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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 530
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, WEDNESDAY, July 27, 2005

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

1. UKRAINE ECONOMY: STUCK ON THE THRESHOLD OF THE WTO?
Country Briefing: The Economist Intelligence Unit Limited
The Economist, London, UK, Tuesday, July 26, 2005

2. UKRAINE'S STOCK MARKET: REVOLUTION SURGE,
REPRIVATIZATION DROP, NEW RISE
Govnt needs developed stock market to sell shares of state companies
ANALYSIS AND COMMENTARY:
Roman Bryl, Ukraine Analyst; Andrew Afanasiev, CIS Senior Analyst
IntelliNews-Ukraine This Week, Kyiv, Ukraine, Monday, July 25, 2005

3. INVESTORS COMPLAIN ABOUT CHAOS IN UKRAINE
After the election of the reformist president Victor Yushchenko,
the politics and jurisprudence have become even less predictable
By Frank Herold, Berliner Zeitung in German
Berlin, Germany, Friday, 22 July 2005
Published in English by The Ukraine List (UKL) #355, Article 12
Compiled by Dominique Arel, Chair of Ukrainian Studies, U of Ottawa
Ottawa, Ontario, Canada, Tuesday, 26 July 2005

4. GERMAN INVESTOR IN UKRAINIAN TITANIUM PLANT EXPRESSES
CONCERN ABOUT PRIVATIZATION PROBE IN CRIMEA
ICTV television, Kiev, in Ukrainian 1545 gmt 23 Jul 05
BBC Monitoring Service, UK, in English, Sun, Jul 24, 2005

5. PARLIAMENT SPEAKER BELIEVES PARLIAMENT AND GOVERNMENT
SHOULD REVISIT ISSUE OF FREE ECONOMIC ZONES IN UKRAINE
Ukrinform, Kyiv, Ukraine, Tuesday, July 26, 2005

6. KIEV PROBES SUSPECTED CRIME LINK TO GAS SUPPLY
By Tom Warner in Kiev, Financial Times
London, UK, Tuesday, July 26 2005

7. ILLEGAL UKRAINIAN PETROL TRADE
Polish News Bulletin, Warsaw, Poland, Sun, Jul 24, 2005

8. RAMSTORE GOES TO UKRAINE FROM MOSCOW
Ukrainian projects are highly popular with Russian businessmen
Kommersant, Moscow, Russia, Fri, July 22, 2005

9. YUSHCHENKO UNDERCUTTING MOLDOVA IN TRANSNISTRIA?
ANALYSIS AND COMMENTARY: By Tammy Lynch
The NIS Observed: An Analytical Review, Vol. X, No. 8 (Part 2 of 2)
Institute for the Study of Conflict, Ideology & Policy at Boston University
Boston, Massachusetts, Tuesday, 26 Jul 2005

10. "AUTUMN OF THE COALITION'
Public conflict between Speaker Lytvyn and PM Tymoshenko
COMMENTARY: By Larysa Zhalovaha and Oleh Ivantsov
Den, Kiev, Ukraine, in Ukrainian 16 Jul 05; p 1, 4
BBC Monitoring Service, UK, in English, Fri, Jul 22, 2005

11. UKRAINIAN TV EXAMINES PRESIDENT'S ROW WITH
MEDIA OVER SON'S LIFESTYLE
One Plus One TV, Kiev, in Ukrainian 1630 gmt 26 Jul 05
BBC Monitoring Service, UK, in English, Tue, July 26, 2005

12. UKRAINIAN JOURNALISTS DEMAND APOLOGIES FROM PRESIDENT
Ukrayinska Pravda web site, Kiev, in Ukrainian 26 Jul 05
BBC Monitoring Service, UK, in English, Tue, July 26, 2005

13. UKRAINIAN PRESIDENT WRITES IN LETTER HE HOPES FOR
'MUTUAL UNDERSTANDING" WITH JOURNALISTS
Ukrayinska Pravda web site, Kiev, in Ukrainian 26 Jul 05
BBC Monitoring Service, UK, in English, July 26, 2005

14. VIKTOR YUSHCHENKO GETS FAMILIAR WITH PROCESS OF
ESTABLISHMENT OF "ART ARSENAL" MUSEUM IN KYIV
Ukrinform, Kyiv, Ukraine, Tue, July 26, 2005

15. MOTHER RUSSIA LOOKS BACK TO THE SOVIET ERA
FOR A NEW PATRIOTISM
Soviet-style, military, patriotic programme for school children
By Andrew Osborn in Moscow
Sunday Herald, London, UK, July 24, 2005

16. ORTHODOX CHURCH SAYS REVOLUTION WOULD BE BLOODY
"Members of the Moscow Patriarchate in Ukraine acted as agents of
secular Russian political interests" during the 2004 elections, Uzzell said.
By Stephen Boykewich, Staff Writer
Moscow Times, Moscow, Russia, Mon, July 25, 2005

17. RUSSIAN CHURCHMAN WARNS AGAINST 'COLOR' REVOLUTIONS
Some Christians are upset by what Aleksii and his hierarchs are doing.
WINDOW ON EURASIA: By Paul Goble
UPI, Vienna, Austria, Monday, July 25, 2005

18. IN POLAND, A CULTURE REVITALIZED
By Richard Bernstein, The New York Times
International Herald Tribune (IHT), Europe
Wednesday, July 27, 2005

19. SECOND NO-TILL AGRICULTURE 2005 CONFERENCE
Dnipropetrovsk, Ukraine, August 17-20, 2005
Neonila Martyniuk, Agro-Soyuz Farm, Dnipropetrovsk, Ukraine
The Action Ukraine Report, No. 528, Kyiv, Ukraine, Fri, July 22, 2005
=============================================================
1. UKRAINE ECONOMY: STUCK ON THE THRESHOLD OF THE WTO?

Country Briefing: The Economist Intelligence Unit Limited
The Economist, London, UK, Tuesday, July 26, 2005

In passing several key laws in early July the Ukrainian parliament kept
alive the government's hopes of joining the World Trade Organisation (WTO)
by the end of the year. However, the poor recent performance of Ukraine's
political class suggests that accession is still far from certain-and raises
more general concerns over the effectiveness of the country's new
leadership.

MUCH TO GAIN -----
Ukraine's parliamentarians approved six trade-related laws on July
6th-7th-at the last possible moment before the summer recess. They also
passed an additional three bills in a first reading. The process of debating
and voting these laws proved unprecedentedly raucous-featuring deafening
protests by the opposition and brawls between deputies-but the final out-
come has at least kept the country's WTO aspirations on track.

The government hopes that the trade body will approve Ukraine's accession
at its mid-December summit in Hong Kong. Considerably more work is
nevertheless still needed. Parliament will have to move quickly when it
reconvenes in early September, having rejected or failed to consider several
other bits of legislation required.

These efforts could founder in the face of vested interests, which remain
well represented in parliament even within pro-government factions. With the
March 2006 parliamentary election approaching, deputies are likely to be
particularly wary of alienating important interests or constituents.

Ukraine also still needs to complete bilateral negotiations with members of
its WTO working group. It has concluded agreements with 37 countries, but
still must finish talks with 13 more. These include the US, which could
still object to some aspects of the legislation recently approved, and
Australia, which continues to demand greater access for its sugar exports.

Should Ukraine fail on these fronts, the consequences would be significant.
If accession is delayed, the government could be forced to renegotiate a
number of the bilateral agreements already concluded, given that WTO rules
in certain areas (for instance regarding agricultural subsidies) are
expected to tighten in 2006.

Moreover, any delays would increase the chance that Russia enters the WTO
first. Ukraine would then face particularly difficult negotiations with its
largest trading partner-according to some reports, Russia has been actively
lobbying sympathetic Ukrainian deputies with this in mind.

Further setbacks would also, obviously, defer the benefits to be had from
membership in the world's most important trade body. As a WTO member,
Ukraine would be much better protected against the anti-dumping charges
and quotas that many of its key sectors-particularly steel and
chemicals-currently face.

It would also enjoy improved access to new markets and, once the
distortionary effects of its existing trade restrictions are lessened, its
economy would become more efficient. These effects are expected to
outweigh the downside to WTO membership-namely an increase in
pressure felt by a number of protected domestic industries.

MAYBE HALFWAY THERE -----
The most important of the six laws passed in early July was one stiffening
intellectual property rights. The new law addresses international concerns
over Ukraine's role as a hub for laser-disk piracy, and paves the way for a
deal with the US, which has long maintained sanctions against Ukraine as a
result of this issue.

The other laws approved by parliament are also significant. Two of them
relate to the automotive sector. They ease restrictions on used car imports,
stiffen environmental standards and lift requirements that half of
components used by Ukrainian car manufacturers be domestically sourced.

Two other laws pave the way for foreign auditors and life-insurers to
operate in Ukraine. A final law, also approved in full in early July, will
gradually lower the export duty levied on sunflower seeds.

In addition parliament has preliminarily approved three bills that will now
presumably go to a final vote in September. The first two would allow
foreigners to own a larger share of Ukrainian broadcast companies and
permit foreign banks to operate in Ukraine. The third would lift the
existing export ban on alloyed ferrous metal scrap and non-ferrous metal
scrap.

The opposition to further reforms nevertheless remains considerable. The
deputies who voted against additional changes include not only those who
are clearly opposed to the new government-namely deputies from the
Communist Party of Ukraine and from factions linked to the oligarch
interests that had underpinned the previous government.

Some of the resistance has also come from otherwise pro-government
deputies. These deputies either have business interests in key sectors, or
else have long opposed greater trade liberalisation. Some, with an eye to
next year's parliamentary election, are merely hesitant to back the
government fully.

This combination of forces has so far succeeded in blocking a number of
bills. It voted down measures to scale back sugar quotas and reduce the
export duty on ferrous metal scrap, and ensured that parliament not even
consider laws to eliminate duties on live cattle exports, reduce the duty on
hides, permit the import of raw sugar cane and cancel dairy export
subsidies.

DISUNITY AND INEFFICACY -----
The failure of both the government and the presidential secretariat to
ensure the loyalty of their parliamentary allies during the recent votes is
of particular concern. It increases doubts over further progress on
WTO-related legislation being possible once deputies return in September.
It also raises questions over the cohesion of the existing cabinet, and over
the possibility of a stable, pro-government majority forming in parliament
after the 2006 election.

The cabinet headed by the prime minister, Yuliya Tymoshenko, consists of
a broad coalition. It includes not only her own allies and those of the
president, Viktor Yushchenko, but also members of the Socialist Party of
Ukraine (SPU) and the Party of Industrialists and Entrepreneurs.

Leaders of the latter two groups have loudly opposed parts of the
government's WTO agenda. The criticism voiced by one SPU member in
particular, Agriculture Minister Oleksandr Baranovskiy, has brought the lack
of cabinet cohesion into sharp relief.

Mr Yushchenko and Ms Tymoshenko had moreover hoped that the speaker
of parliament, Volodymyr Lytvyn, would ally himself with their two parties
in advance of next year's parliamentary election. This now appears more in
doubt.

Although Mr Lytvyn's faction, the People's Party, ultimately backed the WTO
bills in early July, his behaviour in the lead-up to the vote was hardly
consistent. Not least, he warned against key reforms related to agriculture,
and appears to have helped to keep some of the government's proposals off
the parliamentary agenda.

The ineffectiveness displayed by the government and the presidential
secretariat is equally of concern. Having declared WTO accession as a key
policy goal, the cabinet proved inept at pushing its agenda. It hesitated
until late May to spell out the steps required or to finalise the necessary
proposals, and then rushed them, belatedly, to parliament..

This permitted opponents to criticise the government's proposals as poorly
drafted, and to refuse to back bills that they had not had a chance to
consider properly. Dismissive statements by the government and by Mr
Yushchenko himself-that parliament should just go ahead and pass the
bills-further alienated legislators.

Similarly counterproductive was Mr Yushchenko's willingness to tolerate the
reluctance of many on his team to surrender their parliamentary mandates-as
required by law once they move into other posts. Mr Yushchenko finally
forced them to do so at the start of July-but only after the opposition had
used this issue as an excuse to block consideration of the WTO bills.

The government's tactical errors and internal divisions-as revealed during
the WTO-related votes-have fuelled concerns over the future of its reform
agenda more generally. Ukraine's new leadership has undoubtedly
succeeded on several fronts since coming to power earlier in 2005.

In contrast to the previous administration, it has embarked on serious
efforts to level the economic playing field, reduce corruption, enforce the
rule of law and free up the media. However, it has badly mishandled a number
of issues-not least its pledge to revisit shady privatisation deals agreed
in the past.

It has also showed an inability to prioritise effectively, or work smoothly
with parliament, or avoid resorting to state intervention when confronted
with difficult problems.

Although Ukraine's new governing team is still widely and correctly hailed
as a significant improvement on the past, failure on the WTO issue would
add to growing concerns that it is failing to live up to potential. -30-
=============================================================
2. UKRAINE'S STOCK MARKET: REVOLUTION SURGE,
REPRIVATIZATION DROP, NEW RISE
Government needs developed stock market to sell shares of state companies

ANALYSIS AND COMMENTARY:
Roman Bryl, Ukraine Analyst; Andrew Afanasiev, CIS Senior Analyst
IntelliNews-Ukraine This Week, Kyiv, Ukraine, Monday, July 25, 2005

State authorities aim to develop local stock market -----

President Victor Yuschenko during his visit on Tokyo stock exchange on July
21 declared that Ukraine starts to make a deep upgrade of its stock market.

He confirmed the local market is underdeveloped and lacks both a common
concept of development and modern trading infrastructure.

Regarding infrastructure, Japanese stock market experts agreed to help
Ukraine with up-to-date equipment. First vice PM Anatoly Kinakh confirmed on
July 24 that Tokyo stock exchange experts have agreed to cooperate with
Ukraine. So far details of Japanese-Ukrainian cooperation are not disclosed.

Government needs developed stock market to sell shares of state companies --

According to the concept of stock market development, Ukrainian authorities
have made first steps already. On June 14, state property fund (SPF) and
national committee on securities and stock market (NCSSM) signed an
agreement on joint actions in this area. The agreement aims to prepare the
stock market for placement of small stakes in state enterprises.

To remind you, on July 13 the government approved the list of 54 medium-
sized state enterprises shares of which will be sold on the stock exchange.

According to SPF chairman Svetlana Ledomskaya, a large part of the
shares will be put up for sale in the nearest future. The shares of all 54
enterprises cost a total of USD 19.8mn. SPF reached an agreement with
FinMin to approve another list of medium-size enterprises for IPOs.

FSTS stays the largest trade floor in Ukraine -----

However, the agreement between SPF and NCSSM provoked at first a big
scandal on the local stock market. Authorities of 7 Ukrainian stock
exchanges addressed president Yuschenko and PM Timoshenko with an open
letter claiming the agreement is lobbying interests of First Securities
Trading System (FSTS). That is the most developed stock exchange in Ukraine.
¾ of securities trades are performed on FSTS.

Government seems to have chosen FSTS as the main Ukrainian stock
exchange. Moreover, board of FSTS directors on July 7 signed documents on
creating public corporation Stock Exchange FSTS (SE FSTS). It is expected
the new stock exchange will complete all necessary state registration
procedure by this autumn. The authorized capital of SE FSTS will amount to
USD 1.8mn.

Stock market rally began on Nov 14, 2004, inspired
by presidential elections and possible change of regime -----

We suppose that rival stock exchanges in Ukraine will lose their battle for
obtaining a decent market share. They would have to settle with the role of
small regional exchanges with low interest paid from large local and foreign
traders. Our conclusion is based on the impressive rise of trade volumes
FSTS is experiencing since the end of 2004 till present. The rally on FSTS
began on Nov 14, 2004 when it became more probable that Yuschenko
would win presidential elections.

FSTS trade volume exceeds USD 1bn in H1/2005 -----

Let us give you several facts and figures. Total FSTS trading volume
increased 1.7-fold H1 y/y and amounted to USD 1.02bn. The reading
corresponds to 77.5% out of all securities transactions in Ukraine in
H1/2005, NCSSM informs. The volume of corporate bonds traded grew
1.4-fold to USD 574mn.

T-bonds, equity and corporate bonds all see stronger interest -----

The surge in volumes of corporate bonds traded is resulted by increase in
activity of institutional investors (independent pension funds and mutual
funds). Also many Ukrainian companies started to issue bonds. According to
NCSSM, in H1 there were 128 corporate bonds emission reregistered worth
USD 625mn. To compare there were only 68 issuances in H1/2004.

The volume of shares traded increased 1.8-fold y/y in H1/2005 to USD 237mn
(USD 128mn in H1/2004). The rise is caused by entrance of new foreign
portfolio investors onto the local stock market and by the rise in demand
for shares of 2nd tier companies (Motor Sych, Poltava mining processing
plant, Illych metallurgical plant etc.). At the same time, demand for blue
chips' shares (Ukrtelecom, Ukrnafta, Zaporizhstal, etc.) stayed stable.

Meanwhile, there was sharp increase in trades with state securities. The
total volume of state securities trades surged 13.5-fold H1 y/y to USD 200mn
(USD 13.8mn in H1 2004). The trend is caused by higher demand from local
and foreign investors.

The only segment of the stock marked that showed decrease in H1 was
municipal bonds (58% slide). But starting from July there were several large
municipal bond issues registered worth UAH 500mn on total. So this segment
of the Ukrainian securities market is also finding renewed interest from
investors.

FSTS index rises 14.21% y/y in H1, but
that actually folds in a plunge, stagnation and new rise -----

As a result, FSTS index rose 14.21% y/y in H1 from 260.13pts to 297.09pts.
January and early February witnessed a strong rally. In the same period
Standard&Poor's equity index for Ukraine (S&P/IFCF-Ukraine) rose by
34.04% - from 114.4 pts to 153.28 pts. That is the highest increase of the
S&P/IFCF index among CIS and Central European countries.

However, after reaching 346.64pts on Feb 11, the market turned sour. High
trade volumes then were attributed to large-scale sell-offs of previous
attractive paper. Re-privatization risk and uncertainty over economic and
political policies of new authorities restrained investment.

The index fell 20.3% to 276.22pts on Apr 4. After that, when
re-privatizations seemed to concern only separate enterprises, the market
calmed down and the index fluctuated around 300pts. But now investor
sentiment has been revamped, pushing the index up 6.6% over Jul 12-22 to
319.36pts at last week's close.

We attribute this to investors' fears about massive resale of companies
being eased. Also, successful trading in bonds gives investors greater
confidence regarding equity investments.

The total market capitalization of FSTS grew 30% y/y in H1/2005 to USD
18.5bn. FSTS registered 40 new traders since the beginning of 2005. As of
Jul 1, there were 810 registered brokers. Also there were 67 new stocks
listed and 17 de-listed. The amount of listed issuers reached 377 by the
start of this month.

We expect further stock market growth, but it would
be contingent on economic expansion and political stability -----

Despite the recent stock market stagnation, high trade volumes across the
board give us reason to believe in a future rise of market activity. First,
we expect increase in demand for 2nd tier stocks because of the small
number of traded blue chips.

That can lead to a series of IPOs. We cannot exclude that some investors
can re-orient from the Russian stock market to the Ukrainian one, because
of a tricky legislative environment in Russia.

Creating a new modern stock exchange in Ukraine that is expected to appear
in autumn also can cause a rapid increase in trade volumes.

According to local market experts, Ukraine is becoming a "fashionable"
country for portfolio investors. That means they may hurry to enter the
local market without making preliminary deep analysis of future development.
Thus, at some point the stock market can experience a swift outflow of funds
due to any serious negative event.

That said, we suppose that until 2007 (closer to the next elections) there
would not be any severe disturbances. The parliamentary vote in 2006 can
cause some anxiety, but we doubt the new administration would lose the grip
on Rada. Also, the stock market is still too small to harm the economy in
case of a drop.

A major 'if', though, is economic growth. If the current slowdown continues,
corporates would have lower borrowing needs, which can impact investment
in securities. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
3. INVESTORS COMPLAIN ABOUT CHAOS IN UKRAINE
After the election of the reformist president Victor Yushchenko,
the politics and jurisprudence have become even less predictable

By Frank Herold, Berliner Zeitung in German
Berlin, Germany, Friday, 22 July 2005
Published in English by The Ukraine List (UKL) #355, Article 12
Compiled by Dominique Arel, Chair of Ukrainian Studies, U of Ottawa
Ottawa, Ontario, Canada, Tue, 26 July 2005

BERLIN, July 21. The revolution in Ukraine and entry into a new age is being
accomplished more slowly than many western investors had hoped.
Furthermore they complain that under the reform team of President Victor
Yushchenko and Prime Minister Yulia Tymoshenko, the country has become
less predictable economically.

The belief in Kyiv is that investments under consideration have to be
reassessed all over the place. "Unclear terms of reference cause
difficulties. There is a list of factors driving uncertainty that negatively
influence the investment climate" said Martin Hoffmann, the Ukraine expert
on the East subcommittee of the German Industry group at the Berliner
Zeitung.

THE LONG ARM OF RUSSIA -----
Above all, there is irritation over the announced checking of past
privatizations. President Yushchenko assures that there will be no list of
companies slated for privatization reversal. But at the same time, the Prime
Minister gave 3,000 as the number affected. The view in Berlin is that
German investors had barely come to terms with the corporate privatizations
of Yushchenko's predecessor in office, Kuchma.

The Hamburg-based RSJ Erste Beteiligungsgesellschaft led by the Briton
Robert Shetler-Jones thereby an exception. Last year RSJ invested around
100 million dollars in the Crimean raw materials producer Krymskii Titan and
the Krymsoda company. Shetler-Jones sees himself as "pushing aggressively",
as he puts it in his own words.

The public prosecutor has ascertained that RSJ doesn't pay enough tax. RSJ
is also threatened with accusations concerning violations of health
protection laws and failure to comply with fire codes. And the Russian raw
materials oligarch Viktor Vekselberg is active behind the scenes. He is
alleged to have spoken to Yushchenko already, to express his interest in
taking over the RSJ interests in the Crimea.

"Russia has lost the political battle for Ukraine. Evidently now Moscow is
trying to drag Ukraine to its side by economic means," suggests
Shetler-Jones. This cannot be ruled out, agree German analysts in Kyiv.
Next, the increased activity of Russian investors in the neighbouring
country shows that after the Yukos affair, capital flight from Russia has
increased again.

Ukraine offers certain advantages: there is practically no language barrier,
and there are traditional contacts and some existing investments that can
be tapped.

Foreign experts see a greater problem in the Ukrainian budget. This
document, initiated by Prime Minister Tymoshenko, obliges carrying out not
only the election promises on social welfare of the victorious Yushchenko,
but also those of his opponent Viktor Yanukovych. That means first and
foremost tax increases and pay increases for civil servants. This
nonetheless exceeds the means of the state treasury.

COMPANIES UNDER GENERAL SUSPICION -----
The deficit is supposed to be closed with a package of measures. Overnight,
tax holidays and toll exemptions are to be terminated, and special economic
zones abolished. Companies fall practically under general suspicion, for
allegedly wanting to circumvent the rules. Shetler Jones says it is very
difficult to interpret the signals coming out of the regime.

He wants to build on the RSJ Investments, but he needs clarity. "Add to all
that the confusion in the legal system", says Vadim Karasov, the Director of
the Institute for Global Strategies in Kyiv. For example, in any one matter,
one could face legal action in multiple courts simultaneously. "The justice
reform that is supposed to end this confusion is going to wait some time
yet, if it ever comes at all" he says. -30-
----------------------------------------------------------------------------------------------------------
http://www.BerlinOnline.de/berliner-zeitung/wirtschaft/467866.html;
Translated by Nykolai Bylaniuk for UKL, www.ukrainianstudies.uottawa.ca
=============================================================
4. GERMAN INVESTOR IN UKRAINIAN TITANIUM PLANT EXPRESSES
CONCERN ABOUT PRIVATIZATION PROBE IN CRIMEA

ICTV television, Kiev, in Ukrainian 1545 gmt 23 Jul 05
BBC Monitoring Service, UK, in English, Sun, Jul 24, 2005

KIEV - The British owner of a Ukrainian-German joint venture, Robert
Shetler-Jones, has expressed concern about reports of the Ukrainian
government's plans to probe the privatization of the Crimean-based
titanium plant by his company, Ukrainian television has reported.

Apart from the Crimean Titanium joint venture, which Shetler-Jones's
company co-owns with the Ukrainian state, it also holds a controlling stake
in the Crimean Soda Plant. In particular, the businessman is alarmed by the
fact that his company's lease agreements with the two ore-enrichment plants
have come under scrutiny.

He is also worried about the government's declared intention to set up a
national vertically-integrated titanium company. The following is the text
of a report by Ukrainian ICTV television on 24 July:

[Presenter] Two court cases and rumours that the government wants to probe
the creation of the Ukrainian-German joint venture Krymskyy Tytan [Crimean
Titanium] have aroused fear in German investors, who invested 150m dollars
in this and the Krymsoda [Crimean Soda] plant, that they may lose their
money.

The State Property Fund of Ukraine has said the investor has no need to
worry and that the state is just checking whether Krymskyy Tytan is working
effectively. The [Crimean] autonomy's authorities have no complaints about
the plants either, and are quite happy about the investor.

[Correspondent] Crimea's two industrial giants, Krymskyy Tytan and
Krymsoda, have long forgotten about the problems of unpaid salaries,
upgrades of equipment, ecological safety and finding outlets.

The explanation is simple - German investors have invested almost 150m
dollars in the plants. This is why the average wage there has exceeded
1,000 hryvnyas [200 dollars]. Both Krymskyy Tytan and Krymsoda pay taxes
diligently and have no debts.

The German investors, however, are worried for a different reason. The new
government is trying to reverse in courts the lease agreements with two
ore-enrichment plants that Krymskyy Tytan works closely with.

[Robert Shetler-Jones, captioned as the president of the German RSJ
investment company, in English, overlaid with Ukrainian translation]
Ukrainian courts are probing the lease agreements with the two
ore-enrichment plants, which Krymskyy Tytan rented completely in line with
the law and transparently. Taking this into consideration, I come to the
conclusion that the Ukrainian authorities are posing a threat to my
business.

[Correspondent] The Crimean authorities also fear that the central
government will eventually probe the legitimacy of forming the
Ukrainian-German venture Krymskyy Tytan amid the government's
statements about seeking to create a vertically integrated company called
Ukrainian Titanium.

[Yevhen Dmytriyev, captioned as general director of the closed joint-stock
company Krymskyy Tytan, in Russian] I believe this is being done to please
someone else. They are just telling lies.

[Correspondent] Meanwhile, the State Property Fund of Ukraine says that
there is no need to worry and offers a simple explanation - the state is
checking on the facility's performance [the state owns a controlling stake
in the venture.]

[Vadym Hryb, captioned as deputy prime minister of the Autonomous
Republic of Crimea, in Russian] It is understandable that they, as owners,
[the state] are looking into the situation, checking something, doing
whatever is needed. This is what they are doing. The Crimean government
harbours no grudge nothing against the investor. We have scared too many
investors by reprivatization, other declarations.

[Correspondent] The German ambassador to Ukraine, Dietmar Stuedemann,
hopes that the new Ukrainian government will do no harm to foreign investors
and will create favourable conditions for them.

[Stuedemann, in German overlaid with Ukrainian translation] The investment
policy should be clear and predictable, not marred by the red tape or
corruption. The Ukrainian government has to create favourable tax and
customs clearance systems for investors.

[Correspondent] So far, neither the deteriorating investment climate nor the
new government's obvious failures in the privatization field have
disappointed Europe. But the first negative trends are already transpiring.

There is one thing foreign investors want to hear - that no-one is going to
take away their investments in the Ukrainian economy. -30-
=============================================================
5. PARLIAMENT SPEAKER BELIEVES PARLIAMENT AND GOVERNMENT
SHOULD REVISIT ISSUE OF FREE ECONOMIC ZONES IN UKRAINE

Ukrinform, Kyiv, Ukraine, Tuesday, July 26, 2005

MYKOLAIV - Parliament Speaker Volodymyr Lytvyn has expressed the
belief that the parliament and the government should return to the issue of
operation of free economic zones in Ukraine in September to analyze and
approach the issue very carefully. Mr. Lytvyn expressed this view during a
meeting with representatives of local self-government organs of the Mykolaiv
region on Tuesday.

According to him, a review of the possibility of operation of free economic
zones is necessary at least because many free trade zones and priority
development territories were created in the country and over 600 investment
projects worth about 5.2 billion US dollars were approved, including 1.4
billion US dollars in foreign direct investment.

He admitted that not all the approved investment projects have been
implemented and that only about 1.6 billion US dollars or less than 32% of
the value of the concluded agreements have been attracted.

At the same time, he said that Ukraine could face lawsuits because the
"rules of the game were changed during the process." Therefore, according
to Mr. Lytvyn, it is important for the parliament and the government to
return to the issue not later than the autumn. -30-
=============================================================
6. KIEV PROBES SUSPECTED CRIME LINK TO GAS SUPPLY

By Tom Warner in Kiev, Financial Times
London, UK, Tuesday, July 26 2005

Kiev is investigating whether an international organised crime group
controls the supply of natural gas from Turkmenistan to Europe, the chief of
the Ukrainian security service has told the Financial Times.

Olexander Turchinov, head of the SBU, the Ukrainian security service, said
his agency was investigating whether Rosukrenergo, a Swiss-registered
company half-owned by Gazprom, the Russian state oil group, and other
companies involved in the Turkmen gas trade were indirectly controlled by
Semyon Mogilevich, a Ukraine-born Russian citizen on the FBI's wanted list.

Mr Mogilevich is considered to be a top crime boss in the former Soviet
Union. Mr Turchinov said: "The surname Mogilevich isn't in the [gas trade]
agreements or in the ownership documents [of the companies involved], but
there are many indications that a group of people under his control could be
involved."

The probe is part of a broader investigation into suspected
money-laundering, smuggling and tax evasion stemming from the Turkmen
gas trade. It will further aggravate Kiev's strained relations with Russia
and Gazprom, while highlighting the new Ukrainian government's struggle to
overcome corrupt practices.

Rosukrenergo was set up in July 2004 as an intermediary between Gazprom
and Naftogaz, the Ukrainian state oil and gas company, for the transit of
Turkmen gas into Ukraine following a meeting covering the matter between
Leonid Kuchma, the former Ukraine president, and his Russian counterpart,
Vladimir Putin. Gazprom owns 50 per cent of Rosukrenergo, with the other
half held by Centragas Holding, a company registered in Austria with
undisclosed owners.

Mr Turchinov said he was investigating whether Rosukrenergo managers
were under the control of Mr Mogilevich.

Wolfgang Putschek, Centragas chief executive, denied that Rosukrenergo
had any ties with Mr Mogilevich. Mr Putschek said the beneficial owners of
Centragas did not want their identities disclosed, but he was confident they
had no ties to organised crime.

Denis Ignatyev, a Gazprom spokesman, said Mr Turchinov's investigation
"might be" part of a larger effort by Ukrainian authorities to spread
"negative news about the former regime", which was thrown out of power in
last winter's Orange Revolution.

Mr Ignatyev said it was Ukraine's responsibility to screen Centragas's
owners. "If the [Ukrainian] government signs something saying these are our
representatives, we don't ask further questions."

However, he said Gazprom probably did know who the owners of Centragas
were. He said Gazprom would have no right to disclose their identities, but
he doubted they could have ties to "a person like" Mr Mogilevich.

Mr Mogilevich was described in an article published on a US Justice
Department internet site in 2003 as the leader of a gang of more than 300
criminals, operating in more than 30 countries, involved in "murder,
extortion, trafficking in women for prostitution, smuggling, money
laundering, bank and securities fraud and, in numerous countries, the
corruption of public officials".

Mr Mogilevich and three associates who allegedly helped him control
companies in the US and Canada in the 1990s were indicted by a US
federal grand jury in 2003 on 45 counts, including securities fraud, money
laundering and a charge under the Racketeering Influence and Corrupt
Organisations Act.

That case, and separate claims that Mr Mogilevich was involved in a $7bn
(euro 5.4bn, £4bn) money-laundering ring with employees of the Bank of
New York, inspired the US Congress to hold hearings in 1999 on the threat
Russian organised crime posed to financial systems. Mr Mogilevich gave
interviews in 1999-2001 in which he insisted he conducted only legal
business.

He has not spoken to any media since the US indictment, which resulted in
international arrest warrants being issued for him and two associates. The
fourth man indicted has pleaded not guilty and is awaiting trial. -30-
=============================================================
7. ILLEGAL UKRAINIAN PETROL TRADE

Polish News Bulletin, Warsaw, Poland, Sun, Jul 24, 2005

WARSAW - Polish petrol stations are not able be competitive in
Podbeskidzie, near the Ukrainian border. Truck drivers from Ukraine
bring petrol into Poland and then sell it for ZL3.20 per litre. Petrol
stations offer a litre for ZL4.30.

The trade takes place by the sides of roads, the sellers pretending to help
out unlucky drivers who find themselves with empty tanks. The police are
powerless, as culprits can only be fined a mere ZL100 for polluting the
environment, if the petrol spills onto the grass.

Due to this activity, sales of petrol at local petrol stations have
decreased by 30 percent and sales of oil have dropped by as much as
50 percent over the last three years. Poles very often cross the Ukrainian
border themselves in order to purchase cheap petrol.

According to Elzbieta Pikor, the spokesperson for the Bieszczady Region
Border Guard, supposedly 80 percent of border crossers only do so in
order to fill up their tanks, returning to Poland almost immediately after.
Polish law allows borders to be crossed with a full tank an unlimited
number of times. -30- [The Action Ukraine Monitoring Service]
=============================================================
Send in names and e-mail addresses for the AUR distribution list.
=============================================================
8. RAMSTORE GOES TO UKRAINE FROM MOSCOW
Ukrainian projects are highly popular with Russian businessmen

Kommersant, Moscow, Russia, Fri, July 22, 2005

Ramstore retail chain has sealed an agreement with IKEA to become a
major operating company in Kyiv's MEGA shopping mall. The project
proves that the Ukrainian capital is an undisputed leader on the volume
of Russian retail investment among the CIS cities (excluding Moscow).
However, experts predict a forthcoming sharp decline in the attractive-
ness of Ukrainian projects

Ramstore's Ukrainian expansion will copy the retailer's triumphal entry of
the Moscow market in 1997. Ramstore in Kyiv will also be the biggest
food store in the country with the total area of 12,000 sq. km.

Ukrainian projects are now highly popular with Russian businessmen, as
nearly all top Moscow retailers have their shops in Ukraine. Russian
retailers do not pay that much attention to any other Russian regions,
except for Moscow.

The volume of the retail market is estimated to have risen 28 percent.
The city is relatively close to Moscow - 800 km, compared to several
thousand kilometers to Russian million-populated cities. What is
more, many retailers view Ukrainians as weak rivals.

However, experts predict the Ukrainian retail a short life. The Russian
expansion may die out in a year or a year and a half, as the rent on
commercial premises has soared due to the entry of Russian retailers,
the rates approaching Moscow ones. In these conditions it is easier to
go developing Russian cities with the population of 500,000 - 700,000.
----------------------------------------------------------------------------------------------------
LINK: http://www.kommersant.com/page.asp?idr=519&id=595437
=============================================================
9. YUSHCHENKO UNDERCUTTING MOLDOVA IN TRANSNISTRIA?

ANALYSIS AND COMMENTARY: By Tammy Lynch
The NIS Observed: An Analytical Review, Vol. X, No. 8 (Part 2 of 2)
Institute for the Study of Conflict, Ideology & Policy at Boston University
Boston, Massachusetts, Tuesday, 26 Jul 2005

On 15 July, Ukrainian President Viktor Yushchenko met with the
self-proclaimed leader of the separatist republic of Transnistria,
juridically part of Moldova. Following the talks, Yushchenko's press
office released a glowing review of the meeting. "The parties agreed
to act conjointly to settle the Transdniester conflict," the communiqué
said. Further, the president's press service noted, "Mr. Smirnov fully
supported Ukraine's action plan [to end the separatist conflict]," and
"said it was the first time this topic was discussed professionally." (1)

Mr. Yushchenko's Moldovan counterpart, President Vladimir Voronin,
could not have been pleased. This private meeting with Yushchenko
provides Smirnov with a sheen of legitimacy repeatedly rejected both by
Moldova and the international community. To date, the only other head
of state who has met individually with Smirnov is Russian President
Vladimir Putin, whose tacit support for the separatist republic has
been criticized by everyone from Moldovan officials to the Organization
for Security and Cooperation in Europe (OSCE) and to the Council of
Europe.

But not by Yushchenko. Apparently, during his meeting, Yushchenko
shied away from the topic of Russian troops on Transnistrian territory.
The country reportedly still maintains between 1,300 to 2,000 troops
and a significant stockpile of ammunition and armaments in the
separatist enclave, and has made no attempt to live up to previously
signed international agreements to withdraw.

Instead, Russia has renamed its troops "peacekeepers," and claimed
that they are there to stabilize the situation in the enclave. Moldova,
however, claims that the troops do little more than prop up Smirnov's
administration, while facilitating smuggling of goods and women between
Eastern Europe and the West. Human rights organizations and the OSCE
have generally supported Moldova's contentions on this issue,
particularly regarding what has become known as the Transnistrian
"black hole" of smuggling. In fact, the region has developed such a
reputation for smuggling that the Economist recently referred to
Transnistria as "a big, ugly smuggling racket with a piece of land
attached." (2) Yushchenko does not appear to have spent considerable
time in his meeting with Smirnov on this issue, however, judging from
Smirnov's support following their talks.

The meeting between Smirnov and Yushchenko came at a time when
tensions over the status of Transnistria are particularly high. Just days
before his warm meeting with Yushchenko, Smirnov announced that he
had approved the creation of a "public militia," organized "for the purpose
of cooperating with the Transdniester Armed Forces in state defense."

At the same time, Smirnov asked Russia to increase the number of its
troops within the territory to 2,400. These moves were necessary, he
said, because of possible "provocations from Moldova." During the same
interview, Smirnov reiterated that Transnistria "won't become a part of
Moldova, and such a variant is excluded." (3)

One wonders then to what Smirnov agreed during his meeting just days
later with Yushchenko.

While most observers welcomed Yushchenko's initiative to jumpstart
talks that have been stalled since 2003, the president's plan seems
unlikely to resolve the frozen conflict and may even exacerbate the
situation by angering both Romania and Moldova. In fact, since the
plan's public unveiling, Moldova's position has hardened considerably.

The country's leadership reportedly is concerned that Ukraine's plan
may lead to the de facto partition of the country with permanent
intervention in Moldova both by Russia and Ukraine.

Moldovan officials express particular concern about the absence in the
plan of a requirement that Russia's troops be withdrawn from Moldovan
territory. Moldova's stated position is that there can be no
settlement of the Transnistrian issue until these troops are removed.
Yet, this point is passed over in Ukraine's plan, which instead calls
for a vague "internationalization" of "peacekeeping" operations.

Additionally, Ukraine's proposal would allow Transnistrian officials to
have input into, and perhaps veto power over, international agreements
signed by Moldova. Moldovan officials fear that this would forever end
their goal of joining both NATO and the E.U., since Tiraspol is
ardently opposed to both ideas.

The plan also calls for Transnistria's status within Moldova to be
determined by this fall, with "Elections to be held soon to
Transnistria's Supreme Soviet, the representative body of the
Transnistria region of Moldova, on the basis of a legal status of
Transnistria." (4) National Security and Defense Council Secretary
Petro Poroshenko, the man who drafted Ukraine's plan, has suggested
that such elections could be held as soon as November of this year,
conveniently overlooking the fact that there is no internationally
accepted legal basis for them. Tellingly, Smirnov eagerly agreed to
these elections. He has already invited "international observers" to
monitor the poll, which as yet has no set date. (5)

Moldova has reacted strongly to the idea of quick elections within
Transnistria. In its response to Ukraine's suggestion, Moldova's
parliament wrote, "It is impossible to conduct free and democratic
elections in the Transnistrian region, given that the Moldovan
constitution's norms and international democratic standards are not
observed, that political pluralism and freedom of speech is missing,
and heterodox beliefs are repressed." (6)

Moldovan officials rightly suggest that, should an election be held in
this type of environment, it runs the risk of legitimizing an
entrenched authoritarian regime, blunting international pressure on
Smirnov (who would be the recognized elected leader), and freezing the
Transnistrian conflict for years. Alternatively, should the election
not be recognized as valid by international observers, Smirnov would be
given yet another pretext to reject future international cooperation.

Yushchenko himself should be intimately aware of how elections are
conducted in Transnistria, thanks to seven polling stations set up for
Ukrainian citizens during the recent Ukrainian presidential election.
Oksana Bilozir, the godmother of Yushchenko's children and the current
Minister of Culture, served as a coordinator of monitors in
Transnistria. She returned to Kyiv with a litany of complaints.

She said, "We anticipated the possibility of rigging, which is why we
sent two journalists and one foreign observer to each polling station.
All cars were stopped, people were arrested, video cameras with which
they were supposed to record violations were broken. Journalist
Klebanskyy was deported within on hour, and when he crossed the
Ukrainian border he was followed by the warning that he would be killed
if he decided to come back." Bilozir also reported that the head of
the Dniester Ukrainian Association, who was serving as an official
Yushchenko observer, was severely beaten by being kicked in the face,
while numerous other observers were detained and deported. (7)

Yushchenko's plan has spurred a barrage activity within international
organizations involved in the issue. Most of the activity has angered
Moldovan officials, as-like Ukraine's plan-it has often occurred
without consulting them.

On July 7, the country's representatives walked out of a meeting of the
parliamentary assembly of the OSCE after a resolution on the issue
failed to refer to Transnistrian representatives as "separatists."
According to Christian Democratic Party Leader Iurie Rosca, the
resolution "put at equal terms Chisinau's legal authorities and the
criminal Transnistrian separatist regime." (8) Officials also
responded angrily when the OSCE resolution did not predicate
Transnistrian elections on the withdrawal of Russian troops and the
eradication of Transnistria's intimidating and omnipresent secret
services. After the meeting, Moldovan officials were said to be
concerned that the OSCE seemed more responsive to Russia's
suggestion of a federalized Moldova with Russian troop presence
since the Yushchenko plan was released. (9)

On June 9, Moldova's parliament overwhelmingly passed a package of
documents in response to Yushchenko's plan. Although the documents
diplomatically state that the parliament "highly appreciates Ukraine's
offer," they clearly do not embrace the main tenets of the plan. The
parliament states clearly that it is in support of future elections in
Transnistria, but in exchange, demands the withdrawal of Russian troops
from Transnistria by the end of 2005. (10)

Here, Moldova may be attempting to emulate the tactic used by Georgia
in forcing Russia to promise to withdraw its troops. However, because
Russia provides virtually free energy directly to Transnistria and
because the enclave can procure its supplies through illicit channels,
Moldova has less leverage over its separatist republic than Georgia has
over its own separatists. As such, Moldova's demand is likely to be
dismissed.

In June, Voronin traveled to Strasbourg for talks on implementation of
the new E.U.-Moldova Action Plan, and asked for assistance in removing
Russian troops from his country's territory. ""Russian troops have no
official status. They are in the territory of the republic of Moldova
illegally," he said. (11) He reiterated the position in July. "We
can't see any political or geopolitical reasons for the presence of
Russian troops on the territory of Moldova," he said. "The place of
troops in the security zone in Moldova must be occupied by observers,
acting under an international mandate." (12)

Since Yushchenko's plan was released, most international organizations
have responded gingerly such requests for assistance. Although the E.U.
has agreed to assist minimally in the monitoring of a portion of the
Transnistrian border, a large-scale mission by the E.U. or OSCE seems
unlikely. The E.U. has shied away from such large-scale bordering
missions in the past, and the OSCE bureaucratic system means it would
need Russian support for such an idea.

It appears that the international community may be collectively sighing with
relief that Ukraine has taken over leadership on this thorny issue, and are
happy to allow the country to do so. Discussions are continuing over
whether the E.U. and the US will participate in talks over the situation, as
Yushchenko has suggested, and Smirnov reportedly has agreed.
Indications at the moment are that they will not.

Yushchenko must know, however, that Chisinau will never-perhaps
politically can never-agree to his plan as proposed, and as accepted by
Smirnov and Russia. Yet, the plan was announced, placing Yushchenko's
supposed ally Voronin in an awkward and difficult position. So then,
what is the purpose of this plan? Was this a carrot to Russia, which
has announced its wholehearted support? Perhaps it was a bone to the
Donbass business entities that are said to profit from the
Transnistrian smuggling trade? Or perhaps Yushchenko truly believed
that this plan was the best option.

Moldovan newspapers, rallying around their president, have suggested
that the plan was designed to benefit businessmen surrounding
Yushchenko - in particular Poroshenko, who, Flux alleged, "has business
interests in the Dniester region." (13) This claim clearly demonstrates
the emotional and unyielding response of many in Moldova to Yushchenko's
proposals. Unfortunately for the Ukrainian president, the almost unanimous
response to his plan within Moldova has been to unite against it.

Regardless of why the plan was offered, the dynamic of the Transnistria
conflict has changed as a result. Is it any surprise, then, why Igor
Smirnov was so happy to embrace Yushchenko's plan?
----------------------------------------------------------------------------------------------------------
Source Notes:
(1) Official website of Ukrainian President Viktor Yushchenko, 14 Jul
05; via www.president.gov.ua.
(2) The Economist, 29 Jan 05.
(3) Novie izvestia, 11 Jul 05; What the Papers Say, Part B via
Lexis-Nexis; ITAR-TASS, 12 Jul 05 via Lexis-Nexis.
(4) Eurasia Daily Monitor, 27 Apr 05.
(5) ITAR-TASS, 15 July 05 via Lexis-Nexis.
(6) Moldovan Parliament's Statement on Principles and Conditions to
Democratise (sic) Moldova's Transnistrian Region, 9 Jun 05 via www.
foundation.moldova.org.
(7) Ukrayina Moloda, 23 November 05; via Lexis-Nexis.
(8) Reporter.MD, 7 Jul 05 via Politicom.moldova.org.
(9) See www.oscepa.org or www.moldova.org for the text of the OSCE
parliamentary assembly, 14th annual session, Washington DC, Resolution
on the Republic of Moldova.
(10) Moldovan Parliament's Statement on Principles and Conditions
to Demilitarization of Moldova's Transnistrian Region, 9 Jun 05 via
www.foundation.moldova.org.
(11) E.U. Observer, 9 Jun 05 via Lexis-Nexis.
(12) Novie izvestia, 11 Jul 05; What the Papers Say, Part B via
Lexis-Nexis.
(13) Flux, 24 May 05; BBC Monitoring via Lexis-Nexis.
-------------------------------------------------------------------------------------------------------
By Tammy Lynch (tammyinboston@yahoo.com)
Institute for the Study of Conflict, Ideology & Policy at Boston
University, 141 Bay State Road, Boston, MA 02215.
=============================================================
10. "AUTUMN OF THE COALITION'
Public conflict between Speaker Lytvyn and PM Tymoshenko

COMMENTARY: By Larysa Zhalovaha and Oleh Ivantsov
Den, Kiev, Ukraine, in Ukrainian 16 Jul 05; p 1, 4
BBC Monitoring Service, UK, in English, Fri, Jul 22, 2005

The recent public conflict between parliamentary speaker Volodymyr Lytvyn
and Prime Minister Yuliya Tymoshenko might be an electoral technique to
get rid of the speaker and possibly call an early parliamentary election, a
centrist paper has written. In the face of attempts by the authorities to
form a "mega-bloc" for the coming election, some politicians are not ruling
out early dissolution of parliament, it said.

It also doubted that an electoral bloc could be formed involving the
political forces led by Lytvyn, Tymoshenko and President Viktor Yushchenko
after the recent conflict between Lytvyn and Tymoshenko. Therefore, the
speaker's future could depend on the willingness of the new authorities to
turn over the pages of the past, it said.

The following is the text of the article by Larysa Zhalovaha and Oleh
Ivantsov entitled "Autumn of the coalition", published in the
opposition-leaning Ukrainian newspaper Den on 16 July; subheadings
have been inserted editorially:

PM AND SPEAKER EXCHANGE ACCUSATIONS -----
It should have been expected. A public skirmish between the prime minister
and the speaker on "who is guilty of disastrous results of interaction
between the government and the parliament" has been programmed.
Participation of interested ministers and MPs from both sides, accentuated
by the president's [Viktor Yushchenko] peacekeeping arrangement, only
increased the noise effect without changing the essence.

The essence lies in the fact that Ukraine does not have a government of
professionals. Meat, petroleum, gas and oil crises, growing inflation and
reduced economic growth, WTO accession is on the verge of breaking down,
information wars between the Cabinet of Ministers, the National Security and
Defence Council and some ministers - what other evidence is needed?

The quota principle on which the president so much relied has not become
the matrix to ensure post-electoral social consolidation and efficient
legislative work.

Moreover, the political activity of the country's leadership confirms the
fact that, instead of initiating improvement of the situation in personnel
issues, the authorities are getting into a deeper administrative crisis. It
is confirmed by their non-effaced intention to form mega-blocs (OUPU [Our
Ukraine People's Union de facto headed by President Victor Yushchenko] -
BYT [Bloc of Yuliya Tymoshenko] - PPU [People's Party of Ukraine led by
speaker Volodymyr Lytvyn]), along with the style and technique of forming
the party of the authorities.

Let us remind you that the quota problem was first disclosed in Prime
Minister Yuliya Tymoshenko's statement on the results of the parliamentary
session. "The Ukrainian and world community witnessed a planned
provocation in the Supreme Council [parliament] hall during the last plenary
week. It is regretful to recognize that the leadership of the legislative
authority is directly involved in it, as it preferred to maintain social and
economic tension in society and to discredit the work of the government and
the president on this basis", Yuliya Tymoshenko announced the government's
statement.

In addition, the behaviour of the parliamentary corps deserved the prime
minister's epithet "political barbarism". The prime minister suggested
turning one of speaker Lytvyn's post-revolutionary phobias into a reality:
formation of a parliamentary majority by September for pleasing the
president with implementation of his electoral programme together with the
Cabinet of Ministers.

The reaction of the opposite side, and namely, parliament's leadership, was
hurried and quite nervous. Volodymyr Lytvyn appeared on [state TV channel]
UT1 the same evening (on Wednesday [13 July]) to make comments on the
situation. The following detail proved that the situation was serious: it
was the first time in many years that the speaker appeared without having
his hair styled.

On the same day, the [parliamentary factions'] coordinating council adopted
a statement in response to "Chamberlains from the Cabinet of Ministers". It
is doubtful whether this statement can be characterized as the position of
all parliamentary forces. [Yushchenko's faction] Our Ukraine and BYT did not
vote for the document.

Moreover, the United Social Democratic Party of Ukraine faction announced
that it did not support the document. Generally speaking, the whole story
with the coordinating council seemed more likely to be an attempt to resolve
Lytvyn's private political problems than a consolidated attempt by
parliamentary factions leaders.

Volodymyr Lytvyn himself described the statement of the Cabinet of Ministers
announced by Tymoshenko as an attempt to shift responsibility for the
developments in the country onto parliament. He accused the Cabinet of
Ministers of attempts to discredit the Supreme Council and of pressure: "it
is not the business of the Cabinet of Ministers to instruct the Supreme
Council on what and how should be done".

In addition, the speaker actually accused the Cabinet of Ministers of a
sacrilege: an attempt to "involve the president of Ukraine, Viktor
Yushchenko, in a political conflict". The president got involved. During his
stay in Austria, Viktor Yushchenko requested that the sides in the conflict
to shake hands and make mutual compliments.

In the opinion of the head of state, the speaker and the prime minister
should learn lessons from the present situation, and in the event that they
cannot find mutual understanding in the near future, "the country can expect
a serious review".

PRESIDENT: PARLIAMENTARY MAJORITY TO BE FORMED BY SEPT--
The president is conditionally more likely to tend to Tymoshenko's group in
this conflict between two centres of influence. This is confirmed by Viktor
Yushchenko's support of the idea of forming a parliamentary majority: "I
think we shall complete the process of negotiations and formalize the entity
in the parliament by 1 September." It is OK. Is the theme familiar, along
with the means?

In case this idea is implemented, the speaker will have to choose: either to
join this majority or to become a technical figure. It is not obligatory for
the coordinating centre of this majority to be spread between the
prosecutor's office, State Tax Administration and Ministry of Internal
Affairs. But it is quite likely that it might be located outside parliament.

If we add the situation with the use of law-enforcement authorities in the
political fight and the absence of real progress in solving high-profile
cases, we shall face a situation resembling deja vu. It means that the
national political class is losing the impulse it had got from the Maydan
[central square in Kiev and venue of Orange Revolution].

We should also remember that the slogan "East and West together" did not
find any reflection in the authorities' policy, first of all, on personnel
issues. There are no authoritative and influential figures from the east and
the south of the country in the security council, the same way as in the
government and in the presidential secretariat.

Meanwhile, one cannot say that there were no such figures who had not been
discredited in the previous authorities (just as an example, [former Deputy
Prime Minister Vitaliy] Hayduk). All this government's and parliament's
pointless fussing can result in a new apathy on the part of disappointed
broad social groups, in their opposition to any kind of politics in general,
and finally, in carrying out their normal business: solving their private
problems, either keeping their distance from the state, or having a corrupt
conspiracy with its specific representatives. This is the price that
everyone will have to pay for fanatics of the quota principle and
demonstrative hypocritical consolidation.

PM HAS THE ADVANTAGE -----
Concerning the parliamentary-governmental crisis in the sense of political
techniques, the chances of Tymoshenko's group seem to be more
advantageous.

First, her team has mobility and good reaction, and to some extent political
impudence. Second, the prime minister's orbit attracts political parties
having real voters and leaders, along with the reputation of "truly
believing" Yushchenko's supporters.

But the way, all this taken together, along with the prime minister's
rating, is a serious resource which can compete with the resource of
National Defence and Security Council Secretary [Petro] Poroshenko, the
same way as with that of state secretary [Oleksandr] Zinchenko and the
president's first aide, [Oleksandr] Tretyakov.

The mentioned group of people is likely to surpass the prime minister's
group in financial and media opportunities, but the president's "closest
circle" can hardly be compared with the prime minister and her ministers,
first of all, the ones from the former ROP [Reforms and Order Party], in
their ability to make news occasions and to become news personalities.

However, many sources testify that the three have quite successfully
organized a news blockade of the head of state, though it is not clear yet
whether this political instrument will retain its efficiency the same way as
under several administrations of the former president [Leonid Kuchma].

There are already some signs of it: for example, the control by
law-enforcement authorities over the president and his rhetoric, especially
in the regions. Yushchenko already speaks in Kuchma and [Belarusian
President Alyaksandr] Lukashenka style, like a politician opposed to his
government and local authorities... [ellipsis as published]

In addition, Tymoshenko's "victory" over Lytvyn will ultimately transform
the government into an independent centre of influence. The security council
is very nervous about this. The most recent example of political logic from
this serial is the OUPU statement on recent events. The party of the
authorities accused both the parliament and... [ellipsis as published] the
government on these developments. It means that the OUPU accused itself,
as both the prime minister and ministers are the key figures in the party of
the authorities at the same time.

FORMER PRESIDENT ALLEGEDLY INFLUENCING PARLIAMENT -----
Coming back to the parliament leadership, the grave political heredity of
Lytvyn and his satellites should be noted as the third peculiarity of the
situation. This fact is used by supporters of Prime Minister Tymoshenko to
the full. For example, Vyacheslav Kyrylenko, the Minister of Labour and
Social Policy, assessed the situation in the Supreme Council in the
following way: "In my opinion, we are witnessing the formation of the
parliamentary coalition with Lytvyn and former President Kuchma as its key
persons.

The latter still has good control over the parliament through his son-in-law
[MP and magnate] Viktor Pinchuk", the minister is quoted as saying by
Obozrevatel [Ukrainian web site]. "In reality, one should search for the
reasons of parliament's unstable work exactly in the building with the dome
[parliament building]".

In Kyrylenko's opinion, "the Kuchma-Lytvyn tandem uses an ordinary scheme
to exploit a number of parliamentary forces which had been quite fruitfully
collaborating with the Kuchma authorities until recently, for its own
purposes. The same way as before, manipulators actively use the services
of the Communists to block the initiatives of the new authorities.

In their opinion, this should discredit the new authorities", the minister
says. He ended the unmasking show with a statement that Volodymyr
Lytvyn was playing a double game. "This is precisely the main reason of
the conflict", Vyacheslav Kyrylenko said. Deputy Prime Minister Mykola
Tomenko presented almost the same allegations against Volodymyr
Lytvyn. He accused the speaker of destabilizing the parliament together
with representatives of the previous authorities in order to make efficient
working of the government impossible and to discredit the new authorities.

EARLY PARLIAMENTARY ELECTION POSSIBLE -----
Based on what has been stated above, the parliamentary leadership is
unlikely to pose a serious threat to the government. In the event of
political support from the president and no sabotage from the Security
Council and [presidential] secretariat, the government will have enough
strength to knock up a progovernment majority.

The new opposition does not have enough votes, and to put it mildly, the
Communist demonstrated their adherence to principles on many
occasions. They demonstrated it in a disciplined, i.e. wholesale, manner.
The parliamentary swamp represented by different kinds of "united and
initiating" [hinting at United Ukraine faction and Democratic Initiatives
parliamentary group] has been arousing the desire to fall in battle to
support the president.

However, taking into account the level of discipline of the factions backing
the authorities, the Socialists retain opportunities for their "miser game"
[term from card game "Preference" implying great risk].

However, there is another detail which should not be excluded from this
whole contrivance. Intentional escalation of the conflict between the
government and parliamentary leadership is likely to be an electoral
technique. The minimum programme of this technique lies in placing political
and information space in parliament under tough electoral control by
replacing the speaker and forming the majority.

The maximum programme lies in dissolving parliament and holding an election
as early as in the autumn. The economic situation is rapidly deteriorating,
and there are no signs that the country will not be shaken by new commodity
crises in autumn, when inflation completely eats up all the previous social
presents from the Cabinet of Ministers.

By the way, this exact scenario was announced by a progovernment MP, Yuriy
Karmazin. "I think that approbation and preparing public opinion to possible
termination of parliamentary powers stand behind this statement (by the
Cabinet of Ministers - Editorial note)", the MP said in an interview with
the Interfax-Ukraine news agency on Wednesday.

He expressed his confidence that "there are intentions to force the
[Supreme] Council to terminate its powers and to stage the holding of an
early election". Being aware of the loss of the party of the authorities if
the situation lasts till spring, Mr Karmazin is sure that MPs "will
themselves collect signatures to support self-dissolution", and in this case
an early parliamentary election will take place in autumn.

"Do you really fail to understand that the issue here is changing the
speaker?" the MP said, having added that the statement by the Cabinet of
Ministers is "a bell for Volodymyr Lytvyn". He emphasized that the
parliamentary majority mentioned in the statement "implies one without
Lytvyn".

In Mr Karmazin's opinion, if parliament does not support the speaker's
resignation, an early parliamentary election is inevitable, and it will be
beneficial for the government, but not beneficial for the president and his
entourage. He emphasized that the necessary 226 signatures for Mr
Lytvyn's resignation can be collected, and MPs "are being prepared to this".

FORMATION OF AUTHORITIES "MEGA-BLOC" UNLIKELY -----
Another conclusion of the most sensational political scandal of the week is
the great doubt concerning formation of the authorities' mega-bloc for the
parliamentary election. Nobody is likely to seriously believe that
Yushchenko's, Tymoshenko's and Lytvyn's parties will run for the elections
in a single bloc after everything that has happened.

The government's force of rejecting Lytvyn and the whole "political set"
related to him is very high. It is now likely to be even higher than the
force of obligations of Yushchenko's entourage to the speaker and political
jealousy of this entourage to the government. The authorities' passage to
parliamentary power in two columns still seems to be more realistic at the
present time: OUPU with smaller brothers and, as the second column, Yuliya
Tymoshenko with partners (PMU [People's Movement of Ukraine], UPP
[Ukrainian People's Party] and former Reforms and Order Party).

There will undoubtedly be a fifth column among those two. Lytvyn's place
will obviously depend on the time and the point when the new authorities are
going to turn over the most difficult pages of the past. There is not only
the Gongadze case [murdered journalist] among these pages: there is also
the quota principle, or reflex, to be more precise. This reflex has already
revealed itself in regions during the first wave of personnel appointments.

The accumulated mass of controversies now reached the "throat". Quotas
and coalitions should seemingly be formed not after the presidential, but
after the parliamentary election. In general, the "level" of coalition
demonstrated by both the previous and incumbent authorities puts the
following question on the agenda: is this whole group of comrades, referred
to as Ukrainian politicians, able to handle an expensive and sophisticated
European instrument as a parliamentary republic?

Might it be given time left before political reform is introduced to think
over the mechanisms of protecting taxpayers and voters from our
parliamentary-government coalitions? -30-
==============================================================
11. UKRAINIAN TV EXAMINES PRESIDENT'S ROW WITH
MEDIA OVER SON'S LIFESTYLE

One Plus One TV, Kiev, in Ukrainian 1630 gmt 26 Jul 05
BBC Monitoring Service, UK, in English, Tue, July 26, 2005

KIEV - Ukrainian television has interviewed journalists directly involved in
a row with President Viktor Yushchenko over an article about his son
Andriy's lifestyle. Journalists Serhiy Leshchenko and Yevhen Lauer defended
their right to receive and report information about the presidential family.

The TV report was clearly sympathetic towards the journalists, implying that
Yushchenko overreacted to the article and should have been more restrained
in talking to Leshchenko at a news conference. Other Ukrainian journalists
have addressed a letter to Yushchenko, demanding apologies from him, the
television said. The following is the text of a report by the Ukrainian One
Plus One TV on 26 July:

[Presenter] And now the biggest scoop of the day. Viktor Yushchenko has
described the story of the Ukrayinska Pravda web site publishing facts
concerning his son Andriy as a joint test of the readiness of the press and
the authorities to live under new conditions, with respect for the
journalist's right to receive information and the citizen's right to
privacy.

It should be recalled that during a news conference yesterday, asked by a
Ukrayinska Pravda correspondent whether Andriy owned an expensive BMW
M6, the president labelled the journalist a hit man and, addressing him in a
familiar manner, stressed - the 19-year-old son of the president is earning
his own living, which enables him to afford a car worth 800,000 hryvnyas
[160,000 dollars] and a personal bodyguard.

Journalists were quick to respond. Artem Shevchenko has the chronology
of the scandal.

[Correspondent] We are seeing the first big scandal in relations between
President Yushchenko and the press. Information hit men was the title
bestowed by the head of state on journalist of the Ukrayinska Pravda
Internet publication. By the way, Viktor Yushchenko has repeatedly described
the solving of the murder of the web site's founder, Heorhiy Gongadze, as a
matter of honour for him.

Curiously enough, the lair of information hit men who, according to
Yushchenko, are hunting for his son Andriy, is located fairly close to the
presidential secretariat, just 200 metres down Lyuteranska Street in Kiev.

The scandal may have resulted from the proximity of the Ukrayinska Pravda
office to the apartment of Yushchenko junior's girlfriend, Hanna. Here is
the office with worn-out orange ribbons and leaflets. And here you can see
the girl Hanna in person, who has come home in her expensive car.

After a while, journalists spotted her boyfriend, presidential son, at the
wheel of a prestigious car, BMW M6 with Czech numberplates and worth
130,000 euros. [Video shows the web site's office, a young woman taking
a bag out of the trunk of an expensive-looking car.]

Journalists also wrote that Yushchenko junior sometimes violated traffic
rules and squandered cash in clubs, restaurants and casinos.

[Serhiy Leshchenko, captioned as Ukrayinska Pravda journalist] This story
was of interest to me in terms of finding out the things we set out to find
out at the very start - who owned the car that the president's son drove and
how it got to Ukraine. Naturally, in this case you can't do without
explaining the financial sources - where you can get such a car from, even
if it is rented, or how you can hire a bodyguard.

As far as I can understand, some journalists went still further and found
where the president's son lives - on the top floor of a residential house,
which he fully occupies, about 600 sq.m.

[Correspondent] After Serhiy Leshchenko asked the head of state about
his son's life style, he received an angry riposte.

[Yushchenko, speaking at a news conference] That's not his. I'm telling you,
my son is paying for the rental. Did you hear what I said to you a minute
ago? He has enough money to pay for car rental. Write it down for the third
time. Car rental. Hold on. Hold on. Behave like a polite journalist would,
not like a hired hit man. To pay for the guard and to rent the car.

He declares all his income. I said to my son: son, I can give you only one
piece of advice to soften your heart - learn to defend yourself. Learn to
defend yourself. The bill - retrieve the restaurant bill to show how many of
you were there, what you ate, what you drank. Stick that bill in front of
that journalist's mug and then take him to court.

[Yevhen Lauer, captioned as chief editor of the Tribuna web site, in
Russian] If Viktor Andriyovych [Yushchenko] had come out with a pile of
papers yesterday and said - gentlemen, here is the firm ABC for which my
son works. Here are the contracts he signed. Here is his tax declaration, a
declaration of his income on which he paid taxes.

Here is the contract, say, for the rental of the car. Here is the customs
duty paid, the declaration. I think in this case most journalists would have
had nothing left to do but raise their hats and leave.

[Correspondent] Yevhen Lauer, the journalist who took the scandalous photos
of Andriy Yushchenko next to perhaps the most expensive foreign-made car
in Ukraine, does not think he did something indecent. The president's son is
not the emperor's wife who has to be above suspicion.

After the scandal, Yushchenko junior could not come up with a better idea
than to remove the numberplates altogether. Here it is by the Mario casino.
Journalists have so far failed to learn anything from police, who are meant
to enforce law and order on the roads. [Video shows pictures of Andriy
Yushchenko and the car without numberplates by the casino.]

[Volodymyr Rudyk, captioned as Ukrainian deputy interior minister] I do not
know whom the minister instructed to check this.
[Journalist] So, there is an instruction to this effect?
[Rudyk] I believe so.
[Correspondent] The corporate solidarity of journalists as a way of
defending their colleague from presidential insults. Dozens of journalists
have signed a letter demanding apologies from the president and a report on
the state of the Yushchenko family's finances. [Video shows well-known
Ukrainian TV journalists apparently writing the letter on laptops.]
[Kyrylo Khoroshylov, captioned as head of the Kiev independent media trade
union] I understand my colleagues who are curious to know what car the
president's son or daughter or wife drives, what numberplates they have and
so on. We want this information to be open - both from the president and his
family.
[Correspondent] And for what money.
[Khoroshylov] And for what money. Exactly. We want to be sure that if one of
our colleagues has to find this out, they will get an absolutely candid and
calm answer.
[Correspondent] Today the author of the investigation, Serhiy Leshchenko,
received a letter by the president from the secretariat. The letter contains
no apology, but offers a kind of peace deal after yesterday's insults.
Yushchenko wrote that he had a man-to-man talk with his son and admitted
excessive emotion in what he said to journalists. [Video shows Leshchenko
demonstrating the letter.] -30-
=============================================================
Send in a letter-to-the-editor today. Let us hear from you.
=============================================================
12. UKRAINIAN JOURNALISTS DEMAND APOLOGIES FROM PRESIDENT

Ukrayinska Pravda web site, Kiev, in Ukrainian 26 Jul 05
BBC Monitoring Service, UK, in English, Tue, July 26, 2005

KIEV - Ukrainian journalists have urged President Viktor Yushchenko to
apologize to Serhiy Leshchenko, a correspondent at the Ukrayinska Pravda
web site who published two articles investigating the lifestyle of his son,
and to provide full information about his family's income and spending.

Answering a question from Leshchenko during a press conference on 25 July,
Yushchenko angrily rejected the suggestion that Andriy was living beyond his
means, describing the journalist as a "hitman" and saying that his articles
were full of lies. The following is the text of the letter posted on the
Ukrayinska Pravda web site on 26 July:

Viktor Andriyovych!

We, Ukrainian journalists, are outraged at the humiliating words you used
towards our colleague from the Ukrayinska Pravda internet publication,
Serhiy Leshchenko, during a press conference on 25 July 2005.

We consider the tone and vocabulary you used in answering a question about
your son's lifestyle to be unworthy of the leader of a democratic European
country. "A hired hitman", "mug [Ukr: morda]", a journalist who "did not
work for a minute for press freedom" - these words are a slap in the face of
Ukraine's journalists.

You vowed on Maydan [Independence Square, focal point of the Orange
Revolution] to defend freedom of speech. We remember the statements in
which you confirmed this intention. "I give you my word, I will personally
answer to you for all my actions. My family will answer to you for every
private operation. I demand that all Ukrainian officials present such
reports." (Interior Ministry meeting, 18 July 2005)

"We want to form a special class of Ukrainian journalists who are proud,
honest and brave. The media are the best carriers of democracy." (congress
of Our Ukraine People's Union, 9 July 2005)

Now you are violating freedom of speech, which includes free access to
information, in particular, about public figures. You should be aware that
you and your family are objects of public attention. The public has a full
right to know about the income, expenditures and lifestyle of your family.

Your behaviour has continued a trend that causes alarm among journalists.
This refers to:
* countless accusations that the press is biased in coverage of political
topics (in particular, the scandal over the education of Justice Minister
Roman Zvarych);
* attempts to take state control over internet publications;
* sabotage of the creation of public-service television and radio on the
basis of state broadcasters;
* the ban on media coverage of election manifestoes (changes to the law on
parliamentary elections).

All this compels us to speak of the country creeping towards lack of freedom
of speech, censorship and self-censorship. In the times of your predecessor,
this led to a virtual ban on the journalistic profession and was the
beginning of the end for the non-democratic regime.

We therefore demand that you:

* publicly apologize to Ukrayinska Pravda correspondent Serhiy Leshchenko;
* answer journalists' questions about your family's income and expenditure.

We insist that you always respect the journalistic profession and the
constitutional right to free speech and free access to information. [As of
1440 gmt on 26 July, the letter had been signed by 113 journalists.]
=============================================================
13. UKRAINIAN PRESIDENT HOPES FOR 'MUTUAL UNDERSTANDING"
WITH JOURNALISTS

Ukrayinska Pravda web site, Kiev, in Ukrainian 26 Jul 05
BBC Monitoring Service, UK, in English, July 26, 2005

KIEV - President Viktor Yushchenko has written to the Ukrayinska Pravda
web site saying he hopes for "mutual understanding", after the site
published two articles by Serhiy Leshchenko investigating the lifestyle of
his son, Andriy.

Answering a question from Leshchenko during a press conference on 25 July,
Yushchenko angrily rejected the suggestion that Andriy was living beyond his
means, describing the journalist as a "hitman" and saying that his articles
were full of lies.

Ukrayinska Pravda said it received the letter from Yushchenko's press
secretary Iryna Herashchenko on a blank sheet of paper signed by the
president. The letter did not contain an apology.

The following is the text of Yushchenko's letter posted on the Ukrayinska
Pravda web site on 26 July:

I highly appreciate the role of Ukrainian journalists in the victory of
democratic forces during the Orange Revolution and respect the position
taken by Ukrainian media in the process of the country's democratization.
Freedom of speech and free journalists are an axiom for me. We consider
that one of the main functions of the media is to control the actions of the
authorities.

I begin every morning with the newspapers and monitoring of internet
publications. Among them is Ukrayinska Pravda, which put a lot of effort
into establishing free journalism in Ukraine. I respect this publication's
reporters, who have won the reputation of omnipresent journalists.

I know that Serhiy Leshchenko always asks difficult and pointed questions,
but this is what makes him an interesting journalist. I appreciate his
persistence, but I hope that it is not just politicians, but also
journalists, whose sense of tact should not desert them.

It seems that the history of the article in Ukrayinska Pravda has become a
joint test - of the readiness of the authorities and the media to live under
new conditions, of the readiness to respect journalists' right to
information and of the readiness to respect citizen's right to privacy.

After the Ukrayinska Pravda article came out, I had a man-to-man talk with
my son. I also urged the police to demand that the rules of the road are
observed by all regardless of the model and its number plate. The rules have
to be observed by all - politicians and their children, that's obvious.

On the other hand, it can be hard for all of us to restrain our emotions
when we are talking about our family, our children. Some situations in life
may cause an understandable reaction. My family, and particularly my son,
have undergone many trials.

It is good that we now live in a country where there are no taboo topics. It
is right that the presidential family should live under the microscope of
the press. But there are no grounds to deprive my relatives of the right to
their private lives. I never avoid answering the toughest questions. The
answer may appear full or not, but I am frank with journalists.

I hope for mutual understanding and sincerity. -30-
=============================================================
14. VIKTOR YUSHCHENKO GETS FAMILIAR WITH PROCESS OF
ESTABLISHMENT OF "ART ARSENAL" MUSEUM IN KYIV

Ukrinform, Kyiv, Ukraine, Tue, July 26, 2005

KYIV - On Monday President Viktor Yushchenko and Kyiv Mayor Oleksandr
Omelchenko toured the Kyiv Arsenal Works, where construction of the
museum "Art Arsenal" was underway.

Oleksandr Omelchenko briefed the President about the process of
reconstruction of the Works' premises. They also shared their opinions with
regard to construction of several museums there.

The guests familiarized themselves with archaeological excavations on the
Works' yard, which are conducted by the Archaeological Institute of the
Ukrainian Academy of Sciences. The students, who are working there, are
examining the fundament of the Women's Voznesenky Monastery, which
was destroyed in the 18th century.

The President thanked the students for their job, having noted that it would
be worthy appreciated by visitors of the museums. -30-
=============================================================
Send in names and e-mail addresses for the AUR distribution list.
=============================================================
15. MOTHER RUSSIA LOOKS BACK TO THE SOVIET ERA
FOR A NEW PATRIOTISM
Soviet-style, military, patriotic programme for school children

By Andrew Osborn in Moscow
Sunday Herald, London, UK, July 24, 2005

Fear of China, "velvet revolution" and disintegration has prompted the
Kremlin to inaugurate a Soviet-style, military, patriotic programme of
unprecedented breadth to keep Russia strong.

Before it broke up for the summer recess, the Russian parliament approved
the reintroduction of Soviet-era style military training for school children
under 18.

Compulsory lessons will include how to strip an AK47 Kalashnikov assault
rifle, parade drills and how to respond to chemical, biological and nuclear
attack.

Such training was first introduced under Stalin in 1939 but was abolished in
1993 after the collapse of the Soviet Union.

The government also recently signed off a five-year, half-a-billion-ruble
programme designed to inculcate patriotism and love of Motherland in the
younger generation.

Its name recalls Russia's Soviet past - "The State Programme for the
Patriotic Education of Citizens" - and it effectively quadruples spending on
"patriotic education".

Its language would also be familiar to Soviet speech writers. It talks of
"resistance to attempts at discrediting or devaluing the concept of
patriotism in the media and in works of literature or art".

Hundreds of thousands of leaflets promoting "correct reproductive behaviour"
will be printed, Russian tricolour flags manufactured, "patriotic" computer
games developed and children encouraged to mark the country's key military
victories as part of an over-arching strategy openly called "developing the
personality of the Russian patriot".

Cassettes and CDs with recordings of patriotic and marching songs will
flood the country and there will be a specific budget for "restoring moral
values".

Opinion polls show that what was once taken for granted in the Soviet
Union - unquestioning love of country - is on the wane, with some 65% of
res-pondents saying they believe it is in decline.

One hundred miles north of Moscow, the Kremlin's patriotic programme is
already in full swing.

Some 3000 youth members of a pro-Putin movement called Nashi (Ours
or One Of Us) are currently camped out in the countryside learning how to
repel "velvet revolutions" (in reference to the overthrow of communist rule
in Czechoslovakia in 1989, achieved by demonstrations and strikes).

Gleb Pavlovsky, a well-known Kremlin adviser, makes no secret of the
camp's purpose: "Young people need to understand the technology of
constitutional action. And sometimes constitutional action involves conflict
or street action. They need - for example, in the case of an
anti-constitutional coup - to be ready to stop it."

Earlier this year, a new TV channel, Zvezda (Star), was launched to promote
the Russian army and in September Russia Today, a 24-hour rolling news
channel (being hailed as Russia's answer to CNN) will start to broadcast to
America and Europe. Few believe it will focus on the less savoury aspects of
Russian reality.

Under Putin, "Russia Day" has also become a grand national holiday. It marks
June 12, 1990, the day when the Russian Parliament formally declared its
sovereignty. However, under Boris Yeltsin the occasion - a kind of Russian
independence day - was not even celebrated. Under Putin, since 2003 it has
been turned into an occasion full of pomp and circumstance at which young
people are urged to demonstrate and reaffirm their love of Mother Russia.

This year it was marked with a concert and fireworks on Red Square. Putin
told the crowd: "I am absolutely convinced that if we unite our forces, we
can realise Russia's colossal potential in the very best way in order to
make our homeland strong and prosperous. The future of Russia is in your
hands!"

Film, a medium which Vladimir Lenin described as the "most important" of
all the arts, is also doing its bit.

A fictional tsarist-era sleuth called Erast Fandorin, who takes on Russia's
enemies with Sherlock Holmes-like cunning, has proved particularly popular.
In the last six months the character has been the centrepiece of two
home-grown blockbusters - Turkish Gambit and The State Counsellor - where
he almost single-handedly foils dastardly anti-Russian plots by the Turks
and a group of anarchists respectively.

It appears the Kremlin believes that patriotism begins at home - with your
choice of spouse. Nationalist MPs recently introduced a draft bill that
would punish Russian women who marry foreigners. The bill's author made
no secret of who he had in mind: the Chinese.

With its rich oil resources, Russia's far east is a source of serious
anxiety to Moscow.

The region has lost 700,000 people, a tenth of its population, since 1990
and the border with China is littered with abandoned Russian military bases.

Chinese workers have become common in many Siberian towns, as have
mixed marriages, and Russia is worried that Beijing has territorial designs
on vast swathes of its under-populated land.

While China is doing all it can to curb its birth rate, in Russia deaths
outstrip births and the UN has warned that its population could tumble by a
third by 2050.

In a recent speech, Vladislav Surkov, one of Putin's most powerful advisers,
openly raised the possibility of the "collapse" of Russia.

There is also real fear of the occurrence of a velvet revolution. Having
seen what happened in Georgia, Ukraine and Kyrgyzstan, the Kremlin is
twitchy ahead of crunch parliamentary elections in 2007.

And finally, there is the Chechnya problem which seems to be spreading to
neighbouring republics.

Much of the south of the country is currently engulfed in a wave of violence
associated with crushing poverty and radical Islam.

"We have a serious task in combating terrorism which is threatening the
integrity of our government and hence our sovereignty," said Surkov.

"The Caucasus is problem number one. Unfortunately the situation there is
not improving. In fact, it is getting worse. It's like an underground fire.
And so far we have nothing to boast about there."

So bad is the situation that President Putin's top adviser in the region has
suggested that direct rule from Moscow be restored.

Faced with such a scenario, the Kremlin has done what it does best: it has
drawn upon its Soviet past and is dabbling again, as they did with the
USSR's five-year plans, in social engineering . -30-
-----------------------------------------------------------------------------------------------------
LINK: http://www.sundayherald.com/50948
=============================================================
16. ORTHODOX CHURCH SAYS REVOLUTION WOULD BE BLOODY

"Members of the Moscow Patriarchate in Ukraine acted as agents of secular
Russian political interests" during the 2004 elections, Uzzell said. "There
were many instances of members of the Moscow Patriarchate in Ukraine
using their influence with their parishioners to get them to vote" for
Viktor Yanukovych, the candidate favored by the Kremlin.

By Stephen Boykewich, Staff Writer
Moscow Times, Moscow, Russia, Mon, July 25, 2005

In a sign that the Russian Orthodox Church wants to play a role in national
politics, its leading spokesman warned a gathering of pro-Kremlin youth
leaders that an Orange Revolution in Russia would bring only bloody chaos.

"Russia has already lived through one colored revolution -- a red one,"
Vsevolod Chaplin said on Saturday in a speech to leaders of the Nashi
youth movement at their summer camp on Lake Seliger, northwest of
Moscow, Interfax reported.

"Russia will not survive a new revolution," said Chaplin, who is the
church's deputy head for external relations.

The possibility of large-scale street protests like those that shook
Ukraine last year was a frequent topic at the two-week camp, which was
to end Monday. Kremlin-connected spin doctor Gleb Pavlovsky warned
during a visit to the camp that "numerous groups are preparing large
demonstrations not just for 2008, but as soon as this fall."

Nashi, or Us, is seen by many as a Kremlin-orchestrated effort to build a
bulwark against a potential popular uprising in the run-up to the 2008
presidential election. The group gained attention shortly after its
founding in April for its aggressively patriotic rhetoric and the staging
in May of a rally in Moscow attended by 50,000 people.

According to Nashi head Vasily Yakemenko, the movement currently has
more than 150,000 members nationwide.

Opposition youth movements such as Ukraine's Pora and Serbia's Otpor
have been instrumental in unseating governments in their respective
countries. Representatives from both groups have recently met with their
Russian counterparts, fueling Kremlin fears of future unrest.

Chaplin's speech was notable as an explicitly political address by a church
representative -- still a rarity in spite of the church's increasing
presence in the secular sphere. Patriarch Alexy II regularly meets with
President Vladimir Putin, and Orthodox clergy are often prominent guests
at political events.

Chaplin used vivid terms in raising the specter of Russia's disintegration,
as Putin himself has.

"If the country breaks apart, it will become not a mass of little
Switzerlands, but one big Yugoslavia torn by bloody chaos, which no foreign
peacekeepers will be able to control," Chaplin said. "The defense of the
country's unity, its independence and its spiritual freedom must be the
business of all society and every one of us."

Lawrence Uzzell, head of International Religious Freedom Watch and a
frequent commentator on religious affairs in the former Soviet Union, said
Chaplin's statements were "a perfectly logical extension of the Moscow
Patriarchate's servile relationship to the state."

"The Moscow Patriarchate has a long history of being Russian first and
Orthodox second," Uzzell said. "Unfortunately, when there is a conflict
between the interests of the Russian people and the interests of the
Russian state, the Moscow Patriarchate usually comes down on the side
of the state."

Chaplin's speech came after a round table last month on "The Orthodox
Question and the Threat of an Orange Revolution in Russia," which
explicitly addressed ways to use religious tradition to combat
revolutionary tendencies. Chaplin, State Duma Deputy Alexander Makarov
and lay activists discussed strategies such as school courses in Orthodox
culture, greater church presence on national television channels and
concerts by Orthodox rock musicians.

Ukraine's Orange Revolution has been a sore point for the Russian Orthodox
Church for several reasons.

"Members of the Moscow Patriarchate in Ukraine acted as agents of secular
Russian political interests" during the 2004 elections, Uzzell said. "There
were many instances of members of the Moscow Patriarchate in Ukraine
using their influence with their parishioners to get them to vote" for
Viktor Yanukovych, the candidate favored by the Kremlin.

Political tensions between Russia and Ukraine in the wake of the Orange
Revolution have also fueled Ukrainian desires for a church that is fully
independent of Moscow. Currently, Ukraine's main Orthodox church comes
under the authority of the Moscow Patriarchate.

"The Moscow Patriarchate is the last surviving Soviet institution both in
terms of its statist mentality and its imperialist mentality," Uzzell said.
"In a sense it is an empire-restoring institution that is used by the
Russian state as a vehicle for political interference in the affairs of
countries like Ukraine."

Nashi press secretary Ivan Mostovich insisted that there was no special
relationship between the Kremlin-connected movement and the Russian
Orthodox Church. He acknowledged that Nashi members had been helping
renovate the Nilova Pustyn monastery near the Lake Seliger camp over the
past two weeks, but said that their cooperation was based on commonly
worldly goals, rather than spiritual ones.

"We have a working relationship with the Russian Orthodox Church as we
do with every structure that is working for the good of our country,"
Mostovich said. "That relates both to Orthodox believers and to Muslims and
to every other group that plays a major role in the life of our country."

Mostovich pointed out that on Friday, Chaplin shared a platform with Sheikh
Mohammad Karachai, deputy chairman of the Russian Society of Muftis, one
of the country's main organizations of Muslim clerics.

Karachai, like Chaplin, sounded a note of national unity, telling his
audience, "Unity must be revived and preserved," Nashi's web site reported.

He also praised the Nashi leaders for having found an alternative to the
more indulgent aspects of contemporary youth culture.

"Nashi has shown that it is possible to organize youth who are not
interested in alcohol and drugs, but are oriented toward education and
learning," Karachai said. He urged those gathered to "remain
high-principled people who care about spiritual values rather than material
goods." -30- [The Action Ukraine Report Monitoring Service]
=============================================================
17. RUSSIAN CHURCHMAN WARNS AGAINST 'COLOR' REVOLUTIONS
Some Christians are upset by what Aleksii and his hierarchs are doing.

WINDOW ON EURASIA: By Paul Goble
UPI, Vienna, Austria, Monday, July 25, 2005

VIENNA - A senior Russian Orthodox Church cleric says
that Russians must unite in order to prevent the appearance of any
orange-style revolutionary movement in their country lest the Russian
Federation repeat the mistakes of 1917 and be transformed into "the
bloody chaos" of a giant Yugoslavia.

Speaking to the pro-Kremlin youth movement "Ours" on Friday night
in Tver, Vsevolod Chaplin, the deputy head of the Moscow Patriarchate's
External Affairs Department and a frequent articulator of official
thinking, adopted the hardest line the Church has so far on this subject,
the Interfax news agency reported today.

"Russia has already experienced a 'color revolution'," Chaplin
said; it was "red" and took place in 1917. The country has not yet
recovered from the coming to power of its "conspirators," he said, but it
must learn from that earlier event because if there is a new "color
revolution," Russia "will not survive."

Moreover, he continued, "if the country falls apart, it will be
converted not into a multitude of small Switzerlands," as some may imagine,
but rather "into one large Yugoslavia, drowning in a bloody chaos with
which no international peacekeepers will be able to cope."

(Speaking to the same group after Chaplin, Sheikh Mukhammad
Karachai, the deputy head of the Muslim Spiritual Directorate of European
Russia, cautioned against the adoption of ideas that might alienate
Muslims and other non-Christians from the Russian state.

The Muslim community of Russia is "an inalienable part" of the
Russian people, Karachai said. Consequently, there must not be "any
persecution of an ethno-genetic type." All of Russia's peoples are "ours,"
he continued: "Muslims are ours; Daghestanis, Chechens, Karachais,
Adygeis, Osetis, all the peoples of the North Caucasus are 'ours.'")

Chaplin, who earlier this month attracted attention for his
remarks about the need to articulate a distinctly Russian definition of
human rights, one that he said would take into account not only the
interests of the individual but those of the state and society as well, is
not the only senior Church leader adopting a harsher nationalist line.

Last week, for example, Patriarch Aleksii II gave his official
oral and written blessing to two extreme Russian nationalist groups, the
Union of Orthodox Brotherhoods and the Union of Orthodox Banner
Carriers, from which he had earlier sought to keep his distance
(http://www.portal-credo.ru/site/print.php?act=comment&id=773).

Members of these groups have often talked about "dark forces"
conspiring against Russia and Russians ­ "forces" that as the Credo.ru
commentary noted usually have Jewish names. And they regularly support
the revival of groups interested not only in restoring the monarchy but also
oppressing religious and ethnic minorities.

Credo.ru suggested that Aleksii may have decided to cooperate with
these unsavory groups as part of his campaign to expand the Church's
influence in the Russian state and over Russian society perhaps because
he fears the Church's increasingly close ties with the Kremlin have
weakened its appeal for at least some Russians.

But however that may be, the Russian Orthodox Church's new and
more aggressive nationalist stance is offending many, both outside the
Church and inside it. Many Muslims in Tatarstan, for example, were
offended last week when Aleksii visited Kazan to underscore that city's
Orthodox heritage.

And even some Christians are upset by what Aleksii and his
hierarchs are doing. Last Thursday, Svetlana Gainushkina, who heads
the "Civil Assistance" group, told Credo.ru that the Church's new
"aggressively" nationalist stance was not only foreign to the genuine
nature of the Church but was driving people like herself away.

These hierarchs, she said, are "creating an aggressive confession
which it by its nature was not" in the past. And as a result, people like
herself who loved to attend Orthodox services even though they were
not directly affiliated with the Church are now being driven away.

And Gainushkina insisted, she is far from alone in being unhappy
that the Patriarchate's leadership is trying to inculcate in the Russian
people "an aggressively nationalist spirit," something that will not only
reduce the Church's ability to help Russia overcome its current crisis
but will in fact only make that crisis worse. -30-
=============================================================
18. IN POLAND, A CULTURE REVITALIZED

By Richard Bernstein, The New York Times
International Herald Tribune (IHT), Europe
Wednesday, July 27, 2005

NOWA HUTA, Poland - You won't find two people more seemingly different
than Bartosz Szydlowski and Leopold Kozlowski, separated by nearly two
generations, living and working in Polish towns that represent contrasting
pasts and contrasting presents.

And you won't find two Polish towns more different than Nowa Huta and
Krakow, where the men live. One, Nowa Huta, is the dull, industrial
Communist-model community that Poland wants to forget; the other, Krakow,
is the ornate, ancient and adorable former capital whose past the Poles and
millions of tourists are striving, almost with desperation, to remember.

But each in its own way - especially when looked at through Szydlowski and
Kozlowski - is doing the same thing: trying to revitalize itself on the
culture front, displaying a penchant for nostalgia and striving to overcome
the weight of Poland's tormented past.

Szydlowski first. He is a 37-year-old theater impresario in this tarnished
town, where the long rows of gray apartment blocks, built to Stalinist
specifications half a century ago, are permanent emblems of the failure of
the recent Socialist-era past. About 250,000 people still live in them.

Nowa Huta, in other words, is here to stay, even if it is, as Szydlowski
puts it, humiliating for many people to live in a place so associated with a
repudiated experiment.

So Szydlowski, who until recently ran a theater in the ultra-fashionable
Kazimierz district of Krakow, a few minutes from Nova Huta, has moved back
to this place, where he grew up. He has taken over a few spaciously gloomy
rooms in a former machine-shop to create an experimental theater and, he
hopes, to spur something new.

"I escaped from Nowa Huta," he said. His parents were not steelworkers but
professors, required for the sake of social-class mixing to live there. "I
hated Nowa Huta," Szydlowski continued. "I always had the feeling, when I
told people, 'I'm not from Krakow, I'm from Nowa Huta,' that it was
humiliating. So you can imagine how emotional it was for me to come back
here."

But having come back, Szydlowski's feeling is that Nowa Huta is far more
substantial, more morally complicated and more worthy than the simple
narrative of Stalinist failure that has generally been imposed on this
place.

This suggests one of Nowa Huta's paradoxes. It was built as a sort of
anti-Krakow, a place of no church spires or fussy bourgeois intellectuals,
where the proletariat would create a model society. In reality, in the 1980s
the workers of Nowa Huta became influential supporters of the Solidarity
Trade Union movement, and Nowa Huta helped bring down the very regime
that created it.

In other words, the town's complex nature includes a mixed nostalgia, for
the grandeur of the Communist dream, for the long-gone sense of social
security, for the moments of glory in the Solidarity Trade Union movement
and for the sense of betrayal that the glory was rewarded by being
forgotten.

It's good material for Szydlowski, who has created theater pieces, played in
the vastness of an old industrial shed, based on the stories of Nowa Huta
residents. "We are trying to create a real citizens' culture," he said,
fully aware of the comparison with the citizens' culture of the Communists,
which was a fake. Szydlowski wants his to be rough and real.

A few miles away is Krakow, Poland's most chic destination, where Kozlowski,
84 , holds court in the Klezmer Hois, a café on Szeroka Street, a center of
a full-swing revival of the aspect of Polish life that is most conspicuously
missing: the Jewish life that was obliterated by the Nazis.

Kozlowski teaches traditional Jewish klezmer music in what might be the last
remaining klezmer school in Poland, perhaps in all of Eastern Europe. He is,
in this sense, certainly in the spirit of the new Krakow, a charming,
achingly beautiful and kitschy city, with carved wooden replicas of the Last
Supper sitting next to carved wooden Hasidic musicians in the tourist shops
of the Old Town Square.

Krakow is one of Central Europe's most inspiring antique cities, a rival for
Prague or Budapest or Weimar any day. In stark contrast to the glum
cement-gray of Nova Huta, it is colorful and vibrant, a domain of reflection
on the tragic past and a sentimentalized reconstruction of it at the same
time.

In the Kazimierz district, where the Jewish third of the population once
lived in the uneasy sort of coexistence with Catholic Poland that was always
the case here, you listen to klezmer music in the evening.

But the odd and somewhat vexing thing about it is that few of the Jewish
restaurants are owned or run by Jews, and none of the klezmer musicians
who play in the cafés are Jewish. They are students from Krakow's
conservatory, or wandering musicians from Ukraine.

"There is a renaissance of Jewish life in Poland, but it's a renaissance
without Jews," Kozlowski said. It's the best that can be done in a city
where perhaps 180 Jews, many of them old, remain.

Kozlowski was born in Lvov, then a part of Poland, and traveled with a
family klezmer orchestra created by his grandfather, Pesach Brandwein,
whose 12 sons were all musicians.

All of that is gone, of course, or almost all of it, since Kozlowski is very
determinedly part of the Krakow scene. He holds court in a restored
wood-paneled café in a busy stretch of Szeroka Street. Pictures of him with
Steven Spielberg, Roman Polanski and Itzhak Perlman are on the walls.
"They come here to breathe Yiddishkeit," Kozlowski said, using the Yiddish
word for Jewishness.

Kozlowski lost most of his family in the Holocaust, though he ended up in
a partisan unit that fought all the way to the Elbe River in Germany. After
the war, he came to Krakow determined that while Hitler managed to
destroy many Jews, he wasn't going to destroy the Jewish culture.

"I am the one who gives them their pais and beards," he said of his
non-Jewish students, referring to the sidelocks worn by the Hasidic men
who used to walk the streets of Kazimierz. -30-
--------------------------------------------------------------------------------------------------------
LINK: http://www.iht.com/articles/2005/07/26/news/journal.php
==============================================================
19. SECOND NO-TILL AGRICULTURE 2005 CONFERENCE
Dnipropetrovsk, Ukraine, August 17-20, 2005

Neonila Martyniuk, Agro-Soyuz Farm, Dnipropetrovsk, Ukraine
The Action Ukraine Report, No. 528, Kyiv, Ukraine, Fri, July 22, 2005

DNIPROPETROVSK - The Second No-Till Agriculture Conference will
be held on the Agro-Soyuz Farm near Dnipropetrovsk, Ukraine on
Wednesday, August 17 through Saturday, August 20. The target
audience for the Conference are agricultural crop producers from
Ukraine, Russia, and Kazakhstan and other interested parties.

For further information about the Second No-Till Agriculture
Conference contact Neonila Martyniuk, Agro-Soyuz Farm,
Mobile telephone: 3 8 050 362 4469, nila@agro.dp.ua -30-
----------------------------------------------------------------------------------------------------
[NOTE: In AUR No. 528 the e-mail address was wrong]
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