"THE ACTION UKRAINE REPORT"
An International Newsletter
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"

Ukraine's President-elect Viktor Yushchenko has embraced a sweeping
program for free market and social reform drawn up by the Washington-
based Carnegie Endowment for International Peace and a major Kiev
think tank. [article one]

"THE ACTION UKRAINE REPORT" - Number 412
morganw@patriot.net, ArtUkraine.com@starpower.net
FROM: KYIV, UKRAINE, TUESDAY, JANUARY 18, 2005

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

1. UKRAINE ACTS ON U.N.-FUNDED REFORM PLAN
ANALYSIS: By Martin Sieff, UPI Senior News Analyst
United Press International (UPI)
Washington, D.C., Monday, January 17, 2005

2. "UKRAINE'S REAGANITE FIRST LADY"
From the Reagan Revolution to the Orange Revolution
By Bruce Bartlett, The Weekly Standard magazine
Volume 010, Issue, 18, Washington, D.C., Jan 24, 2005

3. FOREIGNERS BULLISH ON YUSHCHENKO'S UKRAINE
Since the election of Yushchenko investors have begun flocking to Kiev.
By Peter Graff, Reuters, Kiev, Ukraine, Tue, January 18, 2005

4. RESILIENCE EXPECTED FROM EMERGING MARKETS
[Election victory of Viktor Yushchenko in Ukraine]
By Marta Srnic, Business Report
Johannesburg, South Africa, Tue, January 18, 2005

5. "THE RUSSIAN PRESIDENT'S SECOND TERM DISASTER"
In his most spectacular failure to date, President Putin injected himself
into this campaign, twice going to Ukraine to stump personally for
Yanukovich. Russian businesses were compelled to put up $300 million
By Anders Åslund, Weekly Standard magazine
Washington, D.C., Monday, January 17, 2005

6. "ENDING RUSSIA'S IMPERIAL MOMENT"
Analysis: Robin Shepherd, UPI, Bratislava, Slovakia, Mon, Jan 17, 2005

7. "TUNING THEMSELVES OUT"
The Kremlin's Television Friends May Also Be Its Worst Enemies
COMMENT: By Yelena Rykovtseva
Russia Profile, Moscow, Russia, Mon, January 17, 2005

8. "UNCLEAN POLITICAL FORCES"
Why Russia continues to believe in conspiracy theories
By Dmitri Furman, Novaya Gazeta, No. 1
WPS Monitoring Agency, www.wps.ru/e_index.html
Moscow, Russia, Monday, January 10, 2005

9. "BANDITS TO PRISONS!"
ANALYSIS: by Olga Dmitricheva, Zerkalo Nedeli
Kyiv, Ukraine, 1 (529) Saturday, 15 - 21 January 2005 year

10. FORMER UKRAINIAN EASTERN GOVERNOR FOUNDS
FEDERALIST PARTY
UNIAN news agency, Kiev, in Ukrainian 1220 gmt 15 Jan 05
BBC Monitoring Service, UK, in English, Sat, January 15, 2005

11. UKRAINE HAILS EUROPEAN PARLIAMENT RESOLUTION
ON PRESIDENTIAL ELECTION
Interfax-Ukraine news agency, Kiev, in Russian 1138 gmt 14 Jan 05
BBC Monitoring Service, UK, in English, Friday, Jan 14, 2005

12. YUSHCHENKO, PUTIN COULD CROSS PATHS AT AUSCHWITZ
AP, Warsaw, Poland, Monday, Jan 17, 2005

13. "WILL YUSHCHENKO'S COALITION COLLAPSE?"
By Oleg Varfolomeyev, Eurasia Daily Monitor,
The Jamestown Foundation, Washington, D.C. Mon, Jan 17, 2005

14. "NO LONGER NEEDING U.S. SUPPORT, KUCHMA WANTS
TO BRING TROOPS HOME ON HIS WATCH"
By Taras Kuzio, Eurasia Daily Monitor
The Jamestown Foundation, Washington, D.C., Fri, Jan 14, 2005
==========================================================
1. UKRAINE ACTS ON U.N.-FUNDED REFORM PLAN

ANALYSIS: By Martin Sieff, UPI Senior News Analyst
United Press International (UPI)
Washington, D.C., Monday, January 17, 2005

WASHINGTON -- Ukraine's President-elect Viktor Yushchenko has embraced
a sweeping program for free market and social reform drawn up by the
Washington-based Carnegie Endowment for International Peace and a major
Kiev think tank.

The program was drawn up by the Blue Ribbon Commission, a body established
last spring that was sponsored by the United Nations and funded by the U.N.
Development Program in Ukraine. The commission was composed of more than
100 leading international and Ukrainian experts and it was chaired by Anders
Aslund, director of the Russian and Eurasian Program at the Carnegie
Endowment for International Peace in Washington and Oleksandr Paskhaver,
president of the Kiev-based Center of Economic Development.

The commission urged Yushchenko to rapidly institute root-and-branch social
reforms and integrate his massive country into the World Trade Organization
and move closer to the European Union as soon as possible.

Yushchenko met members of the commission this weekend and made clear his
enthusiastic approval and acceptance of their report, political sources in
Kiev told UPI. The president-elect told the commission members that their
recommendations were "right on," the sources said.

Yushchenko's reported comments indicate the Carnegie Endowment and the
Center of Economic Development have already won the most crucial battle for
Yushchenko's ear, beating out other, more right-wing and Republican-leaning
Washington think-tanks such as the Heritage Foundation and the American
Enterprise Institute.

Yushchenko's Dec. 26 victory in the rerun of the second round of the
Ukrainian presidential election over then-Prime Minister-Viktor Yanukovych
was the most dramatic political shift in any former Soviet republic outside
Russia since the collapse of the Soviet Union at the end of 1991.

Throughout his campaign, the pro-Western Yushchenko made no secret of
his intention to run his nation of 50 million people covering an area the
size of France away from its ancient dependence on Russia to bring it into
the 25-nation European Union and the U.S.-led North Atlantic Treaty
Organization as fast as possible. But the commission's report for the first
time spelled out in great detail a step-by-step program to internally
restructure Ukraine with that goal in mind.

Aslund and Paskhaver were frank about their intention to influence
Yushchenko to implant their ambitious and sweeping reform recommendations
as quickly as possible. "The report is designed to be a hands-on document of
genuine practical use to the new administration in Ukraine, with most
measures designed for enactment within the new President's first year in
office" they wrote.

Among the commission's key recommendations:

-- The relationship between state and citizens must change. The state
machinery must become more efficient through real control by society and
law.

-- Social spending in healthcare and education must be restructured to
benefit the truly needy rather than mainly the well off, as is the case now.

-- The tax system and the legal foundation of the financial system need to
be overhauled to make them effectively stimulate economic growth.

-- Property rights have to be given far more effective guarantees than they
currently enjoy and a far clearer line has to be established between state
and private property than has been the case so far in the 13 years since
Ukraine became independent following the disintegration of the Soviet Union.

-- Ukraine must be integrated into the global economy as quickly as
possible, especially by rapid accession into the World Trade Organization
and forging far closer ties with the European Union.

The report further urges Yushchenko to "reform the judicial system to make
judges independent and impartial, and to make the court administration more
efficient." Other goals are also important for success, according to the
report. It recommends:

-- Enacting "a territorial administrative reform, improving the delivery of
public services by devolving power and resources to regional and local
bodies;"

-- Setting up "a liberal tax code that reduces the number of taxes, lowers
tax rates, eliminates exemptions, and eliminates competing revenue
services;"

-- Reducing "public expenditures substantially by eliminating non-essential
and harmful spending (such as enterprise subsidies) and target social
benefits to the truly needy;"

-- Improving "corporate legislation (and pass a modern law on joint-stock
companies) by enacting rules to introduce ownership transparency and protect
minority shareholders;"

-- Creating "a level playing field for economic activity by abolishing
regulatory discrimination and subsidies and halting state intervention in
pricing and trade;" and

-- Making "Ukraine's 'European Choice' a reality by adopting European legal
standards and forging an initial action plan with the EU that paves the way
to a free trade agreement and makes future membership of the EU a real
opportunity."

Commission members included Iryna Akimova, Ihor Burakovsky, Oleksandr
Chalyi, Marek Debrowski, Adrian Karatnytcky, Ihor Koliushko. Oleksandra
Kuzhei, Dmytro Leonov, Vira Nanivska, Jerzy Osiatynski, Oleksandr
Rohozynsky and Oleksandr Shevtsov.

Ukrainian sources close to Yushchenko told UPI the president-elect has
carefully studied the failures of former Russian President Boris Yeltsin's
crash privatization program more than a decade ago as well his own
predecessor, outgoing Ukrainian President Leonid Kuchma's failure to
implement any meaningful free market economic reforms.

Since independence at the start of 1992, Ukraine has remained a basket case
economy tied to Russia's energy apron strings. Its economic growth has been
extremely disappointing despite its enormous agricultural potential that
could rival the American Midwest and its huge heavy industrial complexes,
now badly obsolescent and desperately needing huge infusions of capital, in
the Don Basin or Donbass.

Yushchenko is determined to change all that. But he also wants to avoid
Yeltsin's catastrophic blunders that discredited both free market economics
and democracy among tens of millions of Russians.

Yeltsin failed to establish transparency and genuinely open markets. As a
result, control of vast swathes of the Russian economy was rapidly seized by
little more than a dozen billionaire oligarchs. The Russian people suffered
a catastrophic fall in living standards during which national death rates
soared and a disastrous population implosion accelerated. Under Yeltsin's
chaotic rule, no effective property laws were passed, especially for the
free sale of agricultural land.

No one ever doubted that Yushchenko possessed a bold and far-reaching
vision. The speed with which he has embraced the Blue Ribbon Commission's
game plan indicates he will show boldness and speed in his presidential
decision-making as well. -30- [Action Ukraine Report Monitoring Service]
==========================================================
2. "UKRAINE'S REAGANITE FIRST LADY"
From the Reagan Revolution to the Orange Revolution

By Bruce Bartlett, The Weekly Standard magazine
Volume 010, Issue, 18, Washington, D.C., Jan 24, 2005

A REMARKABLE ELECTION TOOK PLACE in Ukraine on December
26. After the ruling party stole the November 21 presidential vote, massive
street protests forced a new runoff, in which the rightful winner, Viktor
Yushchenko, finally prevailed.

Although I have neither Ukrainian blood nor any special interest in foreign
affairs, I have followed events in that country closely because a dear
friend of mine, Katherine Chumachenko, is married to Yushchenko and
about to become first lady of Ukraine.

Leading up to the election, I was called by Russian "reporters" looking for
information on Kathy, or Katya, as she prefers today. I should say that they
were looking for dirt, because the Russian press and its counterparts in
Ukraine have been telling terrible lies about her for some time, saying that
she is a CIA agent and other untruths designed solely to undermine her
husband's political support.

I know that these things are untrue because I was intimately involved in
several of her career moves, which are now portrayed as some sort of
nefarious plot to move Kathy into a position of power in Ukraine. If anyone
is responsible, I am; not the CIA.

When I first met Kathy in 1987, she was working for the State Department in
the human rights bureau. We met at a Heritage Foundation event where John
Podhoretz, now a columnist for the New York Post and a Weekly Standard
contributing editor, was speaking. Shortly thereafter, I went to work in the
White House in the Office of Policy Development, headed by Gary Bauer.

The Office of Public Liaison (OPL) was headed by Rebecca Range
(née Gernhardt), whom I had known since my first days on Capitol Hill, when
she was working for the late John Ashbrook, the conservative congressman
from Ohio. (She is now married to Rep. Christopher Cox, whom she met when
he was working in the White House counsel's office for President Reagan.)

Public Liaison is the White House's outreach office, which maintains
contacts with groups and organizations viewed as politically important. In
the Reagan White House, one of these groups was the Eastern Europeans,
whose homelands still suffered under Communist tyranny and Soviet control.
The Ukrainians were a key member of this coalition.

Shortly after I got to the White House, a position in OPL opened up for
someone to work with the "captive nations," as they were called. I pushed
hard with my friend Becky to hire Kathy for the position and I think it
helped. She was hired and we were able to work together for a year or so.
Although Kathy's main interest was Ukraine, she was equally supportive of
people from the Baltic States, Poland, Bulgaria, Romania, and other enslaved
countries. They all understood that they would sink or swim together.

Toward the end of the Reagan administration, I moved over to the Treasury
Department, where I was deputy assistant secretary for economic policy. The
executive secretary--a job that involved managing the department's official
correspondence and the paper flow in and out of the secretary's office--was
a woman named Emily Walker, who hired Kathy as her deputy. So, once
again, Kathy and I were able to work together. But after the Berlin Wall
fell in 1989, I could see that Kathy was becoming agitated about what might
happen in Ukraine. While it seemed clear that most of Eastern Europe would
soon free itself from the Soviet yoke, it was not at all certain that
Ukraine would also be able to do so, since its position as a Russian vassal
long predated the Soviet Union.

Kathy was also too smart to be content in what was essentially a
bureaucratic position, and she looked to move on. Again, I was able to help.
A friend of mine, David Malpass, had just become head of the Republican
staff of the Joint Economic Committee of Congress, where I had previously
been executive director, and was looking for someone to work on issues
relating to what were called transitional economies. I recommended Kathy
and she was hired. (David is now chief global economist for the investment
bank Bear, Stearns & Co. in New York.)

Toward the end of 1991, Ukraine declared its independence, and there was no
stopping Kathy from being part of it. Although born in Chicago to Ukrainian
parents, she was always more Ukrainian in some ways than those born in
Ukraine. She had been raised to speak Ukrainian and was thoroughly steeped
in that nation's culture and history. And with a master's degree in business
administration from the University of Chicago, she knew that she could help
her people recover and prosper in a free economy.

Kathy left the JEC and began traveling back and forth to Kiev, where she
hoped to establish some sort of business. But the situation was very
precarious, even for someone with family there. For example, I recall her
telling me that she could not buy a car because auto theft was rampant. But
for less than a car payment, she was able to hire a full-time car and
driver. She told me that her driver slept in the car to prevent it from
being stolen.

Having studied Soviet economics, I was much less optimistic than she was
that Ukraine would easily throw off the legacy of socialism. I urged her to
get a position with a Western company, where she would at least be paid
in dollars rather than rapidly depreciating Ukrainian currency.

As it happened, another old friend of mine named Clifford Lewis, now
chairman and CEO of Currenex in New York, had just gone to work for
KPMG, the big accounting and consulting firm, which had gotten a U.S.
government contract for work in Ukraine helping to train the people there
in Western methods of banking and accounting.

Kathy was obviously perfect to run the Ukrainian operation, and I was able
to put her and Cliff together. She was soon working for KPMG under the
direction of economist Rudy Penner, who had previously been director of
the Congressional Budget Office.

Although Ukraine became independent, it took a long time before it was
able to shed its Communist legacy. I recall Kathy telling the story of a
reception in Kiev, where she struck up a conversation with one of the
attendees. To her surprise, he knew all about her. It turned out that he had
worked for the Ukrainian KGB and had been assigned to follow her career,
since she was one of the more prominent Ukrainians in the United States.
Kathy asked him what he was doing now, and he said he was running for
the parliament--against one of her cousins, in fact.

Among the organizations KPMG consulted with was the Ukrainian central
bank, whose deputy director was Viktor Yushchenko, now president-elect
of Ukraine. He and Kathy married in 1998, before he was named prime
minister, and they now have three children.

I haven't seen Kathy since before her marriage, so I have no personal
knowledge of their relationship. But knowing her as I do, I think it says a
great deal for the new president of Ukraine that he won her heart. -30-
------------------------------------------------------------------------
Bruce Bartlett is a senior fellow with the National Center for Policy
Analysis in Dallas.
------------------------------------------------------------------------
The Action Ukraine Report Monitoring Service Online Subscription
to The Weekly Standard magazine, Washington, D.C.
==========================================================
3. FOREIGNERS BULLISH ON YUSHCHENKO'S UKRAINE
Since the election of Yushchenko investors have begun flocking to Kiev.

By Peter Graff, Reuters, Kiev, Ukraine, Tue, January 18, 2005

KIEV -- If investors hadn't heard of Ukraine a few months ago, they have
now. A country of nearly 50 million people, Ukraine has a four-year track
record of booming, export-driven economic growth and a fat trade surplus.
Last week it announced record gross domestic product growth last year of 12
percent, Europe's best.

But fundamentals aside, two political factors have finally put Ukraine
squarely on the map since the middle of last year. It suddenly acquired a
long frontier with the European Union when the bloc expanded in May. And it
now has a new pro-Western president after public protests helped overturn an
election result in November that had been rigged to favor a pro-Moscow
candidate.

Liberal President-elect Viktor Yushchenko, who won a rerun vote last month,
campaigned on a platform of transparency, fighting corruption and opening
investment opportunities to outsiders. He had a strong record of reform when
he served as Central Bank chief and prime minister several years ago.

Bond traders on emerging markets desks abroad have known about Ukraine for
some time. Its debt, traded in London and New York, has performed well for
several years. "It had a very strong financing position, current account
surplus, rising reserves, good growth, and it had been a regular issuer in
the market, which raised the country's profile," said Timothy Ash, head of
emerging markets at Bear Stearns in London.

But more investors are now flying in to Kiev and looking at local
investments like stocks and domestic bonds. Tomas Fiala, a Czech who runs
Dragon Capital, one of Ukraine's few brokers, said calls from fund managers
started flooding in just before Yushchenko's "orange revolution." "Since
September we have had at least one European or U.S. investor around here
every week. Some weeks it was at least three investors coming for investment
trips," he said.

Not only are more fund managers coming, they are coming from a different
direction -- east from over the borders of new EU members like Poland or
Hungary, rather than west from Moscow. "We're getting a lot of calls from
Central Europe and a lot of Austrian, German, French and U.K. investors,"
Fiala said. "The election ... changes Ukraine's future development from
tracking Russia to trying to move into Europe and follow Poland, the Czech
Republic, Hungary and Slovakia," Fiala said.

The short-term economic picture is not all rosy. Inflation picked up sharply
because of a pre-election spending binge by the outgoing authorities, who
sold off reserves and handed out higher pensions and wages. Price growth hit
12.3 percent last year, the government said this week, a four-year high up
from 8.2 percent in 2003.

Ukraine's economy is still dominated by former-Soviet heavy industries,
especially steel and chemicals. Those industries have boomed over the past
few years driven by strong demand for industrial raw materials in developing
Asia. But those markets are cyclical and possibly in for a rough patch.

For most investors the only chance of exposure to Ukraine has been debt
issued abroad. The government and private companies both had successful
eurobond placements over the past year. Firm demand has brought yields on
dollar-denominated sovereign debt as low as around 7.3 percent.

"It's been on the radar screens for a long time from a fixed-income
perspective. Equities less so," said Ash. "Obviously there's a lot of issues
about corporate governance. That certainly restricted interest. Going
forward, the interest will be more focused on the equity."
Those flocking to Kiev will not yet find much to buy.

Ukraine's stock market was the world's fastest-rising last year, with an
index compiled by Dragon Capital surging by 180 percent. But volume
is tiny and there are only about 30 traded companies, and only 10 liquid
enough to make the index.

Yushchenko has promised to increase privatizations open to foreigners, which
should make for a more robust market. Domestic government debt may also
still be a good buy, with double-digit yields denominated in a hryvnia
currency that has been stable for years and -- given the large trade
surplus -- could appreciate against a falling dollar.

Foreign investors have doubled their holdings in Ukraine's domestic debt in
the last six months, the Finance Ministry says. Foreigners bought 80 percent
of the paper at an auction last week, the first since the rerun election.
But the best long-term opportunities may be for strategic investors in
sectors like brewing, food processing, retail or construction, aimed at the
still-stunted domestic market.

Ukraine's economy is now 60 percent exports, with local consumption held
back by monthly average incomes of barely $100. If Ukrainians' living
standards ever start approaching those of their new EU-member neighbors,
there is a lot of room to grow. -30-
==========================================================
4. RESILIENCE EXPECTED FROM EMERGING MARKETS
[Election victory of Viktor Yushchenko in Ukraine]

By Marta Srnic, Business Report
Johannesburg, South Africa, Tue, January 18, 2005

LONDON - Emerging market economies would prove resilient to an
increase in US interest rates this year, helped by economic growth, fewer
local political risks and flexible exchange rate regimes, Morgan Stanley
economists said.

"US monetary policy will be tightened by more than that currently priced
into the market, and bond yields will rise," Riccardo Barbieri, Serhan Cevik
and Oliver Weeks at Morgan Stanley in London wrote in a report released
on Friday. "Even so, we believe that emerging market economies will prove
resilient to the transition in US monetary policy." "In addition, structural
improvements continue"

US Federal Reserve policy makers raised their target rate for overnight
loans between banks five times last year, to 2.25 percent. Since May they
have said that any rate boosts would come at a "measured" pace. "The Fed
is unlikely to drive the US economy into recession, and China's appetite for
oil and commodities remains strong," the economists wrote. "In addition,
structural improvements continue in leading emerging market economies."

The economies, including Russia, Turkey and Poland, grew at a faster rate
than the developed economies last year and their stock and bond markets
outperformed developed markets, Morgan Stanley said.

According to the report, growth was unlikely to stall, even though growth
rates might not be as high as last year's. "While last year's performance is
unlikely to be repeated and weaker sovereign credits will suffer from higher
interest rates, emerging markets as a whole will prove resilient."

The only scenario to worry about was a US recession induced by higher
interest rates. But even if the US economy were to slow, the emerging
markets "will prove much more resilient than in the 1990s", the economists
said.

Local political developments, which included the start of Turkey's accession
talks with the EU and the election victory for Viktor Yushchenko in Ukraine,
had also been "generally positive". The Russian economy was forecast to
expand by 5.5 percent this year, the Turkish economy by 7.5 percent, South
Africa's by 4 percent and Poland's by 4.4 percent.

The Hungarian economy would probably grow 2.8 percent, the Czech
Republic's by 3.9 percent and Slovakia's by 4.5 percent. Israel's economy
was forecast to grow 3.8 percent. -30-
==========================================================
5. "THE RUSSIAN PRESIDENT'S SECOND TERM DISASTER"
In his most spectacular failure to date, President Putin injected himself
into this campaign, twice going to Ukraine to stump personally for
Yanukovich. Russian businesses were compelled to put up $300 million

By Anders Åslund, Weekly Standard magazine
Washington, D.C., Monday, January 17, 2005

Rarely has a president, successful in his first term, collapsed so totally
in his second term as Russia's Vladimir Putin did in 2004. Alberto Fujimori
of Peru might offer the closest parallel, with Carlos Menem of Argentina
another contender.

For four years, starting with his election in 2000, Putin seemed to have
nothing but good fortune. Russia saw substantial and far-reaching reforms,
including radical tax reform with a flat income tax of 13 percent, the
legalization of private ownership of land, judicial reform, labor market
reform, and pension reform. The economy boomed, growing 6.5 percent a
year. Abroad, Putin pursued a realist policy, trying to be useful to others,
like the United States, while safeguarding Russia's national interests.

Still, ominous signs were never altogether absent. Putin kept extending his
political control, and he promoted a small group of fellow KGB officers from
St. Petersburg far beyond their competence. Fortunately, their rising power
was balanced by that of the big businessmen known as the oligarchs, leaving
policy to be guided by a few reformers in key government positions, notably
Minister of the Economy German Gref and Minister of Finance Alexei Kudrin.
By playing the equally unpopular KGB and oligarchs off against each other,
Putin successfully appealed to a broad Russian public, gaining an
unprecedented approval rating.

Then in the past year everything changed. Putin's loss of stature has been
defined by three signal events: the confiscation of the oil company Yukos,
the state's failure to respond to the Beslan hostage drama in the Northern
Caucasus in September, and Putin's palpable interference in the Ukrainian
presidential election.

Putin's winning streak ended with the arrest of Mikhail Khodorkovsky, the
principal owner of Yukos, on October 25, 2003. The key motives were to
enlarge Putin's political control and grab assets. The arrest scared
Russia's businessmen out of politics. All countervailing sources of power
were eliminated or curbed. Suddenly, Putin was governing on behalf of
himself and a narrow circle of KGB officers.

In hindsight, Putin's concentration of power appears both systematic and
deliberate. First, he subdued the media. Then he took out the oligarchs, of
whom Khodorkovsky was the third to be eliminated. Then, partly by
manipulating the electoral process, he finagled the removal or
marginalization of the admittedly corrupt regional governors. With the
economy booming and the president's control of the bureaucracy and the media
firm, his United Russia party won a two-thirds majority in the Russian State
Duma in December 2003. Then in March 2004, Putin himself was reelected with
over 70 percent of the votes. These elections were deemed free but not fair.
Russia's repression may not be severe, but it is effective. Potential
opposition figures are coopted or marginalized rather than arrested.

Putin's key weakness is an insatiable appetite for political control. He has
even replaced his strong first-term chief of staff and prime minister with
two individuals famous for their indecision. This leaves all decisions to
the president, but he himself is not very decisive. As a result, his
administration is all but paralyzed. In addition, all information is
manipulated by the security services, and most feedback mechanisms have
been dismantled.

On top of everything else, Putin has proven himself extremely stubborn. Once
he has finally chosen a course of action, he will not change it even to
correct a mistake. His failed policies on Chechnya and Yukos are cases in
point. Indeed, all three big developments of the past year illustrate how
dysfunctional Putin and his government have become.

The Yukos affair boils down to confiscation by means of arbitrary taxation
at the behest of kangaroo courts. In one blow, Putin made a joke of both his
radical tax reform and his enlightened judicial reform. He also threw out
the successful Anglo-American economic strategy based on competing private
resource companies that he had inherited from Boris Yeltsin. And, even as he
indulged his desire to humiliate the independent-minded Khodorkovsky, his
KGB men were striving to seize assets for themselves through state
enterprises.

Naturally, Russia's business leaders are asking who is next, and the tax
authorities and prosecutors have made abundant suggestions to keep them on
their toes. Who wouldn't scale back his investment plans, faced with such a
prospect? Russia's previously high production and investment forecasts are
steadily being downgraded because of the ever more uncertain business
conditions despite the commodity boom.

The Beslan hostage drama was a great human tragedy, but it also afforded the
Putin regime many black marks. The hostage-takers reached the school because
of the extraordinary corruption of the security services. Amazingly, the
government was totally passive during the crisis and told the public nothing
but lies. On the third day, the locals had had enough, and attacked the
school themselves, resulting in chaos and the loss of over 300 lives.
Russians are excessively tolerant of state cruelty, but they have little
patience with such a complete abdication by the authorities.

After the catastrophe, Putin did not sack any of the KGB appointees who had
failed to act, refusing to hold them accountable. Meanwhile, his ill-advised
policy on Chechnya continues unaltered and might destabilize a broader swath
of the Caucasus.

Finally, late last year, Ukraine held its presidential election. From the
outset, a showdown loomed between the pro-democratic candidate Viktor
Yushchenko and the oligarchic ex-convict, Prime Minister Viktor Yanukovich.
All opinion polls suggested a significant majority for Yushchenko in an
honest election.

In his most spectacular failure to date, President Putin injected himself
into this campaign, twice going to Ukraine to stump personally for
Yanukovich. Russian businesses were compelled to put up some $300 million
for the Yanukovich campaign, according to allegations from the Yushchenko
camp. Putin congratulated Yanukovich on his victory despite palpable fraud.
In the Ukraine matter, Putin showed himself ill-informed, antidemocratic,
anti-Western, and ineffective.

It should come as no surprise that Yukos, Beslan, and Ukraine were hardly
freak accidents. Instead, they were the fruit of Putin's extreme
centralization of decisionmaking, his systematic use of disinformation, and
his abolition of all corrective mechanisms, compounded by great personal
stubbornness.

Like Mikhail Gorbachev in 1989, Putin has drained all power out of the
formal institutions of government. His legitimacy resides only in his
popularity, which will inevitably crumble after he has alienated most elites
and paralyzed his government. The Putin regime has too narrow a base
and is too ineffective to last. Although it is hard to predict how fast it
will collapse or what will replace it, the regime is likely to unravel
sooner than anybody now dares to suggest.

Putin's weakness is purely political and does not affect the economy much.
But regime change can occur in the midst of an economic boom, as we have
just seen in Ukraine. The problem is that the current regime is not viable,
and its inherent shortcomings are aggravated with each turn of events.

This analysis of the weakness of the Putin regime has serious implications
for U.S. policy toward Russia. FIRST, realistically, the regime will
probably end rather soon. SECOND, especially on the security side, with so
poorly informed and ineffective a leader, Russia can perform few services
useful to the United States. THIRD, Putin showed himself in Ukraine to be
both antidemocratic and anti-American, leaving little common ground with the
United States. FOURTH, Putin has demonstrated a rare inability to learn from
his mistakes. The only good news is that Russia is too weak to be a threat.

Ironically, Putin is forcing U.S. policy toward Russia to come full circle,
back to where it was in the late Soviet period. Once again, the United
States must manage the decline of a mildly authoritarian regime armed with
nuclear weapons. It should be possible to do this without causing any great
harm, but we should harbor no illusion that this colossus with feet of clay
will stand up and fight with us in the war on terror. -30-
-------------------------------------------------------------------------
The Action Ukraine Report Monitoring Service Online Subscription
to The Weekly Standard magazine, Washington, D.C.
==========================================================
6. "ENDING RUSSIA'S IMPERIAL MOMENT"

Analysis: Robin Shepherd, UPI, Bratislava, Slovakia, Mon, Jan 17, 2005

BRATISLAVA, Slovakia -- Pity the Russian leader who loses
Ukraine. Since the emergence of Kievan Rus, the first Russian
state, in the ninth and 10th centuries, the country has had pivotal
importance in Russia's obsessive, nationalist narrative. Reports of
Russia's demise as an imperial power may have long been exaggerated.

But Vladimir Putin's public humiliation over his handling of Ukraine's
presidential elections last December marks a watershed for Russia's
status as a regional force to be reckoned with. It may yet prove fatal
for his personal ambitions as self-styled savior of the Russian nation.

Putin's Ukraine strategy has appeared in several incarnations over the
last few months.

The setting, of course, was handed to him in the form of the
independent Ukraine which emerged from the dissolution of the Soviet
Union in 1991. Independence, though, was one thing. Viktor
Yushchenko's mutterings about integrating Ukraine with the West were
quite another, threatening to extinguish forever the dream, however
fantastical, of reasserting Russian influence in the form of an
expanded, Russian-led power bloc.

Plan A, therefore, was clear: Stop Yushchenko at all costs and do
everything to promote the interests of the pro-Moscow Prime Minister,
Viktor Yanukovych. As it became clear that that plan was failing,
enter Plan B: Moscow would play the national card. Senior Russian
officials, including Moscow Mayor Yuri Luzhkov were dispatched to
Russian speaking areas of the country to rally pro-Moscow sentiments.

The threat of ethnic strife, even civil war and separatism, was held
up to Ukraine and the West in an effort to whip the country into line
and sew further seeds of doubt about the wisdom of "interfering" by an
already bewildered European Union.

Plans C and D are waiting in the wings. The former sees Russia flexing
its economic muscle using energy supplies as a lever. The latter sees
Russia threatening a major strategic realignment with China following
the recent dramatic warming of relations between the two countries.

The trouble for President Putin is that none of these plans is likely
to work and all risk backfiring on him in a manner which could
humiliate him still further.

Plan A, of course, has already been overtaken by events. It was
throttled by Ukraine's constitutional court which ordered a re-run of
the rigged election that Putin had foolishly congratulated Yanukovych
on "winning." The voters on Dec. 26 did the rest, leaving Putin
looking both stupid and weak.

Plan B still has legs. But even if it works, the victory may be a
pyrrhic one. National conflicts can easily spill out of control. With
the bleeding wound of Chechnya in the south and the messy little
conflict in Transnistria over the Ukrainian border already draining
resources and straining public patience, it is not clear that a rump
Ukraine containing a large minority of disgruntled Ukrainian speakers
would serve Russia's interests. More likely, it would be a liability
both entrenching and further illustrating the extent of Russian weakness.

Plan C is reminiscent of the question long posed by anti-Western
activists in the Middle East: Why don't the Arabs stop selling America
oil as punishment for supporting Israel? Answer: Coz they need the
money! Russia can certainly blackmail Ukraine by threatening to cut
off oil and gas supplies. But only by depriving itself of much needed
cash in the process. The plan is a non-starter.

Plan D is interesting. Important sections of the U.S. political
establishment are little short of obsessed about the prospect of an
emerging China, and Russia has the energy supplies and the weapons
programs to make a difference. In any future brinkmanship over the
future direction of Ukraine, it is a powerful card to play. But hardly
a risk free one. Any such strategic realignment could easily cast
Russia in the role of junior partner to a country whose population is
almost ten times that of its own. This is hardly what Russian
nationalists have in mind when they wax lyrical about the phoenix
rising out of the ashes.

Of course, none of the above means that Putin will necessarily follow
a sensible course of action. As Anders Aslund, director of the Russian
and European Program at the Carnegie Endowment for International
Peace put it in the latest edition of the Weekly Standard: "In the
Ukraine matter, Putin showed himself ill-informed, antidemocratic,
anti-Western, and ineffective." There is no guarantee that he will
learn from past mistakes.

Many scenarios could now unfold in Ukraine: the country could split,
de jure or de facto, on ethno-linguistic lines; the gangster oligarchy
which ruled the country since independence could undermine reform
efforts leaving Ukraine languishing in a twilight zone between
democracy and dictatorship. Looking on the bright side, strong signals
from the European Union offering future membership if reforms can be
enacted could herald a new dawn for the country. The hugely successful
reform process in central and eastern Europe provides a template which
Ukraine could yet adopt. Nothing, however, is certain in Ukraine and
only time will tell.

Whichever scenario does unfold though one thing is certain for Russia:
its sphere of influence has receded behind the point at which a
nationalist discourse about great power status can now be credibly put
forward. Russia can still interfere in Ukraine's internal affairs. It
can still bellow about its own backyard. It can still cause problems,
to be sure. But it can no longer exercise power in a manner which
enhances its own interests and strengthens its own power. The
realities have been present to those willing to see them for years.
But now even the nationalists in Russia will have to face up to the
facts on the ground. Russia's imperial moment has passed. -30-
--------------------------------------------------------------------
Robin Shepherd is an adjunct fellow of the Center for Strategic and
International Studies (CSIS), Washington, D.C. His column appears
weekly.
==========================================================
7. TUNING THEMSELVES OUT
The Kremlin's Television Friends May Also Be Its Worst Enemies

COMMENT: By Yelena Rykovtseva
Russia Profile, Moscow, Russia, Mon, January 17, 2005

Besides being married to Alexei Pankin, Yelena Rykovtseva is a
correspondent for Radio Liberty and also writes on media questions for a
number of Russian newspapers. She contributed this comment, which
represents her own views and not those of Radio Liberty, to Russia Profile.

Throughout the Ukrainian elections, Russia's two main state television
channels - Channel One and Rossiya - seemed to be competing to see who
could praise Viktor Yanukovich more and who could sling more mud at Viktor
Yushchenko. After the first round, Rossiya's reports suddenly changed,
appearing more balanced. But Channel One powered on, vigorously defending
"Russia's interests."

"People in Donetsk are convinced that, when they next go to the polling
booths, the voice of eastern Ukraine will decide the outcome," intoned a
correspondent, followed by a steelworker declaring: "We voted for
Yanukovich . because he's a man of action. He raised pensions. Yushchenko
was already prime minister, and what was the result? . Just a lot of words."

This continued even when Channel One acquired a new news director, Kirill
Kleimenov. For a moment I thought Kleimenov had been recalled and promoted
to make Channel One's news look a bit more objective: He had told me how
ashamed he felt at being part of the information wars during Russia's
elections.

But nothing changed. The correspondents reported on preparations in the
same vein as before, with lines like: "Viktor Yushchenko is using the last
hours of the campaign to criticize his opponent, while Viktor Yanukovich is
busy with practical matters, and today inspected the construction of a new
bridge across the Dniepr."

On the day of the second round, Channel One impatiently prepared for the
Yanu-kovich victory it wanted: "Yushchenko tried to break through the
strong defenses of the industrial east, where there is broad support for
Yanukovich, but the tactic failed and he has not found the support he hoped
for. Yanukovich, on the other hand, has followed a more flexible tactic
that has brought him some success in western regions, which largely
supported Yushchenko."

But Yanukovich did not gain a foothold in the west. Soon the people were
onto the streets and squares, and their faces were there for all to see, in
stark contrast to the "crowds of skinheads" that Russian state television
tried to portray as Yushchenko supporters. But Channel One did not give up:
"Alongside the orange flags are the red and white flags of the Georgian and
Belarusian oppositions. They all share the same sources of foreign funding
and the same ideology".

Channel One kept returning to these "enemy flags", trying to create the
impression that the demonstrators had been taken to the West, taught how to
organize street demonstrations, given money, and then turned onto the
streets of Ukraine. "The opposition is demonstrating on Independence Square
for the second day. Black and red flags have appeared, the flags of the
Ukrainian insurrectionary army better known as Bandera's army." The same
evening, Vremya continued the theme: "The black and red flags of Ukrainian
nationalist organizations, which pledged their support to Viktor Yushchenko
in the summer, were visible today among the orange flags". For anyone still
in doubt, Vremya offered a brief historical overview: "Nationalist groups
emerged in western Ukraine in the 1920s. During World War II these groups
fought in SS divisions and killed tens of thousands of Poles, Jews, Red
Army soldiers and Ukrainians loyal to the Soviet Union."

Kremlin-approved "Ukrainian specialists" made appearances, parroting the
Vremya presenter's line: "It seems to me that the opposition is taking away
its own right to call itself democratic. After all, by demanding that its
own victory be recognized, it is completely forgetting about the half of
the Ukrainian people who voted for Viktor Yanukovich. Furthermore, it is
forgetting the main principle of democracy, which is the supremacy of the
law. Don't you agree?"

Political correspondent Mikhail Leontiev called the opposition meetings a
farce. When everything ended peacefully - the Rada approved a third round
for Dec. 26 and the crowds left the streets - Leontiev appeared on a talk
show on NTV, howling that Russia had to intervene because Ukraine is "our
land, our territory," and that it should use military force if necessary.

There was also the refrain that Russian involvement was only in response to
Western meddling. This is hardly fair. For starters, Western media cannot
exert mass influence on Ukrainian voters. Western media reaction to events
in Ukraine only becomes known in Russia with Kremlin approval: The Guardian
was cited dozens of times after criticizing biased (pro-Yushchenko)
coverage. But these "biased" publications do not reach ordinary Ukrainian
voters, whereas Russian propaganda reaches them very well: Almost all
Russian channels are available on cable networks across Ukraine.

The results of this propaganda are another question. Perhaps it appeals in
pro-Yanukovich Donetsk, but it is less likely to do so in Odessa (where
Yushchenko picked up a third of the vote) or in the 18 regions where he
won a majority. Here, it is likely to arouse hatred - not towards Channel
One, but Russia in general.

If Channel One continues doing its dirty work, the state must like it.
Which means the state has no brains - because no state with any sense
would use its own television channels to do itself such harm. -30-
--------------------------------------------------------------------------
LINK: www.russiaprofile.org
==========================================================
8. "UNCLEAN POLITICAL FORCES"
Why Russia continues to believe in conspiracy theories

Propaganda about Ukraine's revolution has been so effective in
Russia because the audience of the Russian media had already made
some vague assumptions consistent with what it subsequently heard
from government representatives and various commentators.

By Dmitri Furman, Novaya Gazeta, No. 1
WPS Monitoring Agency, www.wps.ru/e_index.html
Moscow, Russia, Monday, January 10, 2005

Polls done by the Levada Center agency indicate that the
regime's fears of Ukraine's "orange revolution" spreading to
Russia are unfounded. Only 9% of respondents support that
revolution. And this low level of support is linked to the fact
that most people in Russia don't believe the explanation offered
by the revolution's participants: that the revolution came about
because the authorities of Ukraine rigged the presidential
election.

Only 12% of respondents believe that Ukraine's revolution was
caused by the dishonesty of the election; meanwhile, 59% attribute
it to the West's plots and power-struggles between Ukraine's
oligarchic clans. This ratio of public opinion roughly corresponds
to the picture presented by Russia's media. And that, in turn,
roughly corresponds to the degree of the media's dependence on the
Kremlin. All this creates a general impression of the Kremlin's
propaganda being effective, and the people being easily
manipulated. In my view, however, this is an over-simplification.
The reality is substantially more complicated.

Propaganda about Ukraine's revolution has been so effective
in Russia because the audience of the Russian media had already
made some vague assumptions consistent with what it subsequently
heard from government representatives and various commentators -
so it was glad to hear its guesses confirmed by intelligent, well-
informed people. What's more, neither the authorities nor the
commentators consider that they are "manipulating" the masses;
they are saying what they really think, and such sincerity is
always convincing.

Our ruling elite is not some sort of closed-off caste with a
mindset radically different from that of ordinary citizens.
Although the elite's material interests and concerns are very
different from those of the people, there is no fundamental
difference between the way of thinking and world-view of the
president and his team and the world-view of the masses. The
current propaganda is so effective because the authorities and the
people think very similarly and speak the same language. As we
see, the explanation of events provided by the orange revolution's
participants themselves is dismissed out of hand, without even
being considered. It appears naive, superficial, not to be taken
seriously. Our mindset aims to uncover the underlying nature of
events.

Behind any actions taken by the masses, we are inclined to
seek some sort of actual, covert puppet-masters motivated solely
by the interests of power and money. For all of us (from the
president to the ordinary television viewer), explaining the
revolutions in Serbia, Georgia, or Ukraine equals pointing out the
American envoy who worked in Belgrade before being transferred to
Tbilisi (this can't have been a coincidence, after all), or
pointing to George Soros, and so on. And even though this is no
explanation at all (for example, it doesn't make sense that the
CIA would bother to topple the pro-Western Shevardnadze), the
illusion of understanding is created in our way of thinking when
such "hidden springs" are pointed out.

To some extent, I think, this is due to the influence of
Soviet Marxism. Soviet analysis always included some elements of
conspiracy theory. If ideology is used to conceal material
interests, and the formalities of lawful and democratic
institutions conceal the power of a bourgeois monopoly, this
requires seeking out the secret room where the monopolists discuss
how to deceive the people and where they share out their "fabulous
profits."

But this Soviet world-view itself was accepted because it
fitted in with the mindset of a people who had never elected their
own rulers - who knew that decisions were always made for them by
someone else - and who were convinced that things could not be
otherwise for the people in any other country. This is a pre-
democratic, pre-modern mindset; an antiquated way of thinking,
characterized by a search for some kind of active entities
standing behind incomprehensible natural processes. We attribute
Ukraine's revolution to CIA plots and Georgia's revolution to
money provided by Soros, just as people in ancient times
attributed illness to the evil eye and epidemics to witchcraft,
and believed that the sun was pushed across the sky by a scarab
beetle.

That's why Western observers find many statements made by
Russian political figures so incomprehensible ("Is it really
possible that Putin believes the West is trying to dismember
Russia?") and write them off as "the mystery of the Russian soul."

Thus, in order for us to become part of the modern, developed
world, we need to change not only our institutions, but our
mindset as well. Just like the Ukrainians are moving away from
that mindset, paving the way to the modern world for us as well as
themselves. (Translated by Pavel Pushkin) -30-
==========================================================
9. BANDITS TO PRISONS!

ANALYSIS: by Olga Dmitricheva, Zerkalo Nedeli
Kyiv, Ukraine, 1 (529) Saturday, 15 - 21 January 2005 year

The arrival of a new government has never been painless. It causes pain not
only because part of society suffers defeat and frustrated hopes. The fact
that the champions of the old regime are more or less actively trying to fit
into the new political regime also adds to the dramatic aspect of the
situation.

That is probably why lustration is currently one of the most widely
discussed issues in Ukraine. Yet the discussion of the need for or
inadmissibility of personnel, political and other purges in post-election
Ukraine is obviously in vain. Not because one will have to lustrate
practically every weighty political figure in order to avoid double
standards, as Vakhtanh Kipiani believes, speaking negatively of this idea in
his article in the Ukrainska Pravda. Accordingly, both social democrat
Nestor Shufrych and his former party-mate Petro Poroshenko are now
claiming to the Prime Minister's post should be lustrated. So too are
current Presidential Administration head Viktor Medvedchuk, and his
predecessor in this post, the current Speaker of parliament, Volodymyr
Lytvyn.

What interesting logic. "A purging procedure", however, presupposes a
certain limitation of the time of improper acts by certain characters. Thus,
during the Bolshevik purges, a lustration example cited by the author,
nobody remembered the Tatar yoke time. Similarly, crimes of the Kaiser's
Germany were not investigated in anti-Nazi lawsuits, as a result of which
many public figures of Hitler's Germany became victims of idem lustration.

Lustration in Ukraine is practically impossible, since this process should
be based on law. However, it is very unlikely that such a law could appear
in the near future. First, even if this bill is drafted, it would not get
enough votes in parliament, with half consisting of the potential victims of
such lustration. Second, . such qualities as vengefulness, or, moreover,
blood-thirst are not in the Ukrainian mentality. This was once more
confirmed by the fact that millions of Ukrainians pin their hopes and
expectations of a better future on Viktor Yushchenko because of his image
as a righteous and ethical politician. Obviously, these qualities do not
agree with hitting a man when he's down, performing a witch-hunt, or
finding scapegoats. Their inadmissibility is emphasized each time the
relations of the new government with its former ill wishers come up.

There's no doubt that the generosity of the winner and his high moral
standards as a part of his pre-election brand should prevent Yushchenko and
his team from a vulgar squaring of accounts with their defeated adversary.
But one should not forget that the most popular of Yushchenko's election
slogans was "Bandits to Prisons!" One can hardly remember a single
Yushchenko speech when he did not say this phrase. It has always raised a
storm of applause in his audience, since it happened to meet the sentiments,
feelings, thoughts and expectations of most Ukrainians.

If a thief who has stolen millions of money from the budget, and
consequently the money of pensioners, invalids, doctors and teachers, must
be sent to prison, then why should the criminals who tried to steal millions
of votes and were caught red-handed remain unpunished? This is the case
even if they represent the loser's side, which traditionally has the right
for the kindness of the winner.

The winner may be kind, but the law is stern. Thus, quotes of articles 157,
158, and 159 of the Criminal Code of Ukraine, which after the first round
were put up at the polling stations near the workplaces of election
commission members, prevented many of them from legal violations as it would
cost them from two to twelve years in prison. This stopped many of them, but

not all. As a result, there was a historic decision by the Supreme Court of
Ukraine, which recognized the election results as falsified.

For the time being, the general public still does not know what the charges
related to the presidential election were, and against which people they
were brought by the Prosecutor General's office. However, we can make
certain assumptions concerning the prospects of those involved in the
vote-rigging. For example, the Zakarpatsky Oblast prosecutor Mykoal
Hoshovsky said that his department had began 38 criminal cases with
charges of meddling in the election process.

Interestingly, only nine of them directly relate to Criminal Code articles
providing for responsibility for hindering the right to vote, forgery of
voting documents and incorrect vote count. All the rest are charges of
hooliganism at polling stations, bulling and physical assault of election
commission members, beating voters, etc. "Three man were arrested; a
decision was made to bring criminal actions against the other four, but
since they are hiding they are being sought. Fourteen more people were
identified, their place of stay is being determined and additional evidence
of their involvement in criminal actions is being collected; one person has
been detained," - the Zakarpatsky prosecutor was quoted as saying by the
internet publication The Political Ukraine.

However, lawyer Oleksiy Reznikov (who participated in the historic session
of the Supreme Court on Yushchenko's side) believes it is essential that the
penalty for all legal violations is imposed upon the key figures of the
Falsification project. It is very likely that only the lower ranks of the
carefully-built scheme will be held responsible. The most odious figure of
the project's top-managers is Serhiy Kivalov. Maybe his actions could not be
prosecuted in line with the election law articles of the Criminal Code, yet
there are many other Criminal articles in line with which criminal
proceedings could be brought against those who infringed on voters' rights.
Yet if the former Central Election Commission head is not given legal
assessment, any punishment of a divisional election committee member who
committed a violation under the threat of a job loss or physical assault
would be the peak of injustice. On the other hand, one should not go to
extremes and pin all accusations upon Kivalov.

Special attention must be paid to the Ukrainian media space. Drastic changes
occurring there on the eve of the so-called third round of the election,
cannot serve as an excuse for the limitless lies, insinuations and
manipulations that ruled a number of national TV channels and print media
before the orange revolution.

We can discourse on people who realized their mistakes and returned to the
rules of journalists' ethics and proved this with their further work. Thus
one should not recollect their disgraceful past every time. One the other
hand, we can look at the split society and the thousands of people
bewildered by propaganda, and realize that this is too high a price for
someone's "momentary mistake." The law demands responsibility for such
mistakes. After expert legal examination of election commercials broadcasted
by several national TV channels before the first and second rounds of the
election, the law firm Kisil and Partners came to the conclusion that some
of them contained information intending to stir up national hatred.

In particular this refers to the reels on "SS Halychyna", UNA activities,
Yu.Kryvoruchko and Ye.Kovalenko, reels on dividing Ukraine into 1st, 2nd and
3d grades and "sub-Ukrainians" speaking the Russian language. According to
Article 2 of the law on television and radio broadcasting, TV and radio
stations may not promote racial, national or religious hatred, disseminate
information undermining public morale or provoking illegal actions, or
belittle human honor and dignity.

The lawyers believe that the information in some of the reels may not
correspond to reality and belittle human honor and dignity. In particular,
this refers to the reels on "devastation and disasters", which Viktor
Yushchenko would cause and on "crimes" allegedly committed by Yulia
Tymoshenko.

Inevitability of punishment is the best means of preventing crime. We will
certainly miss UT-1, 1+1, Inter or ICTV, but did they not violate the law on
radio and television, thus leading to their licenses being suspended? By
court order, of course. Anyway, their general directors, producers and other
top managers should be brought to responsibility.

Otherwise, we will not be able to avoid repeating history. A recent anchor
of the 1+1 TV channel spoke rather confidently of his professional-if you
could call it that-future as a guest on Channel 5. "We have a very short
political memory. My talent will soon be claimed," he said. If we do not see
public lawsuits for those who used this country to their selfish financial
political ends, most likely it will happen as he describes. -30-
----------------------------------------------------------------------------
LINK: http://www.mirror-weekly.com/ie/show/529/48924/
==========================================================
10. FORMER UKRAINIAN EASTERN GOVERNOR FOUNDS
FEDERALIST PARTY

UNIAN news agency, Kiev, in Ukrainian 1220 gmt 15 Jan 05
BBC Monitoring Service, UK, in English, Sat, January 15, 2005

KIEV, Ukraine - The strategic goal of the New Democracy political party
will be turning Ukraine into a federal state, the head of the party's
founding committee and former Kharkiv Region governor, Yevhen Kushnaryov,
said at the founding congress today. [Kushnaryov was unanimously elected
secretary-general of the new party, the UNIAN news agency reported at 1308
gmt 15 Jan 04.]

He said that federalization is "a lengthy process that should be carried out
with close monitoring by the state", he said. Only "hot heads" can compare
federalization to separatism, Kushnaryov said.

He believes that Ukraine de facto is not an unitary state because it has
the Autonomous Republic of Crimea. The first step towards federalization
should be administrative and territorial reform, meaning a return to the
model of regional governance that was used in the early 1990s, when
people elected regional authorities, he said.

The primary task of the new party should be the development of democratic
principles in Ukraine, Kushnaryov said. "We will work to really implement
the new political system and give up authoritarian rule," Kushnaryov said.
New Democracy will support the parliamentary-presidential form of power in
Ukraine, protect the first step of political reform "using all legal means"
and counter attempts to cancel or review it. He is convinced that
Yushchenko's team will make these attempts despite the fact that the leader
of "the orange" [opposition colours] promised to implement the political
reform before 1 September 2005.

The party will initiate a new law on elections, Kushnaryov said. New
Democracy will also try to create conditions for the development of a
multi-party system. It is necessary to raise the threshold in parliamentary
elections to 4-5 per cent for parties and 8 per cent for blocs, Kushnaryov
said.

The new party will support a "sound restriction of MP immunity", he said.
Ukraine should join Europe politically, Kushnaryov said. "But this is
possible only with our big neighbour - Russia," he added. New Democracy is
ready and will cooperate with all ideologically close political forces,
Kushnaryov said.

Speaking about languages, Kushnaryov said that Ukrainian should remain the
only state language in Ukraine but other languages should have a chance to
develop and function freely on the territory of regions. Other languages
could receive official status in some regions if people living there want
this, Kushnaryov added. -30- [Action Ukraine Report Monitoring]
==========================================================
11. UKRAINE HAILS EUROPEAN PARLIAMENT RESOLUTION
ON PRESIDENTIAL ELECTION

Interfax-Ukraine news agency, Kiev, in Russian 1138 gmt 14 Jan 05
BBC Monitoring Service, UK, in English, Friday, Jan 14, 2005

KIEV - Ukraine has welcomed the resolution of the European Parliament of 13
January on the outcome of the Ukrainian presidential elections, acting Prime
Minister Kostyantyn Hryshchenko said.

"A call by European Parliament deputies to develop relations with Ukraine
and review the EU-Ukraine Action Plan in view of a new political situation
in our country after the presidential elections as well as solving current
problems, including the status of a market economy for Ukraine, a simplified
visa regime and support for Ukraine's aspirations to join the World Trade
Organization, fully correspond to the interests and aspirations of Ukrainian
society," the deputy head of the Foreign Ministry's press service, Dmytro
Svystkov, quoted Hryshchenko as saying.

An appeal by European MPs to the European Commission and the EU Council,
asking them to offer Ukraine integration beyond the European neighbourhood
policy, which would envisage clear prospects of Ukraine's possible
membership in the EU, require special attention, Hryshchenko said. This
stance of the European parliament, which represents the attitudes of people
in EU member states, should not be ignored, he said.

"Taking into account the European Parliament's increasing influence and role
in European processes, we expect that suggestions laid down in the
resolution will be duly taken into consideration by the European Commission
and the EU Council when they will determine new approaches to the
development of relations with Ukraine," Hryshchenko said.

Ukraine, for its part, is ready "to actively and persistently continue its
chosen policy of European integration and implement its strategic choice
with practical steps", Hryshchenko said. [Passage omitted: details of the
European Parliament's resolution] -30-
==========================================================
12. YUSHCHENKO, PUTIN COULD CROSS PATHS AT AUSCHWITZ

AP, Warsaw, Poland, Monday, Jan 17, 2005

WARSAW, Poland - U.S. Vice President Dick Cheney will attend
ceremonies marking 60th anniversary of the liberation of the Nazi
death camp of Auschwitz, a Polish official said Jan. 17.

Other dignitaries expected at the Jan. 27 event include presidents
Vladimir Putin of Russia, Jacques Chirac of France, Israel's Moshe
Katsav, Poland's Aleksander Kwasniewski and probably new Ukrainian
President Victor Yushchenko, Kwasniewski aide Andrzej Majkowski
told a news conference.

Cheney is expected to arrive in Poland on Jan. 26, Majkowski said.

Some 1,000 survivors and veterans of the Soviet Red Army that
liberated the camp Jan. 27, 1945 are expected at an open-air ceremony
at the former Auschwitz-Birkenau camp, said Andrzej Przewoznik, head
of a state office preserving World War II monuments.

Between 1 million and 1.5 million prisoners, most of them Jews,
perished in gas chambers or died of starvation and disease at
Auschwitz, which Nazis built in the southern Polish town of Oswiecim
in 1940. -30- [The Action Ukraine Report Monitoring Service]
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13. WILL YUSHCHENKO'S COALITION COLLAPSE?

By Oleg Varfolomeyev, Eurasia Daily Monitor,
The Jamestown Foundation, Washington, D.C. Mon, Jan 17, 2005

While Ukraine 's president-elect Viktor Yushchenko deliberates about whom to
choose for prime minister (see EDM, January 10), differences within his
motley team are threatening to break it up from within. With Yushchenko's
victory, the very broad coalition backing him, consisting of nationalists,
market liberals, populists, socialists, political idealists, and those who
simply jumped on the bandwagon, has probably lost its raison d'etre.

Near insurmountable policy differences among Yushchenko's allies have come
to the fore over the last week. On January 14, Socialist leader Oleksandr
Moroz submitted to parliament a bill calling for elevating Russian to
"official language" status on par with Ukrainian. The 1996 Ukrainian
constitution, which provides no status whatsoever for Russian, has so far
been one of the major achievements of the nationalists who form the core of
Yushchenko's Our Ukraine bloc. Moroz's bill will be very difficult for them
to digest.

Populist leader Yulia Tymoshenko, who is the junior partner in her and
Yushchenko's People's Power coalition, is also ready to quarrel with Moroz.
Speaking at a press conference on January 15, Tymoshenko pledged to torpedo
the constitutional reform passed in December, which provides for expanding
parliament's authority at the expense of President Yushchenko's. But the
constitutional reform is the main condition on which Moroz agreed to back
Yushchenko in the elections. Meanwhile Moroz's Socialists have hinted that
they would break ranks with Yushchenko if they do not get top posts in his
cabinet. "The Socialist Party will not be part of the government if it has
no chance of being responsible for it," the party said in a January 15
statement.

While constitutional reform is set to be the principal bone of contention
between Tymoshenko and Moroz's Socialists, different attitudes to
privatization may alienate Tymoshenko from market liberals and big
businessmen in Yushchenko's camp. Such liberals as Union of Industrialists
and Entrepreneurs leader Anatoly Kinakh and parliamentary budget committee
head Petro Poroshenko -- both of whom are competing with Tymoshenko for
the post of prime minister -- admit that many state companies were
privatized illegally during the "grabitization" of the Kuchma era, but they
are against re-privatization, arguing that it would harm the economy and
simply scare the business elite. Yushchenko apparently shares this point
of view.

But firebrand Tymoshenko would prefer radical methods to restore justice. At
the same January 15 news conference, she said that only small- to mid-size
businesses "should be confident of their existence," while company stakes
that were sold at reduced prices "should be re-evaluated" and their owners
should pay the price difference, and "the state should restore its control"
and "the process should start from the very beginning" in cases where
privatization was illegal.

These plans send shivers down the spines of the majority of Ukraine 's
nouveaux riches, many of whom are behind influential groups in parliament.
It is parliament that will have to approve Yushchenko's candidate for prime
minister. If Yushchenko really promised the prime minister's office to
Tymoshenko, as she claims, her re-privatization plans are sure to put him in
an awkward position.

Moroz's Socialists and the Yulia Tymoshenko Bloc are essentially equal
partners of Yushchenko's Our Ukraine, free to choose their own ways. Their
departure would not be as dramatic a defeat for Yushchenko as would be
serious discord within his own team. Yushchenko's plan to form a single
party in place of his bloc with an eye to the 2006 parliamentary elections
may sow such a discord. Yushchenko wants a single political party to be
formed by March this year. The smaller and weaker parties within Our
Ukraine, like Poroshenko's Solidarity, have embraced the plan.

But the institutionalized and ambitious People's Movement (Rukh) and the
People's Party of Yuriy Kostenko have voiced strong objections. Oleksa
Hudyma, a leading member of the People's Party, has been especially
outspoken. In a recent interview to the Vgolos website, he warned against
"uniting something that cannot be united."

Yushchenko's most ardent supporters, the inhabitants of the tent city and
the main force of the pro-Yushchenko Orange Revolution, have also become
disobedient. Still living in Kyiv's main street, the Khreshchatyk, they
refuse to go home until Yushchenko's inauguration. Yushchenko on January 14
called for the dissolution of the camp. "We need to put the Khreshchatyk
back in order as soon as possible," Yushchenko's aide Roman Bezsmertny said.
But the tent city has refused to dissolve until Yushchenko personally comes
to the camp and asks them to go.

"We are not rubbish that can be swept away," Interfax-Ukraine quoted one
of the camp's inhabitants as saying. Tymoshenko supports them. "I am for
letting people go when they themselves think it is time for them to go," she
said, calling the tent city "the last barricade" defending Yushchenko from
possible last-minute attacks by the elite defeated in the December 26
election. -30- LINK: http://www.eurasiadaily.org.
(Channel 5, December 29, January 14, 15; vgolos.lviv.ua, January 13;
UNIAN, Interfax-Ukraine, January 15)
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LINK: http://www.jamestown.org/edm/article.php?article_id=2369102
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14. NO LONGER NEEDING U.S. SUPPORT, KUCHMA WANTS
TO BRING TROOPS HOME ON HIS WATCH

By Taras Kuzio, Eurasia Daily Monitor
The Jamestown Foundation, Washington, D.C.
Friday, January 14, 2005

On January 10, President Leonid Kuchma held a meeting to discuss the
deteriorating situation in Iraq. Eight Ukrainian troops died when a bomb
they were defusing went off accidentally on January 9. Another seven
Ukrainian troops were injured.

Ukraine has the fourth-largest military contingent in Iraq and the largest
contingent from a non-NATO member country. Since August 2003, some
1,600 troops have been deployed in central Iraq, a sector that is under
Polish overall command. Ukrainian troops have not been involved in major
military operations, and, until this latest incident, Ukrainian casualties
had been low: nine dead and 20 injured. However, the Iraq deployment
was always controversial, and polls showed that most Ukrainians
opposed the mission.

Kuchma instructed Defense Minister Oleksandr Kuzmuk, Minister of Foreign
Affairs Kostiantyn Hryshchenko, and National Security and Defense Council
(NRBO) Secretary Volodymyr Radchenko to make preparations to withdraw
Ukrainian troops during the first half of 2005. The 72nd Battalion would be
repatriated in March-April with the remainder following by June
(president.gov.ua, January 10).

Only two days earlier, Kuzmuk had told Inter TV that Ukrainian troops would
be withdrawn by the end of 2005, i.e. after elections in Iraq, the
establishment of a new government, and completed training of Iraqi security
forces. However, the deaths have give Kuchma an excuse to bring Kuzmuk's
timetable forward.

Kuchma's decision to recall the troops reflects the fact that he no longer
needs them to curry favor with the Bush administration. Kuchma had hoped
that stationing Ukrainian troops in Iraq would make the Bush administration
go light on U.S. criticism of the rigged presidential elections. This proved
to be a strategic miscalculation, as U.S. Secretary of State Colin Powell
led the West's refusal to recognize the official results of the November
21st runoff.

Other post-communist states, such as Poland and Romania, sent troops to Iraq
as a gesture of gratitude for U.S. support for the anti-communist opposition
during the Cold War. This was never the case with Kuchma, whose only reason
was to repair his personal image in the aftermath of the Gongadze murder and
the Kolchuga radar sale to Iraq.

During Ukraine's 2004 presidential elections the Iraqi issue, and foreign
policy in general, was eclipsed by domestic issues. This diversion was
welcome to presidential hopeful Prime Minister Viktor Yanukovych who, as
head of the government, would have had to defend the presence of Ukrainian
troops in Iraq.

Paradoxically, challenger Viktor Yushchenko, who was constantly portrayed as
an "American stooge" by the Kuchma-Yanukovych camp, strongly favored the
withdrawal of Ukraine's troops from Iraq. The political agreement he signed
with Socialist leader Oleksandr Moroz after round two included a clause
stipulating that, if elected, Yushchenko would remove Ukrainian troops from
Iraq.

After the recent Ukrainian casualties, Yushchenko promised to provide
compensation for the families of those killed. A statement from his office
reiterated that withdrawal "remains one of Yushchenko's priorities as soon
as he assumes office" (AFK Europe, January 9).

After Yushchenko's inauguration, he plans to immediately begin consultations
with the NRBO and foreign partners leading to a decree setting out plans for
withdrawal. "I can say that the promise made by Viktor Yushchenko to the
Ukrainian people will be implemented," vowed his campaign chief, Oleksandr
Zinchenk (razom.org.ua, December 10).

One day after Kuchma ordered preparations for withdrawal, the Ukrainian
parliament voted by the constitutional majority of 318 to withdraw troops
from Iraq. This margin surpassed that of a similar parliamentary resolution
adopted on December 3, which was supported by only 234 deputies
(rada.kiev.ua). Two pro-Kuchma factions, Regions of Ukraine and the Social
Democratic United Party members supported the December 3 resolution. Most
Communist and Socialists backed both the January 11 and the December 3
resolutions. However, 69 out of 101 of Yushchenko's Our Ukraine faction and
6 out of 19 of Yulia Tymoshenko's faction supported the January 11
resolution, an increase over the 17 Our Ukraine deputies who backed the
December 3 resolution.

Acting Defense Minister Kuzmuk believes that Ukraine's troops will be
withdrawn by the end of June (Ukrayinska pravda, January 12). But, as Kuchma
will not be around to make any final decisions, Kuzmuk will also not be
re-appointed as Defense Minister in President Yushchenko's new cabinet.

Any Ukrainian withdrawal would affect not only the U.S.-led operation as a
whole. It would also pose major difficulties for Poland, which has become
Ukraine's main lobbyist for integration into Euro-Atlantic structures.

On March 11, 2004, terrorists killed 201 people using ten bombs deployed in
three train stations in Madrid. Three days later, the Spanish Socialist
Workers Party won parliamentary elections on a platform that called for the
withdrawal of Spanish troops from Iraq. With 1,300 troops, Spain had the
fifth-largest contingent in Iraq. With that contingent gone, a withdrawal of
1,600 Ukrainian troops from Iraq would be even more painful for the U.S.-led
Coalition. -30- LINK: http://www.eurasiadaily.org.
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