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Action Ukraine Report

"THE ACTION UKRAINE REPORT - AUR"
An International Newsletter
The Latest, Up-To-Date
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 525
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, TUESDAY, July 19, 2005

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

1. UKRAINE - RECENT DEVELOPMENTS
Dr. Edilberto Segura, President,
Advisory Board, The Bleyzer Foundation;
Chief Economist, SigmaBleyzer
SigmaBleyzer Newsletter
Kyiv, Ukraine, Tuesday, July 19, 2005

2. DERMATOLOGISTS SAY UKRAINIAN PRESIDENT IN
"VERY GOOD SHAPE"
Interfax-Ukraine news agency, Kiev, in Russian, 18 Jul 05
BBC Monitoring Service, UK, in English, Mon, Jul 18, 2005

3. SWISS DOCTORS SAY YUSHCHENKO IN GOOD HEALTH
Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

4. YUSHCHENKO TO ELIMINATE DEPARTMENT OF STATE TRAFFIC
POLICE OF UKRAINIAN INTERIOR MINISTRY
Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

5. UKRAINE'S PRESIDENT ABOLISHES SPECIAL NUMBER
LICENSE PLATES FOR POLICE AND OFFICIALS
TV 5 Kanal, Kiev, in Ukrainian 1600 gmt 18 Jul 05
BBC Monitoring Service, UK, in English, Mon, Jul 18, 2005

6. YUSHCHENKO CALLING ON POLICE TO COMMUNICATE
WITH CITIZENS IN UKRAINIAN
Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

7. UKRAINIAN INTERIOR MINISTER SAYS PRESIDENT'S
CRITICISM JUSTIFIED
TV 5 Kanal, Kiev, in Ukrainian 1800 gmt 18 Jul 05
BBC Monitoring Service, UK, in English, Mon, July 18, 2005

8. PRESIDENT YUSHCHENKO APPOINTS NEW HEAD OF UKRAINE'S
WTO NEGOTIATIONS DELEGATION
Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

9. POLAND SUPPORTS UKRAINE'S EU, NATO BID
PAP news agency, Warsaw, in English 0936 gmt 18 Jul 05
BBC Monitoring Service, UK, in English, July 18, 2005

10. RADIO FREE EUROPE/RADIO LIBERTY UKRAINIAN BROADCASTS
TO BE DISTRIBUTED NATIONWIDE ON THE NASHE RADIO NETWORK
Radio Free Europe/Radio Liberty (RFE/RL)
Washington, DC, Monday, July 18, 2005

11. HEWLETT-PACKARD CONSIDERING THE ASSEMBLY OF ITS
PERSONAL COMPUTERS IN UKRAINE
UNIAN, Kyiv, Ukraine, Monday, July 28, 2005

12. UKRAINE BOND MARKET STARTS STEADFAST DEVELOPMENT
ANALYSIS: Roman Bryl, Ukraine Analyst
IntelliNews - Ukraine This Week,
Kyiv, Ukraine, Monday, July 18, 2005

13. UKRAINIAN AGRARIAN FUND WANTS A LOAN OF UAH 630 MILLION
FROM GOVERNMENT TO BUY GRAIN
Ukrainian News Agency, Kyiv, Ukraine, Wed, July 13, 2005

14. PRES YUSHCHENKO DIRECTS CABINET OF MINISTERS: CREATE
ONE MILLION JOBS PER YEAR IN UKRAINE DURING 2006-2009
Ukrainian News Agency, Kyiv, Ukraine, Tue, July 12, 2005

15. UKRAINE FACES GAS WAR ON THREE FRONTS
Russia's economic agenda has little room for
subsidising sale to neighbouring countries
ANALYSIS AND COMMENTARY: By Igor Tomberg,
Senior Researcher, Russian Academy of Sciences'
Institute of World Economic and Political Studies
RIA Novosti, Moscow, Russia, Saturday, July 16, 2005

15. YUSHCHENKO CLIMBS HOVERLA HILL COMMEMORATES FIFTEENTH
ANNIVERSARY OF UKRAINE'S DECLARATION OF SOVEREIGNTY
Parliament of Ukrainian Soviet Republic acted on July 16, 1990
Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

16. MONUMENTS TO HONOUR UKRAINIAN INSURGENT ARMY (UPA)
CANNOT BE ERECTED IN POLAND
PAP news agency, Warsaw, Poland, Monday, July 18, 2005

17. GEORGIAN PRESIDENT LASHES OUT AT MEMBER OF UKRAINIAN
PARLIAMENT TARIEL VASADZE WHO OWNS POWER GRID
IN KAKHETI REGION IN EASTERN GEORGIA
Imedi TV, Tbilisi, in Georgian 1500 gmt 17 Jul 05
BBC Monitoring Service, UK, in English, Sun, July 17, 2005

18. UKRAINE SUPPORTS GEORGIA'S PLAN ON SOUTH OSSETIA
UNIAN news agency, Kiev, in Ukrainian 1048 gmt 16 Jul 05
BBC Monitoring Service, UK, in English, Sat, Jul 16, 2005

19. A BEACON OF LIBERTY FLICKERS: OBSERVATIONS ON GEORGIA
ANALYSIS AND COMMENTARY: By Charles Grant
Director of the Centre for European Reform
New Statesman, UK, Monday, July 18, 2005

20. IDEA OF UKRAINIAN AND GEORGIAN AUTHORITIES TO
REVIVE GUUAM IS DUBIOUS
An American project where Georgia and Ukraine perform the key roles
Three scenarios for development of the situation in Georgia
COMMENTARY: Interview with Alexander Chachia
Chairman, Samegrelo People's Movement
PRAVDA, Moscow, Russia, Saturday, July 16, 2005

21. FEDERAL UKRAINE?
COMMENTARY: by Alexei Makarkin, Deputy General Director
Center for Political Technologies
RIA Novosti, Moscow, Russia, Mon, July 11, 2005

22. THE FATE OF "POLITICAL TECHNOLOGY"
COMMENTARY: by Andrew Wilson
The Moscow Times, Moscow, Russia, Tue, July 12 2005

23. LOVE AND DEATH IN RUSSIA
The last tsar of Russia and his family, heading into history.
By Susan Mansfield, The Scotsman
United Kingdom, Sat, July 16, 2005
=============================================================
1. UKRAINE - RECENT DEVELOPMENTS

Dr. Edilberto Segura, President,
Advisory Board, The Bleyzer Foundation,
Chief Economist, SigmaBleyzer
SigmaBleyzer Newsletter,
Kyiv, Ukraine, Tuesday, July 19, 2005

The first half of 2005 brought mixed results for Ukraine.

On the positive side, the goodwill created by the Orange Revolution helped
to improve the international image of Ukraine. The President concentrated
his efforts to visit a large number of countries. As a result of these
public relations campaigns and the perceived lower political risk of
Ukraine, there is a growing interest of foreign investors on Ukraine.

Nevertheless, most investors are still in a "wait-and-see" attitude, pending
concrete improvements in the country's business environment.

On the other hand, on the domestic side, the economic situation continued
to deteriorate. The real economy decelerated and by mid-year GDP had
grown by only 4.7% on a year-to-year basis. This was less than half the
rate of growth achieved in 2004.

With large increases in social payments, the fiscal budget situation also
deteriorated. By July 2005, the fiscal budget was in deficit and is
expected to remain so during the year.

This deterioration in the fiscal situation happened despite the revenue
increases achieved by the government (principally from the cancellation
of tax exemptions and privileges and improved customs collections) and
despite the fact that major public investments were postponed.

The external accounts were also less favorable. In January-April, the
merchandise trade surplus narrowed to $800 million, less than half as over
the same period last year. The deteriorated economic situation was also
reflected in a high rate of inflation, which reached 14.6% by mid-year
(year-to-year).

The key macroeconomic challenges facing Ukraine today were analyzed by
an IMF mission that visited Kiev on June 1-7. The mission concluded that
accelerating inflation is the most urgent problem that the government needs
to address immediately. To bring inflation back down to single digits, the
IMF recommended the following actions:

(1) tighten monetary policy by allowing more flexibility to the
exchange rate;
(2) assure stronger fiscal discipline in order to achieve the
optimistic fiscal targets for 2005.
(3) accelerate implementation of market-friendly structural reforms,
including quick resolution of the re-privatization issue.
(4) demonstrate a more unified and coherent macroeconomic
strategy (cooperation between the NBU and the government should be
more effective in order not to send contradictory signals to market
participants.)

The EU also signaled its displeasure with the current situation by denying
Ukraine a market economy status during the recent meeting of the Ukraine-
EU Cooperation Council. The EU postponed its decision on granting
functioning market economy status to Ukraine emphasizing concerns over
the government's intervention in price setting via non-market mechanisms.

The recent crisis on the gasoline market as well as earlier attempts by the
government to reduce meat prices were the likely reasons preventing the EU
from granting market economy status.

The goal of membership in the World Trade Organization in 2005 is now in
jeopardy, due to the failure by Rada to approve 15 draft laws required for
membership. Before its recession in July, Rada approved only 7 laws. Eight
other draft laws were either rejected or not considered. These eight laws
will have to be approved early in the fall to secure WTO membership in 2005.

President Yushchenko is fully aware of these set backs and has declared that
the second half of 2005 would be the period for major economic reforms in
Ukraine to improve the country's business environment.

SigmaBleyzer/The Bleyzer Foundation has sent to the President's office
several notes with our suggestions on the measures that the government
should take.

These recommendations are contained in several recent reports that are
available in the SigmaBleyzer web site (http://www.SigmaBleyzer.com). A
summary of the main recommendations are as follows:

SHORT TERM REFORMS:

(1) Perform quick deregulation and liberalization of business
activities by implementing a "regulatory guillotine"
(2) Eliminate other excessive administrative interventions in
businesses
(3) Enact key pending legislation (e.g., the Joint Stock Companies
law)
(4) Improve image through more frequent communication and
better transparency.
(5) Clarify the Government's policy on Privatization
(6) Create an Investment Promotion Agency
(7) Implement specific promotional activities for large investors:
Identify major projects, carry out targeted promotional campaigns,
identify niches/sectors.
(8) Implement specific promotional activities for small/medium
firms: access to bank credit, better information on laws, and the
business environment

LONG TERM REFORMS:

(1) Ensure "sustainable" fiscal deficits and low inflation (the 2005
deficit can be financed and capital expenditures curtailed; thereafter,
the budget must be sustainable).
(2) Implement a fundamental public administration reform by
undertaking a comprehensive "audit" of government activities (this will
help to improve administrative efficiency, deal with corruption and also
bring equilibrium to the fiscal budget)
(3) Strengthen monetary and foreign exchange rate activities (to
abandon the exchange rate anchor, techniques for inflation targeting
must be developed -open market operations, forecasting models)
(4) Liberalize trade, secure market economy status, join the WTO and
sign free trade agreements with the CIS, EU, US and other countries
(5) Improve the legal environment (particularly by ensuring the
independence of the Judiciary.) -30-
=============================================================
2. DERMATOLOGISTS SAY UKRAINIAN PRESIDENT IN
"VERY GOOD SHAPE"

Interfax-Ukraine news agency, Kiev, in Russian, 18 Jul 05
BBC Monitoring Service, UK, in English, Mon, Jul 18, 2005

KIEV - Ukrainian President Viktor Yushchenko feels good, he is in good
health, the former president of the European dermatology association and
the head of Geneva University's hospital, professor Jean Sora
[as received], has said.

"Viktor Yushchenko's is in very good health. He has no problems with his
internal organs - from head to toe, including his head, heart, lungs, liver
and pancreas," Sora said at a briefing in Kiev today. He said the
president's recent ascent of Hoverla (the highest Ukrainian Carpathian
mountain, 2061m) on 16 July only attested to this.

Sora said Yushchenko's appearance does not reflect the condition of his
internal organs as the dioxin (which was allegedly used to poison the
president when he was running for office) can be taken out of the human
body only gradually. "This is a lengthy process. Ridding a body of dioxins
may take years, but we are going to expedite it so it goes quicker," he
said. [Passage omitted: details of Yushchenko's medical treatment
abroad.]

Sora confirmed that Yushchenko was poisoned. "We have done the
research and it proves the president was poisoned," he said, adding that
a big quantity of dioxins was found in Yushchenko's body and "everyone
knows that dioxin is a poison".

Sora also said to treat Yushchenko they are using a special molecular
method. "We are using an advanced molecular method we have not used
before. We know the method to expedite ridding a body of dioxins," he said.

Head of the medical directorate of the Directorate for State Affairs, Vasyl
Knyazevych, told the news conference that Ukrainian specialists are involved
in treating the president as well. -30-
=============================================================
3. SWISS DOCTORS SAY YUSHCHENKO IN GOOD HEALTH

Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

KYIV - Swiss doctors have told the press in Kyiv that President Viktor
Yuschenko is in good health. The statement was made by Professor
Jean-Hilaire Saurat and head of the Geneva University Hospital's Depart-
ment of Dermatology, biochemist Olivier Sorg, who is also a full member
of the International Dermatology Committee and the ex-president of the
European Dermatology Association.

According to Professor Sorg, general health of the president is good,
especially where it concerns internal parts of his body. As a proof, Sorg
mentioned Yuschenko's ascent of Hoverla mount on Saturday, July 16 and
explained that after dioxin poisoning, skin usually helps the body to get
rid of the poison and this is why it is the last to recover.

Answering the question of Ukrainian News, Sorg noted that they are offering
treatment not as private doctors, but on behalf of the University Hospital.
Sorg stated that they diagnosed dioxin poisoning in the case of Yuschenko,
but are unable to give the exact date of poisoning as the accident happened
quite a while ago. "Today we can establish the date to an extent of several
weeks," he said.

Judging by the nature of poisoning, Sorg concluded that nothing speaks for
the fact that dioxin was applied against the president several times.
President's spokeswoman Iryna Heraschenko told the press that Yuschenko
visited the Swiss doctors thrice and they also visited him in Ukraine three
times in the first half of 2005. Sorg added that he had provided
consultations to Yuschenko before he became president.

Heraschenko informed that Yuschenko's treatment costs are paid by his
family. The doctors declined to answer when his body will be eventually
clean of dioxin, saying that the process can take years, but their methods
serve to speed it up.

As Ukrainian News earlier reported, Yuschenko concluded his visit to
Poland on July 1 and traveled from Gdyna to Geneva for scheduled
medical consultations. The director of Austria's Rudolfinerhaus clinic,
Michael Zimpfer, said that Yuschenko was deliberately poisoned with dioxins.

The interim parliamentary commission set up to investigate the circumstances
surrounding the poisoning of Yuschenko said in November 2004 that it was
unable to confirm the claims that an attempt was made on the life of
Yuschenko. Earlier, media reports had indicated that Yuschenko might have
been poisoned on September 5, 2004, during a dinner with then-SBU
Chairman Ihor Smeshko and his Deputy Volodymyr Satsiuk. -30-
=============================================================
4. YUSHCHENKO TO ELIMINATE DEPARTMENT OF STATE TRAFFIC
POLICE OF UKRAINIAN INTERIOR MINISTRY

Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

KYIV - President Viktor Yuschenko intends to eliminate the department of
the state traffic police of the Interior Ministry. He announced this during
the meeting on the results of the Interior Ministry operation in the first
half of 2005. The President criticized the operation of the state traffic
police and its administration.

"I am asking my question for the 10th time: What are your people doing on
the road?", Yuschenko said to the department head, Serhii Kolomiets.
According to the President, he personally had cases when traffic police
officers were patrolling roads to get bribes. "Because it is necessary to
gather money. This is being done in your sight, General," Yuschenko told
Kolomiets.

The President said he had decided to eliminate the state traffic police at
all. "That is why I decided - there will be no state traffic police in
Ukraine at all," the President said. He said a decree to this effect would
be drafted in 24 hours.

As Ukrainian News reported, Interior Minister Yurii Lutsenko criticized the
Interior Ministry's state traffic department for poor performance. -30-
=============================================================
5. UKRAINE'S PRESIDENT ABOLISHES SPECIAL NUMBER
LICENSE PLATES FOR POLICE AND OFFICIALS

TV 5 Kanal, Kiev, in Ukrainian 1600 gmt 18 Jul 05
BBC Monitoring Service, UK, in English, Mon, Jul 18, 2005

KYIV - [Presenter] Another sensational decision by the president: there will
be no more special number plates for officials in Ukraine. In order to make
everybody equal on the roads, Viktor Yushchenko has proposed that the
police check cars with plates marked VR [parliament], KM [cabinet] and
(MI) more than others.

[Yushchenko, addressing police officials at the Interior Ministry] As soon
as we allow the police to have their own numbers, then everyone will be
tempted: how will the SBU [Security Service of Ukraine] survive? It will die
if it doesn't have its own number plates!

Then the Prosecutor-General's Office - how will it get by? And so on, until
we end up with a situation where all bodies of power have to have their own
special number plates, and officials become untouchable, and they're
allowed to behave in special way on the roads. That's not going to happen.
I won't allow it.

[Presenter] And after the meeting, the president got into his car - which
has ordinary number plates. However, the head of the presidential
secretariat said special plates are being abolished for all officials apart
from the speaker, the prime minister and the president.

[Oleksandr Zinchenko, captioned as state secretary] Special number plates
will all be abolished, the so-called special series, except for a few state
officials. Most likely this will be the president, the Supreme Council
[parliament] speaker and the prime minister. -30-
=============================================================
6. YUSHCHENKO CALLING ON POLICE TO COMMUNICATE
WITH CITIZENS IN UKRAINIAN

Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

KYIV - President Viktor Yuschenko is calling on police officers to
communicate with citizens in Ukrainian. Yuschenko made the statement
at a meeting summarizing performance of the Internal Ministry in the first
half of 2005.

The President addressed the police with such a call after head of the
Internal Ministry department in Zaporizhia region Viktor Bondar spoke out
and apologized for speaking in Russian.

"You have to execute the law of language, which says that state officials
should know Ukrainian, even if broken," the president said.

As Ukrainian News reported earlier, in October 2004 Yuschenko's press
service noted quoting him that, according to the Constitution, all citizens
have a right to speak their native language, including Russian.

One of Yuschenko's pre-election promises was provision of guarantees for
the use of the Russian language and the languages of other nationalities in
Ukraine in places where they are densely populated. -30-
=============================================================
7. UKRAINIAN INTERIOR MINISTER SAYS PRESIDENT'S
CRITICISM JUSTIFIED

TV 5 Kanal, Kiev, in Ukrainian 1800 gmt 18 Jul 05
BBC Monitoring Service, UK, in English, Mon, July 18, 2005

Ukrainian Interior Minister Yuriy Lutsenko has said President Viktor
Yushchenko's harsh criticism of the police's performance, which led to the
dismissal of two regional police officials and the president's decision to
abolish the traffic police, was unexpected, but justified.

"I did not expect this harsh appraisal of our performance, but can
understand his dissatisfaction," Lutsenko said in a live interview to the 5
Kanal TV channel on 18 July.

Lutsenko said he would work on the president's order to purge the traffic
police notorious for "milking drivers on the roads" and come up with
proposal to create a new European-style road police in Ukraine.

During the interview the minister answered questions from TV viewers
and paid special attention to the progress of the investigation of
election-related crimes. He said that since his appointment to the post,
around 1,000 criminal cases have been opened against electoral officials
involved in vote-rigging during the presidential election of 2004.

Lutsenko stressed that completing investigation of the cases and forwarding
them to courts becomes a priority ahead of the forthcoming parliamentary
election campaign.

"I promised the president today that investigation of the election-related
crimes would be completed by the end of August, as the election campaign
starts in autumn," he said.

Lutsenko believes the future election campaign would be much more fair and
transparent than the notorious mayoral election in Mukacheve in spring 2004.
"As long as I am the interior minister, there will not be another Mukacheve
with citizens beaten up and voters pressurized in any city or town of
Ukraine." "The police will not steal ballots, pressurize voters or prevent
voters' or electoral officials' access to polling stations."

Asked to comment on the so called "black list" of officials who have
allegedly committed various crimes released by the Pora party, Lutsenko
said he viewed the Orange Revolution as an uprising against crime and
has compiled his own list of officials who in his view should be brought to
account. "I have 612 regional officials on my own list ," he said, "some of
them have been charged with abuse of office."

Commenting on the "mass exodus" from Ukraine of the former regime's
officials who fear prosecution, Lutsenko said he seeks to make sure they
do not come back to Ukraine later as "white knights of political
opposition". "I reiterate there is no political persecution in Ukraine.
There is prosecution for crimes and abuse of office," he said. -30-
=============================================================
8. PRESIDENT YUSHCHENKO APPOINTS NEW HEAD OF UKRAINE'S
WTO NEGOTIATIONS DELEGATION

Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

KYIV - President Viktor Yuschenko has appointed Deputy Economy Minister
Andrii Bereznyi as head of the delegation at the negotiations on Ukraine's
accession to the World Trade Organization to replace Valerii Piatnytskyi.

Ukrainian News learned this from the presidential decree on the new makeup
of the Ukrainian delegation at the talks on Ukraine's accession to WTO.

The delegation members are:
[1] Deputy Industrial Policy Minister Viktor Baranchuk,
[2] Deputy Environmental Protection Minister Serhii Berezhnov,
[3] Deputy Chairman of the State Property Fund Vadym Vasyliev,
[4] First Deputy Agricultural Policy Minister Ivan Demchak,
[5] Foreign Affairs Ministry ambassador at large Vitalii Yokhna,
[6] Deputy Chairman of the State Tax Administration Mykola Katerynchuk,
[7] Deputy Justice Minister Vasyl Marmazov, Head of the State Committee
for Technical Regulation Mykola Nehrych,
[8] Deputy Head of the State Statistics Committee Yurii Ostapchuk,
[9] Head of the State Intellectual Property Committee Mykola Paladii,
[10] Deputy Head of the State Customs Service Pavlo Pashko,
[11] Deputy Finance Minister Vasyl Rehuretskyi,
[12] Deputy Transport Minister Pavlo Riabikin,
[13] Director of the Economy Ministry's Department on Cooperation with
WTO Viacheslav Tsymbal,
[14] First Deputy Head of the Antimonopoly Committee Serhii Chernenko,
[15] National Bank Deputy Chairman Serhii Yaremenko.

As Ukrainian News earlier reported, President Leonid Kuchma appointed
Economy Ministry State Secretary for European integration Valerii
Piatnytskyi as head of the delegation at the negotiations on Ukraine's
accession to WTO to replace Andrii Honcharuk in June 2003. -30-
=============================================================
9. POLAND SUPPORTS UKRAINE'S EU, NATO BID

PAP news agency, Warsaw, in English 0936 gmt 18 Jul 05
BBC Monitoring Service, UK, in English, July 18, 2005

WARSAW - Poland supports moves designed to help Ukraine get a prospect
of its NATO and EU membership, deputy Foreign Minister Andrzej Zalucki told
the second session of the Parliamentary Assembly of Poland and Ukraine on
Monday [18 July].

We support the plan to grant our neighbour a status of a market economy
country. Poland supports Ukraine's joining the World Trade Organization and
moves designed to simplify visa procedures with that country, Zalucki said.

Zalucki admitted that the rejection of the EU Constitution in France and the
Netherlands made the EU find itself in a crisis situation. The minister
stressed that owing to Poland's support for the Orange Revolution in Ukraine
Poles and Ukrainians got much closer to each other. -30-
=============================================================
10. RADIO FREE EUROPE/RADIO LIBERTY UKRAINIAN BROADCASTS
TO BE DISTRIBUTED NATIONWIDE ON THE NASHE RADIO NETWORK

Radio Free Europe/Radio Liberty (RFE/RL)
Washington, DC, Monday, July 18, 2005

WASHINGTON - Starting today, programs produced by Radio Free Europe/
Radio Liberty's (RFE/RL) Ukrainian Service, known locally as Radio Svoboda,
will again be distributed nationwide in Ukraine. Radio Svoboda's partner in
the venture is Nashe Radio, one of Ukraine's preeminent radio networks with
29 FM transmitters covering all of the major population centers in Ukraine.

Under the terms of the partnership, four specially-prepared five-minute
Radio Svoboda news analysis programs will be broadcast by Nashe Radio
at 2:30PM, 3:30PM, 5:30PM and 6:30PM local time (UTC+3).

RFE/RL President Thomas A. Dine welcomed the agreement enthusiastically,
in a letter sent to Nashe Radio General Manager Bogdan Kozachenko on July
5. Dine wrote, "Our partnership with Nashe Radio represents an important
moment for Radio Free Europe/Radio Liberty -- with this joint venture we
will define a new kind of radio programming and format for Radio Liberty's
Ukrainian Service. My colleagues and I are already preparing to meet this
challenge with rigor and enthusiasm."

Nashe Radio (http://www.nasheradio.ua/) programming is
entertainment-oriented, focused on Ukrainian and Russian-language pop
music with a significant news component in the Ukrainian language. In order
to add a new dimension to Nashe Radio's news and information programming,
a dedicated team of Radio Svoboda broadcasters based in Nashe Radio's
studios in Kyiv will produce the four program segments every Monday through
Friday.

The programs, which will develop a single theme throughout the day, will
address a wide range of topics on Ukrainian themes that cover all aspects of
life of interest and concern to Nashe Radio listeners, according to RFE/RL
Associate Director of Broadcasting Frank Williams.

RFE/RL's Ukrainian Service broadcasts nearly 7 hours of programming a
day Monday through Friday, and 3 hours every Saturday and Sunday, with
programs produced in Prague and the service's Kyiv Bureau and transmitted
to listeners via shortwave, satellite and AM and FM signals provided by
local affiliate stations in Ukraine. Ukrainian Service programming is also
available via the Internet, at the service's website www.radiosvoboda.org
and at www.rferl.org. -30-
--------------------------------------------------------------------------------------------------------
Radio Free Europe/Radio Liberty is a private, international communications
service to Central, Eastern and Southeastern Europe; the Caucasus; and
Central and Southwestern Asia funded by the U.S. Congress through the
Broadcasting Board of Governors.
--------------------------------------------------------------------------------------------------------
CONTACT: Donald Jensen 202-457-6947; Anna Rausova 420-221-122-114
Radio Free Europe / Radio Liberty (RFE/RL)
1201 Connecticut Ave NW, Washington, DC 20036
tel: 202-457-6900; fax: 202-457-6992; http://www.rferl.org
=============================================================
11. HEWLETT-PACKARD CONSIDERING THE ASSEMBLY OF ITS
PERSONAL COMPUTERS IN UKRAINE

UNIAN, Kyiv, Ukraine, Monday, July 28, 2005

KYIV - Hewlett-Packard Company, the world's leader in the field of the
IT-solutions is contemplating the opportunity of starting to assemble its
personal computers in Ukraine, according to a press release obtained by
UNIAN from the Company.

In Ukraine Hewlett-Packard holds the leading position in categories of
notebooks, printers and servers. The PC category of this global brand is
not so well-known to Ukrainian users, even though Hewlett-Packard holds
the 1st place in Europe in their PCs sales, - i.e. in the consumers'
preference (according to the IDS reports for 1st quarter 2000 thru 1st
quarter 2005).

Such situation can only be explained by the fact that for a long time in
this country because of the high import duty tax on PCs the latter's prices
have been unduly high. The production of PCs in Ukraine will allow
considerable reduction of these products' prices, thus making the HP
quality more affordable both for corporate clients and for individual users.

For the Hewlett-Packard company this is a strategically important step
made in the Ukrainian market, for the consumers - it means the availability
of the break-through technologies and more effective business time
management.

According to Gilles Lambinet, Sales and Marketing Manager of Personal
Systems Group in Europe, ISE region "the development of each new line of
PCs requires the investment of approximately USD 8M, and new products
are introduced several times a year. Only major international companies can
afford to make such investments. However these expenses pay back in the
reliable work of equipment and its ability to fully meet the demands of the
consumers".

The PC productions standards of HP guarantee to the Ukrainian user the same
flawless product quality as it does in any other country of the world, since
the company maintains one and the same QC system all over the world. For
example, the testing manual is a 60-page book full of detailed instructions,
each of which is mandatory for any HP factory producing desktops worldwide.

The information regarding all failures of the computers sold in Ukraine or
any other country is accumulated in one global information database. This
global system allows keeping a close eye on the HP computers' components
effectiveness all over the world - something that no local manufacturer can
make possible. In 2004 for example, this database accumulated the
information about 24 million of computers in 165 countries of the world.

The Hewlett-Packard PCs are supplied with the licensed Microsoft software.
Together with Microsoft Corporation HP makes every effort to developing
the civilized market and protection of the intellectual property.

Assembling PCs in Ukraine will give more flexibility to production as well
as certain tactical advantages. This is especially important for large
international customers that quite often require non-standard configurations
while the delivery timing pays an important part in the choice of the
supplier.

"As the economy of Ukraine develops itself the fact of world's IT leaders
entering its market becomes only natural and unavoidable. Such giants as
HP are capable of offering more to the consumer since their potential in the
field of development and implementation of the new technologies is more
powerful, and their experience in carrying out complex projects,
organization of the production and business processes is immeasurable"-
says Olivier Lerouge, PC systems supply chain department manager in
Europe.

Projects like this one are bringing new jobs to this country, as well as new
knowledge and technologies, plus contribute to the augmentation of the
prestige, quality and competitiveness of the Ukrainian products at the
world's markets.

HP is the world's largest supplier of the key technologies both for the
corporate customers and the end users. The company offers the solutions
in the field of IT-infrastructure, personal computing systems, services on
system integration, service support and outsourcing, as well as printing and
imaging devices for large enterprises, medium and small businesses and
end users. During the last 4 quarters ending on April 30, 2005 the revenue
of HP amounted to USD 8.3 billion. -30-
=============================================================
12. UKRAINE BOND MARKET STARTS STEADFAST DEVELOPMENT

ANALYSIS: Roman Bryl, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, July 18, 2005

Total bond issuance volume rises more than 3-fold y/y in H1/05 -----

Ukraine experienced a sharp increase in activity on the local bond market in
H1/05. The total volume of bonds issued grew more than 3-fold y/y. Along
with a large amount of corporate bonds issues, this summer we observed a
series of major municipal bond issues. This makes us consider the Ukrainian
bond market is in the start of a long-term growth period.

According to the state commission on securities and stock market, 136 bond
issues were registered in H1, worth USD 613mn. June 2005 became the
most active month with a total of USD 146.9mn worth of bonds issued.

Construction, design companies most active on the bond market -----

There were 4 big placements that covered 17.4% out of the total volume of
bonds issued in H1. Companies related to the quickly developing construction
market were the most active issuers. In February public corporation Zhytlo
XXI Stolittya (Housing XXI Century) issued bonds worth USD 28.8mn.

Since the beginning of the year public corporation Zhytlo Kiyanam (Housing
to Kyivers) made three bonds placements totalling USD 28.3mn. In June
another investment and building company Komfort Invest issued USD 20mn
worth of bonds.

Such impressive corporate bond emission is expected to continue in Q3 and
Q4 of 2005. At present, we know about the forthcoming UAH 100mn (USD
19.8mn) bond issue of Ukrainian Mining and Metallurgical Company (UMMC).
The yield is expected to make up 12%. In Aug-Sep Galnaftogaz holding will
carry out 2 bond placements worth USD 5.9mn each with 12% coupon rate.

Local banks issued bonds worth USD 52.3mn in H1/05 -----

As we expected, local banks are also becoming active on the bond market.
They already issued bonds worth USD 52.3mn in H1/05. Ukrsotsbank and
Kreschatyk Bank made the biggest placements worth USD 19.8mn each.
Also, ProCredit Bank recently issued USD 9.9mn bonds. We can forecast
that in H2 emission volumes will not decrease.

According to our information, Creditprombank plans to issue USD 19.8mn
bonds via 2 emissions. The bonds will have 6-year maturity period with
13-14% yield. Plus, Active-Bank unveiled its plans to issue 3-year bonds
(14.5% yield) worth USD 3.9mn in the nearest future. According to unofficial
information, Ukrsotsbank and Mriya Bank are preparing to announce their
issuances of USD 19.8mn each.

Total amount of municipal bonds issued in Jun-Jul exceeds UAH 500mn -----

A real surge is seen on the municipal bond market. Within 2 weeks from
June 30 to July 12, large Ukrainian cities - Kharkiv, Donetsk and
Zaporizhzhya - made their emissions worth USD 43.5mn. On July 15,
Odessa city council also announced a USD 59.4mn municipal bonds
placement. Investors demonstrate huge interest towards these securities.
We should note that all the bonds were placed within only 1 day.

Kharkiv, Donetsk Zaporizhzhya were
first cities to issue municipal bonds last month -----

Kharkiv was the first city that announced on June 30 about its municipal
bonds issue. The USD 19.8mn bonds have 3-year maturity period with
10.25% yield (the nominal coupon rate is 10.75%). Foreigners bought the
majority of these bonds. Donetsk, whose municipal budget is larger than
Kharkiv's, decided to issue 5-year bonds worth just USD 8.9mn.

That can be explained by the fact the city already issued USD 3.9mn with
14% yield last year. According to the loan managers (Kreschatyk Bank and
Altera Finance), Donetsk bonds with 11.75% yield were placed within 1 day.

The next day, on July 12, Zaporizhzhya city began to sell its municipal
bonds worth USD 14.8mn. The placement was carried out through authorized
Ukrsibbank. Zaporizhzhya bonds are issued in 4 series (A, B, C, D) with 2 to
5 years maturity and with yield of 10.5%-12% (depending on the series). The
interest is payable on semi-annual basis.

The attracted funds raised are to be invested in reconstruction of the
city's stadium, roads and schools and also in building another bridge over
DniproRiver. Previously, Zaporizhzhya council issued municipal bonds in
1996 (UAH 10mn), in 1997 (UAH 5mn and UAH 2mn), and in 2004
(UAH 25mn).

Odessa announces record USD 59.4mn issuance -----

The last major city that announced about its municipal bonds placement
was Odessa. According to the city council, Odessa will issue a record USD
59.4mn. The city's mayor Edward Gurvitz informed on July 15 that the bonds
would have 3-year maturity with the yield not exceeding 13%. They will be
redeemed on Dec 31, 2008 at the latest.

The securities will be issued after permission from FinMin is received. The
funds attracted by Odessa municipality are to be spent on improving the
work of city housing and communal services, and on building new houses
and roads. In the next 3 years, Odessa intends to sell 50 hectares of resort
land, and these funds will be used to pay off this municipal loan.

Also, the attracted funds will cover Odessa's USD 13.8mn debt for bonds
issued in 1997. In 1998, Odessa failed to pay back a large amount of the
debt. In spite of the previous default, we can predict that the forthcoming
issue will be placed in quickly, as presently investors are interested in
municipal bonds.

We should admit the volume of the Odessa issuance corresponds to 37%
of the city's municipal budget (USD 158.4mn). Such correlation may present
a risk with respect to bond redemption. But we inform that current Ukrainian
legislation places no limits to the volume of bonds' emission. There is only
one restriction that the sum of annual debt service should not exceed 10%
of the municipal budget.

Other Ukrainian cities and towns to
announce their issuance plans in the nearest future -----

We suppose that the boom of municipal bond issuance is caused by fiscal
gaps in the cities' budgets and by the need to develop their infrastructure.
We thus expect further strong activity in this segment. Among large
Ukrainian cities, only Dnipropetrovsk and Lviv still did not carry out bond
issues.

But according to our information, these two cities are preparing to announce
their nearing placements. We also do not exclude that medium-sizes cities,
mainly the capitals of administrative regions, will start issuing bonds in
H2/05 and in H1/06.

Ukrainian bond market will not be satiated in nearest future -----

Despite the issuance surge, the municipal bond market is too young to
predict its saturation in short-term. Only since 2001, after the Budget Code
was passed, were municipalities allowed to issue bonds under transparent
and structured conditions. The code presented a common mechanism for
domestic and foreign emissions (cities with more than 800,000 inhabitants
can place their bonds abroad).

The corporate bond market is also in a developing stage. We should expect
a slide in yields from their high levels. We can predict they will fall
below 10% on average and after that it will be possible to say that
Ukrainian bond market is formed almost completely. But this will happen not
earlier than by the end of 2006.

Possibly we will have to wait even until the beginning of 2007. Consumer
inflation is very strong, and until authorities have found a cure, it will
likely provide upward pressure on yields. -30-
=============================================================
13. UKRAINIAN AGRARIAN FUND WANTS A LOAN OF UAH 630 MILLION
FROM GOVERNMENT TO BUY GRAIN

Ukrainian News Agency, Kyiv, Ukraine, Wed, July 13, 2005

KYIV - The Agrarian Fund is going to request a government loan of UAH
630 million from the Cabinet of Ministers for grain purchases.

Agrarian Fund chairman Volodymyr Ovchar made this statement to the press.
He said his agency currently has UAH 102 million resting on its accounts and
UAH 36 million to be soon received from the government for the purpose of
creation of an agricultural exchange.

The Fund is also to receive a financing from the state joint-stock company
Khlib Ukrainy from the revenues earned from sale of grain-2004 at collateral
prices. In such a way, the Fund will be in possession of around UAH 200
million, but it is not enough to buy grain into the reserve necessary for
maintaining food security during the 2006-2009 period.

The reserve size is supposed to constitute 10-16% of the annual grain
consumption in Ukraine until 2010 and 20% thereafter. The 2005 state
reserve will contain 1.5 million tons of wheat and wheat-rye mix and 180,000
tons of sugar made from sugar beet.

As Ukrainian News earlier reported, the Cabinet of Ministers decided on
June 30 to create the Agrarian Fund as a structural unit of the Agricultural
Policy Ministry for conducting interventions and collateral purchase of
foodstuffs. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
14. PRES YUSHCHENKO DIRECTS CABINET OF MINISTERS: CREATE
ONE MILLION JOBS PER YEAR IN UKRAINE DURING 2006-2009

Ukrainian News Agency, Kyiv, Ukraine, Tue, July 12, 2005

KYIV - President Viktor Yuschenko has directed the Cabinet of Ministers,
the Crimean Council of Ministers, the Kyiv municipal administration, the
Sevastopol municipal administration, and regional administrations to create
1 million jobs per year during the 2006-2009 period. This is stated in the
presidential decree No. 1073 of July 11, a text of which Ukrainian News
obtained.

These jobs are to be created mainly in the spheres of innovative and
high-technology production, in the agricultural industry, the social sphere
in the rural areas, as well as in the services and tourism sectors.

Moreover, mono-functional cities have been set the task of creating jobs
through provision of government support for entrepreneurial organizations
and transformation of self-employment into small and medium businesses.

The Cabinet of Ministers and the Crimean Council of Ministers are to
introduce quarterly monitoring of the fulfillment of this task and provide
public information about it.

The Cabinet of Ministers and the Crimean Council of Ministers have also
been directed to focus priority attention on professional rehabilitation and
employment of people with limited physical abilities.

By January 1, 2006, the Cabinet of Ministers is to introduce clear
mechanisms for stimulating employers to create jobs and create safe
working conditions in order to minimize cases of industrial trauma as well
as to provide employment for people with limited physical abilities.

The Cabinet of Ministers and the Crimean Council of Ministers are also
required to introduce transparent rules for providing services on the labor
market, including employment abroad, in order to prevent violation of the
legislation in this area.

According to the decree, the Cabinet of Ministers is to ensure compulsory
expert examination of draft documents to determine their effects on the
labor market.

Moreover, the Cabinet of Ministers is to submit to the parliament several
draft laws regarding the labor market. In particular, it is to submit the
European convention on the legal status of migrant workers and the
International Labor Organization's convention No. 181 on private
employment agencies to the parliament by December 1 for approval.

The decree also directs the Cabinet of Ministers to constantly monitor the
implementation of international agreements on employment and social
welfare of Ukrainians abroad.

The Cabinet of Ministers and the National Academy of Sciences - together
with trade unions and employers organizations - are to draft before the end
of the year forecasts for the economy's requirement for workers and
specialists by the year 2010.

They are to study reform of the system for training personnel and
determining the state order for training personnel and specialists with
higher education during the January-February period of 2006.

Yuschenko also directed the Labor and Social Policy Ministry - together
with the Agricultural Policy Ministry, the Crimean Council of Ministers, and
local administrations - to study legal regulation of the issue of employment
of people owning or using land plots and improve the legislation in this
area.

The Labor and Social Policy Ministry - together with the Mandatory State
Social Insurance Fund - is to take measures to ensure targeted and
transparent use of the fund's resources and improvement of services to the
population in order to gradually reach European social-welfare standards.

Yuschenko signed this decree with the aim of overcoming the negative trends
in the area of employment and on the employment market as well as creating
working conditions as the basis for increased prosperity and development of
labor potentials.

The Cabinet of Ministers is to provide information about implementation of
this decree every six months. As Ukrainian News earlier reported, creation
of one million jobs per year is one of Yuschenko's election promises. -30-
=============================================================
15. UKRAINE FACES GAS WAR ON THREE FRONTS
Russia's economic agenda has little room for
subsidising sale to neighbouring countries

ANALYSIS AND COMMENTARY: By Igor Tomberg,
Senior Researcher, Russian Academy of Sciences'
Institute of World Economic and Political Studies
RIA Novosti, Moscow, Russia, Saturday, July 16, 2005

Ukraine is set to become the first target of a radical change in Russia's
gas strategy in the post-Soviet space. Having realised that subsidising
neighbours by providing gas at cut-rate prices does not bring any political
dividends and even leads to sizeable economic losses, Russian gas giant,
Gazprom has declared its intention to raise prices to European levels for
CIS countries as well.

Previously, the switch to world prices was restrained by Russia's
integration ambitions, but now the most important thing is solvent demand,
determined by the practical absence of any alternative to Russian supplies.
New gas relations began to be built immediately after the Orange Revolution,
and largely at the Ukrainian side's initiative acquired a scandalous shade
almost immediately.

The "disappearance" of 7.8 billion cubic metres of Russian gas from
Ukrainian gas storage facilities reminded Gazprom of the not-too-distant
past of unsanctioned gas siphoning. However, in the new situation, Gazprom
will not stomach such losses, and hence it applauded the Ukrainian side's
proposal settlements for gas transit in cash.

The switch to market prices - $160 per 1,000 cu. m - came as a shock to
Kiev. Alexei Ivchenko, Ukraine's deputy fuel and energy minister and head of
Naftogaz Ukraine, had offered $60. Optionally, he is ready to spread payment
for these supplies over four years. This, apparently, is a Ukrainian version
of the compromise. In an attempt to find a solution, Gazprom proposed to
offset the missing gas against gas transit to Europe.

At present, Ukraine receives 23 billion cubic metres of natural gas a year,
while Gazprom's offset reduces this volume to 15.2 billion cubic metres.
Kiev immediately went on the offensive. "If Gazprom proposes this offset,
our proposal is to include this gas into payments for gas exports to Europe
via Ukraine," Ivchenko said.

One lawmaker explained this covert threat thus: "If Gazprom refuses to
supply the above-mentioned 7.8 billion cubic metres of gas, the transit
route goes via Ukraine anyway, so we can take as much gas as we need."
It is interesting that Kiev's approach to gas matters has already led to a
conflict between Ukraine and Turkmenistan.

On June 21, Turkmen President Saparmurat Niyazov demanded that Ukraine
switch to cash payments for gas supplies, calling the current practice of
commodity settlements an "unheard-of fraud." In a telephone conversation
with Ukrainian President Viktor Yushchenko, Niyazov said: "You are cheating
us handsomely, while the money is circulated on your side. We shall not
agree to this, neither now nor in future. If you do not have commodities, do
not sign commodity agreements."

A Turkmen foreign ministry press release pointed out that this mostly
referred to the commodity part of settlements for Turkmen natural gas
supplies, for which a special coefficient that considerably overpriced
commodities was applied against offsets. As a result, Ashkhabad
calculated that settlements for 2004 alone ran short by nearly $600
million: Ukraine undersupplied $61.7 million worth of commodities to
Turkmenistan.

Over five and a half months of 2005, Ukraine's debts for commodity
supplies increased to about $500 million. Kiev could not disprove the
Turkmen President's assumptions. There was, however, another party -
the European Union - that was displeased with the fluctuations in
Ukrainian energy policy.

Russia has assumed a greater portion of responsibility for the continent's
energy security, if only for historical reasons. Soviet fuel-export
infrastructure, of which Ukraine is a major part, was almost completely
oriented towards Europe. At the same time, nearly 80% of gas sales in
Europe today depend on Ukraine.

It is no accident that transportation of Russian gas to Europe was a major
issue discussed by President Putin during his visit to Kiev in mid-April.
Putin's meaningful phrase that "we must be sure that the transit of Russian
gas to our Western partners in Europe will work without a hitch," sounded as
an obvious warning, not only from Russia, but also - especially considering
Putin's meetings with major European leaders shortly before the visit - from
Europe interested in uninterrupted gas supplies.

Naturally, Yushchenko, who set Ukrainian accession to the European Union
and the World Trade Organisation (WTO) as a key vector of the country's
development, readily confirmed the inviolability of the policy of "strategic
use of unique gas transit possibilities." He declared that he is ready to
support any agreement asserting Ukraine's strategic function as a country
transporting gas from Russia to Europe.

Regrettably, the new Ukrainian leadership's practices are at variance with
its declarations. Obviously, banal gas theft is not in line with the EU
rules or the WTO trade standards. Today's escapades by Ukrainian govern-
ment officials trying to demonstrate (perhaps only to themselves) Ukraine's
energy sovereignty are fraught with a danger of financial losses and a loss
of prestige.

Moreover, they could seriously worsen relations with Ukraine's major trade
and political partners. Ukraine is unlikely to succeed in its "gas war" on
three fronts. -30- [The Action Ukraine Report Monitoring Service]
-------------------------------------------------------------------------------------------------
The writer is Senior Researcher at the Russian Academy of Sciences'
Institute of World Economic and Political Studies
=============================================================
15. YUSHCHENKO CLIMBS HOVERLA HILL COMMEMORATES FIFTEENTH
ANNIVERSARY OF UKRAINE'S DECLARATION OF SOVEREIGNTY
Parliament of Ukrainian Soviet Republic acted on July 16, 1990

Ukrainian News Agency, Kyiv, Ukraine, Mon, July 18, 2005

KYIV - President Viktor Yuschenko has participated in a Veche (a popular
assembly) commemorating the fifteenth anniversary of Ukraine's Declaration
of National Sovereignty on the Hoverla Hill (Karpaty, Ivano-Frankivsk
region). The presidential press service disclosed this to Ukrainian News.

About 10,000 people attended the Veche, which started with the playing of
the Ukrainian national anthem. In his address at the Veche, Yuschenko noted
that the Our Ukraine coalition of political parties was founded on the hill
four years ago. "The dreams of that time have become reality today,"
Yuschenko said.

The participants in the Veche buried a symbolic capsule, in which they
promised to climb the hill on the same day ten years from now.
Yuschenko to climbed the hill with his daughters Sofia and Khrystyna.

As Ukrainian News earlier reported, Yuschenko traveled to the
Ivano-Frankivsk region to climb the Hoverla hill. The climbing of the hill
is a tradition dedicated to the anniversary of the signing of the
declaration of Ukraine's national sovereignty. This will be Yuschenko's
thirty-first climb.

The Hoverla is the highest peak in the Ukrainian Carpathians. It has a
height of 2,061 meters. The parliament of the Ukrainian Soviet republic
adopted Ukraine's declaration of sovereignty on July 16, 1990. -30-
=============================================================
16. MONUMENTS TO HONOUR UKRAINIAN INSURGENT ARMY (UPA)
CANNOT BE ERECTED IN POLAND

PAP news agency, Warsaw, Poland, Monday, July 18, 2005

WARSAW - No monuments to honour the Ukrainian Insurgent Army (UPA)
can be erected in Poland, the secretary-general of the Council for the
Protection of Struggle and Martyrdom, Andrzej Przewoznik, told the
Parliamentary Assembly of Poland and Ukraine on Monday [18 July].

Przewoznik stressed that the negative attitude of Poles towards UPA was
not the reason for making it impossible for Ukrainians to tidy the graves of
UPA soldiers in Poland.

He stressed that UPA has been perceived by Poles who lived on Poland's
pre-war eastern territories and at the Polish-Ukrainian border in a negative
way but stressed once again that Ukrainians could seek graves of UPA
soldiers in Poland and tidy them.

Poland and Ukraine will not change their position concerning historical
events. We are not going to force anyone to adopt our vision and
assessments, Przewoznik said but stressed that the bilateral agreement to
seek graves in the two countries was a "humanitarian issue resulting from
the international law". -30-
==============================================================
17. GEORGIAN PRESIDENT LASHES OUT AT MEMBER OF UKRAINIAN
PARLIAMENT TARIEL VASADZE WHO OWNS POWER GRID
IN KAKHETI REGION IN EASTERN GEORGIA

Imedi TV, Tbilisi, in Georgian 1500 gmt 17 Jul 05
BBC Monitoring Service, UK, in English, Sun, July 17, 2005

TBILISI - [Presenter] During an address by the governor of Kakheti [at
President Mikheil Saakashvili's meeting with regional governors] today, the
Georgian president used strong language against member of the Ukrainian
parliament Tariel Vasadze [a businessman of Georgian origin who owns the
power grid in the Kakheti region in eastern Georgia]. [Passage omitted:
presenter-read summary of Saakashvili's remarks]

[Saakashvili] Let's go down the bankruptcy route. There was a bandit there
who later passed it on to Tariel Vasadze. Let's act without delay and, if
necessary, get parliament to change the law to simplify bankruptcy
procedures. Let's bankrupt him and kick him out of here.

This can't be allowed to continue because this isn't some kind of kiosk.
This is about electricity supply to an entire region.

I want to warn Vasadze, who is holed up in Ukraine and, I understand, is
having problems there too. This country is not his playground. If he doesn't
want to invest money in his country, he can get out of here. We can't allow
an entire region, Kakheti, where everything is getting better, to fail just
because of Vasadze, who is strangling this power company like a dragon.

Let's go down the bankruptcy route without delay and invite a real investor,
rather than some fake person who can't do anything and who hasn't done
anything in Georgia so far. I do want Georgians to return and invest money
here, though not such Georgians.

One bandit seized it first and then this person got hold of it for free by
writing off some debts. He treats power supply to Kakheti as some kind of
object he can keep at home, just in case he needs it later. Sorry, but no
country would put up with this. That's it, the time for fake investors has
gone. If he can do the job, we will back him to the hilt. If he can't, we'll
kick him out of here. -30-
==============================================================
18. UKRAINE SUPPORTS GEORGIA'S PLAN ON SOUTH OSSETIA

UNIAN news agency, Kiev, in Ukrainian 1048 gmt 16 Jul 05
BBC Monitoring Service, UK, in English, Sat, Jul 16, 2005

KIEV - The Ukrainian Foreign Ministry has praised Georgia's readiness to
grant South Ossetia [Georgia's breakaway region] autonomy status. The
Foreign Ministry said in a commentary forwarded to UNIAN that the recent
international conference in Batumi [on 10-11 July] which addressed the
Georgian government's initiatives on peaceful settlement of the South
Ossetian conflict has become an important step in finding acceptable ways
to resolve the problem.

Ukraine supports the conference's stance on the importance of proceeding
with the initiatives presented by Georgian President Mikheil Saakashvili at
the 59th session of the UN General Assembly meeting on 21 September
2004 and at the Council of Europe's Parliamentary Assembly meeting on
26 January 2005.

The Georgian national government's readiness to grant broad autonomy to
the Tskhinvali region, compensate for losses suffered by its residents,
ensurepayment of pension debts, facilitate the development of small and
medium businesses and adopt a law on restitution paves the way to
reaching a desired accord between the parties involved in the conflict, the
Foreign Ministry said.

Ukraine for its part is willing to assist Georgia in implementing the
proposals that would facilitate a peaceful settlement of the South Ossetian
conflict on the basis of unconditional recognition of Georgia's territorial
integrity. -30- [The Action Ukraine Report Monitoring Service]
==============================================================
19. A BEACON OF LIBERTY FLICKERS: OBSERVATIONS ON GEORGIA

ANALYSIS AND COMMENTARY: By Charles Grant
Director of the Centre for European Reform
New Statesman, UK, Monday, July 18, 2005

President Bush proclaimed Georgia a "beacon for liberty" when he visited
Tbilisi in May. Georgia has certainly made great progress since people
power overthrew the corrupt and incompetent regime of Eduard
Shevardnadze in 2003. Nevertheless, clouds are dimming the light of that
beacon.

There is something amiss, for example, when none of Georgia's television
stations ever criticises the country's charismatic, popular, 37-year-old
president, Mikhail Saakashvili, and most of them carry his speeches and
press conferences live and at full length. The problem is self-censorship
by journalists who know that the businessmen who control the TV stations
have close links with the government. (The written press is more critical.)

Another problem is the criminal justice system. Human Rights Watch says
that "torture and ill-treatment in pre-trial detention remain widespread",
while Georgian NGOs complain that some of those arrested for corruption
are targeted for political reasons, and that the law is not applied equally
to all. In the words of one western diplomat: "Until an independent
judiciary is established, and the law-enforcement agencies become
accountable and lose their sense of impunity, the rights of the individual
vis-a-vis the state will not be protected."

Saakashvili is trying to transform his impoverished country (with a per
capita gross national income of $830, or £450) from the top down. He has
changed the constitution to give the presidency more power, for instance
over the appointment of judges. He and his key advisers and ministers -
most of them aged under 35 - have achieved a great deal in 20 months.

Free and fair presidential and parliamentary elections have been held;
serious efforts are being made to tackle corruption; top officials have had
large pay rises, and thousands of corrupt policemen have been sacked.
The government has squeezed businesses to start paying taxes and thus
greatly increased its budget.

But the government writ extends to only 80 per cent of the country, because
the regions of Abkhazia and South Ossetia resist rule from Tbilisi. The
obvious solution would be for both to have autonomy within Georgia, but
Russia is blocking this. Neither region could survive without Russian
supplies and troops, and President Vladimir Putin, who regards Saakashvili
as dangerously impulsive, seems in no hurry to grant him the "triumph" of
winning back the two enclaves.

Saakashvili has made it his priority to join Nato and the EU: every public
building flies the EU flag, and he has bought George Bush's goodwill by
sending troops to Iraq. In return, both the US and the EU are pumping in
aid. The US backs Georgian membership of Nato, which could be feasible
in five years. EU membership, however, was never a likely prospect, and is
now - with the recent referendums having virtually killed off the prospect
of enlargement - implausible. But the EU sees Georgia as part of its new
"neighbourhood policy", under which Georgia promises more reforms in
return for more trade, aid and political contacts.

All this is useful. However, the EU could be of greater help by taking an
initiative to resolve the South Ossetian and Abkha-zian conflicts. So long
as they persist, Georgia will spend too much on its army, its relations
with Russia will be tense and a resumption of fighting will be likely. Some
Kremlin officials seem to understand now that Russia needs to be flexible
on such issues. The EU could best help by working with the Russians to
broker settlements for both regions. -30-
==============================================================
20. IDEA OF UKRAINIAN AND GEORGIAN AUTHORITIES TO
REVIVE GUUAM IS DUBIOUS
An American project where Georgia and Ukraine perform the key roles
Three scenarios for development of the situation in Georgia

COMMENTARY: Interview with Alexander Chachia
Chairman, Samegrelo People's Movement
PRAVDA, Moscow, Russia, Saturday, July 16, 2005

Alexander Chachia was born August 1, 1958 in the Abkhazian city of
Ochamchir. In 1981, he graduated from the philosophy department of the
Moscow State University; within 1982-1991, was employed in the Georgia
popular schooling system and held the position of deputy minister for
education.

Alexander Chachia resigned from the position in 1991 in remonstrance
against the official line of the Georgian Government. In 2000, he
established party Ertoba (Unity). Candidate of philosophic sciences and
doctor of political sciences Alexander Chachia is now the chairman of the
public organization Samegrelo People's Movement.

The expert says that the idea of the Ukrainian and Georgian authorities to
revive GUUAM is dubious. These plans meant to undermine Russia's
influence on the territory of the former Soviet republics may be a success
only if Russia sticks to the same line it has been doing within the past
years. Russia is still absolutely sure that nobody will come to the
post-Soviet territories and former Soviet republics will again seek unity
with Russia.

It was ten years ago that it was clear for the first time the line was
mistaken. GUUAM is just a method to force Russia out of the post-Soviet
territory. This is an American project where Georgia and Ukraine perform
the key roles. However, the project is unlikely to be effective, as both
countries and other GUUAM members are dependent upon Russia in the
energetic sphere.

It is frequently said that Russia may introduce world prices for energy
resources sent to CIS. The Georgian economy has been in collapse for
a rather long period already, and consequently world prices for energy
resources will not seriously affect the economy. But this measure may be
disastrous for the people's living conditions.

Today, Georgia buys gas from Russia at a privileged price of $60 per one
thousand of cubic meters and sells it to the population at the price of
about $150 per one thousand of cubic meters. Many people make fortunes
by these speculations with the Russian gas; these speculations also help
form a part of the Georgian budget. Raising of prices for the Russian energy
resources may be smooth if the Georgian Government debars intermediaries
from distribution of the Russian gas.

The Russian factor must be obligatorily taken into consideration to carry
out some plans in the Georgian economy. America as a rule grants credits
to the country, and this money immediately disappears. The US has never
participated in investment projects in Georgia. Georgia's debt to the US is
over $2 billion, but there is no enterprise or agricultural association set
up with money provided by the US.

Now the US and its NATO partners provide money for building new military
bases with aerodromes and developed infrastructure in Georgia. These
projects do not concern the national economy of Georgia and will not improve
people's living conditions. The US appropriated $60 million of aid to the
Georgian army.

But $52 million of the sum will be paid to American instructors working at
these bases, spent on making good living conditions for them. And just $8
million will be spent on Georgia's needs. Being absolutely helpless to
improve the national economy, the authorities employ outrageous
expropriation methods; they arrest people who own enough money.

At that, the authorities extort money from these people in exchange for
their release. This measure has helped to replenish the budget this year.
The authorities are sure that it is impossible to have fortunes in the poor
and ruined country. But it is the court that must decide whether people got
their money honestly or not.

This is not the right way of cooperation between the authorities and
businessmen when the latter must one day give their money not to be put
into prison. But the US ignores these disorders in Georgia.

It seems that majority of the poor Georgian population approve of these
Bolshevik methods, including the expropriation, or at east they allow these
methods. At first, this propaganda had a positive effect upon making the
image of the "people's power." It was said the authorities took money away
from cheaters to give it back to the people. But the Georgian people never
got the money and doubted the importance of the measure.

For the time being, everything is being denationalized in Georgia. A
reforming of the Georgian education system is really dangerous for the
population: a great number of free schools are to be closed; 60 per cent of
kindergartens are to be closed too; the number of departments at the Tbilisi
State University is to be reduced from 23 to 6. Teaching of the Georgian
language, Georgian literature and history, the subjects essential for the
national morale, is on a steady decline now.

People's attitude towards the Zhvania-Saakashvili team has always been
negative. People realized the politicians were Shevardnadze's fosterlings.
However, the Georgian people supported the team when it was clear that
Saakashvili could dethrone Shevardnadze.

This is outrageous that Saakashvili's team is exterminating the Georgian
national morale. With this purpose they falsify the history: now Russia is
demonstrated as a historic enemy and Turkey as a centuries-long friend.

Break-up with Russia is catastrophic for Georgia. Today, Russia is the only
possible market for Georgian goods. Abut one million of Georgians live in
Russia where they earn money and then send it to Georgia to support their
relatives there. If Georgia wants no relations with Russia, the Georgian
authorities thus reveal that they will not settle the Abkhazia and Ossetia
conflicts.

Alexander Chachia mentioned at a round-table discussion on the
Russia-Georgia relations held in Moscow that there was no adequate
opposition in Georgia. We often consider political parties or leaders
oppositional only because they are not in power, he says.

In Georgia, there is no oppositional or alternative ideology. There are
parties in and outside the parliament that under Shevardnadze supported
orientation of the government toward NATO and the US and emphasized
Georgia must break up with Russia, and they are still supporting the line.
A party cannot be called oppositional in case it reveals just insignificant
criticism in the address the current political line.

The political expert predicts three scenarios for development of the
situation in Georgia, the country which economy is obviously collapsed and
the population is poor.

The events in Georgia may develop according to the three scenarios. FIRST,
if the ruling regime continues the present line in the foreign policy the
population will grow even poorer and social tension will be gaining force.

The SECOND scenario may come into force in case Saakashvili and his team
realize that Turkey has never been Georgia's ally and friend as Shevardnadze
insisted. The ruling regime should understand that America is far, but it is
more important to improve relations with CIS neighbors, Russia first of all.
If the Georgian authority gets more oriented towards Russia and keeps up
political contacts with Washington and Ankara then the economic situation
and security of Georgia may get better.

But the THIRD scenario is dangerous for the country: if the economic
situation gets worse and worse this may provoke a wave of social disorders
and the opposition will seize this opportunity. This will entail another
revolution and a new government prepared by Americans. But in a year or
two, a new coup is not ruled out.

This scenario will come into force when Americans see that Saakashvili no
longer enjoys people's confidence. Americans have several times applied
the technology of coups in all banana republics. It seems that the third
scenario is highly likely to come into effect in Georgia. (Translated by:
Maria Gousseva) -30-
---------------------------------------------------------------------------------------------------
LINK: http://english.pravda.ru/world/20/92/371/15812_Georgia.html
==============================================================
21. FEDERAL UKRAINE?

COMMENTARY: by Alexei Makarkin, Deputy General Drector
Center for Political Technologies
RIA Novosti, Moscow, Russia, Mon, July 11, 2005

MOSCOW- Ukraine is currently faced with an extremely contradictory
political situation.

On the one hand, a significant part of the country's political class and
many ordinary people increasingly view Ukraine as a unified state. The
Ukrainian yellow and blue flag, which just a few years ago was a highly
controversial symbol, is now seen as perfectly legitimate (it is used by
both Viktor Yushchenko's supporters and Viktor Yanukovich's supporters).

On the other hand, the country is divided into several distinct areas each
of which has its own cultural and historical identity. The ethnic
composition of eastern Ukraine is very similar to that of the neighboring
Russian regions. Galichina was part of Poland, then the Austrian Empire,
then Austro-Hungary, and then Poland again, and it only became part of
the USSR in 1939.

The Russian, Ukrainian and Crimean Tatar communities (58%, 24% and
13% respectively) live side by side in the Crimea, but not without tensions.
The only language spoken by almost the entire adult population of the
Crimea is Russian, and therefore Russian is the language most often used
in communications between different ethnic groups. This situation gives rise
to federalist sentiments, which are further encouraged by the policies of
the Ukrainian authorities.

This year, new local authorities came into power in the Crimea, as well as
in other regions of Ukraine. Anatoly Matviyenko, leader of the Sobor
Ukrainian Republican Party, became the new Crimean prime minister. He
has never lived in the region before and is seen as a close ally of Yulia
Timoshenko. Matviyenko says that the Russian language and culture should
be protected.

Moreover, it has been promised that next year the Russian language might
be included in the curriculum for Ukrainian schools in the Crimea. But when
Matviyenko took office this May, the press service of the Crimean local
authorities stopped publishing its press releases in Russian, and the
website of the local authorities switched to Ukrainian.

These seemingly minor changes have clearly annoyed the Russian community
in the Crimea. Under the Ukrainian Constitution, the state language is
Ukrainian, and all previous Ukrainian governments have ignored proposals
that Russian be given an official national status.

However, the Crimea is an autonomous republic (the only one in Ukraine)
and it is governed not only by the Ukrainian Constitution, but also by its
own constitution. The Crimean Constitution (Article 10) provides for the use
of the Russian language in all spheres of public life.

It is not however simply a question of whether this principle is strictly
observed or not. Russians in the Crimea see the steps taken by the new
authorities as a rehearsal for a sweeping process of "Ukrainization." There
is also an element of disappointment: during his election campaign Viktor
Yushchenko constantly spoke of the need to protect the languages of national
minorities in those areas where there are large ethnic minority populations.

Government officials should speak to local populations in a language they
can understand. Last year, this was put forward as an alternative to Viktor
Yanukovich's proposal to give the Russian language an official status.
Therefore there is a clear divergence between declared aims and practice.

The Russian-speaking population (mostly Russians) is in a difficult
situation in Ukraine. The majority voted for Viktor Yanukovich and their
natural disappointment with the election results is combined with fears of
forced Ukrainization and encroachment upon their customary right to use the
Russian language. During the Soviet era and in the years since Ukrainian
independence, Russians in Ukraine have been accustomed to having the
right to use Russian in public life and to receive education in Russian.

It seems that the country's new leaders are more interested in consolidating
the support of those people who voted for Viktor Yushchenko in the "third"
round of the presidential election (believing that this will give them a
majority in the Ukrainian parliament, the Supreme Rada), than in winning
over the Russian electorate. When this is combined with the tactless actions
of certain representatives of the new Ukrainian authorities in the regions,
the country may well see increased support for the advocates of federalism.

These include the Party of the Regions headed by Viktor Yanukovich, and
also more radical political forces, irreconcilable opponents of Yushchenko's
supporters. Although Yanukovich's party has not yet recovered from last
year's defeat, it is taking steps to do so. For example, it has signed an
agreement on cooperation with the Russian party United Russia. -30-
==============================================================
22. THE FATE OF "POLITICAL TECHNOLOGY"

COMMENTARY: by Andrew Wilson
The Moscow Times, Moscow, Russia, Tue, July 12 2005

Andrew Wilson is senior lecturer at University College in London and author
of "Virtual Politics: Faking Democracy in the Post-Soviet World." He
contributed this comment to The Moscow Times.

Ukraine's Orange Revolution was supposed to be a revolution against these
techniques, a resounding defeat for political technologists and their
methods. Arguably, its most important effect was psychological, activating
populations throughout the region who will henceforth be harder to fool.

The Orange Revolution also made certain political technology methods --
especially mass producing propaganda through control of the commanding
heights of state television -- look distinctly old-fashioned. The Ukrainian
opposition made skillful use of alternative sources of information and
agenda-setting technologies such as the Internet, text messages and video
clip posting.

Events in Ukraine showed what a huge difference outside intervention can
make, and not just in terms of money and diplomatic support. Political
technologists rely on selling a particular dramaturgia, or scripted
scenario. Their methods are therefore vulnerable to local populations
switching off-message, and there was a powerful new message in town.

After the recent wave of color revolutions, the United States has locked
into the rhetoric of democracy promotion. Significantly, for example, the
rigged election in Azerbaijan in 2003 was more or less ignored in the West,
but now in 2005, U.S. Secretary of State Condoleezza Rice is aligning
herself closer to Baku's critics.

Yet at the same time, the 2004 Ukrainian presidential campaign was not that
bad an ad for political technology. It certainly demonstrated the
fallibility of crude fraud when undisguised by a convincing cover story. But
the political technologists, both Russian and Ukrainian, succeeded in one
key task. If the 2002 Rada parliamentary elections had been largely a
referendum on a scandal-ridden government and Viktor Yushchenko's
premiership from 1999 to 2001, in 2004 voters were sold a new story of
"East versus West," both within Ukraine and in terms of geopolitics.

More exactly, the second script overlay the first, rather than completely
replacing it, and Yushchenko refused to fall into the trap of fighting the
election on these terms. But the strategy brought the otherwise unappealing
Viktor Yanukovych close to victory.

On the other hand, times have changed. Yanukovych and the Party of Regions
are still trapped in the political-technology paradigm as they prepare for
the Rada elections in 2006, but they no longer control many administrative
resources and need to play their game more circumspectly even on their
home turf in the Donbass.

The political space for launching some new branded project is narrow,
despite optimistic talk of setting up a "third force." Most east Ukrainian
elites are regrouping under party labels that accept the agenda set by the
new regime: "New Democracy," "Democratic Ukraine" and the "People's Will."

Other post-Soviet regimes have a choice of survival strategies. Traditional
authoritarian methods -- cowing the population, imprisoning the opposition
and cracking down hard on protest -- have been tried in Uzbekistan and are
clearly being contemplated in Belarus and possibly Kazakhstan. So-called
administrative technology -- such as gerrymandering or culling the ranks of
the opposition via the courts -- is also an option. However, in the new
international context, use of either method on its own without a cover story
will produce only fragile success and possibly even stimulate a stronger
counter-reaction.

Even in Uzbekistan there is a role for classic political technology, as
demonstrated by the fake opposition party Sunshine Uzbekistan, which was
established almost simultaneously with the Andijan events in May. The party
is led by Sanjar Umarov, one of Uzbekistan's richest men with interests in
oil, cotton and a joint U.S. telecoms venture -- all areas under the
authorities' tight control.

Sunshine Uzbekistan's role seems to be to stage the appearance of pluralism
for the West rather more convincingly than recent parliamentary elections,
although some believe Umarov has quarrelled with President Islam Karimov's
oldest daughter, Gulnara.

Belarus may well use administrative methods to fix the result of the
presidential election scheduled for 2006 and traditional authoritarian
methods to cow the population beforehand. But the electoral arithmetic
provides an opening for political technology. Belarussian President
Alexander Lukashenko normally receives between 40 percent and 50
percent of votes, and the traditional opposition never more than 15
percent. There is plenty of room for a "third force."

Currently, that role is being played by the head of the Social Democratic
Party, Alexander Kazulin, the former rector of Belarus State University.
That he concentrates most of his fire on others in the opposition suggests
he may be a relay runner for Lukashenko, while his robust Russophilia
suggests the possibility of Kremlin support.

Parliament Deputy Sergei Gaidukevich stands in reserve to play Vladimir
Zhirinovsky's role as jester-cum-hired gun in the political middle. Russia
may, however, find its influence limited, as there is little room for
players outside the regime to use political technology in Belarus.

In Belarus, moreover, real politics takes place elsewhere. Lukashenko's
speciality is playing divide and rule not so much with the local opposition
as with the local nomenklatura. Bureaucrats are never allowed to settle into
cozy sinecures. Yegor Rybakov, the former head of Belarussian state
television, was sentenced to 11 years this February for grand larceny.
Galina Zhuraukova, former head of the presidential administration's property
management department, got four years in 2004. Institutions are also set
against one another: the Interior Ministry versus the KGB, the KGB versus
Lukashenko's personal security service.

In Russia, however, political technology seems to be alive and well. Cloning
opposition parties to create a Kremlin-controlled imitation of partisan
politics seems to be the likely option for 2007. This may occur via three or
more pet parties spun off from United Russia's more than ample ranks: a
Kremlin "liberal" party instead of Yabloko, a Kremlin "nationalist" party
capable of drawing away the more mainstream politicians from the likes of
Rodina, and a Kremlin "state-socialist" party to draw supporters away from
the Communists.

And clearly the next election cycle may see more dramaturgia than drama.
One can already discern the outlines of various forms of "perevod
strelki" -- "switching the points," or passing the buck. These strategies
are designed to shift responsibility and agency. The authorities often blame
extreme nationalists or the Islamic threat for all of society's woes, as the
Putin era is now too advanced to blame the old regime or the West.

Another related strategy involves the artificial polarization of choice, the
threat of "aprÏs moi, le deluge": democracy in danger or scarecrow
nationalists taking power. And the "lesser evil" ploy often works if a
convincing-enough other evil can be found.

The political technology industry is far from dead. Constitutional changes
in Russia -- the abolition of elected governors and single mandate races,
and the establishment of a single nationwide election day -- may narrow
the market. But others -- in particular the 7 percent barrier for Duma
representation -- will make television campaigning even more important.

More fundamentally, in the system of directed democracy, political
technologists do the directing. Without them, democracy would either no
longer be directed, which still seems to be a prospect most post-Soviet
elites are reluctant to face, or would be directed more crudely: The
siloviki do not have their own brand of technology. -30-
==============================================================
23. LOVE AND DEATH IN RUSSIA
The last tsar of Russia and his family, heading into history.

By Susan Mansfield, The Scotsman
United Kingdom, Sat, July 16, 2005

IN THE GRAINY BLACK AND WHITE photograph, a family walks down
the road together. The father, tall and thoughtful; the mother watchful,
concerned. Four daughters, fast becoming beautiful women. A son in an
invalid carriage. United, they move towards an uncertain future. The last
tsar of Russia and his family, heading into history.

But history has not always been kind to them. After the Russian Revolution
there was little sympathy to spare for the family who had been at the
centre of the most opulent court in Europe. They were at best out of touch,
at worst, power-hungry autocrats who cared nothing for the gap between
rich and poor, heading for a disaster they were too shortsighted to prevent.

However, a closer look at the lives of Tsar Nicholas II and his wife
reveals a loving couple, committed to one another and to raising their
children, a couple for whom power was a burden, not a privilege. Nicholas
and Alexandra, the summer exhibition at the Royal Museum of Scotland,
shows that, away from the pomp and circumstance of their official residence
in the Winter Palace, they tried to live a quiet, uncomplicated life.

"At their family home in the country, the Alexander Palace, they chose to
lead quite a simple life," says co-curator Maureen Barry. "They liked their
family life to be very private. It is important to understand why there was
a revolution, why the people of Russia grew to dislike them so intensely,
but we also turn that round by showing them as a living, loving family."

Barry and fellow curator Godfrey Evans made several trips to the State
Hermitage Museum in the Winter Palace in St Petersburg to choose the
items for the show, some of which have never been on public display before.

"We've always been keen to do something from Russia, but none of us had
the wildest expectations it would turn out like this," says Barry. "It's a
dream come true to work with the State Hermitage. It's very unusual to be
allowed to cherry pick items for the show. Staff there went out of their
way to help us."

The exhibition aims to capture the contrasts between the public and private
lives of the family, showing splendid ceremonial robes and dress uniforms
alongside children's dresses, cuddly toys and board games, and formal
state gifts alongside the gifts they gave to one another: an icon the
children gave to their mother as an Easter gift, the walking stick Alexandra
commissioned for her husband.

Princess Alex of Hesse met the heir to the Russian throne when she was
just 17. They fell in love quickly, but Nicholas's father, Tsar Alexander
III, did not approve of their union. Finally, fearing for the royal
succession, he gave them his blessing on his deathbed.

They were married in the Winter Palace in St Petersburg in 1894, just a
week after Alexander's funeral. Alexandra wore a dress of silver and a
cloak of gold, but the superstitious muttered of the "funeral bride" and
spoke of bad omens. "She was incredibly nervous," says Barry, "but she
knew one thing - she was absolutely devoted to this man."

Further bad omens troubled the official coronation two years later: Not
only did the crown slip from Nicholas's head, but about 1,000 people were
crushed to death during a stampede on one of the days of festivities.
Nicholas II began his reign with the nickname "Nicholas [the] bloody".

It was a tough start to a tough job. Nicholas had been trained all his life
in the traditions of Romanov rule: he was God's representative, his
people's shepherd and guide. But too often he came across as cold or
diffident, his wife as aloof, standoffish. Neither was blessed with natural
popularity.

In private, however, they were a warm and passionate couple. Visitors were
surprised at the informality of their home, and their almost jealous desire
for one another's company. When apart, they wrote to one another frequently
and passionately. "My sweetest treasure, my very own one," wrote Alexandra,
adding that "[I] cannot get accustomed, for ever so short, not to have you
in the house", and signing off "thousand tender kisses from your own old
Wify [sic]". The Emperor of all the Russias, meanwhile, signed off:
"Beloved mine I kiss you again and again ... Always your old hubby." Their
first child, Olga, was born a year after their marriage, followed in the
next six years by Tatiana, Maria and Anastasia.

In 1903 Alexandra organised a Masqued Ball for 400 of the nobility of St
Petersburg, a great tradition of the Romanov court. Anna Pavlova danced for
the company, and costumes recalled the days of Peter the Great and
Catherine the Great. But while the elite were waltzing, sipping Champagne
and celebrating past glories, the political ground was shifting under their
feet. Lenin was in London, sowing the seeds of Bolshevism. Two years later,
weakened by war and internal discontent, Nicholas agreed, unhappily, to
curb his own powers and create a state Duma.

By then, at least, he could rejoice in the birth of a son and heir, but
this joy soon gave way to concern. Tsarevich Alexei had haemophilia, an
untreatable condition likely to result in an early death. The family,
fearing for the security of the succession, told almost no one.

Although in public they were increasingly the symbols of a hated regime, in
private Nicholas and his wife and children were simply "We Seven". "They
were a very strong, loving family," says Barry. "They had to shore each
other up. Nicholas was not happy being an emperor, he would have been
happier being a gentleman farmer. Outside public life, Alexandra was not
aloof or cold, she could smile, she enjoyed her family."

The children, virtually devoid of other playmates, were close - Olga, quiet
and bookish, like her father; Tatiana, the outgoing spokesman the others
called "the governess"; pretty Maria; and tomboy Anastasia - wrote joint
letters which they signed "OTMA", and shared the responsibility of looking
after "baby" Alexei, who enjoyed active mischief as much as his illness
would allow him.

Their parents sheltered them as much as possible from the pressures of
wealth and status. They encouraged them to help the maids make their beds
and tidy their rooms. AA Mossolov, a former court official, described an
occasion when the Imperial Train was delayed for some days in the open
country: the children took the opportunity to toboggan down the nearby
banks on the Tsar's solid silver salvers.

But centuries of tradition weighed heavily on them, perhaps never more so
than during the festivities to mark the tercentenary of the Romanovs in
1913. However, public opinion had not yet turned against them. "There were
gifts, paintings, balls, people were still coming out into the streets to
celebrate," says Barry. "On the day, the cathedral was mobbed with people.
You wonder how it can happen - five years later they were dead."

But in the background trouble was brewing, both for the Romanovs and for
Europe. Eight months later, Europe was at war. Nicholas, in a misguided
autocratic move, took supreme command of the army, while Alexandra took
on responsibilities in St Petersburg, assisted by the unpopular Rasputin.

This colourful character was a peasant who used his cunning to worm his
way into the royal household through his ability to treat Alexei's
haemophilia. He was eventually murdered by enemies within the court in
1916.

"He had the ear of the empress and could influence her," says Barry. "She
saw him as the answer to her prayers as far as Alexei as concerned. He
manipulated positions for friends, got rid of people who spoke out against
him. He had a double life he kept hidden, but if you've got a sick child,
you'll try anything. He wasn't a good influence, but he wasn't a
personification of evil. The people who followed him were not fools. He
used whatever skills he had to climb to the highest rank of society. He is
a very interesting character within the story."

In 1917, after the first Revolution, Nicholas agreed to abdicate, hoping
perhaps that he and his family might be allowed to lay aside the mantle of
power in these changing times and live in peace. They were kept under
house arrest at the Alexander Palace, but in his diaries he sounds content.
"It is hard without news of dear Mother," he wrote in July 1917, "but as for
other matters I am indifferent." He writes of going on walks in the grounds
with his daughters.

Then in August, they were moved to Tobolsk in Siberia. There they were more
closely guarded. Any walks were accompanied by a military escort. Yet still
they seemed content in one another's company, the children playing bezique
while Nicholas reads Turgenev. On New Year's Eve 1917, Nicholas writes:
"Not a cold day, with a gusty wind. Toward evening, Alexei got up. He was
able to put on his boot. After tea we separated till the arrival of the New
Year... Lord, save Russia."

In April of 1918, Nicholas, Alexandra and Maria were taken to Ekaterinburg,
followed a month later by the rest of the family. Then on the evening of 16
July, on the pretext of being moved again, they were woken and led down to
the basement of the house where they were staying, and killed along with
their closest servants in a botched and bloody execution. "The Czechs were
advancing, and the Bolsheviks felt that if they fell into enemy hands, they
would be used to raise an army crush the revolution," says Barry. "It was
important that they didn't fall into the wrong hands."

The tragic story of the court of Russia, fallen from imperial grandeur to
bloody revolution and murder in a few short years, caught the imagination
of Europe. Rumours were rife that one of the children had survived the
slaughter, and several claimants emerged in the decades that followed
claiming to be Alexei or Anastasia, but all have since been proved false.

After the fall of the Soviet Union, the bodies of Nicholas and Alexandra
and three of their daughters were recovered and buried with due honour
in the Peter and Paul Cathedral.

Perhaps their fall from power was inevitable, but their deaths still seem
needless. Ironically, it was during the time of their imprisonment that
they were granted the simple life they craved, free at last from the burden
of power. Unfortunately, their enemies believed that they were powerful
still. So much so that they could not allow them to live. -30-
----------------------------------------------------------------------------------------------------
* Nicholas and Alexandra, the Last Tsar and Tsarina, is at the Royal
Museum of Scotland, Edinburgh, until 30 October.
==============================================================
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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)
Chairman, Executive Committee, Ukraine-U.S. Business Council
Publisher, Ukraine Information Website, www.ArtUkraine.com
& www.ArtUkraine Information Service (ARTUIS)
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Power Corrupts and Absolute Power Corrupts Absolutely.
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