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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 538
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, MONDAY, August 8, 2005

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

1. UKRAINE - MACROECONOMIC SITUATION - JULY 2005
By Olga Pogarska, Edilberto L. Segura
SigmaBleyzer, Kyiv, Ukraine, August 5, 2005

2. IMF MANAGING DIR DE RATO EXPRESSES CONFIDENCE IN UKRAINE'S
"BRIGHT FUTURE" DURING MEETING WITH PRIME MINISTER TYMOSHENKO
Ukrinform, Kyiv, Ukraine, Friday, August 5, 2005

3. MANAGING DIRECTOR OF THE IMF ISSUES STATEMENT
AT THE CONCLUSION OF HIS VISIT TO UKRAINE
International Monetary Fund (IMF)
Kyiv, Ukraine, Friday, Aug. 5 2005

4. UKRAINIAN PRIME MINISTER WANTS IMF TO HELP REFORM ECONOMY
Era, Kiev, in Ukrainian 1300 gmt 5 Aug 05
BBC Monitoring Service, UK, in English, Fri, August 5, 2005

5. VICE PRIME MINISTER KINAKH OPPOSES NEW RULES GIVING SPECIAL
FINANCIAL BREAKS TO STATE COMPANIES IN THE GRAIN MARKET
VPM says action violates law on fair competition in the marketplace
AgriMarket.info, APK -Inform Information Agency
Dnepropetrovsk, Ukraine, Friday, August 5, 2005

6. MP VINSKYI ACCUSES CABINET OF CREATING SHADOW SYSTEM
FOR MONEY LAUNDERING THROUGH IMPORT OF RAW SUGAR
Laundering Through Import Of Raw Sugar
'Certain people will put into their pockets 150 Million USD'
Ukrainian News Agency, Kyiv, Ukraine, Fri, August 5, 2005

7. RECENT CHANGES IN UKRAINE'S TAX LEGISLATION REGARDED AS
HAMPERING DEVELOPMENT OF LEASING MARKET IN UKRAINE
VAT tax changes are wrong and double-tax leasing transactions
Anna Medvedeva, Ukrinform, Kyiv, Ukraine, August 5, 2005

8. UKRAINE'S REVOLUTION IS MIRED IN POWER STRUGGLE
Mounting anger over the lack of radical liberal reforms
and the failure to establish a functioning legal system
By Judy Dempsey, International Herald Tribune (IHT)
New York Times, New York, NY, Sunday, August 7, 2005

9. CABINET DECIDES TO CREATE UKRAINIAN CENTER FOR THE
PROMOTION OF FOREIGN INVESTMENTS
World Bank, EBRD and AmCham included on supervisory board
Ukrainian News Agency, Kyiv, Ukraine, Fri, August 5, 2005

10. UKRAINE INTERNATIONAL BECOMES FIRST CIS AIRLINE TO
FULLY COMPLY WITH IATA"S NET QUALITY AND SAFETY STANDARDS
e-Travel Blackboard, Australia's Number One Industry Newsletter
Australia, Monday, August 08, 2005

11. STARTING BID PRICE OF UAH 10 BILLION FOR 93.02% STAKE
IN KRYVORIZHSTAL STEEL MILL
FirsTnews, Kyiv, Ukraine, Friday, August 05, 2005

12. SLOVENIAN FOOTWEAR COMPANY ALPINA OPENS
NEW COMPANY IN UKRAINE, ALPINA UA
New Europe, Athens, Greece, Monday, August 8, 2005

13. YUSHCHENKO ORDERS CONSTRUCTION OF OIL REFINERY IN ODESA
Tender to determine an investor for construction of refinery
Anton Vodianyi, Ukrainian News Agency, Kyiv, Ukraine, Aug 6, 2005

14. "CRYING WOLF ON YUSHCHENKO"
OP-ED: By Volodymyr Hrytsutenko, Lviv
Assoc.- Prof. of English, Lviv Franko National University
Published by The Action Ukraine Report (AUR), Number 538
Washington, D.C., Monday, August 8, 2005

15. ARKANSAS COUPLE TO ADOPT THIRD CHILD FROM THE UKRAINE
Both sons from Ukraine have cerebral palsy and so does Lena
By Todd G. Higdon, Daily News Staff Writer
Neosho Daily News, Neosho, Missouri, Sat, Aug 6, 2005

16. ILLINOIS NATIVE AGAIN ANSWERS CALL OF THE PEACE CORPS
By Herb Meeker, Staff Writer, Journal Gazette
Mattoon, Illinois, Thursday, August 4, 2005

17. MARIE YOVANOVITCH NAMED U.S. AMBASSADOR TO KYRGYZSTAN
Served as Deputy Chief of U.S. Mission In Kyiv, Ukraine from 2001-2004
By David Parker, Republican-American
Waterbury, Connecticut, Friday, August 5, 2005

18. GENOCIDE EDUCATION NOW MANDATORY IN ILLINOIS
Law requires schools to include expanded lessons on tragedies
in Armenia, Bosnia, Cambodia, Rwanda, Sudan and Ukraine
By Maura Kelly Lannan, Associated Press
Chicago, Illinois, Saturday, August 6, 2005

19. EUROVISION WINNER RUSLANA OPENS CAMP FOR
UKRAINIAN VILLAGE CHILDREN
United States Embassy Kyiv Press Office
Kyiv, Ukraine, Friday, August 5, 2005

20. EU PLANS TO FUND OPPOSITION TO BELARUS 'DICTATOR'
Belarus lacks a high-profile and well-organised opposition.
By Murdoi Macleod, The Scotsman
Edinburgh, Scotland, Sun, August 7, 2005

21. EURASIA: DEMOCRATIC POLES
The terror state of Belarus
OP-ED: By Kamil Tchorek, freelance journalist.
The Wall Street Journal, New York, NY, Friday, August 5, 2005

22. GEORGIAN PRESIDENT MIKHEIL SAAKASHVILI SPEAKS OF
"STRUGGLE BETWEEN CYNICS AND IDEALISTS"
Yushchenko will be in Georgia soon
Georgian State TV Channel 1, Tbilisi, in Georgian 1735 gmt 7 Aug 05
BBC Monitoring Service, UK, in English, Sun, Aug 07, 2005

23. SECOND INTERNATIONAL CONFERENCE ON SUSTAINABLE AND
EFFECTIVE AGRICULTURE USING NO-TILL SYSTEMS APPROACH
'We are responsible for the earth we live on'
The Action Ukraine Report (AUR), Kyiv, Ukraine, Monday, Aug 8, 2005

24. UK 'DIDN'T WANT' UKRAINIAN NAZIS
BBC NEWS, UK, Tuesday, August 2, 2005
=============================================================
1. UKRAINE - MACROECONOMIC SITUATION - JULY 2005

By Olga Pogarska, Edilberto L. Segura
SigmaBleyzer, Kyiv, Ukraine, Fri, August 5, 2005

SUMMARY:

[1] Through the first half (1H) of the year, economic growth slowed down to
4% year-over-year (yoy); however, expected good agricultural performance
may improve the overall growth performance.

[2] In January-May, the consolidated budget registered a surplus of 2.85%
of GDP on the back of improved tax enforcement and tax administration.

[3] The government endorsed the list of enterprises to be privatized in
2005. A number of strategic enterprises, including "Ukrtelekom," may
stimulate FDI inflow to the country despite the as yet unresolved
Kryvorizhstal issue.

[4] Total public debt declined due to the government's prudent debt
management policy.

[5] January-May's merchandise trade surplus narrowed to $800 million,
63% less than over the same period last year.

[6] Approving half of the laws necessary for WTO entry, Ukraine may still
join the organization in 2005.

ECONOMIC GROWTH

Sharp deceleration of economic growth in Ukraine, observed since the
beginning of 2005, continued in June. Over the month, real GDP growth
slowed to 1.1% yoy compared with a 3.6% yoy increase just one month ago.

Over the first half of the year, cumulative real GDP growth made up a modest
4% yoy compared to the impressive 12.7% in the corresponding period last
year.

Deceleration was reported in all sectors except for agriculture and
utilities. Value added in agriculture increased by 7% yoy in January-June
compared to a 1.5% yoy decline in 1H 2004. Despite expectations of a fairly
good harvest, agriculture may show moderate performance in 2005 due to a
high base effect caused by the outstanding crop last year.

Over January-June, utilities continued expanding at a robust pace benefiting
from high world energy prices. Utilities registered 4% yoy growth over the
period compared to an almost 3% yoy decline in 1H 2004. On the downside,
construction has been stagnating since the beginning of the year. Value
added in the sector declined by 7.7% yoy over January-June on the back of
explosive 30.3% yoy growth in the respective period a year before.

Over the period, value added growth in wholesale and retail trade contracted
by a cumulative 2.5% yoy, for the first time during the last five years.
However, taking into account the robust growth of disposable household
income (up 26% yoy), domestic trade dynamics may recover in the near future.

In June, industrial growth demonstrated an almost 1% yoy decline. As a
result, cumulative growth slowed to 5% yoy compared to 6.2% yoy at the end
of June. Deceleration may be attributed to weakening export opportunities
for metallurgy and a high base effect. Soaring commodity prices in recent
years were primarily caused by buoyant Chinese demand for metal.

Now, as China has introduced new domestic capacities for production of steel
and has become a net exporter rather than a net importer, steel prices are
likely to continue to fall. Due to production specifications this will have
a contagion effect on other commodity prices. In Ukraine, metallurgy
accounts for more than 20% of the country's total industrial output and
about 45% of merchandise exports.

For six months of the year, metallurgical output contracted by 1.8% yoy. In
June alone, metallurgy reported a 9.3% yoy decline in output. In addition to
external factors, metal production this year is affected by higher
production costs (iron ore prices grew by about 50% since the beginning of
the year, more expensive railroad transportation and energy resources) and
lower domestic demand (due to stagnation in construction).

The downward world price trend for metals may reverse by the end of the year
due to diminishing stocks of metal products in Europe and production cuts
announced by a number of steel giants. However, with largely outdated
production capacities in the sector, higher demand for quality and strong
domestic currency, Ukrainian metallurgy may keep losing its competitiveness
in the medium term unless considerable investments come into the sector.

Chemicals, machine building, food and wood processing were the major
contributors to industrial output growth during 1H 2005. Strong external
demand supported 13% yoy growth in chemicals. Encouraged by robust
growth of household incomes, food processing output advanced by 14% yoy
over the period.

Enjoying buoyant domestic demand, wood producers expanded their
production by a remarkable 20.6% yoy. Machine building kept decelerating
as the sector's production advanced by only 0.1% yoy in June. Over the first
half of the year, it demonstrated moderate 9.1% yoy growth in contrast to
almost 34% yoy expansion in the respective period last year.

Following a gasoline crisis over April-May (when the country experienced a
shortage of gasoline stemming from government efforts to administratively
prevent an abrupt increase of petroleum prices), the situation began to
improve in June. Oil refineries' output grew by an encouraging 8.6%
month-over-month (mom); however, it was almost 11% lower than in June
2004. Consequently, oil-refining production contracted by a cumulative 5.6%
yoy over 1H 2005.

Considering the growth slowdown in the first half of the year, the
government lowered the GDP forecast for 2005 by 0.2 percentage points (pps)
to 8% yoy. However, it is unlikely that economic growth will reach the
expected level. Taking into account worsening external conditions, the GDP
growth of 6-7% forecasted by international organizations and independent
analysts looks more realistic.

FISCAL POLICY

Supported by improved tax enforcement and tax administration, the cumulative
consolidated budget surplus exceeded UAH 4 billion ($793 million) at the end
of May, which is equivalent to 2.85% of period GDP. In real terms,
consolidated budget revenues went up by an impressive 40% yoy to reach
UAH 47.8 billion ($9.5 billion).

Tax revenue collection has been successful so far, as proceeds from
corporate tax and import duties increased 52.1% yoy and 61.5% yoy in real
terms respectively. The largest increase in receipts was registered for
value added tax. Over January-May, value added tax receipts were almost
twice as high in real terms as in the corresponding period last year.

However, the figure should be treated with some caution due to accumulation
of the VAT refund arrears in the amount of UAH 3.1 billion (almost $609
million) as of July 1st. Moreover, preliminary State Treasury data indicates
the failure of fiscal authorities to collect targeted tax revenues in June.
In addition, generous social payments stimulated a 34% yoy real increase
in expenditures to UAH 43.7 billion ($8.6 billion).

Over the period, social expenditures, accounting for almost 82% of total
budget expenditures, soared by almost 60% yoy in real terms. Furthermore,
due to coming parliamentary elections in the spring of next year, the
government keeps increasing social payments (starting July 1st, the
government raised the minimum wage to UAH 310, up by 7%). Thus, the
targeted deficit of 1.86% of GDP remains quite a challenging task.

The need to finance debt obligations and substantial social expenditures
motivates the government to look for extra budget resources. At the
beginning of July, the parliament endorsed amendments to the Budget Law,
stipulating an increase in state budget revenues by UAH 372.2 million.
Additional budget revenues will be received thanks to a 83% increase in the
rent for the oil and gas condensate extracted in Ukraine and a 1.5 pps
increase in the obligatory state pension insurance deductions on cellular
communication services.

The Budget Law envisages fiscal deficit financing through new debt issues
and privatization receipts. However, the government demonstrated poor
privatization performance in the first half of the year. According to
government officials, privatization receipts amounted to about UAH 640
million ($125 million) for the period, below 10% of the targeted level for
this year.

The slow privatization process is attributed to the ban on the privatization
of strategic enterprises imposed in February 2005 and the change of the
State Property Fund (SPF) management. Since the ban was lifted in mid-
June and the government endorsed the privatization plan for 2005 in mid-
July, the privatization process should accelerate.

The list consists of 33 enterprises to be privatized in 2005, including
Odessa port plant, Severodonetsk nitrogen union, Nikopol pipe plant and a
number of hotels. Moreover, later in July the government decided to include
the largest telecommunication company "Ukrtelekom" in the 2005
privatization list.

The success of privatization process, however, will crucially depend on the
fair and transparent resolution of the Kryvorizhstal deal. Following the
decision of the Kyiv Commercial Court of Appeals confirming that the
privatization of Kryvorizhstal was carried out illegally, the re-sale of the
enterprise was scheduled by the government for October 24th.

The government earlier declared that the tender will be carried out in the
most efficient and transparent way. However, the very initiation of the
re-sale procedure undermines the stated principles, since the case
proceedings have not been closed. Allegedly, there are some 30 more
enterprises whose privatization may be reconsidered. However, the list of
those enterprises has not been published yet.

Considering modest privatization revenues, the government has increased its
reliance on new borrowings to finance the budget deficit. At the same time,
as the redemption volumes exceed those of newly issued instruments, total
public debt declined by 2.2% year-to-date (ytd) to $15.7 billion. The debt
structure has also been changing.

The government reduced the share of external debt, while issuing domestic
debt instruments. Since the beginning of the year, external public debt fell
by 7% ytd to $11.3 billion, while domestic debt increased by almost 13% ytd
to $4.45 billion. During 1H 2005, the government issued about UAH 6.7
billion of domestic T-bills, exceeding the ceiling of new borrowing on
domestic markets for the whole year.

According to the amended Budget Law for 2005, borrowing on external and
domestic markets is set at UAH 3.23 billion and UAH 6.24 billion,
respectively. However, the government has the right to go beyond the limit
in case the attracted funds are directed to pay out more expensive earlier
obligations.

Domestic T-bills issued in 2005 turned out to be attractive debt instruments
to non-residents, who hold about 40% of Ukrainian domestic government
securities. Although this allowed the government to substantially reduce the
cost of its borrowings, the local money market may be vulnerable to the
changes in foreign investors' sentiment towards Ukraine.

MONETARY POLICY

Following the sharp hryvnia appreciation in April, the National Bank of
Ukraine (NBU) returned to the policy of targeting exchange rate stability in
the following two months. Strong domestic currency, an economic growth
slowdown and worsening of foreign trade performance slowed the inflow
of foreign exchange into the country.

As a result, the NBU reported a negative $10.5 million balance of its
interventions on the forex market in June. For the previous periods, the NBU
forex purchases were among the major reasons for mounting inflationary
pressure. In addition, stabilization of gasoline prices also helped to
contain further acceleration of consumer prices.

In June, consumer inflation decelerated slightly to 14.4% yoy, down from
14.6% yoy a month before. However, this may be a temporary relief
considering the further increase in social payments and the upward trend
of world oil prices. Food prices continued to grow, advancing 0.5%
month-over-month in June.

In annual terms, however, the growth of the foods price index slowed down
to 18.4% yoy. The market for foods seems to suffer from perpetual price
upsurges on various products. During 2004, the prices on meat products
grew by more than 35% yoy on average each month. Over January-March
2005, monthly growth accelerated to 53.5% yoy on average.

As import duties on meat products were reduced, the price trend reversed
and reached 36% yoy growth in June. However in April, the market was hit
by surging sugar prices. In June, it was 32% more expensive than in the
respective month a year ago. Despite state reserve interventions on the
market, sugar prices will remain high until the end of September, when
sugar manufactured from the new harvest will start flooding the market.

At the same time, non-food prices continue to decelerate, reporting a 4.6%
yoy increase in June. After the government managed to reach an agreement
on the growth of gasoline prices with the major gasoline market players, the
growth of gasoline prices kept slowing to 18.2% yoy, down from a 67% yoy
increase in April.

However, the trend may rebound in the coming months as world oil prices
continue to increase, because the agreed level of gasoline prices in Ukraine
is conditional on their dynamics. Service tariffs growth accelerated to 8.2%
yoy as a lagged effect of the gasoline price increase on transportation
tariffs.

The producer price index (PPI) continued to decelerate, reaching 17.6% yoy
in June. Despite higher-than-expected inflation in 1H 2005, the official
inflation target for 2005 was left unchanged at 9.8% yoy.

The growth of monetary aggregates accelerated in June, which should be
attributed to loose fiscal policy. Over the period, money supply (M3) growth
sped up to 37.1% yoy, up from 35% yoy in May. In June, cash in circulation
advanced 39% yoy responding to increasing social security payments.
Growing population income stimulates the growth of deposits.

However, the growth has been slowing down since the beginning of the
year due to declining deposit rates and high inflation. In June, the average
deposit rates declined to an annual 6.9%, while inflation was well above
that level (14.4% yoy). Despite the tightening of reserve requirements in
May, commercial bank lending continued to accelerate reaching 34.2% yoy
growth, while the average cost of loans fell to 13.2% annually from 14% in
May.

After a sharp revaluation in April, the official hryvnia rate remained
virtually unchanged at UAH/USD 5.05 during May-June. At the end of June,
the NBU revised its forecast for the main monetary indicators for 2005. The
bank lowered the average exchange rate forecast for 2005 to UAH/USD
5.1-5.15.

This implies a relatively stable exchange rate for the rest of the year,
taking into account that the 1H exchange rate averaged UAH/USD 5.19.
In June, gross international reserves declined slightly by about 1%
month-over-month (mom), amounting to $13.1 billion.

INTERNATIONAL TRADE AND CAPITAL

Following an almost balanced trade of goods account in May, the cumulative
surplus remained virtually unchanged at the $800 million level registered
over January-April. January-May's trade surplus was 63% lower than that
achieved in the same period last year. Since the beginning of 2005, import
growth has been accelerating, eventually exceeding the rate of export
expansion in March-May.

Over the period, exports grew by a fairly modest 10.4% yoy as compared with
the more than 50% yoy growth for the first five months of 2004. Advancing
34% yoy each month during April-May, merchandise imports reported a 25%
yoy increase since the beginning of the year. Export growth deceleration
over April-May should be attributed to sharp hryvnia appreciation and
weakening external demand for Ukrainian metals.

Cross border metals sales remained among the largest contributors to the
overall growth of goods exports; however, the pace of metals export
expansion dropped from 60% yoy to slightly above 40% yoy. At the same time,
growing population income and cheaper domestic credits together with strong
national currency will further facilitate imports.

Although the first quarter current account reported a surplus 4% higher than
in the respective quarter last year, decelerating exports and accelerating
imports will result in a narrower current account surplus as compared with
the previous year.

The extensive country promotion campaign, which should improve the country's
image, and the policy of maximum assistance to foreign investors declared by
the Ukrainian top officials should stimulate the inflow of FDI to Ukraine.
The first quarter of the year reported rather moderate net FDI inflows of
$235 million, slightly below the level registered over the same period last
year.

The slowdown is attributed to the drastic change in the country's manage-
ment and the whole issue of re-privatization. With a stabilized political
situation and resolution of privatization disputes, foreign investors'
perception of Ukraine's investment climate should improve. To promote and
inform foreign investors about business opportunities in the country, the
foreign investment promotion agency was created at the beginning of July.

INTERNATIONAL PROGRAMS

On July 21st, an IMF mission arrived in Ukraine to assess current
macroeconomic developments in the country. The mission will primarily focus
on current and 2006 fiscal policy issues. Since there is no active lending
program, cooperation between Ukraine and the IMF is limited to technical
assistance support.

At the beginning of July, the government received a $172.5 million tranche
under the Second Programmatic Adjustment Loan (PAL-2) from the World
Bank. The program aims to facilitate structural reforms in Ukraine,
including public administration reform, strengthening fiscal discipline,
property rights protection, and social services.

In mid-July, the World Bank Board of Directors approved another lending
program, the First Development Policy Loan (DPL-1) in the amount of $251
million of development assistance financing. Earlier in June, the WB
approved two loans of $86 million and $106 million for investment projects
in education and energy sectors, respectively. According to the WB director
in Ukraine, Belarus and Moldova, the amount of lending programs issued by
the World Bank in 2005-2007 may exceed $2 billion.

OTHER DEVELOPMENTS AND REFORMS
AFFECTING THE INVESTMENT CLIMATE

On July 6-7th, despite acute opposition protests, the Verkhovna Rada of
Ukraine approved seven laws necessary for World Trade Organization (WTO)
accession out of the 15 proposed by the Cabinet of Ministers. In particular,
critical laws on intellectual property rights and agricultural trade were
approved.

Moreover, amendments to the law on banks and banking activities allowing
non-resident bank branches to operate in Ukraine were approved in the first
reading. For WTO entry to be discussed by the WTO's ministerial meeting
scheduled for December 2005, all necessary laws should be endorsed by the
end of September-mid-October.

Due to the Ukrainian parliament's summer vacation, the government
intensified negotiations to complete bilateral agreements on joint access to
the markets of goods and services. In July, the respective protocols were
signed with Norway, Indonesia, and Japan. However, Ukraine still has to sign
the respective agreements with 13 countries including the US and Australia.

Despite a very comprehensive agenda over a fairly short period of time,
Ukraine still has the chance to join the WTO in 2005. Ukraine's active
seeking of WTO membership received broad support by the international
community, including the World Bank and the European Commission.

In June, the government initiated a number of policy actions intended to
further liberalize the Ukrainian economy. Following the abolition of the
mandatory sale of 50% profits received from export operations in March,
the government lifted the mandatory requirement to register foreign trade
contracts in June.

The possibility to abolish the 90-day obligatory return of foreign currency
receipts and other measures to liberalize the money market are being
actively discussed by government authorities. -30-
-----------------------------------------------------------------------------------------------------
NOTE: To read the entire macroeconomic report, including the detailed
graphs and charts in color click on the following link:
http://www.sigmableyzer.com/files/ukraine-ec_situation_07_05_2.pdf
==============================================================
2. IMF MANAGING DIR DE RATO EXPRESSES CONFIDENCE IN UKRAINE'S
"BRIGHT FUTURE" DURING MEETING WITH PRIME MINISTER TYMOSHENKO

Ukrinform, Kyiv, Ukraine, Friday, August 5, 2005

KYIV - Prime Minister Yulia Tymoshenko met with the International Monetary
Fund's Managing Director Rodrigo de Rato and an IMF delegation led by him on
Friday, the press service of the Cabinet of Ministers has informed
Ukrinform.

The visit by the International Monetary Fund delegation is expected to
provide an impetus to the International Monetary Fund's bilateral
cooperation with Ukraine, Mrs. Tymoshenko said.

The two sides discussed problems involving the reform of the Ukrainian
economy, ways of lowering the rate of inflation, issues involving attraction
of investments, the drafting of Ukraine's state budget for 2006, and
improvement of taxation.

Mrs. Tymoshenko stressed that cooperation with the International Monetary
Fund was important to Ukraine and expressed the view that the "significant
proposals' that were discussed during the meeting would enable Ukraine to
make quicker progress in the reform of its economy.

"As of today, the situation in the country is stable, predictable, and quite
optimistic." Mrs. Tymoshenko said. She thanked the International Monetary
Fund mission, which has "always been highly professional and very
effective."

Mr. de Rato expresses confidence that a "modern, advanced economy" will be
built in Ukraine and expressed general approval of the macroeconomic
situation in the country. He also stressed the need to work productively on
lowering the rate of inflation. According to him, an important role in this
will be played by an effective monetary policy.

He gave a high appraisal of the National Bank of Ukraine's monetary policy.
At the same time, he said that the National Bank of Ukraine needed to make
more efforts in order to achieve positive results in this area.

"The immediate problem that the Ukrainian government needs to solve is
reduction of inflation," Mr. de Rato said. According to him, reduction of
inflation should ensure further economic growth in the country.

He also stressed the need to facilitate development of the market atmosphere
in the country and to create a positive climate for development of the
private sector. Mrs. Tymoshenko and Mr. de Rato agreed on the need to draft
the state budget for 2006 with a low deficit.

Moreover, Mrs. Tymoshenko said that a foundation for accelerated development
of the economy - based on a sensible tax policy that would expand the tax
base and reduce the size of taxes - should be laid in the state budget for
2006.

Mr. de Rato expresses confidence that "good prospects" await Ukraine. "You
and I believe in a bright future for Ukraine," Mr. de Rato said. "We have
seen that the efforts of the Ukrainian people and yielding good results."
He also expressed the International Monetary Fund's readiness to constantly
support Ukraine in the realization of its reform programs. -30--
=============================================================
3. MANAGING DIRECTOR OF THE IMF ISSUES STATEMENT
AT THE CONCLUSION OF HIS VISIT TO UKRAINE

International Monetary Fund (IMF)
Kyiv, Ukraine, Friday, Aug. 5 2005

Mr. Rodrigo de Rato, Managing Director of the International Monetary
Fund (IMF), issued the following statement today at the conclusion of his
visit to Kiev:

"First of all, I would like to thank President Yuschenko for inviting me to
my first visit to Ukraine. I would also like to thank President Yuschenko,
Prime Minister Tymoshenko, and Governor Stelmakh for a productive and
constructive dialogue on Ukraine's economy performance and prospects.

"We agreed that the immediate challenge for the government is to lower
inflation while helping to re-launch sustained growth. In my view, this
requires, in the first place, a coordinated and well-communicated
macroeconomic strategy on how to achieve these objectives.

"The building blocks of this strategy are
(1) a prudent fiscal stance in 2005 and 2006;
(2) tighter monetary conditions, including by adopting a monetary
framework that allows the National Bank of Ukraine (NBU) to
control inflation more effectively; and
(3) an improvement of the investment climate.

"Looking beyond this and next year, the main challenge will be to develop
market-friendly institutions that could support economic growth and enhance
the role of the private sector. Further integration into the world economy
provides for a clear framework in which this longer-term strategy could be
implemented.

"With the right policies in place, I am confident that the outlook can
quickly improve and remain favorable for years to come. We at the IMF
stand ready to assist the authorities in any way they find appropriate."
=============================================================
4. UKRAINIAN PRIME MINISTER WANTS IMF TO HELP REFORM ECONOMY

Era, Kiev, in Ukrainian 1300 gmt 5 Aug 05
BBC Monitoring Service, UK, in English, Fri, August 5, 2005

KYIV - [Presenter] The Ukrainian government and the International Monetary
Fund [IMF] have agreed to hold permanent working consultations, Ukrainian
Prime Minister Yuliya Tymoshenko told a news conference in Kiev today
after her meeting with IMF Managing Director Rodrigo de Rato.

She said that it is of utmost importance at present for IMF experts to join
forces with Ukrainian Cabinet of Ministers representatives to reform the
Ukrainian economy.

[Tymoshenko] It is necessary to carry out deep and systemic reform in
virtually every area of our life in Ukraine at present. It is of extreme
importance to us for the highly-skilled professionals who work with the
International Monetary Fund, first, to monitor the situation at the
macroeconomic level and join intellectual forces with us in order to
correctly and adequately reform our economic and financial life.

It is indeed important to do everything correctly during transformations of
this kind and take account of international experience. After our meeting it
is quite clear what Ukraine should now do at the level of the National Bank
[of Ukraine] and at the government level so that the inflation processes in
Ukraine are fully in line with the planned macroeconomic indicators for this
year. -30- [The Action Ukraine Report (AUR) Monitoring Service]
=============================================================
5. VICE PRIME MINISTER KINAKH OPPOSES NEW RULES GIVING SPECIAL
FINANCIAL BREAKS TO STATE COMPANIES IN THE GRAIN MARKET
VPM says action violates law on fair competition in the marketplace

AgriMarket.info, APK -Inform Information Agency
Dnepropetrovsk, Ukraine, Friday, August 5, 2005

KYIV - The First Vice-Prime Minister of Ukraine Anatoly Kinakh disapproved
the preferences, provided to the state companies on Ukrainian grain market,
speaking to a press conference Friday. He said that the recently released
ruling of the Cabinet of Ministers broke the rules of fair competition on
the grain market and contradicted to the legislative norms of Ukraine.

"We suggest making an amendment to the ruling, in order that the measures
for increasing competitiveness should be applied to all the economic
subjects, irrespective of the forms of ownership", Mr. Kinakh said to the
media.

According to him, the decision, providing such preferences to the state
operators of grain market, is unacceptable since it contradicts to
international obligations of Ukraine and may become an obstacle for
granting it the status of market economy country. "I view this ruling as
another backset, which is not to be tolerated", he said.

On July 29 this year Cabinet of Ministers of Ukraine issued a ruling,
entitled "On the Measures for Price Stabilisation on the Grain Market and
for Ensuring Its Break-Even Production", whereby it ordered the Committee
for State Reserves to purchase 1 million tonnes of grain and the State
Joint-Stock Company "Khlib Ukrainy" - 2 million tonnes.

For these two governmental bodies there have been also arranged a series
of preferences, i.e.: strictly limited timing of export VAT refund (three
days since submission of the documents), maximally cut amount of port
service fees to be charged at grain exports, reduced tariffs for inland
grain transportation (by 15.26 percent from the regular rates).

Besides, the enterprises of State Reserves and Khlib Ukrainy till the end of
year have been exempt from paying extra services, charged by load carriers
from the clients at non-fixed tariffs.

According to calculations of grain market analysts, such preferences will
enable these two governmental agencies to save 30 to 40 hryvnias ($6 to 8)
per each tonne of grain.

The non-market preferences, given to the state companies, were also strongly
opposed by Ukrainian Grain Association and Ukrainian Agrarian Confederation.
These organisations stated that by issuing the ruling the government had
violated the law about protection of fair competition in the economy. They
claimed that the ruling should be abolished. -30-
------------------------------------------------------------------------------------------------------------
LINK: http://www.agrimarket.info/showart.php?id=27499
==============================================================
6. MP VINSKYI ACCUSES CABINET OF CREATING SHADOW SYSTEM
FOR MONEY LAUNDERING THROUGH IMPORT OF RAW SUGAR
Laundering Through Import Of Raw Sugar
'Certain people will put into their pockets 150 Million USD'

Ukrainian News Agency, Kyiv, Ukraine, Fri, August 5, 2005

KYIV - Parliamentary Deputy Yosyp Vinskyi (Socialist Party faction) accused
the Cabinet of Ministers of working out a shadow pattern for money
laundering through the import of raw sugar under the guise of give-and-take
material without payment of duties and value-added tax for further sale in
Ukraine. Ukrainian News learned this from the SPU press service with
reference to Vinskyi's statement.

"The Cabinet of Ministers organized a shadow pattern according to which
certain people will put into their pockets USD 150 million," the report of
the press service quoted Vinskyi as saying about the Government's decision
on raw sugar deliveries to Ukraine.

The MP says that 1.8 million tons of sugar were made in 2004, and now the
import of 150,000 tons without payment of VAT and dues is expected. "This
sugar may beat down the price, but it will also beat down domestic
producers, and destabilize the situation in the market," Vinskyi noted.

He called the decision on the import of raw sugar a "shady deal" that will
lead to destruction of the branch. As reported, Vinskyi has the impression
that the Government and, in the first place Prime Minister Yulia Tymoshenko
and Economy Minister Serhii Teriokhin, are being guided by not disinterested
motives rather than interests of the state and its residents.

Vinskyi also reminded that socialists urged against the laws opening
unlimited access for raw sugar to Ukraine. "We warned that this fraud had
nothing to do with Ukraine's accession to the World Trade Organization,"
Vinskyi said.

As Ukrainian News reported, the Cabinet of Ministers adopted a set of
documents, including those granting permission for the import of raw sugar
into Ukraine, which would allow for reduction in sugar price to UAH
3.00-3.20 per kilogram.

The prices for sugar in retail trade rose in June in all regions by
10.8-40.6% to UAH 3.55-4.77 per kilogram over those in May. Sugar prices in
retail trade were UAH 2.90-3.20 per kilogram September to December 2004.
Experts estimate the annual size of the domestic sugar market at 2 million
tons. -30- [The Action Ukraine Report (AUR) Monitoring Service]
============================================================
7. RECENT CHANGES IN UKRAINE'S TAX LEGISLATION REGARDED AS
HAMPERING DEVELOPMENT OF LEASING MARKET IN UKRAINE
VAT tax changes are wrong and double-tax leasing transactions

Anna Medvedeva, Ukrinform, Kyiv, Ukraine, August 5, 2005

KYIV - Ukraine's still imperfect legislation, in general, and those changes,
which were made in tax-related legislation in March 2005, hamper develop-
ment of Ukraine's leasing market and may result in its curtailment. This was
what participants in a round table in Kyiv stated, when they discussed
problems of the leasing market.

The round table was sponsored by the International Financial Corporation
(IFC) and the World Bank's Representation to Ukraine. As the round table's
participants noted, drawing capital and technical investments through
leasing mechanisms is an essential element of Ukraine's strategies toward
modernizing technologies and basic assets.

The rate of deprecation of Ukrainian means and implements of production
averages 50 percent, but in some industries it is as high 80 percent,
whereas in developed nations it is greatly lower. In developed countries the
share of leasing in the aggregate amount of investment reaches 30 percent,
in transition economy nations it is about 15 percent. Ukraine's demand for
leasing services is appraised at at least 14 bn. USD.

Those amendments which were made to the VAT Law disbalance advantages
of leasing payments through levying the VAT on interests and commission
fees, which greatly increases costs of leasing services and creates
advantages for banks and credit associations.

Besides, those amendments distort the VAT's economic gist as the value-
added tax is levied on go-betweens, who distribute, rather than produce,
added value. Changes, which were made in the VAT Law's section 7.4.2,
result in double taxation of leasers, and if the VAT is to be reimbursed,
this results in levying the VAT thrice.

This makes leasing companies' activities unprofitable, when the NBU
changes refinancing rates of currency exchange rates in evaluating leasing
companies' liabilities. Besides, this necessitates recalculation of leasing
agreements and repeated signing of these.

Moreover, the Law on the tax on enterprises' proceeds does not take into
account peculiarities of leasing activities, in which insurance expenses may
greatly exceed the 5 percent norm.

Furthermore, problems must be legislatively regulated of ceding
proprietorial rights under leasing agreements, accelerated tax amortization,
the State's supervision, securing adequate accounting of leasing activities,
optimizing state programs of stimulating the leasing sector, signing
relevant international conventions.

UKRINFORM NOTE: As of January 1, 2005, the nation's portfolio of leasing
agreements was appraised at 221 M. USD. The leasing market's annual
turnover is 0.25 percent of Ukraine's GDP versus 1.55 percent of the world's
average and 5 percent in nations with fast economic growth rates. -30-
=============================================================
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=============================================================
8. UKRAINE'S REVOLUTION IS MIRED IN POWER STRUGGLE
Mounting anger over the lack of radical liberal reforms and
the failure to establish a functioning legal system

By Judy Dempsey, International Herald Tribune (IHT)
New York Times, New York, NY, Sunday, August 7, 2005

YALTA, Ukraine - Eight months after hundreds of thousands of demonstrators
removed a corrupt government in Ukraine, its peaceful Orange Revolution is
being undermined by rivalries, conflicting reform programs and lack of
coordination between the two people who did most to lead the revolt,
advisers and supporters in both camps say.

They say the struggle between President Viktor A. Yushchenko, a former
chief of Ukraine's central bank, and Prime Minister Yulia Tymoshenko, a
former business tycoon, is delaying much-needed reforms. It could even
erode the popular support that put both leaders, who are very different,
into power.

"Tymoshenko is very left-wing, hugely populist, paternalistic and also very
charismatic," said Boris Nemtsov, a former deputy prime minister of Russia,
leading member of Russia's pro-market Union of Right Forces political party
and now an adviser to Mr. Yushchenko.

"Yushchenko is a liberal, democrat, European-oriented politician," he said,
using the term liberal in its economic, free-market sense. "Such ideological
differences are very hard to overcome. There is jealousy and rivalry while
reforms keep being delayed."

Yet, say their advisers and analysts, they depend on each other. Mr.
Yushchenko needs Ms. Tymoshenko's power, popularity and political guile to
keep a fragile coalition of free-market advocates, Socialists and Communists
together before parliamentary elections in March. Ms. Tymoshenko needs Mr.
Yushchenko's support to retain the office of prime minister.

Neither politician will admit publicly to a conflict. But the openness with
which their advisers discussed the problem at a conference in Yalta in late
July illustrated that the rivalry and clash of agendas were hampering
change. This means that changes proposed by the International Monetary
Fund and the European Bank for Reconstruction and Development - like the
introduction of clear property rights, the rule of law and privatization -
have not gotten very far.

"There is a lack of coordination and coherence inside the government," said
Grigoriy Nemyrya, an adviser to the prime minister and director of the
Center for European and International Studies in Kiev. "If last December's
revolution was a managed revolution, then a managed counterrevolution is
possible over the next eight months. It would be damaging for Europe and
Ukraine. It would be catastrophic for the region."

Mr. Nemtsov and Mr. Nemyrya were among several top government advisers
and businesspeople at the conference in the Livadia Palace, a favorite
summer residence of the Russian czars perched above the southernmost tip
of the Crimean coast in Ukraine.

It was here, in February 1945, that the United States, Britain and the
Soviet Union decided the fate of Germany and Eastern Europe after World
War II. After Nazi Germany capitulated three months later, Eastern Europe
soon came under Soviet domination.

Sixty years later, with the Soviet Union gone, Germany reunited and former
Communist countries becoming members of the European Union and the
North Atlantic Treaty Organization, there is another agenda. "This is about
bringing Ukraine back to Europe," said Marek Siwiec, a Polish legislator in
the European Parliament and a board member of Yalta European Strategy,
a private group that organized the conference.

The aim of Yalta European Strategy is to muster international support for
Ukraine's wish to become a member of the European Union. The driving
force behind it is the oligarch Viktor Pinchuk, the son-in-law of the former
Ukrainian president, Leonid Kuchma.

Mr. Kuchma stepped down last December after Mr. Yushchenko was
elected in a vote that was rerun after huge protests by people accusing
the government of electoral fraud.

At the conference, the staunchest supporters of the Orange Revolution from
inside and outside the country could not hide their disappointment over the
slow pace of change, seen as an essential step toward Ukraine's gaining
entry in the World Trade Organization.

"There is mounting anger in Western business circles over the lack of
radical liberal reforms and the failure to establish a functioning legal
system," said Alexander Rahr, an expert on the region and program director
at the German Council for Foreign Relations in Berlin.

With the election scheduled for next spring, Mr. Rahr and other analysts
said Ukraine's legislators would balk at any unpopular changes that could
damage their election chances. Widespread privatization could lead to
restructuring and job losses, which could dent support for the reformist
parties.

The political challenge for these changes was clear earlier last month, when
the government tried to get parliamentary approval for reducing import
tariffs, a measure required for joining the W.T.O.

Socialist Party legislators backed by the Ministry of Agriculture fought
hard against Mr. Yushchenko's supporters to prevent any relaxation of the
high tariffs on sugar imports in order to protect domestic farmers. The
debate ended in fistfights. -30- [Action Ukraine Report Monitoring]
-----------------------------------------------------------------------------------------------------
http://www.nytimes.com/2005/08/07/international/europe/07ukraine.html
=============================================================
9. CABINET DECIDES TO CREATE UKRAINIAN CENTER FOR THE
PROMOTION OF FOREIGN INVESTMENTS
World Bank, EBRD and AmCham included on supervisory board

Ukrainian News Agency, Kyiv, Ukraine, Fri, August 5, 2005

KYIV - The Cabinet of Ministers has decided to create the Ukrainian Center
for the Promotion of Foreign Investment. This is stated in the Cabinet of
Ministers' decree of August 2, No.666.

It is stated in the decree that the center is being created with the aim of
improving the investment image of Ukraine, and creating favorable
economic, legal and organizational conditions for the activities of foreign
investors.

The center is to be created as a budget-financed institution under the
management of the Economy Ministry as a non-profit organization, which
will render services free-of-charge.

At the same time it is envisaged in the decree that the Economy Ministry
is to approve the list of individual services, which might be rendered on a
paid basis, and also the tariffs for these services.

The tasks of the center include: providing information to potential foreign
investors about the business conditions and investment activity; the
investment potentials of Ukraine and its regions; information and
organizational preparation of investment projects on the "single window"
principle; preparation of proposals on stimulating investment activity and
eliminating obstacles in its implementation and facilitating out of court
settlement of disputes between foreign investors and government agencies.

A director will run the center, and is to be appointed to and dismissed from
the post by the economy minister.

In order to control the activity of the center, the Cabinet of Ministers
created a supervisory board comprising 14 persons headed by Economy
Minister Serhii Teriokhin (Cabinet of Ministers' directive dated August 2,
No.303-r).

Also included in the supervisory board are: World Bank Representative to
Ukraine Dushan Voyovhych; Kamen Zahariev, EBRD (European Bank for
Reconstruction and Development) Country Director for Ukraine and Jorge
Zukoski, the president of the American Chamber of Commerce in Ukraine.

The Cabinet of Ministers instructed the Economy Ministry to resolve within a
month the issue of setting up the center and the material technical support
of its activity.

The Cabinet directed the Economy Ministry and the Finance Ministry to use
budgetary funds for upkeep of the center within the confines of the
financial resources that are envisaged for the Economy Ministry in the state
budget for 2005, and to envisage expenditures for supporting the activity of
the center in the budget for 2006 and the budgets for the subsequent years.

At the same time, the Cabinet of Ministers declared void the government's
directive of April 29, 2004, No.259 entitled "On Creation of the Agency for
Foreign Investments."

As Ukrainian News earlier reported, the National Security and Defense
Council recommended to President Viktor Yuschenko in June to create a
governmental agency, which would deal with investment issues and function
under the Economy Ministry.

The Cabinet of Ministers decided in April 2004 to create the Agency for
Foreign Investments as a joint stock company, in whose statutory fund the
state should hold equity of not less than 51% and it instructed the State
Property Fund to serve as founder of the Agency and to delegate powers to
the Economy Ministry for management of the state's corporate rights in the
statutory fund of the Agency. -30- [Action Ukraine Report Monitoring]
=============================================================
10. UKRAINE INTERNATIONAL BECOMES FIRST CIS AIRLINE TO
FULLY COMPLY WITH IATA"S NET QUALITY AND SAFETY STANDARDS

e-Travel Blackboard, Australia's Number One Industry Newsletter
Australia, Monday, August 08, 2005

Ukraine International Airlines (UIA) became the first officially registered
IOSA Operator in CIS that has successfully completed the special IATA
Operational Safety Audit (IOSA). This fact testifies to the high
appreciation of the UIA operations by authoritative international aviation
organizations.

UIA became the 51st registered IOSA Operator out of 265 IATA members,
equal with airlines such as KLM, Lufthansa, Austrian Airlines, TAP, SAS and
other leading airlines of the world that are on the IOSA Registry.

On August 1, 2005 in Kiev UIA President Yuri Miroshnikov received the
Certificate of the airline's full conformity with the up-to-date IOSA
requirements from Mike O'Brien, IATA Director, Programme Implementation/
Auditing.

According to Mr. O'Brien successful completion by UIA of the serious IOSA
Audit this summer "is evidence that UIA has in place a management structure
and corporate philosophy that actively promotes best practices in
operational safety. Having become the first registered IOSA Operator in the
region, I trust that their achievement will be seen as a model to follow for
other carriers in the Region".

The IATA Operational Safety Audit (IOSA), developed by the best airline
experts under the guidance of IATA, that was launched in 2003 is the
internationally recognized standardized programme of auditing airline
operational management and control systems aimed at improving the industry
operations safety. All IATA members have agreed to undergo an IOSA Audit.
=============================================================
11. STARTING BID PRICE OF UAH 10 BILLION FOR 93.02% STAKE
IN KRYVORIZHSTAL STEEL MILL

FirsTnews, Kyiv, Ukraine, Friday, August 05, 2005

Coming in at nearly double earlier predictions of opening bids at UAH 5.88
billion, the tender commission for the privatization of a 93.02 percent
stake in the Kryvorizhstal steel mill on Friday reportedly approved a
starting price of UAH 10 billion.

When Viktor Pinchuk's and Rinat Akhmetov's Investment Metallurgical Union
purchased the country's largest steel producer in the original privatization
bid last summer, they paid UAH 4.26 billion, a price many around the world
have said was far too low.

KYIV, August 5 (Interfax-Ukraine) - The starting price for a 93.02 percent
stake in OJSC Kryvy Rih Mining and Metallurgical Mill Kryvorizhstal
(Dnipropetrovsk region) during a tender scheduled for October will total
approximately UAH 10 billion. This price was approved by the tender
commission's meeting on Kryvorizhstal privatization issues on Friday,
according to the State Property Fund's press service.

Earlier, a source in the State Property Fund of Ukraine reported that the
starting price of a 93.02 percent shareholding in Kryvorizhstal may reach
UAH 5.88 billion. The terms of the repeat tender will be approved at the
Cabinet of Ministers' meeting on August 10. First Vice Prime Minister
Anatoliy Kinakh made the announcement in a Friday interview with
journalists.

According to him, the tender terms agreed with Kryvorizhstal's workers and
trade unions will ensure openness and transparency during the tender, as
well as equal access for all investors. Commenting on the reports concerning
the starting price of the 93.02 percent stake in Kryvorizhstal, the first
vice prime minister said those were unofficial reports, and the government
will announce the official price next week.

On April 22, the Kyiv Economic Court declared the company's privatization
illegal, and ordered its re-nationalization. The Kyiv Economic Court of
Appeals confirmed the ruling on June 3. On June 16, the registrar of the
stocks, ING Bank Ukraine, transferred the stocks to the State Property
Fund's account.

On July 21, the Supreme Economic Court declined the protest of Investment
Metallurgical Union against the rulings that nullified the privatization of
Kryvorizhstal. The union had bought the stake from the State Property Fund
for UAH 4.26 billion.

Kryvorizhstal is a leading producer that accounts for around 20 percent of
Ukraine's overall steel production. -30- [Action Ukraine Repot]
=============================================================
12. SLOVENIAN FOOTWEAR COMPANY ALPINA OPENS
NEW COMPANY IN UKRAINE, ALPINA UA

New Europe, Athens, Greece, Monday, August 8, 2005

Alpina has set up a subsidiary in Ukraine, aimed at increasing its exports
in this country, the Ziri-based footwear manufacturer said in a press
release on July 28. The manufacturer has preferred Ukraine because of the
low supply of the market by western manufacturers on the one hand and the
rising standard of living in this 48 million market on the other.

The press release also read that the new company, named Alpina UA, is
based in Kiev, and its main focus would be on wholesale of sports and
fashion footwear, and later open its own stores in the country.

Alpina UA is the ninth company of the Slovenian manufacturer to be
established abroad. The producer boasts a total of 114 stores in Slovenia,
Croatia, Serbia-Montenegro, Bosnia-Herzegovina, Hungary and Bulgaria,
and plans to open its first store in Romania in September.

Alpina generated revenues of 4.7 billion tolars (19.6 million Euro) in the
first half of the year, a decrease of 1.5 percent over the same period last
year. Sales on foreign markets dropped by 4 percent year-on-year, while
domestic sales rose by 2 percent. -30-
=============================================================
13. YUSHCHENKO ORDERS CONSTRUCTION OF OIL REFINERY IN ODESA
Tender to determine an investor for construction of refinery

Anton Vodianyi, Ukrainian News Agency, Kyiv, Ukraine, Aug 6, 2005

KYIV - President Viktor Yuschenko has instructed the Cabinet of Ministers
and the Odesa regional state administration to ensure the construction of an
oil refinery in the area of the Pivdennyi Port in Odesa. This instruction is
contained in the president's directive of August 5, No.1136/2005-rp, the
text of which Ukrainian News has obtained.

The Odesa regional administration should offer within a to-day period a land
parcel for setting up the new refinery. The Cabinet should determine the
place for the refinery within a month. The Cabinet should also ensure the
conduct of a tender to determine an investor for construction of the
refinery.

The tender should envisage diversification of the channels of oil deliveries
and guarantee the provision of raw material for the facilities of the new
refinery. The design output of the refinery should be not less than 8
million tons of oil per year.

The depth of oil refining should be not less than 95%, whereas the quality
of the petroleum products received should conform to European standards.

Besides, Yuschenko ordered the Cabinet of Ministers to ensure conformity of
the refinery to European environmental standards. Yuschenko also ordered all
local authorities to allocate land parcels for construction of an extensive
network of gas stations.

As Ukrainian News earlier reported, the Cabinet of Ministers approved the
draft of the decree of the President at a meeting on July 11, which
envisages construction of an oil refinery in the Odesa region, in the area
of the Pivdennyi Port. Prime Minister Yulia Tymoshenko announced in May
the intention of the Cabinet of Ministers to build an oil refinery in Odesa.
It was planned at the time that the annual output of the refinery will be 10
million tons, and it will be built within one and a half year.

There are presently 6 oil refineries operating in Ukraine, including in
Odesa: Lysychansk oil refinery, Ukrtatnafta (Kremenchuk, Poltava region),
Kherson oil refinery, Odesa oil refinery, Halychyna refinery (Drohobych,
Lviv region) and Naftokhimik Prykarpattia (Nadvirna, Ivano-Frankivsk
region). The annual output of the existing Odesa oil refinery is nearly 3.6
million tons of crude oil. -30- [Action Ukraine Report Monitoring Service]
=============================================================
Send in a letter-to-the-editor today. Let us hear from you.
=============================================================
14. "CRYING WOLF ON YUSHCHENKO"

OP-ED: By Volodymyr Hrytsutenko, Lviv
Assoc.- Prof. of English, Lviv Franko National University
Published by The Action Ukraine Report (AUR), Number 538
Washington, D.C., Monday, August 8, 2005

Unfortunately, the views expressed in my comments during the past 6-
months have shown remarkable longevity - only to prove that the problem
stays.

In his "Yushchenko's Wrong Move" (OUTSIDE VIEW, United Press
International, Washington, D.C., Wed, January 5, 2005) Ira Straus blows the
whistle on Yushchenko's evil plans to take a confrontational line with
Russia by maintaining warm relations with unruly Georgia and disregarding
the rights of the Russian-speaking minority.

Surprisingly oblivious of the good old it-takes-two-to-dance principle, Ira
Straus instructively writes: "Yushchenko should be attentive to legitimate
Russian interests [in Ukraine] and seek out ways to make constructive
compromises with them." Furthermore, Mr Straus insists, NATO, EU and
Uncle Sam must do everything to force Ukraine "to achieve genuine
reconciliation with the ethnic Russian minority and genuine conciliation
with the external Russian state."

By double-using the word genuine, Ira Straus implies that the Russians
living permanently in Ukraine and those residing in Russia are the underdog.

According to the vigilant Ira Straus, one of Yushchenko's "wrong moves"
(close ties with Mikhail Saakishvili), puts Ukraine almost at the brink of a
war with Russia. I am absolutely convinced that Ukraine's new democratic
president, like the rest of Ukraine's politicos, will never give Mr Straus a
chance by going to war with Russia.

We are destined to look for compromises because we live side-by-side. In
fact, there is no other option to a compromise, not with so many centuries
of a shared history, despite, as Ira Straus quite amusingly admits, "the
temptation [for Ukraine] to punish Russia."

While tacitly implying that goody-goody Russia is a compromise-loving
state, Ira Straus is continuously reminding Ukrainians of some legitimate
Russia's interests in Ukraine (apparently, hinting at the misfortunes of the
Russian-speaking minority threatened by blood-thirsty Ukrainian
nationalists).

At the same time, not a single word has been uttered in the article to
comment on Russia's growing imperial assertiveness, crackdown on
democracy, Pres. Putin's flagrant support for a pro-Russian presidential
candidate or the use of oil and gas price hikes to get political leverage on
Ukraine in the run-up to the parliamentary elections due in March 2006.

Incessant calls by the author to appease Big Brother Putin bring memories
of the same stance once taken by Europe vis-a-vis Adolf Hitler, with
pitiable ramifications to civilization. Furthermore, Mr Straus unjustly
blasts NATO and the West for not taking a tough line with Ukraine. However,
West's condemnation of the Gongadze killing or the Kolchuha saga, or the
rigged presidential election tellingly prove that this is not the case.

Meanwhile, according to Viktor Yushchenko, the state status for Russian is
merely a campaign card aptly played by then-Pres. Kuchma and by his
hand-picked successor, Viktor Yanukovych, to score political points. Another
avid single-minder is Socialist Oleksandr Moroz who is pushing for awarding
Russian the official-language status on a par with Ukrainian.

Before insisting on a state language status for Russian, Mr Straus would be
better served by reading up on almost three centuries of ruthless
suppression of the Ukrainian language by uncompromising tsars and
communists as well as massive resettlement of Russians to Ukraine which
resulted in large-scale russification of the country.

The Russian language trump card, on the advice of his Kremlin spin doctors,
has been shamelessly played by presidential candidate Viktor Yanukovych.
Citing the example of Switzerland, whose main languages enjoy the state
status, he hypocritically defended the allegedly oppressed Russian minority
in Ukraine.

To a large extent, Yanukovych was able to pull it off during his campaigning
because of the virtual information iron curtain in his eastern and southern
strongholds, incidentally, one of the wrongdoings for which he must be held
accountable.

Unlike Mr Straus, we, Ukrainians, believe us to be the underdog, not the
allegedly oppressed Russian minority, which has all the benefits of
Russian-language literature, TV, Radio, and education.

Have you ever seen a Ukrainian who would not speak Russian? I haven't. But
there are very many only-Russian speakers in Lviv, the hotbed of Ukrainian
nationalism, some with up to 60 years of living side-by-side their Ukrainian
neighbors. Paradoxically, the much-coveted status for Russian will not
resolve the issue unless Russian-speaking Ukrainians learn Ukrainian and, by
doing so, do their share of work toward reaching a vital compromise with the
rest of the populace.

In this context, I don't think it has been difficult for Mr Yanukovych to
sell himself to Ukrainians while on a campaign trail. Let's give credit
where credit is due - he proved a quick learner and now speaks very decent
Ukrainian. Meanwhile, the big question remains - why has he, or his patron
Kuchma in all the ten years of his tenure, failed to send this message to
his voters in Ukraine's russified oblasts?

But the Ukrainization of Ukraine is in the making, as more and more of our
Russian-speaking compatriots realize the need to know both languages. Just
listen to those of them who phone in during Radio Era hotlines, starting the
conversation in Ukrainian and then (sic!) apologetically saying they do not
know enough Ukrainian and have to switch to Russian!

The state status for Russian will remain an ammo for future election battles
unless a large-scale program of how to reach a genuine, not the Ira
Straus-proposed one-way compromise with the Ukrainian-speaking majority,
has been implemented by our new government all over Ukraine, not only in the
Russified regions.

The program should have both educational and multiple practical dimensions,
for instance, encouraging new local administrators to speak Ukrainian,
offering tax breaks to Ukrainian-language media and publishers, holding
topical television bridges between eastern and western audiences, etc.
----------------------------------------------------------------------------------------------------------
Mail to: vhryts@lviv.farlep.net
=============================================================
15. ARKANSAS COUPLE TO ADOPT THIRD CHILD FROM THE UKRAINE
Both sons from Ukraine have cerebral palsy and so does Lena
First Baptist Church of Bentonville set up donation fund

By Todd G. Higdon, Daily News Staff Writer
Neosho Daily News, Neosho, Missouri, Sat, Aug 6, 2005

BENTONVILLE, Ark. - Jimmie and Amanda Clark love children and soon
there will be one more addition to their family of four. The Clarks are
going to the Ukraine to adopt a little girl, Lena, 5, to join them in the
United States. Amanda, who is originally from Neosho, and Jimmie,
originally from Carl Junction, have been married for seven years.

"We have always wanted children," Amanda said. "But due to medical
problems, my doctor advised us not have children." Looking on the Internet
one day, the couple found the Web site of Cathy Harris from Florida, who has
"found homes for more than 1,000 children from the Ukraine." "We wanted to
adopt," said Jimmie.

So the couple started the paperwork and donated $500 for the process. After
the paperwork went through the proper channels both in Arkansas, then to the
United States and eventually to the Ukraine, it was time to go to the
Kramatorsk, Ukraine. "When we arrived back in 2002, we looked at books
and books of children to adopt," Amanda said. "We could not pre-choose or
even tell them who we wanted."

In Ukraine, if children to be adopted are not walking by the age of 4, the
children are sent to an institution. Because of neglect and disease, the
children in the institutions usually survive only a few months. Amanda said
there was some medical history of the children in the books. The only
stipulation that the Clarks wanted was to have the children under the age of
four. They got their wish.

"They (doctors) brought in Dimitri 'Dima', 2 1/2, and sat him on my lap,"
Amanda said. "At that time, I knew that I wanted him." Minutes later, the
doctors brought in Aleksei 'Leks', 20 months old. "They brought in Leks all
wrapped up, with his arms curled up," said Amanda. "Both of our sons have
cerebral palsy and so does Lena, who we will soon get."

In the Ukraine, both of the boys were malnourished, weighing 14 pounds
each. But according to Jimmie, "the kids are not picky." After the children
got home, they became involved in speech, occupational, physical and
developmental therapy. According to Amanda, Dima, now 5, and Leks,
now 4, attend the Sunshine School Preschool.

In their spare time, the two boys love to watch "Spongebob Squarepants,"
go swimming and riding horses at the physical therapist center.
With the expansion of their family, the Clarks have recently built and moved
into a new home. "We decided to adopt one more child," said Amanda.
This is not the first time that the couple has seen Lena.

"We saw her when we were in the Ukraine to get the boys," Jimmie said.
"After we came home and decided that we wanted another child, there was
another couple that wanted Lena. Just recently, the other couple's request
fell through."

"We are going through the adoption process by ourselves this time, and it
cost about $15,000," Amanda said. "We sent the documents to the Ukraine
this past week and hope to travel by October to get Lena." Lena currently
weighs 28 pounds and is 40 inches long.

For the past couple of years, the Clarks have been in contact with the
orphanage where Lena is and the orphanage will keep her there until the
Clarks can raise enough money to go get her.

In order to help in the adoption process, the couple's church, First Baptist
Church of Bentonville, has set up a donation fund. If you are interested in
making a contribution, checks should be made payable to the Clark Family
Adoption Fund, in care of First Baptist Church of Bentonville, 220 S. Main
St., Bentionville, Ark., 72712. According to Amanda, about $6,000 has been
donated so far.

Once they get to the Ukraine, Jimmie and Amanda will be there for two weeks
while their parents will be watching their sons. "Our sons are pleased about
having a sister," Jimmie said. "Our sons are very well behaved and I haven't
seen two happier kids in my life." [Action Ukraine Report Monitoring]
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http://www.neoshodailynews.com/articles/2005/08/06/news/news06.txt
Jimmie and Amanda Clark and sons Dima and Leks. COURTESY PHOTO
=============================================================
16. ILLINOIS NATIVE AGAIN ANSWERS CALL OF THE PEACE CORPS

By Herb Meeker, Staff Writer, Journal Gazette
Mattoon, Illinois, Thursday, August 4, 2005

MATTOON, Illinois -- Now Steven Senteney knows what a friend meant
about the Peace Corps when he said: "You've got to do this."

For the last two years, Senteney, of Mattoon, lived in the Ukraine helping
with language education and environmental projects. And this month, the
26-year-old headed back for an extension of his work with the Peace Corps,
which has helped developing countries across the world for more than 40
years.

"When you take two weeks' vacation in a country you don't get in very deep,"
Senteney said during an interview in Mattoon just a day before he headed
back to the Ukraine. "You really don't get to make many friends like you do
with the Peace Corps."

Senteney stayed for a time with a host family, who took him in as their own
and taught him the fine art of "toasting" in the Ukraine tradition at
Christmastime. "You could have 15 to 20 toasts. I told my host father I
would probably stick with wine, not Vodka."

The Ukraine, which became an independent country after the breakup of the
Soviet Union, is a developing country with many contrasts. A student might
be working on a new computer and talking on a cell phone in his bedroom
while his mother washes clothing by hand in another room.

There might be a 25-year-old Russian-made car parked in front of one house,
while a brand-new Mercedes Benz is parked and covered next door, while a
horse-drawn cart meanders down the street by the houses. The parks are
beautiful in the Ukrainian cities, but goats might roam free in them,
Senteney said.

Modernity has made great inroads in the country, but many people are not
overstressed by the clock. This was not just true for people in the
countryside or smaller towns. It was also true for residents of Zhytomyr
(pronounced Ja-Tomer), a city of 300,000 west of Kiev.

"The people there are much more relaxed. They are not as punctual. That
was the biggest shock for me initially," said Senteney. For example,
consider the daily wait for the marchutkas, mass transit vehicles that are a
cross between a van and bus with seating for 12-15 people.

As a Peace Corps volunteer, Senteney was not allowed to drive on his own
so he used the marschutkas, but he had to get used to their "full-or-no-go"
schedules. "They only leave when they get full," Senteney recalled. "So that
might take about 45 minutes. Another thing about the marschutkas is that
people can wave them down, too."

He was impressed with the professionalism of the Ukrainian educators he
worked with at the Ukrainian schools. Senteney worked with environmental
education projects and helped with teaching conversational English. His
value as a "native reader" was prized in the classrooms of teenagers.

He also helped shoot down some misperceptions of America for the
Ukrainians. "I'd tell them I was from Illinois so naturally Chicago came up
in the conversation. I had to explain that people from Chicago are not all
gangsters. And I had to explain that not all Americans drive huge SUVs.

But most of the people there like Americans. They just don't understand why
we do certain things at times."

There are not that many cars in the Ukraine. In one apartment complex with
about 1,000 residents, where Senteney lived for a time, there were less than
six dozen vehicles parked in the lot. Another thing about the Ukraine is
there is no tolerance whatsoever of DUI offenders. Partygoers are usually
accompanied by designated drivers.

There were also similarities between the Ukraine, known as the Breadbasket
of Russia, and Senteney's homestate. "There is a lot of corn and soybeans
and larger farms. And it is great riding through the countryside with the
rolling hills and the woods," Senteney said.

In many ways, Senteney's extension of one year of work there is an honor: he
was one of two out of 65 volunteers to receive an extension from the Peace
Corps leadership.

He will celebrate his 27th birthday next week in Ukraine, and he hopes
others might gain from service in the Peace Corps as well.

"It has been a fabulous experience. If anyone is interested I would highly
recommend it," he concluded. -30- [Action Ukraine Report Monitoring]
----------------------------------------------------------------------------------------------
For more information on Peace Corps, log onto www.peacecorp.gov
LINK: http://www.jg-tc.com/articles/2005/08/07/news/news003.txt
=============================================================
17. MARIE YOVANOVITCH NAMED U.S. AMBASSADOR TO KYRGYZSTAN
Served as Deputy Chief of U.S. Mission In Kyiv, Ukraine from 2001-2004

By David Parker, Republican-American
Waterbury, Connecticut, Friday, August 5, 2005

WATERBURY -- It's a long way from the small, tree-shaded village where
young Marie Yovanovitch made her mark at Kent Center School and Kent
School to the impressive seventh-floor Treaty Room of the State Depart-
ment in Washington. It's a still longer journey to strategic and mountainous
Kyrgyzstan in Central Asia.

This afternoon, a small delegation from Kent is scheduled to be in the
Treaty Room as Yovanovitch raises her hand and takes the oath as
"Ambassador Extraordinary and Plenipotentiary of the United States of
America" to the Kyrgyz Republic, also known as Kyrgyzstan. The small
Central Asian republic is recovering from a bloodless revolution last spring
that left the country in political and economic tatters.

The new ambassador, nominated by President Bush and unanimously
confirmed by the Senate on July 30, still calls Kent and Connecticut "my
emotional home," even though her career of the past two decades has
taken her to one distant post after another.

Colleagues at the State Department call Yovanovitch by her childhood
nickname, Masha, which is a Russian nickname for Marie. Masha's parents,
Michel and Nadia Yovanovitch, had traveled widely and were fluent in many
languages. From the mid-1960s until about 1993 they taught Russian,
French and German at Kent, a private, independent school.

While those who knew her as a child and adolescent in the 1970s say they'll
be proud this afternoon, they may not be astonished at her success. Veteran
Kent faculty member Tom Roney remembers Yovanovitch as a "fiercely
dedicated student, especially in the areas of history and English."

Don Gowan, now chairman of Kent's history department, concurs. "Masha
wasan outstanding student, near the top of her class, graduating with high
honors and accepted to Princeton," he said Wednesday as he and his wife,
Georganne, prepared to drive to Washington as longtime family friends
invited to the swearing-in.

Would Gowan have been surprised three decades ago to learn his student
would eventually rise to the top ranks of the diplomatic service? "It
wouldn't have seemed out of the realm of possibility," he said, "given her
ability and family background. But I think I would have seen her more as a
doctor or a lawyer."

Had Gowan asked, however, young Masha might have offered him a clue to
her future. "Oh, I thought about it first when I was at Kent," she said in a
phone interview Wednesday night. Her family friends the Obers, also part of
the school community, had served overseas "and it seemed like a wonderful
life: travel, languages, a chance to be part of what was happening."

She didn't pursue that life until a decade after leaving Kent, however.
Taking her Princeton degree, she headed for Moscow first for more study
and then for a job there at a time when the Cold War was in full force.
"When I came back to New York I went into advertising," Yovanovitch said.
"But after a while I decided that wasn't for me. That's when I entered the
Foreign Service in 1986."

A single woman now in her mid-40s, Yovanovitch can already look back on
a 19-year diplomatic career that includes a series of strategic postings
including political officer in Moscow, deputy director of the Russia Desk at
the State Department in Washington and deputy chief of mission in Kiev,
Ukraine. "That was in 2001 to early 2004," she said, "just before the Orange
Revolution there."

Her most recent assignment has been as senior adviser to the Under
Secretary of State for Political Affairs, again back in Washington. Now,
when she leaves her suburban home about Aug. 23, it will be to move
into the U.S. ambassador's residence in the Kyrgyz capital of Bishkek.

Her first assignment as ambassador promises to be a challenging one.
"Kyrgyzstan is really at a crossroads," Yovanovitch explained. "We have a
really good relationship with them. We're eager to see them consolidate
their democratic gains." Recent events help illuminate those remarks.

Soon after she takes up residence, Yovanovitch will present her credentials
to the Kyrgyz government, headed by a president due to be sworn in Aug. 14.
Kurmanbek Bakiev, a former opposition leader, was elected by a landslide
in July, following the downfall of Askar Akayev, who fled into exile after a
mostly peaceful uprising early this spring. Opposition groups appointed
Bakiev to take his place pending July's elections.

That election "was closely watched by the U.S. and Russia," the BBC reported
at the time, "which both have military bases in Kyrgyzstan. Russia and China
have been making it increasingly clear they want to limit U.S. presence in
Central Asia."

Neighboring Uzbekistan last week told the U.S. it must close its air base
there within six months. Hundreds of Uzbek refugees recently fled into
Kyrgyzstan after a bloody government crackdown on demonstrations. Other
neighbors of Kyrgyzstan, a nation of about 5 million people, are China,
Kazakhstan and Tajikistan.

While the political change must be on the new ambassador's mind, she has
an additional item on her agenda. The State Department, in consultation with
museum curators and ambassadors, has a program of installing art from
various regions of the United States in ambassadors' residences and other
diplomatic facilities worldwide.

"We're still in the early stages of this," she said. "But I'm really excited
about this and we'll be working with some curators and arts people in
Connecticut to select such work. There definitely will be art from
Connecticut in the residence, and from Litchfield County and from Kent."
It may be a while before Yovanovitch next gets back to Kent, where she
lived from age 3 to 17.

But it's a place she remembers fondly and visits as often as she can. "I got
a great education there," she said, beginning at Kent Center School, which
she attended from kindergarten through eighth grade, "not only in academics,
but also in ethics, right and wrong and in democracy." -30-
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LINK: http://www.rep-am.com/
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18. GENOCIDE EDUCATION NOW MANDATORY IN ILLINOIS
Law requires schools to include expanded lessons on tragedies
in Armenia, Bosnia, Cambodia, Rwanda, Sudan and Ukraine

By Maura Kelly Lannan, Associated Press
Chicago, Illinois, Saturday, August 6, 2005

CHICAGO - Illinois public schools are required to teach about genocides
around the world under a bill signed Friday by Gov. Rod Blagojevich.
The measure, which took effect immediately, expanded the previous
requirement that elementary and high school students learn about the
Holocaust to include lessons on genocides in Armenia, Bosnia, Cambodia,
Rwanda, Sudan and Ukraine.

School districts have the entire academic year to meet the law's
requirement, State Board of Education spokeswoman Becky Watts said.
"As we teach our kids the important lessons of history, we have to be sure
that they understand that racial, national, ethnic and religious hatred can
lead to horrible tragedies," Blagojevich said in a statement.

Glenn "Max" McGee, superintendent of schools in the Chicago suburb of
Wilmette and a former state schools superintendent, said learning about
genocide and other tragedies should be part of the curriculum.

"I think it is important for boys and girls to learn about these tragic
events so that maybe they can make contributions that will truly change the
course of history in the future," he said. But McGee worried the requirement
could become an unfunded mandate from the state.

"I hope and trust that the state Board of Education will provide resources
and some training in teaching these and it won't fall in the district's lap
to develop units," McGee said.

The law says the State Board of Education may give instructional materials
to districts to help them develop classes. Local school districts would set
specifics on the classes for each grade level.

The state board's curriculum and instruction division, which is responsible
for learning standards, was researching what curricula exists and which ones
would be most helpful to schools to teach about genocides, Watts said.

No decision has been made yet about whether the board will recommend a
curriculum or help schools access parts of one by providing online
resources, she said. Schools will teach a unit on genocide and the lessons
can last for different lengths of times, she said.

The genocides students will learn about include Rwanda, where about
500,000 people, most of them from the country's Tutsi minority, were killed
in 100 days by a regime of extremists from its Hutu majority in 1994. In
July 1995, as many as 8,000 Bosnian Muslim men and boys in the U.N.-
protected Bosnian enclave of Srebrenica were killed in Europe's worst
massacre since World War II.

In the Darfur region of Sudan, war-induced hunger and disease have killed
more than 180,000 people and driven more than 2 million from their homes
since rebels from black African tribes took up arms in February 2003,
complaining of discrimination and oppression by Sudan's Arab-dominated
government.

Richard Hirschhaut, project and executive director of the Illinois Holocaust
Museum and Education Center, praised the bill. "The new law affirms the
continuing relevance of applying the universal lessons of the Holocaust to
the tragedies of genocide in our world today," he said in a statement. The
measure was sponsored by state Rep. John Fritchey, D-Chicago, and state
Sen. Jacqueline Collins, D-Chicago. -30- [The Action Ukraine Report]
=============================================================
19. EUROVISION WINNER RUSLANA OPENS CAMP FOR
UKRAINIAN VILLAGE CHILDREN

United States Embassy Kyiv Press Office
Kyiv, Ukraine, Friday, August 5, 2005

On Friday, August 5 at 4:00 pm Eurovision winner Ruslana will open the
“Knowledge and Education KEY Camp” for orphans and village children at
Karasyk, Kyiv Oblast, about 30 minutes from the center of Kyiv. The camp
organizers and Ruslana will welcome media coverage.

The 8-day camp will be conducted in the Karasyk Recreation Center by
Ukrainian Youth NGO Youth CAN with the support of the Public Affairs
Section of the United States Embassy, Ukraine Citizen Action Network
Project/Institute for Sustainable Communities and the United States Peace
Corps in Ukraine.

In her letter to camp organizers the first lady, Ms. Kateryna Yushchenko
praised the work of Youth CAN. She wrote, “The Ukrainian society comes to
appreciate how important for Ukraine’s move ahead is citizens’ participation
in solving common problems.

A particular place in this process belongs to young people – the future of
the Ukrainian nation. I believe that Youth CAN’s’ work in supporting young
people will bring significant results in creating a healthy and tolerant
young generation and in increasing this generation’s moral and esthetic
level.

I am confident that through Youth CAN’s support, young people will come to
recognize their responsibility and will demonstrate the fundamental active
citizens’ position in defending the rights and freedoms of people. I would
like to wish you success in accomplishing your projects aimed at developing
strong and educated youth.”

Youth CAN is a non-governmental youth organization designed to empower
and motivate young people from throughout Ukraine by promoting civil society
development, human rights, active participation in community problem
solving, critical thinking, social and cultural diversity, and tolerance for
people of different ethnicities and language groups.

This year Youth CAN is expanding its reach through the introduction of new
programs for orphans and village youth across Ukraine emphasizing healthy
lifestyles and HIV/AIDS education.

60 children aged 11 to 16 from various regions of Ukraine will participate
in the KEY camp and attend classes on civic responsibility, leadership,
environment, healthy lifestyles and sports. Classes will be facilitated by
Ukrainian youth leaders and US Peace Corps Volunteers.

English language teachers from village schools will also participate in the
camp and receive instruction in contemporary methods of foreign language
teaching by a US teaching methodologist. The camp theme “Around the
World in 8 Days” will allow the participants to learn about world cultures,
customs and traditions.

Directions: Karasyk Recreation center is located 25 km away from Kyiv. Take
Vyshhorod Highway to Khotyanivka Village. Turn left in front of the church
and drive straight. For more detailed directions contact Henry Shymonovych
at (044) 247-6840. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
Send in names and e-mail addresses for the AUR distribution list.
=============================================================
20. EU PLANS TO FUND OPPOSITION TO BELARUS 'DICTATOR'
Belarus lacks a high-profile and well-organised opposition.

By Murdoi Macleod, The Scotsman
Edinburgh, Scotland, Sun, August 7, 2005

THE European Union is set to provide cash for opposition parties in the
former Soviet republic of Belarus. Western leaders fear that president
Alexander Lukashenko, widely regarded as Europe's last dictator, will
attempt to influence next year's presidential election in order to stop
pro-Western or pro-reform candidates taking power.

The move comes in the wake of the peaceful democratic revolutions in
neighbouring Ukraine and nearby Georgia, which both saw corrupt
governments ousted.

Last December, the opposition in Ukraine successfully challenged the result
of a presidential election which was widely regarded as having been fiddled
by the outgoing president in favour of his allies. Dirty tricks included an
attempt to poison the main opposition leader, Viktor Yushchenko, and
intimidation of campaign workers.

EU diplomats are considering direct funding to allow Belarus's opposition
parties to compete with the pro-government campaign. If approved, it would
mark a major shift in EU policy towards promoting democracy.

It would also mark a significant ramping up of pressure on the authorities
in Minsk, but would risk antagonising Moscow. Russia has a close
relationship with Belarus and is still smarting over what it sees as Western
interference in Ukraine, which is looking to join the EU and Nato.

A document prepared by the EU policy unit says that the "Lukashenko regime
is becoming increasingly repressive", pointing to the harassment of the
opposition and of lobbyists for reform, and asks whether "direct/indirect
opposition support" should be considered.

Brussels is also considering visa restrictions on Belarussian officials and
the freezing of some of the country's overseas assets. Olga Stuzhinskaya,
who represents a coalition of Belarussian opposition parties and NGOs, told
the Brussels-based news magazine European Voice: "The situation for
opposition parties is very bad.

"In the last couple of years all the donors have moved out and the political
parties have been left on their own. Many have closed. Everyone is talking
about great support for the opposition, for civil society and isolating the
regime but nothing happens. The repression increases."

Many leading figures in the Belarussian opposition have been charged with
criminal activities, debarring them from running in the elections - a move
seen as a trick by the government to neutralise the opposition.

While the EU is unwilling to allow Belarus to continue as Europe's most
repressed country, the obstacles to democratic reform are considerable.

Lukashenko has warned that anyone who attempts to spark a revolution will
be treated as a "hellraiser" and given "special treatment".

In contrast to Ukraine, Belarus lacks a high-profile and well-organised
opposition. Ukraine's burgeoning middle class - a factor absent in Belarus -
gave much of the impetus to last year's 'Orange Revolution' in Kiev out of
fear that an undemocratic
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http://news.scotsman.com/international.cfm?id=1740702005
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21. EURASIA: DEMOCRATIC POLES
The terror state of Belarus

OP-ED: By Kamil Tchorek, freelance journalist.
The Wall Street Journal, New York, NY, Friday, August 5, 2005

MINSK -- While western Europe focuses on terrorism in London, the terror
state of Belarus, dominated by dictator Alexander Lukashenko, is treated in
the tradition of Neville Chamberlain's "faraway country of which we know
little."

This is a mistake. Aside from the close though little-known historical and
cultural ties that the West has with Belarus -- Tadeusz Kosciuszko, a
leading figure in the American Revolution and an early advocate of democracy
and emancipation, was born and bred in these parts -- the Moscow-backed
regime in Minsk poses a security risk to Europe.

Two years ago Saddam Hussein's closest aide, Abid Hamid Mahmud Tikriti,
was captured carrying Belarus passports for himself and Saddam's notorious
sons. After a recent state visit from Tehran, the flag of Iran has been left
to decorate the main thoroughfare in Minsk. Mr. Lukashenko is arming himself
with cutting-edge Sukoyev Su-30s.

Last week, in a chilling echo of the Balkan conflict, Belarus special forces
stormed buildings used by the nearly 500,000 strong ethnic Polish
community -- some of whom live in the village of Kosciuszko's birth. The
woman who leads the Union of Poles, Andzelika Borys, yesterday was
questioned by police; her deputy and four other Union activists are in
prison. Minsk is trying to replace her with a quisling. In protest, Warsaw
last week withdrew its ambassador from Minsk.

Poland, Belarus' western neighbor and the EU's largest new member, is taking
a far tougher line with Mr. Lukashenko than much of Europe. Poland has
provided refuge for Belarusian émigrés who support the democracy movement,
and has allowed the Belarusian opposition to use Warsaw as a place to work
with Western NGOs and diplomats, assemble and speak freely without fear of
reprisal.

This policy is buoyed by American legislation. Washington's Belarus
Democracy Act 2004 grants financial backing to promote human rights and
democratic development in Belarus. But as evidenced by a letter from the
Polish foreign ministry to European leaders last month, at the start of the
crisis, Poland is having to work to get the EU to follow suit.

In private, some EU diplomats emphasize that it is important not to
antagonize Russia, an ally of Belarus, and dismissively claim that Poland
has an interest in raising its profile through conflict.

But Poland's Eastern policy is set to get tougher still. After elections
next month, Poland's ruling ex-communists are likely to be replaced by the
conservative opposition. When I recently interviewed a leading candidate
for prime minister, Jan Rokita, he spoke of foreign policy in positively
neoconservative terms.

"This now ends the period of mild politics," he said of the crackdown on the
Polish minority. "Ours will be a simple message: Lukashenko must go. I will
do all I can to help the Belarus opposition and I will want the EU to engage
rather than look the other way."

On Monday, Mr. Rokita's colleague and presidential candidate Donald Tusk
crossed into Belarus to show the Polish community there that they aren't
alone. Since then, Belarusian Poles who met with Mr. Tusk have been jailed,
and one of the prisoners, Andrzej Pisalnik, who edits the Polish-language
newspaper, has responded by going on hunger strike.

Meanwhile, also on Monday, an emerging opposition leader, Alexander
Milinkevitch was in Poland. "This is not an ethnic minority problem," Mr.
Milinkevitch told me. "This is a civil rights problem for all Belarusian
people from whatever background. Lukashenko is destroying civic society
and we've got to stop him."

Mr. Milinkevitch believes that there is a European tendency to consign the
current crisis between Warsaw and Minsk to the realm of bilateral relations.
To continue to believe this, he argues, would play into Mr. Lukashenko's
hands. His immediate wish is for Europe to rally round Poland in support of
democracy in Belarus.

The shared vision of Jan Rokita and Alexander Milinkevitch is rooted in
history. From the sixteenth century, Belarus was united with Lithuania,
Ukraine and Poland in a state known as the "Rzeczpospolita Polska," or
Polish Commonwealth. Much like in the United Kingdom or the U.S., citizens
could belong to any or several cultural groups but swear allegiance to one
state.

In such traditions tolerance is born. It is no coincidence that European
Jews, Armenians and Protestants thrived in the Rzeczpospolita when they were
hounded elsewhere. The Rzeczpospolita also produced Europe's first written
constitution, which was defended militarily by Kosciuszko, who was born in
Belarus of Lithuanian stock, spoke Polish, and was awarded American
citizenship.

It is also unsurprising that the Czarist and Soviet empires attempted to rub
out this history. "Until perestroika I thought I was Russian, and a minor
Russian at that," commented Mr. Milinkevitch. "All my life, like everyone in
Belarus and Ukraine, I'd been told that Russian history was our history, and
that we didn't have our own. Now that we have learnt about ourselves, we
want change."

As a means of coercion, President Lukashenko is doing everything to russify
the nation and make sure the historical links with Poland aren't restored.
He has changed the national flag from the medieval red and white Belarusian
banner it was in the 1990s to a near copy of the Soviet era symbol.

He has closed Jewish, Polish and Belarusian schools and established Russian
replacements. For years he has touted plans to reunify with Russia, though
they've never gone far.

Europe can stand by and watch Belarus, a European country, plunge into a
totalitarian abyss. Or it can recognize and support the immense effort of so
many Belarusians to become a democracy. -30-
=============================================================
22. GEORGIAN PRESIDENT MIKHEIL SAAKASHVILI SPEAKS OF
"STRUGGLE BETWEEN CYNICS AND IDEALISTS"
Yushchenko will be in Georgia soon

Georgian State TV Channel 1, Tbilisi, in Georgian 1735 gmt 7 Aug 05
BBC Monitoring Service, UK, in English, Sun, Aug 07, 2005

TBILISI - President Mikheil Saakashvili has said that the political struggle
in Georgia is not between parties but between "cynics and idealists".

Speaking at the opening of a small park in Tbilisi built in memory of a
regional governor killed in a road accident earlier this year, Saakashvili
said that he and his supporters had proved the cynics wrong through their
achievements since he came to power less than two years ago. He
particularly praised infrastructure improvements in Tbilisi.

In the speech, Saakashvili announced that one of Tbilisi's central squares
would soon be named after late Prime Minister Zurab Zhvania. He also
announced that Ukrainian President Viktor Yushchenko would soon pay an
"unofficial visit" to Georgia. The following is the text of a report by
Georgian TV on 7 August:

[Presenter] This is a special edition of "Mtavari". The opening ceremony is
under way for the Zhani Kalandadze [late governor of the Guria region]
public park, which was built in Ortachala [area in Tbilisi] on the
initiative of the Georgian president. We are going live to the ceremony,
which is being attended by Mikheil Saakashvili.

[Saakashvili] We are opening a small park named after Zhani Kalandadze. A
cinema which he started building in Ozurgeti will open tomorrow. The water
supply and road projects which he started are continuing.

This is important to me because we are talking about people who came to
power as a result of the Rose Revolution. In fact, they have completely
changed the public perception of a civil servant, state apparatus,
politician and political figure. We have a new generation of officials who
place their country and the ideals they serve above their own private
interests and their own private lives.

The current struggle is not one between political parties but one between
cynics and idealists. This is a struggle with people who do not believe in
themselves and thus do not believe in their country and their future role in
it. This is a struggle that will prove once and for all that Georgia can
have statehood and be a successful state in which people can be honest
and successful at the same time.

We have named this park after Zhani. In the next few days we will name one
of the city's central squares after [late Prime Minister] Zurab Zhvania. I
have already asked the city authorities to do it. In addition, we should
learn to value not only famous people but also the policemen who have fallen
in the line of duty, soldiers who have given their lives for Georgia and
everyone else who selflessly served or serves their own country.

Regardless of what you hear, it is apparent that, to a greater or lesser
extent, things are improving everywhere in Georgia. Just a year ago no-one
believed that we could have achieved what we did achieve last year. This
year no-one believed that everything would change the way it has. You watch
what's going to happen next year and the year after.

Look how beautiful Tbilisi is becoming. This is not just about one park. At
least 50 parks such as this will open in Tbilisi in the course of this year
and next year, at least 50. Nor is it about just one sports ground a few
metres from here, which is illuminated and where children are playing now.
What's important is that up to 400 similar sports facilities will open in
Georgia in the course of this year and next year.

That is what this new generation, these new ideals and this new mentality
have produced. The result is that people have started believing that this is
their budget and this is their country, so money shouldn't be stolen but
instead spent on their sports facilities, parks, houses, construction
projects, army, police, state apparatus, education, their children's future
and their own future in this country.

I think that it means that a new ideology is establishing itself. We are all
building what is essentially a new country and, in my opinion, we are doing
it quite successfully.

Once again I must note how much I like the lights in this park behind me.
You will have noticed that Tbilisi is becoming a city of lights. We all had
to live through the times when Tbilisi was in darkness, when Georgia was in
darkness. There are still problems, but Batumi is becoming a city of lights,
Tbilisi is becoming a city of lights, Kutaisi will become a city of lights
and so will Zugdidi, Ozurgeti and Telavi. At present that is particularly
true of Tbilisi.

Look how well decorated houses in the city centre are. It seems that we have
grown accustomed to it and no longer notice it. Look how beautiful the city
has become. It has become as beautiful as the best European capitals and
even much better than many European capitals. I think this will continue.
This has happened thanks to the people who believed that this could be
achieved. I am sure it will get even better in the near future.

By the way, I would like to greet Yuriy Pavlenko, Zhani's friend and
Ukraine's minister of youth affairs. I know that a large group of Ukrainian
youths are currently staying in our patriotic camps. We also look forward to
the Ukrainian president's unofficial visit to Georgia in the next few days.
I am not telling you exactly when, so you don't bother him.

We can now open this park [unveils a sign saying Zhani Kalandadze park;
broadcast ends] -30- [The Action Ukraine Report Monitoring Service]
=============================================================
23. SECOND INTERNATIONAL CONFERENCE ON SUSTAINABLE AND
EFFECTIVE AGRICULTURE USING NO-TILL SYSTEMS APPROACH
'We are responsible for the earth we live on'

The Action Ukraine Report (AUR), Kyiv, Ukraine, Monday, Aug 8, 2005

KYIV - The Second International NT-CA Conference will be held on the
17th-20th of August, 2005. It is sponsored by the CJSC Agro-Soyuz
Corporation, and held on their large farm located near Dnepropetrovsk,
Ukraine.

The forthcoming conference is a unique opportunity for information
exchange, and important contacts with researchers, experts, scientists
and farmers.

Experts from USA, Canada, Brazil, Australia and Argentina will make
presentations at the Conference. About 300 specialists of agrarian
enterprises, investors and representatives of the food processing industry
from Ukraine, Russia and Kazakhstan will take part in the Conference.

In November, 2004 the First International No-Till Conference took place
in Ukraine. More than 30 leading No-Till specialists from 9 countries
presented innovative sustainable No-Till technology to the agrarians of
Russia, Ukraine and Kazakhstan.

No-Till technology is a harmonious combination of agrarian business and
concerns for tomorrow. The world farming experience has demonstrated
that annual deep soil cultivation used so many places in Ukraine and else-
where around the globe harmfully influences the soil microflora,
intensifying erosive processes. The No-Till system is aimed at the recovery
of soil fertility.

The first attempts of the new technology implementation provoked numerous
questions of the Ukrainian, Russian and Kazakh farmers. The Second NT-
CA International Conference will be devoted to the search of answers to
those questions.

The leading experts from different countries and specialists of Agro-Soyuz
Corporation, which elaborated their own complex approach to agricultural
business management and step-by-step transition algorithm from
Conventional Tillage through Minimal Tillage to No-Till system, will take
part in that Conference.

ANALYTICAL CENTER --------
The Conference will be held in the Maiskoye Village, Synelnikovsky District,
Dnepropetrovsk Region, where the Model Farm of CJSC Agro-Soyuz is
located.

The Conference will take place in modern buildings that have technically
equipped spacious lecture-rooms; a large conference-hall, a press-centre,
all equipped for teleconferencing. Highly-qualified interpreters will help
participants overcome the language barriers and provide translation of
the lectures and reports. -30- [Action Ukraine Report Monitoring]
-----------------------------------------------------------------------------------------------------------
CONTACT: AGRO-SOYUZ CORPORATION: + 38 (056) 370-04-86,
+ 38 (0562) 36-74-98, +38 (050) 3420901, e-mail: nt-ca@agro.dp.ua;
Also contact Nila Martyniuk, nila@agro.dp.ua. Conference website:
http://nt-ca.org.ua/eng/index.php
=============================================================
24. UK 'DIDN'T WANT' UKRAINIAN NAZIS

BBC NEWS, UK, Tuesday, August 2, 2005

British officials were very uneasy about the decision to allow an entire
Ukrainian SS division to settle in the UK in 1947, newly released files
show. The papers from Britain's National Archives deal with 8,000
Ukrainians who had been recruited by the Nazis to fight the Soviet Union.

"What little we know of their war record is bad," commented Beryl Hughes,
an official at the UK Home Office. Police are investigating some of the
former SS men for alleged war crimes.

REPATRIATION FEARS
The Ukrainians had fought in eastern Europe and surrendered in Austria.
They were being held in British camps in Italy. When in 1947 the Italian
government signed a treaty with the USSR, that meant the soldiers could
be repatriated. But the UK Foreign Office was anxious to thwart their
repatriation, fearing massacres or rioting if the Ukrainians tried to
resist.

Initially the home secretary decided they should not be given refuge in the
UK, the BBC's Sanchia Berg reports. But a year later he had accepted that
they could stay, arguing that they were good workers and there was a labour
shortage in agriculture. It was also far more difficult now to send them
home.

The Home Office has confirmed that police have identified several hundred
members of the SS division who may still be alive and investigations into
possible war crimes are continuing.

The US Justice Department believes some of the veterans may have been
guards at a notorious labour camp and that some may have been involved in
the liquidation of the Warsaw Ghetto. The Polish government believes some
were involved in a massacre there, while the Slovak government has
questions about wartime atrocities on its territory. -30-
----------------------------------------------------------------------------------------------------
LINK: http://news.bbc.co.uk/2/hi/europe/4739645.stm
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