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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"

BUSINESS WEEK: 2005 STARS OF EUROPE - AGENDA SETTERS
25 Leaders at the Forefront of Change
Viktor Yushchenko-President, Ukraine

Until recently, most people regarded Ukraine as an international backwater,
not a beacon of freedom for the new Europe. But that changed last November,
when the world watched transfixed as opposition leader Viktor Yushchenko
led a peaceful revolution. Backed by millions of protesters in Kiev and
other cities who braved subzero temperatures to defend their right to a free
election, he forced the government to hold a repeat ballot -- and won by a
wide margin. In the process, Yushchenko, now President of Ukraine, has
become a revolutionary leader in the tradition of Vaclav Havel, Lech Walesa,
and more recently, Georgia's Mikheil Saakashvili. [article twenty]

"THE ACTION UKRAINE REPORT - AUR" - Number 491
E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, TUESDAY, May 24, 2005

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

1. UKRAINE FURNITURE MARKET: MANY NICHES, MANY LEADERS
Furniture production up 15%, sales increased 38% in 2004
ANALYSIS: Andrey Voltornist, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, May 23, 2005

2. EBRD TO BOOST LENDING THROUGH UKRAINIAN BANKS TO SMALL
& MEDIUM-SIZED ENTERPRISES, MORTGAGE LENDING, LEASING
Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

3. EBRD OPENS USD 10 MILLION CREDIT LINE FOR RAIFFEISENBANK
(UKRAINE) HOUSING MORTGAGE CREDIT PROGRAM
Ukrainian News Agency, Kyiv, Ukraine, Mon, May 23, 2005

4. WORLD BANK LOAN FOR USD 100 MILLION FOR RECONSTRUCTION
OF STATE HYDROELECTRIC POWER PLANTS IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

5. WESTERN DAIRY GROUP (LUTSK) TO BUILD NEW DAIRY
PLANT IN VINNYTSIA BY 2007
Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

6. THE FUTURE'S BRIGHT...THE FUTURE'S ORANGE
Colm Gilmore, PrivateEquityOnline.com
London, UK; New York, NY; Wed, May 18, 2005

7. POLAND TRANSFERS RIGHT TO BUY HUTA CZESTOCHOWA STEEL
PLANT TO UKRAINE'S DONBASS INDUSTRIAL UNION (DIU) IN DONETSK
Ukrainian News Agency, Kyiv, Ukraine, May 23, 2005

8. BRITISH BANK BARCLAYS CAPITAL TO COMPETE FOR OPERATION
OF A FEW MAJOR HIGHWAYS IN UKRAINE
IntelliNews - Ukraine Today, Kyiv, Ukraine, Mon, May 23, 2005

9. PRESIDENT SAYS LIST OF ENTERPRISES TO UNDERGO
REVISION OF PRIVATIZATION TERMS WILL BE CLEAR THIS WEEK
Ukrinform, Kyiv, Ukraine, Monday, May 23, 2005

10. YUSHCHENKO SAYS UKRAINE BEHIND SCHEDULE REGARDING GOAL
TO ENTER THE WORLD TRADE ORGANIZATION IN YEAR 2005
Over 20 bills haven't been submitted yet to the parliament for consideration
Ukrayinska Pravda, Kyiv, Ukraine, Monday, May 23, 2005

11. RUSSIAN TRADE BODY EXPRESSES CONCERN OVER
UKRAINE'S WTO TERMS
ITAR-TASS news agency, Moscow, in Russian 1509 gmt 23 May 05
BBC Monitoring Service, UK, in English, Monday, May 23, 2005 (15:09)

12. VIKTOR TRETIAKOV APPOINTED HEAD OF WORKING GROUP FOR
DEVELOPMENT OF UKRAINIAN PETROLEUM INDUSTRY
Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

13. KrASZ STOPPED ASSEMBLING GAZ AND UAZ CARS IN APRIL
Due to cancellation of tax incentive for Ukrainian car-builders
Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

14. UKRAINE: FDPP ANATOLII KINAKH OPPOSES CONSTRUCTION
OF NEW OIL REFINERY IN ODESA
Ukrainian News Agency, Kyiv, Ukraine, May 23, 2005 (16:21)

15. REVOLUTIONARIES IN UKRAINE NO LONGER SINGING SAME SONG
Chris Stephen in Kiev, Scotsman
Edinburgh and Glasgow, Scotland, Mon, May 23, 2005

16. EBRD: ECONOMIC GROWTH SLOWING ACROSS EASTERN
EUROPE AND FORMER SOVIET UNION
Ukraine's growth is expected to drop to 6.5 percent from 12.1 percent
By Marta Srnic, Bloomberg, London, Tuesday, May 24, 2005

17. COMMISSION RECOMMENDS PRESIDENT DECORATE LATE
JOURNALIST GEORGI GONGADZE WITH TWO STATE AWARDS
Ukrinform, Kyiv, Ukraine, Monday, May 23, 2005

18. PRESIDENT: TODAY'S UKRAINE IS WHAT TARAS SHEVCHENKO
DREAMED ABOUT AND POET'S CHERISHED DREAMS CAN COME TRUE
Taras Shevchenko's works keep inspiriting new generations
Ukrinform, Kyiv, Ukraine, Monday, May 23, 2005

19. UKRAINIAN FILM WAYFARERS AWARDED CANNES GOLD
PALM IN SHORT-REEL DIVISION
Ukrinform, Kyiv, Ukraine, Monday, May 23, 2005

20. 2005 STARS OF EUROPE -- AGENDA SETTERS
25 Leaders at the Forefront of Change
Viktor Yushchenko - President, Ukraine
Section about Viktor Yushchenko - President, Ukraine
By Jason Bush and Roman Olearchyk
Business Week, Moscow, Paris, May 30, 2005 edition

21. EXHIBITION: JACQUES HNIZDOVSKY WOODCUTS
Thursday, May 26, 2005 (7 p.m.); Ukraine Embassy Washington
Svitlana Fedko Shiells, Chair
The Washington Group Cultural Fund
Washington, D.C., Monday, May 16, 2005
===============================================================
1. UKRAINE FURNITURE MARKET: MANY NICHES, MANY LEADERS
Furniture production up 15%, sales increased 38% in 2004

ANALYSIS: Andrey Voltornist, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, May 23, 2005

KYIV - According to preliminary estimates, furniture production in Ukraine
surged 15% y/y in 2004, while sale revenues increased 38%. At that, the
total volume of the market exceeds UAH 3bn (USD 594mn). The last few
years indicated that Ukraine has the Italian scheme of furniture sector
development. There are a lot of small enterprises producing furniture of
cheap and medium-price niches, while the sector of components is well
developed.

According to a marketing research held by BizPro, a striking part of local
producers is small enterprises with less than 50 employees (84%). At that,
medium-sized enterprises with 51-250 employees make up 14.5% of all
furniture-makers, while the largest ones with over 250 employees – only
1.5%. Worth noting, 65% of the marked belongs to home furniture. It
seems that Ukrainian furniture producers try to run after the high rates of
the house building industry.

Active development of the market in Ukraine is provided by two things –
rising buying power of the population, on one hand, and legislative
restrictions of imports, on the other. The latter include high duties (up to
20-25% depending on furniture type).

Consequently, the share of foreign furniture on the domestic market
decreases from year to year. According to marketing company Liga-Nova’s
data, foreign furniture, imported mainly from Italy, Germany, and Poland,
covered only 1/4th of the Ukrainian market in 2004, while the relevant index
was 75% some five years ago.

In 2004 exports of furniture rose 35.7% y/y, making up USD 119.685mn, while
imports increased 34.1% to USD 134.276mn. Furniture exports and imports
amounted to 0.37% and 0.46% of total exports and imports respectively. Over
Jan-Feb furniture exports jumped 1.6-fold y/y to USD 23.77mn, while imports
increased 2.81% y/y to USD 14.84mn.

Domestic furniture produces successfully compete with foreign companies---

According to Tatyana Chernobai, executive director of the Ukrainian
Association of Furniture-makers, currently there is no sub-sector segment in
which Ukrainian producers do not present their goods. They mastered even
such narrow niches as massage arm-chairs, arm-chair-transformers, and
bath-room furniture. The highest competition with foreign companies can be
observed in upholstery and kitchen furniture. Competition is even observed
in the first class segment.

Every segment and region has its own leader -------

The TEN largest market players are [1] Merks, [2] closed joint-stock
company Novyi Stil – Ukraina (New Style - Ukraine), [3] CJSC Enran, [4]
Herbor Holding, [5] Art Metall Furnitura, [6] Progress, [7] joint venture
Veneto, [8] shop Dom Mebeli (Furniture House), [9] private company
Energiya (Energy), and [10] Velam.

Valentin Morgunovskyi, head of marketing and advertising department of
Irma (one of the market players) says that presently Ukraine does not have
one leader in all segments of the domestic furniture market. Every region
and segment has its own leaders. In terms of sales and number of trade
shops Merks, LVS, Ekmi-mebel, Grand, Irma rank at the top.

IKEA intends to enter Ukrainian market
and invest EUR 300mn in creation of trade center -------

Still, the picture of the Ukrainian market can significantly change, in our
view, as Swedish furniture major IKEA intends to open its 1st trade center
in Ukraine. According to head of IKEA-Russia group of companies Lennart
Dalgren, the project, which IKEA is planning to implement in Ukraine, is the
largest in Europe.

According to mayor of Kyiv Oleksandr Omelchenko, IKEA wants to invest
about EUR 300mn in construction of a trade center in Kyiv near subway
station Kharkovskaya ploschad. Omelchenko noted that the project is
expected to last for 15-17 months and to start in June or July. Kyiv
administration intends to provide 40-50 hectares for construction. The
planned trade ground will make up 220,000 m2, which is 20-fold higher
than that of Moscow’s Metro.

Omelchenko also stressed that IKEA mulls a possibility to invest another
EUR 200mn in development of local timber and furniture industries. Such
mini-projects are already implemented in Poland and Russia, but this will be
the largest one in Europe, Kyiv mayor said. According to IKEA, the company
owns 172 stores in 22 countries as of Aug 31, 2003. IKEA has 2,000 suppliers
from 55 countries. Besides, there are 40 purchasing offices in 33 states.

Ukraine takes antidumping measures against wood clipboard importers-------

Local furniture market faces price increase, which started in November 2004.
Over this period furniture prices grew 10-20%. In our view, the key reason
for this is introducing of antidumping duty (15%) in addition to existing
import duties from Poland and Slovakia.

In March Interagency Commission for International Trade (ICIT) introduced a
25.1% antidumping duty on wood clipboard imports from Poland and 15.4% –
from Slovakia. Besides, an 11.7% import duty was introduced for Kronospan
Slovakia, producer of the good. The duties will be valid for 5 years. ICIT
took the decision on Feb 15, and it stepped in effect on Mar 1.

In October 2004 ICIT introduced preliminary antidumping duties in the same
amounts for a period of 4 months. The action is the result of ICIT’s
antidumping investigation against wood chipboard imports from Poland and
Slovakia. Investigation began in September 2004. The commission believes
that laminated wood chipboard from Poland and Slovakia were sold in Ukraine
over 2000-2002 at prices that were on average 44% cheaper than in these
countries.

In the opinion of the local companies, this gives grounds to consider such
imports as dumping. According to State Statistics Committee, production of
wood chipboards in Ukraine in Jan-Aug 2004 totaled 622,000 m3, which is
1.4-fold growth in y/y terms.

Donbass Industrial Union (DIU) to build MDF plant in Russia ------

At the same time, Donbas Industrial Union (DIU) decided to build a plant to
produce medium density fiberboards (MDF). The plant will be located in
Krasnodar region, Russia. The total cost of the project is expected to make
up USD 50mn. The planned annual capacity is 100,000 m3 of MDF. Pay-off
period will be 5 years. The plant will generate annual revenue of RUR 800mn
(USD 150mn).

MDF is a base element for modern furniture industry. Worth noting, DIU is
specialized in production and sale of metal products as well as engaged in
providing natural gas and electricity to Ukrainian enterprises. So, this is
non-profile activity for the industry group. This, we believe, can be
explained by the fact that Ukraine does not have rich wood resources, thus,
it has to import wood and its materials from abroad.

IKEA to create hard competition in
Ukrainian furniture market as it is in Russia -----

In our view, furniture market in Ukraine will change soon. Competition after
IKEA’s entrance the market will increase significantly. Small local producer
will hardly preserve their positions and might have to leave the market. The
same story was in neighbouring Russia, where Russian furniture produces
experienced pressure from such furniture world major as IKEA. This was,
by the way, the reason, why some Russian companies came to Ukrainian
furniture market.

To remind you, in H2/04 Sevzapmebel (St Petersburg) announced that the
enterprise plans to expand its presence in Ukraine. Earlier, the same
intentions were mentioned by another Russian furniture company, Shatura.
Both entities started creation of their trade networks in the country. -30-
===============================================================
2. EBRD TO BOOST LENDING THROUGH UKRAINIAN BANKS TO SMALL
AND MEDIUM-SIZED ENTERPRISES, MORTGAGE LENDING, LEASING

Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - The European Bank for Reconstruction and Development (EBRD)
is going to devote special attention to rendering credit lines to Ukraine
for micro-financing and financing of small and medium-sized enterprises,
and also for mortgage lending, leasing and financing of projects for
improving energy efficiency.

The EBRD's press service disclosed this to Ukrainian News, citing the new
strategy of the bank's activity in Ukraine. Besides, the bank plans to begin
work with insurance companies and other non-banking financial institutions
in Ukraine.

It is also mentioned in the press service's statement that the EBRD will
support the private sector in Ukraine by way of encouraging direct foreign
investments, increasing investments in local projects in the areas of
production, services, real estate and the agro-industrial complex.
The EBRD is also going to examine the possibility of developing the
financial instruments in the local currency on the basis of approaches,
which are being employed in other countries in the region.

The press service also discloses that the new strategy envisages support
for reconstruction and modernization of Ukrainian roads, railroads, ports
and airports, and also for the energy and petrol gas sector. In addition to
these, the EBRD will exert efforts aimed at expanding its support for
projects concerning the municipal infrastructure in Ukrainian cities.

As Ukrainian News reported previously, the EBRD plans to invest EUR 500-
600 million in Ukraine in 2005. The EBRD had earlier announced plans to
invest over USD 350 million in Ukraine in 2005. The bank invested nearly
USD 350 million in Ukraine in 2004. -30-
===============================================================
3. EBRD OPENS USD 10 MILLION CREDIT LINE FOR RAIFFEISENBANK
(UKRAINE) HOUSING MORTGAGE CREDIT PROGRAM

Ukrainian News Agency, Kyiv, Ukraine, Mon, May 23, 2005

KYIV - The European Bank for Reconstruction and Development (EBRD) has
opened a credit line for Raiffeisenbank (Ukraine) in the amount of USD 10
million as part of the mortgage credit program. The EBRD's press service
disclosed this to Ukrainian News.

The press service's statement specifies that this is the second transaction
under a $30 million framework set up by the EBRD in 2004. The press service
did not provide details relating to the terms under which this credit line
was provided. In the opinion of the EBRD, assistance for development of
mortgage finance in Ukraine should have a significant social and economic
impact through support for improving the housing conditions for the
population.

As Ukrainian News earlier reported, the Board of Directors of the EBRD
decided in February 2004 to allocate USD 30 million to Ukraine for
development of mortgage finance. Within the framework of this program,
EBRD opened a credit line for Aval Bank late last year in the amount of USD
10 million.

As of January 1, 2005, Raiffeisenbank (Ukraine)'s net assets were valued at
UAH 4,407.3 million, whereas its loan portfolio was UAH 3,429.7 million and
the bank's own capital totaled UAH 354.2 million. The bank reported a net
profit of UAH 22.942 million for 2004. The Austrian banking group Raiffeisen
created Raiffeisenbank (Ukraine) in April 1998.

The EBRD plans to invest EUR 500-600 million in Ukraine in 2005. The bank
invested nearly USD 350 million in Ukraine in 2004. -30-
===============================================================
4. WORLD BANK LOAN FOR USD 100 MILLION FOR RECONSTRUCTION
OF STATE HYDROELECTRIC POWER PLANTS IN UKRAINE

Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - The Ukrhidroenerho state company is going to take a USD 100 million
loan from the World Bank for the purpose of carrying out reconstruction of
its hydroelectric power plants. A source in the Fuel and Energy Ministry
disclosed this to Ukrainian News.

According to the source, Ukrhidroenerho plans to take the World Bank loan
for a 14-year period. The annual interest rate of the loan should be
LIBOR+1%. The source disclosed that the credit agreement might be signed
by the end of May. He did not give other details.

As Ukrainian News reported previously, Ukrhidroenerho manages the Kyiv,
Kaniv, Kremenchuk, Dniprodzerzhynsk, Dnipro and Kakhovka hydroelectric
power plants, the total installed capacity of which is 3,940 megawatts, and
it also manages the Dnister hydroelectric power plant with installed
capacity of 700 megawatts. -30-
===============================================================
5. WESTERN DAIRY GROUP (LUTSK) TO BUILD NEW DAIRY
PLANT IN VINNYTSIA BY 2007

Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005 (12:59)

KYIV - Major producer of dairy products, Trading House Western Dairy
Group (Lutsk) plans to build a new dairy processing plant in Vinnytsia by
the end of 2006. Press service of the TH Western Dairy Group informed
about this in the statement. According to the statement of the press
service, capacity of the new plant will reach up to 1,000 tons of milk
daily.

The new enterprise will be called Vinnytsia Dairy Plant, and TH Western
Industrial Group plans to invest about UAH 160 million in its construction.
It is expected that the new plant will produce daily up to 60 tons of hard
cheeses and up to 100 tons of whole milk products (including yoghurts,
sour cream, boiled fermented milk, bio-kefirs, bio-yoghurts).

According to the press service, besides construction of the plant, TH
Western Dairy Group also plans to invest UAH 25 million into development
of dairy cattle husbandry in the Vinnytsia and Zhytomyr regions.

Trading House Western Dairy Group was founded in 2002; it processes,
makes and sells dairy products. TH Western Dairy Group makes and sells
dairy products under trademarks Komo, Hurmanika, Dairy Family, Vykrutas
and Ekonom. TH Western Dairy Group produces 18 types of hard cheese,
73 types of soft cheeses and spreads, 4 types of butter, dry dairy products
and 188 types of whole milk products.

TH Western Industrial Group exports dried milk, butter and cheeses to
Russia, Kazakhstan, Moldova, Azerbaijan, Bulgaria, countries of Asia, Africa
and to Japan.

TH Western Dairy Group controls Kovelmoloko OJSC (Kovel, Volyn region),
Lviv City Dairy Plant OJSC (Lviv), Vinnytsia City Dairy Plant OSJC
(Vinnytsia), Volodymyr-Volynskyi Dairy Products Plant OJSC (Volodymyr-
Volynskyi, Volyn region), Dubnymoloko OJSC (Dubny, Rivne region), Brody
Dry Skimmed Milk Plant OJSC (Brody, Lviv region), Molokoprodukt Concern
LLC (Artemivsk, Donetsk region), Volyn Creamery Base OJSC (Lutsk),
Novohrad-Volynskyi Creamery OJSC (Novohrad-Volynskyi, Volyn region),
Horokhiv Creamery OJSC (Horokhiv, Volyn region).

Annual turnover of TH Western Dairy Group reaches about UAH 300 million.
TH Western Dairy Group LLC was founded by private individuals. -30-
===============================================================
6. THE FUTURE'S BRIGHT...THE FUTURE'S ORANGE

The bloodless revolution that gripped the watching world and swept Viktor
Yushchenko to the office of president in Ukraine may be just over 100 days
old, but private equity funds in the region are already gearing up to take
advantage. Colm Gilmore investigates.

By Colm GIlmore, PrivateEquityOnline.com
London, UK; New York, NY; Wed, May 18, 2005

There aren't many places in the world where private equity professionals
would actually go on strike. But then again, there haven't been many periods
in European history to match the Orange Revolution, i.e. the tumultuous,
albeit peaceful, uprising in Ukraine that followed the disputed presidential
election on November 21 last year which eventually led to former opposition
leader Viktor Yushchenko forming a new government.

During the rebellion, hundreds of thousands of Ukrainians flocked to Kyiv
to protest against electoral fraud and corruption, and a general strike was
called that affected many parts of Ukraine's society - including the
country's fledging private equity community. Western NIS Enterprise Fund,
a $150 million evergreen Ukrainian private equity vehicle, was no exception.
"The whole office was on strike, absolutely," says Natalie Jaresko, the
group's president and CEO.

What was striking about the uprising was the fact that it was predominantly
led by the middle classes. "This was not poor versus rich. This revolution
was led by shopkeepers demanding a European standard of living," says
Jaresko.

The prospect of gradual liberalisation - part of Yushchenko's promise to the
electorate was to achieve EU accession - coupled with a number of years of
significant economic growth makes Jaresko excited about the prospects for
private equity in the region.

The Western NIS Enterprise Fund is an evergreen vehicle that to date has
invested $95 million in 28 companies in Ukraine and Moldova. Jaresko
believes that investment opportunities in a country post-revolution and
pre-EU accession are enormous: "Consumer confidence is high. The
currency is stable, even appreciating. Inflation is low, valuations are
reasonable and there is a political will to push through change." Crucially,
the Yushchenko government is committed to eradicating the corruption
that previously blighted the country's economic base.

Jaresko's fund focuses mainly on growing mainstream business sectors
such as fast-moving consumer goods, retail, financial services and
leisure/tourism.

Moscow-based Delta Private Equity Partners, which recently closed a $120
million direct investment fund with a 10 percent allocation to the country,
has a similar industry focus.

Ukraine's proximity to and historic trading relationship with Russia mean
that cross-border investment opportunities are likely to continue to present
themselves, particularly in the energy sector.

However, Ukraine today is predominantly facing west, particularly now that
awareness of the country has increased significantly. Says Jaresko: "The
amount of media coverage that the uprising generated was better than a
$10 billion ad spend for Ukraine - it was fantastic PR."

As a result, now seems a good time for the private equity managers in the
region to get back to work. As investment activity gains momentum in the
region, funds on the ground are likely to enjoy a head start. Provided the
country can maintain a degree of political stability, others will
undoubtedly follow them into a country that mesmerised the world for 13
days last year. -30- [The Action Ukraine Report Monitoring Service]
----------------------------------------------------------------------------------------------------------
http://www.privateequityonline.com/topstory.asp?ID=5938&strType=5
===============================================================
7. POLAND TRANSFERS RIGHT TO BUY HUTA CZESTOCHOWA STEEL
PLANT TO UKRAINE'S DONBASS INDUSTRIAL UNION (DIU) IN DONETSK

Ukrainian News Agency, Kyiv, Ukraine, Mon, May 23, 2005

KYIV - Poland has transferred the rights to hold exclusive talks on purchase
of metallurgical plant Huta Czestochowa to Ukrainian corporation Donbas
Industrial Union (Donetsk). Kostiantyn Lytvynov, a representative of DIU in
Poland, disclosed this to Ukrainian News. He said the privatization
commission made a relevant decision late at night on Saturday, May 14.
"They decided to give us exclusive rights," the representative told.
Lytvynov said the corporation started talks on Monday, May 16.

The privatization commission reported that under the terms, DIU must pay
USD 10 million by May 24 to secure its offer and to submit a bank guarantee
of the deal payment by June 13. Additionally, the corporation is required to
initial an agreement with Huta Czestochowa's sellers - state-run company
Towarzystwo Finansowe Silesia and the management board of Huta
Czestochowa - by June 17.

Lytvynov told Ukrainian News in Warsaw that the sale procedure does not
imply any deadline for DIU to obtain permission of the minister, but he
hopes it will happen right after the agreement is initialed. He called the
talks with sellers and trade unions intensive and noted that the company
expects to finish them in time. "We work day and night to complete the
deal," Lytvynov said.

As Ukrainian News earlier reported, the privatization commission gave Mittal
Steel exclusive right to negotiate the purchase of Huta Czestochowa on
February 23, in as much as the holding company offered the highest price
for the steel plant.

Though exclusive talks lasted for nine weeks, until April 29, and were later
extended till May 13, Mittal Steel failed to conclude the transaction.
Polish Deputy Minister of Treasury Stanislaw Speczik emphasized that the
Ministry will not agree to the sale of Huta Czestochowa if Mittal Steel
fails to reach agreement with trade unions on social guarantees to the
company personnel.

To complete the purchase of Huta Czestochowa, DIU still needs to reach
consent on the plant's sale conditions with the Polish State Treasury
Ministry, the creditors of the mill and the trade union and receive a number
of approvals from the Antimonopoly Committee, Polish Ministry of Interior
and the European Commission. The restructuring and privatization
processes at Huta Czestochowa should be completed by August 7, 2005.
===============================================================
NOTE: Additional names for the AUR distribution list are always welcome.
===============================================================
8. BRITISH BANK BARCLAYS CAPITAL TO COMPETE FOR OPERATION
OF A FEW HIGHWAYS IN UKRAINE

IntelliNews - Ukraine Today, Kyiv, Ukraine, Mon, May 23, 2005

KYIV - British bank Barclays Capital will compete for operation of a few
automobile roads in Ukraine . The meeting between the bank and State
Automobile Road Service (Ukravtodor) took place on May 16 this year.
Barclays Capital intends to participate in competitions for concession on
construction and operation of the Lviv-Krakovets (Lviv region) and the
Vinnytsia-Kyiv segment of the southern trans-European highway in the
village of Kosyny (Zakarpattia region)-Kyiv.

The decision to attract investors to the contraction of these highways was
made by the government in November 2004. However it is still necessary
to obtain permission from the parliament to authorize reconstruction of
automobile road on concession terms.

Barclays Capital is the third largest bank in Great Britain . Its profit was
USD 8.6bn for 2004. Ukravtodor intends to spend USD 220mn on road
repair in 2005. -30- [The Action Ukraine Report Monitoring Service]
===============================================================
9. PRESIDENT SAYS LIST OF ENTERPRISES TO UNDERGO
REVISION OF PRIVATIZATION TERMS WILL BE CLEAR THIS WEEK

Ukirinform, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - President Viktor Yushchenko told a Sunday press conference,
which he jointly held with Prime Minister Yuliya Tymoshenko and
Verkhovna Rada Chairman Volodymyr Lytvyn on Shevchenko Mount
in Kaniv, the list of those enterprises which were privatized with
irregularities and so are subject to undergo repeated tenders, will
become clear this week.

According to the President, to compile the list tremendous juridical work
had to be done, which took weeks. We understand the need, the President
noted, to send a signal to the business community to calm down through
drawing the fair line under this issue.

Nevertheless, Viktor Yushchenko noted, there are legislative initiatives,
which need the Parliament's consideration. Though there are some legal
circumstances, it is a matter of several days, President Yushchenko
reassured the journalists. -30-
===============================================================
10. YUSHCHENKO SAYS UKRAINE BEHIND SCHEDULE REGARDING GOAL
TO ENTER THE WORLD TRADE ORGANIZATION IN YEAR 2005
Over 20 bills haven't been submitted yet to the parliament for consideration

Ukrayinska Pravda, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - President Viktor Yushchenko announced about Ukraine being behind
schedule in is drive to enter the World Trade Organization [WTO] in 2005.
"Today it seems to me that we are seriously behind the schedule necessary
to ensure our entry into WTO this year", he said at the Friday session of
the National Security and Defense Council of Ukraine.

Yushchenko added: "More precisely, it is this year's entry of Ukraine into
WTO that is on the verge of disorder". Yushchenko underlined that passing
necessary bills was a major problem: over 20 bills haven't been submitted
for consideration yet; four are on deputies' approval.

In addition, the issue of bilateral negotiations remains problematic. "As
far back as one and a half or two months ago we had to hold the most
difficult negotiations under bilateral protocols, beginning with the USA and
ending with some leading countries of Asia", he said. "Essentially, this is
a primary part of work, remaining as the task for implementation.
Unfortunately, as far as I am informed on this point, there is no great
progress here", added Yushchenko.

The President emphasized that entry into WTO as well as the issue of
forming of Single Economic Space form "basic strategic interests of
Ukraine". Yushchenko also stressed the necessity of forming separate
structure occupied with questions of Ukraine's entry into WTO and
forming SES.

"It enables to structure and form the proper institutions for solving these
questions, holding negotiations, preparing the proper projects, considering
them by the authorities and the parliament, provided current administration
will establish a structure, engaged in this issue not only before but also
after our entry into WTO on permanent basis", he said. According to him,
the matter concerns a structure for ensuring work with European and world
organizations, Russia and CIS under the SES plan.

"I mean functions which the Ministry of Foreign Affairs used to carry out ",
he marked, reporting that he has already talked about it to the Vice-Prime
in Euro-integration Matters Oleh Rybachuk. "There must be an office engaged
in such issues from morning till night. It must be occupied only with this
activity. It is an important activity, exceptional for Ukraine, which needs
special mobilization, including structural", underlined Yushchenko. -30-
===============================================================
11. RUSSIAN TRADE BODY EXPRESSES CONCERN OVER
UKRAINE'S WTO TERMS

ITAR-TASS news agency, Moscow, in Russian 1509 gmt 23 May 05
BBC Monitoring Service, UK, in English, Monday, May 23, 2005 (15:09)

MOSCOW - Ukraine's acceptance of discriminatory terms for entry into the
World Trade Organization could destroy the free trade regime with Russia and
other CIS states. This is the opinion of Sergey Glazyev, the chairman of the
Federation of Russian Manufacturers and head of the Russian Trade and
Industry Chamber's committee for assisting foreign economic activity.

Today he sent an open letter to Ukrainian Prime Minister Yuliya Tymoshenko.
"The Ukrainian leadership's agreement to terms that sharply decrease the
protection of the Ukrainian market will inevitably bring a review of the
trade regime with Russia," he said in the letter, which was sent to
ITAR-TASS.

"Ukraine's joining the WTO on these terms will make it impossible for
Ukraine to integrate with the European Union, since its market is much more
strongly protected than the WTO terms of entry that Ukraine has agreed to,"
Glazyev writes.

He said "Ukraine's negotiators have made concessions to their foreign
partners on practically all positions". Ukraine agreeing to the opening of
almost all significant sectors of the economy when Russian-Ukrainian trade
is duty-free and there is essentially free movement of goods from third
countries via Ukraine and Russia will lead to serious losses for Russian and
Ukrainian manufacturers, particularly in the agro-industrial and pulp and
paper industries, furniture and light industry and ferrous and nonferrous
metals, Glazyev suggests.

Glazyev says Ukrainian negotiators' agreement to reducing duty on spirit
imports is particularly worrying, since in Russia's talks with the WTO it's
set at 100 per cent. If Russia is prepared to take on commitments for access
to the market in 109 service sectors, then Ukraine must take on commitments
for access to the market in 132 sectors, including in 94 sectors without any
limitations at all, Glazyev says.

Glazyev thinks Ukraine's entry to the WTO on these terms will make the
creation of a Customs Union and the implementation of plans for the
establishment of the Single Economic Space [SES] by Ukraine and Russia
"essentially impossible". Glazyev thinks that in order to preserve the
free-trade regime and plans for the SES, Ukraine and Russia must hold
urgent inter-governmental consultations to agree their positions in talks
on WTO entry terms. -30- [Action Ukraine Report Monitoring Service]
===============================================================
12. VIKTOR TRETIAKOV APPOINTED HEAD OF WORKING GROUP FOR
DEVELOPMENT OF UKRAINIAN PETROLEUM INDUSTRY

Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - President Viktor Yuschenko has created a working group for
developing the petroleum refining industry and he appointed his first
assistant Oleksandr Tretiakov to head this group. The presidential press
service disclosed this in a statement, the text of which Ukrainian News has
obtained.

This working group is expected to bring forth recommendations, as well as
prepare the drafts of regulatory legal acts with respect to the future
development of the petroleum refining industry and stimulating the refining
of crude on the territory of Ukraine.

The president created the group in order to improve the efficiency and
development of this sector, as well as for creating conditions for
augmenting its potential and monitoring of the processes on the global
market for crude and petroleum products.

Members of the group are: Stanislav Vasylenko, the director general of the
Ukrtransnafta company; Serhii Hlushko, the head of the management board of
the Ukrtatnafta company; TNK-BP President Oleksandr Horodetskyi, Verkhovna
Rada deputy Ihor Yeremeev; First Deputy Fuel and Energy Minister Oleksii
Ivchenko, who is also the head of the management board of the National Joint
Stock Naftohaz Ukrainy Company.

Also those appointed to the group were: Feiruz Isayev, the director general
of the LukOil Ukraine company; Oleksandr Kireev, chairman of the State Tax
Administration; Pyotr Miroshnikov, the head of the management board of
Kazakhoil company; Ihor Palyets, the head of the management board of
Ukrnafta; Fuel and Energy Minister Ivan Plachkov, Secretary of the National
Security and Defense Council Petro Poroshenko, Verkhovna Rada deputy
Oleh Salmin (faction of People's Party) and Economy Minister Serhii
Teriokhin.

According to the president's directive, Tretiakov might change the
composition of the working group and enlist specialists from central and
local government agencies and state enterprises to join its work, and to
receive the necessary documents and materials within the established order.

As Ukrainian News reported previously, Yuschenko and representatives of
oil companies that are operating in Ukraine agreed at a meeting on market
formation of prices for petroleum products without administrative
interference. -30- [The Action Ukraine Report Monitoring Service]
===============================================================
Letters-to-the-Editor are welcome, send in one today
===============================================================
13. KrASZ STOPPED ASSEMBLING GAZ AND UAZ CARS IN APRIL
Due to cancellation of tax incentive for Ukrainian car-builders

Ukrainian News Agency, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - The Kremenchuk car assembling plant (Poltava region), which is
otherwise know as KrASZ, stopped assembling the GAZ and UAZ car
models from April. Vasyl Poliakov, the chairman of the board of directors
of the AIS (AvtoInvestBud) corporation, of which the car assembly plant
is a part, disclosed this to journalists.

He said that the car assembly plant is currently producing only VAZ cars
and commercial vehicles. GAZ and UAZ cars are brought into Ukraine in
the finished form.

In Poliakov's words, the cessation of the assembling of GAZ and UAZ is
on account of the cancellation of tax incentives for Ukrainian car-builders.
As Ukrainian News reported previously, the Verkhovna Rada raised the
import duties for cars that are being imported into Ukraine from 15% to
20% of their value, while the duties for importing components will be 5%.

The Cabinet of Ministers had prior to this proposed to Rada to raise the
import duties for cars that are being imported into Ukraine from 15% to
34.5% of their value, while simultaneously canceling incentives that were
earlier set aside for Ukrainian car enterprises. KrASZ boosted production in
2004 by 99.9% or 10,814 vehicles to 21,637 vehicles, compared with 2003.

The plant is dealing with large-unit assembling of GAZ, VAZ and UAZ
automobiles, selling them through the trading network of the AvtoInvestBud
corporation, which is the general dealer of the plant, and also KrASZ deals
with repair of automobiles, their after-sales and service maintenance.

The founders of the plant are: British company Model Investments Limited
(with 40% of the statutory fund), AvtoProm (33.7779%), Gorky automobile
plant (25%), and three private investors with 0.222% each.

The Kremenchuk Car Assembling Plant Ltd was founded as a joint
Ukrainian-Russian venture under the name Kremenchuk-AvtoGAZ in 1995
by the Gorky automobile plant and the Kremenchuk experimental mechanical
plant. The joint venture was reregistered as KrASZ in July 2001. -30-
===============================================================
14. UKRAINE: FDPP ANATOLII KINAKH OPPOSES CONSTRUCTION
OF NEW OIL REFINERY IN ODESA

Ukrainian News Agency, Kyiv, Ukraine, May 23, 2005 (16:21)

KYIV - First Deputy Prime Minister Anatolii Kinakh opposes the idea of
construction of petroleum refinery in Odesa. Press service of the First
Deputy Prime Minister informed Ukrainian News about this with reference
to his speech at the council of Russian Union of Industrialists and
Entrepreneurs in Moscow. "First Deputy Prime Minister believes it is
inappropriate to build a new petroleum refinery in Ukraine," the statement
reads.

Kinakh said that Ukraine already has facilities to process 50 million tons
of petroleum annually, while annual processing of Ukrainian refineries
constitutes 23-24 million tons of oil. Kinakh believes it is expedient to
invest funds envisaged for construction of the plant into modernization
production facilities of existing oil refineries.

According to the statement, at the meeting of RUIE Kinakh also made a
statement that in order to keep the supply and demand balance at the
market of petroleum products, the government of Ukraine needs a
constant dialogue with representatives of business, which will permit
avoiding crisis situations.

He also mentioned the need to diversify of power supply of Ukraine,
strengthen energy safety of the country, create vertically integrated
petroleum company and increase efficiency of use of its own power
resources. As Ukrainian News earlier reported, Kinakh left for Moscow
with a working visit to participate in the work of the Economic Council
of the Commonwealth of Independent States.

Prime Minister Yulia Tymoshenko disclosed at a news conference on May
16 that the Cabinet of Ministers is going to build an oil refinery in Odesa
with annual output of up to 10 million tons within one-and-a-half year's
time.

There are presently 6 oil refineries operating in Ukraine, including in
Odesa: Lysychansk oil refinery, Ukrtatnafta (Kremenchuk, Poltava region),
Kherson oil refinery, Odesa oil refinery, Halychyna refinery (Drohobych,
Lviv region) and Naftokhimik Prykarpattia (Nadvirna, Ivano-Frankivsk
region). The annual existing capacity of the Odesa oil refinery is nearly
3.6 million tons of crude oil. -30-
===============================================================
15. REVOLUTIONARIES IN UKRAINE NO LONGER SINGING SAME SONG

Chris Stephen in Kiev, Scotsman
Edinburgh and Glasgow, Scotland, Mon, May 23, 2005

KIEV - DEMONSTRATORS were again packing the streets of Kiev this
weekend, six months after their Orange Revolution. But this time their
focus was not on confrontations with riot police, but on a celebration of
Eurovision. Written off by many as kitsch, the song contest has provided
the focus for an outpouring of emotion.

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.

Victor Yushchenko, Ukraine's president, has cold-shouldered the movement,
grudgingly giving it a single cabinet post and telling Pora that if it wants
more, it will have to stand for election, just like anybody else.

Pora - it means "it is time" - is now trying to form a political party, but
its membership drifted away with the end of the street protests and, shorn
of its pro-democracy zeal, the leaders struggle to define what they stand
for.

For Eurovision, Pora reopened the camp it formed as a focus for the winter
revolution. But the Kiev authorities, having just resurfaced the roads,
ordered the camp be set up on an island on the Dnipr river, so barely a
tenth of the 5,000 expected inhabitants showed up.

Many, even inside the movement, now want Pora to stay out of politics,
instead 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, there are tensions between Mr Yushchenko and Julia Timoshenko,
his prime minister. During the revolution, they were an inseparable double-
act, with Mr Yushchenko playing the role of sober father- figure and Ms
Timoshenko providing the fire and the passion.

Since then, they have gone their own way.

Ms Timoshenko has worried economists by splashing out on a generous
programme of pensions and social payments that the government cannot
afford. That has made her popular, as has her shrill campaign to root out
corrupt tycoons who grew rich under the previous government. Dozens of
its privatisations have been revisited, starting with the sale of a giant
steel works by the 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.

Despite their squabbles, the Yushchenko-Timoshenko team remains popular,
regularly scoring 60 per cent in opinion polls. And most expect their
alliance to hold, if only out of self-interest. "They are destined to work
together," said Mr Burkovski. "If they break up, it will be a huge blow to
both."

Meanwhile. their opponents have lost ground. Victor Yanukovich, the former
prime minister who lost the presidential election to Mr Yushchenko, has seen
his popularity tumble. And the westerners living there say the downfall of
the old regime has eased corruption.

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

Rougher times lie ahead. Kiev may find a cash crisis because of Ms
Timoshenko's spending on social services, unless she can find extra money
from the anti-corruption investigations now under way.

But, for now, after a history of domination by Russia, the Soviet Union and
home-grown despots, many in Kiev are simply savouring democracy. "The
number one emotion you find on the streets is hope," one western diplomat
said.

Echoing that point, Anna Voznita, a hotel worker, said: "This is like a new
circle of history for us. It is not just empty optimism. With the
revolution, our country was reborn." -30-
===============================================================
16. EBRD: ECONOMIC GROWTH SLOWING ACROSS EASTERN
EUROPE AND FORMER SOVIET UNION
Ukraine's growth is expected to drop to 6.5 percent from 12.1 percent

By Marta Srnic, Bloomberg, London, Tuesday, May 24, 2005

LONDON -- The European Bank for Reconstruction and Development said
economies in Eastern Europe and the former Soviet Union will expand at a
slower pace this year as growth and demand for their exports wane in the
European Union.

The average gross domestic product growth probably will decline to 5.2
percent this year from 6.5 percent in 2004, the bank said in its latest
report. The London-based EBRD was set up in 1991 to help former
communist states build market economies.

"Going forward we expect we'll see a good year, but nothing as spectacular
as 2004," said EBRD chief economist Willem Buiter at a news conference on
Sunday. "The international economy is slowing down quite markedly, including
a further slowdown in the main market for many of our countries, which is
the EU."

Poland, Hungary and the Czech Republic and six other Eastern European
nations that joined the EU last year and potential members in the Balkans
are counting on high growth rates to bring their economies up to EU
standards. The countries, many of which export more than half their output,
depend on European growth to fuel economic expansion. They also need
to keep growth rates high to attract foreign investment and get new
technologies.

"The growth in the euro zone is expected to slow further or stagnate" and
"global liquidity is likely to decline," the EBRD said. "The U.S. Federal
Reserve is likely to continue a policy of moderate interest rate tightening,
although rates may have to rise significantly if inflationary pressures
increase."

At the same time, appreciating Eastern European currencies and slowing
inflation may prompt central bankers in the region to continue lowering
interest rates, which "could also contribute to a reduction of capital
inflows," the EBRD said.

The growth in the eight new EU members in Central Europe and the Baltic
states may slow to 4.7 percent from 4.9 percent in 2004. The Baltic
states -- Estonia, Latvia and Lithuania -- are expected to grow faster than
the Central European states.

In southeastern Europe, growth is expected to slow to 4.9 percent from
6.4 percent last year. The region includes Romania and Bulgaria, which
are planning to join the EU in 2007.

Growth in the former Soviet states is expected to decline to an average 5.7
percent rate from 7.8 percent, led by slowing growth in Ukraine. Ukraine's
growth is expected to drop to 6.5 percent from 12.1 percent. In Ukraine,
"after a year of very strong growth, macroeconomic policies need to be
tightened to address fiscal imbalances and reduce inflation," the bank said.

Azerbaijan's growth is expected to more than double to 21 percent as it
boosts oil and natural gas production after the scheduled opening of a $3.6
billion pipeline that will carry Caspian Sea oil from the capital, Baku, to
Turkey's Ceyhan port.

For the CIS investor, sentiment will depend on the attitude investors take
toward Russia, where "there were signs of heightened risk perception last
year," the EBRD said. "The business climate is mixed, very difficult, [with]
conflicting signals from the different parts of the government," Buiter
said. "It is clearly a country with an enormous potential, but one that
needs to make up its mind as to what kind of market economy it is willing
to create." -30- [The Action Ukraine Report Monitoring Service]
===============================================================
17. COMMISSION RECOMMENDS PRESIDENT DECORATE LATE
JOURNALIST GEORGI GONGADZE WITH TWO STATE AWARDS

Ukrinform, Kyiv, Ukraine, Monday, May 23, 2005

KYIV-The Commission for state distinctions and heraldry has recommended
President Viktor Yushchenko to posthumously decorate the late journalist
Georgi Gongadze with the State Order and confer the Hero Of Ukraine title
upon him according to the President's press service.

President Yushchenko was reported to have supported the initiative. As Mr
Yushchenko put it, Georgi Gongadze helped Ukraine to rise from its knees
and so he was a real hero. President Yushchenko was also reported to have
reiterated his promise to bring the Gongadze case to court, make the names
of those who masterminded and ordered the murder known to the society.
===============================================================
18. PRESIDENT: TODAY'S UKRAINE IS WHAT TARAS SHEVCHENKO
DREAMED ABOUT AND POET'S CHERISHED DREAMS CAN COME TRUE
Taras Shevchenko's works keep inspiriting new generations

Ukrinform, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - Speaking at a literary-artistic festival in Kaniv Sunday, dedicated
to the great poet Taras Shevchenko, President Viktor Yushchenko stated
the Ukrainian nation's strength as stemming from spiritual unity. Today's
Ukraine, President Yushchenko noted, is precisely the nation Taras
Shevchenko dreamed about, that is, a really free, independent sovereign
nation.

Taras Shevchenko's works keep inspiriting new generations of the Ukrainian
people to selflessly toil for the good of the nation. Taras Shevchenko's
values remain immortal as these are consonant to today's realities.

The great poet wished to see the Ukrainian people free, democratic,
affluent, and today Ukraine has a unique chance to make the poet's most
cherished dreams come true. If we enjoy no blessing for every deed we
will accomplish nothing, President Yushchenko stressed.

The Head of State, his spouse and younger children attended a service at
the Dormition Cathedral in Kaniv. Verkhovna Rada Chairman Volodymyr
Lytvyn and Prime Minister Yuliya Tymoshenko participated in the Shevchenko
events in Kaniv. -30- [The Action Ukraine Report Monitoring Service]
===============================================================
19. UKRAINIAN FILM WAYFARERS AWARDED CANNES GOLD
PALM IN SHORT-REEL DIVISION

Ukrinform, Kyiv, Ukraine, Monday, May 23, 2005

KYIV - Ukraine's debut at the Cannes Film Festival brought the nation its
first-ever trophy. The ten-minute film Wayfarers, which was shot by Igor
Strembitsky, 32, who graduated from the Kyiv I. K. Karpenko-Kary University
of theater, cinema and television, was awarded the Gold Palm in the short
film division.

It took Igor Strembitsky three years to shoot the film, which cost only
15,000 UAH (about 3,000 USD). President Viktor Yushchenko sent
a message of congratulations to Igor Strembitsky.

["With his work this filmmaker has shown once again that Ukraine may be
of interest to the world," the statement reads. Yuschenko also wished
Strembytskyi and his wife Natalia Kononchuk success and new bright
ideas.] [Ukrainian News Service] -30-
===============================================================
20. 2005 STARS OF EUROPE -- AGENDA SETTERS
25 Leaders at the Forefront of Change
Viktor Yushchenko - President, Ukraine

Section about Viktor Yushchenko - President, Ukraine
By Jason Bush and Roman Olearchyk
Business Week, Moscow, Paris, May 30, 2005 edition

VIKTOR YUSHCHENKO - PRESIDENT, UKRAINE

Until recently, most people regarded Ukraine as an international backwater,
not a beacon of freedom for the new Europe. But that changed last November,
when the world watched transfixed as opposition leader Viktor Yushchenko
led a peaceful revolution. Backed by millions of protesters in Kiev and
other cities who braved subzero temperatures to defend their right to a free
election, he forced the government to hold a repeat ballot -- and won by a
wide margin. In the process, Yushchenko, now President of Ukraine, has
become a revolutionary leader in the tradition of Vaclav Havel, Lech Walesa,
and more recently, Georgia's Mikheil Saakashvili.

Six months later, Ukrainians are putting the revolution behind them and
picking up the pieces of their everyday lives. Some are disappointed that
change isn't coming as fast as they expected. But overall most Ukrainians
are feeling pretty positive about the future: Consumer confidence reached an
all-time high in the first quarter of the year, and 54% of the population
approves of the new government's agenda, vs. 17% who don't, according to
an April poll by Democratic Initiatives Foundation. "I still have high hopes
that the new team will come through with the reforms they promised, though
it's becoming clear that the process will be difficult," says Fedir, a café
owner in Kiev.

In the larger world the movement Yushchenko launched, dubbed the Orange
Revolution after the color worn by his supporters, has shaken up political
agendas from Brussels to Moscow. It showed that a decade and a half after
the end of the cold war, Europe is not doomed to a new continental divide
that would abandon Ukraine and the other states of the old Soviet Union to
authoritarian systems characterized by rigged elections and political
intimidation. "Free and fair elections have brought a new generation of
politicians to power, not encumbered with the mentality of the Soviet past,"
Yushchenko told the U.S. Congress on Apr. 6.

Yushchenko, 51, has made membership in the European Union a central
plank of his political agenda, forcing the EU to redefine its policy toward
the former Soviet states. His victory has strengthened the hand of new EU
members in central and eastern Europe, led by Poland, that favor eventual
expansion of the EU farther to the east. In the former Soviet states the
Ukrainian revolution has been a bombshell.

It has inspired a copy-cat uprising in Kyrgyzstan, where autocratic ruler
Askar Akayev was toppled in April. In Russia the Orange Revolution has
starkly exposed the limits of "managed democracy," leading to intense
speculation about possible upheavals in 2008, when President Vladimir
V. Putin is due to step down.

The long-term effects may turn out to be even more significant. If
Yushchenko succeeds in turning Ukraine into a European-style democracy,
it will set a hugely positive example for all the states in the region,
particularly Russia. It's too early to say whether hopes of radical reform
in Ukraine will be fulfilled. But Yushchenko has made early symbolic moves,
such as replacing 18,000 state officials to show his determination to reform
the bureaucracy. And he has begun to expose the massive corruption of the
previous regime, moving to revise the results of controversial
privatizations. There's a danger that this drive could turn into a crude
settling of scores with his political enemies. But Yushchenko says the
review will revisit only the most notorious cases and promises that new
sales will be open to foreigners.

The new President's worldview is shaped by deep personal convictions.
"The main driving force behind him is his patriotism and strong faith in
God, which he got from his parents," says Kateryna Chumachenko,
Yushchenko's American-born wife. "Their upbringing made him a strong
believer in the battle of good vs. evil." Yushchenko's father survived
Auschwitz and refused to join the Communist Party when he returned to
Soviet Ukraine.

The lack of a party card limited his career opportunities, and he became a
village schoolteacher. Like his father, Yushchenko has had to pay a price
for his beliefs. Once admired for his rugged good looks, he was permanently
disfigured by an attempt to poison him during last year's election campaign.

His early career hardly suggested a revolutionary hero in the making.
Trained as an agricultural accountant, he worked his way up through the
USSR State Bank, becoming governor of Ukraine's National Bank in 1993.

His financial skills came to the fore in 1998 when he stewarded the
Ukrainian currency through the devastating Russian financial crisis. That
success led to his appointment as Prime Minister in 1999. Yushchenko's
market-based reforms kick-started a boom that has continued ever since.

Despite these achievements, Yushchenko was forced out of office in April,
2001, when his rising popularity made him a threat to President Leonid
Kuchma and the clan of businessmen around him. Many doubted that the
mild-mannered banker had what it takes to stage a comeback in the dirty
and often violent world of Ukrainian politics.

But Yushchenko's dismissal only boosted his popularity, enabling him to
unite the fractious opposition and turning him into a hero to the many
Ukrainians who were fed up with corruption and the country's growing
political repression.

The rest, as they say, is history. -30--
===============================================================
21. EXHIBITION: JACQUES HNIZDOVSKY WOODCUTS
Thursday, May 26, 2005 (7 p.m.); Ukraine Embassy Washington

Svitlana Fedko Shiells, Chair
The Washington Group Cultural Fund
Washington, D.C., Monday, May 16, 2005

WASHINGTON - The Washington Group Cultural Fund in cooperation with
The Embassy of Ukraine invite you to an exhibit of woodcuts by JACQUES
HNIZDOVSKY (1915-1985) one of the foremost woodcut artists in America.

The exhibition will be held at The Embassy of Ukraine, 3350 M Street, N.W.,
Washington, D.C. on Thursday, May 26, 2005, starting at 7 p.m.

During the exhibit and reception, there will be an opportunity to purchase
the woodcuts on display. RSVP by May 25 by e-mail: nholub@ukremb.com
or telephone Svitlana Fedko Shiells (703) 506-4745. -30-
===============================================================
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7. ODUM- Association of American Youth of Ukrainian Descent,
Minnesota Chapter, Natalia Yarr, Chairperson
8. UKRAINIAN FEDERATION OF AMERICA (UFA),
Zenia Chernyk, Chairperson; Vera M. Andryczyk, President;
Huntingdon Valley, Pennsylvania
9. UKRAINE-U.S. BUSINESS COUNCIL, Washington, D.C., Van
Yeutter, Cargill Inc., Interim President; Jack Reed, ADM, Interim
Vice President; Morgan Williams, SigmaBleyzer, Interim Secretary-
Treasurer
10. UKRAINIAN AMERICAN COORDINATING COUNCIL,
(UACC), Ihor Gawdiak, President, Washington, D.C., New York, NY
11. U.S.-UKRAINE FOUNDATION (USUF), Nadia Komarnyckyj
McConnell, President; John Kun, Vice President/COO, Washington,
D.C.; Markian Bilynskyj, VP/Director of Field Operations; Kyiv,
Ukraine. Web: http://www.USUkraine.org
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PUBLISHER AND EDITOR - AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer Private Equity Investment Group
P.O. Box 2607, Washington, D.C. 20013, Tel: 202 437 4707
mwilliams@SigmaBleyzer.com; www.SigmaBleyzer.com
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Director, Ukrainian Federation of America (UFA)
Coordinator, Action Ukraine Coalition (AUC)
Senior Advisor, U.S.-Ukraine Foundation (USUF)
Interim Secretary-Treasurer, Ukraine-U.S. Business Council
Publisher, Ukraine Information Website, www.ArtUkraine.com
& www.ArtUkraine Information Service (ARTUIS)
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