"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 597
Mr. E. Morgan Williams, Publisher and Editor
Washington, D.C., Kyiv, Ukraine, TUESDAY, November 8, 2005
--------INDEX OF ARTICLES--------
"Major International News Headlines and Articles"
1. ECONOMIC PROGRAM OF NEW UKRAINIAN GOVERNMENT
PRESENTATION: The Honorable Yuriy I. Yekhanurov
Prime Minister of Ukraine (in Ukrainian)
Carnegie Endowment for International Peace (CIPE)
Washington, D.C., Tuesday, November 1, 2005
Transcript in English: Federal News Service (edited)
The Action Ukraine Report (AUR), Number 597, Article 1
Washington, D.C., Tuesday, November 8, 2005
2. UKRAINE: CONTRADICTIONS AND OPPORTUNITIES
Growing economy dragging along legal reforms with it
By David Hill, The Budapest Times
Budapest, Hungary, Monday, February 7, 2005
3. EU TO GIVE UKRAINE MARKET ECONOMY STATUS
European Commission clears Ukraine for improved trade relations
By Daniel Dombey in Brussels, Financial Times
London, United Kingdom, Tuesday, November 8 2005
4. UKRAINE'S FAILURE TO JOIN WTO BY END-2005 WILL
DERAIL EUROINTEGRATION, ROMAN SHPEK SAYS
Interfax-Ukraine, Kyiv, Ukraine, Monday, Nov 7, 2005
5. OLIGARCHS PREFER TO BECOME TRANSPARENT
ANALYSIS: Roman Bryl, Ukraine Analyst
Intellinews - Ukraine This Week
Kyiv, Ukraine, Monday, November 7, 2005
6. EASTWARD FOCUS SERVES AUSTRIA'S ERSTE BANK WELL
"We want to expand into new areas, such as Romania or Ukraine."
By Haig Simonian, Financial Times, London, UK, Monday, Nov 7 2005
7. UK'S LARGEST OPERATOR OF PRIVATE NURSERIES FOR
CHILDREN SELLS OUT IN UKRAINE
Commercial outlook was likely to deteriorate
By Michael Neill, Financial Times, London, UK, Tuesday, Nov 8 2005
8. INTERVIEW ON POLITICS IN UKRAINE
INTERVIEW: Kyiv Post editor Andrey Slivka
By Peter Lavelle, United Press International
Kiev, Ukraine, Sunday, November 6, 2005
9. WESTERN NIS ENTERPRISE FUND CELEBRATES 10 YEARS
Ten years of investment in Ukraine and Moldova
The Action Ukraine Report (AUR)
Washington, D.C., Tuesday, November 8, 2005
10. FOREIGN MINISTRY WANTS REASON AZERBAIJAN
BARRED ELECTION OBSERVERS FROM UKRAINE
Associated Press (AP), Kiev, Ukraine, Monday, Nov. 7, 2005
11. PRES YUSHCHENKO ORDERS CABINET TO STRIVE FOR
INTERNATIONAL RECOGNITION OF 1932-1933 FAMINE
IN UKRAINE AS ACT OF GENOCIDE
Construction of a memorial to Ukrainian famine victims
Ukrainian News Agency, Kyiv, Ukraine, Sunday, Nov 6, 2005
12. MONUMENT TO KULAKS UNVEILED IN IRKUTSK REGION
Itar-Tass, Moscow, Russia, Sunday, November 6, 2005
13. UKRAINIAN COMMUNISTS MARK BOLSHEVIK REVOLUTION
AS NATIONALISTS HOLD COMPETING RALLY
Associated Press (AP), Kiev, Ukraine, Monday, Nov 07 2005
14. CANADIAN JOURNALISTS FOR FREE EXPRESSION HONOR
JOURNALISTS FROM GAMBIA AND UKRAINE
Media: Banned in Gambia, Defiant in Ukraine
Channel 5 TV journalist Mykola Veresen winner from Ukraine
Stephen Leahy, Toronto, Canada
Inter Press Service, Johannesburg, South Africa
Friday, November 4, 2005, Web posted November 7, 2005
15. CONTEMPOARTUKRAINE
Quarterly art magazine introducing today's Ukrainian artists
The Action Ukraine Report (AUR)
Kyiv, Ukraine, Monday, November 7, 2005
========================================================
1. ECONOMIC PROGRAM OF NEW UKRAINIAN GOVERNMENT
PRESENTATION: The Honorable Yuriy I. Yekhanurov
Prime Minister of Ukraine (in Ukrainian)
Carnegie Endowment for International Peace (CIPE)
Washington, D.C., Tuesday, November 1, 2005
Transcript in English: Federal News Service, (edited)
The Action Ukraine Report (AUR), Number 597, Article 1
Washington, D.C., Tuesday, November 8, 2005
THE HONORABLE YURIY I. YEKHANUROV,
PRIME MINISTER OF UKRAINE
MODERATOR: DR. ANDERS ÅSLUND,
CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE
TUESDAY, NOVEMBER 1, 2005, Washington, D.C.
ANDERS ÅSLUND: Good morning, ladies and gentlemen. It's a great pleasure
and honor for me to introduce to you today, Yuri Yekhanurov, prime minister
of Ukraine. My name is Anders Aslund and I am director of the Russian and
Eurasian program here at the Carnegie Endowment for International Peace.
Almost a year ago, we saw a wonderful event in Ukraine, the Orange
Revolution. After that, we saw Ukraine become a full-fledged democracy.
Ukraine's foreign policy turned to the West as most of us wanted. There was
only one problem - the economic policy.
Therefore, we were happy to see a change in the government in September.
I can't imagine today a better person to be prime minister in Ukraine than
Yuriy Yekhanurov, whom I have known well since '94, when he became
minister of privatization.
And without going into his splendid CV, I would just like to say two things
about Yuriy Yekhanurov. It's a man who knows what to do and how to do it.
Yuriy Ivanovich, the floor is yours. (Applause.)
YURIY YEKHANUROV: Thank you very much, Mr. Aslund, for your warm
reception and for your kind words. I have the impression that I have known
on a personal basis everyone present here in this hall.
I remember my visit here in November '94, when we were just making some
very timid steps on the way of privatization, and we had to learn a lot so I had
to come here and learn how to do things. We took advice in the World Bank,
in a number of other institutions that are definitely here.
Eleven years have passed since then, and totally new challenges are now in
front of the fledgling Ukrainian democracy. And I would say that the
buzzword here would be responsibility.
The perception of Ukraine as we stand now, the perception of it
internationally, is based on the very basic formula; that is, the success of
Ukraine has a very strong impact on the Eastern European developments.
We have very clear-cut references in our foreign policy, and that is
full-fledged integration into the European Community, which is based on
the fully shared democratic values.
And that gives a strong boost to the internal domestic economic and
political transformations. It promotes the consolidation of the civil
society, rule of law, and the triumph of democracy.
With our European neighbors, our main priorities are as follows - the
implementation of the plan of action Ukraine-EU, which will provide the
groundwork for spiraling dialogue for Ukraine to move gradually but surely
towards the European Union; and getting the status of the market economy
within the framework of the anti-dumping investigations vis-à-vis Ukraine; a
simplification of the visa regime by the European Union for Ukraine's
citizens; the establishment of the free trade area between Ukraine and the
EU; and the development of the Ukraine - (unintelligible) - cooperation in
the energy sector.
An important landmark on this way is going to be the EU-Ukraine summit,
which is going to take place in Ukraine on the first of December this year.
And the roadmap for these transformations is the intensified dialogue
between Ukraine and NATO that has been recently launched. The promotion
of cooperation with the alliance is a very important move for all those
democratic transformations in the country, the promotion of civic rights and
freedoms.
And we hope that the forthcoming session of the Ukraine-NATO commission
in December this year at the level of foreign minister will get a very
strong signal from the alliance for Ukraine to gain membership there. Ukraine
has remained leader in that region of the world as regards the promotion of
democracy, strengthening human rights, civic rights and freedoms.
And the government and the top leaders of the country are very much
interested in cooperation with those countries, with those partners that are
keen on implementing democratic values. And the initiative to establish the
area between the Baltic Sea and the Black Sea and further toward the Caspian
Sea is going to be a very strong step towards establish stability in this
area.
All those efforts are aimed at strengthening human rights, promotion of
democracy, and getting out of the so-called frozen conflicts is going to be
all that we are trying to achieve.
But the government of Ukraine is playing a very special significance toward
our strategic partnership with the United States. We proceed from the
assumption that combating tyranny is one of our top priorities and shared
priorities. Foreign political goals of the United States and Europe are
either absolutely equivalent or very much in conformity with each other.
We strongly believe that our bilateral relationships are now on the upsurge,
and the top executives in Ukraine are doing their utmost to get rid of some
negative things that we had inherited from the past. Most problem issues in
the relationship between Ukraine and the USA are in the area of trade and
economical issues.
Ukraine's accession to the WTO is the top priority for foreign economic
policy of Ukraine at this given stage. Ukraine is very strongly attuned to
have this process completed by the end of this year.
And we really are inspired with another portion of optimism following the
adoption of some very crucial laws - of the sixteen remaining laws that are
needed to be passed for Ukraine to qualify to the accession to the WTO.
Therefore, it is of crucial importance for us to have this protocol between
the United States and Ukraine signed because that is going to be a very
strong message to a number of other countries, in the first place to
Australia.
Recently, Ukraine has made very significant progress in its negotiation
process with the United States. In the course of these negotiations, we
have delivered on all those agreements they have assumed, while there have
been some additional requests that we are now attempting to respond to.
I have told a group of investors who came to Ukraine in the context of
Ukraine's meeting these conditions, these modalities, that actually brings
me to some of my academic pursuits - (unintelligible) - because in the
context of all kinds of tests and exams, many questions are asked, and after
(unintelligible) some of those, you can feel that the student has got the
answers, the right answers, but still you feel like asking a little bit
more, so the professor is feeling quite assured sitting at the examination
desk, but the student is getting somewhat nervous and fidgety.
We have adopted all the necessary measures and iterations to decrees - the
size of the customs duties, which by 80 percent meet all those modalities
that had been set forward.
Ukraine is really very much closely following all those policies pursued
with respect to the goods getting to the national markets in the first place
that is concerning the poultry meat. Ukraine is finding a lot of
understanding with the United States in the first place in the way of
eliminating the duties for ferrous metals and concerning the elimination of
the ban on the exports of the non-ferrous metals.
Special attention is the agriculture dimension and that is in the first
place the diminishment of the supplies of the sugar cane from 260 million
tons to 5 and 8 million tons.
And a few words about the efforts of the government - the main question I
am asked time and again is why is this change of government?
I would put it very simply that President Yushchenko's team has remained as
it was, but at the first stage, it was a composition of the membership that
was very much bent on all sorts of propaganda campaigning and now, this
is a team that is based on pragmatism and realistic approach.
The previous team had been very good in expressing all sorts of ideas about
the directions, where to go, and telling a lot of stuff about what's to be
done. Regrettably, this kind of eclectic and idiosyncratic policies had
brought about a number of problems for the Ukrainian economy.
Let's take the pension fund, for example. The situation here has become
really much too critical, and we had found ourselves in the situation with
being confronted with the same kind of shortfalls and problems that we had
been several years ago at the time of Mr. Yushchenko being the prime
minister.
But, I would like just to iterate the point that it's not something out of
the blue for us. We know exactly what to do and how to eliminate these
issues.
In August this year, for the first time, we had the stop to the decline of
the GDP growth as compared with August of the previous year. And
actually, that has happened for the first time over the past five years that
we had seen the decline of the growth to stop growth in taking place.
And now, the government is very strongly intent on creating the positive,
favorable environment for the development of business and investments.
The top priority was the statement made in Ukraine about the protection of
ownership in Ukraine.
I think the very fact of me being appointed to the post of the Prime
Minister is the testimony to the observance of the principle that private
ownership in Ukraine is going to be sacredly honored and observed.
We'll do our utmost to ensure that the rights of property are very strongly
followed in spite of whatever political slogans and statement could be made
in the foreground before the forthcoming parliamentary election.
We are now pursuing very well balanced economic policy, but we also have
to honor all those commitments in the social sector that have been taken
previously, and we are going to ensure that the economic growth is going to
be achieved.
The regulation policy is going to be pursued, as well as the elimination of
a number of all sorts of permits and licenses that are still valid,
particularly in the region and local levels, which are a major impediment on
the way of the business development. The priority of the government is the
development of small and medium businesses.
One of the major tools in this area is the advisory council that has been
established under the president of Ukraine to promote the business
development and investments. On the 20th of October, there was the first
meeting of this council for stimulating investments. That has taken place.
We are also identifying the priority clusters that are going to be major
players on the international markets. In our perception, those clusters
that are going to be vanguards are going to be the companies that belong to
the mining industries and the ferro alloys companies, aircraft-building, and
energy machinery-building.
Actually, we are going to involve the efforts of those advisory and
consulting companies that will help Ukraine to be making a breakthrough in
the international business perspective. They managed to secure the services
of such advisory services are going to be provided by the people that had
gathered for this sort of discussions under the president of Ukraine.
I would even call it - give it the grand name as the council of oligarchs,
this body that I am talking about. We really want these people to become
truly devoted with a national perception, bourgeoisie, and will be very
sincerely involved in our business promotion and development.
So we have a very clear picture of what's to be done in the foreseeable
future. We definitely await the announcement to be made by the European
Union that Ukraine is a market economy.
Definitely we are looking forward to the forthcoming WTO summit in Hong
Kong where the Ukrainian delegation headed by the new minister of economy,
Mr. Yatsenyuk, is going to attend, and we will be really looking forward to
their coming back and sharing with us some very good news.
We've got to do whatever it takes for the forthcoming parliamentary
elections in Ukraine, to be held in a quiet, peaceful, democratic
atmosphere. And we are involved in the ongoing dialogue with the heads
of parliamentary factions in the Ukrainian parliament, Rada.
Now, the parliament has adopted in its first reading the budget for the next
year. I think that all the actions are going to be taken so that Ukraine
could form a new government next summer in line with the new constitution
of Ukraine.
I would really want to see Ukraine - I would want to see my country -
complete the first round of all these economic and social transformations.
And that is going to materialize next year. But I'd rather answer some of
your questions. (Applause.)
MR. ÅSLUND: Thank you very much, and we have now ample time for
questions for 40 minutes. I should say before that two things: first, that
the prime minister has with him here a substantial delegation, and I should
introduce a few people who could also take more special questions.
Minister of Economy Arseniy Yatsenyuk. (Applause.) Minister of Agriculture
Olexander Baranivskiy. Deputy Minister for Foreign Affairs Oleg Shamshur.
(Applause.)
And then, this talk, as we had agreed, was about the economic policy, which
is the big topic I think today in Ukraine, but you are also welcome to pose
questions about other things. I see many hands. Mike Haltzel?
Q: Mike Haltzel, DLA Piper Rudnick Gray Cary. Mr. Prime Minister, before
we get to the economic question, I'd like to return to the first part of
your speech, which was dealing with political issues. You stated that
Ukraine would be a regional leader in democracy and human rights.
In that context, I wonder if you could tell us what your government's policy
towards the Lukashenko government in Belarus will be.
MR. YEKHANUROV: Two weeks ago, I made a visit to Belarus and met
personally with President Lukashenko. He made a very favorable impression
on me. He is a strong propaganda man. And now, I realize why the German
women were shouting so loudly in the '30s, "I want to have a baby from the
Fuhrer."
But, I know he is a man of talent, and he knows how to deal with huge masses
of people. But, let me also tell you that about a year ago, I also met with
members of the Belarus opposition, and I know personally Mr. Shushkevich.
And I think that Ukraine should be the country who should be involved on the
ongoing basis in the dialogue with neighboring Belarus.
We have got a normal trade relationship between the two countries.
Actually, I had visited a tractor factory where half of the spares are
supplied from Ukrainian enterprises.
And definitely, we would want to see the next elections to be held in a
democratic fashion because we want Belarus to be our safe and reliable
neighbor. And we will do whatever it takes to have a common understanding,
mutual understanding between our two peoples.
MR. ÅSLUND: Vladimir Kara-Murza, RTVI.
Q: Thank you, Dr. Aslund. I'll pose the question in Russian, if I may,
then state it in English. (In Russian.) The question is, President
Yushchenko recently stated that the Orange Revolution inspired democratic
forces in many countries including Russia. Is the Ukrainian policy towards
Russia based on the assumption that similar events may happen in Russia in
the near future?
MR. YEKHANUROV: A month ago, I visited Moscow and I met President
Putin, and I guess that Ukraine hasn't got yet enough weight to influence
the policies of our big powerful neighbor. Well, Russia has a fairly sufficient
democratic environment in which they have to identify their moves on how to
develop further.
I am very glad that our relationships with the Russian Federation are
turning a very pragmatic perspective, and this is the way I would like for
them to develop further. You can ask me a question about Turkmenistan,
which I also recently visited.
Q: Ed Segura, SigmaBleyzer. Mr. Prime Minister, I am going back to the
economic area. My name is Ed Segura. I am now with SigmaBleyzer. You
say that in order to be able to meet the social commitments made to the
population, clearly economic growth will have to accelerate. We have to
proceed.
And that is very right, but also, if you were to look at the experience of
countries that have had similar economic shows in terms of very large
increasing budget expenditures, one of the few successful stories comes
from carrying out a major public administration reform.
To carry out a major audit of economic problems to make sure that the
problems are not only under control, but they are efficient. I think that
we look at Canada in the 1995, Ireland, New Zealand, and so on, many
countries.
But also countries like Poland were able to address the questions of an
unsustainable budget by carrying out a major public administration reform,
and I was wondering where public administration reform, comprehensive
audit of economic problems is now in the government today?
MR. YEKHANUROV: Thank you very much, Mr. Segura. I really very much
appreciate your input that you had made towards Ukraine's development when
you were working in the World Bank in Ukraine, and now that you're working
at SigmaBleyzer.
Very soon the government is going to pursue a set of actions to very clearly
discriminate between the political and administrative functions. We have
already handed out the relevant presidential decrees to the members of the
government on that issue. There we say that ministers and their deputies
are going to be political functionaries while all the others are going to be
ordinary civil servants, public servants.
Let me assure you that whatever has already been achieved from the point of
view of preparation for these reforms, what we did in the context of the
World Bank, in the context of our work with Madam Baranchuk, this is all
going to be delivered now at this point in time.
Much more challenging is the administrative territorial reform because the
suggestion and ideas that the previous government had come up with had not
found very positive response on the part of the people, which only points to
the fact that it is not enough just to think about reforms, to have very
clear technological views on how to do it, but it's very important to
implement them adequately and properly because this administrative
territorial reform revolves around the interests of about 200,000 civil
servants that are working and acting locally.
And they had really felt a threat to their comfortable life. So in reality,
we could really launch this massive effort properly and adequately after the
parliamentary elections next year. So now, the focus is going to be on the
central government.
MR. ÅSLUND: Thank you. I have lots and lots of questions. Celeste
Wallander, next? CSIS.
Q: Celeste Wallander, Center for Strategic and International Studies.
Mr. Prime Minister, I want to thank you for this wonderful discussion, and
in particular, your very straightforward, practical and friendly response to
questions and engagement. I think it's a very welcome approach to dealing
especially with Americans.
But my question is about Europe. I think it's quite well-known and
understood, and largely endorsed why Ukraine is interested in a good
relationship with the European Union and perhaps even with the perspective
towards membership some day.
My question for you is how does the Ukrainian leadership - your
government - convince not just the leadership of the European Union, but the
European people in a period where I think it's fair to say the European
Union has lost its strategic perspective and its leadership, that Ukrainian
relations - better relations with the EU and even membership in the EU is
good for Europe.
MR. YEKHANUROV: Thank you. It's only through success in economy, it's
only by ensuring wealthy and deserved standards of life, and also developing
and instilling all those European standards and norms at large that we can
really make ourselves come closer to the European Union.
For me, it's a very specific project. It's only when rank-and-file
Ukrainian citizen is going to live in a very dignified manner, to the same
standards of living as his or her counterparts in the European Union does -
it's only then we can say that we have approached the European Union.
Well, the oblast - the region of Ukraine where I had recently been serving
as a governor has had very serious problems with water supplies; like 60,000
people still rely on the water delivered in the tanks for their consumption.
Well, so for me, European standard of living would be for that specific
individual that depends on these kind of primitive infrastructure, for that
individual to be living in real conditions when there is going to be the
centralized water supply system, when there's going to be warm water on the
ongoing basis, and when there is going to be access to the Internet in his
or her home.
So I think that the major challenge now for us is organization from the
point of view of logistics and discipline because we lack - badly lack
modern-style managers, because we've got too many problems now with
qualified personnel.
When the economy grows, new challenges emerge, which is only to be
expected. So for us, the accession to the European Union is really a great
challenge for our nation, and that's a fascinating project to be implemented.
MR. ÅSLUND: Andrei Sitov, ITAR-TASS.
Q: (Off mic) - my question is about the WTO. Mr. Yekhanurov previously
said in Moscow that Ukraine was going to consult with Moscow on the issue of
WTO accession. My question is if Ukraine and Russia could help each other
accede to the WTO, whether he spoke about that in Moscow, whether he wants
to speak about that in Washington. Thank you.
MR. YEKHANUROV: Well, during our talks with the Russian Federation, we
felt a concern on the parts of the Russian negotiating team that, in the
context of Ukraine's accession to the WTO, there could be all kinds of
problems emerging in their borders.
To my knowledge, Russia can expect to join the WTO next year. When the
Russian Federation is a member of the WTO ahead of Ukraine, that would mean
that Ukraine will never be a member of the WTO. Well, this is a very simple
task that I am now trying to accomplish. We have to be a member of the WTO
before the Russian Federation, and we will do it.
MR. ÅSLUND: Thank you. That was a very clear answer. (Laughter.)
Andrew Bihun, Department of Commerce. (Laughter, applause.)
Q: Hello, Andrew Bihun from the U.S. Department of Commerce.
(Exchange in Ukrainian, not translated.) (Cross talk, inaudible.)
Q: Do you want me to translate this thing? (Laughter.) Let me do this
thing. (Chuckles.) (Cross talk.)
We hear quite a bit - and understandably so - about efforts in economic
development as well as civil linkages with the Western world, meaning the
European Union; also the Northern world - Russia, the Russian Federation,
United States, Canada, et cetera.
I'm asking what efforts are being made and what attention is being paid to
some of the upcoming, bigger markets of the world, faster growing ones such
as China, India, Japan, the Far East in general, the Middle East, as well as
Latin America.
MR. YEKHANUROV: Mr. Bihun, you are absolutely right. For us it's of
paramount importance to step into the new markets, particularly into those
markets where the Ukrainian products were there at the time when the - when
Ukraine was part of the former Soviet Union.
The countries you have just mentioned, they are belonging to that set of
nations, and I would really want to have established a very strong
cooperation with the Russian federation regarding our presence and our
doings on those markets.
Well, and now the government of Ukraine is considering this big project
involving the key big players on the international markets, by which I mean
the major Ukrainian companies because we have not yet learned to play
properly on the international markets.
And a very good example is the market of grain. Ukraine is usually facing
two calamities: when the harvest is low and when the harvest is much too
good. (Laughter.)
Well, and that is the problem of management; that is, the lack of adequate
administration, and that is the heritage of the times when Ukraine was part
of a huge country and had no experience of its own on how to work on the
international markets. But slowly but surely the Ukrainian businesses are
stepping into the new markets and there are more and more pieces of
Ukrainian property that are emerging there.
And I would like now to talk about the new role of the government, the new
role of the state that we are now trying to put in place. That's a very
good idea to learn from the experience of the U.S. embassies throughout the
world, how they can really launch their efforts and how they work that. And
we are going to learn from them in this respect, too.
MR. ÅSLUND: Thane Gustafson, Cambridge Energy Research Associates.
Q: Mr. Prime Minister, as Ukraine heads into winter, could you bring us
up-to-date on the current talk with Gazprom, and in particular, does your
government plan to revive the discussion of an international pipeline
consortium? And finally, does your government plan to revive the
investigation into RosUkrEnergo? Thank you. (Exchange in Ukrainian.)
MR. ÅSLUND: May I add here we had Alexander Medvedev from
Gazprom here 10 days ago, and he said that Gazprom wanted to force
Ukraine to pay market prices from next year.
MR. YEKHANUROV: Well, first I would like to mention the gas transit
system available in Ukraine. Again, there is a buzzword here:
responsibility because depending on how that - how successful that gas
system - gas transportation system functions, the well-being and prosperity
of the whole Europe depends.
Well, within the framework of this gas transit consortium, we are going to
build the new capacities and are going to revamp and revitalize the already
existing capacities.
We are being very calm but very persistent in our negotiations with
Gazprom, and I strongly believe that we - that is, both countries - are
destined to do whatever it takes to ensure the steady supplies of gas to
Ukraine and Europe at large.
We are not going to resort to all sorts of subterfuges in connection with
some issues that might emerge so that we could meet the agenda of our
populist demands or the agenda of the elections.
Well, we are going to be very reliable partners for both the Russian
Federation and Turkmenistan concerning the supply of their gas. Thank
you.
MR. ÅSLUND: Please introduce yourself.
Q: My name is Vadim Gorbach. I'm from World Bank.
I have one question. (In Ukrainian, translated.) When assuming the helm of
power at the ministry of economy, Mr. Yatsenyuk said that his first task is
to make the assessment of the existing economic situations and to make a
breakthrough in the economic development.
Well, do you have a vision of how you are going to deliver in the economic
perspective in the foreseeable future? And the second question is
concerning the tax reform package, which is expected to be implemented
within seven years. So what are your actions going to be to bring the
economy out of the shadows?
MR. YEKHANUROV: Well, I would like to answer the second question first.
The shadow economy is really very sizeable in economic - in the economy at
large.
The first steps that the government has taken were in the area of legalizing
the wages and salaries, bringing them to the surface, and I have got certain
experience on how to do it because that's what we had implemented in the
Dnipropetrovsk region, and that initiative is going to be spread over the
whole Ukraine.
Well, but further steps to bring the economy out of the shadows are really
much more challenging and is going to take a number of years. So the tax
reform will really take a long way to go.
So the question we are facing now is how to tax the real estate, which is
not an easy question to be answered from the point of view of methodology
and logistics.
Just imagine one living in the downtown of Kiev with a flat in that area
costing about $3, and this is exactly in the same downtown area where the
new buildings are being constructed where the value of each square meter is
$2,000 U.S. These are discrepancies that we have to get rid of, and that
will take a number of years. So it's going to be a great profit for the
assessing and evaluating companies.
But to implement the tax reform, one political question is to be - going to
be answered. When we have elected President Yushchenko for his second
term of office, then the tax reform will definitely be delivered completely.
As regards the economic situation and its growth, it's probably - the
minister of economy, Mr. Yatsenyuk that will have to answering that.
ARSENIY YATSENYUK: Do I have to speak English or - (in Ukrainian) - I
will try to answer very quickly. We actually detected many challenges, and
we have elaborated the primary steps which has to be enacted by the
government.
The main problems are trade gap, you know; the substantial decline in
current account; then import duties which were at substantially reduced;
then we have to protect internal market; then we have to do a lot of
different things, and I am sure that we have the similar vision with the
World Bank, but actually we have different approaches (to those things).
MR. ÅSLUND: I think that I only have time for one more question -
Susanne Lotarski, U.S.-Ukraine Business Council.
Q: Mr. Prime Minister, would you care to share with us vision and plans or
work that is being done by your government on a longer-term energy policy,
its directions, and what your priorities are?
MR. YEKHANUROV: Well, I would invite you - I would invite you to attend
the energy conference that is going to take place tomorrow, and that's where
I'm going to talk about all these steps and actions because that's a very
comprehensive issue which takes more time.
MR. ÅSLUND: Well, let me then ask what nobody has asked about:
reprivatization, which has been the big topic this year. Kryvorizhstal was
auctioned off on the 24th of -
MR. YEKHANUROV: It was Mr. Åslund that mentioned this - (unintelligible).
It wasn't me. (Laughter.)
MR. ÅSLUND: You have said before that reprivatization has to stop. How
will it stop and which will be the legal modalities for stopping it?
MR. YEKHANUROV: Well, we could call it by convention the reprivatization
process. I mean, this recent sale of Kryvorizhstal Iron and Steel Metal
Works, and that was the commitment that was made - was taken by the
presidential candidate in the Independence Square of Ukraine, the
present-day - incumbent president Yushchenko. Well, the successful sale of
this company has become a breeding ground for a number of talks and ideas.
The stand of the government is as follows: The process of reprivatization
in Ukraine is over, full stop. We had delivered on whatever promises and
pledges had been given in the Independence Square during the revolution.
As regards the other facilities that cause a number of questions to be
answered, that's up to the judiciary to work with all that and to establish
the truth.
However, we have got some individuals which follow the principle which
was very colorfully described in the Russian - (unintelligible) - there is no
beginning of the revolution and there is no end to the revolution.
Speaking about the privatization - reprivatization, our government is very
clear cut. It's over, and that is without a doubt the stand issued by -
taken by the president.
Thank you very much indeed. I really appreciate your patience and attention
to my statements and answers.
MR. ÅSLUND: I would like to thank you very much, Yuriy Ivanovych, for a
wonderful performance, and we wish you all the best of luck in your new job,
and we see that you know what to do. Thank you very much. (Applause.)
(END) (Note: Yuriy Yekhanurov's remarks are made through a translator.)
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2. UKRAINE: CONTRADICTIONS AND OPPORTUNITIES
Growing economy dragging along legal reforms with it
By David Hill, The Budapest Times
Budapest, Hungary, Monday, February 7, 2005
How long will droves of foreign investors continue to avoid Ukraine, a
country whose 48 million residents and fast growth could make it the next
Hungary, Czech Republic, Slovakia and Romania all rolled into one?
At a guess, for just as long as Ukraine's political and business
environments continue to be plagued by intricate webs of contradiction, and
politics and business remain so closely linked as to be indistinguishable.
That may seem a perverse view after the privatisation two weeks ago of the
country's biggest industrial asset. The auction of steel mill Kryvorizhstal
not only fetched a record USD 4.8 billion (EUR 4 billion) from Indian-
owned winner Mittal Steel, but seemed a model of transparency, being
ostentatiously broadcast live on national television.
Indeed, although Ukraine first embarked on a fitful series of state asset
sales in 1992, many people consider this tender - the second time
Kryvorizhstal has been sold - to be the first fair and free privatisation.
But as the bidders sat there, raising the stakes ever higher before an
expectant nation, heroically-scarred President Viktor Yushchenko was
nowhere to be seen. He arrived late for the event and watched from a
backroom.
Instead, sitting near the bidders, and the first to congratulate the
victors, was the golden-braided figure of Yulia Tymoshenko.
Sacked as prime minister, she holds no official post, but somehow bluffed
her way into the auction room to claim the result as a personal triumph -
and a trophy for her next election campaign.
CURIOUSER AND CURIOUSER
The Kryvorizhstal sale fulfils a promise Yushchenko made when running for
president late last year, part of a campaign to rid Ukraine of its corrupt
image.
Over the years, weak governments had awarded many privatisations to a
handful of local tycoons who carved up the country's main industries
between them.
Seeing little need to make technological upgrades, with labour costs a
fraction of those in the EU, the oligarchs kept production running as it
was and skimmed off the profit, much of it landing offshore.
Yushchenko pledged to revise privatisations and, if they were found
irregular, to re-nationalise and re-sell the assets.
Opinions differ as to whether this pledge was a positive or a negative sign
to investors. It sparked attention, but the suggestion that the present
government does not believe in property protection, nor recognise contracts
signed by previous administrations unsettled many businesspeople.
When Yushchenko fired Tymoshenko as premier in September, it was
precisely because of her excessive zeal over re-privatisation. It has been
assumed that her replacement, Yury Yekhanurov, would finish the resale
of Kryvorizhstal but leave other privatisations alone, in the interest of
stability.
But no one was expecting Kryvorizhstal to fetch USD 4.8 billion, a full USD
4 billion more than when President Leonid Kuchma sold it to oligarchs Renat
Akhmetov and Viktor Pinchuk (the latter his son-in-law) in 2004.
That sum removes any budgetary pressure to re-sell more major assets. But
politically, the high price increases the pressure on the government to
conduct more re-privatisations.
Tymoshenko is triumphant about the extraordinary revenue and is calling on
the government to re-sell other companies. This is likely to be her rallying
cry as she seeks to regain power in next March's parliamentary elections.
Going straight
Another landmark foreign investment deal in recent months came when
Raiffeisen Bank bought the country's second biggest financial institution,
Aval Bank, for what some consider an exaggerated EUR 1 billion. Though
the Austrian bank was already present in Ukraine, the deal increased its
visibility.
Some international banks, such as Sweden's SEB and Poland's Pekao, had
made purchases before that and more are expected.
It is thought that much of the banking sector, overdue for consolidation,
will be bought out by professional investors within the next year, providing
an economic backbone that could encourage M&A in other industries.
However, many investors are awaiting the result of next March's elections.
Other factors inhibiting investment in Ukraine are lack of transparency and
confusing laws.
Here, matters are improving. But this is not so much thanks to lobbying by
foreign investors as due to local tycoons being at a certain stage of
maturity.
Having carved up the economy, they need laws on land ownership,
commercial transactions, anti-trust and the like, so they can protect their
investments and develop their businesses. The government has acquiesced.
And as local companies increasingly tap international bond markets for
financing, they show a pragmatic interest in declaring results according to
international accounting standards - contributing to overall transparency.
TRUST THE SLAVS
Ukraine remains a Ukrainian's market, where foreigners tread with caution.
Yet in another sense, foreign investment is happening all the time.
For one thing, never forget the risk-tolerant Russians. Rarely harping on
about due diligence and the rule of law, they instinctively understand
Ukraine, and have pumped millions of dollars into it.
Much of this money - if it registers in official statistics at all - shows
up as coming from Cyprus or the British Virgin Islands.
Another trend in Ukraine is for an initial investment in a business -
privatised or greenfield - to be made by a local entity, and a strategic
foreign partner to come on board a few years later.
Less headline-hogging than M&A, such processes allow the local
entrepreneur to take the initial risk, and the foreign partner to bring in
know-how once the difficult years are through.
Local business watchers see this scenario playing out with increasing
regularity, at grassroots level. On a larger scale, one of the country's
dozen or so fertiliser makers operates as a Ukrainian-US joint venture.
Perhaps, a few years from now, all the major industrial producers will be in
joint ventures with foreign partners bringing in money and expertise. And
that will make re-privatisation an irrelevant question. -30-
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LINK: http://www.budapesttimes.hu/index.php?art=1244
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3. EU TO GIVE UKRAINE MARKET ECONOMY STATUS
European Commission clears Ukraine for improved trade relations
By Daniel Dombey in Brussels, Financial Times
London, United Kingdom, Tuesday, November 8 2005
BRUSSELS - The European Union is set to lower its defences against
imports from Ukraine in a sign that Brussels is finally providing concrete
help for Kiev after the Orange Revolution.
The European Commission has decided that Ukraine deserves the title of
"market economy status" - a move that reduces Brussels' scope to levy
hefty anti-dumping duties on Ukrainian imports.
Such a classification has been one of Kiev's main objectives this year. The
EU is Ukraine's biggest trading partner; annual bilateral trade stands at
$22bn (E18.6bn, £12.6bn), ahead of the $20bn trade between Ukraine and
Russia.
"Ukraine now fulfils all the criteria to be granted market economy status,"
says an internal Commission paper seen by the Financial Times. "This means
that Ukraine will be treated as a full-fledged market economy in all trade
defence investigations," once the measure has come into force.
The Commission expects the process will be completed by the end of this
year or early next year.
Viktor Yushchenko, Ukraine's president, has sought greater help from the
EU to consolidate the country's democratic swing, but Brussels has been
dismayed by disarray within the Ukrainian administration and has been
reluctant to encourage Ukrainian hopes for EU membership.
Now, however, the EU is finally progressing on two of Kiev's most important
priorities ahead of an EU-Ukraine summit scheduled for December 1:
anti-dumping duties and simpler visa rules.
The Ukrainian government hopes negotiations on simpler visas will be speedy,
leading to an agreement relatively early next year. But the Commission warns
that Kiev will have to make progress on a parallel agreement on readmitting
illegal migrants who entered the EU via Ukraine.
On a related issue, Brussels also believes that Kiev will have to make
considerably more progress in reducing tariffs if its membership application
to the World Trade Organisation is to proceed. -30-
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4. UKRAINE'S FAILURE TO JOIN WTO BY END-2005 WILL
DERAIL EUROINTEGRATION, ROMAN SHPEK SAYS
Interfax-Ukraine, Kyiv, Ukraine, Monday, Nov 7, 2005
KYIV - If Ukraine fails to join the World Trade Organization by the end of
this year, the country's plans to join the European Union will also suffer a
setback, Ukrainian mission head to the EU Roman Shpek has said.
Shpek said that if Ukraine doesn't join the WTO by the end of 2005, the
stimulus for the development of foreign trade will be lost, and negotiations
on drafting a new agreement with the EU will have no grounds for further
progress.
Shpek was commenting on President Viktor Yuschenko's speech on
priorities for Ukraine's entry to the WTO by the end of the year.
Shpek criticized the political forces speaking against passing the bills
needed for Ukraine to join the WTO. He said that with Ukraine's
accession to the WTO, the EU would abolish quotas on Ukrainian
exports. -30-
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5. OLIGARCHS PREFER TO BECOME TRANSPARENT
ANALYSIS: Roman Bryl, Ukraine Analyst
Intellinews - Ukraine This Week
Kyiv, Ukraine, Monday, November 7, 2005
Forthcoming sale of 33% in Galychyna oil refinery may become first
transparent deal on selling oligarchs' assets -----
Impressed by the success of the results of a transparent auction on selling
the 93.02% stake in steel major Kryvorizhstal, other Ukrainian finance and
industrial groups announced about the forthcoming sale of their assets also
in an open and transparent way.
The major acquisition that is expected soon concerns a 33% stake in
Galychyna oil refinery owned by individual shareholders close to
Dnipropetrivsk Privat finance and industrial group. It is expected that it
will the first case when these shareholders sell their assets in transparent
way.
Galychyna owned by Privat group is one of the biggest oil refineries in
Ukraine -----
MP Igor Yeremeev owns a 41% stake in Galychyna, the state owns 25%+1
stake and minority shareholders, primarily Privatbank, own the rest. Galychyna
reduced volumes of oil refining by 45% y/y in Jan-Sep 2005 to 916,200 tons.
The refinery produced 216,800 tons of petroleum, 305,100 tons of diesel fuel
and 324,400 tons of black oil during this period. Authorized capital of the
company amounts to USD 1.74mn.
Five bidders may participate in Galychyna tender -----
The sale of the Galychyna stake is slated for mid-Dec 2005. The open tender
will take place at the Ukrainian interbank currency exchange (UICE).
Investment and finance group Sokrat is an organizer of the auction. The
initial price is about USD 117.2mn.
According to experts, the price could be increased to USD 150mn during the
auction. At present, 5 companies unveiled their interest in participation in
the tender.
They are Alfa-Eco, controlled by Russian magnate Mikhail Fridman;
Russian-controlled investment company Renaissance Capital Ukraine;
Continuum Group; the largest Ukrainian oil producer Ukrnafta; and a
Czech investment fund, the name of which is still not disclosed.
The participants of the tender should pay a 10% pawn in UAH or in foreign
currency for non-residents. A winner should pay the whole sum for the stake
within 30 days after the tender. Rewriting ownership rights will be carried
out on the 3rd day after the auction.
Privat Group wants tender to take place in transparent way to boost its
chances in future privatisation dealsPrivat group representatives declared
earlier that they would like the tender held the same way as with
Kryvorizhstal, i.e. with a live broadcast and in front of journalists and
all interested parties.
At first, the owner of the stake hopes the transparent auction could raise
the price of the Galychyna stake and increase the reputation of Privat group
as a transparent company. Showing itself to be transparent, Privat Group
increase its chances to successfully participate in forthcoming
privatization projects in Ukraine.
Privat proposed USD 300mn for Nikopol ferroalloy plant the state
wants to sell -----
For instance, at the end of October Privatbank sent a proposal to president
Victor Yuschenko and to state property fund that in case of the sale of a
50%+1 stake in Nikopol ferroalloy plant (NFP), the bank would pay UAH
1.5bn (USD 300mn). Privatbank supposes that Russian Evraz Group and
Renova might partake in the tender.
The price of the stake could rise to UAH 2-2.5bn (USD 400-450mn), the bank
forecasts. The sale of the stake should be held the same way as with
Kryvorizhstal. Earlier Privatbank offered UAH 1bn (USD 200mn) for NFP.
To remind you, in May 2003 state property fund sold NFP's 25% stake to
Prydniprovie consortium for UAH 205m (USD 41mn). In August the fund
sold another 25%+1 stake to Prydniprovie for UAH 205.5mn (USD 41.1mn).
Currently Prydniprovie owns 73% of NFP. Another 25% of the plant is
controlled by companies affiliated with Privatbank. At the end of August,
supreme commercial court declared illegal the sale of a 50%+1 stake in NFP.
In September president Yuschenko ordered the general prosecutor's office
and ministry of justice to return the 50%+1 share to the state property fund.
Major bidder for Galychyna is state oil producer Ukrnafta -----
On the other hand, experts predict that in spite of an open tender, Ukrnafta
will buy the stake in Galychyna, held by its old partner Privat. Earlier,
companies controlled by Privat, under such brands as Sentoza, Avias and
others sold to Ukrnafta several hundreds of gasoline stations.
Thus, during last two years Ukrnafta within its program on creation of a
vertical integrated company, bought 600 gasoline stations paying for them
USD 1bn in total. Sector analyst say the price paid for the stations
exceeded 2-3 fold the real price. We cannot exclude the profit was divided
between Ukrnafta and Privat Group.
Main shareholder of Ukrnafta - Naftogaz Ukrainy - can forbid company
to participate in tender -----
Commenting the Galychyna sale, Privat group did not deny that Ukrnafta is
the most preferable bidder. According to deputy president of Privatbank
Timur Novikov, Ukrnafta already has a vast network of gasoline stations
but it needs oil-refining capacities to become a real vertically integrated
company.
Although Ukrnafta might not get to participate in the contest. The entity
needs permission from its main shareholder, state-owned Naftogaz Ukrainy
that owns 50%+1 in Ukrnafta. Naftogaz lately expressed its disappointment
regarding the high price Ukrnafta paid for the gasoline stations.
In summer Naftogaz's president Olexiy Ivchenko promised to unveil the true
reasons why Ukrnafta paid such a high price for the gasoline stations, but
no actions have followed.
Ukrainian industrial and finance groups should be transparent to attract
foreign funds -----
In any case, the tender for 33% in Galychyna surely would not be such a
big event as selling Kryvorizhstal metallurgical plant. But it may reflect
several new trends new for Ukrainian businesses.
First, Ukrainian finance and industrial groups owned by local oligarchs
realized a transparent way of selling/buying assets would secure them from
pressure by state authorities.
Second, the groups started improving their image before the foreign partners
and community. It is important for attracting foreign credits. For example,
in late October PrivatBank attracted a USD 158mn syndicated credit.
Standard Bank Plc and Barclays Capital were the organizers of the loan.
The respective credit agreement was signed on Oct 26, as PrivatBank's
president Olexander Dubilet informed on Oct 28.
Initially the bank planned to attract a USD 89mn syndicated loan, but the
participants of the syndicate were ready to provide more funds. Among
the syndicate members were major banks from Europe, the US, Japan
and Middle East.
DIU joined Arcelor in Kryvorizhstal tender just to show it is transparent
corporation -----
Another example of higher transparency is that one of the reasons of
Donbass Industrial Union (DIU) participating in the tender on Kryvorizhstal
together with Arcelor was to show that DIU is a transparent company. For
a long period of time, DIU was considered one of the most closed industrial
groups in Ukraine.
Having said all this, we must note that some sell-offs by oligarchs might be
a form of capital flight. Specific business tycoons come under pressure from
state authorities trying to lay their hands on specific highly lucrative
economic sectors.
This is something worth keeping in mind when analyzing corporate
governance standards and the investment climate in Ukraine. -30-
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6. EASTWARD FOCUS SERVES AUSTRIA'S ERSTE BANK WELL
"We want to expand into new areas, such as Romania or Ukraine."
By Haig Simonian, Financial Times, London, UK, Monday, Nov 7 2005
VIENNA - At Erste Bank's headquarters in Vienna, all eyes are on Romania
as the Austrian bank waits for news on its bids for two of the few remaining
banking assets in eastern Europe still for sale.
Andreas Treichl, Erste's suave chief executive, denies his company is under
pressure to bid high to ensure victory in at least one of Romania's
outstanding bank privatisations.
But the fact that Erste is the only bank bidding for both Banca Comerciala
Romana (BCR) and CEC, the two very different banks being privatised by the
Romanian government, is a sign of Mr Treichl's determination to maintain his
bank's eastern European momentum.
In the past few years, Erste has established bulwarks in the Czech Republic,
Slovakia and Hungary by buying former run-down savings banks. Although
the prices sometimes seemed high, the deals are widely recognised today as
having been extremely canny in providing access to high growth markets at a
time of slowing business in mature western Europe.
Erste has moved recently to build on its presence in Croatia and Serbia
through further purchases, and now claims to have the biggest retail banking
presence in central and eastern Europe.
"We have 12.5m customers, of whom more than 10m are now in the European
Union. That's more than [Italy's] UniCredito even after its takeover of HVB
Group is completed," says Mr Treichl.
The eastwards focus has served Erste well. Although already the second
biggest bank in Austria as the umbrella body for the country's savings
banks, growth in its home market is limited. Domestic earnings have risen
thanks to improved productivity and cost cuts, but Mr Treichl admits the
room for further growth in Austria is restricted.
The acquisition-led eastern focus has boosted Erste's earnings. Group net
profits after minorities jumped almost 40 per cent to E508.8m in the first
nine months, boosted by this year's sharp cut in Austrian corporate taxation
and lower minority interests. Pre-tax earnings rose by a smaller 19.6 per
cent to E890.3m.
The figures may strengthen the Austrian group's hand in the final round of
bidding for BCR, Romania's biggest bank, as it comes head to head with BCP,
the Portuguese bank that has emerged as the other, surprise, contender on
the final shortlist.
"The trouble now is that Treichl is under pressure to maintain the growth
momentum. He's going to have to bid high in Romania," says one well
placed investment banker.
The pressure is all the greater as Erste is widely perceived to have missed
out on recent opportunities in Bulgaria and, most recently, in Ukraine.
Earlier this year, Bank Aval, Ukraine's second biggest, was snapped up by
the Raiffeisen group, one of Erste's domestic arch-rivals, for more than
$1bn.
Mr Treichl plays down acquisition-led growth in favour of a twin-track
emphasis in which continuing geographic expansion is complemented by
broadening the product range in Erste's existing eastern European markets.
"We want to expand into new areas, such as Romania or Ukraine. But there
are also still lots of opportunities in the 'first wave' of eastern European
countries now already in the EU," he says.
The additional business potential in countries such as the Czech Republic or
Hungary involves going beyond just current accounts and personal finance to
mortgages, insurance and fund management.
Mr Treichl also stresses the growing need for private sector pensions as
governments, prioritising tax cuts to attract foreign investment and boost
growth, start to roll back the cover once provided by state schemes. "These
are going to be the real stories over the next 10-15 years," he says.
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7. UK'S LARGEST OPERATOR OF PRIVATE NURSERIES FOR
CHILDREN SELLS OUT IN UKRAINE
Commercial outlook was likely to deteriorate
By Michael Neill, Financial Times, London, UK, Tuesday, Nov 8 2005
LONDON - Nord Anglia Education, the UK's biggest operator of private
nurseries, has sold the 75 per cent it owned in the International Schools
business in Dnipropetrovsk and Kiev, Ukraine, for £1.34m to Advanced
British Education, a company owned by Nord Anglia's local partner.
The sale was forced by what Nord Anglia said were "specific issues [which]
have meant that the commercial outlook was likely to deteriorate". The
schools in Ukraine generated an operating contribution before costs of
£206,776 from turnover of £1.91m in 2004.
In May, Nord Anglia passed its interim dividend and renegotiated its bank
debt in a bid to conserve cash after last year's rapid expansion of its
nursery operations ran into problems.
The highly geared group saw pre-tax profits fall 73 per cent to £1.13m for
the six months to the end of February 2005. Nord Anglia is committed to
expanding its international division. Countries in which it operates include
Slovakia and China. The shares rose 1½p to 126p. -30-
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8. INTERVIEW ON POLITICS IN UKRAINE
INTERVIEW: Kyiv Post editor Andrey Slivka
By Peter Lavelle, United Press International
Kiev, Ukraine, Sunday, November 6, 2005
KIEV, Ukraine - Andrey Slivka is editor of the English language weekly Kyiv
Post. Here, he is interviewed by Peter Lavelle on politics in Ukraine.
UPI. It has been over a month week since Ukrainian President Viktor
Yushchenko dismissed the government of Yuliya Tymoshenko -- Yushchenko's
strongest ally during the "Orange Revolution." How has this parting of ways
affected the popularity of Yushchenko and Tymoshenko?
Andrey Slivka. Yushchenko has gotten more popular with the West, on the one
hand, and Moscow on the other. The former, and especially Washington, liked
to see the departure of Tymoshenko, whom they consider insufficiently
liberal on economics.
Moscow considered Tymoshenko an irritant. But domestically, both
Yushchenko and Tymoshenko saw their popularity fall this year, as part
of what's been called "post-revolutionary depression."
Now, however, Tymoshenko's popularity seems to be rising again, while
Yushchenko's keeps falling. Fairly or not, as Yushchenko attacks Yulia and
meets with Leonid Kuchma and Viktor Yanukovych, he's taken on the slight
aura of a sell-out.
Part of Yushchenko's problem is that he's not particularly charismatic or
politically articulate. He's a banker, who sort of got forced by
circumstance into being the opposition candidate. Yulia, on the other hand,
is incredibly charismatic, and she's still significantly seen as the prime
mover behind the Orange Revolution.
Q. During the Orange Revolution and after -- even to the day when the
government was dismissed, Tymoshenko used the "anti-oligarchy" card to
whip-up popular support when support the re-privatization of some former
state assets. One could easily make the claim that she is an "oligarch." How
can she use the "anti-oligarchy" card when she herself can be considered as
one?
A. Her participation in the so-called "oligarchy" was a long time ago: Back
in the '90s, when a lot of people in Ukraine were up to no good. Since then,
she's been an effective deputy prime minister for energy: So effective in
cleaning up energy sector corruption, in fact, that they threw her in jail.
She's also been saying the right things about corruption, as far as
Ukrainians are concerned, for years. She actually seems to personally resent
the oligarchs, which appeals to people, who generally resent them, too.
People know what she was doing in the '90s; but they also know that a lot of
water has passed under the bridge since then.
Q. How is this possible? So there are "good oligarchs" and "bad oligarchs?"
A. Maybe. For the Orange Revolution crowd, Petro Poroshenko -- the
pro-Yuschenko tycoon who's at the center of the current corruption
scandals -- was a "good oligarch" indeed. Also, few people believe that
Tymoshenko had her hands in the till as prime minister. It seems more
credible that she made enough money in the past not to have to bother with
such business now.
Q. What is her political future?
A. She'll stay powerful, and maybe get more powerful. She'll obviously be
a force in the parliamentary elections next spring. Recent opinion polls
suggest that if she went head-to-head against Yushchenko, she'd win.
Irrespective of the outcome in March, she's not going away. She'll be a
force in Ukrainian politics. She's not even 45 yet and she takes her work
very personally.
Q. What of the former presidential candidate and Prime Minister Viktor
Yanukovych? We know that Yushchenko reached out to him to help ensure
Yuriy Yekhanurov was elected as prime minister on a second ballot? Is
Yanukovych still a credible player in Ukraine's politics?
A. Yushchenko worked with Yanukovych to ensure a new government was
installed. But Yanukovych is no longer a meaningful figure on the political
stage. His moment's over: He blew it last year, big-time. He's a joke. He
still has his Donetsk constituency, and can sway things in the parliament,
but it's unlikely he'll return to prominence again.
Q. Kuchma appears to still have influence in Ukrainian politics and the
economy. Settling into retirement, what is his influence and how is he
thought of by Ukrainians?
A. Kuchma got away with it: He won. His plans to install his own successor
didn't work out the way he hoped, but the Orange Revolution isn't a tragic
outcome for him. He's got his money; he's got his powerful friends, his
quiet retirement.
That said, when most in the political elite and the general population think
of Kuchma, the consensus is to accept closure. Everyone's just pleased he no
longer dominates the political stage.
Q. During the Orange Revolution, Western media liked to spin Ukraine's
political upheaval as a struggle to bring Ukraine into the "Western fold."
Some Russian media also interpreted the Orange Revolution as a Western
plan to "weaken and isolate" Russia. As someone who was on the ground
during the Orange Revolution, does either interpretation hold water?
A. Both interpretations are simplifications for the benefit of the media.
The revolution was about refusing to be lied to anymore: About not
tolerating a spectacularly corrupt vote. It was about wanting to be a
normal, European, country. But even if Ukraine wants to be European, it
knows it's joined with Russia at the hip.
You can't really be anti-Russian in Ukraine: You can roll your eyes when you
hear a Moscow accent down in Yalta, or resent Kremlin policy, but you can't
live without Russia, and people know that. Most everyone in Ukraine speaks
Russian, after all.
Q. With the new government, for the most part, assembled, many in the media
are saying that Ukraine is looking for some kind of rapprochement with
Vladimir Putin's Russia. Is there again an exaggeration?
A. The word "rapprochement" might be a bit of an exaggeration, because
there was never any radical split. Ukraine, after all, still has to get its energy
through Russia. Given that, and despite all the Orange Revolution rhetoric,
who in Kiev would really want a radical split with Russia?
On the other hand, it's true that superficial relationships with Moscow will
be smoother now. There will be more hand-shaking, more smiling for the
camera, more kind words. That seems to be something the new government
wants to do. Tymoshenko, whom the Russians were making noise about
arresting, would not have done it.
Q. What is the future of the Orange Revolution? Has it stalled or is it
over?
A. The process of building a civil society here is still going on.
Yushchenko and Tymoshenko are really tangential to that process. There's a
more healthy political culture now, and a free media, and few think that the
2006 parliament elections will be as fraudulent as elections have been in
the past. Things are incrementally better.
The last nine months have been a shaking out period. There are still
horrible problems - for example, there's no functioning justice system in
Ukraine - but the Orange Revolution has changed the way Ukrainians think
about politics and themselves their country. That's it: There's no way back.
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9. WESTERN NIS ENTERPRISE FUND CELEBRATES 10 YEARS
Ten years of investment in Ukraine and Moldova
The Action Ukraine Report (AUR)
Washington, D.C., Tuesday, November 8, 2005
WASHINGTON - The Western NIS Enterprise Fund (WNISEF)
celebrated its 10 year anniversary with a dinner in Washington, D.C. at
the J. W. Marriott Hotel. Over 90 guests attended the event hosted by
Dennis A. Johnson, Chairman of the Board of Directors and Natalie A.
Jaresko, President and CEO and Managing Partner, Horizon Capital.
WNISEF was established in 1994 by the U.S. Congress with initial
funding of $150 million from USAID. The privately managed fund
invests capital and provide best business practices to small and medium
sized business in Ukraine and Moldova. The Fund has leveraged its
original capital by attracting additional investment from local and
international investors.
Ambassador Carlos Pascual, Coordinator, Office of Reconstruction
and Stabilization, U.S. Department of State and former U.S. Ambassador
to Ukraine was the master of ceremonies. William Green Miller, Senior
Policy Scholar, Woodrow Wilson Center, and also a former U.S.
Ambassador to Ukraine also participated in the program.
WNISEF honored three persons who were with the fund in the early
start-up years: Glenn H. Hutchins, first Chairman of the board of
directors; Scott A. Carlson, the first President and Harold J.Schroeder,
the first Chief Investment Officer.
The keynote speaker was U.S. Senator Richard G. Lugar, Chairman,
U.S. Senate Foreign Relations Committee. The Senator spoke about
his long involvement in Ukraine as a result of the Nunn-Lugar legislation
designed to eliminate weapons of mass destruction. Lugar went to
Ukraine the first time in 1992 and has made many visits since that time.
Lugar spoke about his trips during the period when Ukraine destroyed
the third largest nuclear weapons stockpile in the world in the early
1990's. The Senator said this was a great achievement by the Ukrainian
government and by the people of Ukraine.
Senator Lugar also spoke about his trips to Ukraine in 2004 for the
presidential election and during the famous Orange Revolution.
Senator Lugar was the official representative of the U.S. Government
during round two of the presidential election and played a critical role
in the U.S. government's decision to declare that election as not being
free and fair and not meeting international democratic election standards.
Lugar said the democratic and private sector economic progress of
Ukraine is tremendously important to the United States and that, "The
U.S. will be watching closely the March 2006 parliamentary elections
and the progress Ukraine makes regarding the implementation of
needed economic, legal and political reforms.
According to WNISEF it has invested $97.8 million in 26 companies,
employing over 18,000 people. Western NIS Enterprise Fund's
management team has formed Horizon Capital to capitalize on its
ten-year investment experience and attract substantial additional
capital into the private equipment industry in Ukraine and Moldova.
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=====================================================
10. FOREIGN MINISTRY WANTS REASON AZERBAIJAN
BARRED ELECTION OBSERVERS FROM UKRAINE
Associated Press (AP), Kiev, Ukraine, Monday, Nov. 7, 2005
KIEV - Ukraine's Foreign Ministry Monday criticized the deportation of
Ukrainian election observers from Azerbaijan and demanded an explanation.
"This incident creates a hostile atmosphere for the development of friendly
bilateral relations between Ukraine and Azerbaijan," the Foreign Ministry
said in a statement.
Sixteen Ukrainians who traveled to Azerbaijan to monitor its parliamentary
elections were barred from the country and sent home Sunday, the day of
the vote. The observers said they were told at the airport in the Azerbaijani
capital, Baku, that they weren't wanted.
Ukraine's Foreign Ministry called on Azerbaijan to determine what happened
and explain.
Fears are high in Azerbaijan that the opposition, which has claimed the vote
was largely rigged, will try to emulate last year's Orange Revolution in
Ukraine. Those protests helped cancel a fraud-marred vote and ushered
then-opposition leader, Viktor Yushchenko, into power, giving hope to
opponents of governments in other ex-Soviet republics.
It wasn't immediately clear what observer group the Ukrainians were working
with. One of the Ukrainians who was barred said he was invited to observe
the elections by Isa Gambar, leader of the opposition Musavat party. Another
was a leader of Pora, a youth movement that was one of the main organizers
of the Ukrainian protests. -30-
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11. PRES YUSHCHENKO ORDERS CABINET TO STRIVE FOR
INTERNATIONAL RECOGNITION OF 1932-1933 FAMINE
IN UKRAINE AS ACT OF GENOCIDE
Construction of a memorial to Ukrainian famine victims
Ukrainian News Agency, Kyiv, Ukraine, Sunday, Nov 6, 2005
KYIV - President Viktor Yuschenko has commissioned the Cabinet of
Ministers to take additional measures for international recognition of the
Famine in Ukraine of 1932-1933 as genocide against Ukrainians and one
the largest tragedies in the history of humankind. The president issued
relevant order 1544/2005 on November 4, a copy of which is available
to Ukrainian News.
Yuschenko also commissioned the government to take urgent measures
to submit the bill on political and legal evaluation of the Famine in the
Ukrainian history and define the status of those, who suffered from it.
Yuschenko instructed the Cabinet of Ministers to form an organizational
committee led by Prime Minister Yurii Yekhanurov within two weeks to
prepare and conduct the events timed to the 75th anniversary of the
Famine of 1932-1933 [in 2007-2008].
The Cabinet of Ministers shall appoint to the organizational committee
representatives of central and local executive authorities, local
self-government and NGOs.
By November 20, the committee should confirm a plan of events timed to
the 75th anniversary of the Famine for 2006-2008. The plan should include
construction of a memorial to Ukrainian famine victims, monuments and
memorial tablets in Kyiv, as well as setting in order the graves of famine
victims.
The government should provide annual conduct of the Day of Memory of
Victims of Famines and Political Repressions.
Before November 20, the government should also settle the issue of creation
of the Ukrainian Institute of National Memory. Before December 15, the
government shall submit suggestions to grant the Bykovnia state historical
and memorial reserve a status of national.
Yuschenko commissioned the Security Service of Ukraine to facilitate the
access to archive materials on the Famine. Presidential Secretariat chief
Oleh Rybachuk was tasked to develop a ritual of honoring the memory of
Famine victims in Kyiv and regions.
The Foreign Ministry and Ukraine's mission in other countries should hold
the Day of Memory of Victims of Famines and Political Repressions this year.
In his order, Yuschenko put honoring the memory of victims and support
of victims of famines as priority issues for central and local authorities.
As Ukrainian News reported earlier, Ukraine believes that creation of the
Holocaust Memorial Day by the United Nations is an occasion to recognize
the Famine in Ukraine in 1932-1933 as a genocide act against Ukrainian
people.
Ukraine plans to prepare a document towards 2007 that the United Nations
will adopt, which will recognize the Famine in Ukraine in 1932-1933 as an
act of genocide.
In November 2003, a number of states prepared a joint statement, in which
they referred to the Famine in Ukraine as the result of the policy of a
totalitarian regime. According to various estimates, from 3 to 7 million
people died as a result of famine in 1932-1933. -30-
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12. MONUMENT TO KULAKS UNVEILED IN IRKUTSK REGION
Itar-Tass, Moscow, Russia, Sunday, November 6, 2005
IRKUTSK - A monument to kulaks, well-to-do farmers deprived
of their wealth and deported to Siberia, was unveiled in the town of
Cheremkhovo in the Irkutsk region [Russia] on Sunday.
The Soviet campaign against kulaks - the confiscation of their
property and the deportation to remote areas as mining and timber
industry laborers - began 75 years ago.
About 14,000 farmers were brought to Cheremkhovo, then mining
center of East Siberia, Irkutsk Pedagogical University Assistant Prof.
Galina Kirillova told Itar-Tass.
Kirillova and several children and grandchildren of kulaks initiated a
fund raising campaign for the monument. They received donations
from residents of the Irkutsk region and other areas and local plants.
---------------------------------------------------------------------------------------
FOOTNOTE: Many of the family farmers [kulaks] taken to Siberia
by the Soviets under Stalin's leadership were from Ukraine. One
did not have to be 'well-to-do' to be labeled a kulak. One just had
to own a small plot of land, have a home, a little farm machinery and
a few livestock. All of this property was stolen by the Soviets and
the family farmers were either sent to Siberia, murdered or had
to work on government owned and controlled farms. EDITOR
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13. UKRAINIAN COMMUNISTS MARK BOLSHEVIK REVOLUTION
AS NATIONALISTS HOLD COMPETING RALLY
Associated Press (AP), Kiev, Ukraine, Monday, Nov 07 2005
KIEV - Hundreds of Ukrainian Communists commemorated Russia's
Bolshevik Revolution on Nov. 7, while nationalists gathered behind
police barricades and shouted "Shame!"
The Communists turned Kyiv's Independence Square into a sea of red,
waving red flags as giant red balloons floated above the crowd. One protester
held aloft a painting of Bolshevik leader Vladimir Lenin, while others - red
ribbons tied around their arms - joined in singing the workers' anthem, "The
Internationale."
The anniversary of the 1917 revolution is no longer an official holiday in
this ex-Soviet republic.
But, "we've been celebrating this day since childhood and I intend to
celebrate it until my death," said Valentyna Chernova, 68.
Some Communist protesters also carried cartoon photos of President
Viktor Yushchenko in American-flag stars-and-stripes underwear.
Outside the president's office, young protesters in black leather jackets,
who did not identify themselves, hurled oranges over the heads of police
lines and chanted "Long Live the Russian Empire."
Last year's Orange Revolution brought to power a pro-Western government
that critics accuse of being a lackey to the West and of ruining relations with
Ukraine's giant neighbor and longtime ruler, Russia.
Also in downtown Kyiv, dozens of nationalists held a competing rally near
the rebuilt St. Michael's Cathedral, which had been destroyed by the
Communists, to remember the victims of Communist repression. They held
candles and sang Ukraine's national anthem.
"I'm here because I owe it to my grandfather," said Valentyna Polushchyna,
55, who said her grandfather was forced into exile in Kazakhstan.
The Communist legacy continues to divide Ukraine. In the Russian-speaking
east, many feel nostalgia for the Soviet Union.
Ukraine's more nationalistic west, which only fell under Soviet rule after
World War II, viewed the Soviet Union as an occupying force that trampled
on Ukraine's dreams of independence.
Some of the younger nationalists rallying near St. Michael's later marched
down the hill toward Independence Square. They gathered on the opposite side
of the main road that bisects the square, as hundreds of police stood behind
specially erected metal barricades separating the them from the Communists.
Some 800 Kyiv police were on duty to prevent clashes and 6,000 more were on
call, the Interfax-Ukraine news agency said. Last month, leftists and
nationalists clashed when members of Ukraine's insurgent army, which fought
both Communists and Nazi's during World War II, tried to march through the
capital. Police were heavily criticized for not preventing violence on that
occasion. -30-
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14. CANADIAN JOURNALISTS FOR FREE EXPRESSION HONOR
JOURNALISTS FROM GAMBIA AND UKRAINE
Media: Banned in Gambia, Defiant in Ukraine
Channel 5 TV journalist Mykola Veresen winner from Ukraine
Stephen Leahy, Toronto, Canada
Inter Press Service, Johannesburg, South Africa
Friday, November 4, 2005, Web posted November 7, 2005
Journalists from Ukraine and Gambia were honoured this week with the
International Press Freedom Award for persisting in their work even while
facing serious threats against their lives.
"Mykola Veresen's and Alagi Yorro Jallow's cases exemplified true fighters
for freedom of the press," said Rod Macdonell of the Canadian Journalists
for Free Expression (CJFE).
CJFE promotes and defends free expression and press freedom and grants
thousands of dollars to aid persecuted journalists in Latin America, Africa,
Asia and Eastern Europe. "Their courageous work in the face of great
adversity has demonstrated an exceptional commitment to free expression,"
said Macdonell.
The annual award is given to journalists outside of Canada by the CJFE to
recognise and call attention to the many countries where journalists face
personal danger simply for telling the truth.
"Journalism is one of the few professions that requires personal courage,"
noted Marlys Edwardh, a prominent Canadian criminal law lawyer. Edwardh
also received a special award from CJFE for her work in defending the right
to freedom of expression, including the defence of Canadian reporters.
Being a reporter is a very dangerous job in many parts of the world.
Fifty-four journalists have been killed and more than 110 imprisoned so far
this year, according to Reporters without Borders, an NGO watchdog based
in France.
Iraq remains the most dangerous place in the world for journalists, with at
least 24 killed this year alone. But journalists are targeted in many other
countries as well.
Alagi Yorro Jallow's mentor and fellow journalist Deyda Hydara was
murdered in Gambia last December. Jallow is managing editor of The
Independent newspaper and a former correspondent for the BBC. He
believes Hydara's killing was politically motivated because of his criticism
of the ruling government.
There has been little effort by the police to find the killers, said Jallow,
who himself has been arrested and detained 12 times in the past six years.
Gambia is a small West African nation that gained its independence from
Britain in 1965.
For four years, Jallow served as the vice chairman of the Gambia Press
Union, where he was part of a successful campaign to disband a
government-controlled media commission with extensive powers to punish
journalists with years of imprisonment and heavy fines.
Ironically, Gambia's constitution guarantees freedom of the press. "How
can journalists be held criminally accountable for telling people the
truth?" Jallow told IPS.
In April 2004, a group of armed men entered the offices of The Independent
and set them ablaze with the staff still inside. Several people were hurt,
and the office and brand-new printing equipment owned by the paper was
destroyed, causing huge financial losses.
Currently living in temporary exile in the United States, Jallow is
painfully separated from his family and community simply because Gambian
officials can "oppress any journalist they don't agree with".
Gambian President Yahya Jammeh, who first came to power in a military
coup in 1994, has expressed an increasingly hostile attitude toward the media,
according to a recent report by Reporters Without Borders. That and "the
unpunished murder of journalist Deyda Hydara" makes Gambia one of the
more dangerous places to be a reporter, the group concluded.
The New York-based Committee to Protect Journalists also recently noted
the decline in press freedom in Gambia in 2004, "a year marked by arson
attacks, threats, and repressive legislation aimed at the independent media".
Jallow says that it is vital to bring worldwide attention to what is
happening to journalists in his country. "The press must be free or it can't
be called a press at all," he added.
The media also played an important role in Ukraine's dramatic Orange
Revolution last year, thanks in large part to the efforts of TV journalist
Mykola Veresen, the other CFJE award winner.
The Orange Revolution began in Ukraine as a series of political protests and
events in response to charges of fraud in the Nov. 21 run-off election. A
small cable TV station called Channel 5, with Veresen as anchor, was the
sole media outlet to provide unbiased coverage to the challenger, Viktor
Yushchenko.
Channel 5 became the station everyone watched, including international
monitors of the election, and Veresen was the public face of the news.
Ukraine is a dangerous country in which to be a journalist in recent years.
In 2004, 20 journalists were arrested and more than 30 were physically
attacked. In the past 10 years, four journalists have been murdered in
Ukraine.
Veresen was a well-known and respected journalist. He was also the first
Ukrainian journalist to work for a foreign news service, the BBC, reporting
for them from 1986-1996.
Later he hosted a social affairs programme called "Taboo", which tackled
themes that had previously been off-limits, such as drug addiction, sex, and
police corruption. Although the Orange Revolution was largely peaceful,
Veresen faced personal threats. But one year later, there are signs of
movement towards a free and open media, he said through a translator.
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LINK: http://allafrica.com/stories/200511070102.html
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15. CONTEMPOARTUKRAINE
Quarterly art magazine introducing today's Ukrainian artists
The Action Ukraine Report (AUR)
Kyiv, Ukraine, Monday, November 7, 2005
KYIV- ContempoARTukraine is an outstanding quarterly art magazine
designed to introduce and promote contemporary Ukrainian artists.
The magazine was first published in Ukraine in the summer of 2003 in
English. The magazine was founded by Walter Belanger who is
still the managing editor and lives in Kyiv.
Each issue features 10 different artists, of the more traditional art styles
[not modern art]. Each artist has six pages of full color reproductions
and a comprehensive article by a qualified art historian about their life,
styles and level of artistic experience.
Belanger told The Action Ukraine Report the aim of the magazine is to
show to the world the richness and quality of Ukrainian art. "The
publication, after three years, is turning into a mini-encyclopedia of
Ukrainian art, so far featuring over 80 outstanding painters and artists,"
Belanger said.
During the past three years ContempoARTukraine has also organized
15 art exhibitions of works by artists featured in the magazine in
California. With the active support of the U.S.-Ukraine Foundation
(USUF) of Washington, D.C., Ukrainian artists were introduced to
many U.S. art lovers.
Collectors of many national origins have now discovered Ukrainian art
and the list of collectors is growing with each exhibition. Managing
Editor Walter Belanger said, "California many not be the world but it
has been a good place to start. It is very gratifying that at our
exhibitions, since the Orange Revolution, we do not have to explain
anymore 'Where is Ukraine?'
Belanger wrote in his 'From The Editor' column in the fourth issue for
year 2004, "We dedicate this issues of contempoARTukraine to the
Orange Revolution. To the young people of the student organization
PORA! (Time has come!), to all the people of Ukraine who, at last,
could exercise their constitutional rights, and to the fairly elected new
president, Victor Yushchenko. May the Spirit of Orange guide them
now and in the future."
Walter Balanger spends a considerable portion of his time traveling
around Ukraine looking for, interviewing and then working with the
artists he chooses to feature in the magazine. He said he plans to
continue publishing the magazine and promoting Ukrainian art and
artists for many more years. -30-
-----------------------------------------------------------------------------------------
NOTE: All the past issues of the outstanding new magazine
contempoARTukraine are still available. For information on how to
purchase any or all of the past editions of the magazine or to purchase
a yearly subscription please contact ArtUkraine.com@starpower.net .
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