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Action Ukraine Report

"THE ACTION UKRAINE REPORT"
In-Depth Ukrainian News, Analysis, and Commentary

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

BUSINESS TERRORISM IN UKRAINE
Hostile Takeover Ukrainian Style

"The big question is: Is it okay to have a country in which conditions
favorable for business terrorism exist? I suspect strongly that Volia Cable
is not the only company to which this approach has been used. I wouldn't
be surprised if there are a number of other companies, in this very city and
country, which are experiencing the same thing that Volia Cable is
experiencing, without any political reasons behind it. It is just a
takeover. It is just because people feel they can do it in this country.

If the country becomes known as a place where business terrorism can
prosper, it will be horrible for the investment climate and for the image of
the country. It is extremely important for the country's policymakers to
stop attacks like this as quickly as possible, and to punish those who
do this." [Articles one, two, three and four]

"THE ACTION UKRAINE REPORT" Year 04, Number 113
Action Ukraine Coalition (AUC), Washington, D.C.
Ukrainian Federation of America (UFA), Huntingdon Valley, PA
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C.; Kyiv, Ukraine, MONDAY, July 12, 2004

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

1. BUSINESS TERRORISM IN UKRAINE
STATEMENT: By the Management of Volia Cable, a Ukrainian
company, to the nine-hundred Volia Cable employees
Kyiv, Ukraine, Wednesday, July 7, 2004

2.U.S. INVESTOR SAYS COMPANY HIT BY 'BUSINESS TERRORISM'
SigmaBleyzer CEO Claims Cable Company Victim of Hostile Takeover
By Vlad Lavrov, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 8, 2004

3. "VOLIA CABLE MYSTERY DEEPENS"
By Vlad Lavrov, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 8, 2004

4. CABLE TV COMPANY BRINGS COUNTER SUIT AGAINST
UKRAINIAN PROSECUTOR'S OFFICE
[Volia Cable Fights Back Against Business Terrorism]
UNIAN news agency, Kiev, Ukraine, in Ukrainian, 9 Jul 04
BBC Monitoring Service, UK, in English, Friday, Jul 09, 2004

5.TEXTILE FIRMS STUNG BY LVIV STATE TAX ADMINISTRATION
European Business Association Writes Strong Letter of Protest
By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 8, 2004

6. UKRAINIAN PRESIDENT UPBEAT ON 10 YEARS IN OFFICE
One Plus One TV, Kiev, Ukraine, in Ukrainian, 11 Jul 04
BBC Monitoring Service, UK, in English, Sunday, Jul 11, 2004

7. CIS STATEMENT AGAINST THE WATCHDOG OSCE IS ATTEMPT
BY UKRAINIAN GOVERNMENT TO REDUCE OBSERVATION AND
INTERNATIONAL MONITORING OF UKRAINIAN ELECTIONS
Statement by Anatoliy Hrytsenko, Head, Informational and
Analytical Department, Yushchenko for President Campaign
Press Service for Viktor Yushchenko, Kyiv, Ukraine, Friday, July 9, 2004

8.UKRAINE'S MOTIVES FOR SIGNING CIS ANTI-OSCE STATEMENT
"I'm Riding Someone Else's Horse, Not The Right Horse"
By Volodymyr Kravchenko
Zerkalo Nedeli, Kiev, Ukraine, in Russian 10 Jul 04, p 1,4
BBC Monitoring Service, UK, in English, Sunday, Jul 11, 2004

9. UKRAINIAN DEPUTY FOREIGN MINISTER SAYS CIS
CRITICISM OF OSCE "CONSTRUCTIVE"
TV 5 Kanal, Kiev, Ukraine, in Ukrainian, 9 Jul 04
BBC Monitoring Service, UK, in English, Friday, Jul 09, 2004

10.RUSSIA MUST NOT HAVE A VETO ON UKRAINE'S FUTURE SAYS
FORMER SENIOR US DIPLOMAT RICHARD HOLBROOKE IN KYIV
[Another major U.S. speaker sponsored by Viktor Pinchuk]
Agence Presse France, Kyiv, Ukraine, Friday, July 09, 2004

11. UKRAINIAN PRIME MINISTER VOWS TO KEEP PRESIDENTIAL
ELECTION THIS FALL FREE AND FAIR
By Natalia A. Feduschak, The Washington Times
Washington, D.C., Friday, July 9, 2004
=========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER ONE
=========================================================
1. "BUSINESS TERRORISM IN UKRAINE"

STATEMENT: By the Management of Volia Cable, a Ukrainian
company, to the nine-hundred Volia Cable employees
Kyiv, Ukraine, Thursday, July 8, 2004

We are under attack. A clear case of business terrorism. Our main fault -
we built a business that is too good to be left alone. A great business
model, fantastic people, a strong corporate culture, visionary management
and an unbelievable market opportunity. And we have built this in Ukraine -
a country most people would argue is impossible for doing business, at least
doing clean business in a civilized way governed by the rule of law.

Our efforts over the last several years have proven the doubters wrong
and in the process have attracted attention of some seedy personalities
that only have one question for us: Why can't this be mine?

So what do they do about this, since we cannot provide a satisfactory
answer to their question? Their plan of attack on our business is quite
simple. Here is their plan:

• Identify the most noticeable targets, hopefully those that have
symbolic importance as well
• Hit them hard
• Take some hostages if you can
• Instill fear and panic among everyone else concerned
• Demoralize and paralyze
• Take over

Sounds simple and effective. Reminds you of the World Trade Center and
9/11. Except it is directed at us - a Ukrainian company called Volia Cable.
Sounds kind of hard to believe, doesn't it? But it is true and the events of
the last few days could not be more illustrative.

a.. Accuse the company of totally ridiculous charges, but with a highly
emotional element
b.. Detain, then arrest the top executives (take hostages)
c.. Cause incredible pain and suffering on them, their family and friends
d.. Demoralize all employees of the company and seed fear and panic
e.. Paralyze the business by confiscating critical equipment
f.. Undermine consumer confidence and cause significant financial damage
by draining the company of cash through a combination of reduced revenues
because of customer loss and increased expenses due to high legal costs and
other defensive measures
g.. Cause an avalanche of customer and employee defections
h.. Bring about a complete business shutdown by turning off the cable to
one and a half million viewers in Kiev
i.. Appear out of the blue on a white horse to "save" the day
j.. Take over the business

Now - that really hits home! Doesn't it? So far the plan is proceeding on
schedule. All initial efforts on our part to defend the business did not
stop the attack, but only slowed it down occasionally. Why? Mainly because
we did not understand the plan of attack! But now we do.

So, what do we do about this? We have to confront the threat as what it is -
a clear case of business terrorism! Why does terrorism work? Does it work
because of the damage it causes by random violent acts? Not really. It works
because it instills fear and panic amongst those who are under attack!

The assailers on our business understand this well. But so must we. The
assailers on our business do everything they can to achieve their goals. But
so must we. The assailers on our business work tirelessly to devise more
and more effective means to succeed. But so must we.

We all must face our fears and do the only thing that can stop terrorism,
business or political - go on with our lives, go on with our work, fight
them with everything we've got as a business, as individuals and as the fine
team that we are. We can and will succeed in this battle and we will
succeed together!

We will never leave our people behind! Never, ever! The hostages must be
freed! The families and friends of those who are the best among us - Sergey
and Valeriy, can be assured that we, the management of our company, will do
everything humanly possible and then some to bring our people home. But
everyone else on our team can and must contribute their share.

And it is simply this: Our business must go on and must be successful. Our
customers must be assured of the rock solid nature of our company and our
complete resolve to bring them the best products and services they expect
from Volia Cable for many, many years to come.

This is the best way to fight terrorism - by fighting our own fears and
carrying on with pride and resolve! This is the best way to confront our
assailers and to help bring our people home! This is the best way to prove
all the doubters wrong again and demonstrate that YES - WE CAN RUN
A CLEAN AND CIVILIZED BUSINESS IN UKRAINE UNDER THE
RULE OF LAW! (END) (ARTUIS)
=========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER TWO
=========================================================
2. U.S. INVESTOR SAYS COMPANY HIT BY 'BUSINESS TERRORISM'
SigmaBleyzer CEO Claims Cable Company Victim of Hostile Takeover

By Vlad Lavrov, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 8, 2004

Michael Bleyzer is president and CEO of SigmaBleyzer, an American investment
banking group that manages the assets of the Ukrainian Growth Fund III,
which owns Volia Cable. An American citizen, Bleyzer was born in Kharkiv in
1951. He moved to the United States at age 27.

Prior to founding SigmaBleyzer in 1994, he held senior managerial positions
at Exxon Corporation and Ernst & Young. The [Kyiv] Post met Bleyzer at
his office on July 6.

KP: What are the latest developments in the Volia Cable conflict? What is
really going on?

MB: The facts are that we have a company that provides services to a total
viewership of 1.5 million people. There are rumors that this scandal is
politically motivated. Actually, our belief is that it is probably not. It
looks much more like a purely commercial attack on our business. You can
call it a hostile takeover, Ukrainian style. However, we cannot exclude the
political implications or reasons behind it.

What is important to understand is that we have no content of our own; we
are like airwaves. So, if you nationalize a cable operator, and want to
arbitrarily shut down a particular channel, it will be the same as shutting
down any newspaper or radio station. The airwaves, a service provider, or
manufacturers of television sets cannot be blamed for showing, or not
showing, something.

You will actually have to explain to the public why this particular channel
had to be shut down. The accountability will still be with public opinion.
For political means, having control over the cable operator is useless.

Let's go back to the facts. Several months ago, Volia Cable was accused by
the prosecutor's office of Kyiv of operating a business that clearly did not
require a license at that time, without a license. Cable operators were not
on the list of businesses requiring licenses. The charge is totally baseless
and had absolutely no legal foundation.

The lower court in Kyiv quickly dismissed the case, and [the lower court's]
decision was upheld by the court of appeals.

The prosecutor's office then initiated criminal cases against Volia Cable's
management, charging them with exactly the same offences. It cannot be
explained as anything other than harassment. They arrested [the top
executives of Volia Cable] Serhy Boyko and Valery Saliamov, adding the
charges of production and spread of pornography. The production [charge]
is totally ridiculous, as the company does not produce any content at all.

The charge of spreading pornography is clearly there to play on the emotions
of the public. It has absolutely no legal basis. Volia Cable was providing
adult entertainment in strict compliance with international and Ukrainian
laws. It is the same package that is being offered in 25 countries
surrounding Ukraine, from Russia to Austria. So, for Ukraine, which is
advocating European integration, this charge makes no sense, and more
importantly, it has no legal basis.

The third charge against us is laundering money that was obtained through
criminal activities [operating without a license and the production and
distribution of pornography].

If you read the fine print of the prosecutor's charges, the criminal
activities are the first two charges against Volia Cable, although if those
charges are groundless, the third charge cannot exist. However, this fine
print is conveniently emitted, and all that sticks out is the money
laundering charge.

As a result of that, we have had two people sitting in jail for eight to
nine days. [Boyko and Saliamov were released from jail on July 7.]

KP: Did you make sure that the content of those adult channels complied
with Ukrainian standards? As you know, pornography is a criminal offence
in Ukraine.

MB: All I can say is that in-house and outside lawyers assure us that we are
fully within the law.

KP: There are reports that cable operators in other parts of Ukraine are
feeling pressure. The issue is basically about removing Channel 5 from their
networks. Do you see any connection between Volia Cable's situation and
that of other cable operators?

MB: I cannot exclude that there is a connection. However, we have not been
approached and asked to shut down a channel, possibly because we're an
American company. If someone does shut down a channel, they'll still have to
explain this decision to the public, and be accountable for it.

If other cable operators are feeling pressure, I don't believe they should:
They just need to understand that they're simply a means of transportation
[for the signal].

KP: Is there any connection between selling KTM and IVK channels and the
current conflict?

MB: A couple of months ago we sold a number of positions in our portfolio
that were unrelated to the cable business. Can I exclude that the buyers are
behind [the current conflict]? No, I cannot exclude that. It is possible,
but I have no basis to say that.

KP: So who's behind it?

MB: Someone who would like to have a cable business. Clearly, a number
of groups could be interested in buying good businesses, but the situation
with Volia Cable is not exactly buying. This is a takeover.

KP: Do you think that taking over the company is the main objective here,
rather than pressure or intimidation?

MB: In my opinion, hostile takeover is the most likely reason for this. I
view what is going on with Volia Cable as business terrorism. The strategy
is simple: You take the two most important people for the business as
hostages; you really hurt them and their families very badly.By doing that,
you scare everybody else, and you demoralize and paralyze the business.
Then it's much easier to take it over. In my mind, this is what is going on
now.

The big question is: Is it okay to have a country in which conditions
favorable for business terrorism exist? I suspect strongly that Volia Cable
is not the only company to which this approach has been used. I wouldn't
be surprised if there are a number of other companies, in this very city and
country, which are experiencing the same thing that Volia Cable is
experiencing, without any political reasons behind it. It is just a
takeover. It is just because people feel they can do it in this country.

If the country becomes known as a place where business terrorism can
prosper, it will be horrible for the investment climate and for the image of
the country.

It is extremely important for the country's policymakers to stop attacks
like this as quickly as possible, and to punish those who do this.

KP: Do you know of any conditions that should be fulfilled in order to
resolve this conflict?

MB: At this stage we don't even know who [the attackers] are. They
probably feel they haven't hurt us bad enough yet.

KP: What is the status with the seizure of Volia Cable's equipment?

MB: By arresting our equipment, you can paralyze our business, but even if
you confiscate it, how do you give it to somebody else to own? This is a
simple question of property rights - we own this property [worth over $30
million], most of which we bought with our own money. We did not privatize
it and we did not get it from anybody else. You can arrest it, but how can
you give it to somebody else - it is ours!

KP: That is what a takeover is all about.

MB: No, that is what a robbery's all about! At the moment, the efforts to
confiscate our equipment have stopped. They have confiscated the equipment
we used to deliver our adult channels [which Volia Cable no longer
broadcasts]... but subscribers still receive the rest of the channels
broadcast by Volia Cable.

Most importantly, two of our people have been illegally arrested. And this
is the only reason why I have agreed to give you the interview: Two very
distinct people are being humiliated, because somebody has paid for this,
most likely.

KP: How does this situation affect SigmaBleyzer's plans regarding Ukraine?

MB: It affects our plans in dramatic fashion. Until this matter is resolved,
we will conduct no business in Ukraine, other than maintaining a presence
and a watchful eye on our other investments in the country. We are
concerned that this might affect our other investments in the country.

We have suspended any expansion plans for Ukraine, while in fact, up until
about a week before these arrests took place, we were actively working on
[an investment program] worth $250 million, most of which would have
been invested into Ukraine. Now we do not feel uncomfortable investing
into Ukraine, and also, we do not feel comfortable recommending that others
invest here.

This case has already become a scandal in Ukraine, and we are doing
everything we can to prevent it from becoming an international scandal, as
that would not be in anybody's interest.

All that I want is for our people to be released and for this matter to be
brought to a quick and just resolution: Hopefully that can be done without
major international scandal. If that were to happen on a fairly quick scale,
then I think this damage can be contained somehow. (END)(ARTUIS)
----------------------------------------------------------------------------
LINK: http://www.kyivpost.com/business/invest/21352/
========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER THREE
========================================================
3. "VOLIA CABLE MYSTERY DEEPENS"

By Vlad Lavrov, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, Thursday, July 8, 2004

Cable TV industry insiders are arriving at differing views about why
prosecutors have launched an investigation into Volia Cable, but the
overwhelming position remains that greed and pro-presidential manipulation,
not attempts to reorganize Ukraine's broadcasting services, are the
underlying motivations behind the cable monopoly's recent troubles.

The ongoing investigation by the Kyiv office of the Prosecutor General and a
Kyiv court-sanctioned arrest of Volia's top executives Serhy Boyko and
Valery Saliamov June 30 on charges of broadcasting pornography, operating
without licenses until late 2003, and laundering money have put the company
in a tailspin. A July 7 decision by Kyiv's Appellate Court released Boyko
and Saliamov on orders that they remain in Kyiv pending trial, but their
arrest has spooked company employees, prompting Volia management to
release a harshly worded statement last week to assuage their fears.

"We are under attack. Our main fault is that we built a business that is too
good to be left alone," reads a statement that company management
distributed to employees last week.

The statement went on to compare the arrest of company executives Boyko
and Saliamov to tactics used by terrorists, like taking hostages for the
purpose of instilling fear and panic. The statement went on to say that the
situation is part of a hostile takeover bid designed to steal the
broadcasting business from Ukraine's largest cable operator.

The arrests followed a June 17 criminal case opened by the Kyiv PGO against
the local cable monopoly. Volia, which has denied the charges and is
appealing them, has not been forced to halt broadcasting, but the company's
future remains uncertain.

That's bad news for SigmaBleyzer, the American investment banking group
that is the controlling investor in Volia, which now seems locked in a fight
for its survival. But whether Volia's fight is with unnamed rival firms,
such as those that recently bought two local television channels from the
cable giant, or with forces loyal to the government, is still unclear.

TAKING HOSTAGES

Representatives of Volia Cable have been vocal about their view that the
case against their company is part of an orchestrated attacked by emerging
competitors. But they are not naming names yet, at least not directly.

Michael Bleyzer, president and CEO of SigmaBleyzer, would not exclude the
possibility that the firms behind the recent purchase of channels KTM and
IVK could be behind the current attacks, though he stressed that he has no
proof of this. He also could not identify who the buyers are due to a clause
in the sale contract that forbids him from doing so, he said.

Volia officials meanwhile insist their business did not require a
broadcasting license and blame competitors for orchestrating the
investigation. They do not exclude the possibility that their company might
be facing charges due to the fact that their network broadcasts one of the
only television channels allied with the political opposition movement:
Channel 5.

FREEDOM TO SPEAK

Ivan Adamchuk, general director of Channel 5, says he's nearly certain that
the investigation into Volia is part of an attempt by pro-presidential
forces to pressure cable operators into cutting off his channel.

People behind the attack chose one of the largest cable television operators
in Europe "to show [other cable operators] what will happen if they do not
remove our channel from their networks," he said.

Adamchuk said such pressure tactics have been effectively used in recent
weeks to push Channel 5 off the air in other regions of Ukraine. The channel
has been completely removed from all cable networks in Donetsk oblast, and
an increasing number of cable operators in eastern Ukraine have also severed
ties with Channel 5. In private discussion, some these cable operators have
said they were pressured to do so, he added.

Natalya Ligachova, chief editor of the Internet-based media watchdog
Telekritika.kiev.ua, said the investigations into Volia could be linked to
both business and politics.

"The reason for the attacks might be political, as well as related to the
business interests of certain groups," she said.

Ligachova said the conflict with Volia might be rooted in Channel 5's recent
decision to air parliamentary sessions live.

Channel 5 currently has access to about 40 percent of the country, mostly
through cable providers. Pressure tactics have, however, put the channel's
expansion plans on hold.

Channel 5, which has not been issued wide spectrum television broadcasting
rights throughout Ukraine, has access to most of its television viewers in
Kyiv through the Volia Cable network, which controls more than 80 percent of
the market in Kyiv. (END) (ARTUIS)
==========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER FOUR
==========================================================
4. CABLE TV COMPANY BRINGS COUNTER SUIT AGAINST
UKRAINIAN PROSECUTOR'S OFFICE
[Volia Cable Fights Back Against Business Terrorism]

UNIAN news agency, Kiev, Ukraine, in Ukrainian, 9 Jul 04
BBC Monitoring Service, UK, in English, Friday, Jul 09, 2004

KIEV - The Volia Cable company has submitted a lawsuit to a court (an
unnamed court) against the Ukrainian Prosecutor-General's Office [PGO] for
disseminating false information, which was released in a statement issued by
the PGO and released on 8 July. This is stated in an official press release
from Volia Cable received by UNIAN.

In particular, Volia Cable believes that the PGO "seriously violated the
principle of presumption of innocence" by rushing "without having an
appropriate ruling from a court" to state that Volia Cable "is disseminating
blatant pornography".

Volia Cable is also strongly denying information from the PGO that its
"financial revenues pass through offshore zones in Cyprus", and that "in
actual fact, the company is run by foreigners - citizens of the USA".
[Passage omitted: background to case]

[On 6 July the Kiev city economic court rejected a lawsuit by prosecutors
against the Kiev cable TV provider Volia Cable after prosecutors had
demanded that Volia pay almost 2m dollars, see "Ukrainian court rejects
lawsuit against cable TV company", Interfax-Ukraine news agency, Kiev, in
Russian 0819 gmt 7 Jul 04]. (END) (ARTUIS)
---------------------------------------------------------------------------
FOOTNOTE: The family of three Ukrainian Growth Funds (UGF) is
managed by the American company, SigmaBleyzer, one of the largest
and most successful private capital investors in Ukraine. SigmaBleyzer has
been operating in Ukraine since 1994 and has raised on the private
international financial markets over $100M that has been invested in
Ukraine. The largest UGF investment in Ukraine is their investment in Volia
Cable. Over the last four years the SigmaBleyzer team acquired several
large cable operators in Kiev. They have been consolidated under one
brand name -Volia Cable.
=========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER FIVE
=========================================================
5. TEXTILE FIRMS STUNG BY LVIV STATE TAX ADMINISTRATION
European Business Association Writes Strong Letter of Protest

By Roman Olearchyk, Kyiv Post Staff Writer
Kyiv Post, Kyiv, Ukraine, July 8, 2004

Officials in Lviv oblast have again paralyzed dozens of foreign-backed
sewing shops in their region by toying with the country's tax legislation.
On June 19, regional tax officials stopped accepting promissory notes as
temporary payment for imported raw textile materials.

The authorities' refusal to accept promissory notes has brought the oblast's
textile shops, most of which sew clothing and other garments for European
firms, to an abrupt halt - for the second time this year - and elicited
protest from a Kyiv-based advocacy group.

"This is the second time in recent months that the entire industry has come
to a virtual halt," said Andry Beyzyk, who chairs the Kyiv-based European
Business Association's western Ukraine committee. "Most of the Ukrainian
companies established by foreign investors are literally paralyzed," reads a
letter of protest issued by the EBA on July 5.

Ukrainian legislation permits firms to import raw materials duty- and
tax-free on a 90-day basis, which means that the materials should be
processed and exported within the three month period. By issuing a
promissory note, firms avoid pulling funds out of their cash flow in order
to temporarily pay the import duties and value added tax, which would be
refunded at a later date. As of July 7, some textile shops were being issued
authorization by regional tax officials for promissory notes, while others
were not.

This is not the first time this year that the region's authorities have
created havoc in the textile industry by manipulating tax legislation. In
mid-April, customs officials in western Ukraine effectively brought the
region's textile industry to a halt when they demanded that import duties
and value-added tax be paid on imported raw materials, even though taxes
had not been officially imposed on the materials.

Lviv officials kept the controversial taxes, which halted operations at
several of the region's sewing shops, in place for one month.

The strange sequence of events has left many investors in the region
wondering whether investing in Ukraine is worthwhile at all. "During the
past seven years, about 60 European companies have invested in the light
[textile] industry in western Ukraine, creating over 20,000 jobs.

[Today, these companies are] not receiving raw materials, and consequently,
are not producing anything," the EBA said in its letter, addressed to the
newly appointed State Tax Administration head Fedir Yaroshenko, First
Deputy Prime Minister in charge of financial issues Mykola Azarov, and
Steffen Skovmand, acting head of the European Commission's delegation
to Ukraine. "But the most important risk they run is losing their clients
[in Europe,]" the letter continues."

Lviv's Tax Administration has been tightlipped. A spokesperson declined to
discuss the situation in detail, insisting that no laws had been violated.
However, textile shops and the EBA disagree.

The situation "contradicts the law and orders of the State Tax
Administration and also the Instruction of the President of Ukraine [Leonid
Kuchma] 'On Measures as to Intensification of Corruption-fighting within the
State Tax Service' as of June 21, 2004," the EBA said in its letter.

The EBA added that the situation could reduce the investment attractiveness
of western Ukraine, which could, in turn, cause difficult economic and
social consequences for the region. On average, western Ukrainian textile
shops employ between 100 and several hundred Ukrainian workers, primarily
females.

The textile shops are typically located in small villages where jobs are
scarce. Salaries average about $100 per month. Investors are attracted to
the region's low-cost workforce and close proximity to Europe. (END)
=========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER SIX
=========================================================
6. UKRAINIAN PRESIDENT UPBEAT ON 10 YEARS IN OFFICE

One Plus One TV, Kiev, Ukraine, in Ukrainian, 11 Jul 04
BBC Monitoring Service,m UK, in English, Sunday, Jul 11, 2004

KIEV - Ukrainian President Leonid Kuchma has given a TV interview in
which he spoke highly of his term of office. Summing up his 10 years as
Ukrainian president, Kuchma said that an economic collapse was averted and
living standards had risen.

President Kuchma was speaking to presenter Vyacheslav Pikhovshek on the
propresidential One Plus One TV. The channel broadcast a recording of the
interview on 11 July, the day after the 10th anniversary of Kuchma's first
election as president.

Speaking about his term of office, Kuchma said that "the 10 years seem to be
like one moment". "It feels as if only yesterday I was elected president for
the first time," he added.

ECONOMIC GROWTH

When Kuchma first took office in 1994, he said he "was well aware of the
economic situation - 10,650-per-cent inflation, GDP halved, no wages, only
barter operations." "I clutched my head thinking what to do next," Kuchma
said. "There was total emptiness," he added.

But eventually, Kuchma said, "impressive" results were achieved. In the last
four years, GDP had grown by a third, industrial output by 60 per cent and
real wages by 61 per cent, Kuchma said.

UPCOMING PRESIDENTIAL ELECTION

Asked by the presenter about his attitude to a campaign urging the president
to run for re-election, Kuchma did not say whether or not he will run for a
third term of office in the October presidential poll. He said he hoped that
the "voters will make the right choice, and the best contender will win".

The Ukrainian constitution bans the election of one and the same person for
president more than two times in a row. Yet the Constitutional Court said
that Kuchma was elected for the first time under the old constitution, and
he was entitled to take part in the presidential election on 31 October.
Earlier, Kuchma said that he would not run for re-election this time.

Speaking about possible Western concerns about the state of democracy in
Ukraine ahead of the presidential election, Kuchma said: "It is good to have
an eye on what is happening abroad - so long as it remains within the bounds
of common sense. But it should be we, Ukrainians, who decide on something as
serious as the presidential election. Let America and Russia keep quiet."

Kuchma gave positive comment on Prime Minister Viktor Yanukovych's
manifesto as a presidential candidate. "Everything he said at his party
congress was correct," Kuchma said. "His deeds speak for him, and not
just his - the government's deeds, specific results," he added.

At the same time, Kuchma criticized the main opposition contender, Viktor
Yushchenko, for being "populist" "His speech was more like that of a
communist, a populist. I think that he has taken upon himself a task that he
will be hard put to carry out," Kuchma said.

FOREIGN POLICY

According to Kuchma, the three main foreign-policy achievements in the
last 10 years are the international recognition of Ukraine as a state, the
creation of a basis for Ukraine's membership of collective security
organizations and the mapping out of the state's borders.

He said that a basis had been laid for Ukraine's European integration. It
"is one of our main foreign policy priorities," he said. According to him,
there is no alternative to close cooperation with NATO and the EU. "We
are all in one boat - especially in the face of the sort of global threat
that terrorism now poses," Kuchma said.

At the same time, Ukraine's relations with Russia remain special, Kuchma
said. "With Russia, we always speak the same language, even when we raise
our voices," he said. Kuchma said he was ready to meet Russian leaders more
often to step up trade with Russia and thus create more jobs in Ukraine.

DOMESTIC POLICY

Asked if he ever wanted to dissolve parliament, Kuchma said he had never
considered the option. "This would be a total disaster for Ukraine. It would
become completely isolated," he said. However, Kuchma said that parliament
should have been dissolved in 1996, if it had not approved the constitution.

President Kuchma also criticized the opposition for "rejecting the most
important bills" and "stalling reform". Many opposition activists are
"revolution people" who do not want to assume power and are thus avoiding
responsibility, Kuchma said.

Summing up his 10 years in office, Kuchma said that "all these were Kuchma's
years". "I took upon myself all political and economic decisions," Kuchma
said.

The interview was recorded in a book-lined studio. Kuchma appeared relaxed
and casual, wearing no tie. The interview lasted for over an hour,
interspersed with the presenter's and experts' comments. (Audio and video
available. Please send queries to kiev.bbcm@mon.bbc.co.uk) (END)
=========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER SEVEN
=========================================================
7. CIS STATEMENT AGAINST THE WATCHDOG OSCE IS ATTEMPT
BY UKRAINIAN GOVERNMENT TO REDUCE OBSERVATION AND
INTERNATIONAL MONITORING OF UKRAINIAN ELECTIONS

Statement by Anatoliy Hrytsenko, Head, Informational and
Analytical Department, Yushchenko for President Campaign
Press Service for Viktor Yushchenko, Kyiv, Ukraine, Friday, July 9, 2004

A declaration adopted by the presidents of the countries-members of the
Commonwealth of Independent States (CIS), in which they criticize OSCE for
its attempts to ensure democratic elections in Ukraine, "has demonstrated
the double standards used by the Ukrainian government and the fact that it
applies thirty-year-old Brezhnev's criteria to the OSCE activities." On the
one hand, President Kuchma has invited observers to the elections while on
the other - as the head of the CIS - has signed documents, which doubt the
work of the OSCE in the sphere of controlling human rights, including
electoral rights.

Such commentary was provided by the head of the informational-and-analytical
department of Victor Yushchenko's electoral headquarters Anatoliy Hrytsenko
as he commented on the adoption of the Declaration of the CIS member-states,
which had been adopted at the informal summit of the Commonwealth; the
declaration criticizes rather sharply, for a diplomatic document, the work
of the OSCE. Hrytsenko sees this declaration "as an attempt by the
government to lessen the attention of international observers to Ukrainian
presidential elections."

The declaration, which was signed by the leaders of all CIS states
(Azerbaijan and Georgia - with caution), accuses OSCE of excessive
politicization and failing to take the peculiarities of certain states into
consideration. OSCE is being criticized for supposedly shifting its
priorities towards humanitarian problems, especially towards monitoring the
situation in the sphere of human rights and evaluating electoral results.

"The implication of this declaration is understandable," said Hrytsenko, "to
limit the activities of the OSCE Bureau on democratic institutions and human
rights, limit the OSCE "field" missions on the eve of presidential elections
in Ukraine. It is a pity that it had to happen during Ukraine's headship at
the CIS. This is exactly the time we need to hold honest and transparent
elections. It would allow us to "get rid of" the humiliating monitoring
procedures by international organizations over the situation in Ukraine."

"The government's behavior reminds me of the events that took place thirty
years ago when Leonid Brezhnev signed the Helsinki Pact despite the fact
that the headship of the USSR had no intentions of upholding human rights
while the sharp negative reaction by the international community concerning
violations was either ignored or criticized by the Central Committee of the
Communist Party of the Soviet Union," stressed Hrytsenko.

He thinks that, "the government and its so-called "common" candidate -
Victor Yanukovych - have been showing since the day one of the campaign
that they are preparing for dishonest and "dirty" elections because they
feel the cool reception of this candidate." Distorted accounts of Victor
Yushchenko's nomination, provocations by the government-controlled
"nationalists" are just a few examples of the "dirty" methods, used by the
Yanukovych team.

They are afraid of international attention and are attempting to limit it by
all means because OSCE's work in many countries has proven that it is an
effective instrument for uncovering the violations of the citizens' rights,
which, "unlike observers from the CIS member-states, soundly and decisively
report on the undemocratic nature of elections in the former soviet states."

Anatoliy Hrytsenko thinks that, "attempting to keep the OSCE out of the
game, the government wants to legalize dishonest elections in Ukraine with
[the help of] observers from the CIS member-countries. It will not happen,
however: millions of Yushchenko's supporters will control the results of the
elections and the citizens will elect the people's president. Neither
Kuchma nor the CIS headed by him will prevent Yushchenko's team from
implementing an effective mechanism for counting votes. We are confident in
our victory, in the victory of democracy."

Representative of Victor Yushchenko's headquarters also stressed that the
aforementioned "declaration of the Commonwealth of Independent States
was adopted, as is the case with many foreign policy decisions, behind
closed doors: there were no preliminary consultations, expert and public
discussion."

"The presidents gathered together and, at a "gallop pace," "blessed" the
document, which states the negative position of the CIS towards a respected
international organization. Adopting strategic decisions this way is
unacceptable because it damages Ukraine's national interests," stressed
Anatoliy Hrytsenko. (END) (ARTUIS)
--------------------------------------------------------------------------
LINK: http://www.yuschenko.com.ua/eng/present/News/883/
========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER EIGHT
========================================================
8.UKRAINE'S MOTIVES FOR SIGNING CIS ANTI-OSCE STATEMENT
'I'm Riding Someone Else's Horse, Not The Right Horse"

By Volodymyr Kravchenko
Zerkalo Nedeli, Kiev, Ukraine, in Russian 10 Jul 04, p 1,4
BBC Monitoring Service, UK, in English, Jul 11, 2004

Ukraine joined eight other CIS countries in signing a statement initiated by
Russia critical of the OSCE, a serious Ukrainian weekly has said. It is
likely that President Leonid Kuchma breached Ukrainian laws by signing up
to it. From Ukraine's viewpoint, the document forestalls possible OSCE
criticism of the coming presidential elections, the article concludes.

The following is an excerpt from the article by Volodymyr Kravchenko
entitled "I'm riding someone else's horse, not the right horse" published by
the Ukrainian newspaper Zerkalo Nedeli on 10 July; subheadings have been
inserted editorially:

The weekend at the Moscow hippodrome was a great success. [Passage
omitted: CIS leaders enjoyed horse races in Moscow.]

Even the rain did not dampen the festive atmosphere of the meeting of
Commonwealth [of Independent States] presidents. On the contrary, it helped
them to concentrate and return to the decision of matters of state
importance. For that reason, somewhere in a break between classical ballet,
horse racing and supper at Volynskiy, eight of the ten Commonwealth heads of
state that had come to Moscow - Robert Kocharyan [Armenia], Nursultan
Nazarbayev [Kazakhstan], Askar Akayev [Kyrgyzstan], Vladimir Voronin
[Moldova], Vladimir Putin [Russia], Emomali Rahmonov [Tajikistan], Islam
Karimov [Uzbekistan] and Leonid Kuchma [Ukraine] - without unnecessary
publicity agreed the idea of a statement by CIS member states regarding the
state of affairs in the OSCE.

They were joined by another virtual signatory: Alyaksandr Lukashenka
[Belarus] approved the text without visiting the Russian capital. Well,
Alyaksandr Ryhoravich [Lukashenka] has had it in for the OSCE ever since
the debates on his third term [in office]. [Passage omitted:
non-signatories]

Five days later the statement was made public in Vienna at a meeting of the
OSCE permanent council. [Passage omitted: text of CIS statement on OSCE]
As far as is known, Moldovan President Vladimir Voronin was the only
signatory to make a reservation. The Moldovan side considers that additional
attention should be concentrated on the insufficient effectiveness of the
OSCE in settling territorial conflicts. Chisinau "regrets the disproportion
between the OSCE's high activity in issues of supporting democratic
standards and its passivity in tackling `frozen' conflicts on CIS
territory".

COLD WAR LANGUAGE

We confess that when we first read the statement, we were shaken both by
its style and its content. You don't often read documents that cast doubt
not only on the effectiveness of OSCE activity as an organization, but also
on the observance of the mandate granted to it. Some people even at the
beginning supposed that it was a crude provocation, so clumsily did the text
read. The phrase that "CIS states intend to build their further joint line
[ellipsis as published] depending on the real ability of the OSCE properly
to adapt to new conditions and the degree of its receptivity to the concerns
listed" was especially moving.

Not to mention such expressions as "the organization does not properly
implement the fundamental documents", "violation of the OSCE mandate",
"unjustified criticism", "the practice of double standards", "selective
approach" and "the politicized character of the ODIHR [Office for
Democratic Institutions and Human Rights]".

There are undoubtedly things to be criticized in the OSCE. But it can be
done differently. One would think that Ukrainian diplomacy over past decade
had managed to enrich its arsenal with means making it possible to make
known Kiev's view on the problem without such sharp formulations. The
language and content of the statement are more reminiscent of the ultimatums
of Soviet diplomacy of cold war times that made the whole world community
tremble.

But if the USSR could allow itself to stand against the whole world, why
does Ukraine need to do that? Why is that four months before the election
the Ukrainian president [Leonid Kuchma] on behalf of the state joined a
document that may complicate the already complicated relationship with the
West and democratic institutions?

And how should we understand Leonid Kuchma, who promises honest and
transparent elections in The Hague and Istanbul, but in Moscow calls on the
OSCE to take account of the specifics of the CIS countries and talks about
unjustified criticism? Now probably many friends of Ukraine on both sides
of the Atlantic are becoming reflective and guessing what more can be
expected from such a "predictable" partner as Ukraine.

According to available information, it was the Kazakhs who were the formal
initiators of adopting the statement and its designers. If one looks more
closely at it, the Kazakh authorship is indirectly confirmed also by the
accents placed in some provisions of the document. For example, it says "the
activity of the ODIHR often has a politicized nature and does not take
account of the specifics of individual states". Experts say that
representatives of CIS countries from Central Asia constantly talk precisely
about the specifics of the newly independent states in general and the
Central Asian region in particular at sessions of the OSCE permanent council
and at meetings with representatives of the ODIHR.

STATEMENT INSPIRED BY RUSSIA

However, it is doubtful that Astana was the real initiator and inspirer of
the statement. It is precisely our northeastern neighbours that can be more
confidently called the real authors of the document. Since if anyone has
every reason to rub their hands after the adoption of the statement, it is
the Russians. Its content is too reminiscent of Moscow's view of the OSCE
as an alternative to NATO in building the European architecture of security.

Moreover, the significance of the document for the Russians is far more than
simply the creation of a group of countries jointly issuing an appeal to
reform the organization: the idea itself is good, but at present Utopian.
However, the creation of such a "reformist faction" in the OSCE has allowed
Moscow to solve at least three foreign policy aims.

The theme of Russian military bases in Moldova and Georgia was hovering
unseen in the text: the OSCE is constantly reminding the Kremlin about the
obligations taken on by Russia at the Istanbul OSCE summit. And this cannot
fail to irritate Moscow, which would not object to its bases continuing to
be in those countries.

However, it is not polite to state this directly, and moreover it would have
extremely serious consequences. For this reason, an elegant deceptive
movement is being carried out and a right hook is inflicted: Russia, at the
head of a group of states, is casting doubt on the effectiveness of the
organization's activity, including its military-political component. Along
the way Moscow is taking on the role of one of the main guarantors of
peacekeeping activity in the post-Soviet space.

After all, it is no accident that the comment of the information and press
department of the Russian Foreign Ministry talks about a violation of "the
basic principle of the OSCE - a comprehensive approach to security".

Neither should one lose sight of the fact that Russia also has its own hot
spot-Chechnya. And Moscow is extremely irritated when the organization
starts talking about human rights violations in the republic.

What is more, this document is probably the first case in the recent history
of post-Soviet states where leaders of Commonwealth countries have come
out with a single position on an international question: the final part of
the statement in effect speaks of the formation of a common CIS policy. And
Russian diplomacy has been trying to get this idea through for several
years. And finally there is this task: the Commonwealth presidents have made
a move from a single economic space to a common security policy.

And the department comments on the statement like this: "CIS countries are
continuing to coordinate their actions in the OSCE on working and political
levels. They will build their further joint line in the organization,
including at the forthcoming ministerial meeting next December in Sofia
depending on the readiness and existence of the political will of OSCE
partners to make the organization appropriate to contemporary conditions,
to develop in parallel and equally all three dimensions of security and to
eliminate the practice of double standards."

And finally the main thing. It is obvious that the Russians, who lobbied
behind the scenes for the adoption of the document, were also pursuing the
intention of deepening the split between Ukraine and the West, pushing our
country on to the path of Belarus. And on the example of this statement to
demonstrate to European and Euro-Atlantic organizations the Ukrainian
leadership's lack of will to build a normal dialogue not only with the OSCE,
but also with solid international institutions. In the larger scheme of
things, Russia is thereby aiming to confirm its right to keep Ukraine
further in its sphere of influence.

UKRAINE'S MOTIVES

In general one can very precisely trace Russian interest and Moscow's desire
to use its CIS partners to achieve its foreign policy aims in this document.
Nevertheless, our president joined the document. Today some Ukrainian
officials, justifying the step, are saying that it was, so it goes, a
demonstration of the fact that Ukraine was consistently defending its
position in the question of OSCE reform and also that our country was not
afraid of criticism from that structure. But if Kiev has such a strong
desire to reform the OSCE, what prevented it from showing such consistency
in a less sharp form and acting more neutrally, as was done, for example, by
the Georgians?

Evidently the Ukrainian president's desire to engage in reform of the OSCE
was so strong that Leonid Kuchma decided not to pay attention either to the
constitution or the Ukrainian law "On international treaties". Let us note
that the document signed by the president is entitled "Statement by CIS
member states regarding the state of affairs in the OSCE". This means that
Leonid Kuchma accepted it in the name of the state.

In the opinion of international affairs lawyer Anton Buteyko, this provides
grounds for claiming that this political statement comes under the above law
and article 106 of the Constitution of Ukraine. All the more so in that the
statement contains completely concrete obligations that our country should
now adhere to. And then such questions arise: did this document go through
all the internal procedure of agreement in the Foreign Ministry and the
Cabinet of Ministers?

Did the foreign minister [Kostyantyn Hryshchenko] and prime minister [Viktor
Yanukovych] affix their imprimatur? And if so, when did it happen? According
to our information, the Foreign Ministry, where the document lay, gave it an
extremely negative assessment. But was there a government session at which
the issue was considered?

However, the end justifies the means. Obviously Leonid Kuchma can overlook
the procedures and foreign policy consequences of the statement adopted if
it starts to be a matter of presidential elections. The OSCE has recommended
itself as an extremely circumspect organization that has evaluated with
maximum restraint the election process on the territory of post-Soviet
states. In order for the organization to react sharply, it would need a
really unusual event like a murder at a polling station in front of OSCE
observers. Indeed, it intends to send only 700 people to the present
presidential elections, which is extremely few and shows negligible interest
in what is going on in Ukraine.

Nonetheless, the Ukrainian authorities considered it necessary firmly to
criticize the activity both of the OSCE and the ODIHR. Perhaps it is all
because the OSCE is probably the only organization that has a mandate to
assess the electoral process. And in that case, in order to make a cautious
organization still more cautious, the Ukrainian authorities are taking part
in such a psychological attack as the White Guard officers against the
position of Chapayev's fighters [reference to Russian Civil war].

On the other hand, for the Ukrainian authorities the statement is sweeter
than manna from Heaven, since it makes it possible to forestall possible
negative conclusions on the part of the OSCE regarding the procedure and
results of the elections on 31 October. Official Kiev must also be pleased
that the demarche in relation to the organization was made collegially by
nine CIS countries.

Something like this is an excellent means of justifying internal policy and
possible violations at the presidential elections. After all, it is now
demonstrated to the whole world that the bias of the OSCE and ODIHR
with regard to the CIS in general and Ukraine in particular is not something
invented by Mr [Viktor] Medvedchuk [head of presidential administration] or
[Prosecutor-General Henadiy] Vasylyev, but a genuinely existing problem.

However, it is likely that this will be believed only on Bankova [Street
where presidential administration is located]. (END) (ARTUIS)
========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER NINE
========================================================
9. UKRAINIAN DEPUTY FOREIGN MINISTER SAYS CIS
CRITICISM OF OSCE "CONSTRUCTIVE"

TV 5 Kanal, Kiev, Ukraine, in Ukrainian, 9 Jul 04
BBC Monitoring Service, UK, in English, Friday, Jul 09, 2004

KIEV - [Presenter] Ukraine and eight other CIS states have accused the
Organization for Security and Cooperation in Europe (OSCE) of disrespect
for their sovereignty. Apart from Ukraine, a statement to that effect was
signed by Russia, Belarus, Moldova, Kazakhstan, Armenia, Kyrgyzstan,
Tajikistan and Uzbekistan. The statement says that the OSCE interferes in
the internal affairs of those states, thereby infringing on their
sovereignty.

The OSCE Parliamentary Assembly meeting discussing the Ukrainian issue is
under way. Ukrainian Deputy Foreign Minister Volodymyr Yelchenko has
said that the accusations against the OSCE are unrelated to the coming
[October] presidential election in Ukraine. He said that the accusations are
quite constructive and that the OSCE will only benefit from them.

[Yelchenko] The meeting of the OSCE standing committee has taken place.
This is a working agency of the organization. At the meeting the Russian
delegation made a statement on behalf of a group of countries, it seems you
are right saying that there were eight of them.

The statement contains - let's put it this way - a number of constructive
observations regarding the organization's activity. This is general
criticism which on the whole corresponds to Ukraine's position. (END)
========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER TEN
Send The Action Ukraine Report to the Friends of Ukraine Around the World
========================================================
10.RUSSIA MUST NOT HAVE A VETO ON UKRAINE'S FUTURE SAYS
FORMER SENIOR US DIPLOMAT RICHARD HOLBROOKE IN KYIV
[Another major U.S. speaker sponsored by Viktor Pinchuk]

Agence Presse France, Kyiv, Ukraine, Friday, July 09, 2004

KIEV - Russia should not have the right to veto a bid by Ukraine to join
NATO or the European Union once it has carried out social and political
reforms, a senior former US diplomat said in Kiev Friday.

Ukraine could not ignore Russia on which it depended for its energy and with
which it had very strong economic and ethnic ties, Richard Holbrooke, former
US ambassador to the United Nations, told an audience which included
Ukrainian Foreign Minister Konstantin Hrishchenko. But Russia must not have
a veto on Ukraine's future, he added.

Holbrooke reminded his audience that Russian opposition had once appeared to
make it impossible for the three Balkan states Estonia, Latvia and Lithuania
to join NATO and said that Ukrainian membership of NATO or the EU was not a
threat to Russia but a stimulus for rapprochement with the rest of Europe.

However preconditions for EU or NATO membership were social and political
reforms, respect for the rule of law and free media. He said that if the
Ukrainian presidential election on October 31 was criticised as fraudulent,
that would have a very negative impact.

Holbrooke, an adviser to United States Democratic presidential contender
John Kerry, was due to leave Kiev Friday at the end of a two-day visit at
the invitation of businessman and politician Viktor Pinchuk, son in law of
President Leonid Kuchma. (END) (ARTUIS)
----------------------------------------------------------------------------
FOOTNOTE: Viktor Pinchuk must be the best friend the Washington, D.C.
Speakers Bureau has. But of course after the $400 million gift he received
from the Ukrainian government recently, when he and a partner purchased
the largest steel mill in Ukraine for half-price, Mr. Pinchuk can afford to
spend big bucks, paying the very high speakers and travel fees, to bring
many former, high level U.S. citizens to Kyiv for a two-day speaking and
meeting engagement. So far former President George Herbert Walker Bush,
General Wesley Clark and now Richard Holbrooke have benefited
from Viktor Pinchuk's generosity.
=========================================================
ACTION UKRAINE REPORT-04, No. 113: ARTICLE NUMBER ELEVEN
=========================================================
11. UKRAINIAN PRIME MINISTER VOWS TO KEEP PRESIDENTIAL
ELECTION THIS FALL FREE AND FAIR

By Natalia A. Feduschak, The Washington Times
Washington, D.C., Friday, July 9, 2004

KIEV - Ukrainian Prime Minister Viktor Yanukovych pledged yesterday
that presidential elections this fall will be free and fair, and said he
hopes the ballot will open the door to a new relationship with the West.

The prime minister also said in an interview that he supports creating a
democratic society in Iraq but that a timetable for withdrawing about 1,500
Ukrainian troops from the country should be drawn up once the security
situation stabilizes.

"I've said before I don't need elections at any price," said Mr.
Yanukovych, who announced his candidacy for president this week. Other
declared candidates include the opposition leader, former Prime Minister
Victor Yushchenko.

The two top finishers in the Oct. 31 ballot will meet in a runoff three
weeks later if no one wins 50 percent of the vote. Mr. Yanukovych and Mr.
Yushchenko, often dubbed "the two Victors," are the top contenders in an
election that could mark a turning point for Ukraine.

President Leonid Kuchma won approval from Ukraine's constitutional
court to run for a third term, even though the constitution prohibits more
than two terms. The decision was based on a loophole.

Although Mr. Kuchma has said repeatedly that he will not seek another
term, many candidates are nervously waiting for July 28, the last day for
nominations.

Sources say the president, who has been in government for more than a
decade, was unambiguously told at a recent NATO summit in Istanbul that
the West would not welcome another Kuchma term.

The United States was angered in the run-up to the Iraq war last year by
reports that Mr. Kuchma had approved the sale of a sophisticated $100
million radar system to Saddam Hussein's regime.

Mr. Yanukovych, appearing relaxed and confident, said he wanted all the
presidential candidates to have access to and constant contact with
international election monitors.

"We need to strictly keep to Ukrainian laws," he said. "The government
will monitor the elections and create all conditions for observers to be
convinced of what is being done in Ukraine."

The prime minister said he understood Western concerns about media
ownership in Ukraine, calling the concentration of media holdings in the
hands of one political party or individual "an illness."

Although much of the media is no longer government-owned, Mr.
Yanukovych said laws assisting the development of democratic media
need to be expanded and improved.

To help level the playing field, Hanna German, the prime minister's
press secretary, said Mr. Yanukovych has declined many interviews,
especially those with Ukrainian media, during the campaign.

Regarding Iraq, Mr. Yanukovych said involved nations "should sit down
at the table and determine what measures ... we should take to stabilize the
situation ... and have a step-by-step exit out of Iraq. I'm for this
approach. We should all cooperate to have a result of stabilizing Iraqi
power."

Mr. Yanukovych, who was governor of the industrialized Donetsk region in
eastern Ukraine before becoming prime minister, said Ukraine's aspiration to
join the European Union remains unchanged, although "we have to be realists
and pragmatists."

"There are natural conditions in building the European Union, and for
this, time is needed," he said. "Ukraine is building a country on European
values and bases and is harmonizing its life and laws to Europe."

He said Ukraine will be ready for EU membership eventually, although he
would not predict when that would happen. For the moment, the country will
build its European relations on short-term agreements, he said. (END)
----------------------------------------------------------------------------
LINK: http://www.washtimes.com/world/20040708-094836-9980r.htm
----------------------------------------------------------------------------
FOOTNOTE: This must be the 100th pledge made over the past few
months by top-level Ukrainian government officials, as reported by the
international press, promising to keep the presidential election in Ukraine
free, fair and democratic. Unfortunately the international press has not
reported on many specific concrete actions these officials are going to
take that will back up their many hollow words on the subject.

This problem is most likely caused by the fact that most of the actions
taken in Ukraine during 2004 have produced just the opposite results.
Results which for sure indicate strongly the presidential election will not
be free, fair or democratic. The international press should start asking
Ukrainian officials what concrete actions they plan to take immediately
regarding media freedom, equal access to national TV outlets, and a
host of other areas where major infractions have occurred during 2004.

There are no real indications yet the October presidential election, "will
open the door to a new relationship with the West." Quite the opposite.
=========================================================
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PUBLISHER AND EDITOR
Mr. E. Morgan Williams, Coordinator, Action Ukraine Coalition (AUC);
Executive Director, Ukrainian Federation of America (UFA);
Senior Advisor, Government Relations, U.S.-Ukraine Foundation (USUF);
Advisor, Ukraine-U.S. Business Council, Washington, D.C.;
Publisher and Editor, www.ArtUkraine.com Information Service (ARTUIS),
http://www.ArtUkraine.com Ukrainian News and Information Website;
CONTACT: P.O. Box 2607, Washington, D.C. 20013,
Tel: 202 437 4707, morganw@patriot.net
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