"THE ACTION UKRAINE REPORT - AUR"
An International Newsletter
The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis, and Commentary
"Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World"
"THE ACTION UKRAINE REPORT - AUR" - Number 581
Mr. E. Morgan Williams, Publisher and Editor
Washington, D.C., Kyiv, Ukraine, TUESDAY, October 11, 2005
--------INDEX OF ARTICLES--------
"Major International News Headlines and Articles"
1. NEW GOVERNMENT: STRONGER THAN EXPECTED
ANALYSIS: by Roman Bryl, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, October 10, 2005
2. UKRAINE: BANKING INTEREST
LATEST BRIEFING: Ukraine: Banking Interest
In association with Dragon Capital
By Paulius Kuncinas in Kyiv, Oxford Business Group
London, United Kingdom, Monday, 10 October 2005
3. GOVERNMENT TO PROTECT FOREIGN INVESTMENTS SAYS NEW PM
By Kostis Geropoulos, Senior Correspondent,
New Europe, Athens, Greece, Monday, October 10, 2005
4. RUSSIAN, UKRAINIAN BUSINESS ASSOCIATIONS TO CREATE NEW
ORGANIZATION TO REPRESENT INVESTORS
ITAR-TASS news agency, Moscow, in Russian 1053 gmt 10 Oct 05
BBC Monitoring Service, UK, in English, Monday, Oct 10, 2005
5. MOSCOW IS BACK IN FASHION IN UKRAINE AS POLITICIANS
MANEUVER FOR SUPPORT
By Mara D. Bellaby, AP Worldstream, Kiev, Ukraine, Mon, Oct 10, 2005
6. UKRAINE'S ORANGE FADES TO BLACK?
COMMENTARY: By David A. Mittell, Jr., Columnist
Member, Editorial Board, The Providence Journal
Providence, Rhode Island, Thursday, October 6, 2005
7. UKRAINE NO LONGER DEMANDS STATE REGISTRATION OF WEB SITES
Victory for freedom of speech, freedom of expression
Interfax-Ukraine news agency, Kiev, in Russian 0820 gmt 10 Oct 05
BBC Monitoring Service, UK, in English, Monday, Oct 10, 2005
8. USA: UKRAINE'S FIRST LADY REVISITS ROOTS IN BLOOMINGDALE
By Amy Boerema, Daily Herald Staff Writer
Daily Herald, Suburban Chicago's Information Source
Arlington Heights, Illinois, Sunday, October 10, 2005
9. ORIGIN OF FAKE BOOKS IS UKRAINIAN MYSTERY
By Peter Finn, Washington Post Foreign Service
The Washington Post, Washington, D.C.
Monday, October 10, 2005; Page A15
10. UKRAINE CARDINAL HUSAR WANTS SYNOD WITH ORTHODOX CHURCH
By Daniela Petroff, Associated Press Writer, Vatican City, Mon Oct 10, 2005
11. THE ECONOMIC SITUATION IN UKRAINE
U.S. Assistant Secretary of State for Economic Affairs discusses the
economic situation in Ukraine in a speech at Kiev International University
REMARKS: By E. Anthony Wayne
U.S. Assistant Secretary of State for Economic and Business Affairs
Kiev International University, Kyiv, Ukraine, Thursday, October 6, 2005
Public Affairs Section, United States Embassy Kyiv
The Action Ukraine Report (AUR), Kyiv, Ukraine
Tuesday, October 10, 2005, Number 581, Article
12. PRESIDENT YUSHCHENKO HOLDS NEWS CONFERENCE
Text from presidential news conference
NEWS CONFERENCE: Ukrainian President Viktor Yushchenko
State-Owned TV UT1, Kiev, Ukraine, in Ukrainian 1005 gmt 7 Oct 05
BBC Monitoring Service, UK, in English, Saturday, Oct 08, 2005
=============================================================
1. NEW GOVERNMENT: STRONGER THAN EXPECTED
ANALYSIS: by Roman Bryl, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, October 10, 2005
THIS WEEK ALL VACANCIES IN NEW GOVERNMENT WILL BE FILLED
President Victor Yuschenko on Oct 7 appointed Sergiy Golovatiy as justice
minister. This left only ministerial seat to be occupied in the new
government - the post of healthcare minister. It is expected that the name
of the minister will be disclosed this week and the new government will be
formed completely.
GOVERNMENT INCLUDES ONLY VICTOR YUSHCHENKO'S SUPPORTERS
The appointment process revealed several peculiarities. FIRST, the joint
memorandum signed by president Yuschenko and his counterpart in 2004
presidential elections Victor Yanukovych did not influence at all the
composition of the new government. The president's consultations with
leaders of parliament factions also had no impact on the final list of
ministers.
The consultations and memorandum simply helped Yuri Yekhanurov to receive
289 votes that were enough for his appointment as PM. No representative of
Yanukovich's Party of Regions or any other oppositional party got any
ministerial chair. The same happened to supporters of ex-PM Yulia
Timoshenko.
None of the ministers that declared support of Timoshenko after the
dismissal of her government was included in the new government. These were
economy minister Sergey Teryokhin and deputy PM Mykola Tomenko. Victor
Penzenyk had to support Yuschenko's party Our Ukraine to keep his finance
minister chair.
That resulted in a split in the party Reformy and Poryadok (Reforms and
Order) that Penzenyk headed. All in all, the government was filled up with
representatives and allies of Our Ukraine. Socialist party members kept the
3 ministerial seats that they occupied in the old government.
LOCAL BUSINESS MOGULS EXCLUDED FROM GOVERNMENT
The SECOND peculiarity of the new government is that it did not include
high-ranking officials that ran own businesses while occupying posts in
government. Among them are ex-minister of transport Eugeniy Chervonenko,
ex-justice minister Roman Zvarych, and ex-secretary of the national security
and defense council Petro Poroshenko.
MINISTERS OBLIGED TO COORDINATE STATEMENTS WITH PM, PRES
Examining the new government staff, we doubt some experts' opinion that
Yekhanurov's government is temporary and weak. It becomes obvious that the
new government will avoid populist declarations in contrast to the previous
one.
In line with president Yuschenko's "silence order", ministers will avoid
frequent communications with mass media. A major part of the government's
information will be placed only on government's web-site.
Every declaration of a minister should be coordinated with PM and the
president. Such move prevents contradictions in ministers' declarations that
had been typical of the previous government.
Lack of populism and possible improvements in the economic situation can
serve the new government better that Timoshenko administration's actions.
The economic slump and price crises undermined the general public's opinion
of the old government, as we wrote. If a positive perception forms now, the
new government will create a core of the future government that should be
formed after the parliamentary election in March 2006.
CANCELING REGULATORY PRESSURE ON BUSINESS SAID TO
BE MAJOR TASK OF NEW GOVERNMENT
The main issue Yekhanurov's government is supposed to concentrate on is
promoting business activities by means of weakening regulatory pressure
and a new wave of privatization. At the same time, Yekhanurov declared that
re-privatization is over, as everything that should be returned to the state
has already been returned.
He pledged to provide immunity for private property. Any question regarding
disputable property rights would be solved only by means of talks and only
through voluntary settlement, Yekhanurov declared.
Taking into consideration the previous experience of Yuri Yekhanurov as a
high-ranking state official it seems to us that Yekhanurov can cope with the
task.
PM YEKHANUROV NOT STAINED WITH ANY SCANDAL OR WRONGDOING
Yuri Yekhanurov began his career as a state official in 1994 when headed the
state property fund. That was a period of mass privatization in the country.
Many experts including foreign ones consider that economic reforms in
1994-1996 including large-scale privatization, fight against hyperinflation,
and launch of a new national currency hryvnia) were among the most
successful actions in the new history of Ukraine.
Heading the state property fund, Yekhanurov did not get involved in any
scandal or wrongdoing.
ECONOMICS MIN HEADED BY YOUNG AND AMBITIOUS MINISTER
The new PM managed to include in the government new members with
unspoiled reputations. First of all we are talking about new economy
minister Arseniy Yatsenyuk. He is 31 years old and has an experience of
serving as minister of economy of Crimea autonomy in 2001-2002.
At the post he succeeded in reforming the municipal economy of Crimea,
determined the major problems in agriculture, and attempted to battle local
corrupted oligarchs. Yatsenuk says he is not involved in the recent scandal
about recent illegal privatization of Crimea resorts.
After his work in Crimean government, Yutsenyuk was invited by NBU chairman
Sergiy Tigipko to work in the national bank. Yatsenyuk is young, ambitious,
and speaks English fluently.
TRANSPORT MINISTER VICTOR BONDAR AT 29 IS YOUNGEST MINISTER
However, Yatsenuyk is not the youngest new minister. Victor Bondar, 29, has
headed the ministry of transport and communication. In fact, his youth
became a key factor that helped him be appointed as minister.
After the resignation of ex-minister of transport and communications
Eugeniy Chervonenko there was a tough battle for the ministerial chair
between Stanislav Dovgyi and Oleg Shevchuk.
The former had been communication minister. The latter was an MP,
previously a top executive in communication monopoly Ukrtelekom.
To avoid any scandals, the PM and president decided to appoint aide of
ex-minister Chervonenko, young Victor Bondar. The decision was taken by
Yuschenko in spite of his close personal ties with Chervonenko.
SOCIAL, ENERGY BLOC IN GOVERNMENT STRENGTHENED
In the new government the most problematic social and energy departments
were strengthened significantly. Ex-minister of labor and social policy was
appointed as deputy PM. Ivan Sokhan who once headed the social policy
ministry got his chair back.
Before his appointment, Sokhan was CEO of Ukrainian Aluminum, a
subsidiary of Russian Aluminum. Stanislav Stashevski became first deputy
PM. He previously worked in Kyiv municipal administration.
It is said that appointment of Stashevski, Ivan Plachkov as energy minister
and Pavel Kachur as head of new construction ministry creates a "Kyiv
builders group" in government. They to various extent were in charge of
construction issues before. That increases chances of Kyiv mayor Olexander
Omelchenko of keeping his post.
Also, it bodes well for expansion of the construction boom not only in Kyiv
(supported by Omelchenko), but also all over the country. It does not
contradict the plans of PM Yekhanurov, who intends to initiate several large
construction projects funded from the state budget.
NEW GOVERNMENT HAS ALL CHANCES TO RESTORE
ECONOMIC STABILITY
The likely smaller political ambitions and high professional skills of new
government members are major factors that can bring back economic
stability in Ukraine. On the other hand, the government is short on time to
provide structural reforms due to the forthcoming general vote.
It would serve mostly as caretaker until the election. But if it succeeds,
we expect it to form the basis of the next government that is to be
appointed by parliament. -30-
[Edited by The Action Ukraine Report (AUR) Monitoring Service]
==============================================================
2. UKRAINE: BANKING INTEREST
LATEST BRIEFING: Ukraine: Banking Interest
In association with Dragon Capital
By Paulius Kuncinas in Kyiv, Oxford Business Group
London, United Kingdom, Monday, 10 October 2005
Even if the recent political turbulence in Kiev kept most Ukrainian bankers
on their toes, there were no signs of the kind of panic that occurred during
the Orange revolution. Back then, a run on the banks and the local currency,
the hryvnya, had a powerful effect, but this time, capital migration was
widely thought much smaller.
We saw a slight migration of capital into real estate, Vladimir Khlyvnyuk,
the chairman of Finance and Credit Bank, told OBG last week. But it was
quite light stress compared to last year's events.
Faced with the political crisis in December last year, many companies and
individuals decided to pull out their savings from the banks, causing a
temporary liquidity crisis.
The National Bank of Ukraine (NBU) was forced to introduce administrative
measures to conserve liquidity and threw an emergency credit line to some
30 troubled banks to keep them afloat.
As one Western banker based in Kiev recently told OBG, it was quite
fortunate that Ukraine did not lose a single bank. Indeed, he added,
according to Western practice, some of these lenders would have been
declared insolvent and obliged to file for bankruptcy.
Yet a partial shakeout might even have been a good thing, some analysts
suggest. With 150 banks active in Ukraine today, the country remains
significantly over-banked.
But while the Orange revolution nearly led to a financial collapse, it also
managed to stoke new interest in the Ukrainian banking sector, as many
foreign lenders rushed in to explore what they reckoned to be a virgin
market.
Suddenly, it dawned on many Westerners that Ukraine is actually a big
country which they had overlooked, said Gerd Wriedt, chairman of the
management board of HVB Bank, Ukraine, which has been present in the
country since 1998.
However, It remains to be seen how many of them will actually decide to set
up shop here. I think the expectations fuelled by the Orange revolution will
be hard to meet, he told OBG.
Nevertheless, the Vienna-based Raiffeisen Bank chose to brave the elements
when it announced in August that it had concluded acquisition talks for a
93.5% share of Aval Bank, the second-largest bank in Ukraine. Aval is a
major catch as it has an extensive branch network in country.
At the same time, the acquisition not only marks the biggest deal ever in
the Ukrainian banking sector, but will also mean that Raiffeisen will become
the biggest bank in Ukraine after the merger, with an estimated 12% market
share.
Herbert Stepic, CEO of Raiffeisen International, described this acquisition
as a further important step in securing... Raiffeisen International's
leading local presence. Ukraine is one of the most important markets for us.
Other banks are also said to be waiting in the wings and analysts believe
that some seven other large banks could come up for sale in the next year or
so. Ukrsotsbank, one the most attractive targets, apparently, has as many as
15 banks analysing its loan books.
If these rumoured sales are realised, analysts say, they will galvanise the
sector, bringing better management practices and access to cheaper
sources of liquidity.
Meanwhile, local analysts hail the arrival of Western banks and continued
interest in the sector as evidence of its resilience in the face of a
difficult political environment.
Yet the sector's capacity to manage liquidity in a year of sharp economic
slowdown, strong inflationary pressures and political uncertainty remains
under close scrutiny.
The list of threats which could still cause a financial meltdown in the
future include weak public confidence, undercapitalisation and inadequate
legislation skewed in favour of debtors rather than creditors.
Ukrainian banks, sceptics say, need to secure a more solid long-term
liquidity base to withstand economic shocks in the future and, more
importantly, to be able to finance their ambitious loan portfolio growth to
increase the level of financial intermediation, which is very low at 30% of
GDP.
Loan growth in the first seven months of 2005 has helped to increase total
banking assets by 23.5%, from around $25bn recorded at the end of 2004.
Yet, with demand for loans getting ever stronger and consumer lending on
the rise - albeit from a low level - the banks need to watch their risk
exposure to ensure there is no rapid deterioration in asset quality.
Some observers are concerned that banks in Ukraine continue to give out
loans faster than they can attract new deposits, creating the so-called
liquidity gap.
While the loan maturity is being gradually extended, with the arrival of
popular mortgage finance, the source of funding, for the most part, is still
short-term and unstable. According to Khlyvnyuk, there are few people who
place money for more than a year.
Whether we like it or not the biggest investor in the banking sector today
is still the Ukrainian public, says Oleksandr Soltus, chairman of
Ukrprombank - one of the fastest-growing banks in Ukraine today.
Soltus told OBG last week that in the absence of established pension and
insurance funds and with limited access to international capital markets,
Ukrainian as well as foreign banks will have to rely on private deposits as
the main source of funding.
National Bank of Ukraine (NBU) statistics show that during the first seven
months of the year individual deposits amounted to $3bn, compared to
$1.4bn brought in by the corporate sector.
Meanwhile, a number of banks have attempted to secure more long-term
sources of funding on international capital markets through syndicated loans
and bond issues. According to market sources, a total of $575m has been
attracted in this fashion by the state-owned Ukreximbank and private
UkrSibbank and Ukrsotsbank.
According to Vadim Lyashko, chairman of Ukrgazbank, The successful
placement of these issues on international markets is a sign of confidence
in the Ukrainian banking system and will hopefully establish a more
long-term source of financing.
Yet, international analysts and credit rating agencies say the appetite for
Ukrainian syndicated loans and bonds is still limited. While no one
questions the growth potential, foreign analysts have yet to be convinced \
of the banks' ability to manage growth efficiently.
Last year, international credit rating agency Fitch argued in its report
that Ukrainian banks will find dealing with a sharp increase in business
volume a challenge in itself. This will be especially the case as they
diversify into new, more profitable lines of businesses such as retail
banking, where Ukrainian banks still have relatively little experience.
Separately, a report produced by Calyon Bank Ukraine says that a difficult
operating environment and limited enforcement capabilities translate into
significant intermediation costs for the local banks, which need to be
provided with at least an 8% to 10% margin between the cost of liabilities
and interest rate revenue to cover non-performing loans. The same margin
in the West is normally between 2 and 4%.
Ultimately, analysts say, the health of this all-important sector depends on
economic growth and macroeconomic indicators. As Lyashko puts it,
Objectively speaking, the banking sector is a reflection of strengths and
weaknesses of our economy and the sector cannot be more robust than the
economy itself.
More immune to political stress, the sector will thus no doubt be looking
for signs of greater stability and firm policy goals that will help to
revive the spectacular growth witnessed last year. By all accounts, the road
ahead promises to be a bumpy ride. -30- [The Action Ukraine Report]
-----------------------------------------------------------------------------------------------------------
Paulius Kuncinas, BA, MA (OXON), Senior Country Editor, Oxford
Business Group, Emerging Ukraine 2006, Emerging Romania 2006,
Emerging Bulgaria 2005; mobile: +38 067 729 9322 (in Kyiv, Ukraine)
pkuncinas@oxfordbusinessgroup.com; www.oxfordbusinessgroup.com
==============================================================
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==============================================================
3. GOVERNMENT TO PROTECT FOREIGN INVESTMENTS SAYS NEW PM
By Kostis Geropoulos, Senior Correspondent,
New Europe, Athens, Greece, Monday, October 10, 2005
Ukrainian Prime Minister Yury Yekhanurov pledged to protect foreign
investments and to put an end to all speculations about reprivatisation. "As
the head of the government, I am authorised to announce that all talk about
reprivatisation is over," he said speaking at an international conference on
Ukrainian reform in Brussels on October 6.
"Controversial privatisation will be considered exclusively through courts.
The state will get market prices for the undervalued assets through
concluding amicable agreements. Not a single efficient owner will be
disadvantaged," he said at a packed auditorium.
Ekhanurov and European Commission Vice President Siim Kallas led a
panel of leading businessmen to discuss new developments in the Ukrainian
economic policy, especially in view of relations of Ukraine with the EU and
the EU-Ukraine Action Plan.
The premier said that Ukraine hopes to be granted market economy status
at a Ukraine-EU summit in Kiev on December 1.
Kallas expressed his hope that Ukraine will realise another one of its
ambitions and enter the World Trade Organisation before the end of this
year.
The EC vice president said the EU has supported Ukraine in a pragmatic way
and that areas of cooperation include increase of transparency and fight
against fraud. But he stressed that the future relationship will depend on
the course of internal reforms.
Drawing parallels between his native Estonia and Ukraine, Kallas said as
"Ukraine carries out reforms and adapts EU standards cooperation will get
closer. My friends, you have a lot of friends and sympathy in European
institutions."
Ukraine is eager to seek foreign investment as the development of its
economy slows. "The new government will in the near future show adamant
will for the protection of foreign investment," the premier said. "
We will offer clear, responsible and equal rules of play to the business on
Ukraine's market based upon securing the principle of market competition
and private property rights in accordance with the law in force," Yekhanurov
said.
However, the premier's comments came the same day the Ukrainian Institute
of World Economics and International Relations announced that investment
in the country's economy has dropped by 14 percent in the past eight months.
The institute said the negative trend could be reversed by putting an end to
reprivatisation and economic persecution for political reasons.
The best known reprivatisation action taken by the Ukrainian government
after the Orange Revolution involved Ukraine's largest steel producer,
Krivorozhstal.
The company was privatised in June 2004 and 93.02 percent of its shares
were sold to Ukrainian consortium Investment Metallurgy Union which united
the companies of Donetsk-based businessman Rinat Akhmetov and of then-
President Leonid Kuchma's son-in-law Viktor Pinchuk.
The consortium acquired the stake for USD 800 million, while Russia's
Severstal offered to pay USD 1.2 billion and LNM-US Steel - USD 1.5 billion
for the same shares.
After Kuchma lost his post, the new government ruled that the privatisation
was illegal and took the shares back into state custody. Now Ukraine plans
to hold another tender for Krivorozhstal.
Alexander Chaly, former minister of European Integration, told New Europe
at the sidelines of the conference that the Krivorozhstal reprivatisation is
an exception. "It was a special decision of the government followed by a
proper decision of court.
But I think it will be the first and last big case of reprivatisation in
Ukraine," he said. Chaly hailed Arcelor's decision to participate in the
privatisation of Krivorozhstal. "I think if Arcelor will be part of the team
that will privatise Krivorozhstal it will be a very strong signal for
further European big companies to come to Ukraine," Chaly said.
He expressed confidence that the new government will stop reprivatisation
and start transparent and responsible privatisation policy.
Ukrainian Minister of Economy Arseniy Yatsenyuk told journalists that there
is no legal definition in Ukrainian legislation of reprivatisation.
"If one can say we are going to reprivatise something, the question is in
what way? How to do it? There are no legal procedures," he said, responding
to a New Europe question. "And talking about abolishing reprivatisation my
question is how can we abolish something that is not prescribed in Ukrainian
legislation? So the final position of the government is no more fear of
reprivatisation. No more talks no more lists."
The minister of economy also expressed his hope that the Ukrainian
parliamentary elections in March would not take their toll on the country's
economy. "Last year I was acting governor of the Central Bank during the
crisis and believed the political aspect would not have dramatic impact on
Ukrainian economy.
I was wrong! But this time I strongly believe Ukrainian elections will be
legal and transparent and will not have a dramatic impact on economic
situation. For investors now everything is clear."
During the elections all eyes will be on Ukraine. Kallas said the EU will
monitor the elections closely. "Parliamentary elections will be the real
test for Ukraine." -30- [The Action Ukraine Report Monitoring Service]
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4. RUSSIAN, UKRAINIAN BUSINESS ASSOCIATIONS TO CREATE NEW
ORGANIZATION TO REPRESENT INVESTORS
ITAR-TASS news agency, Moscow, in Russian 1053 gmt 10 Oct 05
BBC Monitoring Service, UK, in English, Monday, Oct 10, 2005
MOSCOW - The Union of Investors of Russia and Ukraine will be created on
the foundation of cooperation between the Russian Union of Industrialists
and Entrepreneurs leader Aleksandr Shokhin and the Ukrainian Union of
Industrialists and Entrepreneurs.
The news was announced today by Anatoliy Kinakh, the head of the Ukrainian
Union of Industrialists and Entrepreneurs at talks with the Russian Union of
Industrialists and Entrepreneurs [as Kinakh is the head of the Ukrainian
Union of Industrialists and Entrepreneurs and secretary of the Ukrainian
National Security and Defence Council]. He said that "such agreement had
been reached during meetings in Moscow".
Such a union "would help to broaden cooperation between the businessmen
of Russia and Ukraine at political level". He added that the Ukrainian Union
of
Industrialists and Entrepreneurs "would never allow administrative control
of the economy to resume in Ukraine, including bypassing the interests of
business, or the redistribution of Ukrainian property by disregarding the
law".
In turn, Aleksandr Shokhin, the head of the Russian Union of Industrialists
and Entrepreneurs, said that "the first meeting of the investment union will
most likely be held in Kiev on the eve of the meeting between heads of state
so that businessmen have the opportunity to put forward their
recommendations".
[Itar-Tass reported at 1159 gmt today that Shokhin said that the recent
formation of a new Ukrainian cabinet was an opportunity to close the page of
misunderstanding in Ukrainian-Russian economic cooperation, adding that
"the basis exists to suppose that the new Ukrainian government will be more
pragmatic as the new prime minister has worked in the economic field for a
long time"] -30- [The Action Ukraine Report (AUR) Monitoring Service]
==============================================================
5. MOSCOW IS BACK IN FASHION IN UKRAINE AS
POLITICIANS MANEUVER FOR SUPPORT
By Mara D. Bellaby, AP Worldstream, Kiev, Ukraine, Mon, Oct 10, 2005
KIEV - He's not Ukrainian, cannot vote or run for office here and is the
leader of another state. But Russian President Vladimir Putin has
nonetheless found his name attached to a small Ukrainian political party -
the Party of Putin's Policies.
Moscow is back in fashion in Ukraine, with politicians from President Viktor
Yushchenko to his ousted prime minister, Yulia Tymoshenko, turning their
gaze eastward as they court the Kremlin's support ahead of the March
parliamentary elections.
Analysts say wooing Moscow is such an ingrained habit here that even the
pro-western rhetoric of last year's Orange Revolution failed to stamp it
out. Last month, Yushchenko's new prime minister, Yuriy Yekhanurov, and
Tymoshenko both dashed off to Moscow for competing talks with Russian
officials.
"Like it or not, Ukrainians still have a tendency to look up to Russia ...
the residual idea remains that Moscow is the center," said Ivan Lozowy,
president of the Kiev-based Institute of Statehood and Democracy.
Former lawmaker Sergei Kiyashko said his Slavic People's Patriotic Union
Party renamed itself the Party of Putin's Policies to advertise its strong
Russian bent.
"For us, it isn't just rhetoric," he said. "We wanted Ukrainians to
understand there is a force out there that is serious about its orientation
toward Russia."
Until recently, Russia's influence in Ukraine had been decidedly on the
wane.
During last year's heated presidential campaign, Putin traveled to Ukraine
to stump for Viktor Yanukovych, sparking Western criticism and suffering an
embarrassing defeat when Yanukovych's fraudulent victory was canceled. The
Kremlin's political misstep proved to most Ukrainians that Moscow's days as
a kingmaker were history.
Yushchenko's win initially shifted the focus westward as he set this nation
of 47 million on a course for EU and NATO membership. Ukraine canceled visa
requirements for EU nationals, and Yushchenko told Putin that Ukraine would
now be looking out for its own interests.
But recent events show that Ukrainians seem unable to shake the habit of
turning to Moscow for guidance.
Even Yushchenko chose Moscow as the destination for his first foreign trip
as president. And dissatisfaction with the EU has grown recently because
talks have failed to yield any big new initiatives for Ukraine.
"We have centuries of history with Russia. What if the West just doesn't
understand us?," said Serhiy Antipov, 47, in the eastern, Russian-speaking
city of Dnipropetrovsk, voicing a common worry.
A poll conducted last month by the Razumkov think tank found that 43.1
percent of Ukrainians think relations with Russia should be a priority _
compared to 27.1 percent who believe the focus should be on the European
Union. The poll of 2,011 Ukrainians had a margin of error of 2.3 percentage
points.
The economies of Ukraine and Russia are closely intertwined. Russia supplies
Ukraine with the cheap gas its metallurgical and chemical factories need.
Nearly every strategic road, oil and gas pipeline from Russia to lucrative
European markets runs through Ukraine, and Russia's navy still keeps its
Black Sea fleet in the Ukrainian port of Sevastopol.
After the breakup of the Orange Revolution alliance last month, winning
votes in the industrial, Russian-speaking east has become crucial for the
members of the former coalition to offset the split in their shared western
base.
"For many there is a need to be photographed with President Putin ... to set
in motion those rumors that you had dinner," Yushchenko's chief-of-staff
Oleh Rybachuk told the Kommersant newspaper while visiting Moscow.
Kiev has sent conciliatory signals to Russia, describing Moscow as its "main
partner," saying it would consult Moscow on its WTO bid and consider joining
a fledgling common market led by Russia.
But analysts tend to see Yekhanurov's and Tymoshenko's visits more as
political opportunism than as a change a change of heart toward Russia.
"These are both politicians who are relatively more pro-Ukrainian than
anything we've seen in the last 14 years," Lozowy said. "Their wooing of
Russia is tactical. -30- [The Action Ukraine Report Monitoring Service]
==============================================================
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6. UKRAINE'S ORANGE FADES TO BLACK?
COMMENTARY: By David A. Mittell, Jr., Columnist
Member, Editorial Board, The Providence Journal
Providence, Rhode Island, Thursday, October 6, 2005
CAMBRIDGE, Mass. - IT HAS BEEN 46 weeks since the fraudulent
election of Viktor Yanukovich as president of Ukraine led to vast protests
and a democratic revolution.
It has been 40 weeks since Viktor Yushchenko was proclaimed elected,
after a second vote. These heady events became known as the Orange
Revolution; and they brought a long-oppressed, poorly understood
people to the world's attention.
The true protagonists of the Orange Revolution were the Ukrainian
people: women who went to work with their hair dyed orange; a sign-
language interpreter who contradicted the spoken words of a TV news
reader; thousands who camped throughout December in the Maidan,
Kiev's great square.
The political protagonists were two very different characters. First, Mr.
Yushchenko: a banker, economist and briefly former President Leonid
Kuchma's prime minister - but not an orator, nor a natural politician.
Second, Yulia Tymoshenko: an energy investor who got rich after the fall
of communism, was elected to parliament, and was Mr. Kuchma's energy
minister - but later was jailed by his government.
Ms. Tymoshenko took to politics like a harbor seal to salt water. If Mr.
Yushchenko was the Orange movement's George Washington, she was
its Joan of Arc. She has the gift of beauty, and in what seems to be a
crown of perfect self-confidence, she wears a long braid on top of her
head, over her parted hair.
With her voice, her gestures and her rhetoric, this ''crown'' is
intoxicating to a crowd. It was mainly she who rallied the Maidan during
the six weeks when the future was in doubt.
When Mr. Yushchenko was inaugurated, he named his charismatic partner
as prime minister. But Ms. Tymoshenko was soon in conflict with her
colleagues in the cabinet, and by spring she was having open spats with
the president over such things as unsustainable agricultural and energy-
sector subsidies, which she favored. On Sept. 8, the president dismissed
her - less than nine months after appointing her.
When parliament then voted not to confirm his choice of Yuri Yakhanurov
to succeed Ms. Tymoshenko, Mr. Yushchenko signed an astounding
memorandum of ''unity and collaboration for the sake of the future'' with
Viktor Yanukovich - so recently the Orange Revolution's very antagonist.
With the support of Mr. Yanukovich's party, Mr. Yakhanurov was
confirmed in a second vote.
In Moscow, Vladimir Putin was ecstatic - as, in his theretofore muted
retirement, was former President Kuchma. In the Maidan, Yanukovich
supporters gleefully put out trash barrels, into which disconsolate
Tymoshenko supporters tossed their orange buttons, scarves, etc.
In the West, commentators inclined to see Ukraine as belonging in
Russia's sphere of influence pronounced the Orange Revolution's
democratic pretensions a failure.
This week, I attended a conference at Harvard at which scholars from
several North American universities tried to sortout what had happened
and what it means. The question I posed was ''Is President Yushchenko
primarily corrupt, is he primarily inept, or is he fitfully learning what it
is to be a political leader?'' They didn't agree, though no one seems to
think he is corrupt.
My take, based on the scholars' many insights (and a couple of my own),
is that Ms. Tymoshenko and Mr. Yushchenko have both conflated their
egos with the fate of the nation. With Ms. Tymoshenko it is conflation of
the nation with her ambition: ''If you're against me, you're against the
revolution!''
As adept as she is in the politics of propaganda, she proved inept in
the politics of the cabinet system. Mr. Yushchenko correctly recognized
that her prime ministry wasn't working.
Mr. Yushchenko's conflation is otherworldly. Having survived an attempt
to poison him during the 2004 campaign, having then become president,
he developed what one person at the conference called a messiah
complex.
On taking office, he traveled the world, spent too little time governing,
squandered chances to pass reforms, and showed poor judgment about
his subordinates. (Whereas Ms. Tymoshenko thinks anyone who betrays
her betrays the state, Mr. Yushchenko thinks that anyone who works for
him would never betray the state!)
The president's first mistake was to largely exclude Viktor Yanukovich's
eastern, Russophone political base from the Tymoshenko cabinet. To
the extent the Yushchenko-Yanukovich rapprochement rectifies that, it is
good for the unity of the country. The question is: What's in the deal?
On becoming president, Mr. Yushchenko showed much less interest in
prosecuting the crimes of the Kuchma era than he had as a candidate.
Has Mr. Yanukovich's endorsement of Prime Minister Yakhanurov been
exchanged for criminal immunity? If Mr. Yushchenko agreed to that, it
would be a corrupt act.
We don't know yet, but it appears that a president who has been very
strong on freedom of expression and minority rights is still only
learning the low art of politics.
In this view, Ukraine has gone from being a totalitarian Soviet state to
being an authoritarian state under Mr. Kuchma to being a messy
democracy under Mr. Yushchenko. Americans might recognize that.
-------------------------------------------------------------------------------------------------
NOTE: David A. Mittell Jr. is a member of The Providence Journal's
editorial board.
===============================================================
7. UKRAINE NO LONGER DEMANDS STATE REGISTRATION OF WEB SITES
Victory for freedom of speech, freedom of expression
Interfax-Ukraine news agency, Kiev, in Russian 0820 gmt 10 Oct 05
BBC Monitoring Service, UK, in English, Monday, Oct 10, 2005
KIEV - The Ministry of Transport and Communications of Ukraine has cancelled
the decree setting the procedure of state registration of information
resources in Ukraine.
Pursuant to decree No. 584 of 26 September 2005 "On the cancellation of
decree No. 153 of the Ministry of Transport and Communications of Ukraine of
27 April 2005", the latter was cancelled "as the one that does not meet the
principles of state regulatory policy in the field of IT development".
Decree No. 584 was registered with the Justice Ministry on 6 October 2005
and is already effective.
As reported earlier, the Transport Ministry has issued decree No. 513 to
approve the procedure of [state] registration of information resources. The
decree applied to all the owners of resources regardless of the form of
their ownership.
A resource registered by the state was included into the national registry
of information resources kept by the state communications department.
Public organizations protested against the decree because they believed that
the registration demand contradicted the principles of the freedom of
speech, the freedom of expression and requirements not described in the
legislation.
They believed some clauses of the decree were vague and the absence of
clear criteria for approval or denial of registration formed solid grounds
for corruption. -30- [The Action Ukraine Report (AUR) Monitoring Service]
==============================================================
8. USA: UKRAINE'S FIRST LADY REVISITS ROOTS IN BLOOMINGDALE
By Amy Boerema, Daily Herald Staff Writer
Daily Herald, Suburban Chicago's Information Source
Arlington Heights, Illinois, Sunday, October 10, 2005
Ukraine's first lady returned Saturday to the Chicago area she once
called home, to celebrate musical traditions and honor victims of
a past tragedy.
Kateryna Chumachenko-Yushchenko, wife of Ukraine President Viktor
Yushchenko, visited St. Andrew Ukrainian Orthodox Church in
Bloomingdale while in town for a conference at her alma mater, the
University of Chicago.
The first lady, who grew up in Mount Prospect, greeted hundreds
of supporters outside the church, which was hosting a two-day Kyivan
Liturgical Music Festival.
"She told us she would attend (the festival), and we were flabbergasted
and so pleased," member Mary Jaresko said. "It means so very much."
The first lady's supporters stood behind a velvet rope, clapping
and snapping pictures as she stepped out of her car.
Her local roots run deep. Chumachenko-Yushchenko, who had visited
St. Andrew growing up, attended Prospect High School, where she was
known as Kathy and voted "Most Likely to Succeed."
She met her husband in 1993 while leading a group of Ukrainian
businessmen on a Chicago tour. They married in 1998.
Many St. Andrew members were part of a local group that worked to
weed out previous corruption in the Ukrainian government and get
Viktor elected president. He took office in January.
"She's been very close to the (local) Ukraine community all her
life," church member Dora Turula said.
Before an evening service, the first lady laid a wreath on the church's
memorial remembering the estimated 10 million victims of Ukraine's
1932-33 famine-genocide.
The deliberate starvation, part of a Soviet oppression that lasted
decades, took place under Joseph Stalin's regime.
The festival's concert followed the service. Kyivan liturgical music
is a cornerstone of Ukrainian culture, but its dwindling popularity
has leaders seeking a revival.
In this form of traditional music, only voices are used, and are
seen as the best and more pure expression of religious feeling.
Instruments are viewed as material.
"Singing to God is supposed to be a spiritual gift from his believers,"
said Archbishop Alexander Bykowetz. -30- [Action Ukraine Report]
--------------------------------------------------------------------------------------------------
LINK: with a photograph of the first lady.
http://www.dailyherald.com/search/searchstory.asp?id=103547
The AUR thanks Theodora Turula for sending us this article.
==============================================================
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9. ORIGIN OF FAKE BOOKS IS UKRAINIAN MYSTERY
By Peter Finn, Washington Post Foreign Service
The Washington Post, Washington, D.C.
Monday, October 10, 2005; Page A15
MOSCOW -- At open-air markets in the Ukrainian capital Kiev this summer,
devotees of Dan Brown, the best-selling author of "The Da Vinci Code," came
upon what looked like an unexpected treat, a sensational new novel exploring
a deep Vatican secret.
Its title, "The First Merovingian," referring to a Dark Ages European
dynasty that according to myth descended from Jesus, hinted of a classic
Brown story line.
The book was written in response to a request that Pope John Paul II had
made just before his death, a blurb on the jacket said. On the back of the
attractively bound 511-page volume was a photo of Brown.
But when readers cracked the hardcover book, they were sorely disappointed.
A crude cut-and-paste job, it contained lengthy excerpts from histories of
Christianity and the Inquisition interspersed with selections from a
14th-century anthology of short stories.
"This wasn't an 'honest' pirate edition," said Nikolai Naumenko, editor in
chief at Brown's Russian publisher, AST, which also publishes such American
authors as John Grisham and Michael Connolly. "I cannot even describe it as
a book. It's trash."
For years, Moscow publishers who dominate Russian-language publishing
across the former Soviet Union have complained that their books were being
illegally copied by a thriving underground industry in Ukraine.
But this year, the pirates have gone one step further, patching together
bogus works and attaching the names of well-known authors.
In the last year, these fakes have appeared in Ukrainian cities under the
names of popular Russian authors such as Polina Dashkova, Darya Dontsova,
Alexander Bushkov and Boris Akunin, according to publishers here.
"It's a painful issue for me," said Grigori Chkhartishvili, who, under the
pen name Akunin, has written 11 historical crime novels featuring the
detective Erast Fandorin and set in late czarist Russia. Four of his books
have been translated into English, and Akunin is gaining a large following
in the West.
Now comes a counterfeit Akunin novel, "The Rook," bound in almost exactly
the same kind of black-and-white jacket as legitimate Akunin books.
"Just by looking, it's very difficult to tell the difference between the
fake one and a real one -- until you start reading," said Irina Bogat,
general director of the Zakharov publishing house, which publishes Akunin in
Russian. "When I first got a copy I was afraid it might be a good novel, but
it's an absolute fake. Terrible. The beginning has nothing to do with the
end."
Instead of the usual czarist setting of a Fandorin novel, the action in "The
Rook" takes place in present-day Russia and features a descendant of
Fandorin as a main character.
Chkhartishvili said in an interview that a Ukrainian journalist told him
that large parts of the novel appear to be lifted from an obscure Ukrainian
novel published six or seven years ago. It merely substitutes Fandorin's
descendant for one of the original characters.
"Some readers were saying that Akunin has no shame and he'll write anything
for money," Chkhartishvili said. "I couldn't bring myself to read it. . . .
My wife read it. It was just awful. There were also pornographic episodes
which I would never write."
The books bearing the names of Brown and Akunin cite Pheonixcher Press
as the publisher, with an address in St. Petersburg. But when the writers'
publishers investigated, they found that it was the location of a student
hostel and that there was no such publishing house in either Russia or
Ukraine. They believe, however, that the books are being printed in Ukraine.
There have been similar problems in China with fake Harry Potter novels. In
2002, a Chinese publishing house issued "Harry Potter and the
Leopard-Walk-up-to-Dragon," which was in fact a translation of JRR Tolkien's
"The Hobbit" with Potter and some other characters added to the mix. The
publishers of the real Potter series eventually obtained an injunction
stopping distribution.
Publishers here say the Ukrainian authorities are doing nothing to stop the
illicit trade, despite requests, and they note bitterly that most if not all
printing presses in Ukraine are state-owned.
"As Sherlock Holmes would say, this is a one-pipe mystery," said
Chkhartishvili. "In the time it would take to smoke one pipe, you could
solve it. You just trace the books back to the source." -30-
==============================================================
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==============================================================
10. UKRAINE CARDINAL HUSAR WANTS SYNOD WITH ORTHODOX CHURCH
By Daniela Petroff, Associated Press Writer, Vatican City, Mon Oct 10, 2005
VATICAN CITY - A senior Ukrainian cardinal said Monday there was little
dividing the Catholic and Orthodox Christian faiths and suggested that the
pope call a meeting of the world's bishops to discuss the Eastern rite
within the Catholic Church.
Cardinal Lubomyr Husar, head of the Greek Catholic Church in Ukraine, made
the suggestion in a speech to a three-week meeting of the world's bishops
that is designed to give the pope recommendations on running the church.
Eastern rite Catholic churches share many Orthodox rituals but are loyal to
the pope.
The Catholic and Orthodox churches split in 1054 over several questions,
including the issue of the primacy of the pope. Relations now between the
two sides have been made tense by Orthodox charges of aggressive Catholic
missionary work in Eastern Europe and by property disputes.
Pope Benedict XVI has made unifying all Christians a fundamental priority of
his pontificate, and he invited a record number of ecumenical
representatives to take part in the Oct. 2-23 meeting, known as a synod,
including one from the Russian Orthodox Church.
In his speech, Husar noted that the Catholic and Orthodox churches share
fundamental beliefs about the Eucharist, which is the topic of the synod.
The Catholic Church also recognizes as valid Orthodox ordinations of
priests, and both churches recognize the apostolic succession of their
bishops, meaning both trace the ordination of their bishops back to Christ's
12 apostles, Husar said.
"If the mutual recognition of the apostolic succession of bishops is
recognized, and consequently that of the priests who celebrate it, my
question is: what else do we need for unity?" according to a summary of his
remarks released by the Vatican.
"Is there perhaps another source, or another summit superior to the
Eucharist?" he asked. "And if it doesn't exist, why can't we allow
concelebration?"
Husar then suggested that the pope call a new synod of the world's Catholic
bishops to discuss the role of the Eastern rite church, saying there was a
lack of understanding among other Catholics about its role. He suggested
Orthodox clerics be included in the meeting.
In an interview with The Associated Press after his speech, Husar noted that
the late Pope John Paul II had frequently said the Catholic Church "breathes
with two lungs" - a reference to the Eastern and Western halves of the
church.
"At the moment we do not feel that the church is breathing with these two
lungs," he told the AP.
At the start of Monday's meetings, the bishops were asked to keep the
victims of the South Asian earthquake in their prayers.
Several bishops also spoke of the need for the church to incorporate more
local customs into the Mass. The working document of the synod warned that
while useful, such attempts at including local songs and dance in the Mass,
sometimes go too far and can cause "scandal" and confusion among the
faithful.
But the archbishop of Abuja, Nigeria, Monsignor John Olorunfemi Onaiyekan,
said such "inculturation" has had a positive effect on the church in Africa,
increasing participation of the faithful and promoting evangelization, and
said it should not be cause for alarm.
"Solemnity and sacredness can be expressed not only in plain chant and the
organ, but also by the gong, the xylophone and the tam-tam," he said,
according to the Rev. John Bartunek, a synod spokesman who read from his
text.
"We may not have much to offer in terms of the glorious architecture of
European cathedrals or the fabulous paintings of Michelangelo and Leonardo
da Vinci," he said. "But what we have, we are happy to give: our songs and
lyrics, our drumming and rhythmic body movements, all to the glory of God."
==============================================================
11. THE ECONOMIC SITUATION IN UKRAINE
U.S. Assistant Secretary of State for Economic Affairs discusses the
economic situation in Ukraine in a speech at Kiev International University
REMARKS: By E. Anthony Wayne
U.S. Assistant Secretary of State for Economic and Business Affairs
Kiev International University, Kyiv, Ukraine, Thursday, October 6, 2005
Public Affairs Section, United States Embassy Kyiv
The Action Ukraine Report (AUR), Kyiv, Ukraine
Tuesday, October 10, 2005, Number 581, Article 11
KYIV - United States Assistant Secretary of State for Economic and Business
Affairs Anthony Wayne discussed the economic situation in Ukraine October
6 during a visit to Kiev International University.
Mr. Wayne spoke to approximately 100 students in an event hosted by KIU
Rector Khachatur Khachaturian.
The following is the text of Assistant Secretary Wayne’s remarks.
Subheadings have been inserted by The Action Ukraine Report (AUR)
Monitoring Service.
ASSISTANT SECRETARY WAYNE:
It's a great pleasure to be here today. My visit to Ukraine is a sign of
the strong interest Americans take in your country. We were inspired by the
courage of the Ukrainian people and the events that led last winter to the
election of President Viktor Yushchenko.
It was one of the most visible demonstrations in recent history of the
hunger of people everywhere for democracy. With your slogan "no to
falsifications, no to machinations" you demanded, and in the end achieved,
free and fair elections.
A free, democratic process is a goal that the United States always
supports. As you go forward with a new government into the election of a
new Rada in March, the United States remains committed to helping ensure
that Ukraine's political and economic transformation continues to move
forward.
Democracy and market economics are two sides of the same coin. They are
both about freedom. Just as the government should not choose your leaders
for you, it should not control your actions in the economic sphere.
Instead, the most important economic role of a government is to ensure that
the market is functioning properly and fairly.
It is clear that President Yushchenko understands this. One of his chief
promises has been to undertake reforms that will expand opportunities for
trade and investment, attack corruption, and give greater freedom for
ordinary people to make their own economic choices.
There were certainly times in the past eight months when progress on these
reforms seemed to have stalled. Building consensus on the tough issues of
transformation is never easy. We were concerned that infighting and
disarray in decision-making was preventing the government from moving
forward on the economic reforms it needed to undertake.
But we are now optimistic that with the confirmation of Prime Minister
Yekhanurov and other new cabinet members, the process of economic
reform is back on track.
In the past two days, I have met with the Prime Minister and other
government officials, members of the Rada, and Ukrainian and American
businessmen—people who are investing in Ukraine’s future. I am very
pleased to report that our optimism is justified.
I have been particularly impressed by the ability of the Ukrainian
government to keep working toward President Yushchenko's economic
goals, even after the cabinet dismissal of September 8.
ACCESSION TO THE WTO
In the last thirty days, we have seen significant progress on our bilateral
trade agenda, including constructive discussions on Ukraine's accession to
the World Trade Organization (WTO) and on enforcement of intellectual
property rights.
WTO accession has understandably been one of President Yushchenko's top
economic priorities. Prime Minister Yekhanurov has publicly endorsed that
goal. They both recognize that membership in the WTO shows a country's
commitment to conducting economic relations under a common rules-based
system.
Membership will lower barriers to exports of Ukrainian products to the
roughly 150 WTO members around the world, it will help expand Ukraine's
markets, and it will give encouragement to investors that Ukraine has met
international standards of economic openness and fairness.
Presidents Bush and Yushchenko jointly committed earlier this year to work
together to conclude within 2005 a bilateral market access agreement - a
necessary step toward Ukraine's WTO accession. I have been glad to hear
that tangible progress has been made toward this goal.
But other hurdles also have to be crossed to join the WTO. Most
importantly, Ukraine must still undertake a number of commitments, for the
most part in the form of passage of laws required to meet WTO norms.
The Rada passed a few important pieces of WTO-related legislation in July.
Upon returning from recess in September, it took up several other pieces of
legislation needed to advance the process. This legislation has a common
theme: it is all designed to dismantle government rules or intervention that
distort the free functioning of markets.
It's not politically easy, because powerful business interests often want
the government to grant them special favors and protection from competition.
But these reforms are not only the key to entry into the WTO.
They are also the best way to ensure that the Ukrainian economy can grow
unencumbered by government interference. I hope that the new government
will be able to muster the political will to complete this work quickly.
PROTECTION OF INTELLECTUAL PROPERTY
Protection of intellectual property has been a key issue for the United
States in our economic relations with Ukraine for several years now. We
were very glad to see the enactment on August 2 of amendments to Ukraine's
law on Laser-Readable Discs.
We had been urging their passage for several years in order to protect the
rights of producers of music, movies, and software. Not only American
artists and innovators benefit from this protection.
So do your own musicians, filmmakers, and software designers. That’s why
some of the most prominent Ukrainian artists, including the famous winner
of the 2004 Eurovision Song Contest, Ruslana, strongly backed this measure.
With the passage of these amendments, the U.S. government was very
pleased on August 30 to restore normal tariff levels on a range of Ukrainian
products, lifting sanctions that we had put in place in 2002.
But effective protection of intellectual property does not end with passage
of legislation. You need strong enforcement; The U.S. government is in the
midst of a three-month review of Ukraine's efforts to strengthen its IPR
enforcement through effective prosecution and penalties against piracy and
counterfeiting, border controls, and other means.
Among the important outcomes of the review will be a decision on whether to
restore Ukraine's eligibility for benefits under the U.S. Generalized System
of Preferences, which offers certain countries lower tariffs for selected
products.
We have received some encouraging reports on the work of the Ukrainian
government in IPR enforcement, and we very much hope that the government
can document these good results and clarify some of the outstanding
questions that we have.
JACKSON-VANIK AMENDMENT
The Ukrainian government has urged the U.S. Congress to lift provisions of
the Jackson-Vanik Amendment to the Trade Act of 1974. For over a decade,
we know Ukraine has had free emigration policies and practices, the original
basis for Jackson-Vanik.
This Administration strongly supports ending the use of Jackson-Vanik in the
case of Ukraine and establishing Permanent Normal Trade Relations between
our two countries.
BUREAUCRATIC PROCEDURES
One of the greatest challenges for Ukraine and other countries around the
world is to encourage investment by doing away with burdensome bureaucratic
procedures and other structural problems.
In meetings I have had with Ukrainian officials and in public events I
attended in New York in which President Yushchenko spoke, I have been happy
to hear that the Ukrainian government is quite aware of some of the things
it needs to do to tackle them.
STRAIGHTFORWARD REPRIVATIZATION PLAN
One of the most contentious issues for the previous cabinet was what to do
about the former state enterprises that the government had earlier sold for
discount prices under dubious circumstances.
While there was general agreement that those privatizations had been
improperly conducted, the absence of a clear policy on such cases helped
precipitate the cabinet's downfall.
Mixed signals coming from the Ukrainian government diminished investor
confidence. Ukrainian and foreign businessmen were understandably reluctant
to invest new money into enterprises whose ownership might soon have come
into question. The critical need now is for the government to establish a
straightforward plan to resolve the issue and move on.
President Yushchenko and Prime Minister Yekhanurov have now resolved to
pursue speedy and amicable resolution of the most difficult cases. That's
encouraging.
FIGHT AGAINST CORRUPTION
Other problems are more deeply rooted and will require constant attention:
The new administration has to step up the fight against corruption. It
pervades many levels of both the government and the private sector and it
seriously discourages investors.
The 2004 Corruption Perception Index of Transparency International ranked
Ukraine at 122nd place, near the bottom of the list, well below most other
European countries.
But how do you fight corruption? You start by publishing government budgets
and revenues, disclosing official incomes, and rigorously investigating and
prosecuting wrongdoing.
These help eliminate opportunities for malfeasance. You also need to draw a
clear line between government service and involvement in private sector
activity.
As long as government officials, legislators, or judges have personal
interests in the welfare of particular enterprises, they will not be able to
make impartial decisions in an unbiased manner. Making these changes isn’t
easy but it's very important.
Weak rule of law and a poorly-functioning judicial system have been largely
responsible for the failure to resolve many longstanding commercial and
investment disputes. The lack of resolution of at least some of these
disputes is another major disincentive for increasing trade and investment.
STREAMLINE REGULATIONS
There is a need to streamline regulations and make it easier for companies
operating in Ukraine to understand the rules that everyone must follow. An
annual report of the World Bank ranks countries according to the ease of
doing business.
The most recent edition of that report, issued this summer, put Ukraine in
the bottom 25% of all countries for ease of doing business. The United
States is directing some of our technical assistance to Ukraine to be of
assistance in this area.
REFORM OF THE OLD SOVIET STYLE COMMERCIAL CODE
One of the priorities of legal reform should be reform of the old Soviet
style Commercial Code that conflicts with the modern Civil Code.
LAW ON JOINT STOCK COMPANIES
Another is to adopt the law on Joint Stock Companies to strengthen corporate
governance. It was very good to hear President Yushchenko in New York two
weeks ago say that he wanted to deal with these issues.
COHERENT MACROECONOMIC POLICY NEEDED
The factionalism of the previous cabinet undermined coherent macroeconomic
policy, leading to price controls and other forms of undue state
interference, along with frequent reversals of policies. It is essential
that the new cabinet maintain a steady policy that minimizes state
intervention and allows the market to function efficiently.
The U.S. government is providing advisors to the Ukrainian government in
areas such as banking policy, tax administration, energy, and macroeconomic
management. We are optimistic that this technical assistance will help the
government develop the policies it needs to integrate successfully into the
world market economy.
CONCERTED ENERGY DIVERSIFICATION STRATEGY
It is no secret that Ukraine is highly dependent on subsidized gas and oil.
The fact that Ukraine pays unusually low prices for its fuel has led to
wasteful use of energy. For every dollar it produces, Ukraine consumes
about two and a half times as much energy as does Poland.
We are all painfully reminded, the age of cheap fuel is coming to an end.
There are no short-term fixes to this, but the Ukrainian government urgently
needs to develop a concerted energy diversification strategy.
With its strategic location between Russian and Caspian oil and gas fields
on one side, and European energy consumers on the other, Ukraine has
greater potential to profit from the pipelines that pass through its
territory.
It could take better advantage of that position, for example, by developing
a commercial plan for the Odessa-Brody pipeline - to transport Caspian crude
to Central Europe - and working with Russia to expand current gas transit
infrastructure.
Alternative sources of energy also need to be developed, for example in coal
bed methane and safe nuclear technologies.
American and other energy companies have expressed significant interest in
possible hydrocarbon reserves in Ukraine's Black Sea waters. The Ukrainian
government has begun some discussions on exploration with foreign
companies, but has not established clear rules.
We strongly encourage Ukraine to partner with these international
companies - especially American ones - because they have the expertise to
develop offshore resources. But above all we encourage the Ukrainian
government to establish clear rules of investment in the sector.
BETTER ENERGY CONSERVATION POLICIES
Finally in the energy sector, Ukraine needs to pursue better energy
conservation policies. Historically, the abundance of cheap Russian-supplied
fuel caused Ukrainian industries to be highly energy-inefficient.
Those industries will have to learn ways to conserve if they are going to
compete in export markets.
I know have outlined a lot of urgent tasks. But I'm convinced the Ukrainian
government is already hard at work to accomplish these tasks.
Ukraine's natural resources, its geographical location, and its
well-educated population -- including yourselves -- make it well situated
to become a regional economic powerhouse.
Investors inside and outside of Ukraine know that, and are poised to create
new businesses and expand existing ones in this country.
The most important things missing are a proper policy framework and fair,
consistent implementation of that framework, to allow Ukraine to flourish.
We in the U.S. government stand ready to work with Ukraine to further
strengthen our economic ties and support the important transformation
going on. -30-
[Edited by The Action Ukraine Report (AUR) Monitoring Service]
-----------------------------------------------------------------------------------------------------------
http://usembassy.kiev.ua/infocentral_eng.html
Public Affairs Section, United States Embassy Kyiv
4 Hlybochytska St., Kyiv 04050 Ukraine
(380 44) 490-4026, 490-4090; Fax (380 44) 490-4050
http://usembassy.kiev.ua; info@usembassy.kiev.ua
==============================================================
12. PRESIDENT YUSHCHENKO HOLDS NEWS CONFERENCE
Text from presidential news conference
NEWS CONFERENCE: Ukrainian President Viktor Yushchenko
State-Owned TV UT1, Kiev, Ukraine, in Ukrainian 1005 gmt 7 Oct 05
BBC Monitoring Service, UK, in English, Saturday, Oct 08, 2005
KIEV - Ukrainian President Viktor Yushchenko highlighted the idea of
national unity at a news conference broadcast live by three Ukrainian
channels on 7 October.
He defended the memorandum of understanding he signed with his former
election rival Viktor Yanukovych, saying that he wanted to be the president
of all Ukrainians, not just those who backed him during the Orange
Revolution.
Yushchenko once again explained the reasons for sacking the Tymoshenko
government and repeated that no proof of corruption in his own entourage had
been found. He praised the new cabinet as a professional government without
a selfish political agenda.
Speaking about the law on immunity for local councillors, which he had
signed, Yushchenko said he would contest the law in the Constitutional
Court.
He rejected accusations of slow progress in the Gongadze case and promised
that journalists would not be persecuted in any way in the run-up to the
parliamentary election. Yushchenko also denied the existence of political
repression in Ukraine. He noted that the dialogue with Russia had become
more substantive.
The following is an excerpt from Yushchenko's two-hour news conference
broadcast live by the Ukrainian state-owned television UT1 on 7 October;
subheadings inserted editorially:
[Yushchenko] Esteemed friends, it is a great responsibility and honour for
me to be here with you today and to discuss all the issues that have to do
with the situation inside and outside the country.
I am ready to discuss a broad range of issues today relating to the concepts
of home and foreign policy.
I think we have to pay special attention to the economic, humanitarian and
political fields, as well as to the bloc of foreign relations, which, I
would say, has radically changed over the last seven months, thus, sound
knowledge, enough information and facts are obviously needed now to
understand the direction of this process and where we are standing today in
such an important sphere as foreign policy.
I am stressing its importance because 60 per cent of GDP is formed there.
And depending on which concept or model we will work out - a positive and
beneficial or, on the contrary, a negative one - we will find many answers
to internal processes, including economic and political ones.
CRISIS DEFUSED, BUT CHALLENGES AHEAD
The main message I would like to deliver today is, FIRST of all, that over
the last three months we have managed to make sure that the conflict within
the government [which led to sacking of the Yuliya Tymoshenko cabinet, the
resignation of the secretary of the National Security and Defence Council,
Petro Poroshenko, and the dismissal of first presidential aide Oleksandr
Tretyakov] did not grow into a political conflict.
We stabilized the situation in three weeks' time, formed a new cabinet and
set up tasks, the major part of which remained the same for 2005, even
though the cabinet has to make crucial changes to the economic policy's
mechanisms and to formalize new principles, which [in the past] often did
not translate from declarations into real deeds. This is the first position.
The SECOND position. I believe that we have got a nonpoliticized cabinet.
This is a cabinet of people who know how to stop the trends that have
transpired in our economy over the last seven months.
I will probably comment on this in the context of a question you put, but,
as an economist, I will maintain that these trends are quite dangerous and
the burden they have created is quite serious, affecting both the key
general economic indicators and separate sectors' characteristics.
The THIRD part of challenges, which the current government team is facing
today, is to ensure the complete fulfilment of the humanitarian social
policy declared in the beginning of 2005. We can talk about this at length.
I believe that no political or civil force would have grounds to say today
that weak trends have transpired in the wage or pension payment fields in
the social segment of the [development] blueprint for 2005.
I do believe there is no such political force. Everyone welcomes such social
policy, although it has often been and continues to be now on the verge of
macroeconomic balances [as heard].
At the same time, the trends that transpired in the economy may jeopardize
the fulfilment of certain programmes. To prevent this from happening, we
have to face the third challenge - to fulfil the humanitarian social
indicators, as decreed by the state budget for 2005.
Moreover, today we are talking about creating a national financial reserve
in order to accumulate several billion hryvnyas for the cabinet to deal with
any challenges occurring in any markets, so that we can protect our budget
system, our systems of investments, pensions, wages and so on.
Again, we can talks about this in detail, but I believe that we cannot live
the way we lived before, when the country did not a have even a weekly
supply of petrol, gas, financial resources, grain or sugar and the state
reserves almost ceased to exist. [Passage omitted: repetition]
Now let's begin our conversation.
HIGH EXPECTATIONS OF NEW CABINET
[Correspondent] Mr President, you have almost finished forming the new
cabinet. You are quite optimistic about it. What is this optimism based on?
What is the difference between this team, these individuals and the previous
ones? What changes do you expect them to make in the country?
[Yushchenko] From my own experience, I can say that the same people can
behave in a different way under different circumstances. The key issue the
[former] cabinet had to deal with in the last seven months was not the
cabinet's lack of knowledge or professionalism but the fact that the
cabinet's priorities began shifting from economic and pragmatic towards
political ones. [Passage omitted: more in the same vein.]
I believe that people who are joining the team now have one big advantage -
this is a nonpoliticized, consolidated team, which has harmonious relations
with the security council and the presidential secretariat. I have full
information about the frequency of their meetings, their dialogue and so on.
Therefore, I believe the main lesson they have to learn is to develop a team
spirit, joint intellectual effort and the ability to produce transparent
decisions. On other words, these people have everything needed to change the
existing situation. There are 11 new ministers, which gives me reason to
call this team a new cabinet.
But this is not a matter of a tag - a new cabinet or a seriously reshuffled
old one. I believe this is a cabinet with a new climate. You will witness
transparent decisions and discussions, professional and team-oriented
approach. This is what really matters.
RUSSIAN BLACK SEA FLEET
[Correspondent] Here is my question. Some defence experts say that the
Russian Black Sea Fleet is turning into a businesses structure in
Sevastopol, where they seize more and more facilities in the city, while the
president of Ukraine, as well as the entire government, is simply looking
on.
It is also believed that the Russian authorities are conducting a policy of
genocide towards Ukrainians living in the Russian Federation, where there
is not a single [Ukrainian-language] school or theatre funded by the state
budget.
You, Mr President, also seem just to be sitting and watching this for
months. Should we take this as the continuation of Leonid Danylovych
[Kuchma's] policy, which people called spineless. Thank you.
[Yushchenko] I cannot agree with this, so here is my answer. Over the last
seven months, we have, FIRST of all, changed the status of our bilateral
relations in our dialogue with the Russian Federation. We have formed the
Putin-Yushchenko commission.
SECOND. Russian President Vladimir Putin, whom I sent a congratulatory
birthday message today, and I have agreed to focus the presidents' attention
on seven issues, which will be crucial to Ukrainian-Russian relations over
the next 12-18 months.
I recall that during my first visit to Russia as prime minister I was given
a file that outlined the main 47 problematic issues in bilateral relations,
ranging from customs duty to state border.
There was everything in that folder. But now we decided to focus the
presidents' attention on seven to 10 key issues that can be resolved over a
year and a half.
The [Russian] Black Sea Fleet's temporary stationing [in Ukraine's Crimea]
and the compliance of the basic treaty [on the Russian Black Sea Fleet] and
the seven supplements to the treaty, which defined the format of the fleet's
stationing, was the very first issue.
Which issues pertaining to the basic treaty remain unresolved? The coast
navigation equipment, which includes 182 facilities, has not handed over to
Ukraine, making it blind and deaf when it comes to navigation in the region.
The use of around 120 land plots still remains an issue too. There is also
the issue of improper use, as the Ukrainian side views it, of around 170
facilities. There is a burning issue of the use of radio frequencies and
their transfer to the Ukrainian side. I can go on.
I have just named the four key issues that were triggered by the Russian
Black Sea Fleet stationing on the territory of Ukraine. This is the main
subject that the commission and its subcommittees are going to work on.
You know that 20 days ago we agreed on the commission's agenda, while the
road map for the commission's work will be signed during President Vladimir
Vladimirovich Putin's visit to Ukraine [reportedly in the second half of
October]. This is the answer to your question. [Passage omitted: The cabinet
is to create a body to oversee contacts with Ukrainian Diaspora.]
IMMUNITY FOR LOCAL COUNCILLORS
[Presidential press secretary Iryna Herashchenko] Lots of the notes that we
have received are about deputy immunity. The question is as follows: you
spoke out against deputy immunity, but at the same time signed a law giving
the go-ahead for this. What is the Ukrainian president's stance on deputy
immunity?
[Yushchenko] We have a precedent in Ukraine where people's deputies of
Ukraine enjoy this special status, this immunity. When I conducted my
election campaign, I stated unambiguously that I do not subscribe to this
approach and I will do my best to see it abolished.
In this context, the Supreme Council [parliament] several weeks ago passed a
decision to extend this status to people's deputies of other levels. By the
way, the decision was backed by as many 270 or more MP votes.
To which I said - understanding and accepting parliament's stance on this
issue, I order that an inquiry should be drafted to be submitted to the
Constitutional Court as regards the constitutionality of this provision.
This constitutional inquiry will be submitted very shortly. I am convinced
that [immunity should be abolished] across the board, not selectively for
these or those deputies, but across the board - this is the only solution
that I see to this problem - [changes tack].
We should not have first-class or second-class Ukrainians depending on
whether you are a member of a legislature or not. I am convinced that the
Constitutional Court will give the only right answer to this question. And
this will draw a line under this subject.
In my opinion, this is the shortest path towards a settlement of this
problem. I don't see the prospect of settling this problem via the Supreme
Council hall - for obvious reasons.
NO POLITICAL COERCION
[Passage omitted: obscure question from a journalist about abuse of the
government machinery for partisan purposes]
[Yushchenko] I would like to start by saying that it is my earnest
conviction that from now not a single political future can be built by
issuing ideological instructions or telling someone what to do. If someone
wants to lose an election or suffer political defeat, they should start to
build their party by whip and coercion. They will lose in six months' time.
This is an obvious thing. I am the president of all Ukrainians. I am not the
president of Our Ukraine [pro-Yushchenko party]. I would like to stress that
the idea with which I and most of you stood in Independence Square [during
the Orange Revolution] is something that will not be revised and in which we
believe strongly.
We are convinced that, in order to instill democracy, freedom of speech and
the supremacy of law into this country, one has to pay - with a different
face [referring to his own face disfigured by poisoning during the election
campaign], with relations with partners, with criticism from the press.
It is all worth it because I know that dozens of previous generations wanted
this. Extremes do occur at times because this is apparently the rule of the
pendulum. [Passage omitted: more on pendulum]
ELECTION WILL BE FAIR
If we talk about the use of the government machinery, I give you a personal
instruction. We will respond personally to every such act. I have sent quite
a few telegrams to lots of people - from uniformed ministers to heads of
regional administrations - on how to treat public and political forces and,
most importantly, people.
I pledge that, together with you, we will make the 2006 election a truly
democratic one for the first time.
I have addressed the OSCE when we were arguing about stopping monitoring,
and personally asked them not to stop monitoring Ukraine's compliance with
democratic standards. Be with us. Moreover, we will accept as many observers
as any political force wishes to deploy to ensure that the political
election process is clean.
NO PERSECUTION
On the other hand, dear friends, I would ask you to show civic patience and
dignity when it is said that 18 heads of regional administrations are being
investigated, as are 70-odd heads of district administrations and some 80-90
of their deputies.
I would ask you not to interpret this as political persecution. I know
virtually none of these people, and believe me, I am not really keen on
knowing them.
But I would like to say that if we want to demonstrate the supremacy of law
in this country, everyone should be equal before the law - those who stole
Kryvorizhstal [giant steelworks] and those who stole 4,000 ha of land in
Crimea.
For some reason, these happen to be representatives of the previous
authorities. I understand that this is a coincidence. But I would be
insincere if I said that if this were winked at, you and I would never
believe in the supremacy of law - never ever.
Therefore, there is an easy interpretation - is this responsibility before
the law or is this political persecution? I give you my word - I am ready to
accept any mechanism enabling a journalist to sense the transparency and
purity of these processes at first hand.
I do not rule out that degrading instances both for you and me may happen
somewhere. I am ready to put them right. I am a capable person, believe me.
SEPARATISM
[Herashchenko] There are a lot of questions about the memorandum [of
understanding] signed with the leader of the Party of Regions [Yushchenko's
main presidential rival Viktor Yanukovych]. Does the signing of the
memorandum mean that the vote-riggers have been forgiven?
[Yushchenko] Dear friends, I will start by saying that when we stood in
Independence Square there were days when our boys and girls took food and
warm clothes to the Dynamo stadium for the people brought there [Yanukovych
supporters]. There seemed to be nothing but vodka in those tents.
There was an important slogan in Independence Square - west and east are
together. It was probably then that we realized better than ever before that
a split in Ukraine, the exploitation of an alleged conflict between these
regions, a historical or geographic or linguistic or religious one, found
such a prominent place in political speculation that after Severodonetsk [a
separatist congress in eastern Ukraine].
I think many politicians sensed that we were just one step away from the
creation of a certain autonomous state system in Ukraine, which was at
variance with the constitution. We were several steps away from Ukraine
splitting up. That was because the outsiders were exploiting the topic of
differences. I am convinced that such a policy would rob Ukraine of its
future.
Exploiting it is, first of all, illegal and anticonstitutional and,
therefore, the four criminal cases instituted on charges of separatism will
end up in court.
MEMORANDUM FOR THE SAKE OF NATIONAL UNITY
On the other hand, I am convinced that the political elite should be able to
give an answer on how to accept these challenges. Each nation has been
through tests and trials of varying complexity. What has the elite
demonstrated? As a rule, understanding and an example for society to
emulate.
Two weeks ago, after the government was sacked and great behind-the-scenes
work began to prevent the formation of a new government - and unfortunately
this was not only through the efforts of our opposition, moreover, it did
not come from the opposition - [changes tack].
When efforts began to implement constitutional changes [shifting some power
from the president to the government and parliament] from 1 October and so
on, it was clear to everyone - a final stage of fulfilling a Ukrainian chaos
scenario started.
The first way of ending this was not to allow a political crisis. I called
on the heads of leading parliamentary factions - all but two, the USDPU
[United Social Democratic Party of Ukraine] and the Communists, actually it
was a mistake, I think, I should have called on all of them though reaching
an agreement would have been more difficult and would have required more
time and effort - [changes tack].
There was only one purpose. Seven months are left till the election. We
could live those seven months as if in keeping with a road map,
understanding what we do every day for this country regardless of our
political colours, or we could live in chaos, as was being proposed, without
a government, without a budget, with myths, with recordings, with gossip and
constant scandals - starting from families to international relations.
I chose option one for our colleagues in parliament, friends. For seven
months, if we serve Ukraine, we should work out an action plan that would
give answers to key seven or eight questions wanted by the nation. Is it in
our interest to see this country with a budget? Yes, it is.
Is it in our interest to see the 2006 election being held honestly? Yes, it
is. But it is not only the president who should strive for this. We want
this country to have a law on the president, a law on the government, a law
on the opposition. We talked about this in all squares - I think all of us,
from the left wing of the political spectrum to the right. Why don't we do
this? Let's do this.
Why don't we do Ukraine a favour and pass five WTO-related laws in October,
or rather one law and 14 amendments? It is in our interest - the 8bn dollars
that we would gain from unifying our presence in the WTO [as heard]. This
money isn't just lying around. Is it in our interest? Yes, it is.
Let's look at the SES [Single Economic Space of Russia, Ukraine, Belarus
and Kazakhstan]. The grain to be separated from the chaff for Ukraine is
worth
accepting, isn't it?
It is, regardless of who we are. I can talk about the SES in great detail.
In these three months, I have had to study this model as thoroughly as
no-one else probably. If we see that there is something to it, why can't it
be the subject of a declaration? For the sake of Ukraine's future.
I won't comment on other actions, but I am ashamed to see the topic of
political repression being exploited.
Friends, I lived amid political repression for three years, and every person
that stood next to me up to the seventh circle of relatives was held
accountable by the Kuchma regime. I bear no grudge. I seek no vengeance,
although I'd probably have a moral right - more than anyone else.
I say it is not my profession to persecute anyone. I know that we will win
our political future with our intellect and righteous deeds. But let's sign
a memorandum for this. We signed a basic declaration, which lists all these
issues.
I ask each political force - what's so bad about this document, which has
brought parliament's political elite to the round table? Because three
structures did not sign it? It is their choice, friends. It is their choice.
There are political games.
But let's start with what was written in the slogan in Independence Square.
The administration that will answer the question on how to consolidate east
and west will probably be the first administration to build a fundamental,
promising and consolidated Ukrainian policy for years to come. It is not
easy.
Rebuke could be showered on Yushchenko - why has he signed it with
Yanukovych, who had not yet congratulated him on his election. I am with the
13m Ukrainians who saw a different choice.
That's what I am talking about. It must have been on more than a dozen
occasions that I have reminded myself and you about the apt expression by
the president and general, [Charles] de Gaulle, who said, you know, the
opposition is always difficult.
Sometimes I am reluctant to talk to it. But I will always talk to it. Why?
Because the opposition is also France. We talked about this in Independence
Square.
Why are you crucifying me now, calling it capitulation? It is a conversation
between the authorities and the opposition. These relations should be
formal, friends, not secret.
VOTE-RIGGING
As regards vote-rigging, friends. My comment will be very simple. [FIRST]
More than 4,000 vote-rigging cases have been instituted so far, it seems.
The lion's share naturally targets scapegoats. Why did a teacher in a
village or a doctor in a town or district centre resort to vote-rigging with
absentee ballots?
Someone has run away for a few weeks or months. Someone is being searched
for. But we all understand very well that these are not the people who are
de facto responsible for starting the phenomenon called vote-rigging. Those
indeed were scapegoats.
I am telling you now, without anticipating an answer - society should have a
think. Perhaps now we should talk of vote-rigging in the context of those
who organized that vote-rigging. Because raising the issue of vote-rigging
by the other side [Yanukovych] is proof of vote-rigging in itself. That's
something already.
SECOND, are organizers and simple participants in this process. I am
convinced that the winning authorities will realize - because it is
characteristic of the winner - that an overwhelming majority of citizens
passively involved in vote-rigging and the whole nation have learnt a
lesson.
For the first time in 14 years someone has been held responsible for
vote-rigging. For 14 years we talked about rigging, but not a single case
was opened. Now we have several thousand cases. So this is good food for
thought.
I am not talking about the responsibility of the people who organized the
work of the transit server processing election reports, which was housed not
by the CEC [Central Electoral Commission]. These people will be brought to
justice. I have instructed law-enforcement bodies to this effect.
And other people who were operators of this process should also be held
responsible. But is it really worth trying thousands of doctors and
teachers? That's the question. I am convinced that the strong should be
humane and forgiving. That's the essence of strength, not revenge.
Nobel Prize
[Herashchenko] Ms Yanina Sokolovskaya, Izvestiya, please.
[Correspondent, in Russian] Viktor Andriyovych, did you count on winning the
Nobel [Peace] Prize and how did you intend to spend it? And who do you think
could benefit from fuelling the scandal around your son Andriy and what do
you advise Andriy in this situation?
[Yushchenko] You know, I am pleased that my name was listed among the
candidates for the prize and I regard this as a great achievement.
The only comment I can make is that the prize committee always acts wisely,
and therefore I welcome this decision. It was a great honour for Ukraine
that one of its citizens was nominated for this unique global prize.
SPOTLIGHT ON SON ANDRIY
As regards my children, it is very difficult to answer such questions being
a president. I think I am a decent father and I have five great kids. I am
doing well there.
Now I am trying to find words that would enable me to weave my way around
three trees [i.e. be as diplomatic as possible]. I know that everyone
understands a father's feelings, and I will try not to exploit them.
I will say this. Good people, everything that has been written and said
about my son is far from the truth. I don't want him to break in his life.
He should get used to the idea that he is a president's son and every minute
of his life should demonstrate perhaps not what most of his peers do.
That's the requirement for him. I lend him my hand every day and say - son,
expectations of you are one-hundred times as high. Both your mind and body
should withstand this.
A lot of words and deeds have been invented and hurt me. On some things I
should be frank and say that I have drawn conclusions as a father. I thank
you for being fair.
I would really like you to get to know my son more closely, his life and his
thoughts. I have nothing to conceal as regards his history. He is a good
lad.
[Herashchenko] I think that shortly we will come up with a way of arranging
an informal meeting with Viktor Andriyovych's children and dispelling many
fantasies on this subject. We'll have journalists, not paparazzi, and let
them ask all the questions they have.
[Yushchenko] I will support this in any form, friends. I will support this
in any form.
[Herashchenko] We will surely come up with something.
[Yushchenko] I just want you to learn the aspects that I would be unwilling
to comment on afterwards. I am sick and tired of this, friends.
[Passage omitted: Yushchenko promises to fight corruption]
JOURNALISTS NOT TO BE PERSECUTED
[Herashchenko] There are many questions about the law on elections, which is
believed to restrict journalists' work in a way. Mr President, are you ready
to initiate a moratorium on checks of the mass media [by the authorities] in
the run-up to the parliamentary election [in March 2006.]
[Yushchenko] Esteemed friends, I am ready to do so. I think that by the time
of the parliamentary election, I will meet with leading Ukrainian media
representatives, politicians, leaders of [parliamentary] factions more than
once in order to work out a policy that will grant immunity, in the best
meaning of this word, to journalists and mass media to ensure their
independence during the parliamentary election campaign.
I believe a number of mechanisms should be found [to attain this]. But I do
not rule out that abolishing all kinds of checks during the parliamentary
election could be one of the mechanisms. I would like to stress that this is
just one of the mechanisms. I am not sure that this mechanism will do. We
will think it over. If you have any ideas on the matter, I am ready to
consider them.
GONGADZE CASE
[Correspondent] The day before yesterday, the Parliamentary Assembly of the
Council of Europe [PACE] adopted a resolution, which negatively assessed the
investigation of the [slain journalist Heorhiy] Gongadze case in Ukraine.
The person who actively lobbied for this point of view [MP Serhiy Holovatyy]
was appointed justice minister the following day.
Can you explain whether you share the PACE's negative assessment of the
process of investigation? Can you also say whether you, as chief commander
of all law-enforcement forces in Ukraine, can make sure that this murder is
investigated in accordance with resolutions of the Council of Europe? Thank
you.
[Yushchenko] To be honest with you, I am surprised to hear a reproach from a
journalist when it comes to the Gongadze case. If you know what you are
talking about, then you should be aware that in January when I became the
president of this country, there was nothing on the Gongadze case. Do you
know this?
[Correspondent] Viktor Andriyovych, this was a question, not a reproach.
[Yushchenko, interrupting her] You must have known this. I gave guarantees
regarding this case, which no other president gave, to resume the
investigation and to obtain testimonies which people were afraid of giving
for four years. I put my name on the line. I hid these people.
If need be, I will probably describe what was done to obtain what we have
today. In seven months, investigation bodies established the names of the
killers, collected evidence, carried out a forensic test, finalized the case
and opened it for familiarization a few weeks ago.
I know more could have been done. You know that we were pumping water
out of ponds in winter, looking for personal effects, although we could have
waited until summer. But I said I would not do this.
I said go ahead and put pumps and search for everything - telephones,
jackets, boots, socks and so on - to keep up a dynamic and active
investigation. I would say that the first four months [earlier this year]
were the most active stage of the investigation.
I believe the Prosecutor-General's Office withstood a lot of political
pressure in connection with this case.
The main question remains unanswered - who ordered the murder. In my
view, there is certain progress in this stage of the investigation too.
At least the world and Ukraine know who the key witness is [Gen Oleksiy
Pukach, who fled Ukraine] and who can shed light on the matter.
There are certain problems, including international ones, connected with
this part of the investigation. I will be thankful to all international
forces which will help Ukraine to carry out this stage of the investigation
quickly and effectively.
I would like to separately ask politicians not to mention the murder in
vain. This is a matter to be resolved by professionals exclusively. Stop
mentioning Gongadze's name in vain.
Third. I have appointed Serhiy Holovatyy as justice minister. This person
can hardly be accused of prejudice when it comes to this and other criminal
cases. I believe that given his authority, his status and his abilities,
Ukraine will make considerable progress in the investigation. Thank you.
[Passage omitted: Yushchenko promises more visits to the regions, says some
governors may be replaced, talks about free economic zones and the need to
attract foreign investment.]
RELATIONS WITH FORMER ALLIES
[Herashchenko] Are you ready to take the hand extended to you by Yuliya
Tymoshenko?
[Yushchenko] You know, I did not pull my hand away from Tymoshenko,
Poroshenko, [former State Secretary Oleksandr] Zinchenko or anyone else.
Nor am I going to do this.
They are my friends, and I regard them as outstanding and important people,
but I ask them to have the courage to draw conclusions, to be honest and
courageous. I am convinced that they should take a pragmatic and honest
stance in the name of Ukraine. Then everything will be plain and clear. I am
convinced that those who have taken offence will undergo cleansing. I am
convinced.
An answer to the question what political democratic forces should do in
Ukraine. My view is this: they must be consolidated. Going to foreign
countries to drum up support is not becoming in terms of national interests.
It is not becoming - no matter who does this. It is painful and it hurts me.
One has to be consistent and honest. There is no tragedy. There is even no
drama there.
After Independence Square, we got a second chance to breathe with both
lungs. I'd say there is no need to be so sad or upset about the mistakes
made if there is an opportunity to correct them effectively. This is the
most optimistic thing about the problems that have emerged in recent months
and weeks.
My task was to preserve the team and the team spirit. I have no problems in
relations with anyone. I have not changed my attitude, but my demand remains
basic and fundamental.
The authorities should be united, should work as one team and with the same
team spirit, should not be embroiled in intrigue, should not take
alternative decisions in forests which are at odds with state objectives.
They should work for the benefit of Ukraine and Ukrainian democracy. I am
sure that this is the key theme that can unite even those people who have
left the team for known reasons and who are living emotionally, it seems to
me.
[Passage omitted: Yushchenko says the future of the UT1 state television is
being discussed and will be decided soon.]
NO PROOF OF HIGH-LEVEL CORRUPTION
[Herashchenko] Mr President, have you asked your former colleagues to
provide documents proving allegations of corruption in the top echelons of
power and are you ready to hold a special meeting on this subject - to
confirm or deny the allegations?
[Yushchenko] When we gathered at the secretariat and when I criticized the
performance of 14 departments - [changes tack] I showed them what the
president's working day starts with, with what material, and how it ends
with material on the government policy in individual industries.
I have always wanted to see the presidential secretariat as the most
intellectual institute that formulates the logic of numerous economic,
humanitarian and political processes.
It was painful for me to see the structure [of the secretariat] being formed
for as long as seven months, and new people taking over their jobs at a very
slow pace. I saw many people barred from the secretariat, especially young
ones, although we had the personal records of more than 400 people with
three or four university degrees, and so on and so forth.
When I received the statement from Zinchenko [about corruption in
Yushchenko's entourage], Oleksandr Vasylyovych and I agreed that I could
not accept it until he provided proof - at least of several of the things he
talked about.
Unfortunately, no such proof has been provided so far. When I appointed a
commission [to investigate Zinchenko's corruption claims], I appealed to
journalists and all politicians - if you have any material on corruption
activities by members of the government, the presidential staff or the staff
of the NDSC [National Defence and Security Council], put it on that
commission's desk, whoever you trust.
If you have a special opinion, put it on my desk - about people in power in
Ukraine. But please bear one thing in mind - don't stick the corruption
label until this is proven.
The commission has finished its work. Point one. The SBU [Security Service
of Ukraine], the Prosecutor-General's Office and the Ministry of Internal
Affairs have not received a single fact to confirm corruption activities by
the people in question.
Things have remained which need to be examined by legal bodies. I have
asked legal bodies to actively consider actions by other officials which
pertain
to the subject of possible abuse of office. That's another, a different
subject, but it is important as well. Let it be examined.
As regards the meeting, I am planning to invite Tymoshenko, Zinchenko,
Poroshenko, the people who have spoken on the circumstances or instances of
corruption, to a meeting of the National Security and Defence Council. We
will hold this meeting in the presence of the head of the Supreme Council,
the prosecutor-general, the security service and the new prime minister.
[Passage omitted: Yushchenko repeats his promises of ensuring freedom of
speech during the election campaign.]
STEELWORKS AUCTION
[Herashchenko] Will the privatization of Kryvorizhstal be publicized?
[Yushchenko] It will be, friends. I would like to invite you to the auction.
You will set up a row of TV cameras and will prove by your presence that all
the conditions and bidding procedures have been abided by. I think this will
be the first privatization to have been held on such a level of publicity
and openness.
At the present time we are holding a very active dialogue with prospective
buyers. Two weeks ago five bids for the plant seemed to have been finalized.
I think the bidding for the plant will be very productive.
MEDIA LICENCE DISPUTES
[Correspondent, in Russian] Ukrayina TV company. Maryna Klovska. Viktor
Andriyovych, my question is about freedom of speech and pressure on the mass
media.
The day before yesterday our colleagues from the NTN TV channel said that
the National Council for TV and Radio Broadcasting had been obstructing the
work of the channel instead of helping it, and had been trying to deprive
the channel of the right to broadcast to 75 Ukrainian cities.
NTN chiefs link the situation with the origin of the channel's founders -
Donetsk. Our Ukrayina TV company is not having the best of relationships
with the council, either. Unscheduled audits are being conducted at the
channel and the staff are nervous.
Do you think that the national council is a punitive tool in the hands of
the authorities, or should it simply regulate our work and even help us?
Thank you.
[Passage omitted: indistinct passage with more questions from the audience;
Yushchenko says he is planning to meet with the council.]
[Yushchenko] Friends, I would like us to look at this subject from a
somewhat different angle. What do you think? Ukraine's journalistic world
has gathered here. How come 270 [broadcasting] licences are held by one
company and 180 licences by another. The whole metre range is held by a
third set of hands.
If we talk of contests [for frequencies], they never took place. We are
talking about free media, about some competition, about a media market where
everyone should be equal and where licences are not issued in dozens to
order. I know and you can tell me that it took you company years to win two
or three licences by contest, but no contest was organized for you.
Wouldn't you protest at a procedure where sackfuls [of licences] are issued
without any contest into the same hands, preferably of those in power -
access to one-third of Ukraine's media sector. Is this not media genocide?
Can we live with that?
You know, friends, I call on you to do one thing. In order to emerge from
this conflict with mutual understanding, we should have an anchor - around
which values we are going to settle this issue.
[Passage omitted: urges morals on TV]
I am against any revision, which would in a day or two trigger rumours of a
redistribution of interests between two teams. I would like to give you my
word that starting from the next meeting with the [National TV and Radio
Broadcasting] Council, I will stick to the only position - the rule of law
in all procedural issues that have to do with existing media activities. We
all have to side with the law. Only by observing the law can we resolve all
the problems.
[Passage omitted: recalls history, promises fair treatment to everyone,
talks about efforts to contain consumer prices, about shortages of sugar,
monetary policy] -30-
[Edited by The Action Ukraine Report (AUR) Monitoring Service]
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