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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

CONFLICT HOLDS LESSONS FOR UKRAINE

ACTION UKRAINE REPORT - AUR - Number 896

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

WASHINGTON, D.C., SATURDAY, AUGUST 16, 2008

INDEX OF ARTICLES ------

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. SOUTH OSSETIA CONFLICT HOLDS LESSONS FOR KYIV

COMMENTARY & ANALYSIS: By Steven Pifer

Visiting Fellow, Brookings Institution, Washington, D.C.

U.S. Ambassador to Ukraine from 1998-2000.
Senior Advisor, U.S.-Ukraine Business Council (USUBC)

Radio Free Europe/Radio Liberty (RFL/RL)
Washington, D.C., Friday, August 15, 2008

2. IS UKRAINE NEXT? GEORGIAN WAR EXACERBATES RUSSIA-UKRAINE RELATIONS

Richard Weitz, Senior Fellow, Hudson Institute

World Politics Review contributing editor

World Politics Review Exclusive, Institute of World Politics

Washington, D.C., Friday, August 15, 2008

3. LIMITED LEVERAGE: EURASIA AND THE WEST

OP-ED: William Horton Beebe-Center

President, Eurasia Foundation, Washington, D.C.

International Herald Tribune (IHT), Paris, France, Friday, August 15, 2008

4. UKRAINIAN ENVOY SAYS GEORGIA A 'LESSON FOR UKRAINE'
Interview with Ukrainian Deputy Prime Minister Hryhoriy Nemyria

By Maryana Drach, Kyiv, Ukraine
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, August 15, 2008

5. COULD UKRAINE BECOMES RUSSIA'S NEXT TARGET?

By Peter Fedynsky, Moscow, VOA Correspondent
Voice of America (VOA), Washington, D.C., Friday, August 15, 2008

6. AFTER RUSSIA'S INVASION OF GEORGIA, WHAT NOW FOR THE WEST?

At least for now, the smoke seems to be clearing from the Georgian battlefield.

But the extent of the wreckage reaches far beyond that small country.
COMMENTARY: By John R Bolton

Former US Permanent Representative to the United Nations
Telegraph, London, UK, Friday, August 15, 2008

7. FOREIGN DIRECT INVESTMENT (FDI) RISKS BECOMING A CASUALTY OF WAR
“We think that Ukraine may be the next investment casualty..."

By Rachel Morajee in London, Financial Times

London, UK, Friday, August 15 2008

8. POSSIBLE IMPACT OF THE RUSSIA-GEORGIA CONFLICT

ON UKRAINE AND OTHER CIS COUNTRIES

SigmaBleyzer, The Bleyzer Foundation

Kyiv, Ukraine, Tuesday, August 12, 2008

9. FITCH SEES WORSE THREATS TO UKRAINE THAN RUSSIA ROW,

SERIES OF STRESSES IN UKRAINIAN ECONOMY

By Peter Apps, Reuters, London, UK, Friday August 15 2008

10. UKRAINE CREDIT DEFAULT SWAPS (CDS) WIDENS

ON WORSENING RUSSIA RELATIONS

Peter Apps, Reuters, London, UK, Thu Aug 14, 2008

11. RUSSIA'S WAR IS THE WEST'S CHALLENGE

OP-ED: By Mikheil Saakashvili, President of Georgia
The Washington Post, Washington, D.C.
Thursday, August 14, 2008; Page A17

12. WHY IS VLADIMIR PUTIN SO SCARED OF GEORGIA?

OP-ED: By Anne Applebaum, Author, Columnist
Telegraph, London, UK, Friday, August 8, 2008

13. UKRAINE'S NATO ACCESSION: POLITICS AS USUAL

COMMENTARY & ANALYSIS: By Igor Khrestin

Central Europe Digest, Center for European Policy Analysis

Washington, D.C., Friday, 15 August 2008

14. UKRAINE UNSETTLED BY RUSSIA'S INVASION OF GEORGIA
By Brian Bonner, Special Correspondent, McClatchy Newspapers
The Herald Tribune, Rock Hill, South Carolina, Friday, August 15, 2008

15. UKRAINE'S PRESIDENT WANTS NEW RUSSIAN FLEET DEAL

The Associated Press, Kiev, Ukraine, Saturday, August 16, 2008

16. SEVASTOPOL PRO-RUSSIAN PUBLIC ORGANIZATIONS PREPARE MAGNIFICENT

WELCOME OF RUSSIAN VESSELS COMING BACK FROM GEORGIA "WITH VICTORY"

UkrInform - Ukraine News, Kyiv, Ukraine, Friday, August 15, 2008

17. RUSSIA'S OMINOUS NEW DOCTRINE?

OP-ED: By Strobe Talbott, President, Brookings Institution
Deputy Secretary of State, Clinton Administration
The Washington Post, Washington, D.C., Fri, Aug 15, 2008; Page A21

18. PRESIDENT YUSHCHENKO SAYS UKRAINE SUPPORTS UNCONDITIONAL

TERRITORIAL INTEGRITY OF GEORGIA AS IT EQUALIZES SUCH GEORGIAN

THREAT & OWN SOVEREIGNTY

UkrInform - Ukraine News, Kyiv, Ukraine, Friday, August 15, 2008

19. UKRAINIAN GOVERNMENT EXPRESSES STRONG SUPPORT FOR GEORGIA

Will Ukraine be next after Georgia?

ANALYSIS & COMMENTARY: By Taras Kuzio

Eurasia Daily Monitor, Volume 5, Issue 154

The Jamestown Foundation, Wash. D.C., Tuesday, August 12, 2008

20. UKRAINE AND THE CONFLICT IN SOUTH OSSETIA
Ukraine threatens to prevent return of Russian Black Sea Fleet vessels
Commentary & Analysis: By Roman Kupchinsky
Eurasia Daily Monitor, Volume 5, Issue 153

The Jamestown Foundation, Wash. D.C., Monday, August 11, 2008

21. KYIV ON GEORGIA: DIPLOMACY AWKWARD, PARTIES DIVIDED
Support for Georgia varies among political parties in Ukraine
COMMENTARY & ANALYSIS: By Pavel Korduban
Eurasia Daily Monitor, Volume 5, Issue 157

The Jamestown Foundation, Wash. D.C., Friday, August 15, 2008

22. IS UKRAINE PREPARED TO MAINTAIN ITS TOUGH STAND AGAINST RUSSIA?

COMMENTARY & ANALYSIS, By Jan Maksymiuk

Radio Free Europe/Radio Liberty (RFE/RL)

Prague, Czech Republic, Friday, August 15, 2008

23. AS RUSSIAN TANKS ROLL, EUROPE REASSESSES

NEWS ANALYSIS: By Judy Dempsey, The New York Times

New York, New York, Friday, August 15, 2008

24. MYTHMAKING IN MOSCOW
Georgia wasn't committing 'genocide,' and the Russians aren't keeping the peace.

LEAD EDITORIAL, The Washington Post

Washington, D.C., Saturday, August 16, 2008; Page A14

25. U.S. LACKS OPTIONS TO ACT ON TOUGH RHETORIC

Bush Administration's second-rate response to the crisis

By Andrew Ward in Washington, Financial Times

London, UK, Saturday, August 16, 2008

26. TEA WITH THE FINANCIAL TIMES: YULIA TYMOSHENKO

By Chrystia Freeland, U.S. Managing Editor of the FT

Financial Times, London, UK, Saturday, August 16 2008

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1 . SOUTH OSSETIA CONFLICT HOLDS LESSONS FOR KYIV

COMMENTARY & ANALYSIS: By Steven Pifer

Visiting Fellow, Brookings Institution, Washington, D.C.

U.S. Ambassador to Ukraine from 1998-2000.
Senior Advisor, U.S.-Ukraine Business Council (USUBC)

Radio Free Europe/Radio Liberty (RFL/RL)
Washington, D.C., Friday, August 15, 2008

Analysts have begun to weigh the significance of the Russian-Georgian conflict for Russia's other neighbors and for Western relations with those countries. What lessons should Ukraine draw?

The speed of the launch of Russian military operations makes clear that Moscow was ready to act and only sought a pretext; the Georgians, unfortunately, provided one. Russian forces quickly broadened the conflict beyond South Ossetia, launching air strikes throughout Georgia, deploying into Abkhazia, and occupying parts of Georgia outside of South Ossetia and Abkhazia.

The scale of the Russian attack suggests Moscow was motivated by more than just the situation in South Ossetia. Tbilisi's independent foreign-policy course, particularly its desire to join NATO and the European Union, angers Moscow, which seeks a zone of influence in the former Soviet space.

The Kremlin also intended its actions to send a message to other neighboring states, including Ukraine, and to the West. As Ukrainians think through what this means for their foreign-policy course, there are a number of considerations.

The Russians seek to draw a line between Europe and the former Soviet space. Moscow wants Ukraine and Georgia on the eastern side of that line, and wants neither NATO nor the European Union to cross it. While the Kremlin focuses its objections now on NATO enlargement, Ukrainians should assume that, if prospects develop for Ukraine's entry into the European Union, Russia will object vociferously to that as well.

Moscow's increasingly assertive policy poses challenges for Kyiv and the West. NATO and the European Union must consider carefully their strategies of engaging states to their east. Some will argue that, given Russian opposition, NATO should back away from Membership Action Plans (MAPs) for Ukraine or Georgia.

That would be a mistake. It would encourage Moscow to believe that its pressure tactics -- which have included threatening Ukraine with nuclear weapons and questioning the country's territorial integrity and, in Georgia's case, worse -- have succeeded. A Russia that sees success in such tactics will not be an easy country with which to deal.

Moscow would like to limit Ukrainian sovereignty and independence, to isolate it from European and Euro-Atlantic institutions. Most Ukrainians who favor joining NATO and the European Union do so because they want their country to be a "full member" of Europe. This is not anti-Russian. The Kremlin, however, applies an outdated zero-sum logic by which Ukraine's drawing closer to Europe somehow damages Russian interests.

Dealing with this is a challenge for Ukrainian foreign policy. Whatever decision Ukraine ultimately makes on joining NATO and the European Union is a decision for Ukrainians. Regardless of their specific preferences regarding relations with NATO or the European Union, all Ukrainian political forces presumably want to protect the sovereignty of Ukrainian decision-making.

Faced with the likelihood of continuing Russian pressure against Ukraine's pro-European course, what should Kyiv do?

[1] First and foremost, it is not the time for a divided government. President Viktor Yushchenko and Prime Minister Yulia Tymoshenko must end their infighting and together pursue a coherent policy. The government should also talk to the Party of Regions. Leaders of that party may one day be back in power. They should share the government's interest in protecting Ukraine's right to set its own foreign-policy course.

[2] Second, the government needs to make a real education effort on NATO and the advantages and disadvantages of membership for Ukraine. Based on an understanding of what NATO is today -- a very different organization from it was during the Cold War -- and what it can offer Ukraine, the Ukrainian people can decide what is in their country's interest.

If Ukrainians continue to oppose membership, the leadership should draw the appropriate conclusion. NATO will not take in a country if the population disagrees. If, on the other hand, better understanding leads to growing public support for NATO, that will strengthen the government's hand.

[3] Third, the government should reduce vulnerabilities to Russian pressure. This means paying energy debts on time, so that Moscow has no pretext for reducing the flow of gas. It means energy conservation and developing domestic gas and oil resources in order to enhance Ukraine's energy security. And it means managing the gas-transit system in an open and transparent manner.

A Ukraine that strengthens its own energy-security situation and serves as a reliable and transparent transporter of energy to Europe will reduce its exposure to Russian energy pressures and can become an indispensable part of Europe's energy future.

[4] Fourth, Russia has exploited the breakaway regions of South Ossetia and Abkhazia to destabilize Georgia. While the Georgian and Ukrainian situations are different, the Ukrainian government should keep a close watch to make sure Russia does not use the language or ethnic issues to create pressure points, especially in Crimea. One potential pressure point is the Black Sea Fleet.

Ukraine has the right, as a sovereign country, to insist on the fleet's departure when the current basing agreement lapses in 2017 and to address with Moscow the activities of warships operating from Ukrainian ports. But perhaps now may not be the time to try to accelerate negotiations on the fleet's departure. Ukraine can be pro-European and still try to maintain good relations with Russia.

Russia is playing a serious game with regard to the former Soviet space. Kyiv needs to respond with equal seriousness. A serious Ukrainian response -- a coherent government, growing public support for a pro-European course, and addressing vulnerabilities in the Ukraine-Russia relationship -- will strengthen Ukraine's ability to withstand Russian pressure. It likewise will have a positive effect on how the West and Euro-Atlantic institutions view Ukraine and its pro-European course.

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NOTE: Steven Pifer, who served as U.S. ambassador to Ukraine from 1998 to 2000, is a visiting fellow at the Brookings Institution. Pifer also serves as a Senior Advisor to the U.S.-Ukraine Business Council (USUBC). The views expressed in this commentary are the author's own and do not necessarily reflect those of RFE/RL or USUBC.

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LINK: http://www.rferl.org/content/comment_South_Ossetia_Conflict_Lessons_Kyiv/1191279.html

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2. IS UKRAINE NEXT? GEORGIAN WAR EXACERBATES RUSSIA-UKRAINE RELATIONS

By Richard Weitz, Senior Fellow, Hudson Institute

World Politics Review contributing editor

World Politics Review Exclusive, Institute of World Politics

Washington, D.C., Friday, August 15, 2008

The War in Georgia has seriously exacerbated relations between Russia and Ukraine's pro-Western government. On Aug. 12, Ukrainian President Victor Yushchenko joined the leaders of four other former Soviet states in Tbilisi to show solidarity with Georgia and its embattled president, Mikheil Saakashvili.

Yushchenko told the crowd that had assembled in Tbilisi's central square: "You will never be left alone! . . . We have come to reaffirm your sovereignty, your independence, your territorial integrity. These are our values. Independent Georgia is and independent Georgia will always be!"

The following day, President Yushchenko boldly imposed severe restrictions on the movement of Russian military units in Ukraine. Specifically, he directed that Russian warships, warplanes, or other military units give 72 hours' notice before moving within Ukrainian territory.

The order also applies to ships of the Russian Black Sea Fleet seeking to reenter their home base at Sevastopol. The Russian Foreign Ministry attacked the measures as a "serious, new anti-Russian step."

Ukrainian officials claimed that the restrictions were not a direct result of the Russian military intervention in Georgia. Instead, they maintain that they had long sought to regulate more effectively Russian operations at the Sevastopol base, but that Moscow had repeatedly delayed commencing talks on the issue by arguing that it had no plan to employ the Black Sea Fleet in foreign military operations.

Nevertheless, the Ukrainian Foreign Ministry had stated at the onset of the war that they would not necessarily allow Russian warships to return to Sevastopol if they supported military operations against Georgia. "We have information confirmed by our specialists that several vessels of the Black Sea Fleet left Sevastopol and either made their way or were making their way toward the territory of Georgia,"

Ukraine Foreign Minister Volodymyr Ohryzko explained while in Georgia on Aug. 10. "Obviously, if this is confirmed we will have to reconsider the conditions under which these vessels would be able to be stationed on the territory of Ukraine."

On Aug. 13, moreover, the Ukrainian Security Council issued a statement declaring that the presence of foreign warships in its waters "poses a potential threat to Ukraine's national security, particularly if parts of Russia's Black Sea Fleet are used against third countries." The Ukrainian government has long insisted it will not renew Russia's lease regarding Sevastopol when it expires on May 28, 2017.

For their part, Russian officials denounced the Ukrainian government for siding with Saakashvili, who Moscow holds responsible for starting the war and committing war crimes against Russian citizens in South Ossetia.

After the Georgian War began, Sergei Shoigu, Russia's minister for emergency situations, expressed indignation that, "One week before these events, we send a column of humanitarian aid to Ukraine to help flood victims and the next we find they're offering military aid, arms for the destruction of civilians."

One month prior to the invasion, Ukrainian troops participated in a large, multinational military exercise in Georgia, "Immediate Response 2008" which also involved Azeri, Armenian and American soldiers.

After the war ended in an overwhelming Russian military victory, former Georgian President Eduard Shevardnadze, who as the last Soviet foreign minister helped dismantle the Soviet Union -- a development that Putin called the "greatest geopolitical catastrophe" of the 20th century -- warned that "Ukraine most likely'" would be the next country to experience increased Russian military pressure to abandon foreign and defense policies opposed by Moscow.

There are certainly many disturbing parallels in the situations Ukraine and Georgia find themselves with respect to Moscow. Pro-Western governments came to power following popular revolutions in both countries -- in Georgia in 2003 and Ukraine in 2004. Along with Georgia, the Ukrainian government is seeking to join NATO.

At this April's NATO summit in Bucharest, the alliance's communiqué said that both countries "will become NATO members" eventually. The Georgian and Ukrainian governments also have collaborated to pursue energy transit routes linking the Caspian Sea to Europe that bypass Russia.

Unfortunately, Ukraine shares some of Georgia's vulnerabilities as well. The Ukrainian region of Crimea has a majority Russian-speaking population. Some of its members would like to join Russia. The peninsula also hosts an important naval base that Russia does not want to relinquish.

The Kremlin might be able to instigate a pro-Russian uprising in the Crimea in which the insurgents, following the South Ossetian precedent, would appeal for Russian military intervention to protect them from Kiev.

Various Russian leaders have suggested that, if Ukraine actually joins NATO or attempts to expel the Russian Black Sea Fleet from Sevastopol, then Russia might annex the Crimea. After the Bucharest summit, Putin told a news conference that, "The appearance on our borders of a powerful military bloc . . . will be considered by Russia as a direct threat to our country's security."

Army Gen. Yury Baluyevsky, chief of the Russian General Staff, said that the entry of Ukraine or Georgia into NATO would lead Moscow to "undoubtedly take measures to ensure its security near the state border. These will be both military and other measures."

Foreign Minister Sergei Lavrov likewise said Moscow "will do everything possible to prevent the accession of Ukraine and Georgia to NATO." These statements appear aimed at stoking tensions with Ukraine to exacerbate the country's internal differences and reinforce West European reluctance to allow Ukrainian entry into NATO.

Nevertheless, there are certain major differences between Georgia and Ukraine. First, the Ukrainian armed forces are much stronger than those of Georgia. Whereas Georgia's prewar military had approximately 37,000 soldiers under arms, the Ukrainian military numbers over 200,000.

The Russian armed forces is still five times larger, but would find a war with Ukraine, with a population -- which, though divided about NATO membership, would presumably rally to defend Ukraine's territorial integrity -- some 10 times larger than that of Georgia, a much greater challenge.

In addition, the United States and some other NATO countries have belatedly sought to reinforce their political-military position in the former Soviet bloc. The Bush administration appears to have accepted Saakashvili's warning that the weak U.S. response to the Russian intervention was creating a situation in which "America is losing the whole region" to Russia.

After days of supporting the Georgian position with nothing but rhetoric, President Bush announced on Aug. 13 that the U.S. military would conduct a relief operation in Georgia. Whatever humanitarian assistance it might provide the Georgian people would pale in significance to the deployment's symbolic importance as reaffirming Washington's continuing role and interests in Russia's neighborhood.

The announcement that NATO would hold a special meeting on the conflict, as well as the long-awaited consummation of a Polish-American deal on basing U.S. missile interceptors in Poland, also signaled that Washington and some of its allies were now determined to shore up their presence in the region to dissuade further Russian predations.

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LINK: http://www.worldpoliticsreview.com/article.aspx?id=2571
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3. LIMITED LEVERAGE: EURASIA AND THE WEST

OP-ED: William Horton Beebe-Center

President, Eurasia Foundation, Washington, D.C.

International Herald Tribune (IHT), Paris, France, Friday, August 15, 2008

WASHINGTON: Even before the dust settles on the humanitarian tragedy unfolding today in South Ossetia and the full extent of the damage is known, one essential truth has emerged: The Caucasus region, Russia and indeed all the nations that once comprised the Soviet Union are of crucial strategic interest to the United States.

Witness the spike in oil prices within hours of the outbreak of hostilities, concerns about oil pipeline safety, weapons proliferation, and the fact that both U.S. presidential candidates devoted valuable campaign time to this foreign policy issue.

Despite the region's importance, the current crisis has demonstrated that the United States and Europe have disturbingly limited diplomatic leverage in the Eurasia region.

Less than a week after Russia and Georgia started fighting, European and American officials have actively begun shuttle diplomacy between Moscow and Tbilisi and the results so far are positive but inconclusive. The fact remains that similar initiatives in the past failed to prevent the outbreak of hostilities, much less resolve the underlying conflict, and it is far from certain that they will work any better this time.

This diplomacy deficit has many causes - including conflicting economic and energy interests in the West, inconsistent policies of multilateral organizations and regressive politics in many former Soviet states - but a major cause is the limited investment of time and money in the region by many Western nations since 2001.

The United States and European governments have neglected the quotidian work of formal diplomatic relations as well as the informal connections that constitute civil society. Unglamorous but essential, these formal and informal relations are the ties that bind, especially when it comes to a crisis like the one we faced this week in Georgia.

Preoccupied with other conflicts and increased demands on the Treasury, the U.S. government in particular has reduced its foreign assistance to the region each year for the last seven years, so that today financial support for engagement between citizens and institutions in America and their counterparts in the Eurasia region is one-half what it was in 2000.

Projects ranging from the improvement of local governments to small business development to international education exchanges - activities that not only help build prosperity and stability in the region, but also improve the environment in which economic and diplomatic relations occur - are put at risk by the sharp reduction in government financing.

This in a region of 12 rapidly developing countries - six of which are secular Muslim nations - all of which are essential to managing some of the most serious international challenges we face, from nuclear proliferation to energy security to labor migration.

There is considerable political will today in the United States and Europe to do something to contain the current crisis in Georgia and prevent the outbreak of new ones in the many hotspots in the Eurasia region.

As leaders apply themselves to the deferred maintenance on formal relations with the countries of Eurasia, they should not overlook the importance of strengthening international engagement at the citizen level, the soft power that, if stewarded properly, can help prevent conflict and help resolve conflicts when they arise.

When the dust settles on the current crisis in the Caucasus, debate over what precisely went wrong will no doubt continue for some time. One point on which all should be able to agree is that engagement at the citizen level must be fostered, and financed, to help avert future crises like the one in Georgia and to extend the diplomatic reach of the governments concerned when they do erupt.

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LINK: http://www.iht.com/articles/2008/08/15/opinion/edbeebe.php

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4. UKRAINIAN ENVOY SAYS GEORGIA A 'LESSON FOR UKRAINE'
Interview with Ukrainian Deputy Prime Minister Hryhoriy Nemyria

By Maryana Drach, Kyiv, Ukraine
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, August 15, 2008

A Ukrainian government official has called on the European Union to help Kyiv avoid a "security vacuum" like the one that led to the current conflict between Russia and Georgia.

"For a very long time, it's been clear that there was a security vacuum in the South Caucasus," Deputy Prime Minister Hryhoriy Nemyria said in an interview with RFE/RL's Ukraine Service. "It's a lesson for Ukraine. Ukraine is the largest post-Soviet country after Russia, and one that shares a long border with the European Union. It can't be left in a similar vacuum."

Nemyria was speaking in Kyiv following three days in Tbilisi meeting with Georgian officials and coordinating humanitarian aid shipments to the country.

Ukraine, a recent ally of Georgia since both countries' "colored revolutions" brought pro-democratic leaders to office, has been staunch in its support of Tbilisi since the start of Georgia's armed conflict with Russia over the breakaway republic of South Ossetia.

Ukrainian President Viktor Yushchenko joined a delegation of five Eastern European leaders who traveled to the Georgia in a show of solidarity with Georgian leader Mikheil Saakashvili, and Ukraine has warned that Russia would face restrictions on if its Black Sea Fleet, which is based in the Ukrainian port city of Sevastopol, was used in any aggressive actions against Georgia.

The posture has angered Russia, which often seems to regard both Ukraine and Georgia as wayward neighbors that should be brought back into Moscow's orbit. Kyiv and Tbilisi have actively sought membership in the NATO military alliance, an aim that infuriates the Kremlin and is believed to have played a significant role in Russia's military advance on Georgia.

Nemyria acknowledged the possibility that Russia might next turn its focus to Ukraine. "I think old habits die hard," he said of Russia. "What we can see in this overreaction is that there is a risk [for Ukraine]. And of course, Ukraine has a frozen conflict on its own border" -- a reference to Moldova's breakaway region of Transdniester, which like South Ossetia and a third separatist region, Abkhazia, enjoys Moscow's strong support.

"We want to avoid a security vacuum that will be prone to a defrosting of such a frozen conflict," he said. "European leaders must now realize that the South Ossetia conflict has opened such a vacuum throughout the entire area that Moscow sometimes calls its 'near abroad.' We welcome the EU's effort -- led by France, and supported by Germany and others -- to be more visible as an actor in the region."

Nemyria dismissed speculation that Prime Minister Yulia Tymoshenko -- who has been notably silent on the current Georgia-Russia conflict -- is hoping to secure Russia's support for a future presidential bid.

"The government of Ukraine adopted a clear position, the centerpiece of which was the recognition and support of the sovereignty and territorial integrity of Georgia," he said. "The president of Ukraine took the lead in voicing the official Ukrainian position, and we felt no need to repeat it. Those accusations against the prime minister are misplaced."

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http://www.rferl.org:80/Content/Ukrainian_Envoy_Says_Georgia_A_Lesson_For_Ukraine/1191452.html

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5. COULD UKRAINE BECOMES RUSSIA'S NEXT TARGET?

By Peter Fedynsky, Moscow, VOA Correspondent
Voice of America (VOA), Washington, D.C., Friday, August 15, 2008

The former Soviet republics of Georgia and Ukraine are allies engaged in similar attempts to establish democratic rule, to join NATO and realign themselves with the West, much to the displeasure of Russia.

During the conflict in Georgia, Ukrainian President Viktor Yushchenko prohibited ships from the Russian Black Sea Fleet that are engaged off the
Georgian coast from returning to port on Ukraine's Crimean peninsula without Kyiv's official permission. VOA correspondent Peter Fedynsky examines how the Kremlin may react to Ukraine's pro-Georgian and pro-Western position.

Ukraine's current President, Viktor Yushchenko flew to Tbilisi to join his Georgian friend and fellow head of state, Mikheil Saakashvili, in the school's re-dedication ceremony. Both men rode to power following mass pro-democracy protests that came to be known as colored revolutions. Georgia's was the Rose Revolution and Ukraine's was the Orange. Accordingly, the Hrushevsky School was painted orange.

Moscow has not disguised its displeasure with the colored revolutions and refuses to deal with Mr. Saakashvili. On Tuesday, President Yushchenko again
flew to Tbilisi, accompanied this time by the presidents of Poland, Latvia, Lithuania and Estonia.

Mr. Yushchenko says the task of the presidential mission is to show that Georgia is not alone, that in this age the power of reason should not be replaced by the iron fist.

The Ukrainian leader says the five presidents came to Georgia to prohibit the of killing people and the execution of the country.

Ukrainian military analyst Oleksiy Melnyk, of the Razumkov Center think tank in Kyiv, told VOA the Polish, Ukrainian and Baltic leaders do not
necessarily agree with all of the actions undertaken in the conflict by Georgian leadership, but notes they risked their own physical security to send a signal to Moscow.

Melnyk says Moscow should see the presidential show of solidarity in Tbilisi as a serious signal that Russian foreign policy of establishing control over
former Soviet republics and its neighborhood achieves a totally opposite effect. The analyst says Russia is surrounding itself with nations that are, at a minimum, not friendly and perhaps even hostile toward Moscow.

Oleksiy Melnyk says Russian military actions in Georgia could lead the majority of Ukrainians who now oppose to their country's NATO membership to
reassess their opinions about the respective security threats posed by the Western alliance and Russia.

The chairman of the European Integration Forum in Tbilisi, Soso Tsiskarishvili, agrees with Melnyk's assessment, but notes Ukraine is better prepared to meets NATO's democratic standards for membership than Georgia.

Tsiskarishvili says Ukraine's two recent parliamentary elections and Georgia's presidential and parliamentary contests differ from one another like heaven and earth in terms of democratic and transparent procedures.

But Russian military analyst Pavel Felgenhauer cautions that Ukraine could be Russia's next target as part of what he says is a grand Kremlin plan for the partial restoration of Russian greatness.

"Russia right now wants at least half of Ukraine to be annexed," said Felgenhauer. "Vladimir Putin talked about that rather openly at the NATO summit in Bucharest, Romania in April. Ukraine will disintegrate into two halves, and we want the eastern half, including of course, first and foremost, Crimea."

Felgenhauer says Ukraine's overwhelming vote for independence in 1991, which included a majority of Crimeans, means nothing to Kremlin rulers, who the analyst says do not respect the will of even their own people.

Nonetheless, the analyst says Russia is tied down in Georgia and will not make any immediate military moves against Ukraine. He notes, however, that
Russia's Black Sea Fleet, which leases naval facilities in Sevastopol in Crimea, will likely steam back to port in defiance of a Ukrainian presidential order that it must first ask for Ukrainian permission.

"If Russia openly challenges Ukrainian sovereignty, I think that Ukraine will then turn to the West and say, 'you know guys, they're challenging our
sovereignty with their fleet.' And this will happen without any kind of use of arms, or anything made in anger. Ukraine right now, apparently wants to
make the threat to its sovereignty obvious to outside powers," said Felgenhauer.

Felgenhauer says Moscow's vision of the world is that of Prime Minister Vladimir Putin; one in which Russia and Washington share spheres of influence. The analyst notes that Russia withdrew its bases from Cuba and Vietnam, expecting the United States to stay away from what Moscow thought was to be its sphere of influence. He says Moscow felt betrayed when Washington began supporting colored revolutions among Russia's neighbors.

But Soso Tsiskarishvili points to this week's visit to Tbilisi by presidents of five countries that border Russia as a sign that they do not trust the Kremlin.
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LINK: http://www.voanews.com:80/english/2008-08-15-voa19.cfm

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6. AFTER RUSSIA'S INVASION OF GEORGIA, WHAT NOW FOR THE WEST?

At least for now, the smoke seems to be clearing from the Georgian battlefield.

But the extent of the wreckage reaches far beyond that small country.

COMMENTARY: By John R Bolton

Former US Permanent Representative to the United Nations
Telegraph, London, UK, Friday, August 15, 2008

Russia’s invasion across an internationally recognised border, its thrashing of the Georgian military, and its smug satisfaction in humbling one of its former fiefdoms represents only the visible damage.

As bad as the bloodying of Georgia is, the broader consequences are worse. The United States fiddled while Georgia burned, not even reaching the right rhetorical level in its public statements until three days after the Russian invasion began, and not, at least to date, matching its rhetoric with anything even approximating decisive action. This pattern is the very definition of a paper tiger.

Sending Secretary of State Condeleezza Rice to Tbilisi is touching, but hardly reassuring; dispatching humanitarian assistance is nothing more than we would have done if Georgia had been hit by a natural rather than a man-made disaster.

The European Union took the lead in diplomacy, with results approaching Neville Chamberlain’s moment in the spotlight at Munich: a ceasefire that failed to mention Georgia’s territorial integrity, and that all but gave Russia permission to continue its military operations as a “peacekeeping” force anywhere in Georgia.

More troubling, over the long term, was that the EU saw its task as being mediator – its favourite role in the world – between Georgia and Russia, rather than an advocate for the victim of aggression.

Even this dismal performance was enough to relegate Nato to an entirely backstage role, while Russian tanks and planes slammed into a “faraway country”, as Chamberlain once observed so thoughtfully. In New York, paralysed by the prospect of a Russian veto, the UN Security Council, that Temple of the High-Minded, was as useless as it was during the Cold War.

In fairness to Russia, it at least still seems to understand how to exercise power in the Council, which some other Permanent Members often appear to have forgotten.

The West, collectively, failed in this crisis. Georgia wasted its dime making that famous 3am telephone call to the White House, the one Hillary Clinton referred to in a campaign ad questioning Barack Obama’s fitness for the Presidency. Moreover, the blood on the Bear’s claws did not go unobserved in other states that were once part of the Soviet Union.

Russia demonstrated unambiguously that it could have marched directly to Tbilisi and installed a puppet government before any Western leader was able to turn away from the Olympic Games. It could, presumably, do the same to them.

Fear was one reaction Russia wanted to provoke, and fear it has achieved, not just in the “Near Abroad” but in the capitals of Western Europe as well. But its main objective was hegemony, a hegemony it demonstrated by pledging to reconstruct Tskhinvali, the capital of its once and no-longer-future possession, South Ossetia. The contrast is stark: a real demonstration of using sticks and carrots, the kind that American and European diplomats only talk about.

Moreover, Russia is now within an eyelash of dominating the Baku-Tbilisi-Ceyhan pipeline, the only route out of the Caspian Sea region not now controlled by either Russia or Iran. Losing this would be dramatically unhelpful if we hope for continued reductions in global petroleum prices, and energy independence from unfriendly, or potentially unfriendly, states.

It profits us little to blame Georgia for “provoking” the Russian attack. Nor is it becoming of the United States to have anonymous officials from its State Department telling reporters, as they did earlier this week, that they had warned Georgia not to provoke Russia.

This confrontation is not about who violated the Marquess of Queensbury rules in South Ossetia, where ethnic violence has been a fact of life since the break-up of the Soviet Union on December 31, 1991 – and, indeed, long before.

Instead, we are facing the much larger issue of how Russia plans to behave in international affairs for decades to come. Whether Mikhail Saakashvili “provoked” the Russians on August 8, or September 8, or whenever, this rape was well-planned and clearly coming, given Georgia’s manifest unwillingness to be “Finlandized” – the Cold War term for effectively losing your foreign-policy independence.

So, as an earlier Vladimir liked to say, “What is to be done?” There are three key focal points for restoring our credibility here in America: drawing a clear line for Russia; getting Europe’s attention; and checking our own intestinal fortitude.

Whether history reflects Russia’s Olympic invasion as the first step toward recreating its empire depends – critically – on whether the Bush Administration can resurrect its once-strong will in its waning days, and on what US voters will do in the election in November. Europe also has a vital role – by which I mean the real Europe, its nation states, not the bureaucracies and endless councils in Brussels.

[1] First, Russia has made it clear that it will not accept a vacuum between its borders and the boundary line of Nato membership. Since the Warsaw Pact and the Soviet Union collapsed, this has been a central question affecting successive Nato membership decisions, with the fear that nations in the “gap” between Nato and Russia would actually be more at risk of Russian aggression than if they joined Nato.

The potential for instability and confrontation was evident.

Europe’s rejection this spring of President Bush’s proposal to start Ukraine and Georgia towards Nato membership was the real provocation to Russia, because it exposed Western weakness and timidity. As long as that perception exists in Moscow, the risk to other former Soviet territories – and in precarious regions such as the Middle East – will remain.

Obviously, not all former Soviet states are as critical to Nato as Ukraine, because of its size and strategic location, or Georgia, because of its importance to our access to the Caspian Basin’s oil and natural gas reserves.

Moreover, not all of them meet fundamental Nato prerequisites. But we must now review our relationship with all of them. This, in effect, Nato failed to do after the Orange and Rose Revolutions, leaving us in our present untenable position.

By its actions in Georgia, Russia has made clear that its long-range objective is to fill that “gap” if we do not. That, as Western leaders like to say, is “unacceptable”. Accordingly, we should have a foreign-minister-level meeting of Nato to reverse the spring capitulation at Bucharest, and to decide that Georgia and Ukraine will be Nato’s next members.

By drawing the line clearly, we are not provoking Russia, but doing just the opposite: letting them know that aggressive behaviour will result in costs that they will not want to bear, thus stabilising a critical seam between Russia and the West. In effect, we have already done this successfully with Estonia, Latvia and Lithuania.

[2] Second, the United States needs some straight talk with our friends in Europe, which ideally should have taken place long before the assault on Georgia. To be sure, American inaction gave French President Sarkozy and the EU the chance to seize the diplomatic initiative.

However, Russia did not invade Georgia with diplomats or roubles, but with tanks. This is a security threat, and the proper forum for discussing security threats on the border of a Nato member – yes, Europe, this means Turkey – is Nato.

Saying this may cause angst in Europe’s capitals, but now is the time to find out if Nato can withstand a potential renewed confrontation with Moscow, or whether Europe will cause Nato to wilt. Far better to discover this sooner rather than later, when the stakes may be considerably higher. If there were ever a moment since the fall of the Berlin Wall when Europe should be worried, this is it.

If Europeans are not willing to engage through Nato, that tells us everything we need to know about the true state of health of what is, after all, supposedly a “North Atlantic” alliance.

[3] Finally, the most important step will take place right here in the United States. With a Presidential election on November 4, Americans have an opportunity to take our own national pulse, given the widely differing reactions to Russia’s blitzkrieg from Senator McCain and (at least initially) Senator Obama. First reactions, before the campaigns’ pollsters and consultants get involved, are always the best indicators of a candidate’s real views.

McCain at once grasped the larger, geostrategic significance of Russia’s attack, and the need for a strong response, whereas Obama at first sounded as timorous and tentative as the Bush Administration. Ironically, Obama later moved closer to McCain’s more robust approach, followed only belatedly by Bush.

In any event, let us have a full general election debate over the implications of Russia’s march through Georgia. Even before this incident, McCain had suggested expelling Russia from the G8; others have proposed blocking Russia’s application to join the World Trade Organisation or imposing economic sanctions as long as Russian troops remain in Georgia.

Obama has assiduously avoided specifics in foreign policy – other than withdrawing speedily from Iraq – but that luxury should no longer be available to him. We need to know if Obama’s reprise of George McGovern’s 1972 campaign theme, “Come home, America”, is really what our voters want, or if we remain willing to persevere in difficult circumstances, as McCain has consistently advocated. Querulous Europe should hope, for its own sake, that America makes the latter choice.

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NOTE: John R Bolton is the former US Permanent Representative to the United Nations. Currently a Senior Fellow at the American Enterprise Institute in Washington, he is the author of the recently published “Surrender Is Not an Option: Defending America at the United Nations” (Simon & Schuster/Threshold Editions.

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http://www.telegraph.co.uk/news/worldnews/europe/georgia/2563260/John-Bolton-After-Russias-invasion-of-Georgia-what-now-for-the-West.html

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7. FOREIGN DIRECT INVESTMENT (FDI) RISKS BECOMING A CASUALTY OF WAR
“We think that Ukraine may be the next investment casualty..."

By Rachel Morajee in London, Financial Times

London, UK, Friday, August 15 2008

Within hours of the ceasefire in Georgia, Heidelberg Cement reopened its cement factories near Tblisi. The German company’s three cement plants supply about 60 per cent of the country’s market and are one of Georgia’s biggest foreign investments.

They have flourished thanks to a construction boom in Georgia and neighbouring Azerbaijan and could be set to cash in on reconstruction. Brigitte Fickel, a spokeswoman for Heidelberg Cement, said a plant warehouse was damaged during Russian air raids but production had not been affected.

Damage to Georgia’s civilian and business infrastructure has been minimal, but the brief conflict may have done serious harm to the outlook for future foreign investment not just here but in other former Soviet states that clash with Moscow.

“Georgia’s economic growth will be much reduced and foreign investment that has been so important to Georgia’s fundamentals could be revised,” says Olivier Descamps, a managing director at the European Bank for Reconstruction and Development. “We cannot say Georgia’s economy has been physically damaged. But there is the matter of risk and the impairment of confidence.”

Ratings agencies Fitch and Standard & Poor’s both downgraded Georgia after fighting broke out and warned that the end of combat operations would not shield the country from the longer-term economic impact.

FDI flows are crucial to financing Georgia’s current account deficit and have been a key driver of growth.

Foreign investment stood at 19.8 per cent of GDP in 2007 compared with 13.9 per cent in 2006, according to the Tbilisi government. Georgia attracted more than $2bn (Euro1.3bn, lbs1.06bn) in FDI last year mainly in banking, real estate, mining and agriculture.

The conflict will have a macroeconomic impact in the short to medium term but analysts say there is unlikely to be a clear-cut resolution to the conflict between Georgia and Russia and political uncertainty could cloud investment prospects.

While established projects will not be affected by the conflict, new investors are likely to shy away from Georgia and other countries such as Ukraine, which are seen as standing in Russia’s line of fire.

“We think that Ukraine may be the next investment casualty because it was asked in a veiled fashion if it wants to join Nato and Russia’s actions hark back to the cold war and the desire to retain spheres of influence on its borders,” said Elizabeth Stephens, head of credit and political risk analysis at Jardine Lloyd Thompson.

In Ukraine, FDI has also been a significant part of growth. Net FDI stood at 7 per cent of GDP in 2007 up from 5.2 per cent in 2006, according to the Kiev government.

The Baltic states have tighter trade links with Russia and export large amounts of food as well as being a corridor for Russian exports to western Europe, so are likely to be less affected by the conflict in Georgia, analysts say.

Estonian exports to Russia doubled between 2005 and 2007 and as the share of exports flowing east rose from 6.5 per cent to 8.9 per cent over the period.
“I don’t think there will be a knock-on effect to the Baltic states. They have had tense relations with Russia for some time but that is unlikely to weigh heavily on investors decisions,” said Edward Parker at Fitch Ratings.

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LINK: http://www.ft.com/cms/s/0/d2ede9ba-6ae7-11dd-b613-0000779fd18c.html

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8. POSSIBLE IMPACT OF THE RUSSIA-GEORGIA CONFLICT

ON UKRAINE AND OTHER CIS COUNTRIES

SigmaBleyzer, The Bleyzer Foundation

Kyiv, Ukraine, Tuesday, August 12, 2008

The current military confrontation between Georgia and Russia is the result of a prolonged dispute between these two countries over the future of South Ossetia and Abkhazia. Georgia’s desire to join NATO, against Russia’s wishes, also played a role.

Many observers also believe that Russia’s strong use of power against Georgia can be seen as an attempt to intimidate other countries – particularly Ukraine, which declared its desire to join NATO and seek EU integration, and Moldova with its ongoing conflict in Transnistria (Pridnestrovie).

Although it is very unlikely that the “Georgian scenario” can play out in Ukraine, the situation may become more critical closer to 2017, when the lease agreement for Russia’s fleet in Crimea terminates. Many political forces in Ukraine believe that this agreement should not be renewed, a position that would antagonize Russia.

CIS countries have achieved mixed performance in terms of building modern democratic institutions. Aside from the Baltic States, Ukraine and Georgia are the only two countries in the region considered to be fairly free and democratic states by most international observers. Almost twenty years after the break-up of the Soviet Union, less than one fifth of the 290 million people living in the FSU enjoy healthy democracies.

Since Ukraine is a rapidly developing new democracy surrounded by several non-democratic countries, including Russia, some Western countries may decide to support the provision of additional safeguards for Ukraine. This might include both fast-track negotiations for NATO membership and a clearer prospect for EU membership.

However, other European countries with a higher dependency on Russian energy resources may be more concerned with ensuring their own energy supply and may not want to initiate any action that could annoy Russia.

A Brief Summary of the Georgian Economy

Over the last five years, annual GDP growth in Georgia has been around 10% yoy, with an impressive 12% yoy growth in 2007. This growth was mostly driven by net inflows of foreign direct investments (FDI), which can be attributed to the unprecedented improvement in the business environment. Indeed, net FDI grew from 8% of GDP in 2003 to 15% of GDP in 2007.

In the World Bank’s Ease of Doing Business Ranking for 2008, Georgia is placed in 18th position worldwide (compared to 106th for Russia). Furthermore, Georgia was listed among the top 10 reformers since it managed to improve investor protection and visibly reduced the cost of starting a business. Still, GDP per capita, which stood at $2,300 in 2007, is three times lower than in Kazakhstan, four times lower than in Russia and 25% lower than in Ukraine.

Georgia runs a huge deficit in its international trade in goods, which surged from around 15% of GDP in 2003 to nearly 30% of GDP in 2007. Exports represent only 20% of GDP. Nevertheless, net FDI inflows financed 77% of the $2 billion current account gap in 2007. With large capital inflows, the foreign exchange reserves of the central bank doubled to $1.6 billion in 2007.

Georgia’s trade diversification by commodity is typical for a transition economy with limited deposits of energy resources. In particular, beverages (wines and bottled water), metal ores and transportation equipment are staple export commodities, while petroleum products, cereals, machinery and manufacturing goods are the main types of imported goods.

The geographical orientation of Georgia’s foreign trade is towards the CIS economies (which account for 37% of Georgia’s international trade). The EU accounts for 25% of Georgia’s trade, while the US represents 13%.

Within the CIS countries, Azerbaijan (which supplies petroleum products to Georgia) and Armenia remain the main CIS markets for Georgian goods, accounting for one fifth of all exports. Georgia ships only 4.3% of its exports to Russia (compared to 24% in 2001), as Russia’s embargo on imports of Georgian goods virtually closed access to the Russian market.

The recent military developments in Georgia may have significant effects on the quality of the investment environment in Georgia, which, taking into account the country’s dependence on FDI, may result in a material slowdown of the economy and a collapse of its currency.

Impact of Georgia’s Conflict on the Economy of Ukraine and Kazakhstan

The economic impact of the Russian-Georgian conflict on Ukraine and Kazakhstan is likely to be minimal as the economic links between these countries are quite modest. International trade and capital transactions with Georgia constitute very small shares of the total transactions for these two countries.

Ukraine’s merchandise exports to Georgia represent only 1% of Ukraine’s total exports. About 50% of these exports are in iron and steel, food products, and machinery and equipment. Ukraine’s imports from Georgia are also negligible (0.2% of imports) and are mainly in wines and alcoholic beverages. Trade in services is also small, at less that 1% of total Ukrainian trade. Flows of capital, including FDI, are also less than 1% of the total flows of Ukraine.

Kazakhstan is in a similar situation, with the share of Kazakhstan’s international trade with Georgia at about 0.1% of Kazakhstan’s total trade figures.

Reaction of Ukraine’s top officials

On August 12th, President Yuschenko (accompanied by the Presidents of Poland and Lithuania) flew to Georgia with the intention of assisting in the peace talks. His visit to Georgia appears to be a diplomatic necessity to show support for a friendly nation rather than a way to facilitate an effective solution of this crisis. Other top Ukrainian officials have shown no (or rather weak) reaction to the conflict.

The absence of a comment or response from the Ukrainian Prime Minister may be explained by the fact that according to the Constitution of Ukraine, the President is responsible for shaping the foreign policy of the country.

So far, the Head of the Parliament has made some trivial comments on the superiority of a diplomatic resolution to this crisis. Moreover, taken into account that leading political groups in Ukraine have opposing views on the foreign policy of Ukraine (the main opposition is pro-Russian, while the President wishes to see Ukraine joining NATO and the EU) it would be rather difficult for the country to declare a clear position on the Russian-Georgian conflict.

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9. FITCH SEES WORSE THREATS TO UKRAINE THAN RUSSIA ROW,

SERIES OF STRESSES IN UKRAINIAN ECONOMY

By Peter Apps, Reuters, London, UK, Friday August 15 2008

LONDON - Credit ratings agency Fitch does not yet see rising tension with Russia as a major threat to Ukraine's creditworthiness, it said on Friday, but remains concerned about a series of stresses in the Ukrainian economy.

The aftermath of conflict between Georgia and Russia has seen a deepening row between Ukraine and its larger neighbour over the use of a Ukrainian port by Russia's Black Sea Fleet, prompting investors to price its debt as riskier.

"It's not one of our key worries for the rating at this stage," Fitch director of emerging Europe sovereigns Andrew Colquhoun. "We are more worried about the current account deficit, rising external debt levels and inflation."

He said that a small clash in the Black Sea that went no further might not have too great an impact on Ukraine's current BB- rating with stable outlook.
"But if you had escalation or even if a small clash simply prompted capital flight then that would have a negative effect. Conflict would certainly be negative but that is not something we see as very likely at this stage."

Ukraine's hvrynia currency has been appreciating this year, but any sudden shift in sentiment that prompted currency weakening would threaten both inflation as well as the banking sector, with a lot of domestic private sector debt in dollars and therefore hard to repay in the event of a major currency move, he said.

He also warned Ukraine must do more to tackle inflation. "If inflation stays at these levels in quite high double figures then that would add to risks to the macroeconomy and possibly prompt negative ratings action," Colquhoun said.

He said Fitch was also looking to the results of negotiations with Russian state gas giant Gazprom over the price of gas supplies to Ukraine, a process that may be impacted by worsening relations with Moscow. Ukraine currently receives cheap gas from its neighbour, but supplies were briefly cut off in early 2006 in another row.

"Negotiations with Gazprom have always been politicised," he said. "But if the price of gas to Ukraine did suddenly increased to the same price for European gas exports (from Russia) the economy would struggle to cope."
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LINK: http://www.guardian.co.uk:80/business/feedarticle/7727441

ON WORSENING RUSSIA RELATIONS

Peter Apps, Reuters, London, UK, Thu Aug 14, 2008

LONDON - The cost of insuring Ukrainian government debt in the credit default swaps market sharply increased on Thursday, with investors increasingly worried about worsening relations with Russia.

Ukrainian credit default swaps widened roughly 20 basis points to 437 on Thursday, compared to 401 last Friday. Investors are concerned both over ongoing domestic political worries and worsening relations with Russia over its conflict with Georgia.

"It's a perfect storm for Ukraine at the moment," said Commerzbank debt strategist Luis Costa. "The government has made it clear that it is on a collision course with Russia and there are other issues as well."
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LINK: http://www.reuters.com:80/article/europeCrisis/idUSLE249774

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U.S.-Ukraine Business Council (USUBC) www.usubc.org.

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11. RUSSIA'S WAR IS THE WEST'S CHALLENGE

OP-ED: By Mikheil Saakashvili, President of Georgia
The Washington Post, Washington, D.C.
Thursday, August 14, 2008; Page A17

TBILISI, Georgia -- Russia's invasion of Georgia strikes at the heart of Western values and our 21st-century system of security. If the international community allows Russia to crush our democratic, independent state, it will be giving carte blanche to authoritarian governments everywhere. Russia intends to destroy not just a country but an idea.

For too long, we all underestimated the ruthlessness of the regime in Moscow. Yesterday brought further evidence of its duplicity: Within 24 hours of Russia agreeing to a cease-fire, its forces were rampaging through Gori; blocking the port of Poti; sinking Georgian vessels; and -- worst of all -- brutally purging Georgian villages in South Ossetia, raping women and executing men.

The Russian leadership cannot be trusted -- and this hard reality should guide the West's response. Only Western peacekeepers can end the war.

Russia also seeks to destroy our economy and is bombing factories, ports and other vital sites. Accordingly, we need to establish a modern version of the Berlin Airlift; the United Nations, the United States, Canada and others are moving in this direction, for which we are deeply grateful.

As we consider what to do next, understanding Russia's goals is critical. Moscow aims to satisfy its imperialist ambitions; to erase one of the few democratic, law-governed states in its vicinity; and, above all, to demolish the post-Cold War system of international relations in Europe. Russia is showing that it can do as it pleases.

The historical parallels are stark: Russia's war on Georgia echoes events in Finland in 1939, Hungary in 1956 and Czechoslovakia in 1968. Perhaps this is why so many Eastern European countries, which suffered under Soviet occupation, have voiced their support for us.

Russia's authoritarian leaders see us as a threat because Georgia is a free country whose people have elected to integrate into the Euro-Atlantic community. This offends Russia's rulers. They do not want their nation or even its borders contaminated by democratic ideas.

Since our democratic government came to power after the 2003 Rose Revolution, Russia has used economic embargoes and closed borders to isolate us and has illegally deported thousands of Georgians in Russia. It has tried to destabilize us politically with the help of criminal oligarchs. It has tried to freeze us into submission by blowing up vital gas pipelines in midwinter.

When all that failed to shake the Georgian people's resolve, Russia invaded.

Last week, Russia, using its separatist proxies, attacked several peaceful, Georgian-controlled villages in South Ossetia, killing innocent civilians and damaging infrastructure.

On Aug. 6, just hours after a senior Georgian official traveled to South Ossetia to attempt negotiations, a massive assault was launched on Georgian settlements. Even as we came under attack, I declared a unilateral cease-fire in hopes of avoiding escalation and announced our willingness to talk to the separatists in any format.

But the separatists and their Russian masters were deaf to our calls for peace. Our government then learned that columns of Russian tanks and troops had crossed Georgia's sovereign borders. The thousands of troops, tanks and artillery amassed on our border are evidence of how long Russia had been planning this aggression.

Our government had no choice but to protect our country from invasion, secure our citizens and stop the bloodshed. For years, Georgia has been proposing 21st-century, European solutions for South Ossetia, including full autonomy guaranteed by the international community. Russia has responded with crude, 19th-century methods.

It is true that Russian power could overwhelm our small country -- though even we did not anticipate the ferocity and scale of Moscow's response. But we had to at least try to protect our people from the invading forces. Any democratic country would have done the same.

But facing this brutal invading army, whose violence was ripping Georgia apart, our government decided to withdraw from South Ossetia, declare a cease-fire and seek negotiations. Yet Moscow ignored our appeal for peace.

Our repeated attempts to contact senior Russian leaders were rebuffed. Russia's foreign ministry even denied receiving our notice of cease-fire hours after it was officially -- and very publicly -- delivered. This was just one of many cynical ploys to deceive the world and justify further attacks.

This war threatens not only Georgia but security and liberty around the world. If the international community fails to take a resolute stand, it will have sounded the death knell for the spread of freedom and democracy everywhere.

Georgia's only fault in this crisis is its wish to be an independent, free and democratic country. What would Western nations do if they were punished for the same aspiration?

I have staked my country's fate on the West's rhetoric about democracy and liberty. As Georgians come under attack, we must ask: If the West is not with us, who is it with? If the line is not drawn now, when will it be drawn? We cannot allow Georgia to become the first victim of a new world order as imagined by Moscow.

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http://www.washingtonpost.com/wp-dyn/content/article/2008/08/13/AR2008081303364_2.html?sid=ST2008081401253&s_pos=

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12. WHY IS VLADIMIR PUTIN SO SCARED OF GEORGIA?

OP-ED: By Anne Applebaum, Author, Columnist
Telegraph, London, UK, Friday, August 8, 2008

'It is a riddle, wrapped in a mystery, inside an enigma." In recent days, this famous Churchillian pronouncement on Russia has echoed through many an analysis. In particular, Vladimir Putin - former Russian president, current Russian prime minister, the man still clearly in charge of the country - has been held up as a great puzzle.

What he wants; why he has behaved so aggressively towards Georgia, a much weaker neighbour; why he seems so angry at the West; all of this is widely considered unfathomable.

But in fact, Putin's mindset isn't really all that hard to understand: Ever since he was first appointed prime minister by Boris Yeltsin in 1999, we've known perfectly well who he is.

After all, one of the first things he did after taking that job was to visit the Lubyanka, the former headquarters of the KGB and its most notorious jail, now the home of the FSB, Russia's internal security services.

There - on the 82nd anniversary of the founding of the Cheka, Lenin's secret police - he dedicated a plaque in memory of Yuri Andropov.

Andropov was director of the KGB for many years before briefly becoming, in 1982, general secretary of the Communist Party. Within Russia, however, he is best remembered for his theory about how to reform the Soviet Union: to put it bluntly, he believed that "order and discipline", as enforced by the methods of the KGB - arrests of dissidents, imprisonment of corrupt officials, the cultivation of fear - would restore the sagging fortunes of the Soviet economy.

There was no nonsense about "perestroika" or "glasnost", let alone joining Western institutions. All of that clearly appealed to Putin, a former secret policemen who first tried to join Andropov's KGB at the tender age of 15.

This is not to say that Putin is Stalin, or even Andropov, or that Putin wants to bring back the Soviet Union. But it does mean that Putin, like most of the people around him, is steeped in the culture of the old KGB.

He has a deep belief in the power of the state to control the life of the nation: events cannot be allowed to just happen, they must be controlled and manipulated.

He has a deep, professional wariness of people who believe otherwise: At a very profound level, he does not believe that Russian citizens will make good political or economic choices if left to their own devices.

In practice, this means that he does not believe that markets can - or should be - genuinely open. He does not believe in unpredictable elections.

He does not believe that the modern equivalent of the Andropov-era dissidents - the small band of journalists and activists who continue to oppose centralised Kremlin rule - have anything important to say; on the contrary, he assumes, as did his KGB predecessors, that anyone not loudly supportive of the regime is a foreign spy.

At a rally in 2007, he declared that: "Unfortunately, there are still those people in our country who act like jackals at foreign embassies … who count on the support of foreign friends and foreign governments, but not on the support of their own people."

This was a direct warning to Russia's few remaining human rights and trade union activists, as they well understood. He continues to believe instead, as Soviet secret policemen did before him, that all important decisions should be made in Moscow by a small, unelected group of people who know how to resist these foreign conspiracies.

Given his world view, it's not very surprising that Putin and his entourage have been so openly hostile, not only towards Georgia, but also towards Ukraine and Estonia, the post-Soviet countries that present the greatest contrast to his vision of Russia.

These, after all, are countries in which genuine elections have taken place - sometimes with the help of street demonstrations - and in which people who have not been picked by the ruling oligarchy can rise to power.

In some cases, they have also moved much farther along the path of genuine economic reform, and at least intend to create real market economies, in which people who have not been picked by the ruling oligarchy can set up businesses and make money.

It is not mere nationalism that makes leaders such as the Georgian president, Mikheil Saakashvili, or the Ukrainian president, Viktor Yuschenko, try to escape the political influence of Russia and to move closer to the West: it is also the desire to make their countries more open, more liberal, more authentically democratic.

In that sense, the war between Georgia and Russia really is ideological, and not merely national in origin. Of course Russia retains "great power" instincts, and of course some of the disdain the Russian media shows for Saakashvili represents nothing more than a large country's dislike of defiance from a small one. But the Russian leadership's dislike of Georgia also reflects hatred - and fear - of the kind of democracy that Georgians have chosen.

Georgia's "Rose Revolution", like Ukraine's "Orange Revolution", is precisely the kind of popular uprising that the Russian elite fears most deeply. Putin's paranoia about Georgia is - unlikely though it may sound - at base a paranoia about Russia itself.

What this means, of course, is that any Western support for the Georgian cause will only increase Russian paranoia. And yet, at another level, we have no choice: Western credibility is on the line here, too.

Any outright abandonment of Georgia to Putinist domination will be correctly perceived - not only in the post-Soviet world, but also everywhere else - as an abandonment of an ideological ally, of a country that has chosen, at great cost, to join the West.

What we are left with, then, is not exactly a new Cold War, but an unavoidable, possibly very long-term ideological battle with Russia, above and beyond the normal economic and political competition.

We need to start thinking again about what it means to be "the West", and about how Western institutions - not just Nato, but also the BBC World Service, say, or the British Council - can be brought into the 21st century, not merely to counter terrorism, but to argue the case for Western values, once again.
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LINK: http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/08/15/do1501.xml
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13. UKRAINE'S NATO ACCESSION: POLITICS AS USUAL

COMMENTARY & ANALYSIS: By Igor Khrestin

Central Europe Digest, Center for European Policy Analysis

Washington, D.C., Friday, 15 August 2008

In all likelihood, the recent crisis in Georgia has sunk that country’s chance to enter NATO anytime soon. But as analysts spar over whether Georgia’s NATO aspirations played a decisive role in precipitating the conflict, Ukraine’s entry looms ever larger on NATO’s agenda.

With full view of Russia’s aggressive and disproportionate response to the South Ossetian crisis, will Ukraine be offered a Membership Action Plan (MAP) at the forthcoming meetings of the Alliance in December 2008 or April 2009?

Whereas Germany and France are routinely accused of “blocking” Ukraine’s MAP in Bucharest, ostensibly in response to Vladimir Putin’s hectoring and NATO’s unpopularity among Ukrainians, it is domestic instability and indecisiveness of the Orange Coalition of President Viktor Yushchenko and Prime Minister Yulia Tymoshenko that are the real culprits.

Given the right political will in Kiev, Ukraine’s chances of receiving MAP by next year are actually rather high. The Bucharest Summit last April ended with a joint statement that in unequivocal terms declared that “We agreed today that these countries [Ukraine and Georgia] will become members of NATO.”

At the most recent meeting of the NATO-Ukraine Commission on June 16, NATO leaders yet again praised Ukraine’s participation in joint military operations and maneuvers. Though a number of reforms are yet to be implemented, the general consensus is that Ukraine has so far “punched above its weight” in cooperating with the Alliance.

Thus, if Yushchenko and Tymoshenko manage to put their differences aside – and if necessary, risk their political careers – the Russia factor and low public support should not present a significant hurdle to Ukraine’s NATO aspirations.

Before the outbreak of recent hostilities in the Caucasus, Western leaders generally agreed that for all of Russia’s intransigence – ranging from the emotional incantations of a brotherly nation “losing its sovereignty” to brazen threats to aim missiles at that same brotherly nation – the Putin/Medvedev ruling tandem are scarcely interested in starting a new Cold War, even over Ukraine. That assumption will now undergo a significant rethinking in the West – and clearly not to Russia’s benefit.

Moreover, with Putin’s recent comments to President Bush that “Ukraine is not even a country” and Moscow mayor Yury Luzhkov’s dogged insistence that Crimea is living on borrowed time as a part of Ukraine, one might think the Ukrainian elites – whether from L’viv, Kiev, or Donetsk – should realize that the real threat to their sovereignty lies to the East, not the West.

As the recent Georgia crisis was a direct result of longstanding and festering “frozen conflicts” in Abkhazia and South Ossetia, Ukrainian elites must now begin considering the frightening repercussions of allowing Crimea – or even the Black Sea port of Sevastopol – to descend into such muddy waters.

As for public opinion, NATO membership should generally not be a matter of broad public acquiescence, but of a conscious geopolitical choice by a consolidated national elite. As part of NATO’s post-Soviet expansion, only Slovenia and Hungary have held referendums on membership – and Hungary’s was nonbinding. Slovakia’s 1997 referendum was declared invalid, as it gathered only 10 percent of eligible voters.

Yet, NATO detractors in Ukraine and abroad often showcase their greatest “counterpoint”: domestic public opinion polls, which routinely show only a minority support for entry. For instance, a poll conducted in June 2008 by the Fund for Public Opinion reported that 55 percent of Ukrainian respondents were against NATO membership, with only 22 percent in favor.

Meanwhile, the Ukrainian government recently approved a four-year, $6 million “information campaign” to improve NATO’s image. While the jury is still out regarding its effectiveness, even with the best of PR campaigns and outreach programs, the West by now has generally accepted the uncomfortable fact that NATO may never gain broad popularity among Ukrainians, especially in the eastern regions of the country.

Yet, the matter is wrapped up in domestic politics; President Yushchenko signed an agreement (the National Unity Declaration) in 2006 with then-Prime Minister Viktor Yanukovych, which stipulated a popular referendum before any decision can be taken on NATO membership.

The last real push for NATO membership by the Orange Coalition came early this year. In January, President Yushchenko, Prime Minister Tymoshenko, and Speaker of the Rada (Ukraine’s parliament) Arseniy Yatsenyuk sent a letter to NATO Secretary General Jaap de Hoop Scheffer, reaffirming Ukraine’s commitment to join the Alliance.

When the letter became public, the opposition (Yanukovych’s Party of Regions and the Communist Party) blocked parliamentary work until March 6, relenting only after Yushchenko openly threatened to dissolve the parliament once again.

The deputies returned to work, but not until a resolution stating that “a decision on an international agreement on Ukraine joining NATO shall be taken only as a result of a national referendum” passed by 248 votes in the 450-seat body. Given that the Orange Coalition actually holds a slim two-seat majority, the vote clearly showcased the lack of commitment and party discipline for the Yushchenko/Tymoshenko camp.

After this latest victory for the opposition, it became politics as usual in Ukraine. Gearing up for the 2010 presidential elections, Yushchenko and Tymoshenko remain perennially locked in domestic political battles. After Tymoshenko secured an agreement on gas prices with Gazprom in late July, the Prime Minister has been less willing to openly antagonize Russia on NATO membership.

Despite Yushchenko’s continued vociferous support for the MAP and a constitutional mandate to handle foreign policymaking, he has recently become embroiled in a high-profile public battle with his former political ally David Zhvania, whom Yushchenko accuses of instigating his September 2004 dioxin poisoning.

In addition, Yushchenko and Tymoshenko disagree on about every other domestic issue of relevance to Ukrainian voters: from rampant inflation to the best way to handle the recent horrific floods in the western part of the country.

In short, Ukraine’s political elites lack the political courage and conviction to put aside petty political squabbles to ensure what would amount to a momentous geopolitical breakthrough for their country. The Russia-Georgia war does not change that. Those lambasting Berlin and Paris would do well to re-direct some of their criticism towards Kiev itself.

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NOTE: Igor Khrestin is an analyst and writer specializing in Russian and East European affairs based in Washington, DC. The views expressed in this article are those of the author and do not necessarily reflect the opinions of the Center for European Policy Analysis.

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LINK: http://www.cepa.org/digest/ukraine-nato-accession-politics-as-usual.php

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14. UKRAINE UNSETTLED BY RUSSIA'S INVASION OF GEORGIA

By BRIAN BONNER, Special Correspondent, McClatchy Newspapers
The Herald Tribune, Rock Hill, South Carolina, Friday, August 15, 2008

Russia's invasion of Georgia has unsettled this former Soviet republic, which like Georgia has applied for membership in NATO but now fears that the U.S. could do little to prevent similar Russian action here.

"If the West swallows the pill and forgives Russia the Georgian war, the invasion of 'peacekeeping tanks' into Ukraine will just be a matter of time," Oleksandr Suchko, the research director of the Kiev-based Institute for Euro-Atlantic Cooperation, wrote on Ukrainska Pravda (Ukrainian Truth),
a leading online news site.

Still, not everyone here thinks that Russia would invade Ukraine, which is nearly nine times larger than Georgia, 10 times more populous and much better armed. Many note, moreover, that Ukraine's president, Viktor Yushchenko, is highly unpopular and isn't expected to win re-election in 2010.

There are many disputes between the countries, however.

Ukraine has a long-standing issue with the presence of Russia's Black Sea Fleet at Sevastopol, a holdover from when Ukraine was part of the Soviet Union, which collapsed in 1991. Many in Ukraine want the Russians gone in 2017, when the lease agreement expires, but Russia has been suggesting that it intends to stay longer.

Russian politicians also provoke Ukrainian ire by reminding them that the Crimean peninsula was a gift from Soviet leader Nikita Khrushchev in 1954,
giving rise to fears that Moscow might stoke secessionist sentiments in the area, which is part of Ukraine but inhabited predominantly by ethnic Russians.

Other supposed slights fan tensions.

One that burns, though perhaps apocryphal, is a supposed conversation between Russia's then-President Vladimir Putin and President Bush during the
April NATO-Russia Council summit in Bucharest, Romania, at which the membership applications of Ukraine and Georgia were delayed.

Putin supposedly told Bush that "Well, you understand, George, Ukraine isn't even a state," according to Russia's newspaper Kommersant, citing a
diplomatic source in attendance.

Many here suspect Russian involvement in the still-unsolved and nearly fatal dioxin poisoning of Yushchenko, who fell ill while he was a presidential
candidate in 2004. The Kremlin backed his rival, Viktor Yanukovych, whose path to power was blocked when the democratic Orange Revolution overturned the results of a rigged election.

Yushchenko flew to Tbilisi, Georgia's capital, earlier this week in a show of support for Georgian President Mikhail Saakashvili, and said Thursday that Russia must seek Ukraine's permission before moving its warships out of port. Russian leaders responded by saying they'd ignore Yushchenko.

The two countries also have an ongoing dispute over the price of natural gas. Ukraine is heavily dependent on Russian energy supplies, as is much of
Europe, while Russia depends on Ukraine's transit pipelines to carry its gas to customers in other nations.

Even religion is a source of friction in the mainly Orthodox Christian countries. The most recent spat came during last month's events celebrating the 1,020th anniversary of the conversion from paganism to Christianity of Kyivan Rus, the medieval empire from which the modern nations of Russia, Ukraine and Belarus arose.

Yushchenko irritated Moscow by asking Patriarch Bartholomew of Constantinople, the nominal leader of the world's Orthodox faithful, to recognize a single Orthodox Church in Ukraine. Currently, Ukrainians are divided, with millions of faithful still loyal to Russian Patriarch Alexei II.

Still, many here also have a hard time imagining a Russian-Ukrainian military conflict.

Ukrainians and Russians share centuries of Slavic kinship - Georgians have a separate cultural history - and rule by czars and Soviets. Ukrainians, stuck
between Hitler and Stalin during World War II, are accustomed to navigating unfavorable geographic positions. Moreover, some 8 million of Ukraine's 46
million people are ethnic Russians.

Polls show that Ukrainians are divided over the prospect of NATO membership, with many opposed and others ambivalent. That ambivalence is clear in
interviews.

"Russia will never invade Ukraine, not even for Sevastopol," said Sergei Ribak, a security guard in Kiev. "This thesis is ridiculous." Others aren't so sure, but draw different conclusions about what Ukraine's foreign policy should be.

"I agree that, under certain circumstances, a Russian invasion of Ukraine is possible," said Elena Guzva, a Kiev homemaker. "That's why Ukraine should be
more serious about maintaining balanced and friendly relations with our eastern neighbor in order to avoid the risk."
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LINK: http://www.heraldonline.com:80/wire/world/story/752294.html
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15. UKRAINE'S PRESIDENT WANTS NEW RUSSIAN FLEET DEAL

The Associated Press, Kiev, Ukraine, Saturday, August 16, 2008

KIEV, Ukraine: Ukraine's president has urged Russia to work out an accord on using its Ukraine-based Black Sea Fleet for military purposes. Viktor Yushchenko says Russia's use of the fleet in fighting in neighboring Georgia "showed how Ukraine can be very easily dragged ... into an international conflict against its will."

Under a 1997 lease agreement, Russia's Black Sea Fleet can remain in its historic base in the Crimean port of Sevastopol through 2017. On Wednesday, Ukraine restricted movements of the fleet's ships in response to Russian incursions into Georgia, prompting Russian criticism.

Yushchenko said in a statement on his Web site Friday that he asked his Russian counterpart to launch talks on an accord about the fleet.
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16. SEVASTOPOL PRO-RUSSIAN PUBLIC ORGANIZATIONS PREPARE MAGNIFICENT

WELCOME OF RUSSIAN VESSELS COMING BACK FROM GEORGIA "WITH VICTORY"

UkrInform - Ukraine News, Kyiv, Ukraine, Friday, August 15, 2008

KYIV - Sevastopol activists of pro-Russian public organizations and parties established duty on the raid for meeting the vessels of the Russian Black Sea Fleet. According to head of the Russian People's Assembly of Sevastopol Oleksandr Kruhlov, the meeting will be magnificent, with flowers and music.

“The whole Sevastopol should find out that squadron is coming back at once and should participate in welcoming,” Kruhlov said. “The ships are returning not only with victory, they participated in saving civilians of South Ossetia from Georgian genocide!”

The group of Russian ships which participated in making Georgia accept peace includes guided weapon cruiser Moskva, guard-ship Smetlivyi, three big assault ships, small guided missile ships and anti-submarine ships, support vessels.

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17. RUSSIA'S OMINOUS NEW DOCTRINE?

OP-ED: By Strobe Talbott, President, Brookings Institution
Deputy Secretary of State, Clinton Administration
The Washington Post, Washington, D.C., Fri, Aug 15, 2008; Page A21

Russia has been justifying its rampage through Georgia as a "peacekeeping" operation to end the Tbilisi government's "genocide" and "ethnic cleansing" of South Ossetia. That terminology deliberately echoes U.S. and NATO language during their 1999 bombing campaign against Serbia, which resulted in the independence of Kosovo.

Essentially, it's payback time for a grievance that Russia has borne against the West for nine years. The Russians are relying on the conceit that Georgian President Mikheil Saakashvili is today's equivalent of Slobodan Milosevic, and that the South Ossetians are (or were until their rescue by the latter-day Red Army last week) being victimized by Tbilisi the way the Kosovar Albanians suffered under Belgrade.

This analogy turns reality, and history, upside down. Only after exhausting every attempt at diplomacy did NATO go to war over Kosovo. It did so because the formerly "autonomous" province of Serbia was under the heel of Belgrade and the Milosevic regime was running amok there, killing ethnic Albanians and throwing them out of their homes. By contrast, South Ossetia -- even though it is on Georgian territory -- has long been a Russian protectorate, beyond the reach of Saakashvili's government.

An accurate comparison between the Balkan disasters of the 1990s and the one now playing out in the Caucasus underscores what is most ominous about current Russian policy. Seventeen years ago, the Soviet Union came apart at the seams more or less peacefully. That was overwhelmingly because Boris Yeltsin insisted on converting the old inter-republic boundaries into new international ones.

In doing so, he kept in check the forces of revanchism among communists and nationalists in the Russian parliament (which went by the appropriately atavistic name "the Supreme Soviet").

Meanwhile, Yugoslavia collapsed into bloody chaos because its leaders engaged in an ethnically and religiously based land-grab. Milosevic, as the best-armed of the lot, tried to carve a "Greater Serbia" out of the flanks of Bosnia and Croatia.

If Yeltsin had gone that route, seeking to create a Greater Russia that incorporated Belarus and the parts of Ukraine, northern Kazakhstan and the Baltic states populated by Russian speakers, there could have been conflict across 11 time zones with tens of thousands of nuclear weapons in the mix.

A question that looms large in the wake of the past week is whether Russian policy has changed with regard to the permanence of borders. That seemed to be what Russian Foreign Minister Sergei Lavrov was hinting yesterday when he said, "You can forget about any discussion of Georgia's territorial integrity." He ridiculed "the logic of forcing South Ossetia and Abkhazia to return to being part of the Georgian state."

Lavrov is a careful and experienced diplomat, not given to shooting off his mouth. That makes his comments all the more unsettling. If he has given the world a glimpse of the Russian endgame, it's dangerous in its own right and in the precedent it would set. South Ossetia and Abkhazia might be set up as supposedly independent countries ("just like Kosovo," the Russians would say) -- but would in fact be satrapies of Russia.

While Russia might see that outcome as proof of its comeback as a major power, the Balkanization of the Caucasus may not end there: Chechnya is just one of several regions on Russian territory that are seething with resentment against the Kremlin and that might hanker after a version of independence far less to Moscow's liking than what may be contemplated for Abkhazia and South Ossetia.

Among Secretary of State Condoleezza Rice's important tasks in the days ahead is to get clarity on whether a Lavrov doctrine has replaced the Yeltsin one of 16 years ago. If so, big trouble looms -- including for Russia. Moscow's action and rhetoric of the past week have highlighted yet another, potentially more consequential respect in which this episode could bode ill for all concerned.

For the Bush administration -- and those of Bill Clinton and George H.W. Bush as well -- the fundamental premise of American policy has been that Russia has put its Soviet past behind it and is committed, eventually, to integrating itself into Europe and the political, economic and ideological (as opposed to the geographical) "West."

Prominent Russians have said as much. In one of my first meetings with Vladimir Putin, before he became president, he spoke of his country's zapadnichestvo, its Western vocation. Yet it now appears that beyond the undisguised animosity that Putin bears toward Saakashvili, he and his government regard Georgia's pro-Western bent and its aspiration to join two Western institutions, NATO and the European Union, as, literally, a casus belli.

If that is the case, the next U.S. administration -- the fourth to deal with post-Soviet Russia -- will have to reexamine the underlying basis for the whole idea of partnership with that country and its continuing integration into a rule-based international community.
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LINK: http://www.washingtonpost.com/wp-dyn/content/article/2008/08/14/AR2008081403124.html

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18. PRESIDENT VICTOR YUSHCHENKO SAYS UKRAINE SUPPORTS

UNCONDITIONAL TERRITORIAL INTEGRITY OF GEORGIA AS IT

EQUALIZES SUCH GEORGIAN THREAT & OWN SOVEREIGNTY

UkrInform - Ukraine News, Kyiv, Ukraine, Friday, August 15, 2008

KYIV - We really went through most likely the most terrifying ten days of our contemporary history as for the first time over 17 years the war started between the countries which formed the Soviet Union in past, Ukrainian President Viktor Yushchenko noted in the comment published on his official web-site. He proposes to make some conclusions from this “unexampled situation” which can not leave Ukraine indifferent.

[1] The first conclusion lies in the fact that each national security and defense model can not ensure all-sufficient reply to the national sovereignty.

Viktor Yushchenko is convinced that all that happened in Georgia is a bright example how easily military operations, violation of territorial integrity in present conditions can be transferred to any territory if it is not supported by the system, mechanisms of collective guarantees. “In other words, without guarantees any territory may run the danger of such actions,” he notes.

[2] Second, “providing adequate national sovereignty, integrity of our border may be ensured only in one way - Ukraine's drifting to the system of collective security,” the president underscores, noting that he mentions the need to fight but not the one to fight with.

“Only the system of collective security will guarantee anyone, including Ukraine, the highest international standards which probably could prevent from some actions including the ones that occurred on August 7-8 first on the territory of South Ossetia and later on other Georgian territories,” he underscores.

Confirming that Ukraine supported and still supports the principle of territorial integrity and sovereignty of any countries regardless of who started aggression or who settled a conflict, Viktor Yushchenko reminded that, in fact, Europe came out of World War II in 1975 when the Helsinki Final Act was adopted.

If now territorial integrity of any country is challenged by anyone “so we are facing the beginning of deep serious military actions,” he considers. So, Ukraine should support Georgian territorial integrity and state sovereignty”, this issue should not be discredited in our polemics and in our discussion”.

The president equalizes the threat for the territorial integrity of any European country and revision of Ukrainian territorial integrity. “We support Georgian territorial integrity and its sovereignty because we stand for Ukrainian territorial integrity and sovereignty,” he emphasizes.

He opposes to appeals of some politicians to keep neutrality on this issue as it is “the safest position”.

The president reminded that on August 9, Ukraine formed its vision of immediate termination of the conflict and expressed it by diplomatic channels of the EU countries. “With this, we wanted to say that we may be the party that will actively participate in democratic settlement of this conflict,” the president said.

Touching upon his settlement plan which envisages suspension of arms, withdrawal of troops of the parties to the zones of their previous disposition, humanitarian assistance and unconditional recognition of Georgian territorial integrity, the president stressed that the tripartite peacemaking mission which acted in Georgia “is ineffective”. So, the peacemaking corps should be internationalized.

“And surely, Ukraine is ready to direct particular number of peacemakers for this peacemaking operation under the relevant international mandate”.

The president is convinced that the facts that a part of the Russian Black Sea Fleet temporarily located in Ukraine partook in blocking Georgian marine water area demonstrated “how easily, without agreement and desire of Ukraine it can be drawn into, in passive meaning of this word, any international conflict.

The president said that he sent a proposal to his Russian counterpart to start immediate talks on coordination of similar situations by a separate agreement which should ensure Ukraine's national security.

For this purpose he issued decrees on peculiarities of crossing Ukrainian territorial waters and state border by subdivisions of the Russian Black Sea Fleet. “It is not about attitude to somebody. It is about attitude to the policy of national security,” he underscored.

Will Ukraine be next after Georgia?

ANALYSIS & COMMENTARY: By Taras Kuzio

Eurasia Daily Monitor, Volume 5, Issue 154

The Jamestown Foundation, Wash. D.C., Tuesday, August 12, 2008

Ukraine’s president and the Ministry of Foreign Affairs, which comes under his jurisdiction, have reacted sharply to the Georgian-Russian conflict. President Viktor Yushchenko has close personal relations with President Mikhail Saakashvili with whom he is direct contact on a daily basis

(www.president.gov.ua, August 9).

The Yushchenko-Saakashvili relationship is a political alliance based on the shared aims of the 2003 Rose and 2004 Orange revolutions, a common desire to join NATO and support for an alternative to Russia energy sources through the GUAM (Georgia, Ukraine, Azerbaijan, and Moldova) regional group.

Ukraine and Georgia have also supported pro-U.S. positions in the UN on Belarus’s human rights record and in the CIS through the Community of Democratic Choice created in 2005. Ukraine and Georgia contributed the third largest military forces to the US-led intervention in Iraq (Ukraine until 2005 and Georgia since 2006).

Ukraine’s parliament, which is in summer recess, is a different matter. The two orange forces (the Yulia Tymoshenko bloc and Our Ukraine-Peoples Self Defense [Nuns]) follow the president’s line in support of Georgia’s position.

Meanwhile, the Party of Regions (PR) and the Communist Party (KPU) hold positions that are not sympathetic to Georgia, at times pro-Russian and at other times contradictory and duplicitous.

The PR and KPU have both demanded an investigation into Ukrainian supplies of arms to Georgia. The KPU has accused the Ukrainian authorities of having armed the Saakashvili regime and has described Saakashvili as an “international criminal.”

Such accusations and inflammatory rhetoric echo those emanating from Moscow and the South Ossetian and Abkhaz separatists. Russian and separatist leaders have accused Ukraine of assisting alleged Georgian “ethnic cleansing” of South Ossetia and of “arming the Georgian army to the teeth.” The Georgian Ministry of Foreign Affairs defended Ukraine by accusing Russia of having armed the separatists (Ukrayinska Pravda, August 9-10).

These accusations ignore the fact that “military-technical cooperation between Ukraine and Georgia, which has taken place over the last 15 years, has been within the parameters of international law” (Zerkalo Nedeli, August 9).

Ukrainian supplies of military equipment to Georgia began during Leonid Kuchma’s presidency, and continued under the government of PR leader Viktor Yanukovych from 2002 to 2004. Ukrainian troops were sent to Iraq by the same Yanukovych government.

The Ukrainian Foreign Ministry’s demand that Russia withdraw its troops and respect Georgia’s territorial integrity is an established position articulated under Kuchma. Ukraine’s offer of acting as a mediator is again a long-standing proposal that was rejected by Russia under Kuchma and again now (Ukrayinska Pravda, August 8-9).

Former U.S. Assistant Secretary of State Richard Holbrooke’s comment that Russia’s next objective would be Ukraine is a fear long held in Kyiv. The initial impetus for creating the GUAM group in 1998 was that of Russian-backed separatism in three of its members (Moldova, Georgia, Azerbaijan) and a threat to the Crimea. The Russian parliament continually laid claim to the Crimea and Sevastopol in the 1990s, the island of Tuzla in 2003 and to Sevastopol as recently as May l.

Ukraine’s unease at Russia’s continued territorial demands led to a presidential decree ordering the government to prepare legislation and conduct negotiations with Russia on a full withdrawal of the Black Sea Fleet (BSF) personnel by 2017. BSF personnel, who are Russian citizens, have illegally participated in anti-NATO and pro-separatist rallies.

Russian nationalist, Communist and pro-regime politicians are unanimous in using the Crimea and Sevastopol as a potential bargaining chip to halt Ukraine’s NATO membership. This reflects long-standing Russian views as expressed by President Vladimir Putin at the April NATO-Russia Council that the alleged “fragility” of Ukraine would cause it to disintegrate if it joined NATO (Zerkalo Nedeli, April 19).

Crimean KPU leader Leonid Grach threatened to support the peninsula’s secession from Ukraine if it joined NATO. The view was criticized by the head of the parliamentary Committee on European Integration and deputy leader of the Nuns faction Borys Tarasyuk (www.nuns.com.ua, August 8).

Crimea’s Communists, which are a regional branch of the KPU, played a positive role in the 1990s in supporting Ukraine’s territorial integrity and adopting the 1998 pro-autonomy constitution.

The Simferopol city council voted on July 24 to declare itself a “‘territory free from NATO.” The vote was supported by the “For Yanukovych” faction and the national Bolshevik-oriented Natalia Vitrenko bloc. The PR would lose votes in eastern Ukraine if it began to play, like the KPU and Vitrenko bloc, with separatism.

Russian Communist leader Gennady Zyuganov arrived in the Crimea during the Ossetian crisis to hold negotiations with Crimean Communists on a “joint anti-NATO struggle.” Zyuganov said the Saakashvili regime was undertaking “state terrorism” with the support of the United States and NATO (UNIAN, August 9). Zyuganov supported the independence of South Ossetia and Abkhazia and has long supported Sevastopol’s transfer to Russia.

The stakes are high for Yushchenko and Ukraine in the Ossetian crisis. The removal or weakening of the Saakashvili regime would undermine the Ukrainian-Georgian partnership, destroy the GUAM group (which already has a passive Moldova) and thereby neutralize the pro-Western wing of the CIS.

Ultimately, the most important impact of the crisis will be on the December meeting of NATO Foreign Ministers set to review Ukraine and Georgia’s “‘progress,” held at a time of regime change in the United States.

The two arguments against admitting Ukraine and Georgia to NATO--political instability in Ukraine and Georgia’s military conflict with Russia--have become stronger since they were raised by Germany and France at the April Bucharest NATO summit. It is therefore unlikely that the review meeting will send a positive signal to Ukraine and Georgia about being granted NATO MAPs.

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LINK: http://www.jamestown.org

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20. UKRAINE AND THE CONFLICT IN SOUTH OSSETIA
Ukraine threatens to prevent return of Russian Black Sea Fleet vessels

COMMENTARY & ANALYSIS: By Roman Kupchinsky, Analyst, Writer
Eurasia Daily Monitor, Volume 5, Issue 153

The Jamestown Foundation, Wash. D.C., Monday, August 11, 2008

In the morning of August 10, the Ukrainian Ministry of Foreign Affairs informed its Russian counterpart that in order to prevent Ukraine from being drawn into an armed conflict, Ukraine might take measures to prevent the Russian Black Sea Fleet (RBSF) vessels from returning to their base in Sevastopol in the Crimea if they were involved in combat operations against Georgia. This ban might last until the conflict in South Ossetia is “regulated,” the website of the Ministry of Foreign Affairs of Ukraine stated.

Two days earlier, on August 8, the, troop landing ship Yamal left Sevastopol for the Russian port of Novorossiysk, according to a report on the

www.proUA.com website which also noted that a large contingent of ships from the RBSF that had taken part in the military exercise Caucasus-2008 in late July did not return to Sevastopol but remained in Novorossiysk (www.proUA.com, August 10).

Western media reported that on the night of August 9, Russian troops had been put ashore from warships into the disputed territory of Abkhazia.

On August 9 the flagship of the RBSF, the cruiser Moskva, with the commanding admiral of the fleet, Alexander Kletskov aboard, sailed from Sevastopol. It was accompanied by the destroyer Smetlivy and the anti-submarine ships Muromets and the Aleksandrovets, along with an assortment of support vessels.

As the situation on the ground in South Ossetia rapidly deteriorated, Georgian National Security Council Secretary Alexander Lomaia told the media that the Russian navy was blocking Georgian ports and preventing ships laden with grain and fuel from entering. Meanwhile, Interfax reported that "The navy was ordered not to allow supplies of weapons and military hardware into Georgia by sea."

On August 10, however, Novosti Press Agency quoted an unnamed, highly placed source in the General Staff of the Russian navy as saying that the role of the RBSF in the conflict was to merely “provide aid to refugees” and strongly denied that Russian ships were blockading the Georgian coast. “A blockade of the coast would mean that we were at war with Georgia…which we are not,” the source was quoted as saying.

The question of what type of humanitarian role the cruiser Moskva, armed with 16 cruise missiles, torpedoes and an assortment of other sophisticated weaponry, could play was not raised.

Ukraine’s threat elicited a quick response from the Russian side. Anatoly Nagovitsin, the deputy head of the General Staff of the Russian armed forces, was quoted by UNIAN press agency on August 10 as saying that the Ukrainian statement “needed reworking,” adding that thus far the RBSF was not engaged in military actions against Georgian ships but that this could possibly change along with the situation.

Later that day, Russian Deputy Foreign Minister Gregory Karasin told a press conference in Moscow that the Russian foreign ministry would begin talks with Ukraine on the return of the RBSF to Sevastopol, adding that Russian ships were close to Abkhaz territorial waters in order to prevent a situation similar to the one in South Ossetia from taking place in Abkhazia (UNIAN, August 10, 2008).

Russian statements took on more ominous tones later that evening after Russian troops began an assault on the Georgian city of Gori. The Ukrayinska Pravda website quoted a spokesman for the Russian Foreign Ministry as saying, “The actions by the Ukrainian side are contrary to Ukrainian-Russian agreements and are hostile to the Russian Federation.”

At approximately the same time, Interfax, citing information released by the Russian navy, reported that a Georgian military ship had been sunk by the Russian fleet off the coast of Abkhazia.

The Ukrainian move seems to have come as a nasty surprise for the Kremlin and the Russian General Staff, but it is also a risky one for Ukrainian President Viktor Yushchenko. Throughout Yushchenko’s presidency, Ukraine and Georgia have been exceptionally close.

They both applied for a Membership Action Plan in order to join NATO as part of their pro-Western policies, and both were rejected. Ukrainian arms sales to Georgia have been bitterly criticized by Russia, which claims that the arms were being used by Georgia for “ethnic cleansing.”

As recently as mid-July, Ukrainian, Azeri, Armenian and U.S. troops took part in a large scale Georgian military exercise, “Immediate Response 2008,” which was planned by the U.S. Armed Forces European Command and financed by the U.S. Defense Department.

If the Ukrainian leadership goes through with its threat to close off Sevastopol to Russian ships returning from the Georgian coast, a host of problems might arise.

The political situation on the Crimean peninsula, never favorable for Kyiv, could deteriorate further and increase calls by Russian politicians not to renew the 1997 Treaty of Friendship, Cooperation, and Partnership by which Russia recognized the present borders of Ukraine and which is due to expire in December 2008.

If the treaty expires, the consequences could be severe, since this treaty, in addition to Nikita Khrushchev’s handover of the territory to Ukraine in 1954, legalized Ukrainian claims to the Crimea. This could pave the way for renewed calls by Russian politicians and military leaders to annex the peninsula.

Another problem that is sure to become aggravated is the continuing dispute between Kyiv and Moscow over the Russian lease of the RBSF base in Sevastopol, which is due to expire in 2017. Ukraine does not want to extend the lease, and the Russians insist that it be prolonged.

But the main question worrying the West and the Ukrainian leadership is that an emboldened nationalistic Russia might decide to come to the “rescue” of the predominantly Russian population in the Crimea just as it “came to the rescue” of the South Ossetians and Abkhaz.

Such a scenario could conceivably force Kyiv to defend its territorial integrity and declare war on Russia, which would have enormous repercussions around the world.

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21. KYIV ON GEORGIA: DIPLOMACY AWKWARD, PARTIES DIVIDED
Support for Georgia varies among political parties in Ukraine

COMMENTARY & ANALYSIS: By Pavel Korduban
Eurasia Daily Monitor, Volume 5, Issue 157

The Jamestown Foundation, Wash. D.C., Friday, August 15, 2008

Kyiv was among the first capitals to define its stance clearly in the early stages of the conflict in South Ossetia. Deputy Foreign Minister Kostyantyn Yeliseyev was the first high-ranking foreign official to arrive in Georgia on a peacemaking mission.

While the West was slow in articulating its position, Kyiv hurried with statements condemning Russia but had to backtrack somewhat later. Ukrainian parties have been divided in their attitudes to the conflict.

Yeliseyev said in Tbilisi that Ukraine was ready to mediate in talks between Georgia and South Ossetia (UNIAN, August 9). He also hinted that Ukraine could provide military aid to Georgia (Ukrainska Pravda, August 9). Later on, however, Yeliseyev said that Kyiv did not plan to provide such aid to Georgia (UNIAN, August 11).

The leaders of Georgia’s breakaway regions of South Ossetia and Abkhazia accused Ukraine of direct interference. Abkhazia’s leader Sergei Bagapsh blamed the West and Ukraine for bloodshed in South Ossetia (ITAR-TASS, August 10). South Ossetian leader Eduard Kokoity said that Ukrainians were spotted among “unknown men in NATO uniforms” in Tskhinvali (Rossia TV, August 10).

His foreign minister Murat Dzhioyev suggested that Ukrainian mercenaries must have been fighting on Georgia’s side (www.24.ua, August 11). Ukraine denied the allegations (Interfax-Ukraine, August 11).

On August 10, Ukraine warned that it might take measures to prevent Russian Black Sea Fleet (RBSF) ships sent to Abkhazia’s coast from returning to their base in Sevastopol (see EDM, August 11).

Later on, however, the Ukrainian Foreign Ministry’s spokesman Vasyl Kyrylych admitted that the threat to ban Russian ships from returning had been hollow. “I can say nothing about mechanisms to banish the warships from Sevastopol. We just made public our official position,” said Kyrylych. (Kommersant-Ukraine, August 11).

Yushchenko subsequently issued a controversial decree apparently aimed both at saving face for Kyiv and at avoiding open confrontation with Russia. The decree required the RBSF to agree on any future movement of its ships with the Ukrainian Foreign Ministry. Russia rejected the decree, pointing out that this requirement was not stipulated in the 1997 Kyiv-Moscow accords on the RBSF (Channel 5, August 13).

Richard Holbrooke, a former U.S. Ambassador to the U.N., and Ronald Asmus, a former Deputy Assistant Secretary of State, said in an article that Ukraine would most likely be Moscow’s next target (The Guardian, August 11). Their concern was shared by the leader of Crimean Tatars, Mustafa Dzhemilev, who suggested that Russia could provoke a conflict over Crimea.

Vadym Karasyov, an analyst close to the Yushchenko administration, said that although a conflict between Russia and Ukraine was highly unlikely, Kyiv should not have provoked Moscow by the statement on the RBSF (Blik, August 11).

In theory, Russia could use the presence of its citizens in Crimea as a pretext for a conflict with Ukraine, like it did in South Ossetia. Apart from the BRSF personnel stationed in Sevastopol, many Crimean residents also reportedly have Russian citizenship. It has been claimed that Russian citizenship has been extended to as many as 170,000 Crimean residents (1+1 TV, August 13).

Ukrainian leaders and parties have been divided in their attitudes to the Russia-Georgia conflict. Yushchenko went to Georgia to express his support for Georgia’s territorial integrity (Ukrainska Pravda, August 12).

Prime Minister Yulia Tymoshenko did not venture any comment for several days, which prompted the presidential office to suspect her of trading principles for cheaper natural gas from Russia and Russia’s support in the future presidential race (UNIAN, August 13). First Deputy Prime Minister Oleksandr Turchynov, Tymoshenko’s right-hand man, criticized Georgia for killing civilians in South Ossetia (UNIAN, August 12).

The left-wingers sided with Russia. Communist Party leader Petro Symonenko condemned “the aggressive policy” of Georgia as early as August 8. He called on the Ukrainian leadership to stop supplying arms to Georgia. The Communists also urged a stop to military exercises involving NATO in Ukraine (Interfax-Ukraine, August 8-11).

Hanna Herman, an unofficial spokesperson for the main opposition force, the Party of Regions (PRU), urged the creation of an ad-hoc commission in parliament to look into the supplies of Ukrainian arms to “hot spots,” meaning Georgia (Ukrainska Pravda, August 9).

The PRU called on the government to refrain from openly supporting Georgia. PRU leader Viktor Yanukovych was backed by Moscow against Yushchenko in the 2004 Ukrainian presidential election. “We condemn the powers-that-be for irreparably damaging Ukraine’s national interests by unequivocally taking one side in the Georgian-Ossetian-Russian conflict,” the PRU said in a statement (Ukrainska Pravda, August 12).

Yushchenko’s Our Ukraine People’s Union party expressed concern over Russia’s use of the RBSF “for tasks incompatible with the status of its deployment in Ukraine.” Although many Ukrainians sympathize with Georgia, Kyiv has seen no mass actions in support of Georgia.

Several pickets near the Russian Embassy have been staged by marginal far-right parties and Georgians residing in Ukraine (Interfax-Ukraine, August 11; Inter TV, August 12). A television station reported that UNA-UNSO, a far-right group, was recruiting young men in western Ukraine, a region where Russia is historically disliked, to help the Georgian army (Inter, August 13).
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22. IS UKRAINE PREPARED TO MAINTAIN ITS TOUGH STAND AGAINST RUSSIA?

COMMENTARY & ANALYSIS, By Jan Maksymiuk

Radio Free Europe/Radio Liberty (RFE/RL)

Prague, Czech Republic, Friday, August 15, 2008

As the world watches the ongoing conflict between Moscow and Tbilisi, many eyes have turned to Ukraine -- a country which, like Georgia, has struggled to break free of Russia's post-Soviet embrace.

Throughout the weeklong conflict, Ukraine -- to the Kremlin's evident displeasure -- has offered strong vocal support for Georgia in its conflict with Russia over its breakaway regions of South Ossetia and Abkhazia.

On August 10, the Ukrainian Foreign Ministry warned Moscow that Kyiv might prevent Russian Black Sea Fleet vessels from returning to their base in the Crimean port of Sevastopol if they became involved in combat operations against Georgia.

The Russian Foreign Ministry criticized the warning as a "hostile" action toward Russia. But that didn't prevent Ukrainian President Viktor Yushchenko -- fresh from a show of solidarity with the Georgian leadership in Tbilisi -- from issuing an August 13 regulation requiring Russian naval ships and aircraft from the Black Sea Fleet to request permission 72 hours ahead of any movement. The Russian side shot back that the measure was a "new serious anti-Russian step."

No Mention Of Russia

So is Kyiv actually ready to stand by its tough position in Moscow? While speaking at a rally of support for Georgia and Georgian President Mikhail Saakashvili in Tbilisi on August 12, Yushchenko was more cautious in choosing his words than, for example, his Polish counterpart Lech Kaczynski, who openly called for counteracting Russia's renewed imperial ambitions.

Yushchenko, by contrast, avoided any mention of Russia in his speech. "We have came here today to tell you that Georgia is our friend. Georgians are our friends," he said. "Today, during the most difficult times for Georgia, we want to say that you have the right to be free and independent."

After Yushchenko came to power in 2004, he and Saakashvili -- both brought to power by colored revolutions -- have developed very close ties based on their common desire to join NATO and find alternative sources of oil and gas through the GUAM (Georgia, Ukraine, Azerbaijan, Moldova) regional alliance in order to lessen both countries' dependence on Russia.

But neither of these two strategic goals has been achieved so far. NATO has not offered a Membership Action Plan to either Kyiv or Tbilisi, while the GUAM grouping, which initially also included Armenia, seems to be standing idle, if not falling apart.

Therefore, it may be unrealistic to expect that Kyiv's resolutely formulated warnings against Russia will be followed by equally resolute deeds.

'This Will Mean War'

Former Ukrainian President Leonid Kravchuk told RFE/RL's Ukrainian Service that he does not believe Ukraine could prevent Russian ships from returning to Sevastopol even if their use in aggressive actions against Georgia was proved beyond any doubt.

In Kravchuk's opinion, Kyiv should have limited itself to a "strongly worded" statement without including any specific threat to the Russian Navy.

"How to block the [Russian] ships from coming in? I don't know of any such mechanisms," Kravchuk says. "If we continue to stick to the point of view of 'not letting them in,' this will mean a war between Ukraine and Russia."

Former Ukrainian Defense Minister Anatoliy Hrytsenko, who is currently the head of the parliamentary commission for national security and defense, told RFE/RL's Ukrainian Service that there are possible ways for Ukraine to prevent Russian ships from returning to their base in Sevastopol.

But, like Kravchuk, Hrytsenko said he does not believe that Yushchenko would actually risk ordering a blockade of the Russian naval base in Sevastopol.

According to Hrytsenko, the Russian-Georgian conflict over South Ossetia and Abkhazia should spur Ukraine to conduct its relations with Russia -- including policy issues like the scheduled deployment of the Black Sea Fleet in Crimea until 2017 -- on a purely pragmatic basis.

Hrytsenko argues that in accordance with the 1997 agreement on the Russian Black Sea Fleet, Ukraine has the right to demand a market price for the lease of the naval base in Sevastopol to Russia as of 2008.

Hrytsenko says that in order to make Moscow pay the market price for the lease, which is estimated at $1 billion annually, the Ukrainian government would have to repay its current debt to Russia.

Unpalatable Option?

"Ukraine needs to make just one step for this purpose -- to pay off its debt to Russia. It currently stands at just $1.3 billion," Hrytsenko says. "I have proposed and will insist that the government introduce changes to the budget in September. [Prime Minister] Yuliya Volodymyrovna [Tymoshenko] says there is more than $20 billion [in the budget]. [It is necessary] to repay this debt to Russia immediately and make Russia -- in negotiations, according to the signed agreements -- pay us $1 billion every year."

But this option may also prove unpalatable to the Ukrainian government because Moscow, if persuaded to pay $1 billion annually for the naval base in Crimea, will most likely retaliate with increasing its gas price for Ukraine, which currently stands at a relatively low $180 per 1,000 cubic meters.

However, there is an even more dangerous risk in store for Kyiv if it continues to irritate Moscow with "hostile" statements, let alone actions.

The Russian-Ukrainian Treaty on Friendship, Cooperation, and Partnership -- which both sides signed in 1997 and ratified in 1998 -- expires in December 2008. The document, apart from establishing mutual relations on good-neighborly terms, recognizes the current borders of Ukraine, effectively legalizing the handover of Crimea by Russian leader Nikita Khrushchev to Ukraine in 1954.

If the treaty is not renewed, Russian politicians could once again raise the issue of returning the peninsula to Russia -- as they did during the treaty ratification process in 1998.

Any potential ethnic unrest in Crimea and an ensuing military action by Russia in connection with this issue would have incomparably graver consequences for the region and the world than the current Russian intervention in Georgia.
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LINK: http://www.rferl.org/content/Is_Ukraine_Prepared_To_Maintain_Its_Tough_Stand_Against_Russia/1191251.html

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U.S.-Ukraine Business Council (USUBC): http://www.usubc.org

Promoting U.S.-Ukraine business relations since 1995.

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23. AS RUSSIAN TANKS ROLL, EUROPE REASSESSES

NEWS ANALYSIS: By Judy Dempsey, The New York Times

New York, New York, Friday, August 15, 2008

BERLIN — The Russian tanks rumbling across parts of Georgia are forcing a fundamental reassessment of strategic interests across Europe in a way not considered since the fall of the Berlin Wall in November 1989 and the subsequent collapse of Communism.

For nearly two decades, European capitals in concert with Washington have encouraged liberalization in lands once firmly under the Soviet aegis. Now, they find themselves asking a question barely posed in all those years: How far will or can Russia go, and what should the response be?

The answer will play out not just in the European Union, but also along its new eastern frontier, in once obscure places like Moldova and Azerbaijan.
Already, French leaders, acting on behalf of Europe, have firmly told the Russians they cannot insist on the ouster of Georgia’s president, Mikheil Saakashvili, as a precondition for a cease-fire.

Farther west, in Poland, a long-stalled negotiation on stationing parts of a United States missile defense system was quickly wrapped up, as American negotiators on Thursday dropped resistance to giving the Poles advanced Patriot missiles.

The Poles, of course, had their own security in mind. “Poland wants to be in alliances where assistance comes in the very first hours of — knock on wood — any possible conflict,” Prime Minister Donald Tusk said.

“The reality is that international relations are changing,” said Pawel Swieboda, director of demosEUROPA, an independent research organization based in Warsaw. “For the first time since 1991, Russia has used military force against a sovereign state in the post-Soviet area. The world will not be the same. A new phenomenon is unfolding in front or our eyes: a re-emerging power that is willing to use force to guarantee its interests. The West does not know how to respond.”

At stake 20 years ago was whether the Kremlin, then under Mikhail Gorbachev, would intervene militarily to stop the collapse of Communism. But Mr. Gorbachev chose to cut Eastern Europe free as he focused — in vain — on preventing the collapse of the Soviet Union itself.

Communist bloc lands from the Baltic States in the north to Bulgaria in the south have since joined the European Union and NATO — a feat, despite flaws, that in the Western view has made the continent more secure and democratic.

But Russia never liked the expansion of NATO. In the 1990s, it was too weak to resist; today, in the Caucasus, Russia is showing off its power and sending an unmistakable message: Georgia, or a much larger Ukraine, will never be allowed to join NATO.

The implications of Russia’s action reverberate well beyond that, from the European Union’s muddled relations with a crucial energy supplier, Russia, through Armenia and Azerbaijan in the south and east, to Ukraine and Moldova in the west.

This region has everything that the West and Russia covet and abhor: immense reserves of oil and gas, innumerable ethnic splits and tensions, corrupt and authoritarian governments, pockets of territory that have become breeding grounds or havens for Islamic fundamentalists.

As a result, the region has become the arena for competition between the Americans and Europeans on one hand, and Russia on the other, over how to bring these countries into their respective spheres of influence.

The European Union — as ever, slow and divided — has offered few concrete proposals to bring the countries of what Russia calls its “near abroad” — Belarus, Ukraine, the Caucasus and the Caspian — closer to Europe. Analysts say the 27 member states have not been able to separate their view of Russia from adopting a clear strategy toward the former Soviet republics on the union’s new eastern borders.

“The Georgia crisis shows that Russia is in the process of testing how far it can go,” said Niklas Nilsson of the Central Asia-Caucasus Institute in Stockholm. “This is part of a much bigger geopolitical game. It is time for the Europeans to decide what kind of influence it wants in the former Soviet states. That is the biggest strategic challenge the E.U. now faces.”

NATO, led by the United States and several Eastern European countries, has reached out more actively. At a summit meeting in Bucharest, Romania, in April, Georgia and Ukraine failed to get on a concrete path to membership as they had sought, but did secure a promise of being admitted eventually.

Georgia and its supporters say that NATO membership would have protected Georgians from Russian tanks. Western European diplomats by contrast note with relief that Georgia is not in NATO, and thus they were not required to come to its defense.

The newly resurgent Russians, buoyed by oil and gas wealth and the firm leadership of Prime Minister Vladimir V. Putin, have played their hand with less hesitation.

Tomas Valasek, the Slovak-born director of foreign policy and defense at the Center for European Reform in London, says Russia has used the ethnic and territorial card to persuade some NATO countries that admitting Ukraine or Georgia would prove more dangerous and unstable than keeping them out. Georgia’s incursion Aug. 7 into South Ossetia serves both these Russian arguments, as well as Moscow’s passionate objections to the West’s support for an independent Kosovo.

Recognize Kosovo’s break with Serbia, Mr. Putin warned last spring, and Russia will feel entitled to do the same with South Ossetia and Georgia’s other breakaway enclave, Abkhazia — where Mr. Putin needs stability to realize his cherished project of the 2014 Winter Olympics in nearby Sochi.

Ukraine, bigger than France and traditionally seen by Russians as integral to their heritage and dominion, has been conspicuously quiet over the past week. Senior Ukrainian officials say that the weak European Union response on Georgia will only embolden Russia to focus even more on Ukraine, where many inhabitants speak Russian and, particularly in the eastern half, look to Moscow, not Kiev, for leadership.

“The crisis in Georgia has clear implications for regional security, and of course Ukraine,” said Hryhoriy Nemyria, deputy prime minister of Ukraine, who is responsible for European integration. “This crisis makes crystal clear that the security vacuums that have existed in the post-Soviet space remain dangerous.”

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LINK: http://www.nytimes.com/2008/08/16/world/europe/16europe.html?_r=1&oref=slogin

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24. MYTHMAKING IN MOSCOW
Georgia wasn't committing 'genocide,' and the Russians aren't keeping the peace.

LEAD EDITORIAL, The Washington Post

Washington, D.C., Saturday, August 16, 2008; Page A14

THE EVENTS of the past week in the small Caucasus republic of Georgia will prompt animated debates about Russia and U.S.-Russian relations. We view the events as confirmation of the dangerous challenge posed by an authoritarian regime unwilling to recognize the sovereignty of its former imperial possessions. Many will take issue with our interpretation, and that is as it should be. But the debate should be based on facts.

Instead, assertions of the Russian leadership that have proved contrary to fact continue to circulate. For example:

[1] Georgia committed genocide against the people of South Ossetia.

This charge was initially leveled by Prime Minister Vladimir Putin and has been taken up by others, including President Dmitry Medvedev, who on Thursday came up with the interesting formulation that South Ossetians "had lived through a genocide."

Mr. Medvedev has referred to "thousands" killed, and Russian officials frequently have cited 2,000 South Ossetians killed (out of a population of 70,000). They have said Georgia razed the South Ossetian capital of Tskhinvali. These purported depredations are given as the main motivation for Russian military intervention.

A researcher for Human Rights Watch who visited Tskhinvali reported as follows: "A doctor at Tskhinvali Regional Hospital who was on duty from the afternoon of August 7 told Human Rights Watch that between August 6 to 12 the hospital treated 273 wounded, both military and civilians. . . . The doctor also said that 44 bodies had been brought to the hospital since the fighting began, of both military and civilians.

The figure reflects only those killed in the city of Tskhinvali. But the doctor was adamant that the majority of people killed in the city had been brought to the hospital before being buried, because the city morgue was not functioning due to the lack of electricity in the city."

Independent journalists back up the account provided by Human Rights Watch. The Wall Street Journal, for example, yesterday reported finding Tskhinvali, where most of the fighting took place, mostly intact and with "little evidence of a high death toll."

[2] Russians in Georgia are "peacekeepers" on a humanitarian mission to protect civilians.

This formulation has alternated with repeated Russian statements, repeatedly disproved, that Russian forces were not in Georgia at all, or were leaving, or were about to leave.

In fact, journalists, human rights observers and others have documented that Russian troops have ranged far into Georgia, including the city of Gori and the port of Poti. They have razed, mined and looted Georgian army bases and destroyed civilian houses and apartment buildings.

Militia forces under Russian control include South Ossetians and others brought in from Russia itself -- what Deputy Assistant Secretary of State Matthew Bryza described as "the North Caucasus irregular forces that the Russian military inexplicably encouraged to enter South Ossetia to murder, rape and steal." They have attacked civilians in Gori and engaged in ethnic cleansing of Georgian-populated villages in South Ossetia.

Remarkably, the Russian-allied "president" of South Ossetia acknowledged the ethnic cleansing yesterday in an interview with the Russian newspaper Kommersant, although he did not acknowledge the killings of Georgian civilians that others have documented.

Eduard Kokoity said that his forces "offered them a corridor and gave the peaceful population the chance to leave" and that "we do not intend to allow" their return.

A war crime, yes; but at least he was honest about it.

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LINK: http://www.washingtonpost.com/wp-dyn/content/article/2008/08/15/AR2008081503319.html

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25. U.S. LACKS OPTIONS TO ACT ON TOUGH RHETORIC

Bush Administration's second-rate response to the crisis

By Andrew Ward in Washington, Financial Times

London, UK, Saturday, August 16, 2008

Condoleezza Rice had to use an unfamiliar aircraft when she flew to Europe for emergency talks on the conflict in Georgia this week.

The Boeing 757 usually made available to the secretary of state was being used by Dick Cheney, vice-president, for a political fundraising trip to Colorado, forcing Ms Rice to take a smaller C-40.

To critics, the second-class transport symbolised the Bush administration’s second-rate response to the crisis.

“Washington was caught by surprise – both by the Georgian action and the scale of the Russian reaction,” says Janusz Bugajski, an expert on the region at the Center for Strategic and International Studies.

Stung by the criticism, the administration has adopted an increasingly muscular and high-profile approach in recent days, including the launch of a humanitarian mission to the war zone involving US military forces.

President George W. Bush on Friday sharpened his rhetoric, warning that Russian “bullying and intimidation” would not be tolerated.

“Only Russia can decide whether it will now put itself back on the path of responsible nations, or continue to pursue a policy that promises only confrontation and isolation,” he said.

But experts warn that Washington has few effective instruments to match its tough words. Military intervention has been ruled out, and European allies are resisting US pressure to expel Russia from the Group of Eight industrialised nations and bar it from the World Trade Organisation.

The most concrete US action so far has been its agreement on Thursday to base Patriot missiles in Poland as part of a long-awaited deal to place missile defence facilities in the country.

The deal – fiercely opposed by Moscow – had been nearing completion for months. However, the crisis added urgency to negotiations, with Washington rushing to signal its commitment to US allies in the region.

Experts say the biggest test of US resolve and transatlantic unity will come at the next meeting of Nato foreign ministers in December, when eastward expansion of the military alliance will again be up for discussion.

US efforts to put Georgia on a formal path towards Nato membership look dead for the foreseeable future, but the Bush administration could use the December meeting to press the case for Ukraine to be granted a membership action plan.

Much may depend on who wins the US presidential election in November.

Victory for John McCain, the Republican candidate and staunch advocate of Nato expansion, might embolden the Bush administration on the issue in its final weeks in office, while a win for Barack Obama, who has taken a more cautious stance on Russia, could force Washington to ease off.

Criticism of US handling of the crisis and events leading up to it divide into two camps: those who believe the Bush administration provoked Russia by aligning itself too closely with Georgia, and those who believe it did not stand up to Moscow strongly enough.

Both camps agree, however, that the US delivered mixed messages to Georgia by cautioning it against military action in private while championing its cause in public, and that Washington failed to pay sufficient attention to the brewing crisis.

“There has been no vision or strategy to bring together the different elements of policy towards the region and no common front with Europe,” says Mr Bugajski, blaming the administration’s preoccupation with the Middle East and terrorism.

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LINK: http://www.ft.com/cms/s/0/9a5da0fc-6b16-11dd-b613-0000779fd18c.html

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26. TEA WITH THE FINANCIAL TIMES: YULIA TYMOSHENKO

By Chrystia Freeland, U.S. Managing Editor of the FT

Financial Times, London, UK, Saturday, August 16 2008

Even in Manhattan’s toniest restaurants I have never felt as frumpy as I do walking into the elegant prewar mansion in Kiev that serves as the headquarters of the prime minister’s political party. The long-haired, high-heeled, short-skirted young women striding through the corridors look like the sisters of the Ukrainian girls that crowd western catwalks, and seem to be dressed by the same couturiers.

Yet they are easily outshone by their boss, Yulia Tymoshenko, 47, the rabble-rousing heroine of Ukraine’s 2004 Orange Revolution, who sweeps into her office just after 6pm wearing a still-spotless cream-coloured suit and a smile that is just as fresh.

Tymoshenko, who began her second stint as prime minister last December, has had a dramatic, poacher-turned-gamekeeper career, making a fortune in the shadowy gas-trading business before going into government in the 1990s on a corruption-fighting agenda.

Her populist appeal was burnished by the Orange Revolution, when her fiery oratory helped rally Ukrainians behind pro-western democrat Viktor Yushchenko’s ultimately successful bid for the presidency, in defiance of ballot-stuffing and media control by the pro-Russian incumbent regime.

The Kiev we meet in is a world away from the frozen, euphoric and frightening winter days of the Orange Revolution. Nor does this sunny, late spring afternoon, which most Kievites seem to be enjoying in the city’s sidewalk cafés, offer many portents of the anxiety that friends will report a couple of months later, when Russia’s invasion of Georgia will have many of them wondering if democratic Ukraine is next.

Before our meal – tea and a plate of delicious-looking pastries that the prime minister doesn’t touch, and, so, alas, neither do I – I had made a private vow not to make much of Tymoshenko’s looks. Her beauty is so lovingly – even droolingly – featured in most western press accounts that I had long been dismissive of the male reporters who seemed spellbound by their encounter with a woman who was both pretty and powerful.

But the prime minister’s physical charm is so potent it works even on a fellow Ukrainian matron like me. Up close she is dazzling, both delicate and humming with the animal vitality of the charismatic politician. She opens our conversation with the practised pol’s trick of telling me something nice about myself, thus making me feel good while letting me know she is on top of her game.

Her gambit: she thanks me for teaching my daughters Ukrainian. I say they mostly hate me for it but her prime-ministerial endorsement will be useful ammunition in my domestic linguistic wars. Ukraine itself has its own larger battles over language.

Tymoshenko comes from Dnipropetrovsk in eastern Ukraine, an area often assumed to be largely Russian-speaking and keen on a closer relationship to the country known in Soviet days as their “big brother”. But, says Tymoshenko, the linguistic character of her region is changing.

“When I joined the cabinet for the first time, I didn’t speak Ukrainian,” she recalls. “But after working in the government for two or three months, I simply began to speak in Ukrainian.” The switch was easy for her, and for many urban Russophones, because “even if they Russified the city, no one ever Russified the countryside, even after 70 years [of Soviet rule] ... When our grandmothers came to visit us in the city, they all spoke Ukrainian and we all understood them.”

Like her fellow Orange Revolutionaries, she thinks language is an important marker of national identity – something you can’t take for granted in a state that has been around for less than two decades and has declared independence six times in the past 90 years.

While these subtle shifts between Slavic languages are a big topic in Kiev, they’re pretty obscure if you don’t happen to be Ukrainian. So I ask Tymoshenko about a more recognisable Ukrainian cultural symbol – her trademark coronet of braids. At times, they’ve been a hot political issue.

Once, challenged on whether the thick blonde plaits were her own – even Ukrainian politicians have to prove that they are “authentic” – Tymoshenko dramatically unpinned and unbraided her hair in a Rapunzel-like display.

Sounding a little defensive, she assures me her braids are a family tradition: her village grandmother favoured this style. But, she confides, the real reason she wears her hair this way is simpler than that: it makes her look good. “It is very important for us women how we look. That is an objective fact.”

I’ve just arrived from an America greatly confused about gender and power and beauty, and her matter-of-factness intrigues me. Yet to Tymoshenko – a self-made millionaire, mother and the most powerful European female east of Berlin – none of this seems complicated.

“If we are speaking about what is more important for a woman, her work or her looks, the answer is obvious,” she tells me, looking a little perplexed that the conversation has drifted to such self-evident matters. “She will choose to look good, above all else, even at the cost of her work.”

Tymoshenko cheerfully talks about the differences between men and women in a way that would shock most of us “we-are-all-equal” western feminists.

Here are a couple of my favourite assertions: women are better at taking care of things – both kids and countries – than men: “You know how, when a family breaks up, in most instances, the child stays with the mother? She is the more reliable caretaker. It is the same with a country. I simply think that we are more reliable and we are more able to give up living a normal life in order honourably to fulfil our responsibilities.”

Male voters are inevitably sceptical about female politicians: “Every man thinks he is more capable than any woman. This is normal. Women don’t criticise them for this ... In fact, we support them in their sense of superiority.”

Her sensible bottom line when I ask her if being a woman has been a political disadvantage? “Sometimes it hurts, sometimes it helps.” From a politician who uses her beauty as cannily as any supermodel but who also terrifies notorious Russian oligarchs, that sounds like a fair assessment.

She strikes a less balanced note – in fact, she doesn’t even try – when the conversation turns to Viktor Yushchenko, the Ukrainian president and her Orange Revolution ally. An economist, talented central banker and former prime minister, Yushchenko is as dramatic a figure as Tymoshenko. He too was known for movie-star good looks, until an attempt to poison him on the eve of the 2004 election left him painfully disfigured.

The enmity between the two of them – the president’s supporters see her as a dangerous populist with a poor grasp of economics and a greater commitment to her own career than to the good of the nation – is the country’s great political drama, and its political tragedy. Together, they faced down a corrupt government with authoritarian leanings that was openly backed by Russian president Vladimir Putin.

Today, despite their bickering, the Ukrainian economy is growing robustly and the country is democratic and independent. But essential economic reforms are more halting than they should be, especially given the growing aggression of neighbouring Russia.

The problem, she says, is that instead of attending to today’s problems, “others” are focused already on the “battle for the presidency in 2010”, when Ukraine will have its next election. She tells me she has publicly disavowed any presidential ambitions for 2010 and is prepared to back Yushchenko – if only he will let her – an assertion a little undermined by her also letting slip: “I am certain I would be a better president.”

Tymoshenko thinks she is better at reining in the “political-oligarchic groups”, which she sees as the biggest threat to Ukraine’s prosperity. Indeed, she believes “corruption has become the rule, and the norm and, practically, the law” – quite an admission from a country’s prime minister – and predicts that one day we will discover that many “billion-dollar bribes” have been paid in Ukraine. The oligarchs, she says proudly, “hate me ... they don’t understand me because ... they cannot buy me or scare me”.

She can also claim credit – as she does during our conversation – for the reprivatisation of Kryvorizhstal. This steel mill was sold off in the dying days of Ukraine’s ancient regime to a consortium of oligarchs including the then president’s son-in-law. Tymoshenko led the drive to sell it a second time in an open auction.

That sale – shown live on Ukrainian television and won by the Mittals, the London-based steel magnates – fetched $4.8bn, more than any other privatisation in the entire former Soviet Union, a damning fact, particularly when you consider Russia’s natural resources and the outsize personal fortunes their sell-off created.

For all their sparring, Tymoshenko and Yushchenko have been more united on foreign policy than many expected, with the prime minister moving towards the robust defense of Ukraine’s national interest that the president has long espoused. Even before Russia’s attack this week on Georgia, she has been measured but forthright in her attitude to the Kremlin.

Tymoshenko also understands that Ukraine’s proudest accomplishment – its democratic revolution – makes it a particular target for its authoritarian neighbours. “They fear Ukraine as evidence that a post-Soviet country can quickly and effectively build a rule-of-law society and a democratic society,” she says. “And this example is very, very uncomfortable for those who would like to keep everything undemocratic and untransparent.”

With apologies for the gloom, my parting question is a bleak one: could Ukraine revert to authoritarianism? Despite her repeated and self-serving complaints about the dangerous divisions within Ukraine’s democratic camp, Tymoshenko strikes a positive note. “We are now immune to that illness,” she says decisively.

“Today, I see Ukraine’s path, perhaps not as swift as we would like, perhaps not as rosy or as serene, but unequivocally in the direction of the creation of a real, European, democratic, rule-of-law state ... No one will succeed in plundering our national identity, or humiliating us, or, God forbid, destroying us. For all the difficulties we face, we are moving forward.” This week, as Russian tanks rolled into Georgia, that path looks more treacherous.
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LINK: http://www.ft.com/cms/s/0/f4b1341a-6a58-11dd-83e8-0000779fd18c.html
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