"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 ORANGE REVOLUTION CONTINUES IN THE HEARTS,
MINDS AND ACTIONS OF FREEDOM LOVING
PEOPLE IN UKRAINE AND ALL AROUND THE WORLD
By your actions be a member of the ongoing Orange Revolution in 2006
"THE ACTION UKRAINE REPORT - AUR" - Number 625
Mr. E. Morgan Williams, Publisher and Editor
Washington, D.C., FRIDAY, DECEMBER 23, 2005
--------INDEX OF ARTICLES--------
1. A YEAR ON, UKRAINE'S DEMOCRACY IS SHOWING RESULTS
COMMENTARY: By Viktor Yushchenko
Financial Times, London, UK, Thu, December 22 2005
2. UKRAINE WON'T BE BLACKMAILED BY RUSSIA IN GAS SPAT
Associated Press (AP), Kiev, Ukraine, December 22, 2005
3. UKRAINE GAS DISPUTE WITH RUSSIA RAISES SUPPLY FEAR
By Tom Warner in Kiev, Financial Times, UK, Thu, December 22 2005
4. PM YEKHANUROV DISCUSSES PROGRESS IN GAS TALKS
WITH RUSSIA WITH AMB'S OF UK, FRANCE, GERMANY & U.S.
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
5. MOSCOW SEEKS TO USE PETRO-POWER AS POLITICAL TOOL
Neil Buckley in Moscow, Financial Times, London, UK, Thu, Dec 22 2005
6. RUSSIA-UKRAINE GAS ROW GROWS
OUTSIDE VIEW: By Sergei Kolchin, UPI Outside View Commentator
United Press International (UPI) Moscow, Russia, Wed, Dec 21, 2005
7. PRESERVING THE TRAP? UKRAINE AND RUSSIA DRIVE
THEMSELVES INTO A GAS POLITICAL DEADLOCK.
ANALYSIS & COMMENTARY: By Volodymyr Skachko
Kiyevskiy Telegraf, Kiev, in Russian 17 Dec 05; p 1, 2
BBC Monitoring Service, UK, in English, Thu, Dec 22, 2005
8. IF UKRAINE RAISES GAS TRANSPORTATION CHARGES RUSSIA'S
MOVE TO INCREASE PRICE FOR NATURAL GAS, SUPPLIED TO
UKRAINE, WILL BE UNREWARDING, ANALYSTS BELIEVE
Ukrinform, Kyiv, Ukraine, Thu, December 22, 2005
9. HEDGE FUND SEES UKRAINE STOCKS ON THE RADAR
Ukrainian stocks will become a bigger part of emerging market portfolios
By Pratima Desai, Reuters, London, UK, Dec 22, 2005
10. NATIONAL BANK OF UKRAINE (NBU) TO ALLOW FOREIGN
BANKS TO OPEN AFFILIATES IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
11. RADA EXEMPTS CONTRIBUTIONS TO STATUTORY CAPITAL
OF ENTERPRISES BEING CREATED FROM VAT
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
12. UKRAINIAN PARLIAMENT CHANGES LAW ON VETERINARY
MEDICINE IN ACCORDANCE WITH WTO REQUIREMENTS
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
13. RADA ADJUSTS CUSTOMS CLEARANCE PROCEDURES
TO WORLD TRADE ORGANIZATION (WTO) NORMS
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
14. A GOOD NO-GO FOR WTO
Russia & Ukraine were not inducted into that august institution.
COMMENTARY & ANALYSIS: Boris Kagarlitsky
The Moscow Times, Moscow, Russia, Thursday, Dec 22, 2005
15. DUTCH CO AKZO NOBEL SET TO BECOME ONE OF LEADING
SUPPLIERS TO THE UKRAINIAN DECORATIVE PAINT MARKET
Buys controlling share in Khimrozerv headquartered in Kiev
ChemPoint.com, Bellevue, Washington, Wednesday, December 21, 2005
16. HEIDELBERGCEMENT ACQUIRES UKRAINE'S DONCEMENT
AFX Europe (Focus), Frankfort, Germany, Wed, Dec 21, 2005
17. AUSTRIAN AIRLINES LOOKS FURTHER EAST
Will launch services to four business centers: Donetsk in east Ukraine,
Iasi in Romania, Pecs in Hungary, and Ekaterinburg in Russia
By Roger Bray, Financial Times, London, UK, Dec 22 2005
18. UKRAINE'S FIRST LADY MEETS U.S. HEART SURGEONS
Press office of President Victor Yushchenko of Ukraine
Kyiv, Ukraine, Friday, 16 December 2005
19. AUSTRIAN CHILDREN GIVE 20 THOUSAND CHRISTMAS
PRESENTS TO ZAKARPATTIA SCHOOLS AND HOMES IN UKRAINE
UNIAN, Kyiv, Ukraine, Thursday, December 22, 2005
20. DO THEY KNOW IT'S CHRISTMAS TIME AT ALL
Scot reveals plight of street kids in seaside resort of Odessa, Ukraine
Scot photographer Gillanders wins UNICEF photo of the year
Lisa Adams, DailyRecord.co.uk, Glasgow, Scotland, Fri, Dec 23, 2005
21. UKRAINIAN GIFT OF LIFE CELEBRATES TEN-YEAR
MILESTONE: A FAIRYTALE COME TRUE?
George Kuzma, President, Ukrainian Gift of Life (UGoL)
Glen Rock, New Jersey, December 2005
22. RAISING UP 'THE FUTURE OF UKRAINE'
By Aimee Hornberger, Herald staff writer, Columbia Basin Herald
Moses Lake, Washington state, USA, Wednesday, Dec 21, 2005
23. UKRAINIAN BORDER TOWN READY FOR CHANUKAH
The Federation of Jewish Communities of the CIS (FJC)
Moscow, New York, Wednesday, December 21 2005
24.PROVIDE DIRECT ASSISTANCE TO IMPOVERISHED UKRAINIAN
ELDERLY THROUGH AMERICAN FRIENDS OF "FOR SURVIVAL"
Make A Difference: For Survival, For Dignity, For Ukraine
Katie Fox, Volunteer Director, American Friends of "For Survival"
Washington, D.C., Wednesday, December 21, 2005
========================================================
1. A YEAR ON, UKRAINE'S DEMOCRACY IS SHOWING RESULTS
COMMENTARY: By Viktor Yushchenko
Financial Times, London, UK, Thu, December 22 2005
Last year, as families throughout Europe celebrated winter holidays,
millions of Ukrainians rose up against a discredited regime in what became
known as the Orange Revolution. That peaceful and bloodless uprising against
election fraud came to a close last December 26. Voters chose European
democratic values and elected me as independent Ukraine's third president.
Belief remains that the Orange Revolution will change Ukrainian society.
Politicians offering illusions about simple solutions wrapped in populist
rhetoric have lost trust. Yet, citizens expected and this year we began
delivering policies that provoked a new political, economic and social
discourse within our country. The competition of ideas and sometimes
disorderly nature of democracy is testament to a vibrant young nation that
is steadily evolving.
On our path will be the rise and fall of political parties, alliances and
coalitions. My challenge is to ensure that each of them contributes towards
realising those hopes, values and ideals that provoked my countrymen to
rise against a despotic regime. While it is impossible to transform
instantaneously a country of 47m, significant and irreversible changes,
unthinkable 12 months ago, have been implemented.
First, we instituted the basic freedoms of speech and assembly, which
replaced media censorship and planned democracy. A policy dialogue was
established with citizen groups. Only informed and empowered constituency
groups can make the difficult choices required to transform a closed society
into a competitive nation.
Second, inbred state corruption and privilege enjoyed by oligarch business
interests was terminated. Pillaging state monopolies for personal gain
ended. Tax holidays, budget subsidies and devalued state asset sales ceased.
Our financial and industrial groups possess great entrepreneurial talents.
They can win public trust if they show they are paying taxes and fair and
legal wages and become promoters of corporate social responsibility.
Third, our battle against poverty produced results. Closing budget loopholes
and policies that attacked the shadow economy allowed us to double revenues
and restore basic social services for the most needy.
Fourth, barriers to investment are being reduced. Transparent privatisation
tenders brought renewed trust for state asset sales - especially the $4.8bn
(£2.7bn) sale of the Kryvorizhstal metal works. More businesses paid taxes
than ever before. A visa-free regime for citizens from our main trading
partners opened doors to visitors and investors.
Fifth, petty corruption among law enforcement, tax and customs bodies was
attacked head-on. Rogue law enforcement officers were investigated and those
guilty of crimes were removed from service. Thousands of local officials
were brought to justice for abusing power, taking bribes and tampering with
election results.
Finally, after years of isolation, Ukraine re-emerged as a democratic
regional player and a constructive international partner. Our plan to settle
the Transdniester conflict was supported in Europe, Russia and the US.
Trust among strategic allies was restored. Progress was made on
international recognition of our market economy, which will clear our
eventual membership of global trading bodies.
Today, these macroeconomic and structural accomplishments are taken for
granted. After six consecutive years of economic growth, citizens are
demanding deeper private sector reforms, more transparent market rules, with
fair and speedy legal adjudication of disputes. These issues form the core
of future economic success.
At the height of the Orange Revolution, agreement was reached to shift the
balance of some constitutional powers from the presidency to parliament
from January 1 2006. A new era of parliamentary democracy will be ushered
in, bringing to a final close our post-Soviet period.
In March, voters will once again cast ballots for a new parliament. The
winning parties will form a workable coalition government. I will ensure
that the elections are a free and fair expression of our people's will. No
abuse of public office or misuse of public financing will be tolerated
during the campaign or during vote counting. International election
observers are welcome.
I am convinced that Ukraine's voters will again support those parties and
platforms that extend the tide of personal liberty and economic freedom,
just as they did a year ago. The Orange Revolution proved that individual
yearnings for freedom are universal and that abuse of public trust can be
overcome anywhere. -30-
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The writer is president of Ukraine
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2. UKRAINE WON'T BE BLACKMAILED BY RUSSIA IN GAS SPAT
Associated Press (AP), Kiev, Ukraine, December 22, 2005
KIEV - Ukraine's foreign minister warned Russia Thursday that Kiev will
not be blackmailed in an escalating gas dispute. "We want to develop
partnership, friendly and neighborly relations with Russia, but we will
never accept blackmail and pressure," Foreign Minister Borys Tarasiuk
told reporters.
His remarks were the latest volley in an ongoing feud between the two
countries over Moscow's demands that Ukraine pay more than quadruple
the current price for the gas it imports from Russia next year.
Ukraine, which is heavily dependent on Russia for its energy supplies, has
warned it could review the $97 million annual rent Russia pays to base the
Russian Black Sea fleet in Ukraine's southern port of Sevastopol.
Ukraine asked for a phased increase to give energy-inefficient industry time
to adjust. Russia's gas giant Gazprom, however, rejected the request and has
threatened to turn off the taps if a deal isn't signed by Jan. 1.
Russia provides almost half of the European Union's gas imports, and some
80% of that goes through Ukrainian pipelines. The feud has raised fears that
these supplies could be interrupted.
Tarasiuk said he regrets that "the line of confrontation, which can be seen
in the actions and statements of some Russian politicians, narrows the
opportunities for a normal dialogue." "One should bear in mind that Ukraine
depends on Russia as much as Russia depends on Ukraine," he said.
The gas and fleet disputes highlight a rift in Russian-Ukrainian relations
that emerged with last year's Orange Revolution which brought to power
pro-Western President Viktor Yushchenko.
The new leadership has sought to bring the former Soviet nation of 47
million away from the Kremlin's sphere of influence and closer to the North
Atlantic Treaty Organization and the European Union. "The matter is,
obviously, not about the figures and amounts...but about the approaches
shown by our (Russian) partners," Tarasiuk said. -30-
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3. UKRAINE GAS DISPUTE WITH RUSSIA RAISES SUPPLY FEAR
By Tom Warner in Kiev, Financial Times, UK, Thu, December 22 2005
KIEV - Ukraine and Russia have had many disputes over natural gas, but
have never come as close as now to reducing supplies to Europe.
Even through the break-up of the Soviet Union and crises that followed,
Russia's gas exports to Europe, 80 per cent of which transit Ukraine, have
always been reliable.
But unless Ukraine agrees to pay much more for the gas it takes from the
pipeline for its own use - Moscow first asked for roughly a four-fold
increase, but now suggests it should be more than five-fold - Russia has
said it will cut out Ukraine's portion from the gas going into the pipe.
If Ukraine keeps taking gas, which Moscow says would be stealing, supplies
to Europe could be cut by about 20 per cent.
Both sides have huge incentives to make a deal. Russia has no other way to
get its gas to Europe, while Ukraine, which currently receives 30 per cent
of its gas from Russia in a barter deal in lieu of transit fees, has no
alternative source.
Yet both sides claim the other is refusing to negotiate seriously. Viktor
Yushchenko, Ukraine's president, this week called Russia's position
"irresponsible, unprofessional and naive".
He accused Moscow of trying to punish Kiev for its turn towards democracy
in last year's Orange Revolution and of operating "double standards" by
demanding that Ukraine pay roughly twice as much for gas as the south
Caucasus and Baltic states pay.
Russia in turn accuses Kiev of dragging its feet and refusing to drop the
antiquated barter system. Russian officials ask how Ukraine can aim to
join the European Union while refusing to pay market prices for gas.
Russia says its interests are purely economic. But Mr Yushchenko's
supporters accuse Moscow of trying to damage his popularity three months
before parliamentary elections. Mr Yuschenko's party is facing tough
competition from Viktor Yanukovich, the pro-Russian politician who ran in
last year's presidential race.
The elections also give Mr Yushchenko an extra incentive to face up to
Russia; his stand has been popular with voters little inclined to pay more
for energy.
Mr Yushchenko says he would accept a gradual change to cash payments
and market prices, but no quick increases. He has threatened to retaliate by
demanding "European" rents from Russia's naval base in Crimea, which
Russia says are fixed by contract until 2017.
Russia, too, could escalate the dispute, for example by cutting deliveries
of the central Asian gas that Ukrainian industry relies on.
But a deal at the 11th hour or a delay by Russia of its cut-off threat as
negotiations continue remain the more likely scenarios.
As Sergey Lavrov, Russian foreign minister, said this week: "I'm convinced
the good tradition by which Gazprom and Russia have never once not met
their obligations to European customers will not be broken."
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4. PM YEKHANUROV DISCUSSES PROGRESS IN GAS TALKS WITH
RUSSIA WITH AMB'S OF UK, FRANCE, GERMANY AND U.S.
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
KYIV - Prime Minister Yurii Yekhanurov has discussed Ukraine's progress in
gas talks with Russia with Ambassador of Great Britain Robert Brinkley,
Ambassador of France Jean-Paul Veziant, Ambassador of Germany Dietmar
Stuedemann and US Ambassador John Herbst. An insider with the government
informed Ukrainian News about this.
According to the insider, ambassadors were summoned urgently upon initiative
of the Cabinet of Ministers. At the meeting Yekhanurov informed them about
the progress of their talks with Russia on gas. In their turn, ambassadors
provided official opinions of their counties on this question. "They have a
common viewpoint on legal issues," the insider said.
As Ukrainian News earlier reported, Ukraine is holding active talks with
Russia on gas supplies to Ukraine and conditions of its transit through the
territory of Ukraine to Europe for 2006. Ukraine wants Russia to justify the
price at which it is asking Ukraine to buy natural gas.
Prime Minister Yurii Yekhanurov said previously that Ukraine is ready to
examine an official proposal of the Russian side on changing the contract
signed in 2002 concerning the terms for Russian gas supplies to Ukraine and
its transit to Europe through Ukraine's territory.
On December 8, Gazprom announced the intention to increase the prices of
natural gas supplied to Ukraine up to USD 160 per 1,000 cubic meters
beginning from January 1, 2006.
Gazprom announced on December 14 that it was going to raise the prices of
gas supplied to Ukraine to USD 220-230 per 1,000 cubic meters as of January
1, 2006.
In July 2004, Ukraine and Russia agreed on the terms for transiting 112
billion cubic meters of Russian gas through the territory of Ukraine in 2005
at the rate of USD 1.09 per 1,000 cubic meters for each 100 km of transit.
Under the agreement, Russia is to deliver 23 billion cubic meters of gas in
2005 at a price of USD 50 per 1,000 cubic meters as payment for transit
services.
In July 2005, Naftohaz Ukrainy and Gazprom agreed to increase the volume
of transit of Russian natural gas through Ukrainian territory by 8 billion
cubic meters or 7% to 120 billion cubic meters in 2005. -30-
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5. MOSCOW SEEKS TO USE PETRO-POWER AS POLITICAL TOOL
Neil Buckley in Moscow, Financial Times, London, UK, Thu, Dec 22 2005
Russia is nine days away from potentially carrying out a threat to reduce
gas supplies flowing through a pipeline across Ukraine to western Europe,
unless Kiev pays higher prices for gas it takes from the pipe. The result
could be winter energy shortages in some European countries.
Yet on the same day, January 1, Russia assumes the rotating presidency of
the Group of Eight nations, of which it has made "energy security" a central
theme. Moscow is widely expected to use its presidency to promote itself as
a reliable energy supplier to the world's biggest economies.
These two positions may seem contradictory, but in fact point to the same
conclusion. While it does so in a variety of ways, Russia is ever more
confidently wielding its mammoth reserves of oil and natural gas as a
political tool. High prices, tight supplies, and the west's desire to reduce
reliance on Middle East suppliers are increasing its leverage.
"It is not that energy is the new atomic weapon," says Cliff Kupchan, an
analyst with the Eurasia Group consultancy and former state department
official in the Clinton administration, "But Russia knows petro-power,
aggressively and cleverly applied, can yield diplomatic influence."
After spending the past year bringing key oil and gas assets back under
state control, a string of events have shown how Russia is using its
petro-power. Gazprom, the state-controlled gas giant, is demanding that
former Soviet states, which since the USSR collapsed in 1991 have enjoyed
subsidised prices for Russian gas, finally move to market rates.
But it is doing so in a highly differentiated way. Ukraine, having shifted
out of Moscow's orbit since last year's Orange Revolution, has been slapped
with the biggest demand for a price increase. Prices charged to Georgia and
Moldova, which have also turned their gaze westwards, have nearly doubled.
Yet Belarus, loyal to Moscow, is still getting gas at the old price.
Russia is using its dominant position in oil, too, to favour Russian
commercial interests. It plans to cut oil supplies to Lithuania from January
1 in what analysts see as an attempt to press the Baltic republic to favour
a Russian buyer over rival Polish and Kazakh bidders for the strategically
important Mazeikiu oil refinery.
The refinery is being sold off by the Lithuanian authorities to pay off a
huge back tax bill owed to Moscow by Yukos, the Russian oil company whose
main production asset has, in effect, already been renationalised as part of
the legal assault on Mikhail Khodorkovsky, its former owner.
Russia is, moreover, squeezing potential competitors in the former Soviet
Union - notably Kazakhstan - that are trying to develop their own energy
industries independently of Moscow. It is for example attaching tough
conditions to allowing Kazakhstan to expand a key pipeline from the vast
Tengiz oilfield in the Caspian to Russia's Black Sea port of Novorossiysk.
This is crucial to plans by the field's operator, Chevron of the US, to ramp
up production.
Also this month, Russia started construction, with some fanfare, of the $5bn
North European Gas Pipeline, an export route under the Baltic sea to Germany
that will bypass the Baltic states, Ukraine and Poland. It attracted even
more attention by naming Gerhard Schröder, the former German chancellor,
project chairman.
Within days, word leaked that Russia's president Vladimir Putin had asked
Donald Evans, the former US commerce secretary and close friend of President
George W. Bush, to chair Rosneft, the Russian state-owned oil company
preparing for an initial public offering. Mr Evans this week politely
declined, citing other commitments.
How should the outside world make sense of all these different signals?
Analysts say Russia has always used energy as a lever with its former Soviet
neighbours - and kept natural gas prices low partly to keep them within its
fold - though it is being increasingly hard-nosed.
Political and economic interests are intertwined. With gas prices rising,
increasing the effective revenue loss to Gazprom and Russia from providing
cut-price gas, there seems little point continuing to subsidise states which
have already shunned Moscow.
"The time when we built relations by quasi-subsidising neighbouring
economies is gradually passing," Alexei Kudrin, Russia's finance minister,
said last week. "We must think about our own interests."
Most analysts expect Russia and Ukraine to pull back from the brink before
west European gas supplies are threatened; neither would want to be blamed
for shortages.
Russia has far too much at stake. It is preparing to project its energy
influence to a much wider audience - and its approaches to Mr Schröder
and Mr Evans may be an important part of that.
Moscow has already hinted to US officials and international energy
executives that it intends to use its coming G8 presidency to assure the
world it can be a pivotal energy supplier to Europe, the US and Asia.
Mr Kupchan, of Eurasia Group, believes Russia has studied Saudi Arabia,
which has used its energy clout to build a close geo-political relationship
with the US - and mute US criticism of its domestic policies. But he
suggests Russia is aiming for a "Saudi-plus" model.
"Saudi Arabia has achieved this only with the US. The Russians are looking
for something broader," says Mr Kupchan. Moscow wants to build a wider
network of influence and, unlike some petro-states, turn its oil and gas
companies into international players.
He forecasts more moves to grant minority stakes to foreign oil majors in
Russian companies, both state- and privately-controlled, and oil and gas
projects, though with Russia always retaining control. He also foresees more
invitations to prominent western executives to take jobs with Russian energy
companies.
Both could help confer a sense of legitimacy and transparency on its
industry, especially after the state's asset-grab, and increase Russian
companies' sway in foreign capitals.
But with some, particularly US, politicians challenging Russia's G8 role
amid questions over its democratic record - heightened by the Yukos affair -
western officials say Russia will be under intense scrutiny.
Says one person close to the White House: "The G8 is going to be a great
opportunity for them to appear adult, responsible and be taken seriously by
the world." (Additional reporting by Tom Warner in Kiev and Carola Hoyos)
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6. RUSSIA-UKRAINE GAS ROW GROWS
OUTSIDE VIEW: By Sergei Kolchin, UPI Outside View Commentator
United Press International (UPI) Moscow, Russia, Wed, Dec 21, 2005
MOSCOW - The new round of Russian-Ukrainian gas talks held on Dec.
12 did not produce any visible results, but Russian Industry and Energy
Minister Viktor Khristenko said the parties hoped to settle the price issue
before the year-end.
He said intensive negotiations would help to prepare the necessary
documents to regulate the two countries' relations in the gas sphere by
January 1, 2006.
Earlier that day, Ukrainian President Viktor Yushchenko said he was positive
that Kiev and Moscow would find a mutually acceptable settlement of the
dispute. "Ukraine is ready to pay for gas under market terms, but with a
transitional period," the presidential press service quoted him as saying.
Yushchenko also said he hoped Russia would meet Ukraine half-way.
The dispute between Russia and Ukraine about coordinating gas prices and
transit tariffs for next year is gaining momentum. Remarkably, the Ukrainian
authorities began speaking of a compromise after the Russian leadership had
for the first time voiced its unequivocal support of Gazprom in its
confrontation with Ukraine.
This position was announced by Sergei Mironov, head of the parliament's
upper chamber, and leaders of the lower chamber. Moreover, Russian
President Vladimir Putin for the first time made a very tough statement on
gas
relations with Ukraine, signaling that Russia did not intend to put up with
Ukraine's growing gas debt and to preserve unjustified preferences in
bilateral gas trade.
Gazprom insists on supplying gas to Ukraine at a market price of $160 per
1,000 cubic meters from 2006. At present the country buys Russian gas at a
discount price of $50 per cubic meters and wants to preserve the privilege,
pointing to the present inter-governmental agreement valid until 2013. It
stipulates that market gas prices and transit tariffs cannot be introduced.
Gazprom, in its turn, refers to Article 2 of the same document, which reads
that transit parameters and payments for gas supplies should be adjusted
annually in inter-governmental protocols.
Ukraine does not agree, which has been seen not so much in the attitude of
Gazprom's partner, Naftogaz, as in that of the country's leadership. The
reason is clear: ahead of the parliamentary election it is afraid that a
possible rise in rates will have a negative influence on voters, as will a
probable economic slowdown.
For many years Russia has shown understanding of such reasoning,
distancing itself from conflicts between economic agents and even helping
to settle them through inter-state agreements (offsetting debts, offering
barter, etc.). Now the situation is completely different. There are several
reasons for the change.
[1] First of all, Russia's concessions were to a large degree caused by
foreign political motives, notably, post-Soviet regimes' loyalty to Moscow.
Recently, Kiev (as well as Chisinau, Tbilisi and others) has repeatedly
announced its commitment to the "Euro-Atlantic choice," which makes a
vast difference.
Although it is hard to grasp what choice they are talking about and how
much in line it is with domestic and foreign realities of former Soviet
republics, Russia, obviously, can no longer expect any loyalty from its
past allies. This is proved by Ukraine's resumed attempts to aggravate the
debates about the Black Sea Fleet deployment in the Crimea.
[2] Secondly, the price of concessions has soared following the developments
on the global energy market. Earlier discounted gas prices and transit
tariffs were at least comparable, but now it is more profitable for Russia
to pay globally accepted tariffs, at the same time supplying energy at world
prices. The spread obviously puts it at a disadvantage, taking into account
how much gas it exports.
[3] Thirdly, the Russian parliament's recent decision to remove restrictions
on foreign ownership of Gazprom (although the government will retain control
through a majority stake of 50% plus one share) creates a new situation,
when foreign investors will not agree to their interests being infringed on
because of Gazprom's or Russia's preferences for one partner or another.
Preserving discount gas prices for Ukraine and other states also contradicts
with the strategy of Russia's gas industry development, which is clearly
orientated towards market cooperation.
Given all this, the Russian authorities, perhaps for the first time in
recent history, have responded in an unusually tough way to the traditional
dispute in Russian-Ukrainian gas relations. The President said he did not
want to put his "Ukrainian colleagues at a disadvantage," but that in his
opinion Ukraine was quite able to buy Russian gas at global prices.
In 2006, European consumers will buy Russian gas at $255 per 1,000 cubic
meters, while Ukraine insists on continuing to pay $50. Even given lower
transit costs, this would be more than extravagant for Russia, which stands
to lose $3 billion-4 billion from supplies to Ukraine next year alone. (Gas
prices for Ukraine will be $180 lower than for Germany.)
Moreover, as Putin pointed out, Ukraine produces 18 billion cubic meters
of gas, which is sufficient to meet the demands of domestic households, so
Russia cannot be accused of threatening "to freeze Ukraine." Besides,
household gas prices in Ukraine are lower than in Russia. Why would
Russians pay for their neighbors' comforts?
Given all this, Ukraine's stance looks provoking. Although its leaders
assure that transit of Russian energy to Europe will continue uninterrupted,
the very chance of complications in this sphere is blackmail and is
unacceptable in healthy international economic relations.
This is encouraged by the prospect of alternative gas supplies across the
North-European gas pipeline, the construction of which has been launched
recently. At present, about 110 billion cubic meters of Russia's annual
exports to the West goes via Ukraine.
West European consumers of Russian gas have been slow to respond to
Ukraine's ambitions. They seem to believe that the parties to the conflict
will settle it on their own, as has always been the case. If not, the West
cannot be expected to stand aside and take over the role of subsidizing
Ukraine from Russia because of its role as a transit state.
Independent Western analysts say that the loss of cheap Russian gas is the
price Ukraine has to pay for establishing its independence. -30-
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(Sergei Kolchin is a senior fellow at the Institute of International
Economic and Political Studies of the Russian Academy of Sciences. This
article is reprinted by permission of the RIA Novosti news agency.)
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7. PRESERVING THE TRAP? UKRAINE AND RUSSIA DRIVE
THEMSELVES INTO A GAS POLITICAL DEADLOCK.
ANALYSIS & COMMENTARY: By Volodymyr Skachko
Kiyevskiy Telegraf, Kiev, in Russian 17 Dec 05; p 1, 2
BBC Monitoring Service, UK, in English, Thu, Dec 22, 2005
Ukraine and Russia have reached deadlock in the ongoing dispute over gas
supplies, a Ukrainian weekly has said. Russia is using its raw materials to
exert power over former Soviet countries. In exchange for gas supplies,
Russia wants Ukraine not to join the WTO before it, and not to review its
agreement with Russia on the leasing of bases in Crimea to the Russian Black
Sea Fleet.
The nightmare scenario for Russia would be for Ukraine to hand control over
ABM radar stations run by Russia to the USA and refuse to extend use of
Russian heavy missile launch sites. It said the sides will be forced to
negotiate, although both leaders have said that whatever happens gas
supplies to Europe will not be interrupted.
The following is an excerpt from the article by Volodymyr Skachko entitled
"Preserving the trap? Ukraine and Russia drive themselves into a gas
political deadlock", published in the Ukrainian newspaper Kiyevskiy Telegraf
on 17 December; subheadings have been inserted editorially:
We cannot know what US Secretary of State Condoleezza Rice can have said to
Ukrainian President Viktor Yushchenko during her visit to Kiev, but Vladimir
Putin, the leader of Russia (another strategic partner for Ukraine along
with the USA) was seriously annoyed.
As a result, Russia does intend to yield an inch to Kiev in the most painful
question - the price for its gas, without which Ukraine is threatened not
only with its population being frozen this winter, but also a collapse of
the entire economy reliant on cheap Russian gas like an addict on a needle.
And this means that a new era appears to be looming in Ukrainian-Russian
relations - political concessions from Kiev can no longer be exchanged for
economic privileges and indulgences from Moscow.
Money is at the heart of the relationship. Hard and convertible. And
reciprocally supplied by the parties in exchange for goods and services.
And in the logic of things, it only remains now to try find out whether the
countries are ready for such a scenario. There are large suspicions that
they are not. Because at the present historical stage, as it is customary to
say, a definitive gas rupture may be catastrophic for both. However, in this
process, as always, there are reciprocal pluses and minuses.
And so, let us look at the pluses. They are obvious, because they lie in the
purely economic area. Equal partnership and cooperation comes in only when
the partners do not depend on making concessions to each other, but are
prepared to buy everything necessary for money. And obtain mutual benefit by
being absolutely free to choose both the suppliers of the raw material
required, markets for their products and the country's course. Both internal
and external.
If Ukraine jumps out of the Russian "gas needle" and finds the funds to buy
gas at market prices, it can act on the foreign policy scene without looking
over its shoulder at the former "elder brother". And for example, join the
EU, NATO or the WTO with the SES [Single Economic Space - proposed
economic union of Ukraine, Russia, Belarus and Kazakhstan]. Even the
African Union - that is its sovereign affair.
There is also an advantage for Russia in a definitive "withdrawal" of
Ukraine. The Kremlin would get by its side an independent neighbour, and its
illusions would disappear forever (or for a long time) regarding its own
hegemony in the post-Soviet space, "gathering Russian lands" on foreign
territory and so on and so forth. Life will become easier.
It will be possible to concentrate on exclusively internal problems and
spend money on them freed up from the implementation of the above-mentioned
"missions impossible", and finally to raise the living standards of the 25m
Russians who, according to Putin, are today living below the poverty level
because [Russian gas monopoly] Gazprom is subsidizing the Ukrainian
economy by low prices for its gas. The Russian president, "discovering"
Ukraine after Rice's visit there, as is known, made his calculations.
According to his arithmetic, taking account of the current prices, the
future losses for Gazprom will amount to 3.6bn dollars plus 1bn dollars in
direct subsidies from the Russian budget for Ukraine, since Russia has
moved to levying tax on payments for natural gas, gas condensate and oil
with Ukraine according to the country of destination.
What is more, Putin added separately that he was using the word "direct",
since "there are no two-way flows of such groups of goods and in essence
it is budget support for our Ukrainian friends".
In other words, Russia is not only selling gas to Ukraine, but is also
allowing it to receive sales taxes. And there is nothing of the sort in
Russia, and consequently the taxes are not coming into its budget. So,
indeed, why pay excessive money for the role of hegemony? It seems
illogical.
And Russia today is demonstrating readiness to go to the end and make
Ukraine move to market relations in the gas question.
[Passage omitted: recalling events in gas talks of previous week]
GAS AS POLITICAL PRESSURE
However, today's logic dictates that neither Ukraine nor Russia will be able
for now to realize the scenario of a rupture and move to swimming
independently. Because they are connected not only economically, but also
politically. And thank God Russia is no longer hiding the political
component of the dispute. At an international conference on the theme "After
the 2004 elections, before the 2006 elections.
A Crimean view" that was held on 10 December this year in Crimea, a deputy
of the Russian State Duma [parliament], Konstantin Zatulin, no longer hid
the fact that Russia was exchanging its cheap gas for Ukraine for its -
Ukraine's - political loyalty. And he quoted the example of Belarus, which
will continue to receive cheap raw materials from Russia for this loyalty.
And he made a direct appeal to representatives of the Ukrainian opposition:
win the parliament elections, he said, take power and "we will discuss the
problem of the gas contract with you". It is also clear even now what Russia
does not want from Ukraine.
[1] First, accelerated entry into NATO, seeing it as undermining its own
security.
[2] Second, rapid accession to the WTO without Russia, which threatens
Russian markets.
[3] Third, a review of the rental conditions for facilities of the Russian
Black Sea Fleet stationed in Crimea, which was directly spoken of last week
by the deputy head of the Ukrainian presidential secretariat, Anatoliy
Matviyenko.
[4] Fourth, the transfer to US control of Ukrainian radar stations of the
missile attack warning system in Sevastopol and Mukacheve that are currently
operating exclusively in the interests of Russia.
The former commander of Russia's anti-ballistic missile defence, Lt-Gen
Volter Kraskovskiy, is sure that giving American specialists access to the
radar stations in Sevastopol and Mukacheve will lead to Russia losing
anti-missile control in the south-west strategic direction over the entire
area of Central and Southern Europe and also the Mediterranean.
And, according to an evaluation by Russian experts, Russia has an
alternative - to develop new radar stations on its territory. But that will
take time, two or three years, and money comparable with what Moscow can
receive from increasing the prices of gas sales to Ukraine, or even more.
[5] Fifth, there are fears in Russia that Ukraine may refuse sign the
intergovernment agreement concluded during the recent visit to Moscow by
Ukrainian Defence Minister Anatoliy Hrytsenko on extending the use of the
15P118M missile complex (launch installations for the RS-20 heavy missile
complex, classified by NATO as "Satan").
Russia has over 100 of these heavy missiles, which have over 10
self-guidance nuclear warheads, and they are what the USA fears most of all.
And these complexes, developed in Dnipropetrovsk at Pivdenmash, have been
on combat duty for over 15 years with the strategic missile troops of the
Russian armed forces, and it is proposed to extend their use with the help
of Ukraine for another 10-15 years. If that help is not forthcoming, Russia
faces having to scrap those missiles and produce others to counter the
threat.
That will require huge funds - 3-4bn dollars, since at present not more than
six domestic Topol-M ICBM's - the replacements for the 15P118M - are being
produced a year. Incidentally, Russia suspects that these questions one way
or another were discussed during Rice's visit to Kiev and were decided in
favour of Washington rather than Moscow.
[6] Sixth, the issue of the Ukrainian-Russian border in the Azov-Kerch
region is not being resolved: Russia is frightened of NATO ships in the Sea
of Azov and, therefore, does not want to settle contentious problems.
AGREEMENT WILL BE REACHED
[7] Finally, there is also the purely technical impossibility of "the war of
the taps", whereby, some hotheads propose, Ukraine will cut off Russian gas
to Europe and Russia in retaliation will not supply its gas and not allow
Turkmen gas through. Because there will simply be nowhere for the gas to go.
The bypass gas pipeline along the bed of the Baltic Sea has not yet been
built, and the capacities of Belarus and the Baltic countries are
insufficient for that. And because Europe, in which both Moscow and Kiev
have an interest, will not allow its economy to be halted because of a lack
of raw materials.
Apart from that, sober-minded Russian experts are convinced that a transfer
to world prices in the gas trade with Ukraine is more beneficial for Ukraine
than for Russia, in which gas for internal consumers is sold at reduced
prices. The reason being, so it goes, that Ukraine in that case will be able
more rapidly than Russia to modernize its economy and introduce
energy-saving technologies, having sought out additional funds in hard
times. [Passage omitted: criticizing negotiating skills of Naftohaz
Ukrayiny chief Oleksiy Ivchenko]
And this means that the parties will reach agreement again. Both Yushchenko
and Putin have already given assurances that that would be no disruption of
gas supplies to Europe under any circumstances. [Passage omitted: further
recalling past week's events]
The head of Gazprom, Aleksey Miller, told journalists: "As far as compromise
is concerned, of course it's possible. The Ukrainian side knows about it. It
is the question of the gas transport consortium." Germany, the third member
of the consortium, is also in favour of it.
What is there left for Ukraine to do? Consequently the former mutual
dependence will remain, very similar to a trap or a deadlock. At least for
the year that Ukraine is demanding for a smooth transfer to world prices. If
it used that time to reduce the energy intensiveness of its economy...
[ellipsis as published] But, I repeat, it is hard to believe in that - we
have elections staring us in the face. And indeed, there is nobody to do
it. [ellipsis as published] -30-
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8. IF UKRAINE RAISES GAS TRANSPORTATION CHARGES RUSSIA'S
MOVE TO INCREASE PRICE FOR NATURAL GAS, SUPPLIED TO
UKRAINE, WILL BE UNREWARDING, ANALYSTS BELIEVE
Ukrinform, Kyiv, Ukraine, Thu, December 22, 2005
The present rift between Ukraine and Russia over the price for Russian
natural gas, supplied to Ukraine, and tariffs for transit piping of Russian
gas to Europe via Ukraine's gas transportation system may spell losses not
only for Ukraine, but also for Russia, the Kyiv publication EnergoBusiness
contends.
In the publication's article, captioned "Swinging the Boat," the newspaper
notes that Moscow's "gas attack" on Kyiv has nothing to do with economics.
This is an obvious attempt to discredit the incumbent Ukrainian authority
and assist pro-Russian political forces in winning the March 2006
parliamentary elections, which will allow them to assume control over the
Ukrainian government.
However, the Gazprom is primarily a business, meant for gaining profits. So,
having calculated the costs of adequate raises in tariffs for transit
transportation of Russian natural gas in response to raises in prices for
natural gas, the Russian monopoly-company are racking their brains.
The general picture looks like anything but in their favor as Ukraine will
likely lose nothing, provided it preserves the current gas price: transit
transportation tariff ratio.
It looks like Turkmenistan may benefit from the Kyiv-Moscow conflict, as
allowing to raise the price for Turkmen natural gas to the European level.
The EnegoBusiness cites estimates and computations by independent analysts
with the consultant company East European Gas Analysis, who, for long, have
been vetting the Gazprom company's activities.
As they believe, over the past years the Gazprom paid the just price for its
gas transportation via Ukraine's territory, so changing the status quo would
be unprofitable. Ukraine's transit transportation tariffs for Russian
natural gas have nothing to do with relevant international tariffs.
From the very beginning the tariffs were set at a level, which would allow
to purchase predetermined amounts of Russian natural gas with the money,
earned through transit services.
In other words, the costs of natural gas, which Gazprom supplied to Ukraine
by way of settling for transit piping, were equal to the NaftoGaz Ukrainy
company's earnings from rendering transit transportation services to the
Gazprom.
After 2000 Russian natural gas supplies to Ukraine to pay for Ukraine's
piping services were determined in amounts of 26 bn. cu. m. a year, priced
at 50 USD per thousand cu. m. The transportation tariffs was set at 1.0937
USD per thousand cu. m. per 100 km.
Until 2004 the Gazprom kept shipping only 26 bn. cu. m. of gas to Ukraine by
way of payment for Ukraine's transit transportation services. Ukraine also
imported gas for independent extractors and gas from Central Asia.
Since 2004 the Gazprom supplied the entire amount of Russian natural gas. In
particular, and 2004 the Gazprom supplied 26 bn. cu. m. of gas to Ukraine,
by way of reimbursing in transit services, priced at 50 USD per thousand cu.
m., as well as six billion cu. m. for Ukraine's money, priced at 80 USD per
thousand cu. m.
In July 2004 the Gazprom and the NaftoGaz Ukraine signed an agreement on
regulating Ukraine's debt to the tune of 1.25 bn. USD.
In accordance with the agreement, in 2005 - 2009 the Gazprom's amounts of
natural gas supplies to Ukraine by way of reimbursing Ukraine's transit
services were to be reduced to 21 bn. cu. m. a year, with concurrent
increases of supplies of Turkmen natural gas to Ukraine.
The difference of 5 bn. cu. m. a year (or 25 bn. cu. m. over five years) was
supposed to be subtracted from Ukraine's debt.
The price for Russian natural gas was fixed at 50 USD per thousand cu. m.
In 2005 the Gazprom paid 1,550 M. USD to Ukraine for it transit services,
including 1,300 M. USD in kind (Russian natural gas) and 250 M. USD with the
money. In 2006 transit transportation of Russian natural gas via Ukraine's
pipelines will likely be in the same amount.
According to the analysts' calculations, if the Gazprom raises the price for
its natural gas the NaftoGaz Ukrainy will raise the tariffs for transit
piping, with a view of earning enough to buy either 26 bn. cu., m. of gas or
21 bn. cu. m., which will depend on how the issue of Ukraine's debt will be
regulated.
In this case there will be three likely scenarios of further developments
(A, B and C).
According to the East European Gas Analysis experts, to buy 26 bn. cu. m.
of gas the Ukrainian party will have to raise the tariffs to 2.94 USD per
thousand cu. m. per 100 km ("A" scenario).
This will be somewhat lower than what the Gazprom is paying in some
European countries. For instance, in Austria the tariff stands at 3.40 USD
per thousand cu. m. per 100 km.
As the experts note, even if the Gazprom raises the price to 200 USD per
thousand cu. m. Ukraine's adequate increase in the transportation tariffs
will make these still lower than in some European countries.
In case the agreement on Ukraine's debt repayment remains valid ("B"
scenario) Ukraine will have to raise the tariff to 2.37 USD per thousand cu.
m. per 100 km to buy 21 bn. cu. m. of gas.
Thus, even the most adverse scenario will reduce the Gazprom company's cash
incomings by 858 M. USD ("A" scenario). The Russian monopoly will lose at
least 928 M. USD, if the B scenario materializes.
The C variant envisages Ukraine's purchases of additional 5 bn. cu. m. of
gas not from the Gazprom, but from Central Asiatic countries. The Russian
party's losses, as compared with 2005, will amount of 618 M. USD.
According to preliminary estimates, under the A variant the Gazprom will be
able to offset about half of losses through raising tariffs for transit
transportation of Turkmen gas to Ukraine via Russia's territory.
The Gazprom's losses will be caused by raises in sums of customs. However
encouraging this may appear in terms of the Russian budget, a conflict of
interests between the Gazprom and the Russian State will be inevitable as
the State poses as the company's major stockholder.
The Gazprom's financial performance will deteriorate, which, on the eve of
the stock market's liberalization, will reduce the value of the State's
parcel.
Besides, the company's worsening financial footing may be viewed by other
stockholders, including foreigners, as a deliberate move, which may trigger
complaints and litigation.
In the EnergoBusiness authors' opinion, there is yet another aspect of the
problem in question. Shortly, the Gazprom will sustain additional losses
through inevitable raises in prices for gas, which Central Asiatic nations,
including Kazakhstan, export.
Turkmenistan is keenly watching developments in Ukraine, so raises in prices
the Russian natural gas will most certainly trigger a chain reaction in
Central Asia.
Turkmenistan relies on the price for its natural gas at the Ukrainian
frontier in price calculations. So, if the Gazprom raises the price for
Russian gas to 160 USD, nothing can prevent Turkmenistan from charging 120
USD to 140 USD per thousand cu. . of its natural gas at the Kazakh - Russian
frontier. In this case both imports or re-exports of Turkmen natural gas will be
absolutely unrewarding.
Any attempts to bring pressure to bear on the Turkmen leader would be
futile. As historic experience suggests, Saparmurat Niyazov can switch off
gas supplies and wait.
This, the East European Gas Analysis experts conclude, if Ukraine takes
adequate steps to raise transportation tariffs raising prices for Russian
gas will be unprofitable to Russia.
Thus fact may explain the Gazprom's current strategy, which is to make
Ukraine accept global prices for gas, but not European tariffs for transit
piping, which the NaftoGaz Ukrainy is pressing for. That is, the Russian
party's steps are aimed at disbalancing the existent parity in favor of
Russia. The Gazprom says Ukraine must preserve the basal tariff for transit
at 1.75 USD, which, incidentally, was set last century.
Russia views it as "European." Nevertheless, it is only in Belarus that
lower transit tariffs can be found. Russia pays 0.75 USD per thousand cu. m.
per 100 km to the BelTransGaz for transit piping of Russian gas via Belarus.
However, relations between Russia and Belarus are quite particular, whereas
transit piping of Russian gas via Poland costs the Gazprom 2.34 USD per
thousand cu. m. per 100 km. But the Russians are investing in Polish
pipelines' construction and hold 49 percent of the construction company's
stocks.
Small wonder, after Ukraine made public its plan to set the transportation
tariff at 2.60 USD per thousand cu. m. per 100 km statements promptly
followed by Gazprom vice chairman Aleksandr Medvedev that now the price
of 160 USD per thousand cu. m. is ruled out.
Russia will raise it to 217 USD / 230 USD. That would be an exorbitant price
as equal to the price of gas at the German frontier and there will be no
grounds to further raise it.
Yet, Ukraine will be able to raise its tariffs. So, Ukraine's stand in the
negotiations with Russia appears more advantageous than Russia's the
EnergyBusiness notes. -30-
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9. HEDGE FUND SEES UKRAINE STOCKS ON THE RADAR
Ukrainian stocks will become a bigger part of emerging market portfolios
By Pratima Desai, Reuters, London, UK, Dec 22, 2005
LONDON - Ukrainian stocks will become a bigger part of emerging market
portfolios over the coming year as strong domestic demand boosts economic
and corporate earnings growth in the country, a hedge fund manager said.
Ukraine's government has pledged to reform the economy, the country is a
potential candidate for the European Union and is expected to join the World
Trade Organisation next year, which should underpin economic growth,
analysts say.
The EU also recently awarded Ukraine market-economy status, which should
also help trade relations with the 25-member bloc.
"Ukraine is increasingly coming onto the radar screen. There is tremendous
pent up domestic demand," Leila Kardouche, manager of the RAB Emerging
Europe Fund, told Reuters this week.
"Investment is picking up ... Growth will continue to be strong ... Many
entrepreneurs will be listing their companies, creating opportunities."
Ukraine threw off its communist shackles in the early 1990s along with other
east and central European countries like Hungary and Poland and Baltic
states such as Estonia. But it was ignored by most investors until the
"Orange Revolution" protests in 2004 boosted the chances of reform to
liberalise the economy and financial markets.
"In Ukraine we are looking at banking, industrials, mining and consumer
plays," Kardouche said. Kardouche runs the RAB Emerging Europe Fund,
which has more than $100 million (58 million pounds) under management
and has returned more than 25 percent since it was launched in December
2004. The fund is one of 16 run by RAB Capital and its subsidiary Cross
Asset Management.
Kardouche also rates South Africa and Russia, even though stocks in these
countries have had a strong run recently. "South Africa and Russia have been
key bets for us this year," she said. "We anticipate further good
performance from these markets in the coming year although returns will not
be as easy going into 2006."
Russia, Kardouche says, has been saved by record high oil prices over the
last few years since it defaulted on domestic debt in 1998. If oil prices
came down to $20 to $30 per barrel there would be meaningful repercussions
on growth," she said. "Which is why economic management is important going
forward. In other words, budgetary discipline and structural reform."
In Russia's banking sector the authorities are trying to weed out weak
banks, Kardouche said. "Going forward there are reasons to be optimistic
that the economy will be less dependent on oil," she said.
"Russia's middle class has grown exponentially in the last few years and
people are getting richer, so fuelling domestic consumption ... Households
are leveraging up. A mortgage market will exist in the next one to two
years." RAB's emerging market fund has exposure to energy, financial,
consumer and telecoms stocks in Russia.
South Africa is another market investors have been cautious about in recent
years. "For a number of years there were genuine concerns related to high
unemployment and HIV/AIDS," Kardouche said.
"There were concerns related to (whether) high black economic empowerment
would work in the effective redistribution of wealth ... A lot of people
were writing South Africa off as a social time bomb."
Economic growth in South Africa has to a large extent relied on its reserves
of precious metals such as gold and platinum, where prices in recent months
have also hit record highs. But Kardouche thinks that dependency isn't as
high any more.
"If precious metals prices came back meaningfully it wouldn't be such a huge
problem for the country," she said. "We are witnessing the rise of the black
middle class which in itself is fuelling consumption." -30-
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10. NATIONAL BANK OF UKRAINE (NBU) TO ALLOW FOREIGN
BANKS TO OPEN AFFILIATES IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
KYIV - The National Bank of Ukraine does not intend to wait for a decision
by the parliament and intends to issue its own document allowing foreign
banks to open affiliates in Ukraine. Vasyl Pasichnyk, the director of the
bank's legal department, announced this to journalists.
"We will regulate the terms of such access. We will issue instructions on
the conditions for the access of affiliates," he said.
Pasichnyk added that the law entitled "On Banks and Banking Operations"
authorizes the NBU to regulate the access of foreign capital to Ukraine.
According to him, the active legislation does not prohibit foreign banks
from opening affiliates in Ukraine but there is no mechanism regulating
their access to the Ukrainian market.
Pasichnyk added that NBU intends to apply several principles stipulated in
the relevant draft law that it drafted but was rejected by the parliament
when drafting the instructions on the terms of access of foreign banks'
affiliates to the Ukrainian market.
As Ukrainian News earlier reported, the parliament refused again in
mid-November to allow foreign banks to open affiliates in Ukraine.
The second reading of the draft law No. 7274 entitled "On Amendments to
the Law on Banks and Banking Operations (regarding affiliates of foreign
banks)" received only 183 votes in the parliament instead of the minimum
226 votes required for its approval.
The draft law proposed the following restrictions on the opening of
affiliates by foreign banks: the regulatory capital of the foreign bank
should amount to at least EUR 150 million, the minimum size of the foreign
bank's capital should be EUR 5 million, Ukrainian banks should have the
right to open affiliates in the country in which the foreign bank was
founded, and the country should not be on the list of countries failing to
cooperate with the Financial Action Task Force on Money Laundering
(FATF). -30-
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11. RADA EXEMPTS CONTRIBUTIONS TO STATUTORY CAPITAL
OF ENTERPRISES BEING CREATED FROM VAT
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
KYIV - The Verkhovna Rada has exempted operations involving transfer
capital assets as contributions to the statutory capital of enterprises from
value-added tax.
The relevant draft law, which is entitled "On Introducing Amendments in the
Law of Ukraine on Value-Added Tax" and registered as No. 7494," was
approved as a whole by 290 votes. Only 226 votes were required for its
approval.
The parliament has exempted from value-added tax operations involving
transfer capital assets as contributions to the statutory capital of
corporate entities if the transfer is conducted in exchange for corporate
rights in such entities, including operations involving importation of
capital assets onto the territory of Ukraine (excluding goods subject to
excise duty) and operations involving their export.
Thus, the parliament intends to return the practice of taxation that existed
before March this year, when amendments were made to the state budget
for 2005. Parliamentary Deputy Serhii Kiroiants prepared the draft law.
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FOOTNOTE: This action by the Parliament is very good news for the
international investment community. Ukraine made a move in the wrong
direction when the law was changed in March of 2005. Many very good
investments were lost as a result of this serious mistake by the
Yulia Tymochenko government. EDITOR
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12. UKRAINIAN PARLIAMENT CHANGES LAW ON VETERINARY
MEDICINE IN ACCORDANCE WITH WTO REQUIREMENTS
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
KYIV - The Verkhovna Rada [parliament] has changed the law "On
Veterinary Medicine" in accordance with requirements of the World Trade
Organization (WTO). The draft law No. 7602 "On Amendments to the
Law of Ukraine "On Veterinary Medicine" received approval of 254 MPs
when only 226 votes were necessary to pass it.
The aim of the draft law is harmonization of the national legislation in the
sphere of sanitary and veterinary regulation with provisions of the WTO
agreement on application of sanitary measures.
The draft sets requirements to veterinary and sanitary quality and safety of
inedible food products of animal origin, environmental protection, as well
as powers of the state authorities, rights and duties of legal entities in
the sphere of veterinary, sanitary and environmental well-being, quarantine
of animals, performing of state veterinary and sanitary control and
supervision.
It is expected that approval of the draft law will bring Ukrainian
legislation in accordance with requirements of the WTO agreement, will
facilitate entry to this organization and will increase export of
agricultural products.
As Ukrainian News earlier reported, Ukraine previously aimed to join the
WTO before 2006 and expected a decision on its admission to be made
at the ministerial conference of the WTO that took place in Hong Kong
in December.
The Economics Ministry is now forecasting that Ukraine will join the
WTO by July 2006. -30-
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13. RADA ADJUSTS CUSTOMS CLEARANCE PROCEDURES
TO WORLD TRADE ORGANIZATION (WTO) NORMS
Ukrainian News Agency, Kyiv, Ukraine, Thu, December 22, 2005
KYIV - The Verkhovna Rada has adjusted customs clearance procedures
with norms of the World Trade Organization (WTO).
Of 226 votes needed, 268 MPs backed on the whole bill 8223-1 on
amendments to several legal acts (concerning the customs processing of
goods).
An explanatory note to the law reads that the adoption of the document
should ensure harmonization of the Ukrainian legislation concerning
determination of products' origin countries with norms of the WTO.
Apart from this, the bill is aimed at improving and simplifying the customs
clearance procedure, control over determination of the customs taxation base
and completeness of tax payments, and also at increasing responsibility of
customs agencies.
The project is amending several articles of the customs code, saying that in
general, these changes correspond to basic foundations and regulations of
the European Union's Customs Code, General Agreement of Tariffs and
Trade Treaty, Agreement on Rules of Origin and Special Supplement to the
International Convention on the Simplification and Harmonization of Customs
Procedures.
At present, this sphere is regulated by the Customs Code, laws on single
customs tariff, on amendments to several legal acts concerning import duty
on goods imported to Ukraine's customs territory, intergovernmental
agreements, and the general agreement of tariffs and trade.
As Ukrainian News reported, Ukraine expected to join the WTO during the
organization's December ministerial conference in Hong Kong. The current
customs code was adopted in 1991. -30-
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14. A GOOD NO-GO FOR WTO
Russia & Ukraine were not inducted into that august institution.
COMMENTARY & ANALYSIS: Boris Kagarlitsky
The Moscow Times, Moscow, Russia, Thursday, Dec 22, 2005
The World Trade Organization meeting in Hong Kong brought at least one
piece of good news: Russia and Ukraine were not inducted into that august
institution. Representatives of most of the economic branches of both
countries breathed a sigh of relief. Their lives had been extended for at
least another year.
The plans of both governments, which had promised to join the WTO by
December 2005, did not look very realistic from the beginning. But the
bureaucrats in Moscow and Kiev frightened critics off, swearing up and
down that they would complete the negotiations in time for the Hong Kong
summit.
Naturally, people started lobbying away furiously for their special
interests. But since the interests of all branches of the economy (except
the export of gas and oil, and possibly of metals) are irreconcilable with
membership in the WTO, the position of the official negotiators became
difficult in the extreme.
For they not only would have to sell their own populations down the river
(which wouldn't bother anybody in Russia or Ukraine, Orange Revolution or
no), they also would have to give over the majority of their entrepreneurial
classes, including foreign investors who have already put money into doomed
industries.
Whenever Russian membership in the WTO comes up, people mention the
automobile industry, no doubt because its representatives have been the most
vociferous in expressing their views on the government's plans. And of
course, everybody notes right off that under the long-standing protectionist
policies, the owners of the auto factories simply did not learn to make good
cars.
The famous Volga is going out of production, and the Lada gets progressively
worse and more expensive as the years go by. Yet people forget that the
national auto industry has not consisted simply of Volgas and Ladas for a
very long time now. There are Fords from the Leningrad region, Hyundais from
Taganrog and a whole series of other brand names whose cars have been
assembled in Russia for some time, just as the Ukrainians have been
assembling Daewoos.
A side effect of the protectionism was that foreign corporations were forced
to develop their production in Russia. If the protectionist policy is
retained, the production of automotive component parts will also be
expanded. But the opening of these markets would spell doom for such plans.
What's happening with Russia's and Ukraine's WTO membership is only
one aspect of a larger crisis within that organization, a crisis which makes
the violent protests of the South Korean farmers in Hong Kong seem no
more than a minor irritation.
The WTO's crisis is systemic. It is entirely clear that the organization
needs to change course, that the policy of liberalization and deregulation
has reached a dead end and that continuing it will not be profitable even
for those countries that pushed it through in the first place.
The Western nations understand perfectly that opening their agricultural
markets would lead not only to the disappearance of farming but also to a
whole chain of ecological and social disasters well outside the agricultural
sector. Thus, despite the small relative weight of the farmers in the
general population, their interests are aggressively defended in both Europe
and the United States.
Many Third World countries nevertheless continue to demand the opening
of Western markets, seemingly by inertia. The governments in question are
merely faithfully following the recommendations of their U.S. and European
teachers.
But in practice, the strengthening of export orientation in weakly developed
economies brings them even more trouble than it does the West. The greater
part of the agricultural population does not gain from developing exports.
On the contrary, the position of the transnational agribusinesses is
strengthened at the expense of local rural populations. Unemployment rises,
internal markets are disrupted, and the economic crisis deepens. The sole
answer is to let the West retain its protectionism, but with the condition
that everybody else gets the right to defend their own markets too.
As always happens with failed policies, the costs associated with their
continuation exceed the benefits many times over. The WTO's steering
wheel needs to be turned in the opposite direction, but structures of this
kind are simply incapable of doing that.
They are doomed because they were "imprisoned" by the strictures of
a single task -- the liberalization of markets in this instance -- and they
do not have the minimal flexibility necessary to react either to the demands
of society or even to the needs of a fairly large portion of the Western
elites. -30-
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Boris Kagarlitsky is director of the Institute for Globalization Studies.
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LINK: http://www.themoscowtimes.com/stories/2005/12/22/009.html
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15. DUTCH CO AKZO NOBEL SET TO BECOME ONE OF LEADING
SUPPLIERS TO THE UKRAINIAN DECORATIVE PAINT MARKET
Buys controlling share in Khimrozerv headquartered in Kiev
ChemPoint.com, Bellevue, Washington, Wednesday, December 21, 2005
ARNHEM, the Netherlands - Akzo Nobel is set to become one of the
leading suppliers to the Ukrainian decorative paint market after signing an
agreement to acquire a 51 percent controlling share in the coatings
activities of Khimrezerv.
Headquartered in Kiev, Khimrezerv's paint business employs 225 people and
manufactures and sells waterborne and solvent-borne decorative coatings.
"This deal is further proof of Akzo Nobel's commitment to build positions in
attractive emerging markets," said CEO Hans Wijers, who is also the Board
member responsible for Coatings.
Founded in 1993, Khimrezerv began paint production in 1998 and is currently
one of the Ukraine's top five decorative coatings manufacturers, operating a
plant in Kirovograd, 350 kilometers from Kiev.
"Taking a majority stake in Khimrezerv's coatings activities will not only
boost our existing market presence in the Ukraine-where we already have a
good position in the premium sector-but will also create a solid platform
for further growth in other areas, particularly the rapidly-growing
mid-range segment", added Jan Andersson, General Manager of Akzo
Nobel's Decorative Coatings International business.
The transaction-which is subject to regulatory approvals-marks the latest
in a series of deals involving Akzo Nobel Decorative Coatings, with
acquisition agreements having also been signed in China, Switzerland and
Germany during recent months. -30-
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http://www.chempoint.com/industrynewsdetails.asp?DocumentName=20051221_Akzo&index=1
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Power Corrupts and Absolute Power Corrupts Absolutely.
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16. HEIDELBERGCEMENT ACQUIRES UKRAINE'S DONCEMENT
AFX Europe (Focus), Frankfort, Germany, Wed, Dec 21, 2005
FRANKFURT - HeidelbergCement AG said it acquired Ukraine's
Doncement for an undisclosed amount in order to expand its position
in the Ukrainian market.
HeidelbergCement said the acquisition, made through its CBR Portland BV
subsidiary, is still subject to approval by relevant regulatory authorities.
Doncement's plant has a production capacity of 1.6 mln tonnes of cement per
year.HeidelbergCement already operates two cement plants in the Ukraine.
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alfred.kueppers@afxnews.com amk/ec
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17. AUSTRIAN AIRLINES LOOKS FURTHER EAST
Will launch services to four business centers, Donetsk in east Ukraine,
Iasi in Romania, Pecs in Hungary, and Ekaterinburg in Russia
By Roger Bray, Financial Times, London, UK, Dec 22 2005
LONDON- Austrian Airlines is to expand its already extensive network
of routes between Vienna and eastern Europe.
With the switch to summer schedules in March it will start operating three
round trips a week to Ekaterinburg in Russia, economic focal point of the
Urals oil, gas and metallurgical production region.
It will also launch services to three other cities: Donetsk in east Ukraine,
whose industries include coal mining and the manufacture of steel and
chemicals; Iasi in Romania, a centre of food and drink, textiles and
machinery production; and Pecs in Hungary, home to companies making
wine, porcelain and leather goods. -30-
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18. UKRAINE'S FIRST LADY MEETS U.S. HEART SURGEONS
Press office of President Victor Yushchenko of Ukraine
Kyiv, Ukraine, Friday, 16 December 2005
KYIV - Kateryna Yushchenko, Head of the Supervisory Council of the
Ukraine 3000 Foundation, met with famous Ukrainian and American heart
surgeons to introduce two large Texas hospitals to their Ukrainian partners,
the Rivne Children's Hospital and the Volyn Medical Children's Association.
Professor Vasyl Lazoryshynets, Doctor Nadiya Rudenko, Professor Anatoly
Rudenko, Director of the Medical Relief Fund Oleksandr Etnis, Hospital to
Hospital Coordinator Vira Pavlyuk, Doctor John Wood, and heart surgeon
Charles Reuter attended the meeting.
They discussed the current state of cardiology facilities at the Rivne
Hospital and ways to launch a program to develop cardiosurgical and
neonatal aid in the Rivne region. In Ukraine, almost 70% of handicapped
children suffer from heart and blood vessel disease. It is vital to render
high-quality aid to such patients, so we should build a modern cardiology
center to timely diagnose congenital heart disease.
John Wood informed those present that on December 21, 9:30 AM,
American heart surgeon Charles Reuter would conduct a presentation of
the so-called Maze Procedure for his Ukrainian colleagues. It will take
place at the Amosov Institute. -30-
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FOOTNOTE: The trip to Ukraine by U.S. heart surgeons and the
participation of two hospitals in Texas was organized by John
Wood, Waco, Texas. Two of the organizations John organized
to assist in a wide range of international medical development
programs are participating in the Hospital to Hospital program in
Ukraine. They are John Wood Ministries, Inc. and The International
Medical Education Foundation, Inc. We are pleased to know John
personally and about his outstanding work in Ukraine and other
countries . EDITOR
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LIST: http://www.president.gov.ua/en/news/data/5_5027.html
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19. AUSTRIAN CHILDREN GIVE 20 THOUSAND CHRISTMAS
PRESENTS TO ZAKARPATTIA SCHOOLS & HOMES IN UKRAINE
UNIAN, Kyiv, Ukraine, Thursday, December 22, 2005
KYIV - Austrian children have given 20 thousand presents to Zakarpattia
residents. According to an UNIAN correspondent, the 40-ton humanitarian
cargo arrived in Zakarpattia in 50 micro-buses. The gifts included candies,
school stationery, and toys.
On the St.Nicholas Day, celebrated in Ukraine on 19 December, Austrian
volunteers gave gifts to children in the villages of Tiachivski district (on
the whole, in 34 schools). In these villages, there live descendants of the
families, which resettled from Austria to Zakarpattia more than 200 years
ago.
The action was prepared by two volunteers from Austria, who are passing
a 14-months civil service in the school of Ust Chorna village. For this
service, they are relieved of the liability for military service in their
native Austria.
Otto Gumpinger, member of the parliament of the Higher Austria and chief of
charitable action "One World - Higher Austria's Aide to Compatriots", who
personally accompanied the humanitarian cargo, informed that more than a
hundred of Austrians expressed a desire to arrive in Ukraine and distribute
the presents in schools and children's homes. According to him, this action
unites many people and makes appositive contribution into the development
of a single Europe.
The delegation also included the president of the Higher Austrian
parliament, the Mayor of Sankt-Oswald city, school directors from the
Higher Austria, and 120 Austrian volunteers. Ambassador of Ukraine to
Austria Volodymyr Yelchenko helped to deliver the cargo to Ukraine.
Top deputy chairman of the Zakarpattia Oblast State Administration
Mykhailo Popovych thanked on behalf of local residents to the Austrian
delegation for their attention to the Zakarpattia children, and expressed
readiness to broaden ties with the Higher Austria not only in the
humanitarian sphere.
According to him, presently 35 joint Ukrainian-Austrian companies are
operating in the Zakarpattia Oblast. During the year 2005, the turnover
between these companies made up 100 million dollars. The Austrian
delegation left for their motherland on 21 December. -30-
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LINK: http://www.unian.net/eng/news/print-93661.html
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20. DO THEY KNOW IT'S CHRISTMAS TIME AT ALL
Scot reveals plight of street kids in seaside resort of Odessa, Ukraine
Scot photographer Gillanders wins UNICEF photo of the year
Lisa Adams, DailyRecord.co.uk, Glasgow, Scotland, Fri, Dec 23, 2005
THESE are just some of the forgotten street children who have nothing to
celebrate this Christmas. Freezing and homeless, many are dying from Aids
after injecting drugs to escape the misery of their lives. There are up to
120 communities of youngsters like this surviving in sewers, heating
maintenance tunnels and derelict shelters at the seaside resort of Odessa,
in Ukraine.
Their desperate situation is captured here by Scots photographer David
Gillanders, pictured below, who has won the Unicef photo of the year for
his work with the youngsters.
"It's unbelievable that all this is going on just a two-hour plane ride from
Scotland," says David, 34. "If I had one wish for this Christmas it would be
that these kids had somewhere safe to sleep and someone to care for them."
Many of these abandoned children are as young as six. Some have escaped
orphanages, others were forced on to the streets after their parents died or
landed in prison. "They set up home in rat infested manholes to escape the
bitter -20 o C Ukrainian winters. They survive on any food they can get from
begging or stealing.
"None of these children thinks of a future as they feel they have none,"
David explains. "It's utterly appalling. Children are injecting lethal
concoctions of home made drugs, passing out, crying in their sleep and
waking up screaming."
Here dad of two David tells the heartbreaking stories of the children he met
during several trips to the region.
BEFORE DYING - David says: "This is 13-year-old Yana, who really got
under my skin. She was very ill when I took this picture in August 2004 but,
despite all she'd been through, you'd occasionally get a small smile from
her.
She was living in a concrete shed in Pioneer Park. Just yards away was one
of the main promenades where people with money in Odessa would stroll
and sit in the sunshine.
Yana's father died from TB and her mother was in prison. All she really
wanted was to be reunited with her mum but she'd got caught up in drugs and
was HIV positive. She had abscesses all over her body. I helped her all I
could when I was there bringing food every day. I later discovered she froze
to death on the streets in December 2004
HOME - David says: "This is inside the concrete shelter where Yana and
Yulia were living. Some of the kids here are as young as 11. You can see the
hypodermic needle as they prepare to shoot up.
SUFFER LITTLE CHILDREN - Children as young as six sleep huddled
together in a concrete enclosure in Pioneer Park in Odessa, where the
temperatures can reach -20 o C. Just a short time after David took this
photograph the enclosure was destroyed by a petrol bomb.
LIFE IN THE PACK - David says: "Living together in a derelict building,
these children are like a tribe or a pack of animals. Sometimes there are
fights over food or drugs but mostly they look after each other the best
they can. They have to as nobody else will.'
LETHAL - David says: "Yulia was 14 and died in June this year. Here she is
being injected with drugs by Andre. The drugs are a lethal combination of
trised, essidrene, vinegar and water. The drugs give a head rush and then
the user sinks in to a depression. They can also trigger fits.'
UNDERGROUND - David says: "Andre, 14, was living underground with
eight or nine street kids. The police launched a campaign to close many of
these communities by welding shut manholes like this, sometimes when
there were still children sleeping underneath. -30-
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21. UKRAINIAN GIFT OF LIFE CELEBRATES TEN-YEAR
MILESTONE: A FAIRYTALE COME TRUE?
George Kuzma, President, Ukrainian Gift of Life (UGoL)
Glen Rock, New Jersey, December 2005
Once upon a time in a faraway land, there were many children born with
heart defects and, as they grew, their parents had no hope that they would
run or play sports, go to school everyday, or even help with the chores like
other children their age. Their families were very sad but many prayed for
a miracle and, finally, one day there was hope - news that there was help
available for their child.
Three hundred of these children, ranging in age from one year old to 17
years old, live "more happily after..." having cardiac surgeries because of
the dedicated volunteers and generous benefactors of Ukrainian Gift of
Life (UGoL).
Ukrainian Gift of Life, Inc. (UGoL) recently celebrated its tenth year of
incorporation and these 300 children's lives saved during a reception at
the Ukrainian Institute (also celebrating a milestone of 50 years at its
headquarters on New York's museum mile).
Kathy Kuzma, the organization's treasurer, commented that it has been
like a fairy tale for the organization's founders as well as for some of the
children and their families. "Ten years ago," she said, "we hoped to save
the lives of one or two children a year through relationships we had
developed. We are grateful to God that our efforts have blossomed to
such an extent."
Since 1995, in addition to arranging for surgeries for 100 children at
hospitals in Chicago, New Jersey and New York and sponsoring 200
children's surgeries (35 in 2005) at the Lviv Surgical Center in Ukraine,
UGoL has published textbooks, sourced equipment and consumables
for clinics and hospitals in Ukraine, refurbished a PICU and provided
observational training for eight medical professionals from Ukraine at
US teaching hospitals.
The formal program of the afternoon began when Marta Kokolskyj, UGoL's
Advisor on Global Affairs introduced Nataliya Kostenko, representing the
Ukrainian Consulate in New York, and Andryj Nikitov, representing Valerij
Kuchinsky, Ambassador of Ukraine to the United Nations.
They expressed gratitude for the spirit of cooperation and outreach actively
pursued not only by members of the Ukrainian Diaspora in the US but also
the generosity exhibited by Americans, in general, to advance pediatric
cardiology in Ukraine while the country is working to overcome poor
technological advancement that existed under Soviet domination.
There is evidence in UGoL's programs that Ukrainian surgeons, cardiologists,
anesthesiologists and other medical professionals are seeking to
successfully meet the challenges of bridging the gap in technology and
overcoming limitations imposed by the poor economic condition of families
and hospitals and the government's ability to subsidize programs.
UGoL President, George Kuzma, then highlighted some new initiatives in 2005,
including establishment of a partnership with the charitable organizations
CARITAS and CARDIO in supporting UGoL's outreach to the villages and
of a Mother's Group in Lviv consisting of volunteer parents from the UGoL
programs. Dr. Mykola Konyk, the chief of the Lviv Surgical Center's
Pediatric Cardiac Surgery Department, will spearhead the outreach effort to
bring more children from outlying areas into Lviv for diagnosis and possible
assistance from UGoL programs.
As is true with cases to date, if the child is diagnosed with a congenital
defect of the type for which surgical correction at the center has a high
success rate, the parents can opt to have surgery performed at the Center by
Dr. Konyk's team. For more complex cases, the child may be scheduled for
surgery to coincide with the quarterly visits of surgical teams from Western
Europe or the US.
Extremely complex cases are diagnosed and prepared by Dr. Yuriy Ivaniv,
Director of Diagnostic Radiology at Danylo Halytsky State Medical University
for presentation to a US hospital. The volunteer mothers provide shelter
and subsistence to parents in need who come with their children to Lviv to
obtain a diagnosis of the child's heart defect. This group, one of very
few volunteer groups operating in Ukraine, also provides support for the
needs of the newly refurbished and equipped PICU at Lviv Regional
Surgical Center.
George Kuzma also announced cooperation with the Odessa Regional
Children's Hospital. Upon meeting with the hospital's director and Dr.
Roman Lekan, Chief of Cardio-Vascular Surgery, the UGoL Board of
Trustees and Directors agreed to sponsor Dr. Lekan for observational
training in the US. He was one of three doctors brought to the US for
training at Children's Hospital of Philadelphia (CHOP) in 2005.
The keynote speaker was Dr. Oleksandr Bablyak, another of the doctors
brought to America to study advanced techniques at CHOP under UGoL's
OpCOT program. Dr. Bablyak is a young, aggressive cardiothoracic
surgeon who received much of his education in Australia and currently
splits his practice between the Amosov Institute in Kyiv and Lviv Surgical
Center.
He spoke on the dramatic changes in pediatric cardiology and surgery since
he entered the profession and discussed the feasibility of self-sufficiency
in Ukraine and outreach to surrounding countries during the next ten years,
which he said ".is possible, but it is only through ongoing training
opportunities and other support provided by benevolent organizations like
UGoL that advancements in pediatric cardiology can continue in Ukraine".
On behalf of the volunteers and benefactors, the UGoL President accepted
the challenge to continue providing such support.
The group was brought to tears when Lesya Bablyak, the surgeon's spouse
and an accomplished Iconographer, presented an original icon to Stephanie
Andre, Director of the UGoL program Operation CHILD CARDIO-CARE-
UA and the Operation CHILD CARDIO-CARE-US Welcoming Committee.
In making the presentation of the beautiful icon of the "Blessed Virgin
Mary, Protectress of Children", Lesya noted that Stephanie reflected the
image of Mary reaching out over the children.
This recognition was well deserved as Stephanie touches almost every child
in the program. She manages funding of surgeries in Ukraine and builds a
bond between the sponsors and child's family through coordinating an
exchange of photos and letters. With other welcome team volunteers,
Stephanie visits and brings gifts to each child and parent who comes to
America.
Two UGoL Heart and Spirit Awards were presented this year with heartfelt
appreciation for generous support of the OpCCCare program for children
from Ukraine requiring heart surgery and OpCOT program for training of
pediatric cardiology professionals.
In a crisis situation last year when another hospital cancelled scheduled
surgeries, NYU Medial Center Department of Cardiothoracic Surgery agreed
to perform three surgeries for children who were already in the US. The
second Heart and Spirit award was presented to CHOP (The Cardiac Center
at the Childrens Hospital of Philadelphia) for providing training to seven
pediatric cardiology medical professionals from Ukraine in the past three
years.
Since key members of the Center were at a conference and could not attend,
the award was accepted by Theodore Kurman, the UGoL program director
who has coordinated the training effort since its inception.
The guests were entertained throughout the event by Alla Kutsevych and
her bandura. Alla also joined the Sisters Pavlishyn whose stage presence
captivated the audience. The two young girls sang a medley of songs in
Ukrainian and English as well as selections from their album.
Ihor Shevchuk, website program director, took this opportunity to remind
everyone that there are continuous updates to pictures of children
benefiting from the program and other current events. Tenth anniversary
activities will be posted on the website, including information about a
summer 2006 Tour to Ukraine.
Visiting Kyiv, Ivano Frankivsk and Lviv and surrounding areas, the ten days
will culminate with a gala celebration at the Youth Palace in Lviv to which
all children who have been hosted in the US or sponsored in Ukraine will be
invited to attend with their families.
With the formal program ended, the guests continued celebrating and
participating in a silent auction of gifts and hand made artifacts from
children's families. One guest offered that it was ".a warm, wonderful
feeling to come together with so many people with such generous hearts."
She continued, "it is encouraging at this time, when the world is in
conflict, to know that love can bridge an ocean to help miracles happen
for others in need."
Also announced at this event was that on-line donations can now be made
at www.ugolinc.com. To make donations, offer administrative time or
translator services or for additional information (i.e. memorials, matching
funds), contact: UGoL at 233 Rock Rd., Glen Rock, NJ 07452 or
201-652-4762 or visit its website, www.UGoLinc.com. All contributions
are tax-deductible. -30-
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Contact: George M. Kuzma, Ukrainian Gift of Life, Inc., 233 Rock
Road, Glen Rock, NJ 07452, Tel: 201-652-4762, Fax: 201-584-9155
www.UkrainianGiftofLife.com, cardio@ugolinc.com.
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22. RAISING UP 'THE FUTURE OF UKRAINE'
By Aimee Hornberger, Herald staff writer, Columbia Basin Herald
Moses Lake, Washington state, USA, Wednesday, Dec 21, 2005
MOSES LAKE -- Ukraine native Natalya Skala is just about to sing a
bedtime song to the 17 children housed inside Light of the World children's
center she helped open in 2004 in Ukraine.
It is August 2005 and Natalya will soon take a return flight back to Moses
Lake after spending a month at the center, a nonprofit agency dedicated to
providing homes to abandoned children living with HIV and other
life-threatening illnesses.
As Natalya gets ready to leave, a 5-year-old girl comes up to hug her. "She
just grabbed me and didn't let me go," she said. With seven children of her
own, Natalya does not make a distinction between them and the children at
the center who range in age from 5 up to 16.
In the year since the center opened, Natalya and other volunteer workers
have been fighting to keep it operating amidst changes in government, a
public fear of HIV and harsh criticism toward the Christian beliefs held by
staff at the center. "Our trip was so tense," Natalya said.
Accompanied with a group of seven missionaries from Moses Lake and
around Washington State, Natalya spent some days giving tours of the
center to government officials, taking the children on field trips and
confronting opposition to the center.
Some of the government officials were impressed with the center, but the
rumors and negative stigma in the Ukraine about what HIV is and how it
spreads have made keeping the center open a challenge. These children
still deserve to attend public school and live normal lives despite their
illnesses, Natalya said.
Interviews with media from both the Ukraine and U.S. are helping Natalya to
get the word out about the center and speak openly about socioeconomic
problems in the Ukraine.
One of the more memorable moments for Natalya on her last trip was taking
the children to surrounding villages where they performed a puppet show,
portraying biblically-based themes. "It gave them a new sparkle of life,
happiness that they are able to give something to somebody," Natalya said.
Natalya's third child, 21-year-old Natazshya Skala, currently resides in the
Ukraine where she is studying medicine and is the vice president of the
center. Natazshya moved to the Ukraine at the end of July and plans to be
there six years. She is a link between the U.S. and Ukraine in running the
day-to-day operations at the center.
In between the high demands of her medical studies, Natazshya visits the
center and makes phone calls weekly. The efforts of Natazshya and others
has been to make the center a welcoming place that offers children a normal
life despite their illnesses and troubled backgrounds.
"Institutions that house and raise children without parents/relatives are
very strict and standardized, and rarely have a home-like environment,"
Natazshya wrote in a Dec. 12 e-mail from the Ukraine. "Although the law
provides that these children not be separated and closed off from other
children, this is what normally happens."
All the students at the center attend public school. Each day they are
walked to their classes by center work volunteers after eating breakfast.
The meals the students at the center eat are modeled after a specific diet
plan to help build their immune systems from the illnesses they carry.
Weekends are filled with a combination of homework studies, socializing
and physical activity like most other children.
Donations made to the center from individuals and churches in Moses Lake
have helped continue the day-to-day operations there. Those donations have
included a new refrigerator, washing machine, clothes and other
miscellaneous items.
The next biggest challenge for the center is financing a major remodel of an
abandoned building 15 minutes from the current center site. Because the
building is much larger and has been abandoned for six years, Natalya is
hoping to acquire it for free from the Ukraine government to expand the
center.
The building can house between 150 and 200 children compared to the less
than 20 children the current site houses. The remodel would include a large
kitchen, six rooms with master bedrooms and bathrooms and a performance
theater.
The ultimate goal is to have seven to 10 adult couples taking care of the
children and living with them in mini family units inside the new building
once it's remodeled, Natalya said.
Pairing children with adult couples is part of what Natalya calls raising up
"the future of Ukraine." Natazshya said the center hopes to have the remodel
completed by next spring or summer as the waiting list of agencies wanting
to house children with HIV/AIDS continues to grow.
One day, Natalya would like to have a center in the U.S. for abandoned
children. "I have peace for children's center," Natalya said. -30-
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23. UKRAINIAN BORDER TOWN READY FOR CHANUKAH
The Federation of Jewish Communities of the CIS (FJC)
Moscow, New York, Wednesday, December 21 2005
UZHGOROD, Ukraine - The Jewish community of Uzhgorod, has
announced that a great Chanukah concert will take place for members of
the Jewish community and invited guests. The gala celebration will feature
a ceremony for lighting the candles of the Menorah.
The Head of the City Administration will be given the privilege of lighting
the first candle. Rabbi Mendel Taichman, the Chief Rabbi of Uzhgorod and a
Chabad Lubavitch emissary, will extend congratulations and speak about the
history and meaning of the Holiday of Light.
The cultural program includes a film profiling the lighting of Chanukah
candles in different cities of the world and several performances by
children attending the Ohr Avner Chabad Day School and the Jewish
kindergarten. Those attending will also enjoy traditional doughnuts and
gifts presented by the local community.
The headliner of this concert, is a famous cantor from Brooklyn, Girsh
Tsatskes. Having immigrated to the USA from Moscow more than 30 years
ago, Girsh went on to become a renowned cantor, with songs in Hebrew,
Yiddish, Russian and English. Four years ago, he had toured a number of
Ukrainian cities to perform for local audiences. Upon completing his tour
in Budapest, he will be arriving in Uzhgorod.
Uzhgorod, a Ukrainian city located on the border with Slovakia, is home to
an active Jewish community that is a member of the Federation of Jewish
Communities of Ukraine. -30-
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LINK: http://www.fjc.ru/news/newsArticle.asp?AID=339487
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24. PROVIDE DIRECT ASSISTANCE TO IMPOVERISHED UKRAINIAN
ELDERLY THROUGH AMERICAN FRIENDS OF "FOR SURVIVAL"
Make A Difference: For Survival, For Dignity, For Ukraine
Katie Fox, Volunteer Director, American Friends of "For Survival"
Washington, D.C., Wednesday, December 21, 2005
Dear Friends,
Please consider a final year end gift to Ukraine this year. As most of you
know, for the past several years I have been running a very small charity to
provide direct assistance to impoverished Ukrainian elderly. I decided that
I needed to do something to immediately and directly help the elderly people
who I saw begging on Kyiv's streets, in the wake of the economic collapse
that accompanied the break up of the Soviet Union.
This charity, the American Friends of "For Survival," is an all volunteer
effort, run by Americans here and in Kyiv. All funds collected are sent to
the American volunteers in Kyiv, who work with the established Ukrainian
charity "For Survival" so screen applicants and distribute funds. Every
cent of the funds we collect go directly to a poor elderly person to cover
basic living expenses.
I am making a final appeal this year, because, unfortunately, I have to.
Most of you know that Ukraine saw momentous changes this year, many
very positive. However, 2005 was also a year of tremendous inflation and
rising prices, especially in Kyiv. More than 80% of pensions are still
below the government-established minimum subsistence level.
"American Friends of 'For Survival'" is a registered 501(c)3 not-for-profit
organization. Donations are tax-deductible. Donations should be made out
to "For Survival" and mailed %Katie Fox, 3100 Connecticut Avenue #235,
Washington, D.C.
Thank you very much just for considering this and happy holidays!
Katie Fox
Washington, D.C.
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FOOTNOTE: The Action Ukraine Report (AUR) is publishing this
appeal because we have known about this project for some time and
are impressed with the work Katie Fox and the group of volunteers
that run the American Friends of "For Survival." Katie's daytime job
is as Deputy Director - Eurasia for the National Democratic Institute
(NDI) here in Washington. She can be contacted at katief@ndi.org.
Your support for this fine program will be much appreciated. EDITOR
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