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

Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer

WASHINGTON, D.C., MONDAY, OCTOBER 22, 2007

Clicking on the title of any article takes you directly to the article.

Return to Index by clicking on Return to Index at the end of each article

1. UKRAINE STRIKES DEAL WITH VANCO INTERNATIONAL
Press office of President Yushchenko, Kyiv, Ukraine, Fri, Oct 19, 2007

2. VANCO INTERNATIONAL SIGNS UKRAINE'S FIRST

DEEPWATER BLACK SEA AGREEMENT
Business Wire, Kyiv, Ukraine, Friday, October 19, 2007

3. UKRAINIAN CABINET AND VANCO SIGN AGREEMENT ON
DEVELOPMENT OF BLACK SEA SEA'S TRANS-KERCH SEGMENT
Ukrainian News Agency, Kyiv, Ukraine, Kyiv, October 19, 2007

4. UKRAINE GETS 65%, VANCO INTERNATIONAL 35% OF BLACK

SEA SHELF'S TRANS-KERCH SEGMENT PRODUCTS
Ukrainian News Agency, Kyiv, Ukraine, Friday, October 19, 2007

5. US-UKRAINE BUSINESS COUNCIL HOSTS MEETING WITH

State Export-Import Bank Rep Office in NYC to Join Business Council

U.S.-Ukraine Business Council (USUBC), Wash, DC, Mon, Oct 22, 2007

6. UKRAINE TO END GRAIN EXPORT LIMITS, ECONOMY MINISTER
By Halia Pavliva and Mark Drajem, Bloomberg
Washington, D.C., Friday, October 19, 2007

7. POLITICAL SITUATION IN UKRAINE MAY DELAY ITS
ADMISSSION TO WTO SAYS ECONOMY MINISTER KINAKH
Itar-Tass, Moscow, Russia, Sunday, Oct 21, 2007

8. UKRAINE BRACES FOR 15% GAS PRICE HIKE MINISTER SAYS
Bloomberg News, New York, NY, Saturday, October 20, 2007

9. UKRAINIAN FEDERATION OF AMERICA (UFA) JOINS
THE U.S.-UKRAINE BUSINESS COUNCIL (USUBC)

U.S.-Ukraine Business Council (USUBC), Wash, D.C., Fri, Oct 19, 2007

10. NORTH DAKOTA TRADE OFFICE GETS FEDERAL GRANT TO
EXPAND EXPORTS OF AGRICULTURAL EQUIPMENT TO UKRAINE
Associated Press, Bismarck, North Dakota, Sunday, October 21, 2007

11. TIMOSHENKO WANTS UKRAINE TO REMAIN KEY GAS ROUTE
New Europe, Issue 752, Brussels, Saturday, 20 October 2007

12. TAKING THE POLITICS OUT OF GAS
Commentary: BYuT Inform Newsletter, Kyiv, Ukraine, Mon, 15 Oct, 2007

13. ⌠PLUSES AND MINUSES OF UKRAINE'S MEMBERSHIP IN
THE EU FOR THE EUROPEAN UNION■
SPEECH: By Roman Shpek, Ukrainian Ambassador to the EU
Ukraine-EU Relations, Roundtable VIII; Ukraine's Quest for Mature

Nation Statehood; Ronald Reagan Building and International Trade Center
Washington, DC, Tue-Wed, October 16-17, 2007

14. IMPORTANT THAT EUROPE AND THE U.S. HELP UKRAINE
REACH LEVELS OF PROSPERITY AND STABILITY
LETTER: From U.S. Senator Joseph R. Biden, Jr., Chairman
United States Senate Committee on Foreign Relations
TO: The Honorable William Miller, Ukraine-EU Relations, Roundtable VIII
Ukraine's Quest for Mature Nation Statehood
Ronald Reagan Building and International Trade Center
Washington, DC, Wednesday, October 17, 2007

15. OLD QUESTIONS FOR NEW ODESA-BRODY EXTENSION PROPOSAL
Analysis & Commentary: By Roman Kupchinsky
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Tuesday, October 16, 2007

16. UKRAINE: US DEFENCE SECRETARY GATES TO DISCUSS

Associated Press (AP), Kyiv, Ukraine, Sunday, October 21, 2007

17. THE POWER OF A SECOND CHANCE

Analysis & Commentary: By Jan Maksimyuk, RFE/RL

Radio Free Europe/Radio Liberty (RFE/RL),
Prague, Czech Republic, Friday, October 19. 2007

18. HOW LONG WILL THE ORANGE COALITION LAST?
Ukraine: Yulia Tymoshenko will head an unstable government
Analysis & Commentary: By Yanina Sokolovskaya, Kiev
Izvestia, Moscow, Russia, Thursday, October 18, 2007

19. UKRAINE: WHAT NOW FOR THE DONETSK STRONGMAN?
Commentary: By Peter Dickinson
Business Ukraine magazine, Kyiv, Ukraine, Mon, Oct 15, 2007

20. MISTAKES OF VIKTOR YANUKOVYCH'S ADVISERS
Analysis & Commentary: By Yuriy Starchevsky
Southern Center of Political Consulting
Ukrayinska Pravda, Kyiv, Ukraine, Wed, Oct 10.2007

21. "ESPECIALLY LARGE SWAP. VIKTOR YUSHCHENKO AND

YULIYA TYMOSHENKO AGREED ABOUT EVERYTHING"
Ukraine's new coalition based on concessions by both sides
Commentary: Serhiy Sydorenko, Olena Heda & Oleksandr Svyrydenko
Kommersant-Ukraina, Kiev, in Russian 16 Oct 07; pp 1, 2
BBC Monitoring Service, UK, Tuesday, October 16, 2007

22. TIME FOR YUSHCHENKO TO LET HIS HEAD RULE HIS HEART
Analysis & Commentary: By Taras Kuzio
Business Ukraine magazine, Kyiv, Ukraine, Monday, Oct 15, 2007

23. UKRAINE'S ORANGE LEADERS PRESENT COALITION ACCORD
5 Kanal TV, Kiev, in Ukrainian 1245 gmt 17 Oct 07
BBC Monitoring Service, UK, Wed, October 17, 2007

24. ORANGE AGAIN: YUSHCHENKO AND TYMOSHENKO REUNITE
Analysis & Commentary: By Tammy Lynch
THE ISCIP ANALYST, An Analytical Review, Volume XIV, Number 3
Institute for the Study of Conflict, Ideology & Policy at Boston University
Boston, MA, Thursday, 18 October 2007

25. UKRAINIAN WINS DETROIT'S WOMEN'S MARATHON RACE
By Chris Silva, Sports Writer, Free Press, Detroit, MI, Mon, Oct 22, 2007

26. INTERNATIONAL LAW COMMITTEE OF PHILADELPHIA BAR
ASSOCIATION TO HOLD OPEN MEETING ON UKRAINE NOV 1
Gene M. Burd, Marks Sokolov and Burd, LLC.; Managing Director

of Kyiv Office; Co-Chair Phila Bar International Law Committee
Philadelphia, PA, Monday, October 22, 2007

27. LIVING GENEROUSLY" FALL 2007 EVENTS IN SUPPORT OF

THE UKRAINIAN CATHOLIC UNIVERSITY IN LVIV TO BEGIN
Ukrainian Catholic Education Foundation, Chicago, IL, Mon, Oct 22, 2007

28. UTAH PEOPLE OPEN ARMS TO UKRAINE ORPHANS
By Elaine Jarvik, Deseret Morning News

Salt Lake City, Utah, Friday, Oct. 19, 2007
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1. UKRAINE STRIKES DEAL WITH VANCO INTERNATIONAL

Press office of President Victor Yushchenko, Kyiv, Ukraine, Fri, Oct 19, 2007

KYIV - Deputy Prime Minister Andriy Klyuyev and Vanco Energy Company
Chairman and President Gene Van Dyke have signed a production sharing
agreement to explore the Prykerchenska area of the Black Sea shelf.

President Victor Yushchenko welcomed the deal on Friday, saying it will
strengthen Ukraine's energy security and stimulate exploration efforts in
the Black Sea.

"This is a strategic project for Ukraine and this is a unique precedent for,
on the one hand, formulating a national energy strategy and, on the other
hand, for cooperating with the world's leading international investors," he
said.

Ukraine confirms its important role in developing Europe's energy market
and declares its readiness for global energy cooperation, he added, thanking
all those who made the deal possible for inviting the reliable investors to
Ukraine.
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LINK: http://www.president.gov.ua/en/news/data/1_19986.html

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FOOTNOTE: The photograph on the presidential website shows U.S.

Ambassador William Taylor standing next to President Yushchenko

at the signing ceremony. Vanco Energy Company is a member of the

U.S.-Ukraine Business Council (USUBC) in Washington, D.C.

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2. VANCO INTERNATIONAL SIGNS UKRAINE'S FIRST

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3. UKRAINIAN CABINET AND VANCO SIGN AGREEMENT ON
DEVELOPMENT OF BLACK SEA SEA'S TRANS-KERCH SEGMENT

Ukrainian News Agency, Kyiv, Ukraine, Kyiv, October 19, 2007

KYIV - The Cabinet of Ministers and Vanco International Ltd. (Switzerland)
have signed a product-sharing agreement for the trans-Kerch segment of the
Black Sea shelf. The presidential press service announced this to Ukrainian
News.

Deputy Prime Minister Andrii Kliuev signed the agreement on behalf of
Ukraine while Vanco International's CEO Gene van Dyke signed it on behalf

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4. UKRAINE GETS 65%, VANCO INTERNATIONAL 35% OF

BLACK SEA SHELF'S TRANS-KERCH SEGMENT PRODUCTS

Ukrainian News Agency, Kyiv, Ukraine, Friday, October 19, 2007

KYIV - Ukraine will get 65%, Vanco International Ltd. (the United States)
35% of products from the trans-Kerch segment of the Black Sea shelf.
Founder of Vanco Energy Company (United States), which is parent company

for Vanco International, Gene van Dyke has disclosed this at a press conference.
He said that this is approximate calculation of distributing shares.

"First, we return our money, and then share products between the state and
us. We also pay income tax. And all this makes up 65:35 in favor of the
state," said van Dyke. He stressed that the Cabinet of Ministers is to
announce detailed information on the signed agreement.

In keeping with the agreement, once recovery commenced, all the amount of
hydrocarbons is offered to Ukraine, and only in case of the state refuses to
buy part of this volume, Vanco International would have right to sell it
outside of Ukraine.

Van Dyke told that in case of successful seismological survey and good
drilling Vanco International would invest USD 20 billion into further
development of deposits at the trans-Kerch segment of the Black Sea shelf.

As Ukrainian News earlier reported, the Cabinet of Ministers and Vanco
International Ltd. signed a product-sharing agreement for the trans-Kerch
segment of the Black Sea shelf.

The Cabinet of Ministers declared Vanco International Ltd. as the winner of
a competition for the right to develop the trans-Kerch segment of the Black
Sea's continental shelf in April 2006.

Subsequently, the Cabinet of Ministers and Vanco International Ltd. agreed
the terms of the product sharing agreement for the trans-Kerch segment of
the Black Sea shelf.

In November 2006, Vanco International Ltd. said it could accept an agreement
that provided for sharing products from the trans-Kerch segment of the Black
Sea shelf at the ratio of 45:55 (45% to the investor and 55% to the state)
after the start of development of the segment.

The tender proposal suggested that Vanco would receive until the
compensation for investment spending 70% to 80% of the production depending
on other terms of the product-sharing agreement that influence on the result
and 40% to 50% after the compensation for taxes.

In April 2007, the interagency commission for signing and implementation of
product-sharing agreements approved its version of an agreement between the
Cabinet of Ministers and Vanco International Ltd., a subsidiary of Vanco
Energy Company, on sharing products mined from the trans-Kerch segment

of the Black Sea shelf.

The draft agreement provided for sharing products from the trans-Kerch
segment of the Black Sea shelf in the ratio of 60:40 (60% to the state and
40% to the investor) after the start of development of the segment and 50:50
during the stage before the start of development (before recoupment of
investments).

In May 2007, the Cabinet of Ministers prolonged signing of the agreement on
distribution of produce of Kerch shelf in the Black Sea between the Cabinet
of Ministers and Vanco International until October 21.

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5. US-UKRAINE BUSINESS COUNCIL HOSTS MEETING WITH

State Export-Import Bank Rep Office in NYC to Join Business Council

U.S.-Ukraine Business Council (USUBC)

Washington, DC, Monday, October 22, 2007

WASHINGTON - The U.S.-Ukraine Business Council (USUBC) hosted a

breakfast meeting with Ukraine's Minister of Economy, Anatoliy Kinakh,

and Mykola Udovychenko, Deputy Chairman of the Board of The State

Export-Import Bank of Ukraine, in Washington, DC on Friday, October

19, 2007, in Washington.

Also attending the meeting from Ukraine were Dr. Viktor Sheybut, Head of

the Group of Advisors to the Vice Prime Minister and Sergiy M. Makatsariya,

Deputy Minister of Finance, both members of Ukraine's delegation the World

Bank/ IMF meetings.

The State Export-Import Bank of Ukraine has just opened a representative

office in New York City. Morgan Williams, SigmaBleyzer; President of the

USUBC, announced that the Ex-Im Bank, through its representative office,

will become the forty-eighth member of the USUBC.

In addition to remarks by Kinakh and Udovychenko, the meeting included
presentations by Anders Aslund, Peterson Institute for International
Economics and Edilberto Segura, SigmaBleyzer Private Investment Group/

The Bleyzer Foundation.

Minister Kinakh called for intensive dialogue between Ukrainian and foreign
businessmen. He cited continued positive trends in this country's economy.

Among crucial steps for Ukraine in the near future, the minister stressed
the importance of Ukraine's entry into the WTO by the end of 2007 and to
continue discussions of a framework agreement with the European Union.

Kinakh stated that Ukraine is deeply integrated into European economic
system and noted that Ukraine's external trade turnover with European
countries amounts to 30% -- higher than with Russia (26%).

Mr Kinakh also said that the growth of machine building exports also is

growing. These and many other facts testify to the huge potential of

Ukrainian economy.

Addressing the need for structural reforms, Minister Kinakh cited some
of the steps undertaken by the current government. He said that the cabinet
has approved a draft tax code, which now must be approved by the

parliament.

Minister Kinakh noted that harmonization of this sphere with the EU
standards is one of the corner stones for establishing a Free Trade Area

between Ukraine and the European Community.

Minister Kinakh also spoke on land reform in Ukraine, stressing that it has
been six years since a new land code was adopted. Kinakh called for
transparent privatization, and stressed that he strongly opposes moratorium

on land sales. Mr Kinakh also called for the improvement of legislation to

attract foreign investment.

In his closing remarks minister Kinakh said that structural reforms are
needed without delay, as poor government efficiency and bad public

management do not "correspond to strong intellectual potential of Ukrainian

people."

In his remarks, Udovychenko emphasized the high quality performance of his
bank. He said that Ukreximbank has maintained leading positions among
Ukrainian banks and looks forward to further cooperation with foreign
businessmen.

Udovichenko also stressed that Ukreximbank is highly respected in the
world. Agreements concluded by Ukreximbank in the international capital
markets have attracted about $1.0 billion of long-term financial resources
to projects the Ukrainian economy.

Segura and Aslund also emphasized Ukraine's positive economic outlook.
Aslund called the future government of Ukraine to continue carrying out
necessary reforms and fight corruption. Segura stated massive governmental

reorganization was necessary for Ukraine to gain the capacity to develop,

introduce and implement needed economic and business reforms.

Aslund stressed also that most political parties in Ukraine have European
programs, and, in his opinion, Ukraine currently is experiencing a
transformation from political parties based on the country's regions to
parties based on social class.

Some of the companies and organizations represented at the meeting were

Global Trade Development; U.S. State Department; Export-Import Bank

of the US; Cisco Systems; Vanco Energy Corporation; Rand Corporation;

Overseas Private Investment Corporation; Case-New Holland; U.S.-Ukraine

Foundation; Office the Vice President; Heller & Rosenblatt; Embassy of
Poland; BBC Ukrainian Service; U.S. Commerce Department; RULG-

Ukrainian Legal Group; U.S. Civilian Research and Development Foundation;

Center for Strategic and International Studies; Cargill; Boeing; SigmaBleyzer

Private Equity Group; Center for International Private Enterprise; Oracle;

SASI; Embassy of Ukraine and Westinghouse. LINK: www.www.usubc.org
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6. UKRAINE TO END GRAIN EXPORT LIMITS, ECONOMY MINISTER

By Halia Pavliva and Mark Drajem, Bloomberg
Washington, D.C., Friday, October 19, 2007

WASHINGTON - Ukraine, the world's sixth-biggest grain exporter in 2005,
will cancel restrictions on grain and oilseed exports next month because
prices are the highest ever, Economy Minister Anatoliy Kinakh said.

"The decision is approved already'' to lift the limits Nov. 1, Kinakh said
today during an interview in Washington, where he was attending the
International Monetary Fund annual meetings. The Ukrainian "government is
not in favor of the restrictions,'' he said.

Restrictions on grain exports were imposed in 2006 to avoid a domestic
shortage. Wheat prices reached a record $9.6175 a bushel in Chicago on Sept.
28 after adverse weather affected crops in Europe, Canada, and Australia,
dragging global inventories toward a 32-year low.

Ukraine will export as much as 4 million metric tons of wheat of this year's
harvest, Kinakh said. The country harvested 28 million metric tons of grain
this year, including 14.5 million metric tons of wheat, he said.

"Ukraine has a huge agricultural potential, and therefore it has a good
chance to become one of the major players'' in global grain markets, Kinakh
said.

Farmers harvested 4.2 million metric tons of sunflower seeds in Ukraine and
will produce 1.8 million tons of sunflower oil, of which 1.2 millions tons
will be exported, Kinakh said.
SUNFLOWER OIL
"There were concerns on the market that we may ban exports of sunflower-
seed oil,'' Kinakh said. "We won't. Competition in this market is tough and
we don't want to lose our niche.''

Ukraine was the world's biggest barley exporter in 2006 and the
eighth-biggest wheat shipper behind the U.S., Canada, the European Union,
Australia, Argentina, Russia and Kazakhstan, according to the U.S.
Department of Agriculture.

Wheat exports from Ukraine declined 56 percent to 2.8 million metric tons
last year from 6.5 million tons in 2005, after a drought damaged crops,
leaving less for sale outside the country.

Ukraine had estimated it would produce about 16 million metric tons of
wheat this year, compared with 14 million tons in 2006.
'TRADE DEFICIT IS A PROBLEM'
Ukraine's currency, the hryvnia, is expected to trade between 4.95 to 5.25
per dollar through 2008, and any "artificial revaluation, like the one that
took place in April 2005, would hurt exports,'' Kinakh said. "A weakening
dollar is negative for our exports.''

The country's trade deficit widened in the first eight months of the year as
imports outpaced exports. Ukraine's exports increased 30 percent in the
first eight months of the year, compared with the same period in 2006, while
imports rose 33.8 percent, the statistics agency said Oct. 11.

"The trade deficit is, of course, a problem,'' Kinakh said. "Export policies
are principally important.'' Ukraine also is canceling restrictions on grain
exports because the country wants to become a member of World Trade
Organization. Kinakh declined to comment on whether the country may be
admitted to the organization this year.
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To contact the reporters on this story: Halia Pavliva in New York at
hpavliva@bloomberg.net
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http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azzLyqqA8ZpM

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7. POLITICAL SITUATION IN UKRAINE MAY DELAY ITS
ADMISSION TO WTO SAYS ECONOMY MINISTER KINAKH

Itar-Tass, Moscow, Russia, Sunday, Oct 21, 2007

WASHINGTON - The political situation in Ukraine may delay the republic's
admission to the WTO, said on Saturday Ukrainian Economics Minister Anatoly
Kinakh in an interview with Itar-Tass. He heads the Ukrainian delegation at
the annual meeting of the governing bodies of the IMF and the World Bank.

Kinakh claimed that a date of Ukraine's admission to the World Trade
Organisation will largely depend on when the new national parliament can
start operating, how quickly a new government will be formed and within what
time parameters work on Ukraine' accession to the WTO is completed.

The minister noted that Ukraine has signed bilateral protocols on conditions
of mutual access to markets of goods and services within the process of
joining the WTO with 49 out of 50 countries, with which talks were
conducted.

Kyrgyzstan turned to be the last country. This topic was also discussed in
Washington at a meeting in the US Commerce Department and in the office of
the US representative at trade talks.

"It is very important that we should not worsen bilateral trade and economic
relations with Russia after an admission to the WTO," Kinakh emphasised.
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http://www.itar-tass.com/eng/level2.html?NewsID=11989467&PageNum=0
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8. UKRAINE BRACES FOR 15% GAS PRICE HIKE MINISTER SAYS

Bloomberg News, New York, NY, Saturday, October 20, 2007

NEW YORK -- Ukraine is bracing for a larger-than-expected increase in the
price of natural gas charged by Russia, which is likely to fuel inflation
and curb economic growth, Ukrainian Economy Minister Anatoly Kinakh
said Friday.

Russia may increase the price of natural gas next year by 15 percent, Kinakh
said in an interview in Washington. That's more than Ukraine's initial
estimate of a 10 percent increase to $143 per 1,000 cubic meters.

Higher gas prices will make it harder for Ukraine to hold its inflation rate
to the 6.8 percent government forecast for next year, he said. Ukrainian
industries, including chemicals, need time to adjust to increases in gas
prices, which remain far below European levels of $270 per 1,000 cubic
meters, he said.

"At a gas price of $180 per 1,000 cubic meters, our chemicals-making
industry, one of the major exporters, would become loss-making," he said.
"We need time to modernize our economy, to implement new technologies
and cut energy consumption."

Gazprom cut supplies to Ukraine in January 2006 in a dispute over prices
that interrupted shipments to Europe. Russia later doubled what it charged
Ukraine for gas, and it raised the price by another 37 percent in 2007.

The European Union depends on Russia for about a quarter of its oil and gas
imports. The incident cast doubt over Russia's reliability as a supplier of
energy. "There is a very serious political component here," Kinakh said of
Russia's gas-pricing policies.

"It's very important for us not only to agree on the price for next year but
also to have a medium-term strategy," he said. "It won't be possible to keep
the price" below the average European level "longer than two or three more
years."

"We managed to withstand these prices because of high prices for our major
exports, such as metals and chemicals," Kinakh said. Metals and chemicals,
such as fertilizers, make up 52 percent of Ukraine's exports, he said.

Ukraine's economy will probably grow about 7 percent this year, compared
with the government's initial forecast of 6.5 percent and the central bank's
estimate of 7.5 percent, Kinakh said. Next year, growth may slow to less
than 6.5 percent, he said.

"Ukraine's consumer prices may rise as much as 13 percent by some estimates,
but the government must make every effort to restrict it to 11 percent" this
year, Kinakh said. It initially planned to cut inflation to 7.5 percent in
2007.

Ukraine will attract at least $5 billion in foreign direct investment this
year, Kinakh said. "This is still not much, given Ukraine's economic
potential." Foreign direct investment rose 50 percent in the first half of
the year from the same period a year earlier, to $2.55 billion, he said.

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9. UKRAINIAN FEDERATION OF AMERICA (UFA) JOINS
THE U.S.-UKRAINE BUSINESS COUNCIL (USUBC)

11. TIMOSHENKO WANTS UKRAINE TO REMAIN KEY GAS ROUTE

New Europe, Issue 752, Brussels, Saturday, 20 October 2007

Ukraine wants to continue to provide a transit route for 80 percent of
Russia's natural gas and seeks new routes to bring Central Asian gas to the
European Union, says a coalition agreement between the Yulia Timoshenko
Bloc and Our Ukraine - People's Self Defence.

Ukraine needs loans for the modernisation of its gas transportation network,
energy saving technologies and larger underground gas storage facilities,
the agreement read.

The country must ensure stable deliveries of natural gas from Russia on the
basis of intergovernmental agreements and sign long-term gas contracts with
Central Asian states, the coalition said.

Ukraine will seek an agreement with the Iranian, Turkish, Austrian, Romanian
and Bulgarian governments on its involvement in the Nabucco gas project.

Meanwhile, Vitaly Martynyuk, an analyst at the Ukrainian Independent
Political Research Centre, said Ukraine could have energy problems in three
years when new gas pipelines are opened to Europe that bypass its territory.

"Real energy problems could begin for Ukraine in three years in 2010 - 2011.
These years have been set as the timeframe for opening new gas pipelines to
Europe. All of them bypass Ukraine as well as Belarus, which will be our
sister in misfortune in this sense," Interfax quoted him as saying.

The Nabucco, Blue Stream, South Stream, and Nord Stream projects are the
main natural gas pipelines that will bypass Ukraine, he said.

Martynyuk said the Nabucco pipeline with capacity for up to 13 billion cubic
metres a year to be built starting next year and opened in 2011 will connect
Turkey to Austria through Bulgaria, Romania, and Hungary.

The pipeline will transport Caspian and later Middle East and Turkmen
natural gas to Europe. It will hook into the trans-European energy system.
The pipeline will reach maximum capacity of 30 billion cubic metres in 2020.

Gazprom has suggested transporting Russian gas in the Blue Stream pipeline
through the Black Sea to Turkey for transport through Bulgaria, Serbia, and
Croatia to western Hungary.

The pipeline will be opened in 2010 and will pump up to 16 billion cubic
metres of gas. It will be an alternative to Russian gas transport through
Ukraine, Moldova, Romania, and Bulgaria.

Gazprom in June signed a memorandum with ENI Paolo Scaroni to build the
South Stream pipeline through the Black Sea that will run from Russia's
Black Sea coast to Varna, Bulgaria, through Greece and the Adriatic Sea to
Italy. The pipeline will have capacity for 30 billion cubic metres of gas a
year.

The Nord Stream pipeline will pump nine billion cubic metres of Russian gas
to Germany through the Baltic Sea starting in 2010. It is also an
alternative to transport to Western Europe bypassing Ukraine. The pipeline
will be expanded to 55 billion cubic metres eventually.

Martynyuk said if you add up the possible transport of Russian gas bypassing
Ukraine (up to 180 billion cubic metres including the Yamal-Europe pipeline
through Belarus) and compare it to the capacity of Ukraine's gas transport
system (179 billion cubic metres annually at output), Russia could
completely ignore the Ukrainian gas transport system after 2011 and dictate
its terms.

"This could lead to the scenario that has been mentioned so many times -
Gazprom could buy the Ukrainian gas transport system and put natural gas
prices on the European level of USD 230 per 1,000 cubic metres," Interfax
quoted him as saying.
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LINK: http://www.neurope.eu/articles/79001.php
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12. TAKING THE POLITICS OUT OF GAS

COMMENTARY: BYuT Inform Newsletter, Kyiv, Ukraine, Mon, 15 Oct, 2007

Ukraine has agreed to pay its final demand gas bill from Gazprom much to the
relief of many Western European states that feared supplies could once more
be disrupted if Gazprom was to shut-off gas supplies to Ukraine.

But according to the Russian Prime Minister, Viktor Zubkov, the final bill
of more than $2 billion - far higher than the $1.3 billion demanded a week
ago - will be paid in full by 1 November.

Whilst Gazprom is entitled to payment, the manner in which it is being paid
is worrying and only serves to underline the urgent need to eliminate the
shady deals that have blighted Ukraine's energy sector for too long.

The deal proposed by the Ukrainian Fuels Minister, Yuriy Boyko, will see
$1.2 billion worth of gas transferred from Ukraine's vast underground
storage facilities. The remaining $929 million will be paid by companies
that supply gas on the Ukrainian market.
GOVERNMENT TO PAY PRIVATE DEBT
What has raised eyebrows is the speed at which the Ukrainian government

has moved to cover what is essentially a private debt.

"The government recognised a debt that belongs not to the state but to
companies," said Volodymyr Omelchenko, an energy analyst with the Kyiv-

based Razumkov Centre, "this is the biggest shortcoming of these agreements,

it is a stain on Ukraine's reputation."

In an interview with Pravda, Margarita M Balmaceda of the School of
Diplomacy and International Relations, Seton Hall University, and Harvard
Ukrainian Research Institute, Harvard University, picked up on this issue:
"It is very clear to me as well to Ukrainian energy experts that this is not
Ukraine's state debt, but RosUkrEnergo's private debt.

"So it is very worrying that the Ukrainian government has decided to treat
it, basically, as state debt. Moreover, the sudden increase in the debt from
$1.3 billion to $2 billion tells me some non-transparent business may be
going on." She went on to say that this was why the Bloc of Yulia

Tymoshenko (BYuT) ordered an investigation.

At the heart of the issue is RosUkrEnergo, the troubled Swiss intermediary
company that is half-owned by Gazprom and half-owned by two Ukrainian
businessmen: Dimity Firtash (45 percent) and Ivan Fursin (5 percent).

BYuT Deputy Chairman and a former head of the SBU, Oleksandr Turchynov,

has called for the National Security and Defence Council to meet to find out
precisely how the debt came about. He pointed out that Viktor Yanukovych's
administration had ruined Ukraine's energy policy by allowing shady
practices to proliferate.

"It was during Yanukovych's reign that shadowy intermediaries obtained
complete control over the energy market while opponents of Ukraine obtained
additional arguments for lobbying the construction of additional pipelines
bypassing Ukraine," said Mr Turchynov.
STEPPING OUT OF THE SHADOWS
Yulia Tymoshenko has long argued that "the gas sector should be taken out

of the shadows and cease to be a political football." She has called for
contracts to be put in place between states and an end to intermediary
companies like RosUkrEnergo.

The consistency of her policy was noted by Ms Balmaceda: "If a Tymoshenko
government comes to power, it is very likely that the January 2006 gas
agreements with Russia, involving the intermediary company RosUkrEnergo,
will be repudiated.

"In that case, the energy relationship with Russia, intermediaries and
Central Asian producing states will need to be renegotiated. This could
touch important economic and political interests on both sides of the
border."

Meanwhile, BYuT is sympathetic to Gazprom which has been stuck "between

a rock and a hard place" regarding the timing of its payment demand.

To call for payment before the election would have resulted in accusations
that Russia was attempting to influence the election's outcome. A request
following the formation of the new government similarly would be viewed as

a move to undermine it.

Russian Minister of Foreign Affairs, Sergey Lavrov appealed not to
politicise the situation. "There are no political grounds in the situation
when money had to be paid, but was not paid," said Mr. Lavrov.

"This should not be a political situation," agreed Mr Turchynov, "for
Ukraine it is a matter for legal investigation. We must establish why the
debt was not paid, where the money resides and who has profited from it."

"As far as Gazprom is concerned, there is no reason why we cannot turn a
new-leaf with Russia and work together in cleaning up the energy industry to
our mutual benefit," added Hryhoriy Nemyria, BYuT deputy chairman and Ms
Tymoshenko's foreign affairs adviser.
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BYuT questions or comments? E-mail nlysova@beauty.com.ua
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13. ⌠PLUSES AND MINUSES OF UKRAINE'S MEMBERSHIP

IN THE EU FOR THE EUROPEAN UNION■

SPEECH: By Roman Shpek, Ukrainian Ambassador to the EU
Ukraine-EU Relations, Roundtable VIII
Ukraine's Quest for Mature Nation Statehood
Ronald Reagan Building and International Trade Center
Washington, DC, Tue-Wed, October 16-17, 2007

Published by the Action Ukraine Report (AUR) #881, Article 13

Washington, D.C., Monday, October 22, 2007

Ladies and Gentlemen, dear friends,
It is my honour to address this distinguished audience.

I must admit, the topic is a challenge. Ukraine▓s membership in the EU
remains a distant perspective. Realistic, achievable, feasible, yet a
perspective.

Before I start, I will also share with you the vision of a Ukraine ready for
membership. What kind of country would that be?

Probably, that would be a Ukraine with a mature and balanced constitutional
system, as well as well-embedded traditions of statecraft. The elections
should no longer be a recurring existential moment of truth.

It should be a Ukraine with a firmly established rule of law and a European
judicial tradition. We should be able to deal with ease with such an
important part of the EU law as jurisprudence of the European Court of
Justice.

That Ukraine should have a strong and diversified economy, relatively free
from structural imbalances and protected from external shocks. The
economy, equally friendly to small business and the foreign investment.

It should be a Ukraine which consumes fuel in an efficient and
environmentally friendly fashion. A Ukraine which does not wait with fear
for the New Year and the gas price hikes that follow it.

It should be a Ukraine whose society is free from hatred, social exclusion
and intolerance. A society united by its national identity and yet
respectful of its own diversity.

At the same time, such a Ukraine should be matched by a new, evolved
European Union. An EU with reformed institutional framework capable to
manage 30 and more member states.

An EU with a truly common foreign and security policy, as well as energy
policy. An EU which can show true solidarity with its members on the
international scene.

I think you would agree with this picture. However, you would also agree
that both Ukraine and EU will have to work very hard and long to make it
real. Let me assure you that more and more people in Ukraine are aware of
that. We are aware of our task ahead.

Now, I turn to the actual analysis of pluses and minuses of Ukraine EU
membership.
First, let me do the pluses.
1. Ukraine▓s membership in the EU means more security and stability in
Europe. Everyone is aware about unique geostrategic position of my country.

I would not even try to engage in discussions with Zbigniew Brzezinski. I
fully agree that if stability is to be secured not only in Western Europe
but in the whole continent then Ukraine should belong to the EU. Also I will
not question the statements of all EU leaders that EU membership is the best
way to ensure stability.

With Ukraine on board, Europe will only benefit from a new stronghold of
democracy and stability at the crossroads of the greater Eurasian continent.
We already contribute to the strengthening of security in Europe's hot
spots. We do our best to facilitate settlement of frozen conflicts, for
example in Transdnistria.

For several years Ukraine has played a progressively increasing role in
EU-led peacekeeping operations in the Balkans. If Ukraine becomes the EU
member, our contribution would only increase the EU security and stability
as a whole.

2. Ukraine▓s membership in the EU improves energy security and transport
links of the EU.

Ukraine is a strategic transit zone for transcontinental pipeline networks,
air and land traffic routes. As a part of a single European energy market,
Ukraine would be the best guarantee of the energy-secure Europe, its access
to diversified sources of energy supplies.

The accession of Ukraine to the common European energy area will therefore
remove a transit zone on the way of Russian crude oil supplies to Europe. In
fact, the Ukrainian energy system is already becoming the integral part of
the European one.

Another good example of the potential for energy cooperation is the
so-called Burshtyn Island √ a system of power-plants in Western Ukraine that
has been working in parallel with the electricity grid of Central European
EU Member States.

This interconnection allows these countries to lower electricity costs and
replace the electricity deficit, when necessary. Our key goals for today are
to extend the limits of Burshtyn Island to the whole territory of Ukraine.
We already pursue this goal in our preparations to accede to the UCTE.

3. Ukraine▓s membership in the EU means new economic opportunities.
A country of 47 million inhabitants, it has a considerable market potential.
Today the Ukrainian GDP constitutes 82 billion US dollars according to the
official exchange rate.

However, per purchasing power parity, it is 364 billion dollars. With the
annual growth rates of 6-7 per cent, Ukraine has already proved that even
with existing obstacles to trade and investment it can make a very
impressive results. EU accession would help to improve all the business
conditions and make this success even stronger.

Economic growth is a two-way street. EU membership perspective also offers a
number of business opportunities for EU investments and trade.

However, the best incentive for EU investors is the confidence that tomorrow
Ukraine will join the club. Ukraine is a country endowed with unique natural
resources which enjoy a considerable global demand.

Ukraine's EU membership will provide the Union with unfettered access to
these resources, strengthen its international competitiveness and create
jobs.

4. Ukraine▓s membership in the EU will enrich cultural diversity. Ukraine▓s
history and culture give the country a truly European identity.

I can talk for hours about the depth of Ukrainian culture. Therefore I will
only say the obvious - Ukraine's EU membership will only strengthen and
enrich the common European heritage.

5. For the Europeans Ukraine▓s membership in the EU will send a powerful
signal to the world that the institutional crisis of the Union is over and
the EU will finally become strong global player.

6. For the region it will launch a new era in the history of Eastern Europe.
It will send a very positive political and economic impetus to the EU
neighbors.

In particular, with Ukraine on board the EU will have more possibilities to
realize its ambition for a more active role in the Black Sea region.

Even now, as a Chairman of the Black Sea Economic Cooperation Organization
(BSEC), Ukraine took the initiative to hold the first ministerial meeting of
EU-Black Sea countries, an initiative that can do a lot for promoting
understanding and cooperation in this corner of Europe.

This initiative is supported by virtually all BSEC members. Therefore, as an
EU member, our positive impact on the region will be even greater.

7. Ukraine's EU membership will dramatically improve EU relations with
Russia and for Russians Ukraine▓s membership in the EU will be the most
profitable.

An example of a democratic and prosperous Ukraine can make a difference for
the Russian society, and Russian politics, to ensure the development of
democracy, respect of human rights and the rule of law. A successful Ukraine
in Europe can give hope to those who wish Russia's democratic future.

8. Finally, let me put it very simple. There will just never be a Europe
without Ukraine. Without Ukraine, there will be only a half-Europe.
Now let us turn to minuses.
The major concern with which the EU looks upon the possible Ukraine's
accession is the capacity to absorb or integrate a new member. From the
history of the 2004 enlargement we have seen that a large number of new
Member States have placed the EU institutions under a considerable strain.

On many important issues the EU is not able to move forward, since the
unanimity rule among 27 member states means a stalemate in the
decision-making, the division into 'old' and 'new' Member States, squabbles
and stagnation.

This concern is understandable. In such circumstances today, the EU finds it
difficult to say 'yes' to Ukraine. At the same time, as I already said
earlier, Ukraine may also find it difficult to say 'yes' to a stagnating and
divided EU.

Therefore, both EU and Ukraine must yet go through a long and difficult road
of internal reforms before they can greet each other at its end. Such a road
would require patience and perseverance.

However, both EU and Ukraine would need to have a clear vision what expects
them in the end of the road. A vision of a united Europe without dividing
lines, a Europe which can speak with a single voice in the world. Without
such a vision, we should not even begin our journey.

I thank you very much.
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14. IMPORTANT THAT EUROPE AND THE U.S. HELP UKRAINE
REACH LEVELS OF PROSPERITY AND STABILITY

LETTER: From U.S. Senator Joseph R. Biden, Jr., Chairman
United States Senate Committee on Foreign Relations
TO: The Honorable William Miller, Ukraine-EU Relations, Roundtable VIII
Ukraine's Quest for Mature Nation Statehood
Ronald Reagan Building and International Trade Center
Washington, DC, Wednesday, October 17, 2007

Black Sea port of Pivdenny, the dream remains unfulfilled.

The original idea called for Kazakh and Azerbaijani oil to make its way to
the Black Sea coast, from where it could be shipped to the Pivdenny port.
Once in Ukraine, it would be pumped north through the new pipeline and made
available for distribution to European destinations.

But Azerbaijan and Kazakhstan never committed to providing the oil needed to
fill the pipeline, and cash-strapped Ukraine was unsuccessful in convincing
European states to build an extension that would pump the oil from Brody to
refineries in European markets.
WHITE ELEPHANT FOR RENT
As Stratfor Commentary wrote in September 2003, "The end result was that
Kyiv found itself saddled with a white elephant rusting picturesquely in the
Ukrainian countryside."

To remedy the situation, the flow of the pipeline was reversed in 2004 to
send Russian oil south from Brody to Odesa, and on to global markets by
ship via the Bosporus. Thus, the project envisioned as a way to circumvent
Russia in the end became another means to transport Russian oil.

Now, the original plan has returned to the fore with the signing of a deal
this month to explore the possibility of using the Odesa-Brody pipeline to
pump Caspian oil to European destinations.

At the Vilnius energy summit on October 10, Poland, Ukraine, Lithuania,
Georgia, and Azerbaijan inked a deal under which a $700 million,
500-kilometer pipeline extension would be built to send Caspian oil from
Brody to the central Polish city of Plock.

The first phase of the proposal is for a feasibility study to be conducted,
and if all goes well the Brody-Plock extension could theoretically be built
by 2012.
WHO WILL FILL THE PIPELINE?
But despite the excitement over the new deal, many of the same questions
that originally hampered Odesa-Brody remain. The most glaring of these is,
once again, who will provide the oil to fill the pipeline?

Azerbaijan and Kazakhstan are viewed as the potential suppliers, but doubt
has already been cast on their participation. Azerbaijan's excess oil has
already been earmarked for export via the Baku-Tbilisi-Ceyhan (BTC) pipeline,

and the country currently has no means of increasing production.

The BTC, which in 2005 started pumping oil from Azerbaijan via Georgia to
Turkey, sends Caspian crude to the Mediterranean while bypassing the
overburdened Bosporus. The BP-led consortium that built the pipeline is
unlikely to allow Azerbaijan to divert supplies to a second pipeline,
considering that the BTC itself has spare capacity.

Azerbaijan's industry and energy minister, Natiq Aliyev, has previously said
that the country's "end target is to maximize the capacity of BTC" and that
"we will attract all the oil in the region in order to export it via BTC."

Meanwhile, Azerbaijan's state oil company, Socar, announced on October

15 that it has not yet decided whether it will participate in the new project,
saying any decision to do so would not be made until 2008.

Kazakhstan, for its part, made clear from the start that it has no intention
of supplying oil for the new Odesa-Brody-Plock route. While the country's
energy and natural resources minister, Sauat Mynbayev, attended the October
10-11 summit in Vilnius, he did not sign the new agreement and stressed
Kazakhstan's commitments to export its oil via Russia.

Much of the country's oil presently flows through the Caspian Pipeline
Consortium network to the Russian Black Sea port of Novorossiisk, from
which it is shipped to outside markets.
MORE HURDLES UNDER THE SURFACE
Even in the event Kazakh that and/or Azerbaijani oil is found to supply
Odesa-Brody-Plock, the proposal faces the formidable hurdle of transporting
that oil across Georgia and on to Odesa.

One possibility considered at the Vilnius meeting was to ship the oil by
tanker from the Georgian ports of Batumi and Supsa to Odesa, but the costs
of doing so would make the project commercially unfeasible.

An alternative Georgian proposal is to build a pipeline under the Black Sea
from Georgia to Odesa. But this too presents problems because, aside from
the extreme expense involved (most likely to be incurred by the five states
that signed onto the project), such a pipeline would have to cross over or
under Russia's Blue Stream gas pipeline.

And ultimately, while some in Ukraine might view the pipeline as an
excellent way to show its worth to the EU as it vies for admission to the
bloc, the millions Russia pays Kyiv every year for use of the Odesa-Brody
pipeline may prove insurmountable.
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16. UKRAINE: US DEFENCE SECRETARY GATES TO

Associated Press (AP), Kyiv, Ukraine, Sunday, October 21, 2007

KYIV -- U.S. Defense Secretary Robert Gates arrived in Kyiv on Sunday for
talks on missile defense, Turkey and Afghanistan a week after holding tough
talks in Russia on the same divisive issues.

Gates came to Kiev to attend meetings of the Southeast European Defense
Ministers, a 12-nation group created in 1996, at Washington's initiative,
to promote security cooperation in the volatile Balkans and to facilitate
cooperation with NATO.

Gates also was holding talks with top Ukrainian government officials to
sound them out on Russia and to assess political developments in this
country, which is struggling to emerge from prolonged political turmoil.

Gates arrived Sunday for his first visit since he was CIA director in 1992.
The last U.S. defense secretary to visit was Donald Rumsfeld in 2004.

Later in the week, Gates is to hold talks with government officials in
Prague on the state of negotiations with Washington on a missile defense
plan to place a radar station in the Czech Republic.

In meetings on Oct. 12 in Moscow, senior officials urged Gates to freeze
the missile defense talks with the Czech Republic and Poland, but Gates said
the negotiations would proceed. The talks with Poland are for placing 10
U.S. missile interceptors there, linked to the station in the Czech
Republic.

On Wednesday and Thursday, Gates is scheduled to attend a NATO defense
ministers conference in the Netherlands, where another irritant to Moscow
will be on the agenda: the prospect of yet another expansion of NATO, to
include Croatia, Albania and Macedonia. No decision is expected until NATO
leaders meet in Romania in April.

Gates was meeting with his counterparts from Croatia, Albania and Macedonia
in Kiev on Sunday to discuss progress they have made toward satisfying NATO
requirements for earning an invitation to join the alliance.

He also planned a one-on-one session in Kiev with his Turkish counterpart,
Vecdi Gonul, amid growing tension over the inability of U.S. and Iraqi
government forces to halt Kurdish rebel attacks inside Turkey.

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17. THE POWER OF A SECOND CHANCE

COMMENTARY AND ANALYSIS, By Jan Maksimyuk, RFE/RL

Radio Free Europe/Radio Liberty (RFE/RL),
Prague, Czech Republic, Friday, October 19. 2007

Now that President Viktor Yushchenko has confirmed that he wants
the Yulia Tymoshenko Bloc (BYuT) and the Our Ukraine-People's Self-Defense
(NUNS) bloc to form a ruling coalition, the two Orange Revolution allies
may have a second chance to deliver on the promises they solemnly made in
2004 and disappointingly failed to meet.

But while Yushchenko and Yulia Tymoshenko have already shown some public
signs of unity -- most recently in Lisbon on October 18, where each espoused
the virtues of European values during a congress of the European People's
Party -- the question remains as to whether they have overcome their past
differences sufficiently to run a new government.

After Yushchenko backed the pairing on October 17, Tymoshenko and Vyacheslav
Kyrylenko, a leader of the pro-Yushchenko NUNS, presented the coalition deal
they initialed on October 15. The entire 105-page document was subsequently
published on the Internet.

The most important provisions of the deal state that Tymoshenko is to be
proposed as prime minister, while the NUNS bloc will nominate a candidate
for the post of parliamentary speaker.Cabinet portfolios are to be
distributed on a 50-50 basis between the two blocs.

The deal makes room for a third "democratically oriented" participant in the
coalition, although it does not mention it by name. It does, however,
clearly stipulate that neither the Party of Regions nor the Communist Party can

be considered as a potential coalition partner, thus narrowing the field to
only the Lytvyn Bloc, which has 20 lawmakers in the 450-seat Verkhovna Rada.
ORANGE SEQUEL
The overwhelming feeling of deja vu that Ukraine observers may experience
upon hearing such news is quite understandable.

A similar, if somewhat shorter, coalition document was preliminarily signed
by the BYuT and Our Ukraine immediately after the March 2006 elections. At
that time, the desired third coalition partner was the Socialist Party,
which failed to win parliamentary seats this year.

After four months of futile coalition talks in 2006, the Socialists switched
sides and formed a ruling majority with the Party of Regions and the
Communists.

President Yushchenko had no choice in August 2006 but to designate Viktor
Yanukovych, his bitter political rival, as prime minister.

Could such a situation repeat itself this year? Could the NUNS bloc
eventually abandon Tymoshenko and form a "broad" coalition with the Party

of Regions, thus uniting the west and the east of Ukraine politically, if not

ideologically or emotionally? Such a turn of events cannot be ruled out.

Tymoshenko, for whom the regained post of prime minister could be a much-
coveted springboard for launching a presidential bid in 2009, has already
made many compromises in order to ensure President Yushchenko's support

for her attempt to lead the government once again.

To begin with, she agreed to give the NUNS bloc half of the cabinet
portfolios, although her party won 156 parliamentary mandates versus NUNS's

72.

Furthermore, she agreed to endorse a package of 12 bills ahead of the
expected vote on her approval as prime minister in the newly elected parliament.

Some of the proposed bills, including one on the Cabinet of Ministers, significantly
reinforce presidential powers at the expense of those of the prime minister.
AN UNCERTAIN MAJORITY
But not even such concessions can guarantee that Tymoshenko will be vested
with the powers she craves. BYuT and NUNS together have 228 votes, just two
more than the majority required to pass most legislation in the Verkhovna
Rada, including the approval of a new cabinet.

Tymoshenko can expect voting discipline within the BYuT ranks, but the

NUNS bloc is a motley collection of nine political groups. What if the interests
of one of these groups are not duly taken into account in the distribution
of post-election spoils?

In such a situation, it would not appear to be difficult to persuade just
three lawmakers from a dissatisfied NUNS component to skip or abstain

from a crucial vote.

It also seems unlikely that the Party of Regions will allow the Orange
Revolution allies to adopt the 12 bills Tymoshenko has promised to endorse,
which are sine qua non for starting the new government.

The Party of Regions will almost certainly demand separate votes on each
of the proposed bills in order to exhaust the combat spirit of the Orange
allies and nip their coalition-building effort in the bud.

Attempts to block the parliamentary rostrum and even fistfights among
lawmakers are not out of the question -- and are even likely -- at the
inauguration of a new Verkhovna Rada.

But even if the Orange coalition manages to pass the 12 bills to please
Yushchenko, approves Tymoshenko as prime minister, and appeases the

hunger of all the NUNS constituents for political jobs, the problem of how to
mobilize 226 votes for each individual piece of legislation in the future
will remain an issue.

The Lytvyn Bloc, which could stabilize the slim Orange majority, is not
eager to reveal its political preferences or appetites. Perhaps it is just
waiting for a worthy piece of post-election pie in exchange for its role
of kingmaker.

But what if the Lytvyn Bloc has decided not to meddle in what seems to be
an unavoidable exchange of blows between the BYuT and the Party of Regions,
and has chosen an observer role? In that case, the Orange allies will need
a political miracle or two to get their ruling partnership going.

On the other hand, a restored Orange coalition appears to be the only
way for Yushchenko to perpetuate hopes for launching his presidential bid
in 2009. If the president were to again nominate Yanukovych as prime
minister, he would stand to lose even the dramatically dwindled support he
currently enjoys in western Ukraine.
EYES ON THE NEXT GOAL
Tymoshenko has unequivocally declared that she will immediately starts
working on her presidential bid if she fails to get the post of prime
minister.

It is easy to predict that, given the current distribution of political
sympathies in Ukraine, Yushchenko has no chance of qualifying for the
second round in the next presidential polls.

But keeping Tymoshenko in the government would provide Yushchenko a

glimmer of hope -- either by satisfying her political appetite, or by tarnishing

her image as a competent and efficient politician who can deliver on her
promises.

Tymoshenko has made a lot of unworkable election promises during the
campaign, including one on returning lost Soviet-era savings to Ukrainians

within the next two years-- an endeavor that would require a sum equal to

Ukraine's annual budget.

Another apparently unrealistic pledge, which was written down in the
coalition deal, is to abolish the military draft in Ukraine as of the beginning of
2008 and switch to a fully professional army in 2009.

When asked about the plan on the sidelines of the October 18 congress in
Lisbon, President Yushchenko told reporters that "I'd like to tell my
political friends and colleagues: They may develop certain visions at their
level or they may not, but today I'd advise them to follow the National
Program for the Development of the Ukrainian Armed Forces."

And Defense Minister Anatoliy Hrytsenko, bewildered after reading the
coalition-deal passage pertaining to the military draft, compared it with
abolishing Newton's three laws of motion.

Thus, the birth of a new government in Ukraine is taking place on shaky
ground and amid heightened expectations of economic and political wonders.

Ukraine already has its fairy-tale heroine with a fetching blonde braid
-- now comes the time for her to work her magic.

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18. HOW LONG WILL THE ORANGE COALITION LAST?
Ukraine: Yulia Tymoshenko will head an unstable government

ANALYSIS & COMMENTARY: By Yanina Sokolovskaya, Kiev
Izvestia, Moscow, Russia, Thursday, October 18, 2007

The alliance formed by Ukrainian President Viktor Yushchenko's
supporters and the Yulia Tymoshenko Bloc (BYT) will prove
unstable. The government headed by Tymoshenko, the "gas
princess," will last only a few months before being replaced by a
Blue-Orange coalition government.

These predictions are being stated openly by members of the
Regions Party, and whispered in the hallways by potential members
of the Orange alliance. The new coalition, controlling 228 seats in
the Supreme Rada (Ukrainian parliament), will become ineffective if
only three lawmakers fail to turn up at a Rada meeting, since the
Constitution requires 226 votes for a majority.

Regions Party ideologue Mikhail Chechetov told us in an
interview that he will be keeping a close eye on the Orange
coalition, to ensure that it doesn't practise proxy voting; each
lawmaker should only vote once. According to Chechetov, this is
how the opposition will perform its oversight function in relation
to the government, as the Regions Party warned Tymoshenko
before the election.

Chechetov and the Regions Party predict that the Orange
coalition won't stay in power for long. It might not even have
time to form a government. The Regions Party has decided to ignore
the Orange coalition's offer to include some Regions Party members
in the Cabinet as deputy prime ministers and deputy ministers.

The Blue forces don't want to be held responsible for what
Tymoshenko will do. They predict that her second period as prime
minister will lead to gasoline and food crises again.

The Orange coalition has already cheated the Blue forces: after
promising to cede the post of Rada speaker to Regions Party leader
Viktor Yanukovych, the Orange forces have now announced that
it will go to Our Ukraine leader Vyacheslav Kirilenko.

Yushchenko and Tymoshenko have a problematic history.
President Yushchenko fired Prime Minister Tymoshenko in 2005 on
the grounds that she was "unable to work in a team." Tymoshenko
refused to tolerate the political activities of Yushchenko's
allies: National Security and Defense Council Secretary Petro
Poroshenko and Emergencies Minister David Zhvania. They attempted
to control the prime minister and issue instructions to her.

Tymoshenko responded by accusing her rivals of corruption. The
Prosecutor General's Office opened a criminal case and eventually
cleared the president's friends. The aggrieved Tymoshenko said at
the time that her relationship with Yushchenko was a history of
betrayal.

President Yushchenko has no need to hurry in nominating a
prime minister for endorsement by the parliament. The Constitution
gives the Rada 30 days after the election to get organized and
start work. Then the Rada members have to be sworn in and form
their factions before they can vote to endorse the prime minister
- and they will have another 60 days to do so.

But the parliament could lose its legitimacy if Regions Party
members refuse to take up the seats they have won. That would
leave the Rada unable to reach quorum (300 members), and it would
have to be dissolved. If this happens, the previous parliament -
dominated by the Blue coalition - would be considered legitimate
for the next year. According to the Constitution, early elections
cannot be held more than once a year.

Sources in the Blue forces have told us that the Regions Party will
use this scenario to intimidate its rivals, but that doesn't mean it will
go ahead with such a plan. Our sources say that it's more advantageous
for Yanukovych to remain in opposition until the presidential election
of 2010: "Running for president from opposition is easier than running
for president while holding the office of prime minister."

Tymoshenko's supporters expect to get the economic and social
portfolios in the new government. Sergei Terekhin, economy
minister in the previous Tymoshenko Cabinet, may return to that
office. Nikolai Sivulsky, who used to work with Tymoshenko at the
United Energy Systems corporation, may become deputy prime
minister for fuel and energy.

Bogdan Gubsky, known as one of Ukraine's major land-owners,
might get the post of deputy prime minister for agriculture. Viktor
Pinzenik, founding father of Ukrainian "shock therapy," wants to be
the finance minister.

The post of interior minister is likely to go to Alexander Turchinov,
former head of the Ukrainian Security Service. Anatoliy Hrytsenko,
a Yushchenko supporter, should keep the defense portfolio.

Yuri Lutsenko, a co-leader of the Orange electoral bloc,
aspires to become the mayor of Kiev. This has led Tymoshenko to
announce that once she becomes prime minister, she will launch a
campaign to replace the Kiev municipal leadership by holding new
elections.

Tymoshenko has also promised to reduce the price Ukraine pays
for natural gas from Russia, increase the state bonuses paid to parents
of newborn babies, and repay the money lost by those who had
accounts with the Savings Bank of the USSR in the early 1990s.
(Translated by Elena Leonova)
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19. UKRAINE: WHAT NOW FOR THE DONETSK STRONGMAN?

COMMENTARY: By Peter Dickinson
Business Ukraine magazine, Kyiv, Ukraine, Mon, Oct 15, 2007

As Ukraine edges closer to a new Orange coalition, members of the defeated
Party of Regions must be wondering how long they can remain loyal to their
controversial and nationally divisive leader. In the wake of the
parliamentary elections it is hard to see what more Viktor Yanukovych can
hope to achieve in politics.

Having already made one of the most unlikely and memorable political
comebacks in recent European history, he now stands at the head of a party
which has conspicuously failed to capitalise on the second chance it secured
in 2006 and has instead suffered a resounding electoral snub.
COLLAPSE ON THE EASTERN FRONT
It is not simply the fact that the Orange camp enjoyed a renaissance of
their own at the polls that will have troubled Regions loyalists.
Yanukovych's party still came in first, after all and finished within a whisker

of amassing enough seats to lead a new parliamentary coalition.

However, the election offered dark hints that the party has already peaked
and is now in danger of losing ground under Yanukovych's leadership.

Yulia Tymoshenko's success in winning over sizable minorities in what were
preciously considered the impregnable Regions citadels of southeast Ukraine
is said to have shocked the party leadership, and suggests that they could
be in danger of eventually losing their grip on the Yanukovych heartlands
altogether.

Elsewhere, the party failed to make ground in the centre or west of the
country, and is now facing the prospect of watching the foundations of their
carefully nurtured support base slowly dwindle.
THE ETERNAL NEARLY MAN
Yanukovych still commands a massive following throughout the Regions-loyal
oblasts, but this election has served to illustrate once again his inability
to expand politically or build on this strong regional following.

As such he is something of an electoral busted flush, doomed to remain stuck
in the 30% to 40% bracket but without any hope of ever gaining an actual
majority.

Despite their bluster, his Regions colleagues must be painfully aware of
this fact, and there are no doubt already many party members secretly
discussing the need for a radically new approach.
NO NEW FACES
All of which leaves the Party of Regions in quite a quandary, as there is
nobody in the party ranks capable of replacing the one man who can still
mobilise the Donbass masses and act as a figurehead for an anti-Orange
opposition.

He may not be able to lead Regions to national victory, but his presence at
least guarantees localised dominance.

Having preferred to fill their ranks with caricatures like Nestor Shufrich
or media-friendly political non-entities such as Raisa Bogatorova, Regions
now face the distant but already dim prospect of entering the 2009
presidential race backing Yanukovych yet knowing he is going to lose.

Russia finds itself in a similar predicament, with absolutely no candidates
at hand who could possibly act as an alternative flag-bearer in the way
Yanukovych has over the past three years.

Ukraine's fast-emerging multi-party system is already far too sophisticated
to allow for a well-groomed unknown to be brought in from the shadows, a
practice first employed to bring Putin himself to power and now favoured by
the Russian president.

Both Regions and the Russians may therefore find they are stuck with
Yanukovych, at least for the time being.

In the short term he may still prove useful in destabilizing any renewed
Orange government, but as the harsh reality of the election results sinks in
he can surely harbour few hopes of playing a leading role in Ukrainian
politics beyond the 2009 presidential elections.
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LINK: http://www.businessukraine.com.ua/what-now-for-the-donetsk

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20. MISTAKES OF VIKTOR YANUKOVYCH'S ADVISERS

ANALYSIS & COMMENTARY: By Yuriy Starchevsky
Southern Center of Political Consulting
Ukrayinska Pravda, Kyiv, Ukraine, Wed, Oct 10.2007

Welfare and stability are principal pre-election slogans of the Party of
Regions during pre-term election campaign of 2007. As it turned out, they
were slogans not entirely resonating the political mood of even southeastern
population, let alone that of other parts of the country.

What welfare can one talk about when almost 85 per cent of the population
consider themselves poor? What stability can one talk about if the majority
of these 85 per cent understands that in the near future they won't see any
improvements unlike oligarchs who have increased their fortune to huge
figures?

One can speak about stability of welfare for the chosen and close ones. For
the rest of the population this slogan looked only as a reminder about
reality.

In 2006 with regard to insertion of 2004 the residents of the Southeast voted
for "theirs". There were "theirs" and "sworn enemies" who according to the
propaganda had intended to seize power using the help from abroad.

It still worked in 2006. The Party of Regions was lucky. They formed the
government even though they shouldn't have. So what's next?

Inconsistency in fulfilling pre-election promises, flirting with potential
enemies and rapid enrichment of main investors - those were the actions of
the authorities performed right in front of their voters, of the authorities
which were proud of their strong will, labour genes and miners' characters.

In 2007, against the background of the opponents' aggressive actions the
efficiency of 2004 propaganda ran dry, which determined the result obtained.

American political technologists have transformed the Kyiv face of the Party
of Regions in a truly professional way but couldn't feel the soul of
Ukrainians in the Southeast.

The grassroots didn't want stability and welfare for oligarchs. They needed
some hope for justice, may it even be unreal. These elections have demonstrated

the insufficient depth of understanding of non-Ukrainian political consultants.

The Russian ones turned out to be too rude, and the Americans too simple.
However, both the former and the latter benefited the political evolution of
Ukraine in a certain way.

The Russians substantiated and fixed in the mind of society the division
into rivaling orange and blue camps having attached to these territories
their political beau monde. At first the representatives of different
circles were pretending they hate each other.

But when the country exhausted its primary funds and urban land they started
to hate each other for real in the foreboding of close land enrichment. They
started to hate each other as competitors for their living space, property
and commercial prospects.

The Americans, in their turn, taught to organize huge political shows which
are positively graded by foreign countries. The central and southeastern
Ukraine watches them with teary eyes but votes for others more and more
often.

Obviously, the party headquarters hoped that people in their regions still
hate "those guys" and "strangers" and therefore will come and vote. Many of
them didn't come. Thus people need not only the magnificent five, the hate
for strangers and the stability in their poverty but also something more...

The leaflets with Nazi swastika and their henchmen, the supporters of Stepan
Bandera, stepping with a steel boot on the throat of the Southeast in the
excitement of orange revanche, didn't look at all convincing.

These masterpieces of political technologies demonstrate the disappointing
professional level of MPs of the Party of Regions in place who didn't want
to spend funds for more relevant regional developments and feared political
arguments with local opponents.

The blue and white statements about elections of yesterday and today, about
elections which prevented civil war are only a reflection of more economical
and not ideological gist of the Party of Regions.

The Party of Regions hasn't managed to become an efficient party, namely
an organization of people capable of creating a political intrigue and
maintaining its blow.

Instead, they learned to earn money making the leader yield the way they
want. However, they never learned to create the political process, to
encourage and motivate its supporters and just to protect their interests in
a professional way.

The election campaign of 2007 is an obvious manifestation of crisis of old
party nomenclature in the PRU.

The thirst for political victory even though it may be risky must dwell
inside the team forming its ideology, spirit, structure and relations. But
the Party of Regions didn't have such qualities in the sufficient volume.

It means that PRU strategy needs to change in a fast and efficient way.
Otherwise the instable businessmen, the greedy public officials and the
unprofessional politicians will be torn apart by political forces who know
no mercy.

In one of the last series of a TV program "Freedom of Speech" Yuriy
Lutsenko hinted about this possibility in a very symbolic way, saying that
one shouldn't mix wolves and sheep in the parliament.

Mr. Lutsenko doesn't consider himself a sheep, that's for sure. Whether the
Party of Regions considers itself a flock of sheep the near future will
show. (Translated by Anna Ivanchenko)
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LINK: http://www.pravda.com.ua/en/news/2007/10/10/9168.htm
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21. "ESPECIALLY LARGE SWAP. VIKTOR YUSHCHENKO

AND YULIYA TYMOSHENKO AGREED ABOUT EVERYTHING"
Ukraine's new coalition based on concessions by both sides

COMMENTARY: By Serhiy Sydorenko, Olena Heda & Oleksandr Svyrydenko
Kommersant-Ukraina, Kiev, in Russian 16 Oct 07; pp 1, 2
BBC Monitoring Service, UK, Tuesday, October 16, 2007

The opposition Yuliya Tymoshenko Bloc and the propresidential Our
Ukraine-People's Self-Defence bloc have initialled a coalition agreement
following difficult talks at the presidential secretariat, a daily has
reported.

As a result, Yuliya Tymoshenko agreed to President Viktor Yushchenko's
version of the law on the Cabinet of Ministers, while President Viktor
Yushchenko accepted Tymoshenko's idea of abolishing compulsory army
conscription as early as in 2008.

The following is an excerpt from the article by Serhiy Sydorenko, Olena Heda
and Oleksandr Svyrydenko entitled "Especially large swap. Viktor Yushchenko
and Yuliya Tymoshenko agreed about everything" published in the Ukrainian
daily Kommersant Ukraina, pages one and two, on 16 October:

Yesterday the opposition Yuliya Tymoshenko Bloc [YTB] leader, Yuliya
Tymoshenko, and the head of the political council of the [propresidential]
Our Ukraine-People's Self-Defence bloc, Vyacheslav Kyrylenko, signed an
agreement on forming a coalition in the Supreme Council [parliament] of the
sixth convocation. The signing ceremony was preceded by their meeting with
President Viktor Yushchenko.

The negotiations were fairly difficult and, as a result, all the sides were
forced to make concessions. In particular, the president agreed to Ms
Tymoshenko's demand to switch to contract service in the army from 2008, and
the YTB leader agreed to support the law On the Cabinet of Ministers in the
edition proposed by the president. [Passage omitted: repetition]

In front of the lenses of the TV cameras, Yuliya Tymoshenko for the YTB and
Vyacheslav Kyrylenko for Our Ukraine-People's Self-Defence affixed their
signatures to the weighty files, after which they stated that all the
aspects that were considered contentious had been agreed on, and that there
were no contradictions between them.

The agreement on forming a coalition stipulates that the YTB will have the
post of prime minister and Our Ukraine-People's Self-Defence the post of
speaker.

In accordance with his bloc's decision, Vyacheslav Kyrylenko is due to
become chairman of the Supreme Council. In spite of agreeing the
distribution of the main posts, it is too soon to speak about complete trust
between the YTB and Our Ukraine-People's Self-Defence leaders.

A list of bills due to be voted on in parliament even before confirming the
candidacy of the prime minister has been inserted into the agreement on
forming a coalition as a separate supplement, Mr Kyrylenko said.

He said that the future coalition participants had agreed on 12 bills,
support for which will be a condition for successful voting on the candidacy
of the prime minister.

Vyacheslav Kyrylenko confirmed to Kommersant information that one of the
most problematic ones was the law On the Cabinet of Ministers, and added
that yesterday, in the course of the day, a discussion was held on a number
of provisions in the bill On the status of a people's deputy.

The YTB and Our Ukraine-People's Self-Defence leaders declined yesterday to
name the list of priority bills included in the coalition agreement,
promising to disclose them later. But Kommersant managed to get hold of the
list of those documents.

It is noteworthy that the texts of only six of the 12 bills were initialled
yesterday: On the Cabinet of Ministers, On the parliamentary opposition and
three bills envisaging changes to the law On the status of a people's deputy
(the first draft cancels a number of benefits, the second immunity and the
third brings in the binding mandate [banning deputies from moving from one
faction to another]). A bill on making amendments to the Constitution of
Ukraine in the section cancelling deputies' immunity was also agreed
yesterday.

In the coming days a working group is due to agree another six bills: On
making changes to the law On foreign troops, On local state administrations,
On local government, On the purchase of goods, work and services at state
expense, On confirming the charter of GUAM [a regional organization
comprising Georgia, Ukraine, Azerbaijan and Moldova] and On the legal status
of certain central bodies of power, which removes national commissions for
regulating sectors of the economy from government jurisdiction.

Kommersant has learned that Viktor Yushchenko's main victory among the ones
he achieved at yesterday's talks was the confirmation of the edition of the
law On the Cabinet of Ministers that was drafted by the presidential
secretariat (the YTB was proposing its own edition, in which the prime
minister's powers were somewhat expanded).

The head of state also gained a promise from the YTB to vote in favour of
reform of local government in the presidential edition and to implement the
president's election promises given by him in the framework of social
initiatives in the 2008 budget.

Yuliya Tymoshenko, for her part, achieved the inclusion in the agreement of
points envisaging the realization of the YTB election platform, including
the question of compensation for the public's deposits in the USSR Savings
Bank and a switch to contract service in the army from 2008. Our
Ukraine-People's Self-Defence representatives confirmed to Kommersant that
they had agreed to those demands.

"We were against, since we had doubts on the financial level. But Viktor
Pynzenyk (a YTB MP-to-be who is claiming leadership of the government's
financial bloc - Kommersant) assured us that the funding will be
sufficient," Roman Zvarych said.

A Kommersant source in Our Ukraine-People's Self-Defence stresses that the
YTB will have total leadership of the financial and economic policy of the
Cabinet of Ministers and will bear full responsibility for the
implementation of promises in this sphere.

[Passage omitted: Members of the ruling Party of Regions doubt the YTB and
Our Ukraine-People's Self-Defence will be able to deliver on their election
promises.]
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22. TIME FOR YUSHCHENKO TO LET HIS HEAD RULE HIS HEART

ANALYSIS & COMMENTARY: By Taras Kuzio
Business Ukraine magazine, Kyiv, Ukraine, Monday, Oct 15, 2007

Yulia Tymoshenko's spectacular gains in last month's elections have been
interpreted as a sharp rebuke to the Party of Regions. They also represent
a biting response from the electorate to the leadership of President
Yushchenko, and offer him little choice but to commit himself to a new
Orange coalition with Tymoshenko increasingly calling the shots

Ukraine's pre-term elections held on September 30 are over. Although more
bitterly fought out than last year's elections, they were declared to have
been held in a 'free and fair' manner by the OSCE, EU, Council of Europe,
USA, and Canada.

[1] Ukraine can be justifiably proud that it has held a second consecutive
free election in a Eurasian regional environment where autocracies rule.
CONSISTENTLY DEMOCRATIC COUNTRY
[2] A second aspect that Ukrainians can be justifiably proud of is that the
election results are the fourth victory in five years of the democratic and
Orange opposition.

In three parliamentary elections (2002, 2006, 2007) and one presidential
election (2004) the democratic-Orange opposition either came first or won
(albeit slim) majorities.

In this year's elections the Orange forces have a slim majority which would
increase to 248 deputies if the Volodymyr Lytvyn bloc joins it. The Party of
Regions with the Communists and the Lytvyn bloc together fall short of 225
seats.

Both of these factors - the holding of free elections and Ukrainian voter
support for democratic forces - shows to what degree Ukraine is more in the
European than in the Eurasian mainstream. It's time the EU woke up to the
new democratic boy on the block.
CAUSES FOR CONTINUED CONCERN
While this is a source of great optimism, other aspects of the elections are
more depressing.

Anybody who knows Viktor Yushchenko and the Our Ukraine bloc he set up
in late 2001 also knows that there has always been a split personality in
both Yushchenko and his bloc. This apparent identity crisis rests on two issues.

[1] Firstly, the difficult amalgamation of national democratic forces and
business groups into one political force (Our Ukraine).

The Yulia Tymoshenko bloc (BYUT) has a similar profile but the main crucial
difference is that Tymoshenko dominates and decides BYUT's position whereas
Our Ukraine has had weak and indecisive leaders for its entire six year
existence (i.e., Viktor Yushchenko, Roman Besmertnyi, Yuriy Yekhanurov,
Vyacheslav Kyrlylenko). None of these four can match Tymoshenko's
organisational skills and leadership qualities.
THE NATIONAL INTEREST VS. DEMOCRACY?
[2] Secondly, the 'national' in national democratic often dominates the
'democratic'. Since the Kuchmagate crisis, Yushchenko's and Our Ukraine's
nationalism (i.e., defined as support for the Ukrainian state, including its
head, the president) has often overridden their support for democracy.

During the Kuchmagate crisis [sparked by the release of secretly bugged
recordings allegedly implicating Kuchma in the murder of opposition
journalist Georgi Gongadze], president Leonid Kuchma was saved from having
to resign by Yushchenko and the national democrats, who did not support the
demands of BYUT and the Socialists (SPU) for Kuchma's impeachment.

In February 2001, as opposition to president Kuchma mounted and street
protests grew in size, Yushchenko signed an infamous open letter (with
Kuchma and his current National Security and Defence Council Secretary, Ivan
Pliushch) attacking the Ukraine Without Kuchma protesters as 'fascists'.

Throughout the period 2002-2003, Yushchenko and Our Ukraine wavered
between supporting the Arise Ukraine! protests organised by supporters of
Yulia Tymoshenko and the Socialists and joining a pro-Kuchma, centrist
parliamentary coalition.

Indeed, one wonders with hindsight if Yushchenko would have ever gone into
'opposition' if he had not been removed as prime minister in April 2001.

Therefore, Yushchenko's and Our Ukraine's continued wavering after both the
2006 and 2007 elections between either joining an Orange coalition or a
grand coalition is part of a pattern that reflects dynamics which we have
seen demonstrated over the past five years time and again.
SITTING ON THE IDEOLOGICAL FENCE
Viktor Yanukovych only returned to government in August 2006 (whose
conflict with Yushchenko led, in turn, to pre-term elections) because of a
multi-vector coalition negotiation strategy favoured by Yushchenko that
imploded when the SPU defected from the Orange coalition to the Party of
Regions.

In March-June 2006, Besmertnyi negotiated with BYUT and the SPU for an
Orange coalition while Yekhanurov negotiated with the Party of Regions for a
grand coalition.

Even after this misplaced strategy failed, Yushchenko and Our Ukraine
continued to hold faith in a deal, leading to the August 2006 round table
that only BYUT opposed.

It took Our Ukraine another two months to go into 'opposition', a further
two months for Our Ukraine ministers to be removed from the Yanukovych
government (they refused to resign from the government even though they were
in 'opposition') and another two months for Our Ukraine to revive the Orange
alliance with BYUT.

This meant that an entire year was wasted after the victory of Orange
political forces in March 2006 to the re-creation of the Orange alliance in
February 2007.
UNCOMPROMISING APPEAL OF YULIA
It is useful to contrast this continuous wavering and indecisiveness of
Yushchenko and Our Ukraine with BYUT's consistent line since the
Kuchmagate crisis of complete opposition to the Kuchma regime and its
unwillingness to enter into any negotiations or coalition with the Party of
Regions.

Is it any surprise that Ukrainian voters prefer a consistent policy (BYUT)
to an indecisive one (Yushchenko and Our Ukraine)?

President Viktor Yushchenko adopted two policies during the 2007 elections.
Unlike in 2006, he campaigned openly for the Our Ukraine-People's
Self-Defence Bloc which earned him a reprimand from the Central Election
Commission for not maintaining his neutrality.

His campaigning on OU-PSD's behalf probably did more harm than good as
Yushchenko's low popularity translated into low voter support for the bloc.

Yushchenko also repeatedly stated that he supported only one coalition that
he defined as 'democratic' (i.e. Orange). At a meeting in late September,
Yushchenko said, 'I would like to stress that we have only one scenario - to
form a democratic coalition. Full stop. There will be no other coalition'. A
few days later, Yushchenko ruled out a grand coalition.

Following the elections Yushchenko confused everybody by calling upon three
of the five political forces (BYUT, OU-PSD and Party of Regions) that had
passed the 3% threshold necessary to enter parliament to begin negotiations
on forming a coalition. Only agreement among these three forces, Yushchenko
believed, would lead to political stability.

This is a canard and contradicted Yushchenko's statements during the
election campaign. Ukraine is a stable country with a growing economy. There
are no riots, protests or violent political attacks taking place in the
country.
TYMOSHENKO'S TRIUMPH INSPIRES FEAR
Yushchenko's wavering over which coalition to support rests on the two
factors analysed above that have been in place for the last six years
together with a new factor brought in by this year's election results.

[3] The third and new factor is the decisive victory of BYUT in the
elections. BYUT is the only one of the three original Orange forces to have
gained a greater share of the votes (up by over 1.5 million on 2006 election
results) and, crucially, has demonstrated that it is the only Orange force
that can win votes in eastern and southern Ukraine.

In contrast, OU-PSD won the same number of votes as in 2006 but it won
fewer oblasts (only one oblast in 2007 compared to four in 2006).

Support for BYUT, in contrast, has been on an upward trajectory since it
first fought an election in 2002 (when it obtained 8%), rising to 23% last
year and 32% this year. BYUT also reduced its gap with the Party of Regions
from 10% last year to only 2% this year.

In a longer election campaign BYUT would probably have reached a par with
the Party of Regions or even moved into first place (this year's campaign
time was shorter than is customary for Ukrainian elections).

BYUT's victory is good and bad news for Yushchenko. It is good in that it
saves the Orange Revolution and his own presidency. But it is bad in that it
makes his presidency dependent on his good relations with BYUT.

Yushchenko can either go into the 2009 elections with Tymoshenko as prime
minister and win a second term or lose the competition for the Orange vote
with Tymoshenko in the first round of those elections, thus failing to enter
the second round.

Yushchenko can only defeat Yanukovych in a presidential election if he is
backed by Tymoshenko.

However, Yulia would win the 2009 presidential elections if she stood as a
candidate because central Ukraine ('Ukraine's Ohio'), where she is by far
the most popular politician and BYUT the most popular force, decides the
outcome of presidential elections (as seen in Kuchma's victory in 1994 and
Yushchenko's victory in 2004).

Yushchenko's only chance of a second term is an alliance with Tymoshenko
as prime minister. It is time for him to mature as a politician, put his
head before his heart and accept this fact.
------------------------------------------------------------------------------------------
Dr. Taras Kuzio is a Research Associate at the Institute for European,
Russian and Eurasian Studies, Elliott School of International Affairs,
George Washington University and President of the economic and
political consultancy group, Kuzio Associates.
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LINK: http://www.businessukraine.com.ua/time-for-yushchenko-to-let-his
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23. UKRAINE'S ORANGE LEADERS PRESENT COALITION ACCORD

5 Kanal TV, Kiev, in Ukrainian 1245 gmt 17 Oct 07
BBC Monitoring Service, UK, Wed, October 17, 2007

The leaders of the two Orange Revolution parties that won parliamentary
representation in Ukraine have made public their agreement to set up a
coalition in the newly-elected assembly.

Opposition leader Yuliya Tymoshenko and Vyacheslav Kyrylenko of the
propresidential Our Ukraine-People's Self-Defence made the accord public at
a news conference at the Interfax-Ukraine news agency on 17 October.

The news conference was broadcast live by state-run UT1 television and
private TV 5 Kanal.

Opening the news conference, Tymoshenko said the accord was final and will
not change. "It has been signed. This is not a draft that is going to be
amended."

Yuliya Tymoshenko said the accord was based on the two blocs' pre-election
promises. To fulfil them, she said coalition MPs would pass twelve laws
after the new parliament convenes and before it approves the new prime
minister:

1. A law abolishing MPs' immunity;
2. A law cancelling MPs' privileges;
3. A new law on the Cabinet of Ministers;
4. A law banning MPs from switching factions;
5. A resolution calling an early mayoral and city council election in Kiev;
6. A law on local state administrations;
7. A law expanding the authority of local self-government;
8. A law on central government agencies, detailing how their heads are
appointed;
9. A law on the interior troops, preventing their misuse for political
purposes;
10. A law on state procurement;
11. A law on the statute of GUAM, an alliance of Georgia, Ukraine,
Azerbaijan and Moldova;
12. A law on the rights of the opposition.

Tymoshenko also said that, as demanded by the president, he will have the
right to nominate the head of the power-wielding agencies like the
Prosecutor-General's Office.

To ensure a system of checks and balances in the government, Tymoshenko

said ministers representing Our-Ukraine-People's Self-Defence will have first
deputies nominated by the Yuliya Tymoshenko Bloc, and vice versa.

Yuliya Tymoshenko rejected accusations by the progovernment Party of Regions
that the new coalition will be unstable. "I think that today together with
the leader of the Our Ukraine-People's Self-Defence bloc, Vyacheslav
Kyrylenko, we can say that the coalition will be stable," she said.

Speaking after Tymoshenko, Kyrylenko was keen to confirm this. Answering a
journalist's question, he said: "There are no groups, which you've
mentioned, within Our Ukraine. Everyone of us, 100 per cent of our MPs, will
vote for candidates for the posts of the speaker and the prime minister."

The two parties earlier agreed to nominate Tymoshenko as prime minister.
Kyrylenko also showed a hard copy of the accord, which looked to be

hundreds of A4 pages thick.

An outline of the accord will be processed from a report by the
Korrespondent.net website by 1430 gmt on 17 October.

UT1 stopped relaying the news conference at 1308 gmt, following it up with a
pre-recorded version of President Viktor Yushchenko's address to the nation.
In it, he voiced his support for the plans to set up a coalition involving
the Yuliya Tymoshenko Bloc and Our Ukraine-People's Self-Defence (for
details see "Ukrainian president backs Orange coalition plans - text" by
Ukrainian president's website, Kiev, in Ukrainian 17 Oct 07)
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24. ORANGE AGAIN: YUSHCHENKO AND TYMOSHENKO REUNITE

ANALYSIS AND COMMENTARY: By Tammy Lynch
THE ISCIP ANALYST, An Analytical Review, Volume XIV, Number 3
Institute for the Study of Conflict, Ideology & Policy at Boston University
Boston, MA, Thursday, 18 October 2007

On 16 October, parties supporting Ukraine▓s President Viktor Yushchenko and
former Prime Minister Yulia Tymoshenko signed a coalition agreement that
will see the return of Tymoshenko as prime minister and the return of an
⌠orange■ government after over a year out of power.

The deal came just hours after final results were released by the CEC in the
country▓s snap parliamentary elections. (Note: At press time, the Kyiv
Administrative Court blocked the printing of final results, while it
considers an appeal against the results by the Communist Party. The court
must release its finding within five days, and it is unlikely to alter the
outcome.)

During the elections, the Yulia Tymoshenko Bloc (BYuT) increased its support
by over seven percentage points, while the coalition supporting Tymoshenko▓s
rival, Prime Minister Viktor Yanukovych, saw one of its members (The
Socialist Party) fail to pass the threshold to enter parliament.

These two factors will allow Tymoshenko to put together a slim parliamentary
majority of 228 against 222, consisting of her bloc and Yushchenko▓s Our
Ukraine-People▓s Self-Defense Bloc (OU-PSD). It is a remarkable comeback for
two blocs that spent almost 1 ╫ years in opposition.

The two groups were consigned to opposition following the 2006 parliamentary
elections, when tensions between the two led to months of negotiations to
create a majority. Yanukovych was able to use the time to broker a backroom
deal with the Socialists, who until that point had been a solid member of
the orange coalition. This allowed Yanukovych to become prime minister.

The Socialists▓ change of allegiances also was one of the primary reasons
given by Yushchenko for the dismissal of parliament and calling of the 2007
snap vote. The party, he said, had betrayed Ukrainians who voted for the
Socialists, believing the party would support an orange coalition.

In total, the 2007 results show a swing of around 30 seats from Yanukovych▓s
coalition to Tymoshenko▓s. When elections were called, the opposition
controlled roughly 200 seats compared to Prime Minister Yanukovych▓s 250,
out of a total of 450. Now, Tymoshenko▓s coalition will control 228 to
Yanukovych▓s 222.

The coalition agreement wouldn▓t have been possible one year ago and could
be the latest sign of Ukraine▓s growing≈if nascent≈democratic political
culture. Indeed, the ability of Yushchenko and Tymoshenko to work together
after falling out over two years ago, may signal an understanding by these
politicians of their accountability to voters and of the need for
cooperation, in order to fulfill their objectives.

In particular, Yushchenko has had to recognize Tymoshenko▓s electoral
success, which outpaced even the most generous predictions of political
pundits.

In the run up to the election, Yushchenko and his bloc often repeated their
commitment to a ⌠democratic coalition.■ During the last week of the
campaign, as polls showed BYuT performing far better than OU-PSD,

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25. UKRAINIAN WINS DETROIT'S WOMEN'S MARATHON RACE

By Chris Silva, Sports Writer, Free Press, Detroit, MI, Mon, Oct 22, 2007

After winning Sunday's 30th Detroit Free Press/Flagstar women's marathon,
Ukrainian Anzhelika Averkova, 38, can cross a few things off her to-do list.
"She now can tell everybody, 'I've been to Canada for a couple of minutes,'
" Averkova said through an interpreter.

Averkova had never been to Detroit before this weekend, but she felt
comfortable running the course. She finished in 2:34:50 to win the $5,000
cash prize. Andrea Lamantia, 25, of Windsor, won the women's half marathon
in 1:26:09.

Averkova said she enjoyed crossing the border to Canada and got a kick out
of the "Welcome to Canada" and "Welcome to the United States" signs on the
Ambassador Bridge and in the Detroit-Windsor Tunnel.

Averkova led the entire race. "It's a very beautiful course and very nice
view," she said. "And there's very kind people. It's a nice course, and
fast."

Standing before a few dozen people at the post-race news conference inside
the Hard Rock CafИ, Averkova was flanked by memorabilia that the included
guitars signed by classic rockers Roger Daltrey and David Bowie, and a
jacket that was Keith Richards'.

She thanked her sponsor, Spira, and also gave a brief speech in her native
language. But Averkova won't leave Detroit completely satisfied.

She was intent on breaking the women's course record, but fell 34 seconds
short. She admitted to being a bit bummed by not making history, and said
she'll try to break the mark next year. Averkova said the lack of
competition left her without someone to push her.

"It's very hard to run a marathon by yourself," Averkova said through the
translator. "She was really disappointed, and she told me maybe next year
she can beat the course record."
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Contact CHRIS SILVA at 586-469-4923 or at csilva@freepress.com.
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26. INTERNATIONAL LAW COMMITTEE OF PHILADELPHIA BAR
ASSOCIATION TO HOLD OPEN MEETING ON UKRAINE NOV 1

Gene M. Burd, Esq., Marks Sokolov and Burd, LLC.
Managing Director of Kyiv Office
Co-Chair Philadelphia Bar International Law Committee
Philadelphia, PA, Monday, October 22, 2007

Dear Morgan,

The International Law Committee of the Philadelphia Bar Association will
have an open meeting on Ukraine in November 1. I would like to ask you

to distribute this invitation. Thank you for your assistance in that.

Regards, Gene.

INVITATION ----------
The next meeting of the International Law Committee will be held on
Thursday, November 1, 2007, between 12:00 p.m. and 1:30 p.m., at the
Philadelphia Bar Association. The topic is
COUNTRY INTRODUCTION - UKRAINE
Until recently many Westerners failed to recognize Ukraine as a truly
independent country. However, events of the past several years have shown
that they were wrong. Ukraine has been steadily gaining its international
recognition and independent profile.

Only three weeks ago Ukraine conducted parliamentary elections which have
been unequivocally recognized as democratic and fair. Hopefully by the time
of the meeting the new parliament will form the government and get to
business.

Our speakers will be Richard Steffens, a Senior Commercial Officer at the US
Embassy in Kyiv, Ukraine and a representative of the Ukrainian Embassy in
Washington (invited) who will discuss recent political and business
developments in Ukraine as well as potential business opportunities and
challenges.

Mr. Steffens is a Wharton graduate who served in various positions with the
Department of Commerce since 1991. He was assigned to his current position
in Ukraine in August 2006, prior to which he served in Russia, Iraq and
Czech Republic.

This meeting is open to all members of the Philadelphia Bar Association as
well as non-lawyers interested in Ukraine. Please RSVP as soon as possible
as the space is limited.

Register on-line at www.philadelphiabar.org or complete this form and return
it with payment to: International Law Committee - November 1, 2007 -
Luncheon Program; Philadelphia Bar Association, 1101 Market Street,
Philadelphia, PA 19107-2911 or Fax to (215) 238-1159.

The cost of lunch is $7.50 per person and will only be prepared for those
that have made reservations and paid in advance either via check or credit
card. Checks should be made payable to the Philadelphia Bar Association.
To secure your reservation, please complete the form below, including credit
card information, unless a check has been included.

All reservations that are not canceled 24 hours prior to the event will be
subject to a cancellation fee of $7.50. To cancel, please contact Dawn
Burger at 215-238-6367 or dburger@philabar.org. Contact Gene Burd,

gburd (at) mslegal.com.

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FOOTNOTE: Marks Sokolov and Burd, LLC. is a member of the

U.S.-Ukraine Business Council (USUBC) in Washington, D.C.
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27. LIVING GENEROUSLY" FALL 2007 EVENTS IN SUPPORT OF

THE UKRAINIAN CATHOLIC UNIVERSITY IN LVIV TO BEGIN

Ukrainian Catholic Education Foundation
Chicago, Illinois, Monday, October 22, 2007

CHICAGO - Fall 2007 events organized to benefit the Ukrainian Catholic
University in Lviv, Ukraine will begin in November this year, guided by the
theme "Living Generously".

As in previous years, this year's eight events are being organized by
committees of volunteers that work together with staff from the
Chicago-based Ukrainian Catholic Education Foundation, as well as the
foundation's chapter in Canada.

"An education at the Ukrainian Catholic University is not simply an
acquisition of information, or a checkmark on the path of life after which a
student can say "I got a degree," said John Kurey, president of the UCEF, as
he announced the fall schedule of events.

Kurey continued, "Rather, every aspect of the UCU is involved with the
formation of students into individuals who will have the knowledge and
skills to make choices in life that are respectful of themselves, and of
others, to make decisions that are considerate and generous.

"The years at UCU allow students to become confident people, complete in
their faith, who will then go on to be admirable and loving parents and
spouses and good citizens. And some will go on to become priests and
sisters, and serve in America!"

"Each year the UCEF returns to the Ukrainian American community for support,
since it is this community that fully understands the mission of UCU. It is
this community that for decades has raised their own children in this way
and now, finally, this mission can be continued in Ukraine," he added.
The eight events this fall include:
[1] a luncheon at 2pm on Sunday, November 4 in New York at the

Ukrainian National Home, 140 Second Avenue;
[2] a luncheon at 1pm on Sunday, November 11 in Chicago at the

Ukrainian Cultural Center, 2247 W. Chicago Avenue;
[3] a dinner at 7pm, following a Divine Liturgy at 5pm and welcoming
reception at 6pm, on Saturday, November 17 in Whippany, New Jersey

at the new Ukrainian American Cultural Center, 60C N. Jefferson Road;
[4] a luncheon at 1pm on Sunday, November 18 in Yonkers, New York

at the Ukrainian Youth Center, 301 Palisade Avenue;
[5] a Rector's Dinner (time to be announced) on Tuesday, November 20

in Toronto;
[6] a "Holodnij Obid" at 6:30pm on Sunday, November 22 in Edmonton,

at the Ukrainian Youth Association (SUM) Hall, 9615 153 Avenue NW;
[7] a luncheon at 2pm on Sunday, November 25 at the parish center of the
Assumption of the Blessed Virgin Mary Church, 6175-10th Avenue; and
[8] an informational open house to be held from 1:00-3:30pm on Sunday,
December 2 in Warren, Michigan at St. Josaphat Banquet Center, 26440

Ryan Road.

For the first time the UCEF, working with local volunteers, will host events
in Yonkers and Whippany. The luncheon in Yonkers is being held in
conjunction with the St. Michael's Day celebration.

The rector of the UCU, Rev. Borys Gudziak will speak at both events. On
Saturday, November 17, during the afternoon prior to the dinner in Whippany,
New Jersey, Rev. Gudziak will attend the activities at St. Patrick's Cathedral

in Manhattan to commemorate the 75th anniversary of the 1932-1933
Holodomor [death by starvation] in Ukraine.

On November 4 in New York and on November 11 in Chicago, the keynote

speaker at the events will be Myroslav Marynovych, most recently the director

of UCU's Institute of Religion and Society and currently vice-rector of UCU.

Mr. Marynovych, a scholar, a human-rights activist, and a former Soviet
prisoner-of-conscience speaks eloquently on the topic of the role of
religion and the values imparted by a religious education in developing not
only healthy individuals, but in a maintaining a healthy society.

On November 20 in Toronto, November 22 in Edmonton and November 25 in
Montreal, Rev. Gudziak will be the keynote speaker and then on December
special guest Bishop Hlib Lonchyna, Apostolic Visitator for Ukrainian Greek
Catholics in Italy, will speak in Warren, along with the keynote speaker
Rev. Gudziak.

Tickets are available for all events through the UCEF or through local
representatives. To order tickets and to locate a local representative,
please contact Nell Andrzejewski at the UCEF office: 773-235-8462; email:
nell@ucef.org.

Donations for the UCU are always welcome. For those not able to attend an
event, but interested in contributing to the UCU, tax-deductible donations
can be sent to: The Ukrainian Catholic Education Foundation, 2247 West
Chicago Avenue, Chicago, IL 60622. Please make checks payable to the

UCEF. All donations are tax-deductible.
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28. UTAH PEOPLE OPEN ARMS TO UKRAINE ORPHANS

By Elaine Jarvik, Deseret Morning News
Salt Lake City, Utah, Friday, Oct. 19, 2007

Denise Williams wrote down the phrase in her notebook, hoping her phonetic
ti ha lode ni would sound something like the Ukrainian for are you hungry?

Like the dozens of other Utahns standing in the baggage claim area of the
Delta terminal at Salt Lake City International Airport Thursday night - with
their banners and balloons and eager smiles - Williams was waiting the
arrival of 45 orphans from Ukraine.

The children, from three orphanages, are the latest guests of Utah-based
Save A Child Foundation, started three years ago by Vern and Nannette
Garrett of Salt Lake City.

The purpose of the foundation, Vern explained amid the chaos of arriving
passengers, is to be advocates for orphans ages 6 to 15, the children who
are "largely overlooked," he says. The children will be in Utah until Nov.
5, staying with volunteer families.

"You want to see something really sad?" asked Save a Child Foundation
vice president Craig Sorensen. "Come back here in three weeks."

The Ukrainian government allows the children to come to Utah, but the
agreement is that they can't stay. On the other hand, most of the families
end up adopting the children they host.

In the fall of 2005, the first year of the program, Sorensen says he figured
maybe one of the children would be adopted, two tops; in the end 24 of the
26 eligible children were eventually adopted by the Utah families.

The families must find their own adoption agency, come up with the $20,000
to $25,000 in adoption fees and generally wait about eight months for the
adoption to be final. The Garretts have now adopted two girls and a boy,
who have joined their own eight children.

The next three weeks will be a whirlwind of trips and parties and family
time. In an odd twist of fate and logistics, however, most of the orphans
will wake up tomorrow and be immediately whisked to the dentist for a
donated teeth cleaning.

"We're going to explain it to them," Vern told the parents, "so they don't
think they're coming to America to be tortured."

Margery and Kent Jorgensen of Provo, and their four children plan to take
Misha, 15, and Maxim, 9, to a high school football game, as an antidote to
the dentist trip. That may or may not be successful; according to Sorensen,
other Ukrainian orphans in the past have been bored by American football.

All 45 orphans will go to a Halloween party, the zoo, a ranch, a swimming
pool and Bouncin' Off the Walls while they're here. Among the families waiting

at the bottom of the arrivals escalator were Ukrainian orphans who came on

a similar three-week trip either in 2005 or 2006.

Inna Morgan came last October and was adopted in June by Lorraine and Alan
Morgan of Sandy. Hannah and Abbie Olsen - who asked for American names -
also arrived last summer.

Their new mother, Carla, went to Ukraine last March to help the Garretts
choose the 45 children for this year's program. "If you ask them what their

one wish is," Olsen said about all the orphans she met, "they say 'to come to

America."'

The 45 orphans finally arrived a little after 8:30 p.m. For a few minutes
they just stood in a clump at the top of the escalator. Then, two by two,
here they came, dressed in winter coats, each carrying a backpack.

A big cheer went up in the crowd, and then there was the chaos of families
trying to find Misha and Maxim, Artem and Roman. Pretty soon they'd all
be going home, to strange beds and refrigerators full of odd food.

Ti ha lode ni?
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E-mail: Elaine Jarvik, jarvik@desnews.com
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LINK: http://deseretnews.com/dn/view/0,5143,695220046,00.html
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