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Action Ukraine Report

                     "THE ACTION UKRAINE REPORT - AUR"
                                   An International Newsletter
                                    The Latest, Up-To-Date
                In-Depth Ukrainian News, Analysis, and Commentary

                "Ukrainian History, Culture, Arts, Business, Religion,
    Sports, Government, and Politics, in Ukraine and Around the World"

"THE ACTION UKRAINE REPORT - AUR" - Number 587
Mr. E. Morgan Williams, Publisher and Editor
Washington, D.C., Kyiv, Ukraine, THURSDAY, October 20, 2005

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

1. MADE IN UKRAINE: FURNITURE AND HOME FURNISHINGS FAIR
              Ukraine: Your new sourcing partner in the heart of old Europe
                       October 27-29, 2005, Dnipropetrovsk, Ukraine
The Action Ukraine Report (AUR)
Kyiv, Ukraine, Thursday, October 20, 2005

2.     UKRAINE 3000 FOUNDATION AND SINGER OLEKSANDR
     PONOMARIOV TO HOLD FUNDRAISING CHARITABLE BALL
   IN KYIV FOR HOSPITAL TO HOSPITAL PROGRAM ON NOV 20
Press office of the President of Ukraine Victor Yushchenko
Kyiv, Ukraine, Friday, October 14, 2005

3.                                ELUSIVE MEMBERSHIP
         Ukraine's accession to the World Trade Organisation (WTO).
BRIEFING: By Paulius Kuncinas in Kyiv,
Oxford Business Group, Ukraine: Volume 6
London, United Kingdom, Tuesday, 18 October 2005

4.                UKRAINIAN PRESIDENT UPBEAT ON WTO,
                                  FREE TRADE WITH EU
Interfax-Ukraine news agency, Kiev, in Russian, 20 Oct 05
BBC Monitoring Service, UK, in English, Oct 20, 2005

5.         RUSSIA DRAGS BEHIND UKRAINE IN WTO TALKS
Kommersant, Moscow, Russia, Monday, Oct 17, 2005

6.FOREIGN MINISTER OPTIMISTIC ON UKRAINE'S WTO CHANCES
Interfax-Ukraine news agency, Kiev, in Russian 0627 gmt 19 Oct 05
BBC Monitoring Service,UK, in English, Wed, Oct 19, 2005

7.              WHILE YUSHCHENKO PULLS FOR WTO BY 2006
                         RADA TUGS IN OTHER DIRECTION
Interfax-Ukraine, Kyiv, Ukraine, Tues, October 18, 2005

8. YUSHCHENKO PROMISES TO PROCEED WITH STEEL MILL SALE
By Stefan Wagstyl, East Europe Editor
Financial Times, London, UK, Wed, October 19 2005

9. NATO SECY GENL: DOOR OPEN TO UKRAINE IF REFORMS MADE
Associated Press (AP), Kiev, Ukraine, Wed, October 19, 2005

10.        UKRAINIAN PARLIAMENT BANS POULTRY IMPORTS
Interfax-Ukraine news agency, Kiev, in Russian, 20 Oct 05
BBC Monitoring Service, UK, in English, Thu, Oct 20, 2005

11.         CANADA DESIRES TO STRENGTHEN TRADE WITH
                                    RUSSIA AND UKRAINE
Canadian Embassy, Moscow, Russia, Wednesday, October 19, 2005

12.  KIEV ON SHAKY PATH TOWARD WESTERN INTEGRATION
By Andrew Tully, Radio Free Europe/Radio Liberty (RFE/RL)
The Baltic Times, News from Estonia, Latvia & Lithuania
Riga, Latvia, Wednesday, October 19, 2005

13.    SEPTEMBER CRISIS OVER, BUT STRATEGIC PROBLEMS
                                REMAIN FOR YUSHCHENKO
By Taras Kuzio, Eurasia Daily Monitor
Vol 2, Issue 192, The Jamestown Foundation
Washington, D.C., Monday, October 17, 2005

14.  AFTER THE ORANGE REVOLUTION: THE U.S. AND UKRAINE
The Washington Group (TWG) with David Kramer and Taras Kuzio
By Taras Mazyar and Marta Matselioukh
U.S.-Ukraine Foundation (USUF)
Washington, D.C., Wednesday, October 19, 2005

15.                 EUROPEAN REFORMERS MUST BE BOLD
OPINION & ANALYSIS: By Rodney Leach
Financial Times, London, UK, Tues, October 18 2005

16.        YUSHCHENKO: LONDON INTERVIEW TRANSCRIPT
       Edited transcript of the interview with president Victor Yushchenko
of Ukraine carried out at the Financial Times in London on October 18th 2005
INTERVIEW: with Ukraine's President Victor Yushchenko
Financial Times, London, Wed, October 19 2005

17.                         LIBERTY FOR LATIN AMERICA
              How to Undo Five Hundred Years of State Oppression
          Five principles of oppression; corporatism, state mercantilism,
            privilege, bottom-up wealth redistribution and political law
NEW BOOK: By Alvaro Vargas Llosa
The Independent Institute, Oakland, CA, Fall, 2005

18.  KYIV TO SELL 4.5 HECTARES OF LAND FOR NEW US EMBASSY
Interfax-Ukraine, Kyiv, Ukraine, Monday, October 17, 2005

19.          UKRAINIAN TOP BUSINESSMEN CALL FOR END TO
      REPRIVATIZATION, MEET WITH PRESIDENT YUSHCHENKO
                    Rinat Akhmetov: 'I prefer to have my tea at home.'
INTERVIEW:  With Rinat Akhmetov, Kostyantyn Zhevaho,
Hryhoriy Surkis, Eduard Shyfrin and Viktor Pinchuk
By Serhiy Morda, Ukrayinska Pravda web site, Kiev, in Russian 18 Oct 05
BBC Monitoring Service, UK, in English, Thu, Oct 20, 2005
======================================================
1. MADE IN UKRAINE: FURNITURE AND HOME FURNISHINGS FAIR
          Ukraine: Your new sourcing partner in the heart of old Europe
                    October 27-29, 2005, Dnipropetrovsk, Ukraine

The Action Ukraine Report (AUR)
Kyiv, Ukraine, Thursday, October 20, 2005

KYIV - The Made in Ukraine: Furniture and Home Furnishings Fair is the
first event in the "Made in Ukraine" series organized by USAID/BIZPRO
and the American Chamber of Commerce [AMCHAM] in Ukraine . The
Fair will be October 27-29, 2005 in Dnipropetrovsk, Ukraine

You are cordially invited to meet the finest producers of furniture and
home furnishings that Ukraine has to offer, gathered in one spot, and pre-
selected according to your purchasing needs
                                              UKRAINE
YOUR NEW SOURCING PARTNER IN THE HEART OF OLD EUROPE
With a long tradition of craftsmanship and a highly-skilled workforce,
Ukraine produces a stunning variety of unique furniture and home furnishings
for the modern home.

This unique event, organized by the American Chamber of Commerce in
Ukraine, the Ukrainian Association of Furniture Manufacturers, and USAID|
BIZPRO, promises a hassle-free introduction to the highest quality and most
reliable Ukrainian manufacturers.
                        SUPPLIERS MATCHED TO YOUR NEEDS
Let us do the groundwork for you! The organizers will identify producers
who match your exact buying requests and will forward you the companies'
profiles and product lists in advance of the event, saving you time and
guesswork. At the fair, private meetings will be arranged for you with your
selected suppliers.
    REGISTERED BUYERS ENJOY THE FOLLOWING SERVICES
                                        FREE OF CHARGE
[1]  Supplier information matched to your buying requests,
   sent in advance of your arrival
[2]  Interpretation services during private meetings with suppliers
[3]  Local transportation services in the city of Dnipropetrovsk
[4]  Assistance in arranging travel to Ukraine and booking local
  accommodation
[5]  Seminars on the furniture industry in Ukraine, including shipping
   and customs procedures
                         ABOUT 'MADE IN UKRAINE' FAIRS
Made in Ukraine: Furniture and Home Furnishings Fair is the first event
in the "Made in Ukraine" series organized by USAID/BIZPRO
(http://www.bizpro.ua) and the American Chamber of Commerce in
Ukraine (http://www.amcham.ua)

Future "Made in Ukraine" fairs will focus on trade and investment
opportunities in other high-potential industry sectors, such as construction
materials and textiles  and apparel.

For more information on the "Made in Ukraine" series please click here.
http://www.madeinukrainefairs.com/.  Also contact Courtney Zukoski,
Victoria Yakovleva, 380 44 490 3350, Fax 380 55 590 5801,
MadeInUkraine@dai.kiev.ua.

For more information on trade and investment opportunities in Ukraine
please visit www.UkraineTradeInvest.com.  -30-
====================================================
2.   UKRAINE 3000 FOUNDATION AND SINGER OLEKSANDR
   PONOMARIOV TO HOLD FUNDRAISING CHARITABLE BALL
 IN KYIV FOR HOSPITAL TO HOSPITAL PROGRAM ON NOV 20

Press office of the President of Ukraine Victor Yushchenko
Kyiv, Ukraine, Friday, October 14, 2005

KYIV - At a joint press conference, organized by the Ukraine 3000
International Charitable Foundation and singer Oleksandr Ponomariov,
Andriy Miroshnichenko, Counselor to the Head [Kateryna Yushchenko]
of the Ukraine 3000 Supervisory Council, and Vira Pavlyuk, Hospital to
Hospital Medical Program Director, informed journalists that a charitable
ball would be held in Ukraine on Sunday, November 20.

Before the press conference, Kateryna Yushchenko, Head of the Ukraine
3000 Supervisory Council, and Oleksandr Ponomariov signed an agreement
on charitable cooperation. They agreed that all funds raised at the ball
would be sent to regional hospitals.

Kateryna Yushchenko sincerely thanked Ponomariov for this charitable
gesture at a ceremony to sign the agreement.

"On behalf of our foundation, I would like to assure you that each hryvnya
raised at the ball will be spent to save ill newborn babies in Ukraine. You
demonstrate the way talented artists can work for the welfare of their
community. This is a wonderful example of social commitment," said the
First Lady.

Kateryna Yushchenko added that she hoped his example would encourage
other famous artists to serve their community.

Ukraine 3000 launched the Hospital to Hospital medical program in May
2005 to improve the public health system for the children.

It was elaborated to find foreign partners for twenty-five children's
hospitals in different regions of Ukraine, promote the exchange of modern
technologies, and help Ukrainian physicians practice in the best clinics of
the world.  -30-  [The Action Ukraine Report Monitoring Service]
--------------------------------------------------------------------------------------------
LINK: http://www.president.gov.ua/en/news/data/5_3508.html
====================================================
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====================================================
3.                                  ELUSIVE MEMBERSHIP
         Ukraine's accession to the World Trade Organisation (WTO).

BRIEFING: By Paulius Kuncinas in Kyiv,
Oxford Business Group, Ukraine: Volume 6
London, United Kingdom, Tuesday, 18 October 2005

Now that a new government has been formed and all the vacancies have been
filled, the Ukrainian government's immediate agenda looks to be a full one.

The privatisation of the giant steel plant Kryvorizhstal is likely to
dominate the headlines in upcoming weeks, yet the main government target,
analysts say, is likely to be Ukraine's accession to the World Trade
Organisation (WTO).

Although Ukraine has been seeking membership of the global trading
organisation for over a decade, it continues to be elusive. The announcement
on October 17 by Director General of the WTO Pascal Lami that Ukraine had no
chance to join the WTO in 2005 is a setback for President Viktor Yushchenko,
who was meeting the UK Prime Minister early this week to shore up European
support for Ukraine's entry.

The new government was expected to speed up this stalled process following
the Orange revolution, as WTO membership is widely seen as a way to reach
the ultimate goal of European Union integration.

Indeed, after coming out strongly in favour of the Orange revolution, the EU
has insisted on the conclusion of the WTO process before it can start
negotiating a free-trade agreement.

Yet as well as representing a stepping stone towards the EU, WTO membership
holds other benefits for Ukraine, analysts say. Membership can be used as a
shield against anti-dumping charges, should help to consolidate economic
reforms and improve the business environment.

Unlike EU accession, the WTO process is a lot less demanding of governments
in terms of institutional reforms. There are also in theory no universal
membership criteria, with each new member negotiating a specific accession
protocol.

Nevertheless, the WTO forces members to respect market based rules such as
transparency, predictability and non-discrimination.

Moreover, analysts say, WTO accession would be something President Viktor
Yushchenko could trumpet during the upcoming election campaign, somewhat
counterbalancing the failure to get accession talks with the EU. Membership
would also improve Ukraine's image in the eyes of many foreign investors,
analysts add.

Yet, while the new government has been quite upbeat about its chances of
joining the trading organisation this year, most observers are now sceptical
about its ability to push the necessary legislation through parliament and
complete all the bi-lateral negotiations by year-end.

Parliament has yet to adopt the 14 legal amendments that are necessary to
complete the membership qualification process. Further delays are expected
in approving these, risking derailment of the accession timetable.

While Ukraine's legislative body, Verkhovna Rada, is poised to consider five
bills required for WTO entry, the declaration on October 14 by Viktor
Yanukovich that his party would vote against WTO legislation seemed to dash
hopes of any political consensus until after the March elections next year.

According to one diplomatic source interviewed by OBG this week, "it is not
in the interest of Yanukovich, who opposed Yushchenko in last year's
election, to see the government succeed in this area. Moreover, there are
genuine business interests stacked against the WTO."

Even before the political crisis, some bills got stuck in parliament, with a
number of political factions opposed to opening Ukraine's markets to greater
foreign competition in vulnerable areas such as agriculture.

At the moment, farmers, pharmacists, alcohol traders, producers of
machinery, chemicals and metallurgists are protected by high import tariffs
and have strong lobbying links in the legislative chamber.

In particular, sceptics cite the issue of restrictions on exports to the EU
of scrap metal and leather materials and on the import of raw sugar as the
stickiest points, over which WTO accession could be derailed.

Another thorny issue is trade relations with Russia. Highlighting this,
former Minister of economy Serhi Teriokhin criticised the government for
the lack of a coherent line on this all-important issue and questioned its
decision to synchronise Ukraine's accession with Russia's WTO
negotiations.

Anatoly Kinakh, the new Secretary of the National Security and Defence
Council, defended the government's line when he told the local media in
mid-October that "Intensified mutually beneficial co-operation with Russia
does not contradict Ukraine's intention to join the WTO before the end of
2005."

Kinakh told the local press that Ukraine and Russia must coordinate their
actions and should not impede each other's work while joining the WTO and
should try to avoid artificial customs.

The Russian factor, according to analysts, is quite crucial in Ukraine's WTO
talks, given that Russia continues to be Ukraine's biggest trading partner,
with 18% of exports and 41% of imports last year.

In light of Ukraine's already strained relationship with its significant
neighbour, and rising energy prices, analyst say it is important to ensure
that the WTO process does not harm this vital trade relationship any
further.

Russian policy makers have expressed a concern that a more lenient tariff
regime negotiated between Ukraine and other WTO members would result in
high volumes of re-imported commodities throughout Ukraine into Russia.

Amounting perhaps to $5bn per annum, these re-imports of commodities such as
alcohol, timber and metals would jeopardise the creation of a customs union
with Russia.

While a recent rapprochement between the Ukrainian Prime Minister Yuriy
Yekhanurov and Russian President Vladimir Putin may help to defuse the
tension between the two countries, it is clearly not in Russia's interest,
observers say, to clear the way for Ukraine's WTO accession, which is
ultimately designed to get it closer to the EU.

More importantly, Russia, which also finds itself on the WTO accession
track, would ideally like to join before Ukraine to impose its own trade
conditions for entering the coveted trade club.

As Ukraine started WTO accession much earlier than Russia, it stood a
good chance of entering ahead of it - most believed it would enter in 2005.

Now the consensus is that time has run out, unless a high level political
decision is made on an international level to speed up the accession process
as a concession to Ukraine.

In the absence of such an intervention, all odds seem to be stacked against
Ukraine joining the WTO this year.  -30-
-------------------------------------------------------------------------------------------
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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====================================================
4.                 UKRAINIAN PRESIDENT UPBEAT ON WTO,
                                     FREE TRADE WITH EU

Interfax-Ukraine news agency, Kiev, in Russian, 20 Oct 05
BBC Monitoring Service, UK, in English, Oct 20, 2005

KIEV - Ukrainian President Viktor Yushchenko has said that in the first
quarter of 2006 Ukraine will start talks on creating a free trade zone with
the European Union. Yushchenko was addressing the sixth plenary session
of the consultative council for foreign investment in Ukraine in Kiev on
Thursday [20 October].

"We expect to put this paragraph into practice starting from the end of the
first quarter next year," Yushchenko said. He recalled that Ukraine chose
the course for European integration, and that in the past seven months more
has been done to achieve this than in the past 10 years.

That is why Ukraine has "a road map according to which Ukraine will receive
the status of a market economy and join the WTO by the end of this year,
after which talks will start on a visa free regime with the European Union
and on the creation of a free trade zone with the EU".

"Such is Ukraine's road map, which will make it possible to adapt a major
part of our economic space to European standards according to which you
are accustomed to work," Yushchenko said, addressing the foreign investors
attending the session.

Yushchenko said that the foreign investors' participation in this session
shows "how important Ukraine is in terms of interests, in particular, in
terms of economic interests".  -30-
====================================================
5.          RUSSIA DRAGS BEHIND UKRAINE IN WTO TALKS

Kommersant, Moscow, Russia, Monday, Oct 17, 2005

MOSCOW - Another round of bilateral and multilateral negotiations about the
WTO membership for Russia started in Geneva October 14, 2005 to last for a
week, till October 21, 2005.

Maxim Medvedkov, who is in charge of the trade negotiations department at
the RF Economic Development and Trade Ministry and who heads Russia's
delegation in WTO talks, doesn't forecast prompt success. Meanwhile, Ukraine
might enter the WTO before Russia.

Unlike Russia, Ukraine has agreed with nearly all countries willing to
canvass the terms for goods/service provision and has to finish only some
bilateral negotiations and hold the last sitting of the multiparty working
group.

Nevertheless, WTO Director-General Pascal Lamy doubts Ukraine (and Russia
the more so) will be able to complete the talks before the ministers'
conference slated for Hong Kong December 13-19.

For Russia, the danger of the finish effort of Ukraine is obvious. In case
of success in the WTO undertaking, a new member, Ukraine is bound to begin
respective bilateral negotiations with Russia, the more so that it is one of
its biggest commercial partners and both countries have serious trading
disputes (Russia, for instance, has restricted pipe and sugar import from
Ukraine).

The last resort is Ukrainian Supreme Rada, where some parties, including the
Party of Regions headed by Viktor Yanukovich, advocate not to rush to the
WTO until this move is backed up by all national producers in the country.

One way or another, Russia's negotiators have more problems to tackle than
their Ukrainian counterparts. It is yet unclear when the working group's
talks on system issues (including the copyright protection) near the end.
Medvedkov expects them to complete by summer at best.  -30-
---------------------------------------------------------------------------------------------
LINK: by  www.kommersant.com
=====================================================
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=====================================================
6. FOREIGN MINISTER OPTIMISTIC ON UKRAINE'S WTO CHANCES

Interfax-Ukraine news agency, Kiev, in Russian 0627 gmt 19 Oct 05
BBC Monitoring Service,UK, in English, Wed, Oct 19, 2005

KIEV - Ukrainian Foreign Minister Borys Tarasyuk disagrees with WTO
Director-General Pascal Lamy who said that Ukraine would not join the WTO
by the end of this year. Tarasyuk said that Ukraine has "a serious chance"
to join the organization by December.

"I believe that this reaction on the part of the WTO head was not quite
adequate. The economics minister and me believe that Ukraine has a serious
chance of meeting all requirements to join the WTO by December," Tarasyuk
said on his way from London together with President Viktor Yushchenko.

"We said this week that the Supreme Council [parliament] would hear draft
laws to bring our laws into line with WTO requirements," Tarasyuk said.

"We are expecting a breakthrough in talks with the USA on the one hand and
Australia on the other. This will open our way to the WTO," Tarasyuk said.

Tarasyuk expressed hope that an agreement on free access of goods and
services to the Ukrainian and US markets would be signed in a few weeks
during Prime Minister Yuriy Yekhanurov's visit to the USA. "We hope that
this will be done during the visit, and both parties are working hard in
this direction," Tarasyuk said.

"Let me say that during my Washington visit we addressed these issues - both
with the US Administration and the Congress. I heard quite positive signals
during my meetings," Tarasyuk said. This does not mean that the meetings
"have finally opened the way, but they were a step towards this," Tarasyuk
said.

Tarasyuk said that Australia is a major state among the ten remaining with
which Ukraine has not signed the accords yet. "There are problems with some
other states but they are not that serious," Tarasyuk said.

Tarasyuk added that Australia's "maximalist demand on quotas for raw sugar
export to Ukraine" is a major problem. "It is difficult for us to accept
this demand because this is the issue of our sugar industry and we cannot
agree with this. So we will continue to look for a compromise," Tarasyuk
said.  -30-  [The Action Ukraine Report (AUR) Monitoring Service]
====================================================
7.            WHILE YUSHCHENKO PULLS FOR WTO BY 2006
                         RADA TUGS IN OTHER DIRECTION

Interfax-Ukraine, Kyiv, Ukraine, Tues, October 18, 2005

LONDON - Ukrainian President Viktor Yushchenko said that Ukraine
is living through an effective stage of the process of entering the World
Trade Organization and through the mobilization of its efforts, the country
can enter the WTO by the end of 2005.

The Ukrainian president told this to the press in London on Tuesday.
He noted that Ukraine has made a good start in the process of joining the
WTO in the second quarter of 2005. The president stressed the importance of
accession to the organization as WTO membership will bring Ukraine from $6
billion to $8 billion of commodity turnover and will strengthen Ukraine's
position on global markets, where antidumping measures are taken against
Ukraine.

"There is actually no market where Ukraine is not being forced out. If we
don't change this trend, I am sure Ukraine will be at loss," the president
added.

At the same time, Ukraine's Verkhovna Rada has turned down a bill that
foresees lowering export duties for cattle and animal products.

The bill was among a package of bills necessary for Ukraine to join the WTO.
Moreover, the MPs did not back the proposal to hold another reading of the
bill. Thus, the bill is considered to be refused.

The bill foresaw setting zero duty for exporting cattle. The duty rate for
animal products (cattle leathers) was to be set up at 15 percent. The rates
were supposed to come into force from January 2006. Beginning with January
1 2007, the rate was supposed to go down one point per year to 10 percent.
=====================================================
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=====================================================
8. YUSHCHENKO PROMISES TO PROCEED WITH STEEL MILL SALE

By Stefan Wagstyl, East Europe Editor
Financial Times, London, UK, Wed, October 19 2005

LONDON - Viktor Yushchenko, president of Ukraine, yesterday pledged to
go ahead with next week's $2bn planned sale of Kryvorizhstal, the country's
flagship steel mill, despite a last-ditch parliamentary bid to block it.

Speaking during a visit to the Financial Times, Mr Yushchenko insisted
yesterday's parliamentary vote was only a political resolution with no legal
force. "Yes, of course this is a bad signal [to investors]. But it has a
purely political meaning, nothing more."

While Mr Yushchenko was in London the authorities in Kiev announced that
three bidders had put down $200m (Euro 170m, £115m) in deposits to
participate in Monday's auction.

They were Mittal Steel, the world's largest steel group, Luxembourg-based
Arcelor, bidding jointly with Industrial Union of Donbass, a leading
Ukrainian group, and LCC Smart Group, a Ukrainian company controlled by
Vadim Novinsky, an entrepreneur linked to the Russian steel magnate Alisher
Usmanov.

Mr Yushchenko's government took control of Kryvorizhstal after the courts
invalidated its privatisation last year under former president Leonid
Kuchma, who surrendered power to Mr Yushchenko late last year in the Orange
Revolution.

The aggrieved buyers - Viktor Pinchuk and Rinat Akhmetov, two businessmen
linked to Mr Kuchma - have warned potential investors of possible legal
action.

Mr Yushchenko is trying to reach a compromise with the business community
following last month's dismissal as prime minister of Yulia Tymoshenko, who
had sought a radical review of Kuchma-era privatisations.

Mr Yushchenko promised to focus on a few cases, which he would seek to
settle, not through the courts but through "mutual agreement" with the
owners. He indicated the beneficiaries of untransparent privatisations could
be asked to make extra payments.
"We're saying 'you didn't steal the factories but you did get them at an
inadequate price and this must be corrected'."

Seeking to reassure investors, Mr Yushchenko said he had developed a
dialogue with business leaders at meetings over the past month. "The
government has passed away from the politics of confrontation to the
politics of mutual understanding with regard to the problem of
privatisation."

Mr Yushchenko, who was in London to receive the Chatham House Prize,
an award for services to international relations, also predicted that the
Orange Revolution would inspire people in other parts of the former Soviet
Union.

"Millions of people have begun to think differently about freedom and about
democracy, in the whole terrain of the former Soviet Union."  -30-
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9. NATO SECY GENL: DOOR OPEN TO UKRAINE IF REFORMS MADE

Associated Press (AP), Kiev, Ukraine, Wed, October 19, 2005

KIEV - NATO's doors will remain open for Ukraine if the former Soviet
republic undertakes a set of defense, political and economic reforms, the
alliance's secretary general said Wednesday.

Jaap de Hoop Scheffer stopped short, however, of giving a timeline for
Ukraine's entry into the alliance.

"I cannot talk ... about weeks, months or years," de Hoop Scheffer told
reporters after a meeting with Ukrainian Foreign Minister Borys Tarasiuk and
Defense Minister Anatoly Gritsenko.

After coming to power in January, President Viktor Yushchenko made
membership in both NATO and the European Union key goals for Ukraine.
Recently, Yushchenko has said that talks on possible NATO membership could
begin next year, and many analysts have predicted that the country could
receive an invitation during NATO's 2008 summit. Top Ukrainian defense
officials have suggested it would take Ukraine three years to meet NATO's
requirements.

The Western alliance has said that Ukraine must first reduce and modernize
its bloated military, prove its democratic credentials and fight corruption.
De Hoop Scheffer has also said that the next year's "free and fair
parliamentary vote will be considered a milestone."

"Reforms are essential, and they have to be done," he said.

NATO has stepped up cooperation with Ukraine since last year's Orange
Revolution, and de Hoop Scheffer said the alliance was ready to assist
Ukraine "wherever and whenever necessary" to implement the reforms.
Gritsenko said Ukraine would continue its role in NATO peacekeeping efforts
and would extend the mandate for its battalion in Serbia's southern province
of Kosovo.

He also said Ukraine was ready to offer its transport planes for ferrying
NATO troops to peacekeeping missions in Afghanistan and Sudan.
De Hoop Scheffer was to meet later with Yushchenko and participate in a
meeting of Ukraine's top security body - the National Security and Defense
Council.

Anatoly Kinakh, the council's head, said the meeting would feature
discussion on adjusting Ukrainian laws to meet NATO and E.U. standards.
Opinion polls indicate that many Ukrainians, particularly in
Russian-speaking eastern and southern regions, remain suspicious of NATO,
their old Cold War foe.

Gritsenko tried Wednesday to dispel some of what he described as "Soviet-era
stereotypes" about the alliance, saying "NATO will not deploy nuclear
weapons in Ukraine."

Gritsenko also said that eventual NATO membership wouldn't mean the
withdrawal of Russia's Black Sea Fleet from the southern Ukrainian port of
Sevastopol, where it has permission to stay until at least 2017.

Russia remains wary about the possible appearance of another NATO member
country on its western border. Moscow is also worried that its military
technology will fall into NATO's hands. Virtually all of Ukraine's weapons
and equipment are of Soviet-era designs.

"NATO membership does not mean the closure of the Ukrainian military
industry. Quite to the contrary, it will bring more jobs," Gritsenko said.
De Hoop Scheffer said a delegation from the North Atlantic Council, a top
NATO decision-making body, would visit several regions in Ukraine's east
and south "to explain people what NATO is not."  -30-
=====================================================
10.     UKRAINIAN PARLIAMENT BANS POULTRY IMPORTS

Interfax-Ukraine news agency, Kiev, in Russian, 20 Oct 05
BBC Monitoring Service, UK, in English, Thu, Oct 20, 2005

KIEV -  The Supreme Council [parliament] has imposed a six-month
moratorium on imports of poultry meat and products into Ukraine.
The bill was backed by 229 out of 374 members of parliament
registered in the session hall.

In accordance with the law, a moratorium on all poultry imports into
Ukraine has been introduced for six months.

The Cabinet of Ministers has been tasked with finding resources to
expand and develop the domestic poultry industry. The law enters
into force once it is published [in official newspapers]. -30-
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FOOTNOTE:  This new legislation could turn out to be a really big
problem for Ukraine as the extremely high tariff on U.S. poultry
imports to Ukraine which has shut down all such imports is already
a big trade and political issue between the U.S. and Ukraine.
Poulty used to be largest dollar export item from the U.S.  -30-
=====================================================
11.       CANADA DESIRES TO STRENGTHEN TRADE WITH
                                 RUSSIA AND UKRAINE

Canadian Embassy, Moscow, Russia, Wednesday, October 19, 2005

MOSCOW - International Trade Minister Jim Peterson visited Moscow,
Russia, and Kyiv, Ukraine, from October 11 to 15, to emphasize Canada's
desire to strengthen trade with the two countries. Russia and Ukraine both
have tremendous economic potential, and Minister Peterson took advantage of
the visit to discuss ways of strengthening commercial ties and improving the
business and investment environment for Canadian companies active in the
region.

In Moscow, Minister Peterson announced that Canada will step up efforts to
bring the Canada-Russia bilateral negotiations on Russia's accession to the
World Trade Organization (WTO) to a successful conclusion before the end of
2005.

"We should, we must and we will work toward an agreement on Russia's
accession to the WTO by mid-December," said Minister Peterson. "We have
asked negotiators to aggressively work together in areas where the most work
remains to be done, including market access."

He also met with key Russian economic and trade ministers and attended the
inaugural meeting of the Canada-Russia Business Council (CRBC).
Canada-Russia bilateral trade has almost tripled over the past two years,
with Canadian exports poised to exceed $600 million this year and bilateral
trade expected to surpass $2 billion. Exports to Russia grew by 24% in 2004
and shot up an additional 47% in the first seven months of 2005, with most
gains in machinery and food products.

Canada wants to help build Russia's economic future, including supporting
Russia's accession to the WTO. Bilateral talks on Russia's accession to the
WTO continued in Moscow, resulting in substantive progress. Securing market
access for Canadian agricultural products remains one of the outstanding
issues in these negotiations.

Similar climate, natural resources, agricultural land and geography make
Canada and Russia complementary partners in a number of key sectors. These
include energy, mining and metallurgy, transportation, and information and
communications technology.

In Kyiv, Minister Peterson met with Ukrainian Prime Minister Yury Yekhanurov
as well as Economy Minister Arseniy Yatsenyuk and Foreign Affairs Minister
Borys Tarasyuk. He also participated in a meeting of the Canadian Business
Club.

Bilateral trade with Ukraine was $218 million in 2004. Total Canadian
exports to Ukraine were $57 million in 2004, up 83% since 2002. Exports from
January to July of this year are up an additional 23%. Canada's primary
exports to Ukraine include agricultural machinery, vehicles, textiles,
pharmaceuticals and seafood.

There is significant market potential for Canadian goods and services in the
sectors of agriculture, oil and gas, construction, and information and
communications. The long term potential of Ukraine as an emerging business
partner for Canada is considerable, and the time for Canada to position
itself in the market is now, while Ukraine is in the initial stages of
deregulating its economy and laying the foundation for a new economic
structure with international partners.

Positive business developments with Ukraine will be of keen interest to the
1.2 million strong Canadian-Ukrainian diaspora, who are proud that Canada
has always been a staunch supporter of Ukrainian independence and democracy.
For more information, go to www.moscow.gc.ca and www.kyiv.gc.ca.
=====================================================
                Send in a letter-to-the-editor today. Let us hear from you.
=====================================================
12.  KIEV ON SHAKY PATH TOWARD WESTERN INTEGRATION

By Andrew Tully, Radio Free Europe/Radio Liberty (RFE/RL)
The Baltic Times, News from Estonia, Latvia & Lithuania
Riga, Latvia, Wednesday, October 19, 2005

Ukraine’s new prime minister, Yury Yekhanurov, has described his government
as “technocratic” – motivated, he says, not by ideology but by a desire to
improve the country’s politics and economy. He recently visited Moscow and
Brussels in an effort to do just that by securing a place for Ukraine in the
World Trade Organization and eventually in the European Union and NATO.

The key to Yekhanurov’s success in integrating Ukraine into the world
economy will be how he deals with Russia. Until its independence in 1991,
Ukraine had long been controlled by Moscow, and as recently as last year's
presidential election, Russian President Vladimir Putin had worked to help
ensure the victory of his favored candidate, Viktor Yanukovich.

That effort failed when Viktor Yushchenko eventually prevailed following the
Orange Revolution. Last month, however, Yushchenko fired Yuliya Tymoshenko
as prime minister, even though it was Tymoshenko who led the protests that
brought Yushchenko to power. Some now question the strength of Yushchenko’s
presidency.

Once he replaced Tymoshenko, Yekhanurov’s first order of business was to
travel to Moscow to improve trade relations with Russia, then to Brussels
for talks with officials of the European Union and NATO.

After holding talks with his Russian counterpart, Mikhail Fradkov, in
Moscow, he told reporters, “There have been no meetings between the prime
ministers [of Ukraine and Russia] this year. This is not normal, and now we
should work more intensively to catch up on what was left undone, and also
look objectively at those problems that we have now.”

The Russian media tended to portray Yekhanurov’s Moscow visit as a
significant step backward for an economically independent Ukraine, according
to Georgeta Pourchot, who studies the region for the Center for Strategic
and International Studies, a nonpartisan policy-research center in
Washington.

Pourchot said some Russians and much of the Russian news media believe none
of the country’s East European neighbors can enjoy good political and
economic relations with Moscow and integrate with the West at the same time.
Therefore, she said, they view Yekhanurov as something of a supplicant in
Moscow.

“If there is a new government in place that says, ‘Oh, we’re interested in
European integration or NATO integration,’ some circles in Moscow
automatically see that as mutually exclusive with a good relationship with
Russia,” Pourchot said. “These [Russian] newspapers – right now they’re all
gloating that Yekhanurov came to Moscow two days after the [Ukrainian]
cabinet was confirmed, and [they conclude that] this definitely proves that
Ukraine now is moving toward Russia.”

Pourchot said that assessment may, in fact, contain some truth. She points
to the barter system under which Ukraine gets Russian oil in exchange for
Moscow’s use of Ukrainian pipelines to ship Russian fuel to the West.
Pourchot said that with the price of fuel rising, Russia is threatening to
make Ukraine pay the market price for what it gets from Russia, something
Ukraine can’t afford.

James Millar, a professor of economics and international affairs at George
Washington University in Washington, agrees that the Russian government
believes it has this leverage, but he calls it a miscalculation. He said
that this arrangement puts Ukraine on equal footing with Russia on fuel and
that Kiev has plenty of leverage of its own.

“In a sense, both Russia and Ukraine are dependent on each other, at least
for the immediate future, and Europe depends upon both of them for oil and
gas because Ukraine provides a major source of the pipelines that carry gas
and oil to Europe, and Russia needs that revenue [from Europe]. So there is
something to negotiate [laughs], and it will be interesting to see how it
comes out,” Millar said.

Meanwhile, Ukraine has its own internal impediments to integrating with the
West. They include the need to enact economic reforms and limit bureaucratic
encumbrances on the economy. Yekhanurov said such legislation can be
passed by next month, but Pourchot said that expectation is far too
optimistic, given Ukraine’s current political state.

And Pourchot said membership in NATO and the EU – and especially in the
WTO – are even further beyond the horizon.

“I doubt [the Ukrainians] are going to do much before the next elections
next spring. Are they likely to integrate faster rather than slower? Is it
going to take them a long time? Yes, it will take them a long time. I don't
see Ukraine getting even near Brussels [NATO or WTO membership] in very
serious terms before 2010, if not later,” Pourchot said.

Millar said he can understand Pourchot’s pessimism, but he said he is
encouraged by Yushchenko's decisiveness in replacing Tymoshenko, and
expects quicker progress. However, he isn't making any predictions as to
when Ukraine might join the EU or the WTO.

“I’d say that when Yushchenko decided to make a deal with his former
opponents, many people felt, ‘Well, that's the end of things [the Orange
Revolution].’ But that hasn’t turned out to be the case. That turned out to
be a political decision that has really maintained him fairly well.

I’m fairly positive [about Yushchenko's leadership]. I think Ukraine's
playing its cards pretty well. But Russia is likely to overplay their cards,
and I think that will not work to their benefit. It’ll work to Ukraine's
benefit,” Millar said.

Millar said if Yushchenko and Yekhanurov maintain their focus, Ukraine
should integrate steadily – and, one day, thoroughly – into the world
economy.  -30- [The Action Ukraine Report (AUR) Monitoring Service]
----------------------------------------------------------------------------------------
LINK: http://www.baltictimes.com/art.php?art_id=13853
=====================================================
          Power Corrupts and Absolute Power Corrupts Absolutely.
=====================================================
13.    SEPTEMBER CRISIS OVER, BUT STRATEGIC PROBLEMS
                               REMAIN FOR YUSHCHENKO

By Taras Kuzio, Eurasia Daily Monitor
Vol 2, Issue 192, The Jamestown Foundation
Washington, D.C., Monday, October 17, 2005

President Viktor Yushchenko has declared that the political crisis in
Ukraine is over. The turmoil began on September 5 with allegations of
corruption within his inner circle (Channel 5 TV, October 6).  Parliamentary
Speaker Volodymyr Lytvyn, a close ally of Yushchenko's, added that there are
no longer grounds to speak about a "political crisis" in Ukraine (Ukrayinska
pravda, October 11).

The reprieve will be short-lived, as the constitutional reforms coming into
effect in January will make it imperative for Yushchenko to obtain a
parliamentary majority after the March 2006 parliamentary elections.

Current polls show Yushchenko's People's Union-Our Ukraine (NSNU), the
Yulia Tymoshenko bloc, and Regions of Ukraine all poll about 20% each (Kyiv
International Institute Sociology, September poll). Three other parties
likely to enter parliament -- the Communists, Socialists, and Lytvyn's
People's Party -- all poll less than 10% each. With just 5% support, Lytvyn
may become the power broker for creating a parliamentary majority
(Ukrayinska pravda, October 13).

These low levels of support across the board mean that Yushchenko will need
to compromise with the other two large blocs of votes – the Tymoshenko bloc
or Viktor Yanukovych's Regions of Ukraine. But a compromise with either
political force will bring problems.

Tymoshenko has always demanded a high-profile position in exchange for her
cooperation, either prime minister or speaker of parliament. But after
Tymoshenko's poor economic performance as prime minister this year,
Yushchenko is unlikely to offer her this position again.

After widespread dismay over the memorandum signed between Yushchenko and
Yanukovych in September, Yushchenko will have even more problems cutting a
deal with his former rival for the presidency. A 2006 NSNU-Regions of
Ukraine parliamentary majority would be seen as a betrayal of the Orange
Revolution, reform prospects, and Ukraine's Euro-Atlantic integration.

In the short term, Yushchenko needed to end the immediate crisis if he is to
improve his public standing and ratings in the six months remaining before
the elections.  After eight months of drifting, elite infighting, wasted
opportunities, and too-frequent travels abroad, Yushchenko needs to
re-assert his authority.

The crisis gave Yushchenko an opportunity to clean out his government before
his first year as president ends. Yushchenko's son, Andriy, embroiled in
scandal earlier this year, is no longer seen in a $120,000 BMW "on loan"
from a member of Yushchenko's entourage, although he still has his $30,000
cell phone.

Yushchenko's only major strategic mistake during the crisis was the deal
with Yanukovych. Almost half (47.2%) of Ukrainians supported Tymoshenko's
firing and the subsequent political house-cleaning.  Yet two-thirds of the
new government headed by Yuriy Yekhanurov are holdovers from Tymoshenko,
including three Socialist ministers.

Gone are Serhiy Teriokhin (minister of economics) and Mykola Tomenko (first
deputy prime minister for the humanities) from the Reforms and Order Party.
Reforms and Order party leader Viktor Pynzenyk remains finance minister, but
he may lose his party post at an upcoming party conference.

Serhiy Holovatiy replaced Roman Zvarych as justice minister. Unlike Zvarych,
whose educational background led to a scandal (see EDM, May 4), Holovatiy is
a well-known legal expert who was justice minister in the mid-1990s and
headed the Ukrainian Legal Foundation. Holovatiy was expelled from the
Tymoshenko faction after he voted for Yekhanurov as prime minister.

In return for his agreeing to be justice minister, Holovatiy demanded the
removal of Prosecutor Sviatoslav Piskun, who was duly fired on October 14.
Interior Minister Lutsenko has complained that his Ministry found it
impossible to work with the prosecutor's office, which was blocking
investigations at the local level (Ukrayinska pravda, October 13). The new
team at Justice and the Prosecutor's office may spur progress toward
resolving Kuchma-era crimes.

Yushchenko also sacrificed several family members, businessmen who helped
financed his campaign and the Orange Revolution. Yushchenko fired transport
minister Yevhen Chervonenko, his bodyguard in the elections; Davyd Zhvannia,
minister of emergency situations; and Petro Poroshenko, secretary of the
National Security and Defense Council (NRBO). Both Zhvannia and Poroshenko
are godfathers to Yushchenko's children.

The removal of Poroshenko and other businessmen helps repair Yushchenko's
image of not relying on oligarchs, as had former President Leonid Kuchma.
Poroshenko in particular has very low popularity ratings on a par with
Kuchma. Nevertheless, Yushchenko has always defended Poroshenko and other
now-removed businessmen from allegations of corruption. Even if these
allegations are not proven, Yushchenko would be making a strategic blunder
by allowing Poroshenko and other former entourage members to join the NSNU
2006 election list.

In other personnel decisions, Oleksandr Tretiakov's position as first
adviser to Yushchenko has been eliminated. Tretiakov, whose business
interests lie in the energy sector, had earned a reputation for controlling
access to Yushchenko.

Anatoly Kinakh, first deputy prime minister under Tymoshenko, is now NRBO
secretary. Kinakh, whose Party of Industrialists and Entrepreneurs polls
barely 1.1%, is a poor choice for this position. Under Kuchma, NRBO
secretaries were experienced in national security affairs, but Kinakh --
like Poroshenko before him -- has no background in this field. One of
Kinakh's first policy steps was to raise the possibility of Ukraine and
Russia jointly integrating into the WTO, a position welcomed by Russia
(Ukrayinska pravda, October 10).

Three key ministers have kept their jobs for now. Defense Minister Anatoly
Hrytsenko and Foreign Minister Borys Tarasyuk are both staunchly
pro-Western. Interior Minister Yuriy Lutsenko is currently purging his
corrupt ministry.

Yushchenko survived the September political crisis, but still-bigger
challenges lie ahead: winning the 2006 elections and taking control of
parliament.   -30-  [The Action Ukraine Report Monitoring Service]
=====================================================
14. AFTER THE ORANGE REVOLUTION: THE U.S. AND UKRAINE
       The Washington Group (TWG) with David Kramer and Taras Kuzio

By Taras Mazyar and Marta Matselioukh
U.S.-Ukraine Foundation (USUF)
Washington, D.C., Wednesday, October 19, 2005

WASHINGTON - On Friday, October 14, The Washington Group (TWG),
in conjunction with the Johns Hopkins University School of Advanced
International Studies (SAIS), hosted an "After the Orange Revolution: the
U.S. and Ukraine" presentation.

The speakers included David Kramer, Deputy Assistant Secretary for European
and Eurasian Affairs at the U.S. Department of State, and Taras Kuzio,
visiting professor at The George Washington University.  The event was held
at 7:00 p.m. at SAIS in Washington, DC.

Moderated by Orest Deychakiwsky, Staff Advisor at  the U.S. Helsinki
Commission, the panelists assessed the contemporary situation in Ukraine,
analyzed the effects of the Orange Revolution, and commented on the
direction of U.S.-Ukraine relations for the near future.

As the evening's first panelist, Kramer highlighted the importance of the
Orange Revolution, Ukraine's continued democratization, and its integration
into Euro-Atlantic structures.

Kramer explained that "The Orange Revolution has radically transformed the
political dynamics in Ukraine. And it also had and still has significant
ramifications for the whole region.

All of us, not least the Ukrainian people, have a stake in Ukraine's
continuing democratization and success, the development a market economy
and rule of law and integration into global economic institutions and the
Euro-Atlantic community."

Kramer remarked on his most recent trip to Ukraine with Anthony Wayne,
the Assistant Secretary of State for Economic and Business Affairs.

During the visit, the U.S. delegation met with Ukraine's government
officials, including the Prime-Minister Yuriy Yekhanurov, Presidential
Secretary Oleh Rybachuk, Foreign Minister Borys Tarasyuk, Secretary of
National Security and Defence Council of Ukraine Anatoliy Kinakh, and the
Finance and Deputy Economic ministers.

Meetings were also held with former Prime Ministers Tymoshenko and
Yanukovych, former State Secretary Zinchenko and Verkhovna Rada (Ukraine's
parliament) deputies from a number of different factions.

According to Kramer, during their meetings with Ukraine's officials, the
U.S. delegation delivered a consistent message that the United States
continues to support Ukraine's reform efforts and Euro-Atlantic aspirations.

"For our part, the United States' part, we stay ready to help support
development of democracy, to help in anticorruption efforts and forward
economic reforms. We'll cooperate closely with the Ukrainian government
across a wide spectrum of issues.

The joint statement that the two presidents, President Bush and President
Yushchenko, signed in April focuses on concrete areas of our cooperation
such as promoting democracy and freedom, fighting terrorism, supporting
Ukraine's NATO aspirations and combating weapons proliferation and promoting
economic reform.

We also pledge to cooperate in fighting organized crime, trafficking in
persons and other issues such as HIV/AIDS. We certainly have a full agenda
with the Ukrainians," announced Kramer.

The Deputy Assistant Secretary pointed out that it is also necessary to
remember that Ukraine has made significant progress since this past January.
"The media operate more freely, respect for civil rights has improved and
the court has become more independent", stated Kramer.

Commenting on the recent Ukrainian political turbulence, Kramer said that
"no country has made the transition from communism to democracy and market
economy without ups and downs.  So, we need to have realistic expectations
and to keep helping to steer Ukraine in the right direction.

We [the U.S.] also said that there is a very urgent need to regain the
momentum on vital economic reforms and to redouble efforts to combat
corruption."  During meetings with Ukraine's officials, the U.S. side also
stressed the need to set side personal animosities, and to cooperate on
issues that are vital for Ukraine's future.

Following Kramer's presentation, Kuzio analyzed the recent events in
Ukraine, the public reaction to them, as well as the overall trends in
contemporary Ukrainian politics.

According to Kuzio, it is incorrect to assess the recent crisis in Ukraine
from two maximalist viewpoints - to either ignore it, or to emotionally
exaggerate that the Orange Revolution has been betrayed.

Ukraine's politics is also too complicated to blame only one side (usually
Tymoshenko) for creating the crisis.  Blame is to be shared between Yulia
Tymoshenko and Viktor Yushchenko.

EIGHT positive developments are currently taking place in Ukraine since the
Orange revolution, explained Kuzio.

FIRST, although the new government is a mismatch of various political
factions, the new guard, unlike its Kuchma-era predecessor, is not pursuing
violent means against those who oppose it.
SECOND, the Orange Revolution has empowered young people and reinforced
civil society.
THIRD, there has been a great increase in media freedom.
FOURTH, law enforcement is being brought under democratic control and
corruption attacked.
FIFTH, according to Kuzio, there is a positive trend in that Ukraine is
moving away from Eurasia's and the CIS's super-presidential system to a
European, Central-European system.
"Of the 27 post-communist states which have undergone democratic transition
since 1991, the most successful have been those with parliamentary systems
in Central Europe, not a presidential system. Ukraine is moving in its
reforms towards the Central-European, Baltic model. And that's a good
thing," said Kuzio.
SIXTH, Kuzio continued to point out that the political spectrum of Ukraine
is radically changing, with the Centrist camp in an  even worse mess than
that of the Orange coalition.  The Communists are on the decline.
SEVENTH, corruption is beig dealt with, but not as much as one would have
hoped. And finally
EIGHTH, Russia and Ukraine's paths are diverging.

But, there are also areas to criticize. Overall, Kuzio believes that
President Yuschenko has traveled abroad too much, and the Ukrainian diaspora
in the United States should not have encouraged his most recent trip to
America.

Instead, Yushchenko should have focused more on Ukraine's domestic political
crisis and getting his candidate for prime minister through parliament in
the first attempt.  Also, signing the recent memorandum with former Prime
Minister Yanukovych was a strategic mistake.

Both Kramer and Kuzio agreed that the upcoming March 2006 Ukrainian
parliamentary elections are crucial for Ukraine's future. Because of
Constitutional reforms, the next parliament will be extended by one year,
until 2011.

"During that time basically Ukraine's fate is decided in terms of NATO, WTO
and the EU. That's why Yushchenko has to work hard for the next few months,"
said Kuzio.

A question and answer period with the audience followed the discussion.
Questions were asked about corruption in Ukraine, Ukraine's perspective
membership in the WTO and the EU, Ukraine's treatment of the country's
Jewish community, the problem of Ukraine's graduation from the Jackson-Vanik
amendment, and the media situation in Ukraine were of special interest.

With regard to the Jackson-Vanik amendment, both speakers confirmed that the
Ukrainian government has made significant progress in this area throughout
the years, and that the U.S. Government supports the graduation of Ukraine
from Jackson-Vanik.

Taking into account the positive achievements of the Orange Revolution, the
speakers were generally positive about the medium-term prospects and
possibilities for Ukraine's future.

However, they expressed that the future will depend on the success of
Ukraine's government policy and economic reforms which have been slowed
recently and request the attention of President Yushchenko.

With almost every seat in the SAIS Rome Auditorium occupied, the event was
very well attended.  Among the attendees were Steven Pifer, former U.S.
Ambassador to Ukraine, Marcus Micheli,  Senior Ukraine Desk Officer at the
U.S. Department of State, and Eugene Fishel, Acting Division Chief at the
Bureau of Intelligence and Research of the State Department.  A reception
followed the event.  -30-
=====================================================
15.                EUROPEAN REFORMERS MUST BE BOLD

OPINION & ANALYSIS: By Rodney Leach
Financial Times, London, UK, Tues, October 18 2005

Britain's presidency of the European Union started with a fanfare. Tony
Blair, prime minister, told the Commons he wanted to change the EU
radically.

He talked about "getting rid of" the common agricultural policy. He warned
the European parliament: "The people are blowing the trumpets round the city
walls. Are we listening?"

The answer is - apparently not. So far very little has come of Britain's
presidency. Indeed, the EU has repeatedly demonstrated that it is still
heading in the wrong direction. The drive towards deeper integration
continues unchecked.

Over the summer the Commission started, and promptly lost, an unnecessary
trade war against China. The City of London, Britain's most vibrant - but
also most vulnerable - business community, has increasingly come into the
sights of Brussels.

Many in the City fear the eventual creation of a European version of the
US's Securities and Exchange Commission as the culmination of the
Lamfalussy process, which is centralising regulation via committees of
national regulators. This process, already encroaching on the City's
traditional adaptability and rapid response times, raises the spectre of
driving the more mobile parts of the financial industry abroad.

There are two things the EU must do if it is to save itself and earn the
respect of the people. The first is to embrace the painful economic reforms
needed to succeed in the 21st century. The second is to abandon the historic
drive to "ever closer union" - the real cause of the French and Dutch No
votes on the constitution.

So far EU leaders show no sign of having learnt anything from these defeats.
Although the Brussels machine fell into disarray for a few weeks, the elites
soon regrouped around the dangerous strategy of simply ignoring the public's
verdict.

The constitution proposed the creation of a European Defence Agency, the end
of the veto on asylum issues, the appointment of a president of the
eurogroup of finance ministers and a substantial increase in EU powers over
home affairs and the judicial system. All these have been implemented
regardless of the constitution's rejection.

Other parts, such as voting modifications, cannot be enacted without treaty
change. But there is already widespread discussion about revising the
existing treaties in 2007. Between these revisions and administrative
"mission creep", virtually all the objectives of the defeated constitution
could be attained without a popular mandate.

It is not only the democratic challenge that Europe is failing.
Globalisation has brought economic choices into sharp relief. On the one
hand there is the 21st century information-based network, led by the US,
co-operating with China and India, those massive new industrial entrants to
international production - an alliance of low cost labour and advanced
country service skills.

On the other hand there is the EU, with its "social dimension", obliged to
rely increasingly on subsidies and trade barriers to protect, rather than
earn, its way of life. Unless it reverses direction Europe is heading for
what the French Institute for International Affairs calls the "exit ramp of
history".

This week will see the launch of Open Europe, a UK think-tank that aims to
set out a detailed programme of radical reform. It has commissioned leading
economists to examine the potential benefits of removing the EU's trade
barriers and reforming the CAP.

Their report shows that free trade is not just good for business: it is also
a progressive policy.

Trade barriers hit the poorest in society hardest, because they spend more
of their income on food and clothing - the goods on which the EU places the
highest tariffs.

If Europe's trade barriers were brought down, the poorest tenth of people in
Britain would see their disposable income rise proportionately six times
more than the richest tenth.

Developing countries would benefit even more than Europe. On average poorer
countries currently face higher trade barriers when they export to the EU.
So bringing down barriers would yield greatest benefits for developing
countries, particularly those in Africa.

Counter-intuitively, the report finds that France could benefit more than
Britain from CAP reform. The countries that plough the most resources into
agriculture have potential to realise the largest gains by redirecting these
funds into more profitable uses.

Epoch-changing ideas need political champions and reformist governments have
been far too timid for far too long.

The UK, preferably with others but if necessary alone, should refuse to
agree the EU budget unless there is clear progress on market liberalisation,
including agricultural reform. We must also use our influence to open up the
policymaking process.

The "Article 133 Committee", which leads EU trade policy, operates in an
absurdly secretive way, making it impossible to uncover the backstage
bartering or obstructive behaviour of member states.

Two wars of ideas, then, are simmering within the EU - the clash between the
liberal, devolved, open policies favoured by Britain and the centralising
social market economics still clung to by others; and the deepening divide
between the public and the elites. On both fronts the crunch is coming - the
EU must change or fail.  -30-  [The Action Ukraine Report (AUR)]
--------------------------------------------------------------------------------------------
The writer is a director of Jardine Matheson and chairman of Open Europe
=====================================================
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=====================================================
16.       YUSHCHENKO: LONDON INTERVIEW TRANSCRIPT
      Edited transcript of the interview with president Victor Yushchenko
of Ukraine carried out at the Financial Times in London on October 18th 2005

INTERVIEW: with Ukraine's President Victor Yushchenko
Financial Times, London, Wed, October 19 2005

FT: Could you begin by telling us about what you've achieved on this visit
to London, bearing in mind the British presidency of the EU and the
forthcoming EU-Ukraine summit in Kiev on December 1?

VY: Great Britain with its foreign policy, like Ukraine with its foreign
policy, today are developing new policies, new directions. These are
countries which have brought their positions closer to one another and have
much greater mutual understanding than a year ago.

For us, it's important that ties with Great Britain in many questions and on
many issues are developing in a significant way and getting closer. Our
starting position is that Ukraine's new foreign policy (developed since the
Orange Revolution) accords with the interests of many countries including
those of Great Britain.

Our strategic goal is integration into the EU, into the European
institutions, and for this we have to travel a long path both in terms of
bilateral relations and also relations with the EU.

The subject of our negotiations (this week with British officials) was the
question of achieving market economy status and we feel that we are quite
close to achieving this. A lot has been done towards achieving this
worthwhile aim.

A lot of work has been done at the expert level. Ukraine has given the EU
final information which was requested and that information from Ukraine was
accepted without further questions being asked.

This was information about those reform measures that we have to take.
Issues of price control and issues of bankruptcy and other questions which
made the possibility of achieving market economy status more difficult. I
think that this has worked well. We've done very well on both sides. This
was the issue of our discussion yesterday with the experts.

The second issue was moving towards Ukraine's membership of the WTO.
We have been involved with this issue, working on this issue since the
spring.

Today we have a feeling that about 60 per cent of this road we have
travelled.

Work is being done on bilateral protocols about mutual access to markets of
goods and services. About 30, 36, 37 such protocols have been signed, only
ten protocols are left. We offered to discuss (the issues). The problem here
is the question of signing protocols with certain countries.

We passed this information on to the British prime minister and we also made
our position clear about concrete questions about the problems with the
signing of these protocols.

We also talked about the next step which we're waiting for after getting
membership of WTO. This is the beginning of negotiations with the EU about
forming a free trade zone.

In parallel we're talking about the question of a liberalisation of the visa
regime. In April Ukraine eliminated visas for EU citizens and we think it
would be logical if the EU softens the visa position towards such categories
of people from the Ukraine as journalists, students, business people who
have western partners, and cultural workers...dynamic people in society who
can bring a new style into politics. We have the impression that with the EU
we have a mutual understanding on this question.

We spoke (with British officials) about the action plan of Ukraine towards
the EU, which is a three-year plan. We talked about the summit which will
take place on December 1 between Ukraine and European Union where we are
putting forward as a joint goal to draw conclusions on our action plan for
this year...That's the sort of question which was discussed with prime
minister Blair.

FT: A question of great interest to our business readers in particular is
privatisation. We have heard today that parliament voted against the
privatisation of Kryvorizhstal. Will you go ahead with this anyway? Are you
worried about the bad signal the vote gives to potential investors?

VY: Yes of course this is a bad signal which has purely a political meaning,
nothing more... It was just a decision, it's just a vote and so it's not a
legal document which can be used either by the government or the state
property fund in its action on the privatisation of this company.

Today the state property fund has already made a statement to this effect
which is that it doesn't change the timetable of all the work connected with
the reprivatisation of Kryvorizhstal.

FT: What would be your attitude to other possible reprivatisations?

VY: We've had a meeting with many different business leaders over the past
30 days including a big meeting on Friday. I think that was the final
meeting of the series of meetings that we were having as a dialogue with
business. It was a meeting of big business with (representatives of) about
25 leading economic structures.

I didn't hear any disagreements in any of the meetings with the view that
the privatisations over the past few years, particularly specific
high-profile exercises.. with the view that there was very little that was
in keeping with the laws...and therefore (with the view that it was
necessary) to re-examine the privatisation of some specific enterprises,
considering the circumstances of their privatisation, and acting (on the
basis of ) mutual agreements (and of) some sort of peace treaty.

I felt that business understands this. It understands its social
responsibilities. They want to be honest owners and they don't want to be
owners with people going behind their backs saying 'you stole this factory'.
And we're saying 'you didn't steal the factories but did get them at an
inadequate price and this must be corrected'.

The government has passed from politics of confrontation to a politics of
mutual understanding of the problem of privatisation and of certain - and
I'd like to emphasise - strategic enterprises.

What happened in Ukrainian privatisation was that the Ukrainian authorities
acknowledged (these companies) as private property and the Ukrainian
authorities (today) through the system of laws and judges take upon
themselves the responsibility to defend this private property. This is the
fundamental method for business.

We don't want anyone to have the impression that there is a system of
revision (of privatisations) which gives the wrong impression about the
character of relations between the authorities and private property.

FT: At what point on the long road of integration with the European
institutions should an explicit signal be given of future European Union
membership?

VY: First of all, the question (of integration) is a question of
harmonisation...This process can't happen too aggressively. It seems to me
that for me and for you one thing is understood. Ukraine is not the
borderland of Europe.

It has always been Europe and we feel ourselves today to be European. The
question of membership of the European Union which requires very specific
standards and circumstances is a separate question.

Ukraine will be in Europe when it raises its internal standards, adapts them
to those of the European Union. We're talking about 2,000 - 2,500 laws which
either have to be changed or amended. This is a change of
consciousness...The nation has to understand the system of European values
and has to form a commitment to realising these values, to defending these
values.

It seems to me that European values can be naturally adapted to the
traditions (of Ukraine) ... Whether we're talking about the political
traditions or the democratic traditions or human rights. (European values)
are very close to the Ukrainian nation.

When it comes to economic (issues)..., the implementation of economic
reforms, legal reforms, the adaptation of the financing of the economy, of
investments, of fiscal customs and other policies, the adaptation to the
unified standards of the European Union - we consider this our homework.

We have a plan of action which is set out for three years. I would like to
underscore that this year ... we've done about 50 things in this direction.
This is a concrete answer to some of the daily questions which Ukraine has
to do vis-a-vis the European Union. Very often this is a great technical
job, often easily overlooked.

We have ratified six agreements over the past four months with the European
Union. We have taken joint decisions with the European Union on questions of
foreign policy ... Ukraine politically (shares) the European vision of
foreign policy.

FT: Can I ask a follow up question on that. You can go to countries such as
Georgia or Azerbaijan. Leaders there will talk about membership of the EU
not for the economic benefits but for the political symbolism which is part
of belonging to the Euro-Atlantic community... Are you restrained from
making the same sort of declaration by the precarious relationship with
Russia?

VY: Conducting a policy of European integration, we don't feel any
discomfort in our relationship with Russia... To realise our membership of
Europe meets our strategic desires and interests. We want to be in this
market. We want to work on these shared rules. We want to gain millions of
jobs from this (cooperation).

We are talking about the economic context. We are also talking about the
political context. We are also talking about the security aspect. This
brings benefits which are among our strategic interests.

I am persuaded that these are standards to which we must aspire because this
is good not only for the country but for the ordinary person. I desire that
the Ukrainian pension should be as good as the European pension and this
looks after the interests of the Ukrainian pensioners. I want the citizens
to have the full democratic rights and guarantees which citizens in the EU
have - and this is good for everyone.

We are talking about those things to which it is worth aspiring. These are
better standards and this is a movement, a natural and obvious movement,
there's no coercion, there are no parts (of our integration) which are
unpredictable or are hidden under the table. And so we're talking about
something which is our own, not something which is foreign.

The key thing, is that this is not a policy which is formed against
somebody. This is not a step of revenge or disrespect. We are talking about
the national strategic interest.

When we talk about the eastern sector..( we also have)... great strategic
interests. It would be a great mistake for Ukraine to lose them. I'm not
talking only about the fact that in that direction goes a third of Ukraine's
exports...(or the fact that it's a whole economic system which finds its
interests in co-operation in this direction.

We're talking also about human links...about tradition, about history. There
are millions of Ukrainians who live there, who want to remember their
Ukrainian language, who want to read Ukrainian books, and watch Ukrainian
films. These things (interests in the west and the east) are not mutually
exclusive. They're not in conflict.

I'll tell you what is delicate is that as we conduct western policies we
have to understand that these policies are conducted with various
instruments, with various mechanisms. The methods which are characteristic
for western integration... don't necessarily work in the eastern markets.

You have to speak with a different alphabet. You have to talk about
different approaches, about different mechanisms... But the main thing is
that... (our actions in the east)...mustn't block our path to European
integration.

FT: On the subject of reprivatisation. You are saying you wish to avoid an
arbitrary process and you wish to have a process governed by proper
procedures. I wanted to ask you on what objective criteria would you define
those enterprises that you say need special attention and what particular
action you might take, for example a windfall tax?

VY: I understand very well the state of the legal and judicial system in
Ukraine. And that is why to talk about the problems of privatisation we very
often have to refer also to the morality of what happens after
privatisation.

We have to do a lot in the system of establishing our legal system, and
particularly our judicial system there is a lot of work still to be done.
I'm speaking very delicately but I hope that you are reading between the
lines. I hope you are understanding what I am saying. This is one point.

Second point. In the privatisation process which (has taken place in Ukraine
there are some elementary problems with procedures). For example, how can
you talk about privatisation when something is privatised in an
uncompetitive way.

How can you talk about a privatisation where in the competition there was
only one participant? Or a privatisation which took place without a
competition... (because)... there were three structures which took part but
they are all owned by the same person.

I don't think you have to be a specialist, a lawyer to understand that
something is not right. This is not about what suits business. There has to
be an act of justice ... It's about such things that we're talking.

FT: Do you have a time limit in mind for this process of reconsideration?

VY: We do have in mind a term and it must be very limited... We do not want
it to be the main question in the Ukrainian market. It should be a very,
very secondary issue. Business should be working on the Ukrainian market. It
should bring investment. It should work openly and honestly according to
Ukrainian law.

This is ... (our) policy ... in terms of the relation between the state and
business. And the fact that there will be a reprivatisation of a few
companies...this is just the sacrifice, the cost of (our transformation).

FT: Could the Orange Revolution stimulate further revolutions in other parts
of the former Soviet Union?

VY: I am convinced that after the Orange Revolution we are ... better, more
decent. Such feelings appear ... which make us stronger, regardless of where
we live. And (into) that conflict between truth and falsehood, between
dictatorship and freedom which continues in some parts of the world
including some parts of the former Soviet Union, the Orange Revolution sends
a new stronger signal that people have begun to look at things differently
as they consider (various) questions.

Will they have enough will to get together in the sort of mass national
coming together as happened in Ukraine or will it be smaller? It is a
significant personal question. Millions of people began thinking differently
about freedom and about democracy in the whole terrain of the former Soviet
Union.

It cannot be ignored and that is what has created a new quality (of
political life). To predict scenarios where the revolution will be exported
to this or that country is very difficult thing to do. You need to have a
great understanding and a lot of facts to do this.

(But)...in the human arsenal, in the political arsenal, there is now a new
way of doing things, the Orange Revolution way. I think this is a good
argument for tens of countries.  -30-
=====================================================
17.                         LIBERTY FOR LATIN AMERICA
          How to Undo Five Hundred Years of State Oppression
       Five principles of oppression; corporatism, state mercantilism,
         privilege, bottom-up wealth redistribution and political law

NEW BOOK: By Alvaro Vargas Llosa
The Independent Institute, Oakland, CA, Fall, 2005

                                             SYNOPSIS
In Liberty for Latin America: Undoing Five Hundred Years of State
Oppression, Alvaro Vargas Llosa maintains that, despite conventional
wisdom, no "free market" reform has taken place in Latin America over
the last decades.

According to Vargas Llosa, the latest and far-reaching attempt to foster an
open society in the region has run up against what he calls the "five
principles of oppression": corporatism, State mercantilism, privilege,
bottom-up wealth redistribution and political law.

These same principles of political, social and economic organization have
been present in Latin America since time immemorial. They have been
sustained, over time, by both the Left and the Right. Unless they are
removed once and for all, genuine progress will not be possible.

Seeking to give a comprehensive perspective, Liberty for Latin America
accounts for various reform campaigns that have taken place in the region
since it gained its independence, all of which, including the most recent
one in the 1990s, failed.

It also compares this latest attempt with reforms undertaken in other
countries, from New Zealand to Central Europe, as well as with the types of
institutions that helped develop the leading nations of today.

All of the conclusions are then integrated into a final proposal for real,
meaningful reform. Vargas Llosa's proposal postulates the liberation of the
individual from the coercion that has limited choice, opportunity, wealth
creation and access to property in Latin America.

This reform is also an attack on the deep skepticism and, at times, nihilism
into which repeated failure has thrown large segments of society-the type of
environment in which moral character, and therefore civil society, can
hardly develop.
                        WHAT FAILED IN LATIN AMERICA
Liberty for Latin America is divided into ten chapters, following an
introduction that explains how institutions and culture interact in order to
bring about-or stifle-the free society. Chapter 1 looks at how five basic
"principles of oppression" have shaped life in these countries from
pre-Columbian to republican times.

Chapter 2 concentrates on the 20th century, up to the end of the 1980s, a
period dominated by economic nationalism that ended with the collapse of the
state's legitimacy.

As a result, most of the population had to operate outside of the law, and
various authoritarian movements were able to rally support against the
status quo and the political elites. The long descent into economic and
social devastation is precisely what opened the way for reform in the final
years of the century.

Chapter 3 traces the origin of development in the world's leading nations,
comparing the types of institutions that made free-market capitalism
possible with Latin America's "principles of oppression" (many of the
developed nations have themselves moved away from the some of the
institutions of liberty, of course).
                           SUCCESS, REAL AND IMAGINED
Chapter 4 delves into the tortuous relationship between the U.S. and Latin
America, assessing how various types of policies (including foreign aid,
double standards as regards trade, Cold War tactics, etc.), have tended to
reinforce, rather than attenuate, the causes of Latin America's
underdevelopment. Vargas Llosa closely examines the war on drugs and its
counterproductive effect on the whole of the Andean region.

Chapter 5 sets the stage for the following chapters, which deal with the
end-of-century reforms. This particular chapter analyzes how and why
previous attempts at reform failed in the region, both in the 19th and the
20th centuries. To a large extent, the same reasons that account for
previous failure explain the recent failure, Vargas Llosa shows.
Reform

Chapters 6 and 7 tackle the whole reform process of the 1990s, including the
fight against inflation, privatization, trade liberalization, foreign
investment, and other areas.

A detailed description of what took place in various countries is followed
by a critique seeking to demonstrate that in no area did reform actually
eliminate or substantially reduce the power of the state over the economy
and social life.

The moderate successes are acknowledged, but the failure to take away the
monopoly of opportunity from interest groups linked to the political
machinery is spelled out with a view to helping the reader understand why
there has been no reduction in poverty and why frustration with "free
markets" is now so pervasive in a region where reform has come to a complete
stop.

The conclusion is that the "principles of oppression" shaped the reform
process itself, paradoxically entrenching some of the elements reform was
supposed to do away with.

Chapter 8 explores corruption, both in its most blatant manifestations and
in its subtle, extremely harmful social effects, which account for the
absence of a cogent, morally strong, civil society.

The laudable and laborious efforts by grassroots organizations and civic
associations that help sustain life throughout the region are examined in
the context of the pernicious effect of statism, which is responsible for
the emergence of an entire underclass of marginal people devoid of any sense
of social belonging and for turning social cooperation into a naked struggle
for dwindling handouts at all levels.

Chapter 9 sets the stage for the final chapter, which contains the proposal
for real reform. Here, the book rescues the "individualist" tradition of
Latin America, valuing the manifold instances in which individual
creativity, social cooperation and exchange, and resistance against
political oppression have taken place throughout the centuries.

This section demonstrates that real reform must rest on, and draw
inspiration from, a deep-seated, ancient and therefore "legitimate"
tradition, and that there is nothing alien about liberty across the region.
                                     TURNING THE TIDE
The final chapter of Liberty for Latin America proposes a direct attack on
corporatism, State mercantilism, privilege, wealth transfer and political
law through a transformation of the entire political and decision-making
system based on the devolution of responsibility to the individual in all
spheres of life.

The type of reform proposed here has never before been undertaken in Latin
America and yet it points to the satisfaction of most of the objectives that
previous attempts set out to achieve. Since many individuals depend on the
current system for survival, a careful transition is envisioned, including a
gradual phasing out of some of the commitments of today's governments.

Underlying the entire blueprint for reform is the idea of empowering people
at the grassroots level so that the various types of social institutions
that are currently hindered from developing and blossoming can restore the
moral fiber which society has lost and without which any sort of development
is impossible.
                                            HIGHLIGHTS
Latin America's economy experienced temporary growth during the years of
economic nationalism and protectionism, but ultimately the results were
catastrophic. The GDP annual rate of growth between 1950 and 1980 was 7
percent for Brazil, 6.5 percent for Mexico, 4.9 percent for Peru and 3.8
percent for Argentina.

By the 1980s, however, Latin America's GDP per capita had fallen to less
than one-third of the level in the core countries of the Organization for
Economic Cooperation and Development (OECD).

Three major attempts at market reforms took place in Latin America before
the 1990s (one in the mid-19th century, another at the turn of the 20th
century and the third under military dictatorships in the 1970s).

Except in Chile for special reasons that the book discusses, all of them
ended up concentrating power in an elite and keeping the masses poor. By
repeating many of the mistakes made in previous attempts, Latin America
missed a great opportunity in the last couple of decades.

The crucial mistake made by governments that privatized hundreds of state
companies in Latin America-more than one thousand in Mexico, more than four
hundred in Argentina, more than one hundred in Peru- was to transfer assets,
that is, physical entities, without transferring property rights to all
citizens.

This is why most of the important privatizations took place under monopoly
conditions that have given privatization a bad name. Property is not a
physical entity so much as a set of options that the individual can
exercise.

Contrary to conventional wisdom, so-called free-market reform did not reduce
the size of government in Latin America. Argentina's GDP grew by 40 percent
in the 1990s, but public spending grew by 100 percent. Between 1996 and
2001, Brazil doubled the size of its foreign debt.

Except for Chile, where the privatization of old-age pensions has boosted
savings and created an important pool of capital (more than $50 billion),
privatization was a missed opportunity to vest people with capital across
Latin America.

The creation of regional trade bodies (MERCOSUR being the most notable)
ended up restoring many of the trade barriers that governments had set out
to eliminate in the early 1990s. In Argentina, MERCOSUR meant that barriers
on 71 out of a total of 97 groups of items actually went up even as
Argentina was considered a model of commercial liberalization.

Despite almost $400 billion dollars of foreign investment in the previous
decade, Latin America's investment rate is still an average of 15 percent of
GDP because of the prevailing institutional climate. Hundreds of companies
have moved their investments from Mexico to China because of the high costs
of doing business in the former country (taxes, government-controlled
energy, etc.).

The excess of regulations has expanded the opportunity for corruption. The
high cost of doing business, a problem virtually untouched by reform, has
turned potential producers into candidates for lucrative government posts or
government-protected markets. Brazil has more than 10 million public
employees.

Despite spending more than $25 billion during the 1990s on fighting the drug
war overseas, the U.S. government concluded that Plan Colombia's failure was
a problem of scope. Therefore, in the new decade the U.S. government
appropriated another $1.5 billion for Colombia's war.

Experience shows that every time a significant amount of coca plantations is
eliminated in one country, coca leaves immediately crop up in a neighboring
country. About 95 percent of all coca plantations eradicated in Bolivia in
the last few years were recently planted.

The elimination of U.S. agricultural subsidies totalling $50 billion would
be a more effective way of drawing Andean peasants away from growing
coca leaves.

In Brazil, pending cases in the courts have increased ten times in the last
decade, and there are more than half a million backlogged cases in the
Ecuadorian courts. The absence of judicial reform has contributed to
perpetuating the absence of the rule of law.

The region's legal systems, based on a tradition whose remote origins lie in
Justinian's codified version of Roman law and, much more significantly, in
Napoleon's positive law, give governments total discretion over everything
from constitutional to economic to family matters. Under such arrangements,
there is no independent judiciary.

In order to engage in real reform, the "five principles of oppression" must
be confronted. The entire body of laws should be subjected to a painstaking
scrutiny that judges each law by the same standard.

The standard is set by five questions: Does it relate to individuals in
general or to corporations? Does it make success or failure dependent on
state interference? Does it favor particular groups of people and does it
therefore discriminate against the rest? Does it transfer wealth from one
group of citizens to another?

Does its coercive power, either to make something happen or to forbid,
derive from political law, that is, from the authority of the politicians
and bureaucrats who passed the norms, or, rather, from a higher principle of
which those politicians were careful guardians?

Since reform can hurt those who already depend on the government for basic
services, a careful timetable and different ways to ease the transition are
suggested.

This includes a massive transfer of government assets to public employees
and to the very poor, and a change in the legal status of shantytown
organizations set up to channel government aid so that they can become
incorporated and raise private capital.

Also, while the transition lasts, the government should withdraw from the
provision of all services, concentrating on providing the funds with which
the poor will pay private providers directly, in both health and education.
----------------------------------------------------------------------------------------------------
http://www.independent.org/publications/books/book_summary.asp?bookID=55
=====================================================
18. KYIV TO SELL 4.5 HECTARES OF LAND FOR NEW US EMBASSY

Interfax-Ukraine, Kyiv, Ukraine, Monday, October 17, 2005

KYIV -The Kyiv city administration will sell the U.S. Embassy in Ukraine
4.5 hectares of land, where a new embassy will be built.

Kyiv Mayor Oleksandr Omelchenko told this to Chicago Mayor Richard
Daley at a meeting in Kyiv on Friday.

He said all documents required for the sale had been prepared. The land is
in Tankova Street, he said. The land in "a good district and green zone"
will be sold at a "moderate tactical price," he said.

The construction of the new embassy for the U.S. will begin next year, he
said.  -30-  [The Action Ukraine Report (AUR) Monitoring Service]
=====================================================
19.        UKRAINIAN TOP BUSINESSMEN CALL FOR END TO
    REPRIVATIZATION, MEET WITH PRESIDENT YUSHCHENKO
                  "Akhmetov: 'I prefer to have my tea at home.'

INTERVIEW:  With Rinat Akhmetov, Kostyantyn Zhevaho,
Hryhoriy Surkis, Eduard Shyfrin and Viktor Pinchuk
By Serhiy Morda, Ukrayinska Pravda web site, Kiev, in Russian 18 Oct 05
BBC Monitoring Service,UK, in English, Thu, Oct 20, 2005

Five Ukrainian tycoons - Rinat Akhmetov, Kostyantyn Zhevaho, Hryhoriy
Surkis, Eduard Shyfrin and Viktor Pinchuk - have given an interview on their
recent meeting with President Viktor Yushchenko.

A common conclusion drawn from the meeting, according to the tycoons, was
that all talk about reprivatization should be brought to an end and that
business and the administration should reach a compromise on the question of
additional payments for companies that had been privatized dishonestly.

Akhmetov and Shyfrin spoke of the need for a better investment climate in
the country and Pinchuk said he had not yet decided whether to stand at the
next parliamentary elections.

The following is the text of their interview with Serhiy Morda entitled:
"Akhmetov: 'I prefer to have my tea at home.'; Surkis: 'I cannot be an enemy
of the president."; Surkis: 'I wouldn't like to have to stand again.'",
posted on the web site Ukrayinska Pravda on 15 October; subheadings have
been inserted editorially:

On Friday [14 October], Viktor Yushchenko carried out an unprecedented act
of reconciliation with former oligarchs, inviting them to a four-hour
round-table discussion.

The president is trying to revive trust in big business and, as expected,
the way to do that had to be their voluntary additional payment for plants
and factories purchased under [former President Leonid] Kuchma.

Five participants in this meeting with Yushchenko - Rinat Akhmetov,
Kostyantyn Zhevaho, Hryhoriy Surkis, Eduard Shyfrin and Viktor Pinchuk -
discussed what they got from it in an interview with Ukrayinska Pravda.
             DONETSK TYCOON SAYS REPRIVATIZATION OVER
[Morda] What struck you most about this meeting?
[Akhmetov] Our company - SCM - has been prepared for this for a long time.
We have over 160,000 employees and we are responsible for their welfare.
In turn the president bears responsibility to all the Ukrainian people. We
must think about how to merge our efforts for the good of society.
[Morda] But what did the president say - "all is forgiven" or "there will be
no reprivatization"?
[Akhmetov] I have to tell you, there is nothing to forgive us for!
[Morda] In what context was the subject of Kryvorizhstal raised at the
meeting?
[Akhmetov] It didn't crop up at all.
[Morda] Incidentally, will you be taking part in the repeat privatization of
Kryvorizhstal?
[Akhmetov] I will say just one thing in answer to your question: legal
proceedings are currently in progress around Kryvorizhstal, and I am not the
court, so I cannot predict when they will end.
[Morda] How will you remember this meeting with the president?
[Akhmetov] That we won't be hearing this word "reprivatization". We shall be
signing peace agreements.
[Morda] Who said that?
[Akhmetov] The prime minister. And to the question about additional
payments, I will say this: we need respect for the rights of private
ownership!
The administration must create a favourable investment climate so that we
can be happy about investing in the country. Just imagine, the investment
activity of our company in 2005 amounted to 900m dollars.
The plan for 2006-10 is more than 4bn dollars. This is not on new purchases,
but on increasing production capacities and cutting down on production
costs.
The prime minister [Yuriy Yekhanurov] emphasized that there will be no
surprise moves, and the state has a vested interest in this. Major national
business has already grown out of short pants and entered the big world now.
Our philosophy is that we are not interested in short-term profits, but
long-term prospects. The main thing as far as we are concerned is to give
business value. Just as the main thing for the state is to give the country
value.
They are our only goals. In creating a value for business, we are working on
the power and strength of the state. We don't need privileges, but precise
rules.
[Morda] Oleksandr Yaroslavskyy, the owner of Ukrsibbank, who is standing
alongside, joins the conversation.
[Yaroslavskyy] The president instructed the prime minister to do away with
all these contentious issues on privatization within 30 days.
[Morda] [to Akhmetov] You have been out of the country for practically the
whole summer in connection with this criminal case in which your name
figures. Are you back for good now?
[Akhmetov] Well, if I have to leave for whatever reason, can't I do so?
[Morda] There was a report that you went to the Interior Ministry regarding
this case and met with [Interior Minister Yuriy] Lutsenko. Did he just
invite you for a cup of tea and a chat?
[Akhmetov] Yes, but I prefer to have my tea at home!
          BANKING MAGNATE SAYS COURTS SHOULD RESOLVE
                                    PRIVATIZATION ISSUES
[Morda] [to Kostyantyn Zhevaho, co-owner of Finansy i Kredyt banking group]
What was the main thing you heard from the president?
[Zhevaho] That we must create system-orientated conditions so that business
can develop.
[Morda] In what context was the question of additional payments mentioned at
the meeting?
[Zhevaho] It would be correct to call this a question not of "additional
payments", but "a settlement of the contentious issues of privatization". It
was raised at the meeting, and not only when we spoke about Kryvorizhstal or
the Nikopol Ferroalloys Plant.
This is a question which must be resolved.
We must not turn a blind eye to it, as we have been doing these past nine
months, because the market is expecting answers to these questions. And
until we get some answers we won't have good international ratings at
Standard & Poor's or Moody's [investment service companies].
[Morda] How can these issues be resolved?
[Zhevaho] Through the courts. We have one branch of power which can deal
with this and that is the courts.
[Morda] In other words, a voluntary additional payment is impossible?
[Zhevaho] There isn't such a law whereby one can come and make the
additional payment voluntarily.
[Morda] What inspired or impressed you most from what Yushchenko said at
this meeting?
[Zhevaho] I was very pleased that the president is considering means of
structuring, like a real financier. He understands the link between cause
and effect - where money comes from and where it goes.
              FOOTBALL TYCOON SAYS BUSINESS MUST WORK
                                     WITH ADMINISTRATION
[Morda] [to tycoon and MP Hryhoriy Surkis] What was your impression of the
Friday meeting on Bankova [street in Kiev where presidential administration
building is located]?
[Surkis] We had been hoping for such a meeting for a long time. It's a pity
we didn't have it in January-February, but better late than never, as they
say. The most important thing that Mr Yushchenko said was that a clear idea
had been expressed that big business is one of the system-forming elements
of the Ukrainian state.
Basically, the president has extended his hand and offered partnership to
big business. At the same time, he has not made any specific offers, say, to
[Dnipropetrovsk-based tycoon Ihor] Kolomoyskyy or Akhmetov, or Zhevaho or
Surkis.
That was in the past. And one has to admit, on the one hand this allowed
national capital to stand on its own feet and take part in shaping a base of
economic growth in recent years.
On the other hand, this has led to a dramatic slump in trust, both in the
administration and in big business. The "oligarchs", as we have come to call
businessmen, have in the public opinion turned almost into enemies of the
people.
In the past eight months the country has ceased to be successful in the
question of attracting investment. I am sorry that we have become a
bugbear-country!
One has to admit that it is worth rebuilding a credit of trust in the state.
We must not give preferences to any businessmen.
Now, as I understand it, we are talking about a partnership between the
administration and business as though it were a section of the population.
But for this we need a body to represent the interests of this sector. At
the same time, basically, this should be not a sum total of the private
interests of individual businessmen, but the common interest of this sector.
It is very important what the president said: certain conclusions will be
made. And if a business pays taxes and thinks about social programmes, then
that business will always be respected by the administration.
In my speech I said that big business has a profound interest in the
stability of the state and state institutions and that clear, permanent
rules of the game should exist for everyone.
Only then can we ensure growth of capitalization and, accordingly, economic
growth in the country at the same time.
[Morda] But one gets the impression that you had a long discussion, but
about nothing in particular.
[Surkis] It's no use saying we spoke about nothing in particular. For
example, I proposed that we should create a permanent body and organize
ourselves as representatives of business.
We could meet in the same composition, but not necessarily with the
president, say at least once every two months, preparing study materials and
scientifically based proposals, and after discussing them we could go to the
president or his authorized representatives.
To do this we must set up an analytical fund which would work on a permanent
basis. I reminded him that in this instance it would be worth studying the
experience of the Japanese Keydanren [federation of economic organizations]
company.
[Morda] Tell me specifically, are you prepared to pay more for certain
enterprises?
[Surkis] I will be frank: I don't know which companies you are referring to.
Can you name the companies I run today?
[Morda] Oblenerhos [electricity distribution companies], Dynamo (Kiev)
[football club].
[Surkis] Oblenerhos don't belong to me. And it wasn't mentioned at the
meeting. Why don't you talk to me about how many tens of millions, including
by me personally, have been put into Ukrainian football, an industry which
isn't even profit-making?
Or that our national side has reached the final stages of the World Cup,
with the hearts of all Ukrainians full of pride for their glorious lads!
The subject of additional payments was not raised at the meeting. We said
that, since this saga of Kryvorizhstal and NFP has happened, we should apply
a proper procedure - if the state believes that the Nikopol plant is subject
to reprivatization, then this company will be put out to tender.
All the rest - if the facilities have been privatized under the table,
without transparent tenders and at reduced values - this stage once and for
all must be passed and it must not cripple the investment climate. As the
president said - 196 dollars of investment per capita doesn't bring honour
to the country.
[Morda] After Yushchenko became president, his cool attitude to the Social
Democrats, and in particular Surkis, was obvious. Now there is a clear trend
towards a thaw - he has visited the national football team's base, and then
he invited Surkis to a round-table meeting.
[Surkis] I am head of the football federation and a member of the UEFA
executive committee, I represent the country in the international arena, I
am fighting to improve its image and to win the right to hold the Euro-2012
finals. Our national side has reached the final stages of the World Cup. And
this deserves attention and appraisal - but not to me personally, I am just
one of many.
All revolutions begin and end! You can't have a situation in the country
when some people are always friends and others are always enemies. I am not
an enemy of the president, because there is no way I could be. You mentioned
the word "thaw" in relation to Surkis.
I would put it another way - there is common sense, people have cooled down
after political battles. We have had eight difficult months and malice and
bitterness should be done away with and we should work together to improve
the welfare of our people.
As an MP what am I prepared for? Any healthy cooperation with the
administration. Not around the subject of "social outcasts" - we are all
citizens of the country and we must be sensible and do what is possible to
ensure that the pre-election slogans are implemented.
[Morda] Incidentally, at this meeting, according to the documents of the
president's secretariat, you attended as a representative of the Slavutych
group.
[Surkis] Today I have nothing to do with the Slavutych group! The moment I
became an MP I sold all my shares in Slavutych. I was invited to this
meeting of businessmen because they obviously believed that my experience
and my position in society gave me the right to attend. I expressed a few
things of my own which the president and some of my colleagues there agreed
with.
   MIDLAND BOSS SAYS NORMAL INVESTMENT CLIMATE NEEDED
[Morda, addressing Eduard Shyfrin, head of Midland group] On Friday, [Prime
Minister] Yuriy Yekhanurov said that the best way to put an end to the
subject of reprivatization is the voluntary additional payment for
enterprises by their owners.
[Shyfrin] It seems to me the most sensible way is to put an end to this
business, forget all about "reprivatization" and "additional payments" and
create a normal investment climate in the country.
[Morda] In other words, additional payment is not possible?
[Shyfrin] We should study each specific case. Additional payment should be
looked at from the moment of purchase, and the investments made by owners
when possessing the enterprise should be assessed.
And on that work out a formula. But I don't think it is we who should be
paying extra, but they who should be paying us extra when they see how much
we have put into these enterprises!
 FORMER PRESIDENT'S SON-IN-LAW ON NEED FOR COMPROMISE
[Morda, to Viktor Pinchuk, head of Interpipe and former President Kuchma's
son-in-law] What is your impression - was the meeting between the
businessmen and Yushchenko much ado about nothing or, on the contrary, did
anything specific come out of it?
[Pinchuk] The fact that it took place is important. Such a meeting should
have been held back in January as one of the president's first meetings
after his inauguration. Then a lot of things in the country would have been
different. Undoubtedly, the meeting was an interesting one.
For everyone and for me it was important to hear what the president has to
say today and how the administration and business should work together.
[Morda] Was anything specific mentioned?
[Pinchuk] Yes, from both sides. The president spoke about taxes, about
getting away from the shadow operations and about the social responsibility
of business, and about his attitude to ownership and separating business
from politics. We discussed common and personal issues, for example, the
return of the VAT and, of course, protecting rights of ownership.
[Morda] It is possible this is a false notion, but it seemed that during the
meeting questions would be raised about voluntary additional payment for
companies which were dishonestly privatized?
[Pinchuk] This wasn't raised. I believe this was not quite correct. Although
that was not the format of the meeting. To discuss who should make these
additional payments and how much may be too broad a subject for a specific
discussion, although we should have had such a meeting a long time ago.
We should have discussed this issue in January-February and then finished
with it. Business was, undoubtedly, ready to make compromises. But one needs
to be a philosopher and admit that, possibly, we made mistakes. We must find
compromises.
[Morda] What compromise is possible, apart from additional payment?
[Pinchuk] We must put an end to all this talk about reprivatization! And it
seems we have. Business and the administration should get together and
decide why these additional payments should be made. I think that it should
be because it is in the country's interests.
It's no good saying "we are whiter than white" and "we will not yield an
inch of Russian soil". If society has a need and it relates to past
privatization, then in the interests of this society we must reach a
compromise.
[Morda] Are you prepared, as part of a compromise, to forget the legal
proceedings on Kryvorizhstal and call the trial off and get back your 4.2bn
hryvnyas?
[Pinchuk] I can see a number of compromises over Kryvorizhstal and I have
expressed them. The important thing is for somebody to start talks on this
subject. We haven't had any.
[Morda] Well, what talks are possible? The plant will be sold in two weeks'
time. And your predictions that no-one will take part in the privatization
are not coming true.
[Pinchuk] Let's look at what will happen on 24 October. It seems to me that
the closer it gets to the tender, the more serious investors will start to
ponder the situation. The case has been to the Supreme Council and there has
been no decision. It has been to the European Court and still no decision.
There have been a whole number of violations around the reprivatization of
the combine.
[Morda] There is something you're not saying - what might prevent the repeat
sale of Kryvorizhstal?
[Pinchuk] The investors must stop and think. Our lawyers have sent the
investors a letter describing the situation.
[Morda] To all potential investors - Arcelor, Mittal?
[Pinchuk] Yes, all of them! We have set out the current position. The case
is at the Supreme Council. Say you want to buy a flat but you are told that
this flat is the subject of a court case. Will you risk buying it? I don't
think so.
[Morda] What was the outcome of Yushchenko's meeting with the businessmen -
did it settle anything?
[Pinchuk] No, rather it was the start of a serious dialogue between the
country's leadership and business. The president proposed holding these
meetings every three months.
[Morda] In Russia the first such meeting was held before the default of
1998, when [former Russian President Boris] Yeltsin brought all the
oligarchs together.
[Pinchuk] But you know Ukraine is not Russia! (laughter)
[Morda] After this meeting are you planning to stand for the Supreme Council
[parliament] in 2006?
[Pinchuk] I wouldn't like to. After all, everything starts with respect for
the right of ownership. If this is sealed by legislation, then the
administration will not be pushing businessmen into entering parliament and
protecting their property there.
I believe that there should not be any businessmen in the Supreme Council;
this is the place for professional politicians. Then parliament will have
more time to deal with the interests of the whole country.
[Morda] Anyway, a direct question for you: have you decided to stand for the
new parliament, declined or not yet come to a final decision?
[Pinchuk] I haven't yet made a final decision. Like many other businessmen,
I am still thinking about it.
[Morda] After this meeting with Yushchenko, are you prepared to fund
projects under the aegis of the president: the Hetman palace at Baturyn and
the Hermitage at the Arsenal plant?
[Pinchuk] I am funding a considerable number of projects in the cultural
field, and I see nothing wrong with taking part in this with the president.
For example, I am participating in the funding of Baturyn. You know, I was
planning to open a museum of contemporary art at Arsenal, and I have not
given up on this idea.
I have now acquired several floors in the very centre of Kiev in a building
where the Arena is situated - there will be a museum of contemporary art
there.
Although if it had been at Arsenal this would have been a jewel for the
whole country! I am sure that we need to come back to this and I am
prepared to invest. And why not with the president?  -30-
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