertainment reporter in Kiev
BBC, Kiev, Ukraine, Sunday, May 22, 2005

Witnessing the 50th Eurovision Song Contest in Kiev's Sports Palace was
a strange mixture of excitement, camaraderie and political division.

The vast arena was filled to the brim with both seasoned fans and
Ukrainians enjoying the musical spectacle on home soil for the first time.
While the flag-waving was distinctly partisan, there was a palpable sense
of harmony in the arena.

I spent the long event next to a Ukrainian, who said she knew nothing of the
contest and simply came to enjoy the show. Nearby was a party of Irish fans,
who came to be entertained and were not disheartened by their country's
failure to qualify for the final.

As the slick and colourful show wore on, we exchanged notes on which
songs we favoured, clapping to some and standing up to dance for others.

Every one of the 24 hopefuls were greeted with a rapturous reception as
they attempted the tricky task of persuading voters across Europe that they
had the winning formula.

Maltese balladeer Chiara struck the right note with her soaring voice -
sending a collective tingle down the spine of the vast crowd.

VOTING BLOCKS
But it seemed there were no performances which were unengaging, each
with their own beguiling charm. Old and young had a great night out
The Eurovision experience took a dramatic shift when the music stopped
and it was time for the lengthy and highly controversial votes to come
rolling in.

Some people began to file out of the arena, convinced the show was over,
and the crowd fell into an almost reverential hush as countries delivered
their intriguing verdicts one by one.This year's voting patterns suggested
that Eurovision unites Europe less than ever.

The Scandinavians stuck together, while the mighty Balkan block vote proved
more powerful than ever. The audience expressed their distaste at certain
decisions, such as when Greece gave Cyprus their perennial douze points.

UPBEAT ENDING
Turkey, however, caused the auditorium to erupt when they presented their
old adversary Greece with full marks. But another Eurovision club we hear
remarkably little about was on good form this year. The UK, Malta and Cyprus
exchanged goodwill points, while Ireland's eight points to its nearest
neighbour saved singer Javine from nul points shame.

As the contest drew to a close with a convincing victory for Greece,
seasoned Eurovision pundits were suggesting that it is time for the biggest
contributors to the contest to pull out. Spain, the UK, France and Germany
were sat glumly at the foot of the table as Ukrainian President Viktor
Yushchenko handed Helena Paparizou her prize.

The appearance of Ukraine's head of state put the whole contest into
perspective. The voting temporarily paled into insignificance when the
event closed on a exuberant note of celebration. -30-
--------------------------------------------------------------------------------------------------------
LINK: http://news.bbc.co.uk/2/hi/entertainment/4570093.stm
================================================================
14. HOPEFUL UKRAINE LAPS UP ATTENTION

Chris Stephen in Kiev, Irish Times
Dublin, Ireland, Monda, May 23, 2005

Ukraine : Six months after Ukraine's Orange Revolution, the people were out
on the streets again this weekend, but their purpose on this occasion was
not confrontation with riot police but celebration of the Eurovision.

Written off by much of the rest of Europe as kitsch, the cheesy song contest
has provided the focus for an outpouring of emotion on the streets of Kiev.

But not everybody is happy. Revolutions have a habit of eating their
children, and Ukraine is no different. Pora, the youth group that
spearheaded the December protests, has tried and failed to enter politics.

Ukraine's president Victor Yushchenko has cold-shouldered the movement,
grudgingly giving it a single cabinet post, but telling Pora members that if
they want more, they need to stand for election just like anybody else.
Pora - the name means It Is Time - is now trying to form a political party,
but their membership is declining.

Most drifted away with the end of the street protests and, shorn of its
pro-democracy zeal, the movement is struggling to define what it stands for.
For the Eurovision, Pora reopened the camp it had formed for the winter
revolution. But the Kiev authorities, having just retarmacked the roads,
ordered that the camp be set up on an island on the Dnipr River. The result
was that barely a tenth of the 5,000 expected inhabitants showed up.

Many, even inside the movement, want Pora to stay out of politics and to
place itself instead as a sleeping giant making sure future governments
stick to the right path. "Some think we can be the guardians of democracy,"
said Nina Sorokopud, a Pora press officer. "If it were not for Pora then
maybe the revolution would not have happened."

Meanwhile, tensions have sprouted in the new government, between Mr
Yushchenko and his glamorous prime minister, Julia Timoshenko.
During the Orange Revolution they formed an inseparable double act, with Mr
Yushchenko playing the role of sober father-figure and Ms Timoshenko
providing the fire and passion. Since then they have gone their own ways. Mr
Yushchenko last week blamed his prime minister for a cut in fuel supplies.

Ms Timoshenko has caused anxiety among economists by splashing out on a
generous programme of pensions and social payments that the government
cannot afford. Her pensions plan has made her popular, as has her shrill
campaign to root out corrupt tycoons who grew rich under the previous
government.

Dozens of privatisations by the previous regime have been looked at again,
starting with the sale of a giant steel works by former president Leonid
Kuchma to his son-in-law. "She is a pain in the neck for a lot of strong men
in Ukraine," said Peter Burkovski of Kiev's School for Policy Analysis. "Her
methods are not so legal. Sometimes she goes further."

Despite the squabbles, the Yushchenko-Timoshenko team remains popular,
regularly scoring 60 per cent in opinion polls. "The number one emotion you
find on the streets is hope," said one western diplomat. The handful of
westerners living here are similarly confident, saying the end of the old
regime has lessened corruption.

Mr Yushchenko recently chose Kiev's Irish Pub, O'Brien's, to hold his
birthday party. "Everything has become a lot more transparent," said its
Irish owner, Desmond Reid. "It's too early to say how successful they will
be but they are heading in the right direction."

Rougher times lie ahead. The government has a huge task to introduce new
laws and open the country for business, and it will soon run out of money if
it keeps spending generously on pensions.

But for now, Ukrainians are basking in the warmth of the Eurovision glow.
================================================================
15. RUSSIA'S FAMOUS DOCTOR ROSHAL AND UKRAINE'S PRESIDENT
YUSHCHENKO AMONG EUROPE'S STARS

MOSNEWS, Moscow, Russia, Friday, May 20, 2005

MOSCOW - Russian famous doctor Leonid Roshal and Ukraine’s president
Viktor Yushchenko have been included in the list of 25 Stars of Europe
issued by BusinessWeek magazine.

Roshal and Yushchenko are among five top agenda setters, along with Serbia
and Montenegro’s Natasa Kandic, founder and director of Humanitarian Law
Center, Britain’s Ben Verwaayen, chief executive of BT Group, and
Luxembourg’s Bo Vesterdorf, president of the Court of First Instance.

Roshal, 71, director of Moscow Institute of Emergency children’s surgery
department, became famous after negotiations with terrorists that seized the
theater in Moscow in October 2002. After that, in September 2004, when the
armed gang seized the school in Beslan, the gunmen requested Roshal to
come for the talks. He also helped save children’s lives after both
tragedies. He was awarded as a Hero of Russia after the 2002 theater siege.

Yushchenko became president of Ukraine in December 2004, after a scandal
connected with reports on falsification of the election results. His rival,
the then Ukrainian prime minister Viktor Yanukovich supported by Kremlin was
announced winner in the second round but Yushchenko registered a claim to
the Supreme Court.

After Yushchenko’s supporters organized a wave of protest that was called
“orange revolution” for the color of their clothing and banners, he won in
the rerun. The magazine called him a revolutionary leader “in the tradition
of Vaclav Havel, Lech Walesa, and more recently, Georgia’s Mikheil
Saakashvili.” -30- [The Action Ukraine Report Monitoring Service]
-----------------------------------------------------------------------------------------------------------------
http://www.mosnews.com/news/2005/05/20/roshalyushchenko.shtml
================================================================
16. U.S. SENATE PASSES RUSSIAN APOLOGY RESOLUTION

Joint Baltic American National Committee (JBANC)
Washington, D.C., Saturday, May 21, 2005

WASHINGTON, DC - The United States Senate has passed a non-
binding concurrent resolution on May 19 asking that the Russian Federation
issue a clear and unambiguous statement admitting and condemning the
illegal occupation and annexation from 1940 to 1991 of Estonia, Latvia, and
Lithuania.

Expressing the position of Congress, the legislation was first introduced on
May 12. Reintroduced on May 19 as Senate Concurrent Resolution 35 by
Senate Baltic Freedom Caucus co-chairman Gordon Smith (R-OR), it was
co-sponsored by Democratic Senators Richard Durbin of Illinois and Dianne
Feinstein of California. Senator Durbin, Assistant Minority Leader, is the
other Baltic Freedom Caucus co-chairman.

The companion legislation, House Concurrent Resolution 128, was referred to
the House International Relations Committee after being introduced on April
12 by House Baltic Caucus co-chairman John Shimkus (R-IL). H. Con. Res.
128 already has 19 co-sponsors. A vote is expected this summer.

The importance of such action was made clear by the visit of President Bush
two weeks ago to Latvia and the Russian Federation. In Riga, President Bush
emphasized the importance of making amends regarding past misdeeds, even
evoking the memory of an unjust Yalta agreement. He also stated that the
"captivity of millions in Central and Eastern Europe [by the Soviet Union]
will be remembered as one of the greatest wrongs of history."

President Bush's Riga speech:
http://www.whitehouse.gov/news/releases/2005/05/print/20050507-8.html

The May 9 Moscow commemoration of the 60th anniversary of the end of the
war in Europe brought the matter to the international news forefront. There
was a great surge in media interest over this legacy.

The Russian Federation, however, has never wavered from the official Soviet
view that the Baltics voluntarily joined the USSR. This selective memory has
been evident again this month in the words of the Russian leadership and in
much of the Russian media.

Following the August 23, 1939 inking of the Molotov-Ribbentrop Pact (MRP)
between the Stalin's USSR and Hitler's Germany, Nazi Germany invaded Poland
on September 1, 1939. The Soviet Union reciprocated by invading Poland from
the east on September 17. Moscow then forced the neutral Baltic governments
to cede bases, and on November 30, 1939, the USSR invaded Finland, to begin
the four-month Winter War. The Baltic countries were occupied by force in
July 1940 and then, following sham elections, were annexed in August that
year. The U.S. issued a statement on July 23, 1940 not recognizing this
"devious" takeover.

Support for a Russian condemnation of the MRP was also given by the
six-member U.S. congressional delegation that recently visited Lithuania.
The delegation included Congressmen Jack Kingston (R-GA), Spencer
Bachus (R-AL), Tim Holden (D-PA), David Scott (D-GA), Clay Shaw (R-FL),
and Bill Shuster (R-PA).

JBANC, in helping to guide the introduction of the congressional
legislation, strongly believes that the occupation of the Baltic countries
by the Soviet Union and its resultant terror, mass executions, deportations,
and denial of human rights must not be forgotten, glossed over, or
distorted.

The Joint Baltic American National Committee, Inc. represents the Estonian
American National Council, Inc., the American Latvian Association, Inc. and
the Lithuanian American Council, Inc. -30-
-------------------------------------------------------------------------------------------------------------
JOINT BALTIC AMERICAN NATIONAL COMMITTEE, INC.
Representing: Estonian American National Council, Inc.; American Latvian
Association, Inc.; Lithuanian American Council, Inc.
400 Hurley Avenue, Rockville, MD 20850
Tel: (301) 340-1954, Fax: (301) 309-1406
Karl Altau: E-Mail: jbanc@jbanc.org. Net: http://jbanc.org
================================================================
17. THE OTHER MONSTER
A cascade of new books examines Stalin and his terror.

By Andrew Nagorski, Newsweek International
Newsweek, New York, NY, May 30, 2005 Issue

As Russia prepared for its lavish commemoration of the 60th
anniversary of the end of World War II earlier this month, there were
predictable calls for the rehabilitation of Joseph Stalin. After all, the
Orel city legislature pointed out in its bid to put up monuments to the
Soviet leader, he had led the country to victory over Nazi Germany. But the
provincial lawmakers didn't stop there. They argued that it's never been
proved that Stalin was responsible for the millions of people who were
murdered either by firing squads or in the Gulag during his rule.

The fact that many Russians are still in denial about the monstrosity of
Stalin's crimes­and that much of the world dismisses their behavior in a
way that it would never shrug off Holocaust deniers­is one good reason to
welcome the cascade of new books about the Soviet dictator. As Donald
Rayfield points out in "Stalin and His Hangmen: The Tyrant and Those Who
Killed for Him" (541 pages. Random House), a thorough examination of the
terror apparatus headed by the secret police, Stalinism remains "a
deep-seated infection in Russia's body politic." He adds that Vladimir
Putin's regime "does not so much deny as set aside Stalin's holocaust, by
celebrating Stalin instead as the architect of victory [in World War II]
and the KGB as Russia's samurai."

But that is not the only reason for Stalin's current literary popularity.
The glasnost era of the late 1980s triggered an outpouring of documents,
personal recollections and histories of the Stalinist era that spilled over
into much of the 1990s. Western authors are tapping into that pool of new
information­even as they are discovering that, under Putin, some of the
archives are becoming more secretive again. In part, too, the new focus
on Stalin is a result of the flood of Hitler books a few years ago. Two
tyrants stood out among all the others in the 20th century, and there was
an imbalance in the amount of attention paid to them.

Just as in Hitler's case, though, the primary motivation is fascination
with a man and a system so evil that it defies easy explanation. The
authors grapple with the core personality of their subject. "His was a
complex mind," Robert Service writes in "Stalin: A Biography" (715 pages.
Belknap Harvard), which offers the most detailed account of his life,
career and beliefs. "He was not a paranoid schizophrenic. Yet he had the
tendencies in the direction of a paranoid and schizophrenic personality
disorder." But Rayfield and others point out that Stalin, like Hitler, was
accompanied by a huge band of willing­even ghoulishly eager­torturers and
executioners. In "The Dictators: Hitler's Germany, Stalin's Russia" (849
pages. Norton), Richard Overy examines the parallels and the differences in
the two men's lives. As he and several other authors note, their trappings
of power­and terror­were strikingly similar. And each was intrigued by the
other. "Together with the Germans, we would have been invincible," Stalin
once wistfully declared.

Which leads to the deadly game Stalin and Hitler played during the
war­first as allies during the nearly two years of the Molotov-Ribbentrop
Pact, then as mortal enemies when Hitler invaded Russia. In "What Stalin
Knew: The Enigma of Barbarossa" (310 pages. Yale), David E. Murphy, a
former CIA operative, offers chapter and verse on how Stalin willfully
disregarded an avalanche of warnings from his spies that Germany was
about to attack. "Stalin's Folly: The Tragic First Ten Days of WWII on the
Eastern Front" (326 pages. Houghton Mifflin) by Constantine Pleshakov, the
one Russian author in this mix, spells out the disastrous consequences for
Soviet forces at the start of the invasion: staggering losses and the
collapse of entire military units as the Germans benefited from the element
of surprise they never should have had­all brought to life in a colorful
narrative full of harrowing individual stories.

Eventually, of course, Stalin and the Red Army recovered and pulled the
country back from the brink of defeat. But 27 million Soviet citizens died
in the process, many of them needlessly­ and some of them at the hands
of the machinery of terror that Stalin kept running even as he fought the
Germans.

As these new books make clear, Stalin wasn't just a monster; he was a
disaster for his country and the world. -30-
===============================================================
18. THE GREAT DICTATOR
A surreal new production at the Sovremennik Theater
attempts to paint a portrait of a kinder, gentler Stalin.

By John Freedman, Moscow Times, Moscow, Russia, May 20-26, 2005

Call the 2004-2005 season the season of Josef Stalin's return. That is what
he does literally in the final moments of "The Flight of the Black Swallow,
or Episodes of History at an Angle of 40 Degrees," the newest show at the
Sovremennik Theater. Dead and buried -- or, perhaps, sent to hell -- Stalin
in this show reappears as calmly and confidently as he left us, only this
time he is decked out in his parade whites, a figure, so to speak, fit to
kill.

This is no isolated phenomenon.

In Ion Drutse's "Evening Bells" at the Contemporary Play School, Stalin
courts a young actress. In Mikhail Kononov's "The Naked Pioneer" at the
Sovremennik, he appears unnamed and with no little irony as a leader so
virtuous he is willing to take on the sin of killing his own citizens if
that's what the country requires. And it may be stretching it some --
though not too much -- to say that a Stalin-like figure underlies the
authoritarian character of the dead father in the Presnyakov Brothers'
"Playing the Victim."

In television, Stalin has been downright ubiquitous. The high-profile
revisionist historical chronicles "Moscow Saga," "Children of the Arbat"
and the recent "A Star of the Age" all featured prominent and controversial
portrayals of the former Soviet leader.

At least in the theater world, this has been a curious and abrupt change.
Not much more than a year ago I brought up the topic of Drutse's as-yet
unproduced play in a small circle of theater people. They all recoiled with
disgust, as if to say, "Who cares about him anymore?" Well, somebody
does, because Stalin, now, is everywhere.

"The Flight of the Black Swallow," written by Pyotr Khotyanovsky and Inga
Garuchava, is defined in the program as a "phantasmagoria." As directed
by Vladimir Ageyev, who has a reputation for creating mystical, esoteric
worlds on stage, the play emerges as obscure and impressionistic. Ageyev
blurs the line between the real and the imagined beyond recognition,
leaving us with a strange, incomplete and highly suggestive story about
what may have happened in fact, in essence or in hallucination during the
final days of Stalin's life, from Feb. 28 to March 2, 1953. The action
takes place during a "breach in time" that exists when the calendar, by
Russian tradition, turns from winter to spring, from February to March.

Igor Kvasha, with a bit of makeup, the right costume and the appropriate
Georgian accent, cuts a remarkable physical likeness. Moreover, one
suspects Kvasha spent time studying old film reels, for even his body
language -- an abrupt wave of the arm or a turn of the head -- seems as
convincing as his general appearance.

As is common these days, the makers of the production set themselves the
task of revealing the human being that lies behind the historical mask of
one of the bloodiest tyrants of the 20th century. This Stalin is almost, if
not quite, fluffy and huggable. He is usually soft-spoken, quick to forgive
and accept another's point of view, and always eager to offer edifying
speeches laced with references to the Bible and the Orthodox beliefs in
which he was educated as a young seminarian named Soso Dzhugashvili.

The view of Stalin as a human, as opposed to a historical, figure is
reflected in Marina Filatova's set. At the corners of a mostly empty stage
are a few homey objects: a sofa, a radio, a serving table on wheels. But
the key element is the row of bas reliefs along the back wall. These frozen
figures of common people in common poses turn the tables on the way we
usually imagine the past -- leaders as inaccessible figures represented in
stone and regular citizens as flesh-and-blood creatures around us. Here it
is just the opposite, with Stalin being among the most human figures on the
stage.

Perhaps Stalin's biggest sin as divulged in this play is his inability to
love. Since losing the first love of his life, he never since has said the
words "I love you" to anyone and he has no plans to start now.

The unnamed woman tending him appears at first and at the end as his nurse
attendant. In fact, she is the fulcrum on which this inventive
interpretation of Stalin's dying days turns. As played by Maria Anikanova,
she is bold, seductive, wily and compassionate. She clearly has an agenda,
something she is pushing him towards, for when she steps back and watches
him alone or interacting with others, she is constantly thinking about him,
almost staring through him as if she has X-ray vision. When engaging him,
she encourages him to make confessions or takes great pleasure in revealing
his weaknesses.

This woman paradoxically elicits both trust and suspicion in Stalin when
she admits she is in contact with those who are plotting to kill him. Their
method, she explains, is to poison the buttons on a new overcoat that is
being made to replace his old one. Does her admission mean she is on
his side, or is she merely one of his future killers? Stalin responds by
proposing they wed secretly -- moreover, in a genuine church ceremony
presided over by a priest.

The plot against Stalin is headed by a figure identified only as Stalin's
friend and compatriot (Nikolai Popkov). The arrangements for the wedding,
which run concurrently to the preparations for murder, predominantly
involve a good-natured Jewish tailor (Valery Shalnykh) who made Stalin's
first greatcoat 35 years ago and was brought back now to make him a new
one. Stalin also enlists the tailor to make his fiancee's wedding dress, a
task he executes so brilliantly that Stalin grants him his freedom.

As events progress, the action is repeatedly interrupted by scenes
involving singing and dancing revelers. These include a party in the
Kremlin, an imagined trip to the Carnival in Venice and the wedding itself,
attended by a band of Gypsies. At key moments - often when Stalin refers
to his power or when he cites the Bible - a tremendous grinding, crushing
noise drowns out all other sounds on stage.

What does this all mean and where is it taking us? Increasingly, Stalin's
fiancee appears to be a delectable devil in disguise, or, perhaps, Death
itself. Could Stalin have been declaring his love for death when he finally
overcame his lifelong aversion and declared his love for his fiancee?
Still, as reports of Stalin's death are broadcast on the radio, he is
incensed and admits this will make him look foolish in the eyes of the
world. And when his death, indeed, appears inevitable, he unleashes a
chilling tirade in which he claims his place in history alongside Nero,
Caligula and others. "Nothing hurts us," he begins to say and falls
stricken to the ground.

After Stalin has apparently been buried -- he stands stoically as a
platform slowly drops him out of sight below floor level -- he suddenly
reappears. Only this time he is resplendent and more impressive than ever
in his spotless white uniform. And there is nothing subtle about the song
that accompanies his reappearance. "Don't be sad, I will return," a voice
croons optimistically.

But as in several of the representations of Stalin I have seen on stage and
screen this season, there is something naggingly wrong with the picture the
Sovremennik paints. Stalin here is a nice guy at heart, one whose difficult
childhood left him wounded for life. So far, so true, as I presume most
psychologists would agree. But where is the rest of the story? What of the
leap from a miserable childhood to one of the most sadistic and prolific
killers in world history? Compared to the mysterious, unrelenting force of
death represented by Anikanova, Kvasha's Stalin comes across as one
whom fate treated unfairly. I don't think so. -30-
----------------------------------------------------------------------------------------------------------
"The Flight of the Black Swallow" (Polyot Chyornoi Lastochki) plays June 15
and 18 at 7:30 at the Sovremennik Theater on the Drugoi Stage, 19a
Chistoprudny Bulvar. Metro Chistiye Prudy. Tel. 921-6473. Running time: 3
hours, 10 minutes.
===============================================================
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