"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 540
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ActionUkraineReport@BleyzerFoundation.org
Washington, D.C. and Kyiv, Ukraine, FRIDAY, August 12, 2005
------INDEX OF ARTICLES------
"Major International News Headlines and Articles"
1. UKRAINE ECONOMY: TEN-YEAR GROWTH OUTLOOK
The Economist Intelligence Unit Limited
London, UK, Monday, August 8, 2005
2. UKRAINIAN CENTER FOR FACILITATING FOREIGN INVESTMENTS
Supervisory board of the center has also been approved
Board headed by Economics Minister Serhii Teriokhin
Main task of the center is to market Ukraine
Ukrinform, Kyiv, Ukraine, Thursday, August 11, 2005
3. YUSHCHENKO SETS UP CONSULTATIVE GROUP OF EXPERTS
FOR ADOPTION OF EFFECTIVE ECONOMIC DECISIONS
Reps of international org, govn't institutions, economists, financiers
Ukrainian News Agency, Kyiv, Ukraine, Thursday, August 11, 2005
4. CABINET NAMES PM YULIA TYMOSHENKO AS CO-CHAIR
OF UKRAINE-EBRD COMMITTEE
Finance Minister Pynzenyk is vice-chair of EBRD Board
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
5. UKRAINE CABINET ALLOCATES UAH 100 MILLION FOR
COMPUTERIZATION OF SECONDARY SCHOOLS
Ukraine News Agency, Kyiv, Ukraine, Thu, August 11, 2005
6. IN UKRAINE, HISTORY LOOKS AHEAD
COMMENTARY: By David A. Mittell, Jr.,
Member, Editorial Board, The Providence Journal
Providence, Rhode Island, Thursday, August 4, 2005
7. SIVERSKODONETSK-BASED AZAT TO BOOST CAPACITY OF
VINYL ACETATE SHOP BY 50%, LARGE FERTILIZER PRODUCER
Key player is American businessman of Ukrainian origin Alex Rovt
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 10, 2005
8. FOZZY GROUP OPENS UP ITS 64TH STORE IN UKRAINE
Sales volume was 290 million USD in 2004
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
9. LAST QUIET DAYS OF THE UKRAINIAN BANKING SYSTEM
ANALYSIS: by Roman Bryl, Ukraine Analyst
IntelliNews-Ukraine This Week, Kyiv, Ukraine, Mon, Aug 8, 2005
10. PM TYMOSHENKO SAYS FOREIGN BANKS MUST BE ALLOWED
TO OPEN SUBSIDIARIES IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 10, 2005
11. PM TYMOSHENKO PREFERS TO SELL 51% OF UKRTELECOM
Ukrtelecom is the largest telecommunications company
Controls over 80% of the fixed-line telephone market
Ukrainian News Agency, Kyiv, Ukraine, Wed, Aug 10, 2005
12. MITTAL STEEL SAYS IT PLANS TO BID FOR UKRAINE STEEL MILL
By Natasha Lisova, Associated Press Writer
AP, Kiev, Ukraine, Wednesday, Aug 10, 2005
13. UKRAINE IS DOUBLE-EDGED FOR RUSSIAN STEELMAKER
ANALYSIS AND COMMENTARY: By John Helmer
Mineweb.com, Johannesburg, South Africa, Thu, Aug 11 2005
14. PM YULIA TYMOSHENKO: POWER IN UKRAINE WILL BE IN
THE HANDS OF THREE OR FOUR PEOPLE
INTERVIEW: with Ukrainian PM Yulia Timoshenko
KOMMERSANT, Moscow, Russia, Wed, August 10, 2005
15. POLAND'S KULCZYK CO SEARCHING FOR NEW OPPORTUNITIES
IN ROAD CONSTRUCTION, CONSIDERING INVESTING IN UKRAINE
Polish News Bulletin, Warsaw, Poland, Thu, Aug 11, 2005
16. INVESTORS MOVE EAST TO BOOMING ROMANIA AND BULGARIA
WHILE MUCH OF OLD EUROPE STAGNATES
By Alexandru Alexe, Associated Press Writer
Baneasa, Romania, Wednesday, August 10, 2005
17. FOUR PRESIDENTS TO ATTEND 80TH ANNIVERSARY FESTIVITIES
OF THE ARTEK SOVIET-ERA YOUTH CAMP IN UKRAINE
Presidents of Georgia, Poland, Lithuania, Ukraine
Rustavi-2 TV, Tbilisi, Georgia, in Georgian, 11 Aug 05
BBC Monitoring Service, UK, in English, Thu, August 11, 2005
18. UKRAINE: PRES YUSHCHENKO CONGRATULATES NASTIA OVCHAR
ON COMPLETION OF TREATMENT AT BOSTON BURN CENTER
Ukrinform, Kyiv, Ukraine, Thursday, August 11, 2005.
19. UKRAINE: KYIV TO RESUME WORK ON CITY'S HISTORY MUSEUM
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
20. UKRAINE'S SOFIA KYIVSKA NATIONAL RESERVE TO RESTORE
HOUSE OF METROPOLITAN BUILT IN 1722-1730
Ukrainian News Agency, Kyiv, Ukraine, Thursday, August 11, 2005
21. UKRAINE DONATES THREE MILITARY PLANES FOR ESTONIA'S
TARTU AIRCRAFT MUSEUM
A Su-24 fencer, MiG-23 flogger, and a L-39 fighter jet
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
22. UKRAINIAN COMMUNITY OF AUSTRALIA WANTS TO STRENGTHEN
CULTURAL CONTACTS WITH UKRAINE
Ukrinform, Kyiv, Ukraine, Thursday, August 11, 2005
23. "WANTED: A FAMINE FUND"
LEAD EDITORIAL: The Washington Post
Washington, D.C., Thursday, August 11, 2005, Page A22
24. ANOTHER WALTER DURANTY?
LETTER-TO-THE-EDITOR
Volodymyr Hrytsutenko, Lviv Franko University
Lecturer and freelance political translator
Lviv, Ukraine, Tuesday, August 9, 2005
Published by The Action Ukraine Report, Number 540
Washington, D.C., Thursday, August 11, 2005
25. MEMORIAL COMPLEX DEDICATED TO VICTIMS OF REPRESSIONS
AND HOLODOMOR TO BE ERECTED IN KIEV BY END OF 2006
Will be erected in Kalinovaya Roscha Square
For-Um, Kiev, Ukraine, Tuesday, 9 August, 2005
26. FDR, CHURCHILL GAVE IN TO EVIL
COMMENTARY: by David A. Mittell, Jr., Member
Editorial Board, The Providence Journal
Providence, Rhode Island, Thu, July 28, 2005
=============================================================
1. UKRAINE ECONOMY: TEN-YEAR GROWTH OUTLOOK
The Economist Intelligence Unit Limited
London, UK, Monday, August 8, 2005
We forecast that Ukraine's real GDP will grow at an average rate of 3.9%
annually in 2005-30. The long-term average masks a general trend towards
slower rates of growth: average annual GDP growth is forecast to slow from
over 6% in 2005-09 to 3.5% in the subsequent decade and 3.3% in 2021-30.
The slowdown in the long-term growth rate primarily reflects poor
demographics, with the result that the deceleration in growth rates as
measured on a per-capita basis will be considerably less. Ukraine's economy
will grow significantly more quickly than the developed west European
economies, so that Ukrainian GDP per head (in purchasing power
parity-PPP-terms) will rise from around 24% of the EU15 level in 2003 to
around 43% in 2030.
[1] INITIAL CONDITIONS: Ukraine's efforts to catch up with central and
western Europe will be hampered by the weak institutional legacy inherited
from the Soviet era. Although Ukraine has built up a full range of
institutions since gaining independence with the break-up of the Soviet
Union, few of its institutions yet work effectively, and administrative
capacity remains low-even by regional standards.
The level of restructuring and investment in sectors that are crucial to
ensuring sustainable growth also remains low, including in infrastructure
and utilities. Although Ukraine is now benefiting from more reform-minded
leadership than has existed over the past decade, many of the reforms
required will take years to produce significant results.
Some factors should nevertheless work in Ukraine's favour. It has a
well-educated workforce, and a large domestic market-the largest in the
transition region outside of Russia. Its geographic position is also
favourable. It borders on three new EU member states, and, with the
accession of Romania, will soon border on a fourth.
While building its trade ties with the EU, Ukraine has also preserved close
economic ties with Russia, which remains a large export market and a
source of considerable investment. Ukraine is not only located on the main
trade route between Europe and Russia, but is also well placed to become
an increasingly important route to Europe for non-Russian energy sources.
[2] DEMOGRAPHIC TRENDS: Ukraine's population is expected to decline
at a steady rate over the long term-with the population in 2030 forecast to
be around 10% below current levels. The working-age population has
already fallen steadily since independence in absolute terms, and the rate
of decrease is expected to accelerate over the medium and long term.
Conversely, the number of people above working age is expected to continue
rising. By 2030, the size of this group will have risen by 1.5m to account
for 22% of the population-up from 16% at present. Those of working age
will fall by over 5m to account for 65% of the total, or down from 69% at
present. These trends will reflect low birth rates, continued labour
emigration, and improved life expectancy (rising from 67 to 74 years).
Our assumption is that labour market flexibility will not improve
sufficiently to bring unemployment rates significantly below what they are
at present. We also assume that many of the Ukrainians now working
elsewhere in Europe will settle in those countries rather than returning to
Ukraine.
[3] EXTERNAL CONDITIONS: Ukraine's economy-where exports already
generally amount to over half of GDP-will become more open as a result of
accession to the World Trade Organisation (WTO) and the process of
securing EU membership. Although the EU has so far refused to give
Ukraine any promise of membership prospects, this is expected to change,
and Ukraine is likely to embark on the path to membership over the medium
term.
Even if membership remains a distant prospect, the application process
itself will bring a significant reduction in the barriers that the EU
currently maintains on most of Ukraine's most important exports. A
free-trade agreement with the EU will also encourage greater inflows of EU
investment, particularly given Ukraine's advantages, in terms of wage costs,
compared with the new EU members on its borders.
Institutions and policy trends: Weak administrative capacity will remain a
long-term problem for Ukraine. The Soviet inheritance, in terms of
institutions and political culture, was not good, and the political
leadership in the intervening time did little to improve the situation.
Even though far more reform-minded leadership is expected from now on,
and some major improvements will be seen, the quality of policy formulation
and implementation will still remain below the levels of the better endowed
transition states in the region.
The improvements from the low base of the past decade will nevertheless
still be significant. Ukraine will show far greater commitment to economic
and political reforms than in the past, and the prospect of deeper relations
with the EU-including, eventually, membership-will play a greater role in
terms of providing incentives.
The extent of economic liberalisation and the quality of the business
environment will therefore improve substantially, and should help to offset
some of the effects of the unfavourable demographic trends expected.
[4] LONG-TERM PERFORMANCE: The real GDP growth rates expected
over the longer term are far below what was achieved over the past five
years. This is to be expected-no country has ever maintained such high
rates of growth for any considerable period of time.
In Ukraine's case, the past few years of expansion have moreover been
largely owing to one-off factors: considerable scope for bounceback
following the economic collapse of the 1990s, as well as unusually
favourable external conditions for Ukraine's key export sectors. The far
more modest growth rates expected over the long term are in fact likely
to represent a best-case scenario.
They include optimistic assumptions regarding labour productivity and the
growth in capital stock, as well as sound policies, which are expected to
bring considerable economic liberalisation, disinflation and only limited
fiscal deficits. The risk is that the policymaking environment will be worse
than expected.
Although the balance of power in Ukraine appears recently to have shifted
decisively in favour of a younger, more reform-minded generation, this does
not necessarily replicate the pro-European and pro-market consensus that
helped to drive reforms in central Europe in the 1990s.
Given the continued strength of vested business and bureaucratic
interests-despite the recent transfer of power-policy improvements in
Ukraine could very easily still be far less than is currently expected. This
would result in even more modest growth rates, and a larger income gap
between Ukraine and the current EU member states by 2030. -30-
=============================================================
2. UKRAINIAN CENTER FOR FACILITATING FOREIGN INVESTMENTS
Supervisory board of the center has also been approved
Board headed by Economics Minister Serhii Teriokhin
Main task of the center is to market Ukraine
Ukrinform, Kyiv, Ukraine, Thursday, August 11, 2005
KYIV - The Ukrainian Center for Facilitating Foreign Investments, which was
set up on August 2, 2005, by a Cabinet of Ministers resolution, will work to
improve the investment climate in Ukraine.
Deputy Economics Minister Volodymyr Ihnaschenko announced this at a
press conference on Thursday. The composition of the supervisory board
of the center has also been approved. The supervisory board is will be
headed Economics Minister Serhii Teriokhin.
The center's supervisory board is made up of seven representatives of the
relevant Ukrainian ministries and representatives of international financial
organizations such as the European Bank for Reconstruction and Develop-
ment, the American Chamber of Commerce, the European Business
Association, and other institutions.
According to Mr. Ihnaschenko, President Viktor Yuschenko promise to
create 5 million new jobs cannot be fulfilled without attraction of foreign
capital, and attraction of foreign capital requires creation of the
necessary investment climate. The center has the status of a non-
governmental agency, but it will be financed from the state budget. It will
employ 25-30 people.
The experience that was accumulated during creation of a similar center
in Ireland, which was later applied in the Czech Republic and Hungary,
was applied during the creation of the center.
The [1] main task of the center is to market Ukraine -- organize
conferences, presentations, roundtables, and other events to clarify the
investment conditions in Ukraine -- "because Ukraine's image among
foreign investors is worse that it actually is," according to Mr.
Ihnaschenko.
The center will also [2] perform an information function. According to Mr.
Ihnaschenko, the foreign businesspeople that attended the June 16-17
international investment forum [mini-Davos] in Ukraine obtained 60-70%
of their information about Ukrainian enterprises and their operations from
the Internet.
Moreover, the center is expected to [3] perform the function of a "single
window" for establishment of initial contacts with investors as well as to
provide [4] primary consulting services.
Specialists at the center are also expected to [5] actively work with
Ukrainian regions and serve as investors' 'advocates' in relations with
local government organs and representatives of regulatory bodies (the
tax, veterinary, sanitary, and fire services). -30-
-------------------------------------------------------------------------------------------------------
FOOTNOTE: According to information we have received from Kyiv
the following organizations, represented by the persons listed below,
are members of the new supervisory board:
1) Terekhin, Serhii, Minister of Economy, Head of the Board.
2) Baranchuk, Victor, Deputy of the Minister of Industrial Policy,
Deputy of the Head of the Board
3) Ignashenko, Vladimir, Deputy of the Minister of Economy,
Deputy of the Head of the Board
4) Bondar, Victor, First Deputy of the Minister of Transport and
Communication
5) Voloshina, Olena, Head of International Finance Corporation
(IFC) in Ukraine
6) Voyovhych, Dushan, World Bank Representative in Ukraine
7) Gurzhii, Andriy, Deputy of the Minister of Education and
Science
8) Dereviyanko, Hanna, Executive Director of the European
Business Association (EBA)
9) Zahariev, Karmen, EBRD Country Director for Ukraine
10) Zukoski, Jorge, President of the American Chamber of
Commerce in Ukraine (AMCHAM)
11) Marmazov, Vasil, Deputy of the Minister of Justice
12) Ray, Karin, Delegate of German Economy in Ukraine
13) Titenko, Sergiy, Deputy of the Minister of Fuel and Energy
14) Jaresko, Natalie, President and Executive Director of the
Western NIS Enterprise Fund
[The Action Ukraine Report (AUR) Monitoring Service]
=============================================================
3. YUSHCHENKO SETS UP CONSULTATIVE GROUP OF EXPERTS
FOR ADOPTION OF EFFECTIVE ECONOMIC DECISIONS
Reps of international org, govn't institutions, economists, financiers
Ukrainian News Agency, Kyiv, Ukraine, Thursday, August 11, 2005
KYIV - President Viktor Yuschenko has instructed National Bank Chairman
Volodymyr Stelmakh and Chairman of the State Tax Administration
Oleksandr Kireev to set up a consultative group of experts for adoption of
effective economic decisions. The presidential press service informed
Ukrainian News about a meeting between Yuschenko, Stelmakh and
Kireev.
"The Head of State has instructed to create a consultative group for
monitoring and adoption of effective decisions that would encourage
development of the Ukrainian economy and reform the monetary policy,"
the report reads.
The group will be subordinate to the President and consist of
representatives of international organizations, government institutions,
economists and financiers.
"For prompt adoption of effective decisions by the Head of State, the
group will provide the president with the results of economic situation
monitoring and its critical conclusions and consultations on a regular
basis," the report says.
As Ukrainian News earlier reported, on July 27 Yuschenko left for
Crimea to work in his residence. -30- [The Action Ukraine Report]
=============================================================
4. CABINET NAMES PM YULIA TYMOSHENKO AS CO-CHAIR
OF UKRAINE-EBRD COMMITTEE
Finance Minister Pynzenyk is vice-chair of EBRD Board
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
KYIV - The Cabinet of Ministers has appointed Prime Minister Yulia
Tymoshenko co-chair of committee Ukraine - European Bank for
Reconstruction and Development [EBRD]. Ukrainian News learned this
from the Cabinet of Ministers' resolution #330 of August 9. By this
resolution, the Cabinet of Ministers forms the Ukrainian part of the
committee.
The committee includes Minister for Emergency Situations and Protection
of Population from Chornobyl Accident Consequences David Zhvania, State
Nuclear Regulatory Committee Chair Olena Mykolaichuk, Finance Minister
Viktor Pynzenyk, Fuel and Energy Minister Ivan Plachkov, Foreign Minister
Borys Tarasiuk and Economy Minister Serhii Teriokhin.
As Ukrainian News reported, in June the EBRD appointed Pynzenyk vice-
chair its board of directors. This is the first time a Ukrainian citizen has
been appointed to this post. -30- [Action Ukraine Report Monitoring]
=============================================================
5. UKRAINE CABINET ALLOCATES UAH 100 MILLION FOR
COMPUTERIZATION OF SECONDARY SCHOOLS
Ukraine News Agency, Kyiv, Ukraine, Thu, August 11, 2005
KYIV - The Cabinet of Ministers has decided to allocate UAH 100 million
[USD 20 M] for computerization of secondary schools. Tymoshenko stated
this at a press conference, citing the decision passed by the Cabinet at
August 9 meeting.
"We made a breakthrough in this direction yesterday. We allocated
almost UAH 100 million for this purpose," she said. The prime minister
added that the funds that were allocated will be distributed evenly through
out the territory of Ukraine.
As Ukrainian News earlier reported, President Viktor Yuschenko instructed
the Cabinet of Ministers in July to prepare the conception for educational
reform by October 1, while taking into consideration in this conception the
prospects of integration into the European Union.
Yuschenko had previously promised to begin sectoral reforms from the
second half of the year, including education reforms.
Ukraine joined the Bologna Process in May. Prime Minister Yulia
Tymoshenko identified 17 prioritized programs of the Cabinet of Ministers
for 2005 in April, among which is the program, envisaging a new quality for
education and sciences, including the computerization of schools. -30-
==============================================================
6. IN UKRAINE, HISTORY LOOKS AHEAD
COMMENTARY: By David A. Mittell, Jr.,
Member, Editorial Board, The Providence Journal
Providence, Rhode Island, Thursday, August 4, 2005
KIEV, Ukraine - IT IS MORE than seven months since Ukraine's Orange
Revolution triumphed, with the swearing in of Viktor Yushchenko as
president. For many Americans, the spectacle of thousands of people
camped for weeks in frigid tents in Kiev's Maidan, or Independence
Square, was their first lesson that Ukraine is a nation, not some pseudo-
state on Russia's rump.
I would have loved to have been in the United States seven months after
George Washington first took the oath, in 1789. Technically speaking,
Providence would have been in a different country, since Rhode Island
was still refusing to ratify the Constitution. There, and up the Post Road
in Attleboro, U.S.A., I imagine one would have heard a degree of griping
that high hopes so recently held hadn't seemed to have changed much.
Ukraine is at roughly the same historical point in the 14th year of her
independence as we were in the 14th year of ours. The very independence
much of the world doubted has held. A failed confederation -- in Ukraine's
case, one ruled by the squalid survivors of the old régime -- has been
reformed.
Most importantly, in both countries "We, the people" spoke, were heard,
and thereby put a revolutionary imprimatur on the history of their country.
In our case, it was the "miracle at Philadelphia" -- the Constitution
itself.
In Ukraine's case, it was the nation's refusal to accept the perpetuation
by fraud of rule by a corrupt oligarchy propped up by the former imperial
power's meddling leader, Vladimir Putin.
In history, Ahmed Ben Bella -- the liberator of Algeria who proved too
incompetent and corrupt to govern successfully -- is a much more
recurrent figure than George Washington -- the man with the bravery to
be "first in war" and the humility to be "first in peace."
The jury is out on Viktor Yushchenko. To date, he has been at odds with his
prime minister, Yulia Tymoshenko, over anachronistic price controls on
meat and energy, which she favors. He has been stymied by his socialist
allies in Parliament, who have voted against reforms required for Ukraine
to join the World Trade Organization. At times, he has seemed less than
supple in dealing with these matters.
But more to the point, I think, is that he is an honest man leading a
country needing (to paraphrase Jimmy Carter) nothing so much as a
government that is as honest as its people. Under Mr. Yushchenko,
television stations no longer go black when they offend the government.
He has preached religious, ethnic, regional and international tolerance --
reaching out to the West; visiting and receiving Mr Putin; and publicly
rededicating a cemetery where Polish soldiers who died fighting
Ukrainians are buried.
On my recent trip I took the pulse of the nation with a 2,000-mile tour to
four of Ukraine's largest cites:
- Lviv, in the west, is a hauntingly beautiful Central European city of
narrow streets and richly varied architecture of many centuries.
- Dnipropetrovsk, on the Dnieper - Ukraine's Mississippi - is a Soviet-built
industrial ghetto. Throughout their empire, Soviets scarred the landscape
with box-shaped buildings. But their planners did one thing right: They set
these buildings off from one another with avenues bordered on both sides
with wide swaths of grass and trees. The present effect in Dnipropetrovsk
is of some beauty; as better buildings rise in the future, one can imagine
great beauty.
- Kharkiv, in the east, and almost in Russia, is a gem: a city of fine
buildings radiating from one of the world's largest cobblestone squares,
which, as one reaches its edge, turns into an enormous park and urban
wild.
- [Kiev] But to understand Ukraine politically in the summer of 2005, one
needs to see Kiev, the national capital. The Maidan, where the
revolutionists of fall and winter camped, is two wide avenues that meet to
make cruciform.
These avenues are bordered by street-level sidewalks some 30 yards
wide, which in turn are bordered by raised sidewalks of equal width. Only
at the edge of these second sidewalks do buildings of seven to ten
stories rise.
The result is one of the great places in the world for human beings to
gather on foot for business or pleasure, or to pursue love or revolution. A
few are still camped out to present grievances to Mr. Yushchenko, which
I'm told he sometimes receives in person. But most of the thousands on
the Maidan this summer resemble a "be-in" from the 1960s.
Every imaginable food and knick-knack is for sale. (There's even a chance
to pose for a picture with an owl or a monkey on your shoulder.) Hundreds
gather to watch break dancers, who perform day and night. It is Fourth of
July and the Prague Spring rolled into one, with no Soviet Union to spoil
the party!
Regardless of how Mr. Yushchenko performs, I don't think there is to be a
turning back. Something essential has changed: The quickened walk of
fear of the authorities, which every totalitarian state produces, has
disappeared.
This summer, Ukrainians walk idly, like American teenagers at a shopping
mall. "We, the people" have taken over. As it did in America in 1789, what
this portends, in my opinion, is national greatness. -30-
--------------------------------------------------------------------------------------------------------
NOTE: David A. Mittell, Jr. is a member of The Journal's [Providence,
Rhode Island] editorial board. Contact: dmittell@progo.com.
============================================================
7. SIVERSKODONETSK-BASED AZAT TO BOOST CAPACITY OF
VINYL ACETATE SHOP BY 50%, LARGE FERTILIZER PRODUCER
Key player is American businessman of Ukrainian origin Alex Rovt
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 10, 2005
KYIV - The Siverskodonetsk-based Azot Association (Luhansk region), a
major producer of ammonia and nitrogen fertilizers, plans to increase the
annual capacity of its vinyl acetate shop by 50% or 11,000 tons to 33,000
tons. An insider disclosed this to Ukrainian News.
He said the new vinyl acetate production line will allow for such an
increase. The line will become operational early next year. Its cost would
not be divulged. As Ukrainian News earlier reported, Azot began
reconstruction of its vinyl acetate shop in January. Vinyl acetate is an
acetic acid-acetylene condensate used as a monomer for production of
polyvinylacetate resin, glue and paint.
The State Property Fund and Worldwide Chemical LLC created the closed
joint-stock society called Siverskodonetsk Azot Association on December
24, 2004 with a statutory capital of UAH 1,056.7 million. Worldwide Chemical
LLC owns 60% of the shares in the new company while the State Property
Fund owns 40%.
The SPF contributed the integral assets of the Azot Association into the
statutory capital of the Siverskodonetsk Azot Association while Worldwide
Chemical LLC has paid USD 60 million as half of its contribution to the
statutory capital. Worldwide Chemical LLC is controlled by American
businessman of Ukrainian origin Alex Rovt, who is the founder and
president of the IBE Trade chemical company.
Worldwide Chemical LLC (United States) is contesting at the Supreme
Court the Kyiv Appeal Court's decision to declare the creation of the
SJSC Siverskodonetsk Azot Association on the basis of the state-owned
enterprise Azot Association illegal. -30- [Action Ukraine Report]
=============================================================
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=============================================================
8. FOZZY GROUP OPENS UP ITS 64TH STORE IN UKRAINE
Sales volume was USD 290 million in 2004
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
KYIV - The Fozzy Group, a commercial and industrial group, has opened
its 64th store in Ukraine, the second Silpo self-service store in Vinnytsia.
Silpo's executive director Valerii Vlasenko disclosed this to Ukrainian
News.
The Silpo self-service store opened at 14:00 on August 11 on a junction
of Keletska Street and Street of Soldiers Internationalists in the Vyshenka
microdistrict. The store occupies an area of 800 square meters. Eight
cash registers are installed in the store.
Silpo self-service stores offer between 6,000 and 12,000 food products,
depending on the area they occupy. A Silpo self-service store occupies an
average area of 1,200 square meters. As Ukrainian News earlier reported,
in March Fozzy Group opened a Silpo self-service store in Vinnytsia on the
basis of a shop operating under the Da! Market trademark.
Fozzy Group increased its sales volume through its commercial networks
by USD 110 million or 61.11% to USD 290 million in 2004.
The group is made up of a chain of Silpo self-service stores (64), the Fora
discount shops (20), the Bud Zdorov drugstores (8), the Fozzy wholesale
hypermarkets (3), the Dniprianka chain of food stores (22), and the Nizhyn
tinned food factory (Chernihiv region). -30- [Action Ukraine Report]
=============================================================
9. LAST QUIET DAYS OF THE UKRAINIAN BANKING SYSTEM
ANALYSIS: by Roman Bryl, Ukraine Analyst
IntelliNews-Ukraine This Week, Kyiv, Ukraine, Mon, Aug 8, 2005
The state registry of banks includes 185 banks in Ukraine as of Aug 1,
2005. Among them 162 bank have licenses from National Bank of
Ukraine (NBU) allowing them to provide banking services.
Of this amount, 133 banks are joint-stock companies (92 are public
corporations, 2 are state banks, 41 - closed corporations). The rest 29
have the status of limited liability companies.
Number of banks in Ukraine rises by 4 in H1/05 -----
Since the beginning of the year 4 new banks were included in the state
registry. They are International Mortgage Bank, Eurobank, Vneshtorgbank
and Finansova Initsiativa commercial bank. At present there are 21 banks
underliquidation (this figure corresponds to 11.4% out of the total amount
of listed banks).
Among these banks 14 are liquidated according to NBU decisions, 6 banks -
according to decisions of commercial courts. One bank cancelled its activity
due to its shareholders decision.
Ukrainian banks witness rise of financial performance indices -----
Since the beginning of the year, the increase of main financial performance
indices continues. Thus, the regulative capital of banks grew by 15.3% ytd
in Jan-Jul to UAH 20.97bn (USD 4.18bn). During this period, banks' own
capital increased by 11.4% ytd to UAH 20.52bn (USD 4.1bn). The main
reason of strong own capital growth is that many banks boosted their
authorized capital.
As a whole, authorized capital of Ukrainian banks was increased by UAH
1.14bn (USD 228mn) or by 9.8% y/y. Also own capital grew due to increase
of total reserves, reserve funds and other banking reserves (by UAH 454.6mn
or by 27.4% y/y) and emission disparities (by UAH 43.8mn or by 10.5%y/y).
Own capital is characterized by the following figures: authorized capital
corresponds to 62.1% of own capital, 8.3% are financial results of previous
years, reappraisal of key assets, fictitious assets and investment in
associated companies and subsidiaries makes up 10.1%, financial result for
the current year - 4.7%, total reserves and funds of banks - 11.3%, emission
disparities 2.2%. Financial results for the current year to be approved in
the nearest future makes is 1.3%.
Ukrainian banks rapidly increase their liabilities -----
In 2005 liabilities of Ukrainian banks increased by 24.6%. To compare,
during the same period of 2004 liabilities were up by 19.4%. According to
NBU, liabilities totaled UAH 164.92bn as of Aug 1. Liabilities of
non-residents accounted for 14% of total liabilities. The rise of
liabilities was mainly caused by growth of individual deposits by UAH
13.84bn (USD 2.76bn), and corporate funds by UAH 9.59bn (USD 1.91bn).
Also, credits received from international and other financial institutions
contributed to the rise of banks' liabilities with UAH 359mn (USD 70mn) or
23.9% increase. Worth noting, foreign borrowing in still quite small. Other
factors that drove up liabilities are: issuance of securities (up UAH
306.3mn or 48.8%), subordinated loans (UAH 645.9mn or 46.6%), bills
payable to other banks or banks' clients (UAH 837.4mn or 69.9%), and other
liabilities (UAH 813mn or 42%).
Deposits make up 76.3% of all bank accounts -----
Liabilities of banks have the following structure: deposits of individuals -
38.1%, corporate funds - 34.4%, interbank credits and deposits - 12.1%,
funds of NBU - 0.9%, funds of non-banking financial institutions - 3.6%,
state budget funds - 1.1%, subordinated loans - 1.4%, own debt securities -
0.6%, foreign credits - 1.4%, and other liabilities - 6.4%.
We should note that the recovery of individual deposit growth is quite
encouraging after a drop in late 2004, triggered by the election-related
political uncertainty. Deposits make up 76.3% (UAH 41.98bn or USD 8.39bn)
out of all bank accounts. Current accounts make up 23.7% or UAH 13.06bn
(USD 2.61bn). The population prefers to make savings in the national
currency (58.1%).
Corporates account for 73% of aggregate
loan portfolio; share of retail loans
declines -----
NBU in its report on banking sector development in H1/05 notes
the positive trend of stable asset growth. During the period net assets rose
by 22.8% to UAH 164.96bn (USD 32.99bn). At the same time, total assets
increased by 21.1% to UAH 172.79bn (USD 34.55bn). Non-residents own
6.5% out of all assets of Ukrainian banks.
There are several reasons that had influenced raise of assets. First of all
total asset rose due to increase of credits by 23.8% y/y (UAH 23.16bn) in
H1/05, investment in securities by 52.6% or UAH 4.29bn and rise of highly
liquid assets by 9.8% (UAH 2.3bn. Highly liquid assets make up for 15% of
total assets. The biggest share in assets belongs to credits - 69.7%, and
investments in securities - 7.2%.
Corporations are the main recipients of banks' credits. In H1/05 they
accounted for 73% of the total credit portfolio. Respectively, the share of
individuals' deposits declined to 16.2%. Another 10.7% are loans to banks
and to NBU, and 0.1% are credits given to state authorities. The develop-
ment of retail lending is heavily constrained by the low income of the
population.
The volume of long-term credits and credits for investment activities
continued to rise. In H1/05 they increased by 29.3% y/y (48.9% of total
loans) to UAH 58.88bn (USD 11.77bn). Credits for investment activities
rose by 43.7% y/y and amounted to UAH 8.7bn (USD 1.74bn).
The main challenge for Ukrainian banks is increasing profitability and
efficiency. In H1/05 Ukrainian banks received UAH 966.1mn of income,
which is 1.6-fold higher than in H1/04. We are at least positive that
revenues of banks are growing at pace with spending.
Revenues of Ukrainian banks rose by UAH 2.98bn (USD 596mn) or by
31.7% y/y to UAH 11.8bn (USD 2.36bn). Interest rate revenues made up
UAH 8.14bn (USD 1.62bn) or 69% out of all revenues. Expenditures grew
31.7% or by UAH 2.6bn (USD 520mn) to UAH 10.84bn (USD 2.16bn).
The largest part of expenses is interest payments (43.2%).
NBU prepares measures to stir up competition between
local banks that may lead to bankruptcy of many small banks -----
All these figures convince us the Ukrainian banking system is developing
stably. Though it does not mean that the banks in total and a banking
system as a whole faces any challenges.
We suppose the main problem of the local banking sector is its small size
compared to banking system of Central and Eastern European countries.
This slows down development even of large local banks due to limited funds
for rapid expansion.
First, it creates opportunities for foreign banks with far greater funds to
enter the market by acquiring banks. Today we know about the forthcoming
acquisition of two big Ukrainian banks (Ukrsotsbank and Aval Bank). During
the last few months representatives of Hungarian, Italian, Turkish banks
announced their plans to enter the market. We cannot exclude the sector will
be dominated by foreign banks and local banks will lose their influence on
the economy.
NBU is going to take major steps to step up competition among local banks.
According to our information, NBU is preparing to announce a hike in the
rate of capital adequacy and rate of obligatory reserves on certain
transactions. At present we can hardly predict how radical these changes
will be.
But according to some independent experts, the rates can be raised
significantly. If so, many small banks of Ukraine will not be able to
continue their activities and will go bankrupt. On the other side, this move
can make large Ukrainian banks to start M&A and this way increase capital.
However, M&A will include only purchases of small banks by large ones.
Mergers between large banks are hardly possible now. Traditionally, these
banks are owned by large financial and industrial groups (FIGs) that are
competing with each other. Only M&A between FIGs would make it possible
for big banks to unite. -30- [Action Ukraine Report Monitoring Service]
=============================================================
10. PM TYMOSHENKO SAYS FOREIGN BANKS MUST BE ALLOWED
TO OPEN SUBSIDIARIES IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 10, 2005
KYIV - Prime Minister Yulia Tymoshenko supports granting legal
guarantees to foreign banks for opening subsidiaries in Ukraine. She
said this in interview with newspaper Komersant-Ukraine.
"Ukrainian laws forbid the opening of full-fledged bank affiliates. But if
you wish to know my opinion, Ukraine must lift as soon as possible all
restrictions in this area, and appear in the world market of capitals and
international finance markets," she said.
In the Prime Minister's opinion, this move would help reduce credit rates
as a result of a toughening of competition in finance market. "This is what
I wish to do - to create normal competition in banking market. That is why
I will orient all of my political capacities for the banks and insurance
companies of the whole world to be represented in Ukraine in a worthy
manner," Tymoshenko said.
As Ukrainian News reported, on July 6 Verkhovna Rada adopted in first
reading the bill allowing foreign banks to open affiliates in Ukraine.
The draft law proposes the following restrictions on the opening of
affiliates by foreign banks: the regulatory capital of the foreign bank
should amount to a minimum of EUR 150 million, the minimum size of the
foreign bank's capital should be EUR 5 million, Ukrainian banks should
have the right to open affiliates in the country in which the foreign bank
was founded, the country should not be on the list of countries failing to
cooperate with the Financial Action Task Force on Money Laundering
(FATF).
At present, only banks with partial or 100-percent foreign capital operate
in Ukraine, alongside Ukrainian banks. The liabilities of the cofounders of
such banks are limited to the sizes of their contributions to the statutory
capital of the banks. -30- [Action Ukraine Report Monitoring Service]
=============================================================
11. PM TYMOSHENKO PREFERS TO SELL 51% OF UKRTELECOM
Ukrtelecom is the largest telecommunications company
Controls over 80% of the fixed-line telephone market
Ukrainian News Agency, Kyiv, Ukraine, Wed, Aug 10, 2005
KYIV - Prime Minister Yulia Tymoshenko tends to the decision to sell at a
tender 51% of state-owned shares in the telecommunications company
Ukrtelecom, instead of 42.86% as it was expected earlier. She made the
statement in an interview with the Komersant Ukraine edition.
"In strict terms of the state as for coordination of Ukrtelecom work with
all state institutions we will most probably be selling 51% of shares,"
Tymoshenko said. According to her, the state will hold 42.86% of shares
in Ukrtelecom, from which it will receive guaranteed dividends.
"The very dividend payment in full will be one of terms of the tender.
Besides, we will draw attention to the issues of state security in the
system of communications," she said.
Tymoshenko added that now Ukrtelecom is being prepared for privatization,
during which the state expects to increase the company's capitalization,
return all possible licenses to it, including the license of mobile
communications operator and settle its debts.
Tymoshenko stressed she sees no problem in possible sales of Ukrtelecom
to foreign companies. "The nationality of the investor doesn't matter for
me. It only matters how much he is ready to pay for the stake and how much
he is ready to contribute to the facility to make it effective," the premier
said.
As Ukrainian News reported earlier, at a meeting on July 20, the Cabinet
of Ministers approved an additional list of facilities to be prepared for
privatization this year among which was the state's 42% stake in Ukraine's
largest telecommunications company Ukrtelecom.
The Verkhovna Rada suspended in early July the law on peculiarities of
privatization of Ukrtelecom until adoption of a privatization program.
7.14% of the shares in the company were sold to its employees via the
preferential subscription. The remaining 92.86% of the shares are held by
the state. Ukrtelecom is the largest telecommunications company and
controls over 80% of the fixed-line telephone market. -30-
=============================================================
12. MITTAL STEEL SAYS IT PLANS TO BID FOR UKRAINE STEEL MILL
By Natasha Lisova, Associated Press Writer
AP, Kiev, Ukraine, Wednesday, Aug 10, 2005
KIEV, Ukraine - Mittal Steel Co., the world's largest steel producer, plans
to bid for Ukraine's most profitable steel mill in an upcoming auction.
The PBN Company, which represents Mittal Steel in Ukraine, said in a
statement the company had "declared an intention to bid" for the
Kryvorizhstal steel mill in the auction scheduled for Oct. 24.
Mittal Steel was not ready to comment "on the starting price and form of
participation in a Kryvorizhstal tender at such an early stage," the PBN's
statement said.
The Ukrainian government on Tuesday set a $2 billion starting price for a
93.2 percent stake in Kryvorizhstal, more than doubling the price at which
it was sold in a highly disputed privatization deal.
A consortium controlled by Viktor Pinchuk, the son-in-law of former
President Leonid Kuchma, and Rinat Akhmetov, a tycoon who is Ukraine's
wealthiest man, won ownership of the mill for $800 million. Other major
steel companies including Russia's OAO Severstal and the US Steel
Corp. claimed they made substantially higher bids of around $1.2 billion.
After a long legal battle, the government in June seized control of the
mill, calling the earlier sale an outright theft.
Prime Minister Yulia Tymoshenko, meanwhile, said Wednesday that "a
real price would be much bigger than a new starting price". She said $3
billion "is not beyond the price limit for such an investment."
It isn't clear yet whether Severstal or US Steel Corp. planned to bid again
for the mill, which last year declared earnings of more than $400 million.
Mittal became the world's No. 1 steel maker in April after acquiring
U.S.-based International Steel Group in a $4.5 billion deal. The company,
which is 88 percent owned by the Mittal family, has steel-making facilities
in 14 countries and about 180,000 employees. -30-
=============================================================
Send in a letter-to-the-editor today. Let us hear from you.
=============================================================
13. UKRAINE IS DOUBLE-EDGED FOR RUSSIAN STEELMAKER
ANALYSIS AND COMMENTARY: By John Helmer
Mineweb.com, Johannesburg, South Africa, Thu, Aug 11 2005
MOSCOW - The political winds in Kiev appear to be blowing against
foreign company bidders, notably the Russian Evraz group, in the list of
qualifications for the new privatization of the Krivorozhstal steel plant,
reported in the Ukrainian press yesterday. Evraz is Russia's largest
producer of steel.
Krivorozhstal turns out about 7 million tons of steel products, and is the
Ukraine's leading producer. Its privatization in June 2004 was rigged by the
government of former president Leonid Kuchma, and the successor govern-
ment of President Victor Yushchenko and Prime Minister Yulia Timoshenko
have begun the process to resell the plant on terms that may more than
double the price which Russian bidders, Severstal and Evraz, proposed in
the first round, fifteen months ago. For the time being, Yushchenko appears
to be more favourable to Russian bidding than Timoshenko.
According to this week's reports from Kiev, the list of terms for the
reprivatization of the plant includes the requirement that no bids from
offshore companies or structures with unclear ownership structures will be
considered. In its recent IPO in London, the Evraz group issued shares for a
Luxembourg-listed entity, Evraz SA, while in its acquisition last week of
the Czech steelmaker Vitkovice, the group was represented by the
Cyprus-listed Mastercroft.
Testimony in court cases in the US and Luxembourg have uncovered
significant ambiguities in the ownership structure of the group, while
investigations of the IPO have been confirmed as under way by share-
market regulators in London and Washington.
Fresh trouble for Evraz is also reported to be brewing in the Czech
republic, where privatization officials now admit publicly that, when they
agreed to Evraz's bid for Vitkovice, they knew nothing of the litigation in
which the group has been embroiled abroad. A court case has been filed
in Prague to halt the award of Vitkovice to Evraz.
In the first-round bidding for Krivorozhstal in June 2004, Severstal
disclosed its bid was $1.2 billion. Evraz did not report a figure, but Evraz
CEO Alexander Abramov announced a plan to change Kriovorzhstal's
product mix from long products (used mostly in construction) to a
combination of longs and flats.The other foreign bidder was a
combination of LNM and US Steel, with $1.15 billion.
They were all defeated by a politically favoured local bid of $800 million,
offered by the Investment and Metallurgical Union (IMU), a specially created
joint venture of two Ukrainian businessmen, Rinat Akhmetov and Victor
Pinchuk. Akhmetov runs System Capital Management Holding which includes
a number of various metallurgical companies. Pinchuk is an owner of
Interpipe Holding, which has exposure to the pipe, ferroalloy and
agricultural sectors and is also a son-in-law of the ex-Ukrainian President
Leonid Kuchma.
Other qualifying terms reported for the new Krivorozhstal bid are that
bidders should have at least three years' experience in ferrous metallurgy
or affiliated industries, and have been managing related companies for at
least a year; and they must be able to supply Krivorozhstal with better
quality coal and iron ore than it gets at present.
The sale will take the form of an auction, with a starting price of $2
billion; this compares with the government's reserve of $714 million in the
first auction. Bidding will rise in incremental steps of $20 million. The
winner must also comply with certain requirements and provide commitments,
including a 7-year, $2.4 billion capital expenditure programme for
modernization of plant facilities; a guarantee that no staff will be laid
off for five years and that salaries will be left untouched; a commitment to
increase output of higher value-added steel products; and to give priority
to domestic Ukrainian demand when allocating output.
According to an industry analyst in Moscow, "we understand that these terms
were devised after consultations with potential bidders. It appears that the
bids will not be the only factor taken into account when determining the
winner, as the bidders will be required to submit proposals on their
development strategy for the company."
Abramov, who is also one of the owners of the Evraz group, is already facing
opposition in the Ukraine to his attempt to take control of the manganese
alloy supplier, Nikopol Ferroalloys Plant. Manganese is an important alloy
for hardening steel, and Nikopol is the largest producer of the ferroalloy
in the world.
According to a source close to Abramov, he met Ukrainian President Victor
Yushchenko a few days ago to ask for his support in a buy-out of the plant,
which has been the property of Pinchuk, and is the subject of court
litigation that has frozen its shares. The source told Mineweb that
Yushchenko told Abramov "he agrees to resolve the situation in court or by
an out of court settlement."
Ukrainian Prime Minister Timoshenko has taken a public stance against the
Russian takeover of Nikopol, and is calling for court action to invalidate
Pinchuk's stake, and reprivatize Nikopol, along the lines of the
Krivorozhstal auction.
In his bid to take over Nikopol, Abramov is allied with the Renova group of
Victor Vekselberg. A source close to the latter told Mineweb that Abramov
"wants to act without public company funds and without Evraz's authority."
He said that Abramov is bidding for Nikopol "as an individual".
The source acknowledged that there are Ukrainian rivals for Nikopol too, and
that Timoshenko may be on their side. "If the courts say the shares belong
to Pinchuk," the source said, "then we offer to buy them. If the shares go
the state, we are not ready to say if we will bid." -30-
=============================================================
14. PM YULIA TYMOSHENKO: POWER IN UKRAINE WILL BE IN
THE HANDS OF THREE OR FOUR PEOPLE
INTERVIEW: with Ukrainian PM Yulia Timoshenko
KOMMERSANT, Moscow, Russia, Wed, August 10, 2005
MOSCOW - In less than a month, the amendments to the constitution of
Ukraine that limit presidential power and drastically increase authority of
the prime minister and the role of parliament will go into effect in
Ukraine.
Ukrainian Prime Minister Yulia Timoshenko told Kommersant about her
vision of future political mechanisms of the country and future perspective
of Russian-Ukrainian relations.
[KOMMERSANT] From Sept. 1 to constitutional amendments that were
adopted last year will go into effect in Ukraine. That means that the power
of the prime minister is increasing quite a bit. Are you ready for that?
[TIMOSHENKO] Actually, many times in my interviews I said what I thought
about constitutional reform. Maybe I praise myself a little bit, but my
attitude does not change with a change in my position. It doesn't matter
what position I held, I always quite realistically evaluate the reform. And
even if this reform gives the prime minister more authority, I would like to
say that it does not become more attractive to me.
[KOMMERSANT] Why?
[TIMOSHENKO] This reform at the end will unbalance power in the country
and will put an end to separation of powers. A few people who would rule
the fractions of majority in the Supreme Rada (local parliament) will
appoint everybody and everything in the country, starting with prime
minister and ending with ministers.
In other words, from now on, the prime minister will not be able to appoint
and fire ministers. That would be the role of the majority in the Supreme
Rada. It all will boil down to the decisions of three or four leaders or
owners of the factions. Moreover, this majority in parliament will appoint
and fire all judges, all law enforcement officers and all controlling
organs. It shouldn't be like this. Beside, it breaks the executive
connection.
According to the changes in the constitution, the governors will be
appointed by the president. So it will look like a tree with a bunch of
branches and leaves on the top-the government will be subordinate to the
Supreme Rada and the roots representing governors - to the president. I
would like to see who would be able to take any obligations in the country
within such a system of management. Or how somebody can manage and
finish projects to the logical end.
[KOMMERSANT] You said many times that you intend to run for election to
the Supreme Rada in 2006 in one bloc with Viktor Yushchenko and Vladimir
Litvin. However, some political analysts have doubts that such a union is
even possible.
[TIMOSHENKO] I can say firmly that the bloc of parties that I was heading on
the previous election and which works quite successfully in the parliament
(Faction BYT-Kommersant) we will keep. It went through hard trials, but
people withstood all the troubles and demonstrated ability to work as one
team.
And of course, the bloc that was headed by me for sure will join the efforts
with the president of the country. I want to underline one more time that I
am not separating myself from the president and I will always support him.
[KOMMERSANT] Who will lead this election bloc?
[TIMOSHENKO] The politician that has the highest rating in society. I will
take a risk to think that it will be the prime minister.
[KOMMERSANT] Your visit to Russia was planned many times but always
postponed. When will it finally happen?
[TIMOSHENKO] Of course all visits will be made some day. I think mine in
Russia and the Russian prime minister to Ukraine. Currently the Ministries
of Foreign Affairs are working on the terms and protocols of these visits.
As soon as these visits are prepared they will happen.
[KOMMERSANT] Vladimir Putin stated Russia would supply gas to Ukraine
only "if Ukraine would not snatch it again." Do you agree with such an
evaluation of Ukrainian actions?
[TIMOSHENKO] I do respect Vladimir Putin and Russia. And I would really
want the mutual feeling from them. Because all the friendly relationships
can only be built mutually. One-sided love usually ends up with not good
things: disappointment and the soul aches. I would not want for our peoples
to have such soul aches.
I do believe that Ukraine behaves itself correctly in all issues connected
with gas. Ukraine accurately pays its debt and also accurately pays for all
incoming gas. I also would like that all officials in Ukraine understand
that we have to proudly represent the interests of our people and defend
with honor our national interests.
[KOMMERSANT] In the last week you signed a government order to form a
working group for negotiations for the gas supply from Russia to Ukraine.
How long will it really take to settle gas problems between the two
countries?
[TIMOSHENKO] There are plenty of ways out of the current situation. It is
important that from Ukrainian as well as from the Russian sides there be
professional teams of negotiators. In other words people who know what they
are talking about. I think the Ukrainian government formed a quite competent
group that in the nearest time as soon as a Russian agreement is received
would go to Russia and start concrete negotiations.
A lot of it depends on Russia. For instance, how about this way out from the
situation? In 2001, we had a ratified agreement that Ukraine will pay for
its previous debts not by gas but by money. Later, in a contradiction to
this agreement, Naftogaz of Ukraine and Gasprom struck an deal according to
which we have to give back as a debt payment 5 billion cubic meters of gas
each year. I think we should go back to the agreement of 2001 and pay with
money. We're ready for that. Ukraine has money for that.
[KOMMERSANT] Today several Russian banks are showing interest in the
Ukrainian market. However, they are complaining of administrative obstacles.
Do you plan the liberalization of the market for the banking industry?
[TIMOSHENKO] First of all, the Russian banks can work in Ukraine right
now, but with limited licenses. Ukrainian laws prohibit the opening of
full-operation bank offices. However, if you want to know my opinion,
Ukraine should get rid of all these limitations in the banking industry and
enter the capital market as well as go into the competitive financial
market.
Otherwise, we would never lower the credit percentage for our industry and
we'll never have solid competition in our financial market. That's exactly
what I would like to do-to create normal competition in the banking market.
For that matter, I will employ all my political powers for the opportunity
to have all banks and financial companies of the world be represented in
Ukraine.
[KOMMERSANT] What do you think about Russian participation in
privatization of Ukrtelekom?
[TIMOSHENKO] The nationality of investor does not make any difference
to me. The only thing that is important is how much the investor is willing
to pay for the stock portfolio and how ready he is to comply with the
conditions of the contract. I can say that today we are conducting
preliminary preparation for Ukrtelekom privatization.
We hope to increase capitalization of the enterprise and give back all
possible licenses, including license of the model communication operator
as well as clear out all debt. In other words, we are getting ready.
[KOMMERSANT] Which model might the privatization use?
[TIMOSHENKO] I think that would be pretty simple. With very tough conditions
from the state about Ukrtelekom's coordination with all state structures, I
think we most likely sell 51 percent of stock. The state will stay an owner
of 49 percent and thus will receive guaranteed dividends.
And the dividend payment would be part of the conditions. Moreover, these
conditions will also include all technicalities which concern state security
in the field of connection and communication.
[KOMMERSANT] During the May crisis in the oil market, you criticized the
work of Russian oil companies. Did your attitude toward the work of
TNK-BP and LUKOIL change?
{TIMOSHENKO] These enterprises today are deeply involved in the
reconstruction of their plants. I hope they will continue to provide their
gas stations with the oil byproducts without breaks. And I also hope they
will represent a real competition in our market. This is the main demand to
these companies. And of course, the main demand is to honestly pay taxes.
---------------------------------------------------------------------------------------------------------------
LINK: http://www.kommersant.com/page.asp?id=599873
=============================================================
15. POLAND'S KULCZYK CO SEARCHING FOR NEW OPPORTUNITIES
IN ROAD CONSTRUCTION, CONSIDERING INVESTING IN UKRAINE
Polish News Bulletin, Warsaw, Poland, Thu, Aug 11, 2005
WARSAW - Kulczyk Holding is considering investing in the construction of a
new network of motorways in Ukraine. Rumours have been flying for quite
some time that KH is ready to pull out of Polish road construction and look
for new opportunities abroad. The flagship investment, the A2 from Swiecko
toKonin, has drawn a great deal of criticism from drivers that the tolls are
simply far too high - ZL11 for each toll gate.
Sources seems certain that KH is seriously considering investing in the
Ukraine. A KH spokesman of Autostrad Wielkopolskich says that with all the
experience gained in Poland, the plans of the Ukrainian Roads Department
are very tempting.
The Kiev government plans to invest around ZL60bn in the construction and
modernisation of roads up to 2010. The first two tenders are for the
Winnica-Kiev motorway, worth ZL1.6bn, and the Kiev-Dowzanski motorway,
worth ZL416.1m. Kiev is planning more roads, so these deals would be
choice morsels indeed. -30- [Action Ukraine Report Monitoring Service]
=============================================================
16. INVESTORS MOVE EAST TO BOOMING ROMANIA AND BULGARIA
WHILE MUCH OF OLD EUROPE STAGNATES
By Alexandru Alexe, Associated Press Writer
Baneasa, Romania, Wednesday, August 10, 2005
BANEASA, Romania - A billion-euro real estate development in former plum
orchards north of Bucharest illustrates the fruits being picked in Romania
and Bulgaria, future EU members seeing an economic boom while much of
old Europe stagnates.
The 1.2 billion euro ($1.47 billion) Baneasa development, one of the largest
of its kind in the region, will include more than 3,000 houses, a business
park and a large commercial district, developers say. It is expected to
create 10,000 temporary jobs and space for 25,000 permanent jobs.
While the office space will be open to all clients, it is expected to draw
software, communications and other high-tech companies, said Bogdan
Todea, a spokesman for the developer.
Bucharest mayor Adriean Videanu announced plans last week to annex
dozens of surrounding villages to spur similar developments. The project
would give the crowded city space to grow, while modernizing the
undeveloped surrounding area, Videanu said.
Following the 1989 overthrow of communism, Romania and its southern
neighbor Bulgaria lagged behind Hungary and other central European
states in attracting foreign investment, as they struggled to privatize
state industries and retool centralized economies.
But analysts say the countries are catching up, and their economies have
been expanding rapidly since 2000. Economic growth is expected to hover
at around 6 percent for the next three years in both countries, with
Bulgaria seeing lower inflation.
"Romania and Bulgaria are perceived as the new forces," said Radu
Craciun, an analyst at ABN Amro. "They have low labor costs, and due to
their geographical positions have better access to the Middle East, Russia
and the Balkans."
Both are scheduled to join the European Union in 2007, but could face
one-year delays if they fail to reform their inefficient justice systems and
crack down on corruption.
While both countries already have easy access to EU markets, a postpone-
ment would delay EU funds for infrastructure improvements and rural develop-
ment. But it wouldn't have a major impact on large investors, Craciun said,
as they take a long-term view.
"Foreign direct investment potential is and has been very favorable and all
the years I have been here have not heard of anyone losing money," said Gil
Woods, a U.S. lawyer who heads the Foreign Investors Council in Romania.
He said the country was hampered in the past by bad public relations and
non-responsive governments.
This year, however, direct foreign investment reached 951 million euros
($1.16 billion) from January to May, a 12 percent rise compared to the
same period last year, according to official figures.
"Romania has a great future in development," said Andreas Wiennen,
general manager of the German-based auto parts maker Eckerle Group,
which opened a new factory in 2003 in the Transylvanian city of Cluj.
He said the group had also considered expanding in Bulgaria or Ukraine
before choosing northwest Romania, which he said was more developed.
"The company is doing great here," he said.
Bulgaria, while smaller, also has emerged as an attractive destination for
foreign investors, mainly due to its economic stability. Direct foreign
investment reached 2.14 billion euros ($2.49 billion) in 2004, up 14.2
percent from 2003, one of the highest per capita investments in the region.
The increasing investment and the expectation of EU membership has also
led to a boom in real estate in Bulgaria and Romania, with prices doubling
in the last few years before appearing to level off recently.
"At the moment we register a slight decline in for example Britons' interest
in Bulgarian property," said Krasimira Georgieva, manager of the Yavlena
real estate agency in Sofia. "The reasons could be fear from the globally
increased terror threat, and talk that Bulgaria's EU entry would be
delayed."
Despite relatively low monthly wages by EU standards of about $300 (240
euros) in Romania and $255 (207 euros) in Bulgaria, the domestic markets
are also becoming attractive due to a high consumer appetite for
electronics, appliances, cellular phones and new cars.
In Bucharest, a city of 2.3 million, two new malls opened last year and a
dozen of hypermarkets and supermarkets have sprung up in the last few
years.
French chain Carrefour SA reported last month that sales in its four
Romanian stores nearly doubled to about 190 million euros ($233 million)
in the first half of 2005. The supermarket company plans to add four more
stores by next year, the Ziarul Financiar daily reported.
The Romanian car market has boomed as well, with sales up 60 percent in
the first five months of 2005. Renault, which also owns Romania's top
carmaker Dacia, has sold more than 100,000 of its popular new model, the
Logan, since it began production last year. The French automaker recently
announced plans to build a 219 million euro ($270 million) new gear box
plant in Romania.
Fearing an overheating of its economy and a rise in inflation, Romania
enacted stricter credit rules last week and is considering raising the VAT
to slow the pace of consumption.
The economic boom is not evenly distributed, however, with a strong
concentration of investment in urban areas and around Bulgaria and
Romania's Black Sea coasts, while few foreigners venture in rural, poorer
regions of eastern Romania.
Meanwhile, the Timisoara region in western Romania is home to some
1,900 Italian businesses. "Romania is a Latin country that will soon be in
the European Union," said Mauri Giancarlo, whose company, Perugia-based
Mauri System, sells pastry and breadmaking equipment and has expanded
its business in Romania. "It is a market that I am slowly discovering and I
am convinced that I will work well here." -30- [The Action Ukraine Report]
---------------------------------------------------------------------------------------------------------------
Associated Press writers Veselin Toshkov and Nevyana Hadjiyska in
Sofia and Alison Mutler in Bucharest contributed to this report.
=============================================================
17. FOUR PRESIDENTS TO ATTEND 80TH ANNIVERSARY FESTIVITIES
OF THE ARTEK SOVIET-ERA YOUTH CAMP IN UKRAINE
Presidents of Georgia, Poland, Lithuania and Ukraine
Rustavi-2 TV, Tbilisi, Georgia, in Georgian, 11 Aug 05
BBC Monitoring Service, UK, in English, Thu, August 11, 2005
TBILISI - Georgian President Mikheil Saakashvili and parliament speaker
Nino Burjanadze are to attend events marking the 80th anniversary of the
Artek international children's centre on 18 August.
Ukrainian President Viktor Yushchenko, Polish President Aleksander
Kwasniewski and Lithuanian President Valdas Adamkus will also be
taking part in the festivities. [Passage omitted] -30-
=============================================================
18. UKRAINE: PRES YUSHCHENKO CONGRATULATES NASTIA OVCHAR
ON COMPLETION OF TREATMENT AT BOSTON BURN CENTER
Ukrinform, Kyiv, Ukraine, Thursday, August 11, 2005.
KYIV - President Viktor Yushchenko congratulated Nastia Ovchar, 6, and
her mother, Olha, on completing the treatment and checking out of the
Boston Burn Center via telephone, the presidential press service told
Ukrinform.
The President inquired about the girl's state of health and reassured her
mother that the girl would be provided with all the necessary aid for
complete recovery.
As Viktor Yushchenko noted, the patience shown by six-year-old Nastia,
while undergoing difficult and painful treatment, is an example for any
grown-up person in a tough situation. He called the girl "little heroine"
and added that the entire Ukraine is waiting for her returning back home.
According to Olha Ovchar, they are supposed to stay in the USA for a
couple of weeks and then to come back to Ukraine. The Head of State
wished the mother and the daughter to stay in good spirits and aired his
family's support for them.
As a doctor with the Boston hospital Sergei Samborsky said earlier, the
girl doesn't depend on surgeons any longer and may be treated by
physiotherapists. He noted Nastia Ovchar's "incredible thirst for study".
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19. UKRAINE: KYIV TO RESUME WORK ON CITY'S HISTORY MUSEUM
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
KYIV - The Kyiv city state administration intends to resume the work of the
city's History Museum. Ukrainian News learned this from a resolution of the
municipal administration.
The administration set up a commission for the restoration of work of the
museum, with Valerii Borysov, first deputy head of the administration, in
chair. The commission also includes Kyiv city council deputies, heads of
the local mass media, historians and people's deputies.
The commission must draft proposals on the work of the museum, and
submit them for consideration of the board of the Kyiv city state
administration in October.
As Ukrainian News reported, the Kyiv History Museum occupies a part of
premises in Ukrainian House, which is located in European Square at 2,
Khreschatyk Street. The museum cannot put its exhibits to view for a lack
of space.
It addressed the Kyiv city state administration with the request to help it
find more comfortable premises or provide the whole of the Ukrainian
House for its use. The museum removed to Ukrainian House in 2004.
The Kyiv municipal council decided in July 2003 to transfer ownership of
Klovskyi Palace, the historical building that housed Kyiv's Museum of
History, from municipal authorities to the state, and move the museum to
Ukrainian House.
Kyiv's Museum of History was created in 1978. It was housed in Klovskyi
Palace downtown Kyiv from 1981. Klovskyi Palace, an architectural
monument, was built during the 1752-1756 period. -30-
============================================================
20. UKRAINE'S SOFIA KYIVSKA NATIONAL RESERVE TO RESTORE
HOUSE OF METROPOLITAN BUILT IN 1722-1730
Ukrainian News Agency, Kyiv, Ukraine, Thursday, August 11, 2005
KYIV - The Sofia Kyivska national reserve has decided to restore the
architectural monument of national significance House of Metropolitan.
This follows from the reserve administration's statement, a copy of which
is available to Ukrainian News.
The reserve signed a restoration agreement with the Kyiv interregional
special scientific and restoration and design and production department.
The cost of the agreement, signed in July, is UAH 499,900.
The House of Metropolitan is situated opposite to the main entrance to the
St. Sofia Cathedral and is a pattern of Ukrainian civil architecture of the
18th century. The House of Metropolitan was built in 1722-1730 and
afterwards was reconstructed.
As Ukrainian News reported previously, the last time a comprehensive
restoration of the Sofia Kyivska reserve took place was in the early 1970s.
The St. Sofia Cathedral was built by Prince Yaroslav the Wise in the first
half of the eleventh century.
The Cathedral was put on UNESCO's list of World Cultural Heritage. The
State Committee for Urban Planning and Architecture manages the property
of the reserve, which is owned by the state. -30-
============================================================
21. UKRAINE DONATES THREE MILITARY PLANES FOR ESTONIA'S
TARTU AIRCRAFT MUSEUM
A Su-24 fencer, MiG-23 flogger, and a L-39 fighter jet
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 11, 2005
KYIV - Ukraine has given for free three planes of the Defense Ministry over
to Tartu aircraft museum in Estonia. The Cabinet of Ministers issued
relevant resolution No. 298-r on August 1 on transfer of aircraft to the
Estonian Republic.
Under the resolution, the Cabinet of Ministers commissioned the Foreign
Ministry to transfer the aircraft through the state-owned enterprise
Ukrspetsexport. Particularly, Ukraine will gift Estonia Su-24, MiG-23 MLD
and L-39.
According to the resolution, the government ordered Ukrspetsexport to
conduct works to prepare the aircraft for museum exhibition and provide its
transportation to Estonia. Under the resolution, payment for transportation
and works on bringing the planes in appropriate state is made by the
Estonian side.
The Su-24 fencer was developed in 1960s and is operated by the Air
Forces of the CIS, Algeria, Iraq, Libya, Syria and Iran. The MiG-23 flogger
was created in 1967 and was put out by batch production from 1969 through
1984. The L-39 fighter jet is a light-duty fighter, which is one of the best
and mass-production planes of its kind. L-39 aircraft operates as the plane
for basic training and in some Far and Middle East countries as combat
aircraft. -30- [The Action Ukraine Report (AUR) Monitoring Service]
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22. UKRAINIAN COMMUNITY OF AUSTRALIA WANTS TO STRENGTHEN
CULTURAL CONTACTS WITH UKRAINE
Ukrinform, Kyiv, Ukraine, Thursday, August 11, 2005
KYIV - The Australian Federation of Ukrainian Organizations (AFUO)
arranged contacts with the Ministry of culture and tourism of Ukraine.
During the meeting between AFUO Chairman Stefan Romaniw and Deputy
Minister of culture and tourism Olha Kostenko and leaders of the Ministry's
departments proposals by Australian Ukrainians were discussed with regard
to establishment of the Ukrainian Institute - cultural centers of Ukraine in
the Diaspora.
According to Australian Ukrainians, this establishment may be created,
based on the type of the German Goethe-Institute or the Alliance Francaise.
The AFUO Chairman sent an inquiry to the Ministry of culture and the
Government to support the first Ukrainian-Australian feature the "Iron
Sotnia", Director Oles Yanchuk, who shot this film through financial support
from the Australian Maecenas Yuri Bortz.
The AFUO also supported an initiative by the Ukrainian Embassy to
Australia with regard to inviting artists from Ukraine to participate in
multinational festivals in Australia in 2006.
As a result of the meeting an agreement was reached that the Ministry of
culture and tourism till start a financing program on a training session in
Ukraine for Australian instructors of dance, choir and musical groups.
"We are developing a basis for cooperation, and the AFUO strives to
continue a discussion. In our appeals we underscored importance of active
attraction of the Ukrainian power to support the language and culture in the
Diaspora, as well as for popularization of Ukraine through the language,
culture and tourism", Stefan Romaniw noted.
"We call on the Ukrainian power to support an initiative of creating and
financing cultural centers or similar establishments in other countries",
he emphasized. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
23. WANTED: A FAMINE FUND
LEAD EDITORIAL: The Washington Post
Washington, D.C., Thursday, August 11, 2005, Page A22
HUMANITARIAN crises are seldom just humanitarian: Almost always,
the malnutrition and the misery have political causes. The brutal wars in
Sudan and Congo account for those countries' appalling civilian death
tolls.
Political repression explains the hunger in North Korea and Zimbabwe.
Even the HIV pandemic reflects the failure of politicians to challenge
gender inequality and sexual taboos.
Niger's food crisis has its own political dimension. The government has
been criticized for playing down the crisis -- it speaks of a food shortage
rather than a famine -- and for resisting calls to distribute free food.
International financial institutions, which urged a value-added tax on food
and imposed budget controls that discouraged the government from
maintaining emergency food stocks, also deserve some of the blame.
Even so, Niger's crisis is less political than many. This landlocked country
of about 11 million is a democracy. There is no war going on there. Some
2.5 million people need emergency assistance because of natural disasters
more than politics: a swarm of locusts that ate much of the millet harvest,
followed by a drought.
Usually, natural disasters attract a generous response. The tsunami last
Christmas was a prime example, and earthquakes and hurricanes generally
prompt individuals and their governments to open their wallets -- or at
least to pledge generously, even if they don't always deliver.
But Niger has not even been that fortunate. As early as last November, the
government and the U.N. World Food Program appealed for emergency
food aid and money; only Luxembourg responded. The United Nations
followed up with a second appeal in March and a third in May. Only recently
has the money begun to come.
If Niger's largely unpolitical emergency cannot trigger prompt sympathy,
it's time to rethink the way relief is organized. The world depends on an ad
hoc, pass-the-hat system; there's no standing ability to respond quickly
when the first signs of disaster appear. This raises the cost of action.
In the Sudanese province of Darfur last year, donors didn't provide enough
relief before the onset of the rainy season, so part of their belated
assistance had to be airlifted into the region at enormous expense.
Similarly in Niger, the United Nations estimates that saving a life would
have cost a dollar of aid back in November but may cost $80 or more now.
To avoid this waste of cash and lives, U.N. Secretary General Kofi Annan
has proposed an emergency fund of $500 million from which to finance rapid
response to future famines. In the wake of the oil-for-food scandal, the
onus is on the United Nations to show that it can manage that sort of money
without corruption; perhaps it cannot. But whichever institutional home one
favors for it, the idea of a global famine fund makes sense. -30-
=============================================================
24. ANOTHER WALTER DURANTY?
LETTER-TO-THE-EDITOR
Volodymyr Hrytsutenko, Lviv Franko University
Lecturer and freelance political translator
Lviv, Ukraine, Tuesday, August 9, 2005
Published by The Action Ukraine Report, Number 540
Washington, D.C., Thursday, August 11, 2005
This is not the first time that, by hiring Western-born journalists,
Russia's regime is out to give more credibility to its policies.
Recall the now notorious Walter Duranty, the Moscow-based reporter of The
New York Times, whose openly misleading articles about the famine
artificially induced by the Communist party in Ukraine in 1932-1933 not only
won him a Pulitzer price for journalism but also pulled the wool over West's
eyes for decades. It seems there is another Western journalist ready to step
into Mr Duranty's shoes.
The two most recent articles by Peter Lavelle, Russia's state-run Novosti
information agency political commentator ( 1. THE END OF "COLORED
REVOLUTIONS" AND "STAGLUTION" and 2. YUSHCHENKO LOOSES
HIS ORANGE REVOLUTION COOL - both published in the AUR on July 20
and July 27, 2005, respectively), depict a pretty dreary picture of modern
Ukraine.
The government's track record is all to the detriment of Ukrainians, the
country is blanketed in "gloom and doom". Mr Lavelle has even coined an
appropriate word for it - staglution (in all probability, stagnation +
revolution).
In the first article Peter Lavelle issues a friendly word of warning to
readers - "Those looking for a "colored revolution" in Russia should
consider the impact of such in Ukraine, Georgia and Kyrgyzstan". As to
the "impact" itself, it is, according to Mr Lavelle, unfailingly in the
negative vein. Suffice it to say, there's not a single phrase reflecting any
improvements that have taken place in the lives of Ukrainians since the
revolution!
How about unprecedented media freedom, growing democracy, spectacular
efforts to fight grand corruption, bold economic reforms (business-friendly
tax policy, one-stop-shop business registration and customs procedures,
regular seminars with businessmen at which they openly express their
opinion). The oft-cited hands-on involvement by the government in the meat
crisis proved a good lesson for the cabinet.
After burning her fingers on gas price perks, Ms Tymoshenko has finally
settled for free-market solutions, although not discarding the affordable
and internationally accepted government interference.
The bottom line of the first article is obvious - expressing his Russian
employers' fear of any colored revolution dethroning his darling Pres.
Putin, Mr Lavelle is eager to prove that the revolutions in Georgia, Ukraine
and Kyrgyzstan are failures, nothing but "a rent-a-crowd regime changes".
On the war path against Ukraine's new regime, Peter Lavelle even spurns
high personal approval ratings of Yushchenko and Tymoshenko (in the
60-70% range) as well as the impressive 67% backing for what the
government is doing.
In the other article, Peter Lavelle lashes out at Yushchenko (incidentally,
quite fairly) for the president's utterances in response to a journalist's
criticism of his son's lavish lifestyle. But the conclusions drawn by this
professional journalist are very questionable.
Take this, " His aggressive reply touched upon more than the defense of his
son - it spoke volumes about the state of the Orange Revolution". Mr Lavelle
is so good at reading between the lines that he apparently needs no more
arguments to prop up his condemnation of the Orange revolution results.
Or take this, "I have lived my life witnessing how people would remain at
their posts for half a year and then have to go to prison, usually because
these people would steal. My professional life has been in this environment
and in this system; many of my colleagues are not there any longer [fired or
retired: the most probable conclusions - Auth.] or are still in prison."
Now Mr Lavelle's far-reaching deduction: "Yushchenko's comments amount
to an admission of how little has been done to deal with corrupt state
officials since the Orange Revolution".
Such pecking at Yushchenko coupled with unsubstantiated global
generalizations and lack of unbiased analysis give rise to strong suspicions
that the articles have but one purpose: to give a black eye to the new
Ukrainian regime.
Mr Lavelle might be doing a great disservice to his readers. -30-
----------------------------------------------------------------------------------------------------------
Volodymyr Hrytsutenko, Lviv Franko University, Lecturer and freelance
political translator, Lviv, Ukraine. E-mail vhryts@lviv.farlep.net
=============================================================
25. MEMORIAL COMPLEX DEDICATED TO VICTIMS OF REPRESSIONS
AND HOLODOMOR TO BE ERECTED IN KIEV BY END OF 2006
Will be erected in Kalinovaya Roscha Square
For-Um, Kiev, Ukraine, Tuesday, 9 August, 2005
KIEV - In the end of 2006, memorial complex dedicated to victims of
repressions and holodomor will be erected in Kalinovaya Roscha Square.
Kiev mayor Alexander Omelchenko made corresponding arrangements
on action.
Before the end of September, 2005 the working group headed by
Omelchenko will prepare the concept of the memorial complex.
The complex will be constructed by "Direction of Reconstruction Works"
utility enterprise, the History Institute of National Academy of Ukraine and
other profile organizations. -30- [Action Ukraine Report Monitoring]
--------------------------------------------------------------------------------------------------------
LINK: http://en.for-ua.com/news/?id=1606
=============================================================
26. FDR, CHURCHILL GAVE IN TO EVIL
COMMENTARY: by David A. Mittell, Jr., Member
Editorial Board, The Providence Journal
Providence, Rhode Island, Thu, July 28, 2005
TERNOPYL, Ukraine - ON MAY 7, President Bush commemorated the
anniversary of the end of World War II with a speech in Riga, Latvia, the
capital of one of the first nations to fall to the August 1939 Molotov-
Ribbentrop Treaty, which divided Central Europe between the Soviet
Union and Nazi Germany. Ten months later, Soviet forces began their
50-year occupation of the country.
In his speech, Mr. Bush opined that the Yalta agreement, which was signed
by Churchill, Roosevelt and Stalin in February 1945, and which ratified the
ill-gotten Soviet gains of the 1939 treaty, "had led to one of the greatest
wrongs in human history." This stirred up a scholarly hornets' nest.
On one side, representing a long-accepted consensus, are defenders of
the honor and epochal greatness of Franklin Roosevelt. They argue that,
while the Soviet domination of Eastern Europe after the war was regrettable,
it had been effected not by failed diplomacy but by the presence of the Red
Army everywhere east of what Churchill would famously call the Iron Curtain.
On the other side are conservatives, who note that England and France
finally went to war against Germany, after years of appeasement, to defend
Poland against the dismemberment occasioned by the Molotov-Ribbentrop
Treaty. By it, Hitler conquered western Poland, while Stalin gobbled up
eastern Poland, along with Latvia, Estonia, Lithuania and Karelia -- the
last a Finnish territory that remains part of the Russian Federation today.
The United States never recognized the incorporation of Latvia, Estonia
and Lithuania into the Soviet Union; their exiled governments' embassies
in Washington remained open throughout the Cold War. In that sense, Mr.
Bush's remarks in Riga were misleading.
But the Soviet conquest of eastern Poland, as well as its annexation of the
pre-war Czechoslovakian province of Ruthenia, were indeed ratified
at Yalta. The eastern border of Poland was moved 100 miles to the west
-- a Soviet goal since Lenin's time. The ancient Polish city of Lwow (today
it is the Ukrainian city of Lviv), which had no historic connection to
Russia, was handed to the Soviet Union.
At Yalta, what Hitler and Stalin had agreed to in 1939 Churchill and
Roosevelt thus partly assented to in 1945. The region's Poles were exiled
to the German province of Silesia, which is to the west of pre-war Poland.
Jews had largely disappeared in the Holocaust - their synagogues and
cemeteries were snapped up, in several instances that have been described
to me, for Soviet state or military uses. The remaining Ukrainians were
collectivized against their bitter opposition, with bands of guerrillas'
being violently suppressed in skirmishes that continued until 1950 in both
the former Czechoslovakian and former Polish provinces.
According to Harry Truman's memoirs, the sacrifice of the city of Lwow was
agreed to at Churchill's behest as an act of realism. He hoped that, in
return for British and American recognition of Stalin's strategic security
concerns, the dictator would accept a truly independent post-war Poland.
So the country was picked up and moved 100 miles farther away from the
Soviet capital, in Moscow.
Three months after Yalta, with Roosevelt dead, President Truman had his
first crisis, and Churchill had his answer. There would be no free elections
in Poland. Stalin's puppet Lublin government would have nothing to do with
members of the London Polish government-in-exile. For the next 45 years,
Poland would be a Soviet satellite. The sacrifice of the Lwow region --
sometimes known as the Golden Triangle, for its magnificent medieval
Polish castles -- came to naught.
Stephan's story. Traveling in what was Poland, as I did this month, one
is touched by history's survivors. Stephan Kinasewich was born in Bosyry,
a tiny village near the old Polish-Russian border. Drafted into the Red Army
at 19, he marched west as far as Prague, receiving many decorations, as
the Germans retreated. He speaks of a unit of 700 men with seven survivors
when the war ended.
Apparently because his unit had met up with Americans, it was shipped
to Soviet-occupied Korea. There, working as a telegraph operator in 1946,
Stephan received a message that his father was among those who had
died of starvation during the post-war collectivization of Stalin's Yalta
gleanings.
When Stephan was found to have read this message to other soldiers, he
was imprisoned in Siberia -- not returning to Bosyry until Khrushchev eased
the repression of Ukrainians, in 1956. By then he was 33. He married,
raised a family, and at 82 works each day raising crops and livestock.
President Bush's essentially partisan remarks about Yalta in Riga were
fed to him by an opinionated speechwriter. But the stories like Stephan's
that one hears from people in their 70s and 80s in former Soviet states like
Ukraine, and in former satellite states like Poland, support the idea
that -- regardless of how much ground the Red Army held in 1945 --
Roosevelt and Churchill should not have put the Anglo-American imprimatur
on Stalin's keeping his ill-gotten gains.
They would have better served history, as Lincoln put it at Cooper Union in
1860, to have had "faith that right makes might." -30-
-----------------------------------------------------------------------------------------------------------
NOTE: David A. Mittell, Jr. is a member of The Journal's [Providence,
Rhode Island] editorial board. Contact: dmittell@progo.com.
=============================================================
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